Exhibit 10.16


 


SECOND
AMENDMENT TO OFFICE LEASE


 


THIS SECOND AMENDMENT TO
OFFICE LEASE (this “Amendment”)  is entered by and between CRESCENT
REAL ESTATE FUNDING VIII, L.P. (“Landlord”),  a Delaware limited partnership, and
NETSPEND CORPORATION (“Tenant”),  a Delaware
corporation, with reference to the following:


 


A.                                    Pursuant to
that certain Lease Agreement dated August 11, 2003, by and between
Landlord and Tenant (the “Original
Lease”),  as
amended by that certain First Amendment to Office Lease dated August 2,
2005 (the “First
Amendment),  Landlord
has leased to Tenant approximately 33,172 Rental Square Feet of space
designated as Suites 1200 and 1350 (the “Original Premises”) in the building known as Austin
Centre located at 701 Brazos, Austin, Travis County, Texas (the “Building’).  The Original
Lease and the Amendment are collectively referred to herein as the “Lease”.


 


B.                                    Landlord and
Tenant now desire to further amend the Lease as set forth below. Unless
otherwise expressly provided in this Amendment, capitalized terms used in this
Amendment shall have the same meanings as in the Original Lease.


 


FOR GOOD AND VALUABLE
CONSIDERATION, the receipt and sufficiency of which are acknowledged, the
parties agree as follows:


 


1.                                      Renewal
Term. The Lease is hereby amended to provide that the Term of the Lease is
extended for an additional 32 months, commencing April 1, 2009 and
expiring on November 30, 2011 (the “Renewal Term”),  unless sooner terminated pursuant to
the terms of the Lease.


 


2.                                      Renewal
Options. Landlord and Tenant acknowledge and agree that
Tenant’s future rights to extend or renew the term of the Lease with respect to
the Premises are as expressly provided in Exhibit F of the Original Lease.


 


3.                                      Early
Termination. Tenant shall have the option to terminate the Lease
on November 30, 2009 (the “Termination Date”),  provided Tenant gives notice thereof (the “Termination Notice”)
to Landlord on or before February 28, 2009, and provided Tenant is
not in default under the Lease at the time of the giving of such notice nor on
the Termination Date. Additionally, Tenant’s right to terminate hereunder is
conditioned upon the payment in full by Tenant to Landlord, at least 30 days
prior to the Termination Date, of (a) all Rent through and including the
Termination Date and (b) the cash sum of $291,555.00 (the “Termination Payment”). Upon
written request by Tenant, Landlord shall provide to Tenant, Landlord’s then-
current calculation of all of such unamortized costs together with supporting
documentation. After Landlord’s receipt of the full Termination Payment, and so
long as Tenant has surrendered the Premises in the condition required under the
Lease, neither party shall have any rights, liabilities or obligations under
the Lease for the period accruing after the Termination Date, except those
which, by the provisions of the Lease, expressly survive the termination of the
Lease.


 


1

















 


4.                                      Expansion
Space. The Lease is hereby modified and amended to include, effective as of
December 1, 2006 (the “Expansion
Date”), (a) certain space containing an additional 5,482
Rentable Square Feet located on the 10th floor of the Building, known as suite
number 1010, as shown on Exhibit A-1,
and (b) and certain space containing an additional 12,176 Rentable Square
Feet located on the 13th floor of the Building, known as suite number
1300, as shown on Exhibit A-2
attached hereto (collectively, the “Expansion Space”).  Tenant shall have access to the
Expansion Space up to ten (10) days prior to the Expansion Date for the
sole purpose of installing wiring, cabling, furniture and equipment. Such early
entry to the Expansion Space shall be subject. to all terms and conditions
contained in the Lease (as amended), including without limitation, Tenant’s insurance
and indemnity obligations.


 


5.                                      Premises. From and after
the Expansion Date, the term “Premises” wherever used in the Lease shall mean and
include the Original Premises, together with the Expansion Space, collectively
consisting of 50,830 Rentable Square Feet.


