<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1997 or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _______ to ________
Commission file number: 0-28074
Sapient Corporation
(Exact Name of Registrant as Specified in Its Charter)
Delaware 04-3130648
(State or Other Jurisdiction (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Memorial Drive, Cambridge, MA 02142
(Address of Principal Executive Offices) (Zip Code)
617-621-0200
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
As of November 7, 1997 there were 11,706,591 shares of Common Stock,
$.01 par value, outstanding.
<PAGE> 2
SAPIENT CORPORATION
INDEX
Part I. Financial Information Page Number
Item 1. Consolidated Balance Sheets as of December 31, 1996 and 3
September 30, 1997
Consolidated Statements of Income for the Three and 4
Nine Months Ended September 30, 1996 and 1997
Consolidated Statements of Cash Flows for the Nine Months 5
Ended September 30, 1996 and 1997
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial 8-11
Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit Index 14
2
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SAPIENT CORPORATION
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, September 30,
Assets 1996 1997
------------ -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $49,997,905 $38,783,287
Short term investments 9,540,498 18,519,133
Accounts receivable, less allowance for
doubtful accounts of $150,000 and $350,000 for
1996 and 1997, respectively 11,387,576 14,439,794
Unbilled revenues on contracts 4,673,812 6,600,264
Deferred income taxes 188,534 188,534
Prepaid expenses and other current assets 450,885 1,037,838
----------- ------------
Total current assets 76,239,210 79,568,850
Property and equipment, net 2,256,635 4,993,169
Other long term assets 61,088 61,088
----------- ------------
Total assets $78,556,933 $84,623,107
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 72,419 $ 180,166
Accrued expenses 1,554,473 880,764
Accrued compensation 2,162,016 2,903,138
Accrued income taxes payable 1,551,661 542,955
Deferred revenues on contracts 4,915,681 2,223,377
----------- ------------
Total current liabilities 10,256,250 6,730,400
Deferred income taxes 1,296,171 1,296,171
Other long term liabilities 754,484 927,073
----------- ------------
Total liabilities 12,306,905 8,953,644
----------- ------------
Stockholders' equity:
Preferred stock, par value $.01 per share, 5,000,000 authorized and
none outstanding at December 31, 1996 and September 30, 1997 -- --
Common stock, par value $.01 per share, voting, 40,000,000 shares
authorized, 11,492,760 issued at December 31, 1996;
11,636,653 shares issued at September 30, 1997 114,928 116,367
Additional paid-in capital 54,502,520 55,390,430
Retained earnings 11,657,580 20,162,666
Notes receivable from stockholders (25,000) --
----------- ------------
Total stockholders' equity 66,250,028 75,669,463
----------- -----------
Total liabilities and stockholders' equity $78,556,933 $84,623,107
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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SAPIENT CORPORATION
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $11,500,896 $21,990,391 $31,128,409 $57,318,849
Operating expenses:
Project personnel costs 5,378,551 10,831,967 14,699,577 27,750,569
Selling and marketing 478,560 1,435,828 1,520,114 3,558,680
General and administrative 3,187,641 5,312,952 8,126,689 14,028,711
----------- ----------- ----------- -----------
Total operating expenses 9,044,752 17,580,747 24,346,380 45,337,960
Income from operations 2,456,144 4,409,644 6,782,029 11,980,889
Interest income 328,077 504,731 625,788 1,612,934
----------- ----------- ----------- -----------
Income before income taxes 2,784,221 4,914,375 7,407,817 13,593,823
Income taxes 1,086,141 1,847,633 2,884,579 5,088,737
----------- ----------- ----------- -----------
Net Income $ 1,698,080 $ 3,066,742 $ 4,523,238 $ 8,505,086
=========== =========== =========== ===========
Fully-diluted net income per share $ 0.14 $ 0.24 $ 0.40 $ 0.67
=========== =========== =========== ===========
Weighted average common shares and
equivalents outstanding 12,103,645 12,749,712 11,445,636 12,653,086
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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SAPIENT CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1997
------------ ------------
<S> <C> <C>
Cash flows provided by operating activities:
Net income $ 4,523,238 $ 8,505,086
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 700,979 1,427,655
Deferred income taxes (1,307,638) --
Changes in operating assets and liabilities:
Increase in accounts receivable (4,441,782) (3,052,218)
Increase in unbilled revenues on contracts (2,552,491) (1,926,452)
Increase in prepaid expenses and other
current assets (327,314) (586,953)
Decrease in income tax receivable 479,892 --
Decrease in other assets 48,923 --
Increase (decrease) in accounts payable (236,884) 107,747
(Decrease) increase in accrued expenses 472,291 (673,709)
Increase in accrued compensation 970,796 741,122
(Decrease) increase in income taxes payable 1,560,000 (1,008,706)
(Decrease) increase in deferred revenues on contracts 331,834 (2,692,304)
Increase in other long term liabilities 573,661 172,589
------------ ------------
Net cash provided by operating activities 795,505 1,013,857
------------ ------------
Cash flows used for investing activities:
Purchase of property and equipment (1,393,966) (4,164,189)
Purchase of short term investments (3,015,120) (8,978,635)
------------ ------------
Net cash used for investing activities (4,409,086) (13,142,824)
------------ ------------
Cash flows provided by financing activities:
Repayment of notes receivable from stockholder 50,000 25,000
Proceeds from exercise of stock options 156,479 299,838
Proceeds from initial public stock offering 32,403,350 --
Proceeds from employee stock purchase plan -- 589,511
Principal payments on notes payable to bank (93,415) --
------------ ------------
Net cash provided by financing activities 32,516,414 914,349
(Decrease) increase in cash and cash equivalents 28,902,833 (11,214,618)
Cash and cash equivalents, at beginning of period 378,019 49,997,905
------------ ------------
Cash and cash equivalents, at end of period $ 29,280,852 $ 38,783,287
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes $ 2,256,404 $ 6,097,443
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
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SAPIENT CORPORATION
Notes to Consolidated Financial Statements
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared by Sapient Corporation (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission regarding interim
financial reporting. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements and should be read in
conjunction with the consolidated financial statements and notes thereto
for the year ended December 31, 1996 included in the Company's Annual
Report on Form 10-K. The accompanying consolidated financial statements
reflect all adjustments (consisting solely of normal, recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods presented. The results of
operations for the three and nine month periods ended September 30, 1997
are not necessarily indicative of the results to be expected for the full
fiscal year or for any future period.
(2) SHORT TERM INVESTMENTS
Short term investments are available-for-sale securities, which are recorded
at fair market value. The difference between fair market value and cost is
not material. Realized gains and losses from sales of available-for-sale
securities were not material for any period presented.
(3) NET INCOME PER SHARE
Net income per share is computed using the weighted average number of shares
of common stock and dilutive common equivalent shares outstanding using
the treasury stock method. Pursuant to the Securities and Exchange
Commission Staff Accounting Bulletins, for all periods prior to the
Company's initial public offering, such computations include all common
and common equivalent shares issued at less than the Company's initial
public offering price of $21.00 within twelve months of the offering date
as if they were outstanding for all periods presented using the treasury
stock method. Fully diluted and primary earnings per share are the same
for all periods presented.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share."
SFAS 128 establishes a different method of computing net income per share
than is currently required under the provisions of Accounting Principles
Board Opinion No. 15. Under SFAS No.128, the Company will be required to
present both basic net income per share and diluted net income per share.
Basic net income per share is expected to be higher than the currently
presented net income per share as the effect of dilutive stock options
will not be considered in computing basic net income per share. The impact
on diluted net income per share is not expected to be material.
6
<PAGE> 7
The Company will adopt SFAS No. 128 in its quarter ending December 31,
1997 and at that time all historical net income per share data
presented will be restated to conform to the provisions of SFAS No.
128. Early adoption of SFAS No. 128 is not permitted.
(4) CONTINGENT LIABILITIES
The Company has certain contingent liabilities that arise in the ordinary
course of its business activities. The Company accrues contingent
liabilities when it is probable that future expenditures will be made and
such expenditures can be reasonably estimated.
The Company is in arbitration with a former employee who alleges breach of
certain contractual and other violations resulting from his termination as
an employee. Management denies that it breached any obligations or duties
to this former employee, and asserts that the Company has meritorious
defenses. The Company plans to vigorously contest these claims. Although
the Company does not expect the claim to have a material adverse effect on
the Company's business, results of operations or financial condition, an
adverse judgment or settlement could have a material adverse effect on the
operating results reported by the Company for the period in which any such
adverse judgment or settlement occurs.
7
<PAGE> 8
SAPIENT CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Sapient Corporation is a leading provider of information technology solutions on
a fixed-price, fixed-time frame basis which offer innovations in using both
client/server and Web-based technologies to ignite business change. Sapient
offers a variety of services to help clients rapidly achieve their business
objectives. Services include custom software development, package
implementation, system support and maintenance, and business and operational
consulting using Sapient's proprietary QUADD(R) (Quality Design and Delivery)
process. QUADD is a workshop-based methodology that emphasizes active client
participation to help visualize, prioritize and create time-critical business
and technology solutions.
To determine its proposed fixed price for a project, the Company uses an
internally developed estimation process which takes into account standard
billing rates and the risks associated with the particular project, such as the
number and type of key functions to be developed, the technological environment
and application type to be applied, the project's timetable and the overall
technical complexity of the project. Each fixed-price proposal must be approved
by a member of the Company's senior management team.
The Company's revenues and earnings may fluctuate from quarter to quarter
based on such factors as the number, size and scope of projects in which the
Company is engaged, the contractual terms and degree of completion of such
projects, any delays incurred in connection with a project, employee utilization
rates, the adequacy of provisions for losses, the accuracy of estimates of
resources required to complete ongoing projects, and general economic
conditions. In addition, revenues from a large client may constitute a
significant portion of the Company's total revenues in any particular quarter.
