Exhibit 10.19


 


THIRD AMENDMENT TO LEASE


(Creekside)


 


THIS THIRD AMENDMENT TO LEASE (“Third
Amendment”) is made and entered into as of the 30th
day of July, 2004, by and between SORRENTO VALLEY ROAD, LLC, a Delaware limited
liability company (“Landlord”) and
WEBSENSE, INC., a Delaware corporation (“Tenant”).


 


R  E  C  I
T  A  L  S:


 


A.                  Legacy-RECP
Sorrento OPCO, LLC, a Delaware limited liability company (“Original Landlord”) and Tenant entered into
that certain Office Lease dated as of April 19, 2002  (the “Original
Lease”), as amended by (i) that certain First Amendment to Lease
dated as of October 1, 2002 by and between Original Landlord and Tenant (the “First Amendment”), and (ii) that certain Second Amendment to Lease dated as of
April 30, 2003 by and between Tenant and Landlord (as successor- in- interest
in the Lease to Original Landlord) (“Second
Amendment”), whereby
Landlord leased to Tenant and Tenant leased from Landlord certain office space
located in (i) that certain building located and addressed at 10240 Sorrento
Valley Road, San Diego, California (the “Building”), and (ii) that certain building
located and addressed at 10220 Sorrento Valley Road, San Diego, California  (the “10220
Building”).  The Original Lease, as amended by the First
Amendment and the Second Amendment, may be referenced to herein as the “Lease.”


 


B.                   By this Third
Amendment, Landlord and Tenant desire to expand the Existing Premises to
include the Expansion Space (as such terms are defined below) and to otherwise
modify the Lease as provided herein.


 


C.                   Unless
otherwise defined herein, capitalized terms as used herein shall have the same
meanings as given thereto in the Lease.


 


NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:


A  G  R  E
E  M  E  N  T:


 


1.                    The
Existing Premises.  Landlord and
Tenant hereby acknowledge that pursuant to the Lease, Landlord currently leases
to Tenant and Tenant currently leases from Landlord (A) all of the office space
in the Building containing 64,117 rentable square feet consisting of (i) 51,032
rentable square feet located on the first (1st), second (2nd)
and third (3rd) floors of the Building and known as Suites 125, 150,
200 and 300 (the “Initial Premises”),
as outlined on Exhibit “A” to the Original Lease, and (ii) 13,085 rentable
square feet located on the first (1st) floor of the Building and
known as Suite 170 (the “Must Take Space”),
as outlined on Exhibit “A-1” to the Original Lease; and (B) that certain space
located on the first (1st) floor of the 10220 Building located in
the Project known as Suite 175 and containing approximately 4,617 rentable
square feet (the “Prior Expansion Space”), as outlined on Exhibit “A-2” to
the Original Lease.  The Initial
Premises, the Must Take Space and the Prior Expansion Space are collectively
referred to herein as the “Existing Premises”,
which Existing Premises contains a total of 68,734 rentable square feet.


 


2.                    Expansion
of the Existing Premises.  All of the
space located in the 10260 Building located in the Project, as outlined on the
plan attached hereto as Exhibit “A” and made a part hereof, may be referred to
herein as the “Expansion Space.”  The Expansion Space contains approximately
36,985 rentable square feet.  Subject to
satisfaction of the Contingency described in Section 13 below, effective as of
December 30, 2004 (“Expansion Space
Commencement Date”), Tenant shall lease from Landlord and Land lord
shall lease to Tenant the Expansion Space. 
Accordingly, effective upon the Expansion Space Commencement Date, the
Existing Premises shall be increased to include the Expansion Space.  Landlord and Tenant hereby agree


 





















 


that such
addition of the Expansion Space to the Existing Premises shall, effective as of
the Expansion Space Commencement Date, increase the number of rentable square
feet leased by Tenant in the Project to a total of 105,719 rentable square feet.  Effective as of the Expansion Space
Commencement Date, except as otherwise described herein, all references to the “Premises” in this Third Amendment and in
the Lease shall mean and refer to the Existing Premises as expanded by the
Expansion Space.


 


3.                    New Term.  The Lease Expiration Date of December 31,
2007 shall be extended such that the Lease shall, unless sooner terminated
pursuant to the Lease or as may be extended pursuant to the Extension Option
Rider attached to the Lease, terminate on December 31, 2008 (“New Expiration Date”).  The Term for Tenant’s lease of the Expansion
Space (“Expansion Space Term”)
shall commence on the Expansion Space Commencement Date and shall expire
co-terminously with all other space leased by Tenant in the Project on the New
Expiration Date (unless sooner terminated pursuant to the Lease or as may be
extended pursuant to the Extension Option Rider attached to the Lease).


 


4.                    Monthly
Base Rent for the Existing Premises and the Expansion Space.


 


4.1.               Monthly Base
Rent for Existing Premises.  During
the period until December 31, 2007, Tenant shall continue to pay monthly Base
Rent for the Existing Premises pursuant to the terms of the Lease.  Commencing as of January 1, 2008 and
continuing until the New Expiration Date, Tenant shall pay, in accordance with
the provisions of this Section 4.1, monthly Base Rent for the Existing Premises
(in addition to the monthly Base Rent due and payable by Tenant for the
Expansion Space (as provided in Section 4.2 below) and in addition to all other
charges and Additional Rent payable by Tenant for the Existing Premises under
the Lease including, but not limited to, Tenant’s Share of Direct Expenses) as
follows:


 


	
  Period

  	
   

  	
  Monthly Base Rent

  	
   

  	
  Monthly Base Rent

  per rentable square feet

  of Existing Premises

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  01/01/08 –
  12/31/08

  	
   