 


6.                                      Expansion Options. Landlord and Tenant
acknowledge and agree that, except as expressly provided in Exhibit B and Exhibit C attached hereto, Tenant
has no further options or rights to expand the Premises.


 


7.                                      Lease Term for Expansion Space. Tenant’s
lease of the Expansion Space shall commence on the Expansion Date and shall
terminate on November 30, 2011  (the
“Expansion Term”),  which is the date the Renewal Term
shall terminate, subject to earlier termination pursuant to the terms of the Lease.


 


8.                                      Base Rent for Original Premises. During
the Renewal Term, Tenant shall, at the time and place and in the manner
provided in the Lease, pay to Landlord as Base Rent for the Original Premises
as follows:


 


	
   

  	
   

  	
  Annual Rate

  	
   

  	
  Monthly

  	
   

  
	
  Period

  	
   

  	
  Per Square Foot

  	
   

  	
  Base Rent

  	
   

  
	
  04/01/09
  through 03/31/10

  	
   

  	
  $

  	
  17.00

  	
   

  	
  $

  	
  46,993.67

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  04/01/10 through
  11/30/11

  	
   

  	
  $

  	
  18.00

  	
   

  	
  $

  	
  49,758.00

  	
   

  



 


9.                                      Base Rent for Expansion Space. During
the Expansion Term, Tenant shall, at the time and place and in the manner
provided in the Lease, pay to Landlord as Base Rent for the Expansion Space as
follows:


 


	
   

  	
   

  	
  Annual Rate

  	
   

  	
  Monthly

  	
   

  
	
  Period

  	
   

  	
  Per Square Foot

  	
   

  	
  Base Rent

  	
   

  
	
  12/01/06
  through 03/31/09

  	
   

  	
  $

  	
  14.00

  	
   

  	
  $

  	
  20,601.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  04/01/09
  through 11/30/11

  	
   

  	
  $

  	
  15.00

  	
   

  	
  $

  	
  22,072.50

  	
   

  



 


10.                               Security
Deposit. In addition to the Security
Deposit provided pursuant to the Original Lease, Tenant shall pay to Landlord
as an additional security deposit the amount of


 


2

















 


$37,893.13 (the “Additional
Security Deposit”). The Additional Security Deposit
shall be held and disbursed in accordance with Section 6 of the Original
Lease.


 


11.                               Operating
Expenses Tenant shall pay its Pro Rata Share of all
Operating Expenses in accordance with the Lease, as amended hereby. Landlord
and Tenant acknowledge that Tenant’s Pro Rata Share prior to the Expansion Date
is 9.6525%, which is the percentage obtained by dividing (a) 33,172
Rentable Square Feet in the Original Premises by (b) the 343,664 Rentable
Square Feet in the Building. Landlord and Tenant further acknowledge that
Tenant’s Pro Rata Share on and after the Expansion Date is 14.7906%, which is
the percentage obtained by dividing (i) 50,830 Rentable Square Feet in the
Premises by (ii) the 343,664 Rentable Square Feet in the Building.


 


12.                               Condition
of Premises. Except as provided below, Tenant accepts the
Premises in its current condition, i.e., “AS IS” and “WITH ALL FAULTS” and acknowledges that
Landlord makes no representations or warranties with respect thereto. Notwithstanding
the foregoing, Landlord shall construct leasehold improvements in the Expansion
Space in accordance with the Work Letter attached hereto as Exhibit D. Land lord and Tenant
further acknowledge that Tenant intends to construct additional alterations to
the existing lobby area on the 13th floor of the
Premises at some future date and any such alterations will be subject to the
terms and conditions set forth in Section 9.C of the Original Lease.


 


13.                               Parking. As of the
Expansion Date, in addition to the Parking Permits described in the Parking
Agreement attached to the Original Lease as Exhibit E, Tenant shall take
and pay for 24 permits allowing access to unreserved parking spaces in the
Austin Centre Garage and 35 permits allowing access to unreserved parking
spaces in the St. David’s Garage (each an “Additional Permit”).  During the Expansion
Term, Tenant shall pay $125.00 per month (plus any taxes thereon) for each
Additional Permit allowing access to unreserved parking spaces in the Austin
Centre Garage and $110.00 per month (plus any taxes thereon) for each
Additional Permit allowing access to unreserved parking spaces in the St.
David’s Garage. Other than the fee set forth above, each Additional Permit
shall be taken by Tenant subject to the terms and conditions of the Parking
Agreement attached to the Lease as Exhibit E.