8
<PAGE> 9
RESULTS OF OPERATIONS
The following table sets forth the percentage of revenues of certain items
included in the Company's statements of income:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues 100% 100% 100% 100%
Operating expenses:
Project personnel costs 47 49 47 48
Selling and marketing 4 7 5 6
General and administrative 28 24 26 25
---- ---- ---- ----
Total operating expenses 79 80 78 79
Income from operations 21 20 22 21
Interest income 3 2 2 3
Income taxes 9 8 9 9
---- ---- ---- ----
Net income 15% 14% 15% 15%
==== ==== ==== ====
</TABLE>
REVENUES
Revenues for the third quarter of 1997 increased 91% over revenues for the
third quarter of 1996. For the first nine months of the year, revenues increased
84% over the comparable period of the prior year. The increase in revenues
reflects increases in both the size and number of client projects. Unbilled
revenues on contracts increased from $4.7 million at December 31, 1996 to $6.6
million at September 30, 1997 due primarily to the increase in revenues in 1997.
In the third quarter of 1997, the Company's five largest clients accounted for
approximately 45% of its revenues, and two clients each accounted for more than
10% of revenues. For the nine month period ended September 30, 1997 the
Company's five largest clients accounted for approximately 39% of its revenues,
and one client accounted for more than 10% of such revenues.
PROJECT PERSONNEL COSTS
Project personnel costs consist primarily of salaries and employee
benefits for personnel dedicated to client projects, non-reimbursed direct
expenses incurred to complete projects and third-party project personnel
training. These costs represent the most significant expense the Company incurs
in providing its services. The increase in project personnel costs for the three
and nine month periods ended September 30, 1997 was primarily due to an increase
in project personnel from 350 at September 30, 1996 to 587 at September 30,
1997. Project personnel costs increased as a percentage of revenues from 47% in
the third quarter of 1996 to 49% for the third quarter of 1997. This increase
was a result of additional investments in project personnel training. Generally,
during the third quarter the Company adds the majority of its new college
9
<PAGE> 10
hires, who first complete three weeks of training before being assigned to
projects, compared to a two week training program in 1996. For the first nine
months of 1996 and 1997 project personnel costs as a percentage of revenues were
47% and 48%, respectively. This increase is attributable to increased
investments in project personnel training throughout the year.
SELLING AND MARKETING
Selling and marketing costs consist primarily of salaries, employee
benefits, travel expenses and promotional costs. Selling and marketing costs as
a percentage of revenues increased from 4% in the third quarter of 1996 to 7%
for the comparable period in 1997 and from 5% to 6% for the first nine months of
1996 and 1997, respectively. This increase is a result of the decision to bring
on several senior sales people, along with market specialists to take advantage
of the growth opportunities in the vertical market segments the Company serves.
Total headcount in the selling and marketing group grew from 20 employees at
September 30, 1996 to 35 employees at September 30, 1997.
GENERAL AND ADMINISTRATIVE
General and administrative costs consist primarily of expenses associated
with the Company's management, finance and administrative groups, including
personnel devoted to recruiting and internal training, and occupancy costs. The
increase in general and administrative costs for the three month period ended
September 30, 1997 was primarily due to costs associated with the number of
employees hired during 1997, along with an increase in occupancy costs related
to having three additional offices during the third quarter of 1997. The
Company's total headcount increased from 431 at September 30, 1996 to 721 at
September 30, 1997. As a percentage of revenues, general and administrative
costs decreased from 26% for the first nine months of 1996 to 25% for the
comparable period in 1997. This decrease is a result of improved space
utilization. General and administrative costs as a percentage of revenues
decreased from 28% to 24% for the three month period ended September 30, 1997
compared to September 30, 1996 primarily as a result of improved space
utilization, primarily at our New York and Cambridge offices. In addition,
investments made in the Company's internal training teams reduced the costs
associated with external training programs.
INTEREST INCOME
Interest income for the three and nine month periods ended September 30,
1997 was derived from the Company's investments, which were primarily
tax-exempt, short-term municipal bonds.
PROVISION FOR INCOME TAXES
Income tax expense represents combined federal and state taxes at an
effective rate of 37% for 1997 and 39% for 1996. The decrease in the effective
tax rate primarily represents a reduction in the effective federal tax rate due
to excess cash being invested in tax-exempt municipal bonds.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
In April 1996, the Company completed its initial public offering of common
stock resulting in net proceeds to the Company of $32.4 million. In October
1996, the Company completed a follow-on offering of common stock resulting in
net proceeds of $21.7 million. The Company has a bank revolving line of credit
providing for borrowings of up to $5.0 million. Borrowings under this line of
credit, which expires on June 30, 1998, and bear interest at the bank's prime
rate. The line of credit includes covenants relating to the maintenance of
certain financial ratios, such as minimum net worth and profitability, and
limits the payment of dividends. At September 30, 1997, the Company had no bank
borrowings outstanding and no material capital commitments.
Cash and cash equivalents decreased to $38.8 million at September 30,
1997, from $50.0 million at December 31, 1996. The decrease was primarily due to
additional cash invested in short term investments, along with investments in
property and equipment that was partially offset by cash provided from
operations. At September 30, 1997, $18.5 million was invested in tax-exempt,
short term municipal bonds which mature in less than 12 months, compared to $9.5
million which was invested as of December 31, 1996.
The Company believes that the cash provided by operations, borrowings
available under its revolving line of credit and the net proceeds from its
public offerings of common stock will be sufficient to meet the Company's
working capital and capital expenditure requirements for at least the next 18
months.
11
<PAGE> 12
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - See Exhibit Index
(b) Reports on Form 8-K.
The Company did not file any Reports on Form 8-K during the quarter
ended September 30, 1997.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAPIENT CORPORATION
Date: November 10, 1997 By:/s/ Jerry A. Greenberg
------------------------
Jerry A. Greenberg
Co-Chief Executive Officer
Co-Chairman of the Board
Date: November 10, 1997 By:/s/ Susan D. Johnson
------------------------------
Susan D. Johnson
Chief Financial Officer
13
<PAGE> 14
Exhibit Index
Ex. No. Description Page
10.1 - Amendment dated June 30, 1997 to the Revolving
Loan Facility with Fleet Bank of Massachusetts, N.A.,
dated July 11, 1994 (filed as Exhibit 10.8 to the
Company's Registration Statement on Form S-1; File
No. 333-1586).
10.2 - Lease between the Company and Adams Family LLC
dated March 28, 1997 for offices at 200 West
Adams Street, Chicago, Illinois.
10.3 - Second Amendment to Lease dated April 1997
between the Company and One Memorial Drive
Limited Partnership dated March 30, 1994, as
amended, for offices at One Memorial Drive,
Cambridge, MA (filed as Exhibit 10.1 to the
Company's Registration Statement on Form S-1;
File No. 333-1586).
10.4 - Assignment and Assumption of 101 California
Lease dated as of December 9, 1996 between the
Company and Tri Valley Growers, for offices at
101 California St., San Francisco, CA.
10.5 - Sublease dated as of December 20, 1996 between
the Company and Dreman Value Advisors, Inc. for
offices located at 10 Exchange Place, Jersey
City, NJ.
10.6 - Sublease dated as of August 6, 1997 between the
Company and Fleet Bank, N.A. for offices located
at 10 Exchange Place, Jersey City, NJ.
10.7 - Sub-Sublease Agreement between the Company and
Metro Provider Service Corporation dated as of
April 1, 1997, for office space at 200 West
Adams, Chicago, IL.
11.1 - Computation of weighted average number of shares
outstanding used in determining primary and
fully diluted earnings per share.
27.1 - Financial data schedule.
14
<PAGE> 1
EXHIBIT 10.1
Fleet Bank
June 30, 1997
Ms. Susan D. Johnson
Chief Financial Officer
Sapient Corporation
One Memorial Drive
Cambridge, MA 02142
Dear Sue:
Reference is hereby made to the Letter Agreement between Sapient Corporation
("Sapient" or the "Borrower") and Fleet National Bank as successor to Fleet Bank
of Massachusetts, N.A. (the "Bank") dated July 14, 1994 and amended as of July
1, 1995 and February 15, 1996 (collectively referred to as the "Agreement"). I
am pleased to inform you that the Bank has approved a series of modifications to
the Agreement as detailed below. Please sign below to indicate your acceptance
of these terms. Upon receipt of the countersigned copy of this letter and the
attached Allonge to the Promissory Note these terms shall become effective.
1) The Expiration Date shall be extended until 6130/98.
2) Section 6.3 Facility Fees The fee shall be reduced to $1,875.00 per
quarter beginning with the July 1, 1997 payment.
3) Section 3.6 Reporting Requirements The annual and quarterly financial
statements shall be due within 90 and 45 days of the end of the period,
respectively, in accordance with SEC requirements. Sub-Section (iv) shall
be eliminated.
4) Section 3.8 Net Worth The TNW Requirement shall be deemed to have been
$50,000,000 as of 3131/97. Step ups will continue as called for in the
Agreement.
5) Section 3.10 Profitability The Borrower shall not report consecutive
quarterly Net Losses, a Quarterly Net Loss of greater than $2,500,000 and
shall report Net Income of at least $2,000,000 for each trailing four
quarter period.
6) The requirement for borrowings to be subject to a Borrowing Base shall be
eliminated.
<PAGE> 2
7) Section 4.4 Dividends The limit shall be raised from $50,000 to $500,000.
8) Section 4.5 Loans and Advances The limit shall be raised from $50,000 to
$1,000,000.