  	
  $

  	
  115,473.12

  	
   

  	
  $

  	
  1.68

  	
   

  
								



 


4.2.               Monthly Base
Rent for the Expansion Space.  During
the Expansion Space Term (i.e., the period commencing as of the Expansion Space
Commencement Date and continuing until the New Expiration Date), Tenant shall,
subject to Section 5 below, pay, in accordance with the provisions of this
Section 4.2, monthly Base Rent for the Expansion Space (in addition to the
monthly Base Rent due and payable by Tenant for the Existing Premises (as provided
in Section 4.1 above) and in addition to all other charges and Additional Rent
payable by Tenant for the Expansion Space under the Lease, including, but not
limited to, Tenant’s Share of Direct Expenses) as follows:


 


	
  Months of Expansion

  Space Term

  	
   

  	
  Monthly Base Rent

  	
   

  	
  Monthly Base Rent

  per rentable square

  feet of Expansion Space

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1-12

  	
   

  	
  $

  	
  46,231.25

  	
   

  	
  $

  	
  1.25

  	
   

  
	
  13-24

  	
   

  	
  $

  	
  47,710.65

  	
   

  	
  $

  	
  1.29

  	
   

  
	
  25-36

  	
   

  	
  $

  	
  49,559.90

  	
   

  	
  $

  	
  1.34

  	
   

  
	
  37-New
  Expiration Date

  	
   

  	
  $

  	
  51,409.15

  	
   

  	
  $

  	
  1.39

  	
   

  



 


5.                    Base Rent
Abatement for Expansion Space. 
Notwithstanding anything to the contrary contained herein and provided
that Tenant faithfully performs all of the terms and conditions of the Lease
(as modified by this Third Amendment), Landlord hereby agrees to abate Tenant’s
obligation to pay Tenant’s monthly Base Rent for the Expansion Space for the
first (1st) and second (2nd) full months of the Expansion
Space Term (for the Expansion Space only). 
During such abatement period, Tenant shall still be responsible for the
payment of all of its other monetary obligations under the Lease (as modified
by this Third Amendment).  In the event
of a default by Tenant under the terms of the Lease (as modified by this Third
Amendment) that results in early termination pursuant to the provisions of
Article 19 of the Original Lease, then as a part of the recovery set forth in
Article 19 of the Original Lease, Landlord shall be entitled to the recovery of
the monthly Base Rent that was abated under the provisions of this Section 5.


 


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6.                    Tenant’s
Share of Direct Expenses. 
Notwithstanding anything to the contrary in the Lease, during the
Expansion Space Term, Tenant’s Share of Direct Expenses for the Expansion Space
only (with respect to the Direct Expenses for the 10260 Building) shall be one
hundred percent (100%).


 


7.                    Condition
of Premises and Expansion Space; New Refurbishment Allowance.


 


7.1.               Condition of
Premises and Expansion Space. 
Subject to Sections 7.3 and 7.4 below, Tenant hereby agrees to accept
the Expansion Space in its “as- is” condition and Tenant hereby acknowledges
that Landlord shall not, except as otherwise provided below, be obligated to
provide or pay for any improvement work or services related to the improvement
of the Expansion Space; provided, however, that Landlord agrees to deliver the
Expansion Space to Tenant clean of debris and with any Hazardous Materials
spills cleaned up and free and clear of all prior tenants and their personal
property.  Except as otherwise provided
herein, Tenant also acknowledges that Landlord has made no representation or
warranty regarding the condition of the Expansion Space.  Concurrent with the execution of this Third
Amendment or promptly thereafter, Landlord shall, to the extent in Landlord’s
possession as of the date hereof, provide Tenant with “as built” drawings for
the Expansion Space, which may include dimensioned Blue Line Drawings and/or
CAD (.dwg) files of the base building floor plan, including mechanical,
electrical, plumbing and fire life safety systems.


 


7.2.               New
Refurbishment Allowance.


 


7.2.1            Refurbishment of
Premises.  Notwithstanding anything
to the contrary contained herein, Tenant shall be entitled to renovate the
then-existing tenant improvements in the Premises (including the Existing
Premises, the Expansion Space and any additional space subsequently leased by
Tenant) and, subject to Landlord’s approval, the Common Areas, all in
accordance with this Section 7.2 and otherwise in accordance with the terms and
provisions of Article 8 of the Original Lease. 
In connection therewith, Tenant shall, commencing as of the Expansion
Space Commencement Date (and regardless of whether the costs were actually
incurred prior to or after the Expansion Space Commencement Date), be entitled
from time to time to a tenant refurbishment allowance (the “New Refurbishment Allowance”) in an amount up to, but not
exceeding, Four Hundred Eighty Thousand Eight Hundred Five Dollars
($480,805.00) for the costs relating to the design and construction of certain
renovations to the then-existing tenant improvements in the Premises that are
(except as otherwise provided below) to be permanently affixed to the Premises,
including, but not limited to, voice and data cabling and security system(s)
(collectively, the “Refurbished Improvements”), except that up to One Hundred
Eighty-Four Thousand Nine Hundred Twenty-Five Dollars ($184,925.00)) shall be
made available to Tenant, at Tenant’s discretion, (A) to help Tenant pay for
the actual and documented costs incurred by Tenant for (i) for the purchase and
installation in the Premises of any furniture, fixtures and equipment, (ii) to
help Tenant pay for the actual and documented costs for the fabrication and
installation of Tenant’s Exterior Signage (described in Section 17 below),
(iii) to help Tenant pay for the actual and documented costs incurred by Tenant
for moving into the Expansion Space and (B) as a credit against the monthly
Base Rent due and payable by Tenant under the Lease, as modified by this Third
Amendment (collectively, the “Other Costs”).  After the Expansion Space Commencement Date,
Landlord shall disburse from the New Refurbishment Allowance the available
portion thereof to pay for the Other Costs actually incurred by Tenant, whether
incurred prior to or after the Expansion Space Commencement Date (or in the
case of Base Rent, to be incurred by Tenant) within thirty (30) days after
Landlord has received Tenant’s written request for disbursement together with
(with respect to furniture, fixtures and equipment, signage and relocation
costs) copies of invoices from third parties evidencing the amount of such
Other Costs to be paid by Landlord, but Landlord shall have no obligation to
disburse any portion of the New Refurbishment Allowance to pay for the Other
Costs until after (1) the Expansion Space Commencement Date has occurred, and
(2) the Refurbished Improvements have been completed and the final costs
thereof determined.  Notwithstanding
anything in this Section 7 to the contrary, Landlord shall, subject to the
procedures set forth in Section 7.2.1.2 below, make disbursements from the New
Refurbishment Allowance pertaining to any New Refurbishment Allowance Items
that are scheduled to take longer than sixty (60) days to complete, on a
monthly progress payment basis as costs are incurred by Tenant for each such
New Refurbishment Allowance Item.  In no
event shall Landlord be obligated to make disbursements under this Section 7.2
in a total amount which exceeds the New Refurbishment Allowance nor prior to
the Expansion Space Commencement Date. 
Notwithstanding anything to the contrary contained in this Section 7,
the