 


14.                               Broker. Tenant
represents and warrants that it has not been represented by any broker or agent
other than Herron Williams, LLC (“Broker”) (whose commission shall be paid by Landlord
pursuant to a separation agreement) in connection with the execution of this
Amendment. Tenant shall indemnify and hold
harmless Landlord and its designated property management, construction and
marketing firms, and their respective partners, members, affiliates and
subsidiaries, and all of their respective officers, directors, shareholders,
employees, servants, partners, members, representatives, insurers and agents
from and against all claims (including costs of defense and investigation) of
any broker or agent or similar party (other than Broker) claiming by, through
or under Tenant in connection with this Amendment.


 


15.                               Miscellaneous.
This Amendment shall become effective only upon full execution and
delivery of this Amendment by Landlord and Tenant. This Amendment contains the
parties’ entire agreement regarding the subject matter covered by this
Amendment, and supersedes all prior correspondence, negotiations, and
agreements, if any, whether oral or


 


3

















 


written, between the parties concerning such subject
matter. There are no contemporaneous oral agreements, and there are no
representations or warranties between the parties not contained in this
Amendment. Except as modified by this Amendment, the terms and provisions of
the Lease shall remain in full force and effect, and the Lease, as modified by
this Amendment, shall be binding upon and shall inure to the benefit of the
parties hereto, their successors and permitted assigns. Landlord represents to
Tenant that the person signing this Amendment on behalf of Landlord is
authorized to execute this Amendment without the necessity of obtaining any
other signature, and that this Amendment is fully binding on Landlord.


 


[SIGNATURES
ON FOLLOWING PAGE]


 


4

















 


EXECUTED to the effective as of the Effective Date.


 


	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  CRESCENT REAL ESTATE FUNDING VIII, L.P., 

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CRE Management VIII, LLC, a Delaware 

  
	
   

  	
   

  	
  limited liability company, its general
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Crescent Real Estate Equities, Ltd.,

  
	
   

  	
   

  	
   

  	
  a Delaware Corporation, its manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
  /s/ Robert H. Boykin, Jr. 

  
	
   

  	
   

  	
   

  	
   

  	
  Robert H. Boykin, Jr. 

  
	
   

  	
   

  	
   

  	
   

  	
  Senior Vice President 

  
	
   

  	
   

  	
   

  	
   

  	
  Leasing

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Effective Date:

  	
  Sept. 6, 2006

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NETSPEND CORPORATION

  
	
   

  	
   

  	
  a Delaware Corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard J. Savard

  
	
   

  	
   

  	
  Name:

  	
  Richard J. Savard

  
	
   

  	
   

  	
  Title:

  	
  CEO

  
								



 


5

















 


EXHIBIT A-1


 


EXPANSION SPACE


(Suite 1010)


 





 


6

















 


EXHIBIT A-2



EXPANSION SPACE

(Suite 1300)







 


7

















 


EXHIBIT B



PREFERENTIAL RIGHT TO LEASE


 


1.                                      Preferential
Right To Lease. Tenant shall have a Preferential Right to Lease
approximately 14,478 Rentable Square Feet (+/-10%, in Landlord’s discretion) on
the 6th floor of the Building, as shown on Exhibit B-1
to this Amendment (the “Preferential
Space”),  at
such time as such space becomes Available (as defined below) for direct lease
to a new tenant (whether or not a bona fide offer has been made); provided no
uncured event of default exists under the Lease (and no condition exists which,
with the passage of time and/or giving of notice, would be an event of default)
and Tenant remains in occupancy of the entire Premises. The Preferential Space
shall be deemed “Available”
at such time as Landlord decides to offer the Preferential Space
for lease and such space is no longer any of the following: (a) leased or
occupied; (b) assigned or subleased by the then-current tenant of the
space; or (c) re-leased by the then-current tenant of the space by
renewal, extension or renegotiation (whether agreed to prior to or after the
Effective Date). This Preferential Right to Lease shall terminate upon any
assignment of the Lease (other than in connection with a Permitted Transfer).
The Preferential Space shall be reduced to the extent Tenant leases any portion
thereof, whether or not pursuant to this Amendment or any other provision in the
Lease.