9) Section 4.6 Investments and Section 4.7 Subsidiaries: Acquisitions
Investments in Subsidiaries may be permitted without bank consent as long
as at least 75% of the consolidated Tangible Net Worth is at the parent
company level.
The Borrower represents and warrants that the execution of the amendment has
been duly authorized by the Borrower by all necessary corporate and other action
and that the execution will not conflict with, violate the provisions of, or
cause a default or constitute an event which, with the passage of time or giving
of notice or both, could cause a default on the part of the Borrower under its
charter documents or by-laws or under any contract, agreement, law, rule, order,
ordinance, franchise, instrument or other document, or result in the imposition
of any lien or encumbrance on any property or asset of the Borrower.
The Borrower further represents that this agreement and the attached Allonge to
the Promissory Note dated February 15, 1996 each represent legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms. In addition, the statements,
representations and warranties made in the Agreement continue to be correct as
of the date hereof and the Borrower is in compliance with all terms of the
Agreement. Except as expressly affected hereby, the Agreement remains in full
force and effect as heretofore.
Sincerely,
/s/ Thomas W. Davies
Thomas W. Davies
Senior Vice President
High Technology Group
Acknowledged /s/ Susan Johnson date: 7/14/97
by: Susan Johnson
title: Chief Financial Officer
<PAGE> 3
ALLONGE TO PROMISSORY NOTE
The maturity date of the attached Promissory Note dated February 15, 1996
for $5,000,000 is hereby extended to June 30, 1998 from June 30, 1997.
This Allonge will be governed by the terms and conditions of the Letter
Agreement made as of the 14th day of July, 1994 (as amended as of July 1, 1995,
February 15, 1996 and June 30, 1997) by and between Sapient Corporation and
Fleet National Bank (f/k/a Fleet National Bank of Connecticut, successor by
merger to Fleet Bank of Massachusetts, N.A.). Nothing herein shall be deemed to
constitute a waiver, release or amendment of any terms of the Agreement.
Steve Forman /s/ Susan D. Johnson
- ------------------------------ ------------------------------------
Witness 7/14/97 Name: Susan D. Johnson
Title: Chief Financial Officer
Sapient Corporation
Date:7/14/97
Deborah Tyrrell /s/ Thomas W. Davies
- ------------------------------ ------------------------------------
Witness 7/14/97 Thomas W. Davies
Senior Vice President
Fleet National Bank
Date: 6/30/97
<PAGE> 1
EXHIBIT 10.2
OFFICE LEASE
200 WEST ADAMS STREET
CHICAGO, ILLINOIS
THIS OFFICE LEASE is made as of the 28th day of March, 1997 (hereinafter
referred to as this "Lease") between ADAMS FAMILY, L.L.C., a Delaware limited
liability company, beneficiary of Cole Taylor Bank, not personally, but solely
as Trustee under Trust Agreement dated June 26, 1995 and known as Trust No.
95-6300 (hereinafter referred to as "Landlord"), and SAPIENT CORPORATION, a
Delaware corporation, whose present address is One Memorial Drive, Third Floor,
Cambridge, Massachusetts 01242 (hereinafter referred to as "Tenant").
WITNESSETH:
Landlord hereby leases to Tenant, and Tenant hereby accepts from Landlord,
the premises (hereinafter referred to as the "Premises") containing
approximately 40,000 square feet of rentable area on the 27th and 28th floors in
the building known as 200 West Adams Street, Chicago, Illinois (hereinafter
referred to as the "Building"; the land owned by Landlord underlying and
adjacent to the Building is hereinafter referred to as the "Land" and the
Building and the Land are sometimes hereinafter collectively referred to as the
"Property"), as designated on the plans attached hereto as Exhibit "A", subject
to the covenants, terms, provisions and conditions of this Lease.
In consideration thereof, Landlord and Tenant covenant and agree as
follows:
1. PREMISES AND TERM
(a) The Premises consists of four separate spaces (each a "Space"), as
hereinafter described. "Space No. 1" consists of that certain space on the 27th
floor of the Building containing approximately 10,000 square feet of rentable
area and designated as "Space No. 1" on Exhibit "A:. "Space No. 2" consists of
that certain space on the 27th floor of the Building containing approximately
10,000 square feet of rentable area and designated as "Space No. 2" on Exhibit
"A." "Space No. 3" consists of space on
<PAGE> 2
the 27th and 28th floors of the Building, containing approximately 4,000 square
feet of rentable area on the 27th floor as designated as "Space No. 3" on
Exhibit "A," and approximately 6,000 square feet of rentable area on the 28th
floor at a location designated by Landlord. "Space No. 4" consists of space on
the 28th floor of the Building containing approximately 10,000 square feet of
rentable area at a location designated by Landlord. Notwithstanding the
foregoing, the rentable areas of each of the Spaces and/or the rentable area of
all of the Spaces, in the aggregate, may vary from the amounts stated above by
up to 5% (i.e., Space No. 1 shall be between 9,500 and 10,5000 rentable square
feet and the rentable area of all of the Spaces, in the aggregate, shall be
between 38,000 and 42,000 rentable square feet). The actual rentable area of
each of the foregoing Spaces shall be determined by Landlord based upon the
application of the proportion (x) that the usable area of such Space bears to
the usable area of all tenant space on the applicable floor (such usable areas
to be determined in accordance with the Standard Method of Measuring Floor Area
in Office Buildings promulgated by the Building Owners and Changers Association
International [reprinted August 1990]) to (y) the total rentable area of such
floor (which the parties agree shall be deemed to be 24,143 square feet).
(b) The lease term for Space No. 1 shall commence on the date (the "Space
No. 1 Commencement Date") that is the last to occur of (i) the date Tenant first
takes occupancy of Space No. 1 for the conduct of business and (ii) May 15,
1997. Notwithstanding the foregoing, in no event shall the Space No. 1
Commencement Date be later than June 15, 1997 (the "Outside Space No. 1
Commencement Date"). Notwithstanding the foregoing, if Tenant is delayed in
completing the Work (as defined in the Work Letter Agreement attached hereto as
Exhibit "B" [the "Work Letter"]) in Space No. 1 by reason of a delay
attributable to (x) Landlord or (y) an event of force majeure (as defined
below), and as a result of such delay Space No. 1 is not ready for Tenant to
conduct its business operations therein by the Outside Space No. 1 Commencement
Date, then the Outside Space No. 1 Commencement Date shall be extended for a
period of time equal to period of time that the Work was actually delayed on
account of such Landlord Delay or event of force majeure. For purposes of this
Paragraph 1(b), an "event of force majeure" shall mean any war, insurrection,
civil commotion, riot, act of God or the enemy, failure of power or reduction or
interruption in the furnishing of power, electricity or utilities, strike,
material shortage, lockout, picketing, fuel shortage, accident or other cause
beyond the reasonable control of Tenant.
<PAGE> 3
(c) The lease term for Space No. 2 shall commence on the date (the "Space
No. 2 Commencement Date") that is the first to occur of (i) the date Tenant
first takes occupancy of Space No. 2 for the conduct of business, (ii) May 1,
1998 or (iii) if applicable, the Early Space Commencement Date (as hereinafter
defined) for Space No. 2.
(d) The lease term for Space No. 3 shall commence on the date (the "Space
No. 3 Commencement Date") that is the first to occur of (i) the date Tenant
first takes occupancy of Space No. 3 for the conduct of business, (ii) January
1, 1999 or (iii) if applicable, the Early Space Commencement Date for Space No.
3.
(e) The lease term for Space No. 4 shall commence on the date (the "Space
No. 4 Commencement Date") that is the first to occur of (i) the date Tenant
first takes occupancy of Space No. 4 for the conduct of business, (ii) May 1,
1999 or (iii) if applicable, the Early Space Commencement Date for Space No. 4.
(f) For purposes of this lease, the "Term" shall commence on the Space No.
1 Commencement Date and, unless sooner terminated as provided herein, shall end,
absolutely and without the need for notice from either party to the other, on
the last day of the eighty-fourth (84th) full calendar month following the Space
No. 1 Commencement Date (the "Termination Date"). For purposes of this Lease, at
any time the "Premises" shall constitute those portions of Space No. 1, Space
No. 2, Space No. 3, and Space No. 4 that are then leased by Landlord to Tenant.
(g) Notwithstanding the previous provisions of this Paragraph 1, Tenant may
elect to lease all or portions of the Spaces prior to the respective dates set
forth above, as follows:
(i) Immediately after written notice to Landlord, Tenant may lease
that portion of Space No. 2 containing approximately 2,000 square feet of
rentable area on the 27th floor and designated as the "Space No. 2 Early Space"
on Exhibit "A", at any time from and after the Space No. 1 Commencement Date;
(ii) Immediately after written notice to Landlord, Tenant may lease
any portion of Space No. 2 or any portion of Space No. 3 located on the 27th
floor from and after January 1, 1998; and
(iii) Upon not less than five (5) months prior written
<PAGE> 4
notice to Landlord, Tenant may lease any portion of Space No. 3 located on the
28th floor or any portion of Space No. 4 from and after July 1, 1998.
Tenant's notice specifying the portion of the Space Tenant desires to lease
early ("Early Space") shall designate the date Tenant desires the lease term for
such Early Space to commence (the "Early Space Commencement Date"). If Tenant
elects to lease any such Early Space, then (w) Landlord shall make the
applicable early space available for Tenant to perform construction activities
therein (in accordance with the terms and conditions of the Work Letter) at
least three (3) months prior to the applicable Early Space Commencement Date
(such date when Landlord is to deliver possession of a Space [or an Early Space]
is hereinafter referred to as a "Delivery Date"), provided that the Delivery
Date for Space No. 1 shall be the date that this Lease is fully executed and
delivered); (x) commencing on the applicable Early Space Commencement Date,
Tenant shall pay Rent (as hereinafter defined) for such Early Space at a rental
rate per rentable square foot of such Early Space equal to the rental rate then
payable per rentable square foot of Space No. 1; (y) within thirty (30) days
after Tenant's election to lease such Early Space, Landlord and Tenant shall
execute an instrument confirming Tenant's lease of such Early Space; and (z) if
the Early Space is less than an entire Space, Tenant, at its expense, shall
install gates, temporary walls or other barriers reasonably satisfactory to
Landlord separating such Early Space from the balance of the Space.