 


3





















 


parties hereto
agree that Tenant may use all or any portion of the New Refurbishment Allowance
on all or any portion of the Premises leased, or subsequently leased by Tenant,
and shall not be limited to any particular portion of the Premises.


 


7.2.1.1        New Refurbishment
Allowance Items.  The New
Refurbishment Allowance shall be disbursed by Landlord following completion of
the Refurbished Improvements (except as otherwise provided in Section 7.2.1
above) for the following items and costs only (collectively, the “New Refurbishment Allowance Items”):


 


(A)               Payment of the fees
of the architect and engineer(s) retained by Tenant (if any) in connection with
the review of the plans and specifications prepared for the Refurbished
Improvements, including preliminary space plans, finish plans and
specifications, and architectural and engineering plans and specifications
(including “as-built” drawings) (collectively, the “Refurbishment Drawings”);


 


(B)                The payment of
plan check, permit and license fees and other costs for governmental approval
relating to construction of the Refurbished Improvements (including permits or
fees required by the City of San Diego and other applicable jurisdictions);


 


(C)                The cost of
construction of the Refurbished Improvements, including, without limitation,
testing and inspection costs, trash removal costs, and contractors’ fees, labor
fees and general conditions;


 


(D)                The cost of any
changes in the base, shell and core of the Project when such changes are
required by the Refurbishment Drawings, such cost to include all direct
architectural and/or engineering fees and expenses incurred in connection
therewith;


 


(E)                 The cost of any
changes to the Refurbishment Drawings or Refurbished Improvements required by
applicable laws and building codes;


 


(F)                 Sales and use
taxes and Title 24 fees;


 


(G)                Landlord’s
Supervision Fee (as defined below); and


 


(H)                Subject to the
limitations set forth in Section 7.2.1 above, the Other Costs.


 


7.2.1.2        Disbursement of New
Refurbishment Allowance.  Provided
that Tenant is not in default on any of its monetary or material non-monetary
obligations under the Lease (as modified by this Third Amendment) beyond the
expiration of all applicable notice and cure periods, upon completion of each
Refurbished Improvement (or when a progress payment is required pursuant to
Section 7.2.1 above), Landlord shall make a disbursement of the New
Refurbishment Allowance for New Refurbishment Allowance Items for the benefit
of Tenant and shall authorize the release of monies for the benefit of Tenant
as follows:


 


(A)               Disbursement.  Tenant shall deliver to Landlord:  (i) if Tenant is utilizing a general
contractor for the specific Refurbished Improvement, a request for payment of
Tenant’s general contractor (“Contractor”),
which Contractor shall be retained by Tenant and shall be subject to Landlord’s
reasonable prior written approval, and which request shall be an Application
for Payment (AIA Form G702); (ii) invoices from all subcontractors, laborers,
materialmen and suppliers used by Tenant in connection with the Refurbished
Improvements (such subcontractors, laborers, materialmen and suppliers, and the
Contractor, if any, may be known collectively as “Tenant’s Agents”), for labor rendered and materials delivered
to the Premises for the Refurbished Improvements; and (iii) executed
unconditional mechanics’ lien releases from all of Tenant’s Agents which shall
comply with the appropriate provisions, as reasonably determined by Landlord,
of California Civil Code Section 3262(d) and either Section 3262(d)(3) or
Section 3262(d)(4).  Promptly thereafter,
assuming Landlord receives all of the applicable information described in items
(i) through (iii), above, Landlord shall, after the Expansion Space
Commencement Date, and from time to time as each Refurbished Improvement is
completed (or when a progress payment is required pursuant to Section 7.2.1
above) deliver a check made payable to Tenant in payment of the amounts so


 


4





















 


requested by
Tenant (but in no event to exceed the amount of the New Refurbishment
Allowance).  Unless otherwise indicated
by Landlord in writing provided concurrently with or prior to Landlord’s
payment (along with reasonable written detail describing such non-approval or
non-acceptance), Landlord’s payment of such amounts shall not be deemed
Landlord’s approval or acceptance of the work furnished or materials supplied
as set forth in Tenant’s payment request; and


 