 


2.                                      Acceptance. Prior to
leasing the Preferential Space to a new tenant, Landlord shall first offer such
space in writing to Tenant specifying the amount and location of such space,
the anticipated date of tender of possession, the rental rate based on the
then-quoted rental rates for comparable space, including any projected rate
increases over the applicable term, and other applicable terms (e.g. leasehold
improvement allowance, term, parking rights, etc.) which will also be
based on comparable lease transactions in the Building as of the anticipated
Preferential Space Commencement Date (as defined below) (the “Preferential Rental Notice”).  Tenant shall have 7
business days within which to accept or reject such offer. If Tenant accepts
Landlord’s offer, Tenant shall, within 15 days after Landlord’s written
request, execute and return a lease amendment adding the Preferential Space to
the Premises for all purposes under the Lease (including any extensions or
renewals) and confirming the Base Rent and other applicable terms specified in
the Preferential Rental Notice. Such lease amendment may, if applicable,
contain a construction agreement using Landlord’s then-current form setting
forth the schedule and other terms and obligations of the parties regarding the
construction of any leasehold improvements in the Preferential Space. If Tenant
rejects such offer or fails timely to (a) accept such offer or
(b) execute and return the required lease amendment, then this
Preferential Right to Lease shall lapse and be of no further force and effect. In such event, Landlord shall be
relieved of any future obligations hereunder and may thereafter lease all or
part of the Preferential Space to any party without further notice or
obligation to Tenant.


 


3.                                      Tender
of Possession. The Preferential Space shall be leased for the
period commencing upon Landlord’s tender of possession of the Preferential
Space in accordance with Landlord’s offer and this Exhibit B
(the “Preferential Space
Commencement Date”)  and continuing through the expiration or
earlier termination of the Renewal Term, as it may be extended or renewed.
Landlord shall not be liable for any delay or failure to tender possession of
the Preferential Space by the anticipated tender date for any reason, including
by reason of any


 


8

















 


holdover tenant or occupant, nor shall such failure
invalidate the Lease or extend the Renewal Term.


 


4.                                      Condition of Premises. The
Preferential Space shall be tendered in an “as-is” condition. However, all
leasehold improvements shall be constructed in the Preferential Space in
accordance with the construction agreement (if any) attached to the applicable
lease amendment. Any allowances shall be prorated for any delays in the Preferential
Space Commencement Date, taking
into account the economic assumptions underlying the terms in the Preferential Rental Notice.


 


9

















 


EXHIBIT
B-1



PREFERENTIAL SPACE


 





 


10














 


EXHIBIT C



RIGHT OF FIRST REFUSAL


 


Provided the Lease (as
amended) is then in full force and effect and no event of default, as defined
in Article 18 of the Lease,
shall have occurred, Tenant shall have the right of first refusal as
hereinafter described to lease that portion of the space to be leased to a
prospective tenant (the “Offered
Space”)  which
is all or part of the space (the “Right of First Refusal Space”)  containing
approximately 21,574 Rentable Square Feet on the 10th floor of the
Building (more specifically shown on Exhibit C-1
attached hereto), exercisable at the following times and upon the following
conditions:


 


1.                                 If Landlord
enters into a bona fide letter of intent or other written agreement with a
prospective tenant to lease the Offered Space, Landlord shall notify Tenant of
such fact and shall include in such notice the rent, term, and other
appropriate provisions (including, but not limited to, construction allowance
for leasehold improvements) at which Landlord is prepared to offer such Offered
Space to such prospective tenant (the “Offer Notice”). Tenant shall have a period of 7
business days from the date of delivery of the notice to notify Landlord
whether Tenant elects to exercise  the
right granted hereby to lease the Offered Space. If  Tenant fails to give
any notice to Landlord within the required 7 business-day period, Tenant shall
be deemed to have waived its right to lease the Offered Space.