2. BASE RENT. Tenant shall pay Base Rent to Landlord as follows:
<TABLE>
<CAPTION>
Payable in Monthly
Year of Term Annual Amount Installments of
- ------------ ------------- ---------------
<S> <C> <C> <C>
For Space No. 1 228,000.00 19,000.00
2 231,999.96 19.333.33
3 236,000.04 19,666.67
4 240,000.00 20,000.00
5 243,999.96 20,333.33
6 248,012.04 20,666.67
7 252,000.00 21,000.00
For Space No. 2** 231,999.99 19,333.33
3 236,000.04 19,666.67
4 240,000.00 20,000.00
5 243,999.96 20,333.33
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
6 248,012.04 20,666.67
7 252,000.00 21,000.00
For Space 3** 2 231,999.96 19,333.33
3 236,000.04 19,666.67
4 240,000.00 20,000.00
5 243,999.96 20,333.33
6 248,012.04 29,666.67
7 252,000.00 21,000.00
For Space 4** 3 236,000.04 19,666.67
4 240,000.00 20,000.00
5 243,999.96 20,333.33
6 248,012.04 29,666.67
7 252,000.00 21,000.00
</TABLE>
* Commencing on the Space No. 1 Commencement
Date
** Subject to the early lease of a portion of such Space as
described in Paragraph 1 (g) above.
Base rent shall be paid in advance on or before the first day of each calendar
month during the Term. If the lease term for any Space (or any portion thereof)
commences other than on the first day of a month or ends other than on the last
day of a month, the Base Rent (including any holdover rent) for such Space (or
portion thereof) for such month shall be prorated.
3. IMPROVEMENT AND FIXTURING OF PREMISES; DELIVERY OF POSSESSION.
(a) LANDLORD'S WORK. Landlord covenants that upon the applicable
Delivery Date for each space such Space shall include the Base Building
improvements listed on Exhibit "F" attached hereto. Except as otherwise provided
in the immediately preceding sentence, Tenant shall accept each Space in its
then "as is" physical condition. Tenant shall construct each Space for Tenant's
use and occupancy in accordance with the Work Letter. Landlord shall contribute,
in accordance with the terms of the Work Letter, an amount equal to $40.00 per
square foot of rentable space in the Premises ("Landlord's Contribution")
towards the cost of the Work. Tenant shall pay all costs of the Work in excess
of Landlord's Contribution.
<PAGE> 6
(b) DELIVERY OF POSSESSION. Landlord shall use reasonable efforts to
receive exclusive possession of each space from the current tenants in a timely
manner so that Landlord can meet the requirements of Pargraph1 above. If
Landlord shall, for any reason, fail to make available to Tenant possession of
any Space (or any portion thereof) on or before the Delivery Date for such Space
(or such portion thereof), Landlord shall not be subject to any liability for
such failure except as expressly set forth herein. Under such circumstances, the
Space No. 1 Commencement Date, Space No. 2 Commencement Date, Space No. 3
Commencement date or Space No. 4 Commencement Date, as applicable (or, if
relating to Early Space, the applicable Early Space Commencement Date), shall be
deferred by a number of days equal to the number of days that Landlord was
delayed in delivering possession of such Space (or portion thereof) to Tenant
(the Space No.1 Commencement Date, Space No. 2 Commencement Date, Space No. 3
Commencement Date, Space No. 4 Commencement Date, and each Early Space
Commencement Date, are sometimes hereinafter referred to as a "Commencement
Date"), but not beyond the date that Tenant first takes occupancy of the
applicable Space for the conduct of business. Furthermore, if Landlord shall,
for any reason, fail to make available to Tenant possession of any Space within
ninety (90) days after the scheduled Delivery Date, then Tenant shall be
entitled to abatement of Base Rent next coming due in an amount equal to the
product of (x) the number of days in the period commencing upon the expiration
of the foregoing 90-day period and expiring on the date immediately preceding
the day Landlord makes available to Tenant possession of the applicable Space
(but not to exceed the number of days that the scheduled Commencement Date of
the applicable Space is actually delayed due to Landlord's failure to timely
deliver possession of such Space) multiplied by (y) the product of (I) the
monthly installment of Base Rent initially payable for such Space divided by
(II) thirty (30) (the "Scheduled Daily Rent"). Furthermore, if delivery of
possession of any Space is delayed more than one hundred fifty (150) days beyond
the scheduled Delivery Date the scheduled Daily Rent shall thereafter be
increased to 150% of the prior amount. Furthermore, if Landlord shall, for any
reason, fail to make available to Tenant possession of any Space within ninety
(90) days after the scheduled Delivery Date, in lieu of incurring the abatement
liability described above, to the extent suitable space reasonably acceptable to
Tenant is available in the Building, Landlord shall provide Tenant with
temporary space (the "Temporary Space") in the Building at locations designated
by Landlord for Tenant to conduct its business. Tenant's occupancy of the
<PAGE> 7
Temporary Space shall be upon all of the same terms and provisions as are
contained in this Lease, except as follows:
(i) Tenant shall not be obligated to pay Base Rent or Additional
Rent for the Temporary Space, but Tenant shall pay for all electricity used in
the Temporary Space.
(ii) Tenant's right to occupy the Temporary Space shall commence
on the date such Temporary Space is delivered by Landlord and shall expire on
the first to occur of (a) the Commencement Date of the applicable Space (as
deferred pursuant to the provisions of this Paragraph 3) or (b) the date that
this Lease or Tenant's right to possession of the Premises is terminated.
(iii) Tenant shall accept the Temporary Space, if at all, in an
"as-is", "where is" physical condition, without any representation, credit or
allowance from Landlord with respect to the condition or improvement thereof.
(iv) It shall be a condition of Tenant's right to occupy the
Temporary Space that Tenant is not in Default under this Lease at any time while
Tenant is so occupying the Temporary Space.
Such deferral of the Commencement Date, abatement of Rent and delivery of
temporary space shall constitute Tenant's sole and exclusive rights and remedies
with respect to any such failure to timely deliver possession of a Space. There
shall be no deferral of a Commencement Date, abatement of Rent or delivery of
temporary space, however, if any such failure is caused in whole or part by a
delay caused by Tenant.
4. ADDITIONAL RENT. In addition to paying the Base Rent specified in
Paragraph 2 hereof, Tenant shall pay as "additional rent" the amounts determined
as hereinafter set forth in this Paragraph 4. Any and all sums, expenses and
charges due or payable by Tenant under this Lease besides Base Rent, and any and
all costs, expenses and attorneys' fees incurred by Landlord in collecting any
and all Base Rent, amounts due pursuant to this Paragraph 4, and such other
sums, expenses, charges, or in enforcing any of Tenant's obligations under this
Lease, shall constitute "additional rent." The Base Rent and such additional
rent are sometimes herein collectively referred to as "Rent". All amounts due
under this Lease as additional rent shall be payable in the same manner and at
the same place as the Base Rent.
<PAGE> 8
(a) DEFINITIONS. As used in this Paragraph 4, the terms:
(i) "Base Year" shall mean the calendar year 1997.
(ii) "Calendar Year" shall mean each calendar year in which any
part of the Term falls, through and including the year in which the Term
expires.
(iii) "Tenant's Proportionate Share" at any time shall mean the
percentage obtained by dividing the rentable area of the Premises at such time
by the rentable area of the Building. Subject to Tenant's ability to lease a
portion of a Space early as provided in Paragraph 1 (g) above, effective as of
the Commencement Date set forth below, "Tenant's Proportionate Share" shall be
the corresponding cumulative amounts set forth below:
<TABLE>
<CAPTION>
Space Commencement Date Tenant's Proportionate Share
----------------------- ----------------------------
<S> <C> <C>
Space No. 1 1.540%
Space No. 2 3.081%
Space No. 3 4.621%
Space No. 4 6.161%
</TABLE>
(iv) "Taxes" shall mean all real estate taxes and assessments
(general, extraordinary, special or otherwise) transit taxes, water and sewer
rents, taxes based upon the receipt of rent, including gross receipts or sales
taxes, or similar impositions and expenses, levied or assessed upon or with
respect to the Land and/or Building and ad valorem taxes for any personal
property used in connection therewith and all taxes levied or assessed upon or
with respect to the leasing, use or occupancy of the Property or any part
thereof or the rents or receipts paid or payable to Landlord therefrom
(including, without limitation, any general gross receipts tax and any income
tax levied or assessed especially with respect to real property or any type of
real property which includes the Property), which Landlord shall become
obligated to pay with respect to the Property during any Calendar Year, and
portion of which occurs during the Term (without regard to any different fiscal
year by the respective governmental or municipal authority). Should the State of
Illinois, or any political subdivision thereof, or any other governmental
authority having jurisdiction over the Property, impose a tax, assessment,
charge or
<PAGE> 9
fee, which Landlord shall be required to pay, wholly or partially in
substitution for or in addition to any of the above Taxes, all such taxes,
assessments, fees or charges shall be deemed to constitute Taxes hereunder.