(B)                Other Terms.  Landlord shall only be obligated to make
disbursements from the New Refurbishment Allowance to the extent costs are
incurred by Tenant for New Refurbishment Allowance Items.  All New Refurbishment Allowance Items for
which the New Refurbishment Allowance has been made available shall be deemed
Landlord’s property (unless, as described below, Landlord elects to require
Tenant to remove the same upon the expiration or sooner termination of the
Lease (in which case Tenant shall, at Tenant’s sole cost and expense, remove
the same and repair any damage to the Premises and/or the Project caused by
such removal)).  Except as otherwise
provided in this Section 7, in no event shall Tenant be entitled to any credit
for any unused portion of the New Refurbishment Allowance.  All drafts of the Refurbishment Drawings
shall be subject to Landlord’s prior written approval, which approval shall not
be unreasonably withheld.  When
Refurbishment Drawings are approved by Landlord, Landlord must inform Tenant in
writing if Landlord will require Tenant to remove all or any portion of the New
Refurbishment Allowance Items depicted therein upon the expiration or earlier
termination of the Lease.  Landlord
acknowledges that Tenant intends to custom design its space and may use
materials which are not Building standard; provided, however, that the use of
any such non-Building standard materials shall be subject to Landlord’s prior
written approval, which approval shall not be unreasonably withheld.  In addition, all of Tenant’s Agents shall be
subject to Landlord’s prior written approval (which approval shall not be
unreasonably withheld).  At the
conclusion of construction of the Refurbished Improvements, Tenant shall
deliver to Landlord two (2) sets of sepias of as-built drawings for the
Refurbished Improvements.


 


7.2.1.3        No Rent Abatement.  Tenant acknowledges that the work to be
performed by Tenant pursuant to this Section 7.2 above shall be performed
during the Expansion Space Term, that Tenant shall be entitled to (but shall
not be obligated to) conduct business throughout the course of construction of
such renovations and that Tenant shall not be entitled to any abatement of
rent, nor shall Tenant be deemed to be constructively evicted from the
Premises, as a result of the construction of such renovations.


 


7.2.1.4        Landlord Supervision
Fee.  Tenant shall pay to Landlord a
construction supervision and management fee (the “Landlord’s Supervision Fee”) in an amount equal to the product
of (i) two percent (2%) and (ii) the costs incurred by Tenant to design and
construct the Refurbished Improvements; provided, however, in no event shall
Landlord’s Supervision Fee exceed Five Thousand Dollars ($5,000.00) in the
aggregate for all Refurbished Improvements.


 


7.3.               Acceptance of
Expansion Space.  In the event that
as of the date of execution of this Third Amendment, (A) the Systems and
Equipment of the Building located outside of the Expansion Space, or (B) the
structural components of the Building and the common areas of the Building
(including the lobby and restrooms on the ground floor of the Building) or Real
Property located outside of the Expansion Space, each in their condition
existing as of such applicable date, do not comply with applicable Laws
(including Environmental Laws, as defined in Section 5.2 of the Lease) in
effect as of such date, as such noncompliance shall be determined on an
unoccupied basis without regard to any improvements to be constructed in the
Expansion Space or the Real Property or previously constructed by Tenant in the
Real Property, or to Tenant’s use of the Expansion Space and/or the other
portions of the Premises, then Landlord shall be responsible, at its sole cost,
which cost shall not be included in Direct Expenses, for correcting any such
noncompliance.


 


7.4.               Landlord’s
Representation Regarding Hazardous Materials.  Tenant acknowledges that Landlord has made no
representation or warranty regarding the condition of the Expansion Space,
except as specifically set forth herein. 
Notwithstanding the foregoing, Landlord hereby represents and warrants
to Tenant that to Landlord’s “actual knowledge” (as such term is defined below
in this Section 7.4), as of the date of execution of this Third Amendment, and
based upon the information contained in the Environmental Report (as such term
is defined below in this Section 7.4), copies of which have been delivered by
Landlord to


 


5





















 


Tenant, the
Real Property does not contain any Hazardous Materials in violation of
applicable Environmental Laws in existence as of the date of execution of this
Third Amendment, except as described in the Environmental Report.  Landlord shall, at its expense (which may be
included in Operating Expenses to the extent permitted in Article 4 of the
Original Lease), observe and comply with all applicable Environmental Laws in
connection with Landlord’s activities in or on the Real Property, and in
connection therewith, Landlord, shall not cause any Hazardous Materials to be
brought upon, kept or used in connection with the Real Property by Landlord,
its agents, employees or contractors in a manner or for a purpose prohibited by
any Environmental Laws in existence as of the date such Hazardous Material is
brought upon, kept or used.  As used in
this Section 7.4, the term “Environmental
Report” refers to the following report: Phase I Environmental
Assessment prepared by SCS Engineers, dated October 2002 and known as File No.
01202147.  As used herein, the phrase “actual knowledge” shall mean the actual knowledge of Mike Nelson (“Landlord’s Representative”), without investigation or inquiry
or duty of investigation or inquiry. 
Landlord’s Representative is making such representation and warranty on
behalf of Landlord and not in such person’s individual capacity and, as a
result, Landlord (and not such individual) shall be liable in the event of a
breach of this representation.  Notwithstanding
anything to the contrary contained in this Section 7.4, Landlord, at Landlord’s
sole cost, shall, prior to the Expansion Space Commencement Date, be
responsible for the removal of Hazardous Materials in the Expansion Space that
are in violation of applicable Environmental Laws.