 


2.                                 If Tenant so
waives its right to lease the Offered Space (either by giving written notice
thereof or by failing to give any notice), Landlord shall have the right to
lease the Offered Space to the prospective tenant and upon the execution of
such lease between Landlord and the prospective tenant this Right of First
Refusal as to the Offered Space shall thereafter be null, void and of no
further force or effect.


 


3.                                 If Landlord does not enter
into a lease with such prospective tenant covering the Offered Space, Landlord
shall not thereafter engage in other lease negotiations with respect to the
Right of First Refusal Space without first complying with the provisions of
this Exhibit C.


 


4.                                 Upon the
exercise by Tenant of its right of first refusal as provided in this Exhibit C, Landlord and Tenant shall, within 15 days after Tenant delivers
to Landlord notice of its election, enter into an amendment to the Lease
incorporating the Offered Space into the Premises for the rent, for the term,
and containing such other terms and conditions as set forth in the Offer
Notice.


 


5.                                 Any
assignment of the Lease (other than in connection with a Permitted
Transfer) shall terminate the right of first refusal of Tenant contained
herein. The right of first refusal granted herein is personal to Netspend
Corporation and shall not be assignable to any other person or entity.


 


6.                                 The right of
first refusal of Tenant contained herein shall be subject and subordinate to
any rights of renewal, expansion or extension existing under any other tenant
leases for the Building as of the date of this Amendment.


 


11

















 


EXHIBIT
C-1



RIGHT OF FIRST REFUSAL SPACE


 





 


12

















 


EXHIBIT D


 


WORK LETTER


 


1.                                      Approved Construction Documents.


 


(a)                            Tenant’s
Information.  Within 10
business days after the Effective Date of this Amendment, Tenant shall submit
to Landlord (i) the name of a representative of Tenant who has been
designated as the person responsible for receiving all information from and
delivering all information to Landlord relating to the construction of the
Landlord Work (as defined below), and (ii) all information necessary for
the preparation of complete, detailed architectural, mechanical, electrical and
plumbing drawings and specifications for construction of the Landlord Work in
the Expansion Space, including Tenant’s partition and furniture layout,
reflected ceiling, telephone and electrical outlets and equipment rooms,
initial provider(s) of telecommunications services, doors (including
hardware and keying schedule), glass partitions, windows, critical dimensions,
imposed loads on structure, millwork, finish schedules, security devices, if
any, which Tenant desires or Landlord requires to have integrated with other
Building safety systems, and HVAC and electrical requirements (including
Tenant’s connected electrical loads and the National Electrical Code (NFPA-70)
Design Load Calculations), together with all supporting information and
delivery schedules (“Tenant’s
Information”).


 


(b)                            Construction
Documents.  Following
Landlord’s execution of the Amendment and receipt of Tenant’s Information,
Landlord’s designated architectural/engineering firm shall prepare and submit
to Tenant all finished and detailed architectural drawings and specifications,
including mechanical, electrical and plumbing drawings (the “Construction Documents”). In
addition, Landlord shall advise Tenant of the number of days of Tenant Delay
(as defined below) attributable to extraordinary requirements (if any)
contained in Tenant’s Information. Landlord (or its designated representative)
reserves the right to designate the location(s) of all of Tenant’s
mechanical, electrical or other equipment and the manner in which such
equipment will be connected to Building systems.


 


(c)                             Approved
Construction Documents.  Within
5 Business Days after receipt, Tenant shall (i) approve and return the
Construction Documents to Landlord, or (ii) provide Landlord Tenant’s
written requested changes to the Construction Documents, in which event
Landlord shall have the Construction Documents revised (as Landlord deems
appropriate) and resubmitted to Tenant for approval within 3 Business Days
after receipt. If Tenant fails to request changes within such 5 Business Day
period, Tenant shall be deemed to have approved the Construction Documents.
Upon Tenant’s approval, the Construction Documents shall become the “Approved Construction Documents.” By
granting approval of the Construction Documents (whether such approval is
expressly granted or deemed given as provided above), Tenant shall be deemed to
have confirmed by means of calculations or metering that the available capacity
of the Building electrical system will support Tenant’s electrical
requirements.