"Taxes" for each Calendar Year subsequent to the Base Year shall include all
fees and costs, including attorneys' fees, appraisals and consultants' fees,
reasonably incurred by Landlord in seeking to obtain a reduction of, or a limit
on, any increase in any Taxes (regardless of whether any reduction or limitation
is obtained). "Taxes" shall not include Landlord's net income taxes (except as
otherwise expressly provided in the Paragraph 4 (a) (iv) with respect to new
Taxes as a substitution for or in addition to any of the above Taxes) or
franchise taxes.
(v) "Operating Expenses" shall mean all reasonable expenses,
costs and disbursements (other than Taxes) of every kind and nature (determined
for the applicable Calendar Year on an accrual basis and, to the extent
applicable, in accordance with generally accepted accounting principles
consistently applied) paid or incurred by or on behalf of Landlord in connection
with the ownership, management, operation, maintenance or repair of the
Property, except the following:
(A) Costs of alterations of any tenant's premises;
(B) Principal or interest payments on loans secured by mortgages
or trust deeds on the Building and/or on the land.
(C) Costs of capital improvements (as determined in accordance
with generally accepted accounting principles), except that Operating Expenses
shall include the cost as amortized over such number of years as Landlord may
reasonably determine, with interest at the rate of 15% per annum on the
unamortized amount, of any capital improvements made or installed after the Base
Year which, (1) Landlord reasonably determines will have the effect of reducing
(or limiting an expected increase of) any component cost included within
Operating Expenses (provided the amount of such costs included in Operating
Expenses in any Calendar Year shall not exceed the amount that Operating
Expenses were reduced (or an expected increase was limited) for such Calendar
Year, as reasonably determined by Landlord), (2) are made or installed to keep
the Property in compliance with all governmental rules and regulations
applicable from time to time thereto, or (3) under generally accepted accounting
practices maybe expenses or treated as deferred expenses (and the amortization
and interest so
<PAGE> 10
determined for each Calendar Year shall be included in Operating Expenses for
that Calendar Year);
(D) Leasing commissions for space in the Building;
(E) The cost of any work performed or services provided (such as
separately metered electricity) for any tenant (including Tenant) at such
tenant's cost, or provided by Landlord without charge as a concession (such as
free rent or improvement allowances);
(F) The cost of installing, operating and maintaining any
specialty service, such as an observatory, broadcasting facility, luncheon club,
retail store, sundry shop, newsstand, concession, or athletic or recreational
club, unless provided as an amenity to all tenants without additional charge;
(G) The salaries of Landlord's personnel above the level of
Building Manager (provided portions of the salaries and other employment costs
of off-site personnel of all levels who provide accounting services for the
Building, as reasonably allocated by Landlord to the Building, may be included
in Operating Expenses);
(H) The cost of any work performed or service provided for any
tenant of the Building (other than Tenant) to a materially greater extent or in
a materially more favorable manner than that made available to Tenant;
(I) The cost of any work performed or service provided (such as
electricity) for any facility other than the Building (such as a garage) for
which fees are charged;
(J) The cost of any items for which Landlord is reimbursed by
insurance proceeds, condemnation awards, a tenant of the Building other than
through payments comparable to the payments required of Tenant hereunder
pursuant to this Paragraph 4), or otherwise;
(K) Depreciation and rental under any ground lease or other
underlying lease;
(L) Costs incurred in procuring new tenants, or any fee in lieu
of real estate brokerage commissions;
<PAGE> 11
(M) Any advertising expenses;
(N) Any costs representing an amount paid to an affiliate of
Landlord which is in excess of the amount which would have been paid in the
absence of such relationship;
(O) Payments for rented equipment, the cost of which equipment
would constitute a capital expenditure which Landlord could not include in
Operating Expenses if such equipment were purchased;
(P) Any expenses for repairs or maintenance which are covered by
warranties, guarantees or service contracts, to the extent such warranties,
guarantees and service contracts are actually honored; and
(Q) Legal expenses arising out of the enforcement of the
provisions of any lease, including this Lease, or out of negotiating leases.
(b) EXPENSE ADJUSTMENT
(i) Tenant shall pay as additional rent for each Calendar Year,
that amount ("Expense Adjustment Amount") which is Tenant's Proportionate Share
of the amount of by which the Operating Expenses incurred with respect to such
Calendar Year exceed the amount thereof incurred with respect to the Base Year.
If the occupancy at anytime during the Base Year or any Calendar Year is less
than ninety-five percent (95%), then Operating Expenses for that Base Year or
Calendar Year shall be "grossed up" to that amount of Operating Expenses that
Landlord reasonably projects would normally be expected to be incurred during
the Base Year or Calendar Year if the Building were ninety-five percent (95%)
occupied during the entire Base Year or Calendar Year. Landlord shall provide in
Landlord's annual statement of the Expense Adjustment Amount a reasonably
detailed description of the methodology employed by Landlord to achieve the
gross up of the Operating Expenses. Only those component expenses that are
affected by variations in occupancy levels shall be grossed up. Taking account
of the different Base Year Operating Expenses for the tenants of the Building,
if during any Calendar Year, as a result of the foregoing "gross up" provision,
the total increases charged to tenants in the Building exceed one hundred
percent (110%) of the actual increase in Operating Expenses paid by the Landlord
over the Base Year Operating Expenses, then Tenant's
<PAGE> 12
Proportionate Share of the amount in excess of one hundred percent (100%), as
grossed up, shall be returned to Tenant.
(ii) The Expense Adjustment Amount with respect to each Calendar
Year shall be paid in monthly installments, payable in advance on the first day
of each calendar month during the course of such year, in amounts estimated from
time to time by Landlord and communicated by written notice to Tenant. Landlord
shall cause to be kept books and records showing Operating Expenses in
accordance with generally accepted accounting principles. Following the close of
each Calendar Year, Landlord shall cause the amount of the Expense Adjustment
Amount for such Calendar Year to be computed based on Operating Expenses for
such Calendar Year, and Landlord shall deliver to Tenant a statement of such
amount (based upon generally accepted accounting principles, to the extent
applicable) and Tenant shall pay any deficiency as shown by such statement to
Landlord within 30 days after receipt of such statement. Landlord shall use
reasonable efforts to deliver such statement by April 1 of the immediately
following Calendar Year (provided Landlord's failure to deliver the statement by
such date shall not affect Landlord's or Tenant's obligations in this clause
(ii)). If the total of the estimated monthly installments paid by Tenant during
any Calendar Year exceed the actual Expense Adjustment Amount due from Tenant
for such Calendar Year, then, at Landlord's option, such excess shall be either
credited against payments next due hereunder or refunded by Landlord, provided
Tenant is not then in Default hereunder. Tenant's obligations to pay the Expense
Adjustment Amount and Landlord's obligations to refund any excess amount shall
survive the expiration or earlier termination of this Lease.
(c) ADJUSTMENT FOR SERVICES NOT RENDERED BY LANDLORD. If Landlord is
not furnishing any particular work or service (the cost of which, if furnished
by Landlord would be included in Operating Expenses) to a tenant who had
undertaken to itself to perform or obtain such work or service in lieu of the
furnishing thereof by Landlord, Operating Expenses shall be deemed for purposes
of this Paragraph 4 to be increased by an amount equal to the additional
Operating Expenses, as reasonably determined by Landlord, which would have been
incurred during such period if Landlord had at its own expense furnished such
work or service to such tenant.
(d) TAX ADJUSTMENT. Tenant shall pay as additional rent, in addition
to the Base Rent required by Paragraph 2 hereof,
<PAGE> 13
an amount ("Tax Adjustment Amount") equal to Tenant's Proportionate Share of the
amount by which the Taxes with respect to each Calendar Year exceeds the Taxes
with respect to the Base Year. The Tax Adjustment Amount with respect to each
Calendar Year shall be paid in monthly installments, payable in advance on the
first day of each calendar month during the course of such year in amounts
estimated from time to time by Landlord and communicated by written notice to
Tenant. Following the close of each Calendar Year, Landlord shall cause the
amount of the Tax Adjustment Amount for such Calendar Year to be computed based
on Taxes for such Calendar Year and Landlord shall deliver to Tenant a statement
of such amount and Tenant shall pay any deficiency as shown by such statement to
Landlord within 30 days after receipt of such statement. If the total of the
estimated monthly installments paid by Tenant during any Calendar Year exceeds
the actual Tax Adjustment Amount due from Tenant for such Calendar Year, then,
at Landlord's option such excess shall be either credited against payments next
due hereunder or refunded by Landlord, provided Tenant is not then in Default
hereunder (provided that if such excess exceeds the monthly installment of Rent
next coming due, such excess shall be refunded to Tenant, rather than credited
against Rent, by Landlord). The amount of any refund of Taxes received by
Landlord shall be credited against Taxes for the year in which such refund is
received. In determining the amount of Taxes for any year, the amount of special
assessments to be included shall be limited to the amount of the installment
(plus any interest payable thereon) of such special assessment required to be
paid during such year as if Landlord had elected to have such special assessment
paid over the maximum period of time permitted by law; if the authority to whom
such assessment is to b paid shall not permit such assessment to be paid in
installments, the amount of such assessment shall be treated as being amortized
over such number of calendar years, beginning with the Calendar Year in which
the assessment is payable, as Landlord shall reasonably determine, with interest
at the rate of 15% per annum on the unamortized amount, and such amortization
and interest for each Calendar Year shall be included in Taxes for that Calendar
Year.
(e) PARTIAL YEAR. If only part of any Calendar Year shall fall within
the Term, the amounts computed as additional rent, with respect to such Calendar
Year under the foregoing provisions of this Paragraph 4 shall be prorated in
proportion to the portion of such Calendar Year falling within the Term, but the
<PAGE> 14
expiration or termination of this Lease prior to the end of such Calendar Year
shall not impair Tenant's obligation hereunder to pay such prorated portion of
such additional rent with respect to that portion of such year falling within
the Term, and such obligation shall survive the expiration or termination of
this Lease.