 


8.                    Parking.  Effective as of the Expansion Space
Commencement Date and continuing throughout the Expansion Space Term, Tenant
shall have the right to use an additional one hundred seven (107) unreserved
parking spaces for use in the Parking Facilities serving the 10260 Building
(the “Additional Parking Spaces”).  Tenant’s use of such additional parking
spaces shall be in accordance with, and subject to, all of the provisions of
Article 23 of the Original Lease. 
Notwithstanding anything to the contrary in the Lease, Landlord
acknowledges and agrees that all of Tenant’s parking rights under the Lease may
be utilized by any Transferee (as defined in Article 14 of the Original Lease)
approved by Landlord pursuant to the terms and provisions of Article 14 of the
Original Lease; provided, however, that Tenant shall pay to Landlord fifty
percent (50%) of any parking rent (if any) received by Tenant from any such
Transferee.  For purposes hereof, parking
rent shall also be deemed to include any component of the rent payable by any
such Transferee on account of such Transfer that is in lieu of parking rent
that would otherwise be payable by such Transferee to Tenant on account of such
Transferee’s utilization of Tenant’s parking rights under the Lease.  Landlord acknowledges and agrees that visitor
and guest parking spaces shall be within designated short-term visitor parking
areas adjacent to the 10260 Building; provided, however, that the cost to designate
any spaces as visitor parking shall be at Tenant’s sole cost and expense (and
which cost may be deducted from the New Refurbishment Allowance provided to
Tenant pursuant to Section 7.2 above). 
Landlord further acknowledges and agrees that there shall be no parking
stalls in front of the main entrance to the 10260 Building designated for any
tenant other than Tenant or as a visitor parking space.  All of Tenant’s parking rights under the
Lease (as modified by this Third Amendment) shall be at no additional cost to
Tenant.  Landlord acknowledges and agrees
that in the event that Tenant reasonably requires additional parking spaces for
its employees and/or visitors that Tenant shall have the right, at Tenant’s
sole cost and expense, to institute a parking service and/or operations
pertaining to Tenant’s allotment of parking spaces under the Lease (such as
tandem or valet service) reasonably approved by Landlord; provided, however,
that in no event shall any such parking service unreasonably interfere in any
way whatsoever with the parking rights of any other tenant of the Project or
cause Landlord to be in default under any lease of space in the Project.


 


9.                    Security
Deposit.  Tenant has previously
deposited with Landlord One Hundred Four Thousand Three Hundred Eighty-Two and
48/100 Dollars ($104,382.48) as a Security Deposit under the Lease.  Landlord shall continue to hold the Security
Deposit in accordance with the terms and conditions of Article 20 of the
Original Lease.


 


10.                 Brokers.  Each party represents and warrants to the
other that, except for Legacy Partners Commercial, Inc. (“Landlord’s Broker”) and Orion Property
Partners, Inc. (“Tenant’s Broker”),
no broker, agent or finder negotiated or was instrumental in negotiating or
consummating this Third Amendment.  Each
party further agrees to defend, indemnify and hold harmless the other party
from and against any claim for commission or finder’s fee by any entity (other
than Landlord’s Broker and Tenant’s Broker) who claims or alleges that they
were retained


 


6





















 


or engaged by
the first party or at the request of such party in connection with this Third
Amendment.


 


11.                 Intentionally
Omitted.


 


12.                 Signing
Authority.  Each individual executing
this Third Amendment on behalf of Tenant hereby represents and warrants that
Tenant is a duly formed and existing entity qualified to do business in the
State of California and that Tenant has full right and authority to execute and
deliver this Third Amendment and that each person signing on behalf of Tenant
is authorized to do so.


 


13.                 Contingency.  Notwithstanding anything herein to the
contrary, Landlord and Tenant acknowledge and agree that the rights and
obligations of Landlord and Tenant under this Third Amendment are expressly
conditioned upon the vacation, surrender and delivery of the Expansion Space
leased by KLA-Tencor Corporation, a Delaware corporation (“KLA-Tencor”) (the existing tenant of the
10260 Building) when and as required under the existing lease for the space
leased by KLA-Tencor, which existing lease is scheduled to expire on December
29, 2004 (collectively, the “Contingency”);
provided, however, that (i) Landlord will use commercially reasonable efforts
to enforce and exercise its rights under the existing lease with KLA-Tencor
such that the existing lease terminates as of December 29, 2004, (ii) the
Expansion Space Commencement Date shall be delayed by one (1) day for every day
of delay in satisfaction of the Contingency beyond December 29, 2004, and (iii)
in the event that the Contingency is not satisfied by February 15, 2005, Tenant
may terminate this Third Amendment (but not the Lease) by giving written notice
to Landlord.  Upon such termination, this
Third Amendment shall be null and void and of no further force or effect.


 


14.                 Tenant’s Early
Cancellation Right.  Tenant shall
have a one (1) time right to terminate and cancel the Lease as it pertains to
the entire Premises effective as of the December 31, 2007 (“Termination Date”), which right is
contingent upon Tenant paying to Landlord the Termination Consideration (as
defined below) in a timely manner in accordance with the following provisions
of this Section 14.  To exercise such
termination right, Tenant must deliver to Landlord, on or before December 31,
2006, written notice of Tenant’s exercise of such termination right (the “Termination Notice”).  As used herein, the “Termination Consideration” shall mean an
amount equal to Three Hundred Twenty-Five Thousand Dollars ($325,000.00), less
any unused portion of the New Refurbishment Allowance that has not been
disbursed by Landlord to Tenant.  The
Termination Consideration shall be payable by Tenant on or before that date
which is thirty (30) days after the date Tenant delivers the Termination Notice
to Landlord.  If Tenant timely and
properly exercises its termination option in this Section 14, the Lease shall
expire at midnight on the Termination Date (except for those terms and
provisions of the Lease that, by their terms, expressly survive the expiration
or sooner termination of the Lease), and Tenant shall be required to surrender
the Premises to Landlord on or before the Termination Date in accordance with
the applicable provisions of the Lease. 
The termination right set forth in this Section 14 is personal to the
original Tenant executing this Third Amendment (“Original Tenant”) (and to any Affiliate to which Original
Tenant’s entire interest in the Lease has been assigned pursuant to Section
14.7 of the Original Lease) and may only be exercised by the Original Tenant if
the Original Tenant is not in monetary default in the payment of Base Rent or
material non-monetary default under the Lease (as modified by this Third
Amendment) beyond the expiration of all applicable notice and cure periods as
of the date Tenant delivers the Termination Notice or as of the Termination
Date.