 


2.                                      Pricing and Bids.  Landlord shall seek 3 competitive bids from
general contractors from Landlord’s approved bidding list. Only subcontractors
from Landlord’s approved subcontractor list shall be allowed to work on the
mechanical, electrical and plumbing


 


13

















 


components of the Building. Landlord and Tenant
shall mutually agree on the selection of the general contractor.


 


3.                                 Landlord’s Contributions.  Landlord will provide a construction allowance
not to exceed $219,168.00 (the “Construction Allowance”),  toward the cost of constructing the
Landlord Work. Payments shall be made directly to Landlord’s contractor
performing the Landlord Work. The cost of (a) all space planning, design,
consulting or review services and construction drawings, (b) extension of
electrical wiring from Landlord’s designated location(s) to the Expansion
Space, (c) purchasing and installing all building equipment for the
Expansion Space (including any submeters and other above building standard
electrical equipment approved by Landlord), (d) required metering,
re-circuiting or re-wiring for metering, equipment rental, engineering design
services, consulting services, studies, construction services, cost of billing
and collections, (e) materials and labor, and (f) an asbestos survey
of the Expansion Space if required by applicable Law, shall all be included in
the cost of the Landlord Work and may be paid out of the Construction
Allowance, to the extent sufficient funds are available for such purpose.
Tenant acknowledges that an asbestos survey will probably be required by applicable
Law and that the time required for such asbestos surveys should be incorporated
in Tenant’s construction planning. The Construction Allowance made available to
Tenant under this Work Letter must be utilized for its intended purpose within
180 days after the Effective Date or be forfeited with no further obligation on
the part of Landlord.


 


4.                                 Construction.


 


(a)                            General Terms.  Subject to the terms of this Work Letter,
Landlord agrees to cause leasehold improvements to be constructed in the
Premises (the “Landlord
Work”)  in
a good and workmanlike manner in accordance with the Approved Construction
Documents. Tenant acknowledges that Landlord is not an architect or engineer,
and that the Landlord Work will be designed and performed by independent architects,
engineers and contractors. Accordingly, Landlord does not guarantee or warrant
that the Approved Construction Documents will comply with Laws or be free from
errors or omissions, nor that the Landlord Work will be free from defects, and
Landlord will have no liability therefor. In the event of such errors,
omissions or defects, and upon Tenant’s written request, Landlord will use
commercially reasonable efforts to cooperate with Tenant in enforcing any
applicable warranties. In addition, Landlord’s approval of the Construction
Documents or the Landlord Work shall not be interpreted to waive or otherwise
modify the terms and provisions of the Lease, as amended. Except with respect
to the economic terms set forth in Paragraph 3 of this Work Letter, the terms and provisions contained in
this Work Letter shall survive the completion of the Landlord Work and shall
govern in all applicable circumstances arising under the Lease throughout the
term of the Lease, including the construction of future improvements in the
Expansion Space. Tenant acknowledges that Tenant’s Information and the Approved
Construction Documents must comply with (i) the definitions used by
Landlord for the electrical terms used in this Work Letter, (ii) the
electrical and HVAC design capacities of the Building, (iii) Landlord’s
policies concerning communications and fire alarm services, and
(iv) Landlord’s policies concerning Tenant’s electrical design parameters,
including harmonic distortion. Upon Tenant’s request, Landlord will provide Tenant
a written statement outlining items (i) through (iv) above.