(f) DISPUTES. Any statement furnished to Tenant by Landlord under the
provisions of this Paragraph 4 shall constitute a final determination as between
Landlord and Tenant as to the rent set forth therein due from Tenant for the
period represented thereby, unless Tenant, within ninety (90) days after such
statement is furnished, shall give a notice to Landlord that it disputes the
correctness thereof, specifying in detail the basis for such assertion. Pending
resolution of such dispute, Tenant shall pay all disputed amounts in accordance
with the statement furnished by Landlord. Landlord agrees, upon prior written
request, during normal business hours to make available for Tenant's inspection,
at Landlord's offices, Landlord's books and records which are relevant to any
items in dispute. If Tenant makes such timely written exception, a certification
as to the proper amount of Expense Adjustment Amount and Tax Adjustment Amount
shall be made by an independent certified public accountant selected by Landlord
(but reasonably acceptable to Tenant), which shall be final and conclusive.
Tenant agrees to pay the cost of such certification unless it is determined that
Landlord's original determination of the Expense Adjustment Amount and Tax
Adjustment Amount was in error by more than five percent (5%), in the aggregate,
in which case Landlord agrees to pay the cost of such certification.
(g) PLACE OF PAYMENT. Tenant shall, without any demand therefor and
without setoff, reduction or recoupment, pay, to landlord's agent, Amerimar
Adams Management Co., Inc. at 200 West Adams Street, Suite 1201, Chicago,
Illinois 60606 Attention: Accounts Payable ("Agent") or to such other person
and/or at such other place as Landlord may from time to time direct by notice
given to Tenant, the Base Rent as well as all other sums which may become due
by Tenant under this Lease. All such other sums shall be payable as additional
rent. All checks shall be made payable to ADAMS FAMILY, L.L.C. Tenant hereby
covenants and acknowledges that Tenant's obligation to pay Base Rent and all
additional rent pursuant to this Paragraph 4 is independent of each and every of
Landlord's covenants and agreements contained in this Lease.
<PAGE> 15
(h) DELAY IN COMPUTATION. Delay in computation of the Expense
Adjustment Amount or the Tax Adjustment Amount shall not be deemed a default
hereunder or a waiver of Landlord's right to collect any of such amounts.
Notwithstanding the foregoing, if Landlord fails to provide Tenant with a
statement of Tenant's Expense Adjustment Amount for any Calendar Year by April 1
of the immediately following Calendar Year, any deficiency owed by Tenant to
Landlord shall be payable by Tenant in equal monthly installments over the
balance of such Calendar Year. Furthermore, if Landlord fails to notify Tenant
of any deficiency owed by Tenant with respect to Tenant's Expense Adjustment
Amount or Tax Adjustment Amount for any calendar Year within two (2) years after
the expiration of such Calendar Year, Landlord shall be deemed to have waived
its right to collect such deficiency.
(i) NO CREDIT. Tenant shall not be entitled to any rebate or credit in
the event either Taxes or Operating Expenses for any Calendar Year is lower than
the Base Year.
5. USE OF PREMISES. Tenant shall use and occupy the Premises solely for
general office purposes, including occasional client seminars, in keeping with
the general use of the other tenants of the Building, and for no other purpose.
The maximum permitted occupancy of the Premises is one person for each 175
rentable square feet of the Premises (excluding (i) occasional, short-term
occupancy by a reasonably greater number of persons in connection with
presentations to Tenant's customers and (ii) occupancy by a greater number of
persons necessitated by Landlord's failure to deliver any Space to tenant when
required under this Lease).
6. CONDITION OF PREMISES. Tenant's taking possession of the Premises or any
portion thereof shall be conclusive evidence that the Premises or any such
portion was in good order and satisfactory condition when Tenant took
possession, subject to Landlord's obligation to provide the Base Building
improvements described in Exhibit "F" attached hereto. At the expiration or
other termination of this Lease or of Tenant's right of possession, Tenant shall
leave the Premises, and during the Term will keep the same, in good order and
condition, ordinary wear and tear, damage by fire or other casualty (which fire
or other casualty has not occurred through the negligence of Tenant or those
claiming under Tenant or their employees or invitees respectively) alone
excepted; and for that purpose, Tenant shall make all necessary repairs and
<PAGE> 16
replacements. Tenant shall give Landlord prompt notice of any damage to or
accident upon the Premises and of any breakage or defects in the window glass,
wires or plumbing, heating, ventilating or cooling or electrical apparatus or
systems on or serving the Premises. Landlord shall comply with all laws, rules,
orders, ordinances and regulations at anytime issued or in force by any lawful
authority, applicable to any common areas of the Building to which Tenant has
access and to the Base Building mechanical, electricity and plumbing systems
serving the Premises. Tenant shall at the expiration or termination of this
Lease or of Tenant's right of possession, remove from the Premises all
furniture, trade fixtures, office equipment and all other items of Tenant's
property so that Landlord may again have and repossess the Premises. Tenant
shall comply with all laws, rules, orders, ordinances and regulations at anytime
issued or in force by any lawful authority, applicable to Tenant or any other
occupant of the Premises, or to the Premises, or to the use or occupancy of the
Premises. Tenant shall repair, at or before expiration or termination of this
Lease or of Tenant's right of possession, all damage done to the Premises or any
other part of the Building by installation or removal of furniture and property
by Tenant or any subtenant or any agent, employee or invitee of Tenant or any
subtenant. Tenant shall, upon demand, pay to Landlord the amount of any damages
suffered or incurred by Landlord as a result of any injury to any part of the
Property other than the Premises, done by Tenant or any subtenant or any agent,
employee or invitee of Tenant or any subtenant.
7. SERVICES.
(a) LIST OF SERVICES. Landlord shall provide the following services,
and no others, on all days during the Term, except Sundays and holidays, unless
otherwise stated:
(i) Landlord shall provide heating and air conditioning when
necessary for normal comfort in the Premises (but Landlord shall not be required
to provide heating or air conditioning to any extent in excess of that which is
within the parameters of any federal, state or local requirements or
recommendations which may be applicable or with which Landlord in good faith may
decide to comply) from Monday through Friday, during the period from 8 a.m. to 6
p.m. and on Saturday during the period from 8 a.m. to 1 p.m., holidays excepted.
Tenant, within ten days after its receipt of each bill therefor, will pay for
all heating and air conditioning requested and furnished at other times (the
<PAGE> 17
current after-hours charge for heating and air conditioning is $100 per hour per
floor, which charge is subject to change from time to time) or required due to
heat producing equipment, or equipment requiring a controlled climate, installed
by or for Tenant, at reasonable and non-discriminatory rates to be established
from time to time by Landlord. "Holidays" means: Thanksgiving Day, Christmas
Day, New Year's Day, Memorial Day, Independence Day, Labor Day and any other day
recognized as a holiday by the service unions representing workers providing
services to the Building or customarily designated as a holiday by landlords
operating first-class office buildings in the downtown area of the City of
Chicago. If the Building standard air conditioning facilities serving the
Premises are not sufficient to meet the requirements specified above or if
Landlord's ability to provide sufficient air conditioning services to any other
occupant in the Building is adversely affected because (i) the Premises are
occupied by more than one person for each 200 rentable square feet of the
Premises; (ii) the connected electrical load of lighting fixtures and desk-top
portable office equipment operated in the Premises exceeds the limits stated in
the first sentence of subparagraph 7(a)(ii) below; or (iii) Tenant's activities
in the Premises (other than normal business office activities) materially and
adversely affect the temperature in the Premises or the Building, then Tenant,
at its sole expense, shall either (i) furnish, install, maintain and operate
sufficient supplemental air conditioning facilities in the Premises to eliminate
such condition or (ii) modify its occupancy, its use of electricity or its
activities to eliminate such condition. If Tenant fails to eliminate such
condition as required above within thirty (30) days after written notice from
Landlord, Landlord, at Tenant's expense, may install such supplementary air
conditioning facilities in the Premises.
(ii) Subject to subparagraph 7(b) hereof, Landlord shall provide
electrical energy for standard building lighting fixtures provided by Landlord
and for the operation of desk-top portable office equipment, provided that (A)
the connected electrical load of such equipment does not exceed an average of
one watt per square foot of the Premises and (B) the electricity so furnished
for equipment uses will be at a nominal 120 volts and no electrical circuit for
the supply of such use need have a current capacity exceeding 20 amperes. If
Tenant's requirements for electricity are in excess of those set forth in the
preceding sentence, and if, in Landlord's sole judgment, Landlord's facilities
are inadequate for such additional requirements and if electrical energy for
such additional requirements is available to
<PAGE> 18
Landlord, Landlord upon written request and at the sole cost and expense of
Tenant will furnish and install, or, at Landlord's sole discretion, permit
Tenant to furnish and install, such additional wires, risers, conduits, feeders
and switchboards as reasonably may be required to supply such additional
requirements of Tenant provided (1) that the same shall be permitted by
applicable laws and insurance regulations, (2) that, in Landlord's sole
judgment, the same are necessary and will not cause permanent damage or injury
to the building or the Premises or cause or create a dangerous or hazardous
condition or entail excessive or unreasonable alterations or repairs or
interfere with or disturb other tenants or occupants of the Building, (3) that,
in Landlord's sole judgment, the same will not in any way diminish or adversely
affect the electricity which Landlord deems should remain available for other
tenants, and (4) that Tenant, at Tenant's expense, shall concurrently with the
making of such written request, execute and deliver to Landlord, Tenant's
written undertaking, in form and substance satisfactory to Landlord, obligating
Tenant to fully and promptly pay the entire cost and expense of so furnishing
and installing any additional wires, risers, conduits, feeders and/or
switchboards.