 


15.                 Amendment to
Lease.  Landlord may deliver to
Tenant an amendment confirming the Expansion Space Commencement Date in a form
substantially similar to that attached hereto as Exhibit “B” and made a part
hereof at any time after the Expansion Space Commencement Date.  Tenant agrees to execute and return to
Landlord said amendment within ten (10) business days after Tenant’s receipt
thereof.


 


16.                 Common
Ownership.  Landlord and Tenant
acknowledge that it is Landlord’s current intention to cause the ownership of
the Building (located at 10240 Sorrento Valley Road), the 10220 Building
(located at 10220 Sorrento Valley Road) and the 10260 Building (located at
10260 Sorrento Valley Road) to be held by the same entity.  If, however, at any time during the Lease
Term (including the Option Term (if applicable)), Landlord determines to
separate ownership of the three (3) buildings or to separately finance the
three (3) buildings (where the lender requires separate documentation), Tenant
agrees, at Landlord’s sole cost and


 


7





















 


expense, to
promptly after request from Landlord, negotiate in good faith and thereafter
execute commercially reasonable documents in order to separate Tenant’s lease
of the Premises located at such buildings. 
Any such documentation shall be on the exact same terms as specified in
the Lease (as modified by this Third Amendment) but as applicable to the
relevant portion of the Premises.


 


17.                                 Exterior
Signage.


 


17.1.            Tenant’s Exterior
Signage.  Subject to Tenant obtaining
the approval of all applicable governmental entities and Tenant’s compliance
with all applicable Laws and the terms of this Section 17, Tenant shall have
the right, at Tenant’s option, to install, at Tenant’s sole cost and expense,
(i) one (1) sign displaying Tenant’s logo and Tenant’s name, “Websense, Inc.,”
either in the location of the existing sign for KLA-Tencor or above the
main entrance of the 10260 Building in the exact location as shall be mutually
agreed upon by Landlord and Tenant (the “Tenant’s
New Building Sign”), and (ii) monument and directional signs in the
general locations of the existing monument/directional signs for KLA-Tencor and
in the exact locations as shall be mutually agreed upon by Landlord and Tenant
(“Tenant’s Monument Sign”).  Tenant’s New Building Sign and Tenant’s
Monument Sign are collectively referred to herein as “Tenant’s Exterior Signage.”  The graphics, materials, color, design,
lettering, lighting, size, specifications, manner of affixing and exact
location of the Tenant’s Exterior Signage shall be subject to Landlord’s
reasonable approval.  Subject to the
terms and conditions of this Section 17, Tenant’s New Building Sign will be the
only identification sign on the exterior of the 10260 Building.


 


17.2.            Costs and Expenses.  Tenant shall pay for all costs and expenses
related to the Tenant’s Exterior Signage, including, without limitation, costs
of the design, construction, installation, maintenance, insurance, utilities,
repair and replacement thereof.  Tenant
shall install and maintain Tenant’s Exterior Signage in compliance with all
Laws and subject to the applicable provisions of Articles 8 and 9 of the
Original Lease.


 


17.3.            Transferability.  The rights to Tenant’s Exterior Signage are
personal to the Original Tenant and any Affiliate to which Original Tenant’s
entire interest in the Lease has been assigned pursuant to Section 14.7 of the
Lease (but any name change on Tenant’s Exterior Signage to reflect the identity
of any such Affiliate assignee shall be subject to Landlord’s prior reasonable
approval), and may not be used by or assigned to anyone else, and shall only be
available to Tenant when the Original Tenant or such Affiliate assignee, as the
case may be, is in physical occupancy and possession of not less than sixty
percent (60%) of the total rentable square feet of the 10260 Building.  During the period of time that all of Tenant’s
Exterior Signage is available to Tenant as provided hereinabove, Landlord shall
not place any other tenant identity sign on the exterior of the 10260 Building.


 


17.4.            Maintenance/Removal.  Tenant shall, at Tenant’s sole cost and
expense, keep, maintain and repair Tenant’s Exterior Signage, including the
portion of the 10260 Building and/or the Project where Tenant’s Exterior
Signage is located, in good order, repair and first-class condition during the
Lease Term.  Should Tenant default
(pursuant to Section 19.1.2 of the Original Lease) in the performance of such
maintenance, repairs or replacement, Landlord shall have the right to cause
such work to be performed and to charge Tenant as Additional Rent for the costs
of such work.  Upon the expiration or
earlier termination of the Lease, or upon any earlier loss of Tenant’s rights
to Tenant’s Exterior Signage pursuant to this Section 17, Tenant shall, at
Tenant’s sole cost and expense, cause Tenant’s Exterior Signage to be removed,
and Tenant shall repair all damage occasioned thereby and restore the affected
areas to their original condition prior to the installation of Tenant’s
Exterior Signage, normal wear and tear excepted.  If Tenant fails to timely remove Tenant’s
Exterior Signage and repair and restore the affected areas as provided in the
immediately preceding sentence, then Landlord may perform such work, and all
costs and expenses incurred by Landlord in so performing such work shall be
reimbursed by Tenant to Landlord within twenty (20) days after Tenant’s receipt
of invoice therefor.  The immediately preceding
sentence shall survive the expiration or earlier termination of the Lease.  Tenant shall be responsible for maintaining
insurance on the Tenant’s Exterior Signage as part of the insurance required to
be carried by Tenant pursuant to Section 10.3 of the Original Lease.