 


14

















 


(b)                            ADA Compliance.  Landlord shall, as an Operating Expense, be
responsible for ADA (and any applicable state accessibility standard) compliance
for the core areas of the Building (including elevators, Common Areas, and
service areas), the Building’s parking facilities and all points of access into
the Building. Tenant shall, at its expense, be responsible for ADA (and any
applicable state accessibility standard) compliance in the Expansion Space,
including restrooms on any floor now or hereafter leased or occupied in its
entirety by Tenant, its Affiliates or transferees. Landlord shall not be
responsible for determining whether Tenant is a public accommodation under ADA
or whether the Approved Construction Documents comply with ADA requirements,
including submission of the Approved Construction Documents for review by
appropriate state agencies. Such determinations, if desired by Tenant, shall be
the sole responsibility of Tenant.


 


(c)                             Substantial
Completion.  The Landlord
Work shall be deemed to be “Substantially
Complete” on the date that all Landlord Work (other than any
details of construction, mechanical adjustment or any other similar matter, the
noncompletion of which does not materially interfere with Tenant’s use or
occupancy of the Expansion Space) has been performed. Time is of the essence in
connection with the obligations of Landlord and Tenant under this Work Letter.
Landlord shall not be liable or responsible for any claims incurred (or
alleged) by Tenant due to any delay in achieving Substantial Completion for any
reason. Tenant’s sole and exclusive remedy for any delay in achieving
Substantial Completion for any reason other than Tenant Delay (defined below)
shall be the resulting postponement (if any) of the commencement of rental
payments for the Expansion Space under this Amendment. “Tenant Delay” means
any act or omission of Tenant or its agents, employees, vendors or contractors
that actually delays the Substantial Completion of the Landlord Work,
including: (i) Tenant’s failure to furnish information or approvals within
any time period specified in the Amendment, including the failure to prepare or
approve preliminary or final plans by any applicable due date;
(ii) Tenant’s selection of non-building standard equipment or materials;
(iii) changes requested or made by Tenant to previously approved plans and
specifications; or (iv) performance of work in the Expansion Space by
Tenant or Tenant’s contractor(s) during the performance of the Landlord
Work.


 


5.                                      Costs.


 


(a)                                 Change Orders
and Cost Overruns.  Landlord’s
approval is required in advance of all changes to, and deviations from, the
Approved Construction Documents (each, a “Change Order”),  including any (i) omission,
removal, alteration or other modification of any portion of the Landlord Work,
(ii) additional architectural or engineering services, (iii) changes
to materials, whether building standard materials, specially ordered materials,
or specially fabricated materials, or (iv) cancellation or modification of
supply or fabrication orders. Except as otherwise expressly provided in this
Work Letter, all costs of the Landlord Work in excess of the Construction Allowance
including Change Orders requested by Tenant and approved by Landlord which
increase the cost of the Landlord Work (collectively, “Cost Overruns”)  shall be paid by
Tenant to Landlord within 10 days of receipt of Landlord’s invoice. In
addition, at Landlord’s election, Landlord may require Tenant to prepay any
projected Cost Overruns within 10 days of receipt of Landlord’s invoice for
same. Landlord may stop or decline to commence all or any portion of the
Landlord Work until such payment (or prepayment) of Cost Overruns is received.
On or before the Commencement Date, and as a condition to Tenant’s right to
take


 


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possession of the Expansion Space, Tenant shall pay
Landlord the entire amount of all Cost Overruns, less any prepaid amounts.
Tenant’s failure to pay, when due, any Cost Overruns or the cost of any Change
Order shall constitute an event of default under the Lease.


 


(b)                                 Construction
Management Fee.  Within 10
days following the date of invoice, Tenant shall, for supervision and
administration of the construction and installation of the Landlord Work, pay
Landlord a construction management fee equal to 2.5% of the aggregate contract
price for the Landlord Work, which may be paid from the unused portion of the
Construction Allowance (if any). Tenant’s failure to pay such construction
management fee when due shall constitute an event of default under the Lease.


 


6.                                      Acceptance.  By
taking possession of the Expansion Space, Tenant agrees and acknowledges that
(i) the Expansion Space is usable by Tenant as intended;
(ii) Landlord has no further obligation to perform any Landlord Work or
other construction (except punchlist items, if any, agreed upon by Landlord and
Tenant in writing): and (iii) both the Building and the Expansion Space
are satisfactory in all respects.


 


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