Tenant shall bear the reasonable and non-discriminatory cost of replacement of
lamps, starters and ballasts for lighting fixtures, and shall reimburse Landlord
therefor within 15 days of Landlord's submission of each bill therefor.
(iii) City water from the regular Building outlets for drinking,
lavatory and toilet purposes.
(iv) Janitorial services Monday through Friday in and about the
Premises (except holidays), generally in accordance with the specifications
attached hereto as Exhibit "D". If any material use made of the Premises after 6
p.m. shall by reason of work force scheduling or security, overtime, union
rules, general security or otherwise cause any increase in Landlord's cost for
providing janitorial services, Tenant shall, as additional rent, pay all bills
for reimbursement of Landlord for such increase, within 10 days after Tenant's
receipt of such bill.
(v) Automatic passenger elevator service at all times for
authorized building personnel.
(b) BILLING FOR ELECTRICITY. Tenant's use of electric service shall be
separately metered and Tenant shall pay the costs
<PAGE> 19
of all electricity used in the Premises directly to the utility company
providing the same.
(c) INTERRUPTION OF SERVICES. Tenant agrees that Landlord shall not be
liable for damages (by abatement of rent or otherwise) for failure to furnish or
any delay in furnishing any service, or for any diminution in the quality of
quantity thereof, when such failure or delay or diminution is occasioned, in
whole or in part, by repairs, renewals, or improvements, by any strike, lockout
or other labor trouble, by inability to secure electricity, gas, water, or other
fuel at the Building after reasonable effort do to do, by any accident or
casualty whatsoever, by act or default of Tenant or other parties, or by any
other cause beyond Landlord's reasonable control; and such failures or delays or
diminution shall never be deemed to constitute an eviction or disturbance of the
Tenant's use and possession of the Premises or to relieve Tenant from paying
Rent or performing any of its obligations under this Lease. Notwithstanding the
foregoing, if for any reason other than as a result of an act or omission of
Tenant or any of its subtenants, assignees, agents, employees, contractors or
invitees, or other than as a result of a fire or casualty as described in
Paragraph 11 below, any service is not furnished to the Premises and if as a
result thereof the Premises, or a "material part" (as defined below) of the
Premises, is rendered untenantable or inaccessible for a period of five (5)
consecutive business days, and Tenant does not occupy the Premises, or such
material part thereof which is rendered untenantable or inaccessible, during
such 5-business day period, then as Tenant's sole remedy for such failure to
furnish such service during such period, the Base Rent, Expense Adjustment
Amount and Tax Adjustment Amount payable for such portion of the Premises which
Tenant does not so occupy shall abate for the period commencing on the
expiration of said five (5) business day period and expiring on the date such
service is restored or Tenant is able to resume occupancy of the Premises or
such material part thereof, as the case may be. Furthermore, if for any reason
other than as a result of an act or omission of Tenant or any of its subtenants,
assignees, agents, employees, contractors or invitees, or other than as a result
of a fire or casualty as described in Paragraph 11 below, any service is not
furnished to the Premises and if as a result thereof all of the Premises is
rendered untenantable or inaccessible for a period of two hundred forty (240)
consecutive days, and Tenant does not occupy the Premises during such 240-day
periods, then in lieu of continuing the abatement described in the preceding
sentence, Tenant may elect to terminate this Lease effective as of the date
<PAGE> 20
the Premises were rendered untenantable by delivering written notice to Landlord
within thirty (30) days after the expiration of such 240-day period, in which
case neither party shall have any further liabilities or obligations hereunder,
except those liabilities and obligations that are intended to survive the
expiration or termination of this Lease. (As used herein, the phrase "material
part" shall mean an amount in excess of thirty-three percent [33%] of the
rentable area of the Premises which has been tendered to Tenant for occupancy as
of the time of such interruption.)
(d) EXISTING SUPPLEMENTAL HVAC. Five (5) supplemental cooling units
(the "Supplemental Units") are currently located on the 27th floor of the
Building. When Tenant leases a Space which includes any Supplement Units, Tenant
shall have the right, at no additional charge, to use such Supplement Units.
Tenant shall accept each Supplemental Unit in its "as is" condition. Tenant
shall be responsible for all costs incurred to operate and maintain the
Supplemental Units and shall enter into a contract, with a competent contractor,
for the regular and preventative maintenance of the Supplemental Units. The
Supplemental Units shall remain the property of Landlord and Tenant shall
surrender each Supplemental Unit to Landlord at the Termination Date in the same
condition as when Tenant first received the right to use such Supplement Unit,
subject to reasonable wear and tear (provided Tenant may return a Supplemental
Unit in a non-functioning state if its economic useful life has expired).
8. ALTERATIONS
(a) Tenant shall not, without the prior written consent of Landlord
(which consent shall not be unreasonably withheld), make any alterations,
improvements or additions to the Premises. Landlord shall notify Tenant whether
it consents to a proposed alteration, improvement or addition (1) within three
business days after receipt of all plans, specifications, and other items
required by Landlord with respect to an alteration, improvement or addition that
will cost less than $10,000 or (ii) within ten (10) days after receipt of all
such items with respect to an alteration, improvement or addition that will cost
$10,000 or more. If Landlord consents to any alterations, improvements or
additions, it may impose such conditions with respect thereto as Landlord deems
appropriate, including, without limitation, Landlord's approval of the
contractors to perform the work, contractor's lien waivers, insurance against
liabilities which may arise out of such work,
<PAGE> 21
plans, specifications and permits necessary for such work and as-build drawings
upon completion of such work. Notwithstanding the foregoing, no consent shall be
necessary for any alteration (i) if the cost of such alteration plus the cost of
all other such decorative or cosmetic alterations on the particular floor during
the preceding twelve (12) month period is less than $1.00 per rentable square
foot of the Premises on such floor, (ii) that does not require the issuance of a
building permit and (iii) that does not adversely affect the structural elements
of the Building or the base Building mechanical, electrical or plumbing systems,
the exterior of the Building, the common areas of the Building or the use by
other tenants in the Building of their demised premises. Tenant shall notify
Landlord of the performance of any such alteration promptly after completion.
All work done by Tenant or its contractors pursuant to and in accordance with
this Paragraph 8, or otherwise shall be done in a first-class workmanlike
manner, using only good grades of materials and without disturbing other
tenants, shall be done in compliance with all insurance requirements and all
applicable laws or ordinances and rules and regulations of governmental
departments or agencies and shall be done by responsible contractors and
subcontractors approved by Landlord in advance (which approval shall not be
unreasonably withheld or delayed) whose engagement will not in Landlord's
reasonable opinion, and in fact does not, result in any labor dispute at the
Building, whether in connection with any construction at the Building, the
operation of the Building or otherwise.
(b) All alterations, additions or improvements made by Tenant and all
fixtures attached to the Premises shall become the property of Landlord and
remain at the Premises or, at Landlord's option, any or all of the foregoing
shall be removed at the cost of Tenant before the expiration or sooner
termination of this lease and in such event Tenant shall repair all damage to
the Premises caused by the installation and/or removal thereof. Notwithstanding
the foregoing, at the time that Tenant request Landlord to consent to any
alterations, additions or improvements (including the alterations, additions and
improvements to be constructed by Tenant pursuant to the Work Letter Agreement),
Tenant may request in writing that Landlord (i) identify which of such
alterations, additions and improvements Landlord will be reserving its right to
require Tenant to remove upon the expiration or sooner termination of this lease
and/or (ii) allow tenant to remove specified alterations, additions and
improvements upon such expiration or sooner termination of this Lease, and in
the event of any such
<PAGE> 22
request, Landlord agrees to notify Tenant in writing of its response to the
applicable request within fifteen (15) days after Tenant's request. Tenant shall
not permit or suffer any signs, advertisements or notices to be displayed,
inscribed upon or affixed on any part of the outside of the Premises, or in the
Building, except on the directory board to be provided by Landlord and on the
entrance doors of the Premises, provided, however, that Tenant shall not
display, inscribe or affix any sign on such directory board or on the entrance
doors of the Premises without, in each instance, obtaining the prior written
approval from Landlord as to the size, color and style of such sign. Landlord
shall have the right to remove unauthorized signs at Tenant's expense.
9. LIENS. Tenant shall not permit there to be filed of record against the
Property or Landlord's interest therein or any part of either, and shall
forthwith remove or have removed, any mechanics' or materialmens' or other lien,
or claim thereof, filed by reason of work, labor, services or materials provided
for or at the request of Tenant (other than work, labor, services or materials
provided by Landlord) or any subtenant or occupant or for any contractor or
subcontractor employed by Tenant or any subtenant or occupant, and shall
exonerate, protect, defend and hold free and harmless landlord against and from
any and all such claims or liens. Without limitation of the foregoing, if any
such claim or lien be filed of record and Tenant shall not cause such claim or
lien to be released within five (5) business days after written notice from
Landlord, Landlord may, but shall not be obligated to, discharge it either by
paying the amount claimed to be due in the claim or lien or by procuring the
discharge of such lien or claim by deposit or by bonding proceedings, and in any
such event, Landlord shall be entitled, if Landlord so elects, to compel the
prosecution of any action for the foreclosure of such lien by the claimant or
lienor and to pay the amount of any judgment in favor of the lienor with
interest, costs and allowances. Any amount so paid by Landlord and all costs and
expenses, including, without limitation, reasonable attorneys' fees, in
connection therewith, together with interest thereon at the Lease Interest Rate
(hereinafter defined) from the respective dates of Landlord's making of the
payments and incurring of the costs and expenses, shall constitute additional
rent payable by Tenant under this Lease and shall be paid by Tenant to Landlord
on demand.