 


18.                 Right of First
Offer to Purchase.  Landlord hereby
grants to the Original Tenant, throughout the Lease Term (including the Option
Term), a one-time right (subject to the terms hereof) of first offer to
purchase the buildings in the Project in the event Landlord desires to sell


 


8





















 


less than all
of the buildings in the Project, together with land area surrounding such
buildings that are being sold, as determined by Landlord in Landlord’s sole and
absolute discretion (collectively, the “Offer
Property”), which right of first offer shall be on the terms and
conditions set forth in this Section 18. 
In no event shall Tenant’s right of first offer to purchase apply in the
event Landlord intends to sell its entire interest in the Project.


 


18.1.            Procedure.  Landlord shall notify Tenant in writing (the “First Offer Notice”) when Landlord desires
to sell all or any portion of the Offer Property; provided, however, that
Tenant shall not have a right of first offer to the extent Landlord desires to
sell any portion of the Offer Property as part of the sale of any other
properties owned by Landlord.  The First
Offer Notice shall describe the Offer Property (or portion thereof) that
Landlord intends to sell, together with Landlord’s proposed economic terms and
conditions applicable to Tenant’s purchase of the Offer Property (collectively,
the “Purchase Economic Terms”). 
Except as otherwise provided in the First Offer Notice, the purchase of
the Offer Property shall be (i) on an “as- is” basis, with absolutely no
representations or warranties, express or implied, regarding the condition or
nature of the Offer Property and any improvements thereon, (ii) consummated
using Landlord’s form of purchase and sale agreement (subject, however, to
commercially reasonable changes required by Tenant’s counsel), and (iii)
subject to any and all matters of record and conditions affecting title caused
by Tenant.  Notwithstanding the
foregoing, Tenant’s right of first offer shall not apply in the event Landlord
desires to sell the Offer Property to any existing or future affiliate of
Landlord (which shall mean any entity which controls, is controlled by, or is
under common control with Landlord or any entity resulting from a
reorganization of or a merger or consolidation with Landlord or any entity
which acquires, or will acquire (prior to the closing date of the sale of the
Offer Property) all or substantially all of the assets of Landlord’s business).


 


18.2.            Procedure for
Acceptance.  If Tenant wishes to
purchase the Offer Property pursuant to the Purchase Economic Terms described
in the First Offer Notice, then within fifteen (15) days after delivery of the
First Offer Notice to Tenant (the “Election
Date”), Tenant shall deliver written notice to Landlord (“Tenant’s Election Notice”) pursuant to
which Tenant shall elect either to (i) purchase the Offer Property pursuant to
the Purchase Economic Terms set forth in the First Offer Notice; (ii) refuse to
purchase the Offer Property, in which event Tenant’s right of first offer set
forth herein shall thereupon terminate and be of no further force or effect and
Landlord may sell the Offer Property (or any portion thereof) to any entity on
any terms Landlord desires; provided, however, that if Landlord intends to
enter into a purchase and sale agreement upon Purchase Economic Terms which
are, in the aggregate, materially more favorable to a third (3rd)
party buyer than those Purchase Economic Terms proposed by Landlord in the First
Offer Notice to Tenant, then Landlord shall first deliver written notice to
Tenant (“Second Chance Notice”) providing Tenant with the
opportunity to purchase the Offer Property on such more favorable Purchase
Economic Terms.  For purposes hereof,
Purchase Economic Terms shall be materially more favorable to a third party if
such Purchase Economic Terms reflect a purchase price less than ninety- five
percent (95%) of the purchase price for such Offer Property as proposed by
Landlord in the First Offer Notice to Tenant. 
Tenant’s failure to elect to purchase the Offer Property upon such more
favorable Purchase Economic Terms by written notice to Landlord within seven
(7) business days after Tenant’s receipt of such Second Chance Notice from
Landlord shall be deemed to constitute Tenant’s election not to purchase such
Offer Property upon such more favorable Purchase Economic Terms, in which case
for a period of twelve (12) months after the date Landlord delivered such
Second Chance Notice to Tenant, Landlord shall be entitled to sell such Offer
Property to any third (3rd) party on terms no more favorable to the third (3rd)
party than those set forth in the Second Chance Notice.  If Landlord does not enter into a purchase
and sale agreement and sell the Offer Property within twelve (12) months after
that date Landlord delivers such Second Chance Notice to Tenant, then Landlord
shall, subject to the limitations set forth above, submit to Tenant a new First
Offer Notice with respect to any such unsold Offer Property prior to selling
such property, in which event the foregoing procedures shall again apply
following Tenant’s receipt of such new First Offer Notice.  If Tenant does not so respond in writing to
Landlord’s First Offer Notice by the Election Date, Tenant shall be deemed to
have elected the option described in clause (ii) above.  Notwithstanding anything above to the
contrary contained herein, Tenant must elect to exercise its right of first
offer herein within said fifteen (15) day period with respect to the entire
Offer Property identified in the First Offer Notice and may not elect to
purchase only a portion thereof.


 


18.3.            Conditions
Precedent to Effectiveness of Right of First Offer.  Notwithstanding anything to the contrary
contained in this Section 18, Tenant’s exercise of Tenant’s right of first
offer (and Tenant’s right to thereafter purchase the Offer Property) shall be


 


9





















 


effective only
if all of the conditions precedent set forth hereinbelow are true and correct
during the period commencing upon the date Tenant delivers Tenant’s Election
Notice to Landlord and continuing until the closing date of such sale of the
Offer Property to Tenant, unless Landlord, in Landlord’s sole discretion,
elects to waive any such condition precedent in writing:


 


18.3.1  The Lease is in full
force and effect and Tenant shall not then be in monetary or material non-
monetary default under the Lease (as modified by this Third Amendment) after
the expiration of any applicable notice and cure period; and


 


18.3.2  Tenant shall not have
assigned its interest in the Lease or in the right of first offer (except to
any Affiliate to which Original Tenant’s entire interest in the Lease has been
assigned pursuant to Section 14.7 of the Original Lease), it being acknowledged
and agreed that the right of first offer is personal to the Original Tenant and
may not be voluntarily or involuntarily assigned to, or exercised by, any other
person or entity other than Original Tenant (or any Affiliate to which Original
Tenant’s entire interest in the Lease has been assigned pursuant to Section
14.7 of the Original Lease) and only so long as the Original Tenant (or such
Affiliate assignee, as the case may be) is in physical possession and occupancy
of no less than eighty- five percent (85%) of the Premises.


 


19.                 Non-Disturbance.  Within sixty (60) days of the full execution
and delivery of this Third Amendment by Landlord and Tenant, Landlord shall use
good faith efforts to provide Tenant with a commercially reasonable
Subordination, Non-Disturbance and Attornment Agreement from any ground
lessors, mortgage holders or lien holders relating to the Expansion Space on
the standard forms utilized by any such ground lessor, mortgage holder or lien
holder.


 


20.                 No Further
Modification.  Except as set forth in
this Third Amendment, all of the terms and provisions of the Lease shall remain
unmodified and in full force and effect.


 


10





















 


IN WITNESS WHEREOF, this Third Amendment has been executed as of the
day and year first above written.


 


	
   

  	
  “Landlord”:

  
	
   

  	
   

  
	
   

  	
  SORRENTO
  VALLEY ROAD, LLC.,

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Principal
  Life Insurance Company, an Iowa

  Corporation, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Principal
  Real Estate Investors, LLC, a

  Delaware limited liability company, its

  authorized signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Troy A.
  Koerselman

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Investment
  Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Douglas
  A. Kintzle

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Director-Asset
  Management

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “Tenant”:

  
	
   

  	
   

  	
   

  
	
   

  	
  WEBSENSE,
  INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas
  C. Wride

  	
   

  
	
   

  	
   

  	
  Name:

  	
   Douglas C. Wride

  	
   

  
	
   

  	
   

  	
  Its:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John B.
  Carrington

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John B.
  Carrington

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Chairman and
  CEO

  	
   

  
										



 


11





















 


EXHIBIT “A”


 


OUTLINE OF EXPANSION SPACE


 





 


1





















 


 


EXHIBIT B


 


FOURTH AMENDMENT TO LEASE


 


This FOURTH AMENDMENT TO LEASE (“Fourth
Amendment”) is made
and entered into effective as of                                   ,
20    , by and between SORRENTO VALLEY ROAD, LLC, a
Delaware limited liability company (“Landlord”),
and WEBSENSE, INC., a Delaware corporation 
(“Tenant”)


 


R  E  C  I
T  A  L  S :


 


A.                  Legacy-RECP
Sorrento OPCO, LLC, a Delaware limited liability company (“Original Landlord”) and Tenant entered into
that certain Office Lease dated as of April 19, 2002  (the “Original
Lease”), as amended by (i) that certain First Amendment to Lease
dated as of October 1, 2002, by and between Original Landlord and Tenant (the “First Amendment”), and (ii) that certain Second Amendment to Lease dated as of
April 30, 2003, by and between Landlord and Tenant (the “Second Amendment”), and (iii) that certain
Third Amendment to Lease dated as of July     , 2004 by and
between Landlord and Tenant (the “Third
Amendment”), whereby
Landlord leased to Tenant and Tenant leased from Landlord certain office space
located in those certain buildings located and addressed at 10220, 10240 and
10260 Sorrento Valley Road, San Diego, California (collectively, the “Buildings”).  The Original Lease, as
amended by the First Amendment, the Second Amendment, and the Third Amendment,
may be referenced to herein as the “Lease”.  Landlord is the successor-in- interest in the
Lease to Original Landlord.


 


B.                   Except as
otherwise set forth herein, all capitalized terms used in this Fourth Amendment
shall have the same meaning as such terms have in the Lease.


 


C.                   Landlord and
Tenant desire to amend the Lease to confirm the Expansion Space Commencement
Date, as hereinafter provided.


 


NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:


 


1.                    Confirmation
of Expansion Space Commencement Date. 
The parties hereby confirm that the commencement date for the Expansion
Space occurred on                            
(the “Expansion Space Commencement Date”).


 


2.                    No Further
Modification.  Except as set forth in
this Fourth Amendment, all of the terms and provisions of the Lease shall
remain unmodified and in full force and effect.


 


1





















 


IN WITNESS WHEREOF, this Fourth Amendment to Lease has been executed as
of the day and year first above written.


 


	
   

  	
  “Landlord”:

  
	
   

  	
   

  
	
   

  	
  SORRENTO
  VALLEY ROAD, LLC.,

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Principal
  Life Insurance Company, an Iowa

  Corporation, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Principal
  Real Estate Investors, LLC, a

  Delaware limited liability company, its

  authorized signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “Tenant”:

  
	
   

  	
   

  	
   

  
	
   

  	
  WEBSENSE,
  INC.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
												



 


2