10. INSURANCE AND WAIVER OF SUBROGATION
<PAGE> 23
(a) During the Term, Tenant at its sole cost shall maintain, with
responsible insurance companies reasonably acceptable to Landlord and qualified
to do business in the State of Illinois, general comprehensive public liability
insurance with the broad form commercial liability endorsement including
contractual liability insurance covering Tenant's indemnity obligations
hereunder, insuring against claims for personal injury (including death) and
property damage, with respect to Tenant's activities and property in, on and
about the Premises, and with respect to occurrences arising out of or related to
this Lease and/or Tenant's use or occupancy of the Premises and the Property and
the activities therein, there on and thereabout of Tenant and any subtenants and
their respective servants, employees, agents, invitees and licensees, with
coverage on an occurrence basis in all cases of not less than a combined single
limit of $2,000,000 per occurrence. Landlord, Landlord's beneficiary
("Beneficiary") (if at any time Landlord is a trustee under a land trust),
Amerimar Adams Management Company, Inc. ("Manager"), or any other manager of the
Building, any Mortgagee (as hereinafter defined) and, if Landlord requires,
Landlord's architect or contractor who may perform services or work in, on,
about or in connection with the Premises, and the respective agents, partners
and employees of the foregoing, all as their interest may appear, shall be
designated additional insureds in the policies for such insurance (provided
Landlord has notified Tenant in writing of the identify of such parties). Said
policies shall contain endorsements providing that the naming of additional
insureds shall not operate to limit or void the coverage of any named insured or
additional insured relating to claims by another named insured or additional
insured. Tenant shall, prior to the commencement of the Term, and at least 30
days prior to the expiration date of each policy which Tenant is required by
this Lease to maintain, furnish to Landlord certificates evidencing the coverage
required hereinabove in this Paragraph and the renewal thereof, which
certificates shall state that such insurance coverage may not be materially
changed or cancelled without at least twenty (20) days prior written notice to
Landlord. The aforesaid amount of required insurance coverage may, from time to
time, be increased, in Landlord's reasonable discretion, effective upon the 60th
day after Landlord shall have given Tenant notice specifying the new amount.
During the Term, Tenant, at its sole cost, shall maintain "all risk" physical
damage insurance including fire, sprinkler, leakage, vandalism and extended
coverage for the full replacement cost of all additions, improvements and
alterations to the Premises and of all office furniture, trade fixtures, office
equipment, merchandise and all
<PAGE> 24
other items of Tenant's property on the Premises.
(b) Tenant shall not do or commit, or suffer or permit to be done of
committed, any act or thing as a result of which any policy of insurance of any
kind on or in connection with the Property shall become void or suspended, or
any insurance risk on or in connection with the Building or any other portion of
the Property (other than risks inherent in the operation of a general business
office) shall (in the opinion of the insuring companies or any insurance
organization) be rendered more hazardous. Tenant shall pay as additional rent
the amount of any increase of premiums for such insurance, resulting from any
breach of this covenant.
(c) Landlord agrees to maintain in force and effect during the Term
all-risk fire and extended coverage insurance (or a reasonable equivalent
thereof) in an amount equal to at least 80% of the replacement cost of the
Building (insuring the shell and core on the Building and the Building systems).
Landlord shall also carry commercial general liability insurance with respect to
the Building in amounts and with coverages deemed prudent by Landlord.
Landlord's liability insurance policies shall be excess and non-contributory of
Tenant's liability insurance policies. The cost and expense of all such
insurance shall be included in the Operating Expenses. Notwithstanding the
foregoing, Landlord reserves the right to self-insure any risks which it elects
to self-insure pursuant to a bona fide self-insurance program (including,
without limitation, the risks that would otherwise be covered by the policies
described above).
(d) As used in this Paragraph 10(d) and in Paragraph 12 hereof only,
"Landlord" shall mean Landlord, Beneficiary (if Landlord is a trustee under a
land trust), Manager, any other manager of the Building, any Mortgagee, and the
respective partners, shareholders, agents, employees, officers and directors of
the foregoing. Notwithstanding anything herein to the contrary, and to the
extent permitted by law, Tenant and Landlord hereby release the other party from
any and all liability for any loss, damage or injury to such party's property
which is covered by insurance carried (or required hereunder to be carried) by
such party (and each party shall be responsible for the deductibles under its
own insurance policies, notwithstanding that such loss, damage or injury shall
have arisen out of the negligence of the other party. The policies of insurance
which Landlord and Tenant are required to maintain under this Lease shall
contain a clause to the effect that such release shall not affect said policy or
the
<PAGE> 25
right of the insured to recover thereunder and that the insurer waives all
rights of subrogation which such insurer may have against Tenant and Landlord,
respectively.
11. FIRE OR CASUALTY.
(a) If the Premises or the Building (including machinery or equipment
used in the operation of the Building) shall be damaged by fire or other
casualty and if such damage does not render all or a substantial portion of the
Premises (in the case of the Premises, substantial shall mean 20% or more of the
area of the Premises) or Building untenantable, then Landlord shall repair and
restore the Premises (exclusive of tenant finishes and/or build-outs) or the
core and shell of the Building with reasonable promptness, subject to reasonable
delays for insurance adjustments and delays caused by matters beyond Landlord's
reasonable control. If any such damage renders all or a substantial portion of
the Premises or Building untenantable, Landlord shall within ninety (90) days
after such casualty give written notice (the "Repair Notice") to Tenant of
whether Landlord intends to repair and restore the Building and Premises and, if
Landlord elects to repair and restore, Landlord's reasonable estimate of the
time necessary to complete such work (the "Estimated Restoration Period"). If
the Estimated Restoration Period expires more than two hundred forty (240) days
from the date of the Repair Notice, Tenant or Landlord shall have the right to
terminate this Lease (with appropriate prorations of rent being made for
Tenant's possession subsequent to the date of such damage of those tenantable
portions of the Premises) upon giving written notice to the other party at
anytime within thirty (30) days after the date Landlord delivers the Repair
Notice and thereafter Landlord shall have no obligation to repair or restore. If
the Estimated Restoration Period expires less than two hundred forty (240) days
from the date of the Repair Notice, this Lease shall continue in full force and
effect. Rent shall abate from the date of such casualty until the earlier to
occur of (i) substantial completion of the restoration of the Premises or (ii)
Tenant's occupancy thereof, on those portions of the Premises as are, from time
to time, untenantable as a result of such damage.
(b) Notwithstanding anything contained in Paragraph 11(a) of this
Lease to the contrary, if all or a part of the Premises is damaged by any
casualty and Landlord elects to repair the Premises but fails to substantially
complete such repairs within sixty (60) days after the expiration of the
Estimated Restoration Period, subject to force majeure delays, then as
<PAGE> 26
Tenant's sole and exclusive remedy therefor, Tenant may terminate this Lease by
delivery of written notice thereof to Landlord within ten (10) days after the
expiration of the aforesaid 60-day period. Notwithstanding the foregoing, Tenant
shall not have the right to terminate this Lease as aforesaid if Tenant, or any
assignee or subtenant of Tenant, or any of Tenant's officers, directors,
employees, invitees, agents or contractors causes, in whole or in part, (i) such
damage to the Premises or (ii) any delay in the repair of such damage to the
Premises.
(c) Notwithstanding anything to the contrary herein set forth,
Landlord shall have no duty pursuant to this Paragraph 11 to repair or restore
any portion of any alterations, additions or improvements in the Premises or the
decorations thereto except to the extent that such alterations, additions,
improvements and decorations were provided by Landlord, at Landlord's cost, at
the beginning of the Term.
12. WAIVER OF CLAIMS - INDEMNIFICATION.
(a) To the extent not prohibited by law, Landlord shall not be liable
for, and Landlord is hereby released by Tenant from all liability for, any
damage either to person or property or resulting from the loss of use thereof
sustained by Tenant or by other persons claiming through Tenant due to the
Property or any part thereof or any appurtenances thereof becoming out of
repair, or due to the happening or any accident or event in, on or about the
Property, or due to any act or neglect of any tenant or occupant of the Building
or of any other person. This provision shall apply particularly, but not
exclusively, to damage caused by gas, electricity, snow, frost, steam, sewage,
sewer gas or odors, fire, water or by the bursting or leaking of pipes, faucets,
sprinklers, plumbing fixtures and windows, and shall apply without distinction
as to the person whose act or neglect was responsible for the damage and whether
or not such act or neglect occurred before, at or after the execution of this
Lease, and whether the damage was due to any of the causes specifically
enumerated above or to some other cause of an entirely different kind. Tenant
further agrees that all personal property of Tenant upon the Premises, or upon
receiving and holding areas, or elsewhere in, on or about the Property, shall be
at the risk of Tenant only, and that Landlord shall not be liable for any loss
or damage thereto or theft thereof. Tenant acknowledges and agrees that the
parties have carefully analyzed all risks to persons and property associated
with this Lease and Tenant's occupation of the Premises and that
<PAGE> 27
the parties have sought to have all such risks protected by adequate insurance.
Accordingly, each party has the burden to maintain specific types of insurance
as provided in Paragraph 10 above and the parties have allocated the risks among
such insurance policies as provided by the mutual waiver in Paragraph 10(d)
above. Thus, to the extent permitted by law, and to the extent covered by
insurance (or required pursuant to this lease to be covered by insurance), the
foregoing waivers in this Paragraph 12 (a) shall apply to liability, damage,
loss or claims arising out of or in connection with the negligence or wilful
misconduct of Landlord, its agents, employees, contractors and invitees (without
limitation to the application of the foregoing waivers to all other
circumstances not involving the negligence or wilful misconduct of Landlord, its
agents, employees, contractors and invitees).
(b) Without limitation of any other provisions hereof, Tenant agrees
to defend, protect, indemnify and save harmless Landlord from and against all
liability to third parties arising out of the acts of Tenant or any subtenant or
the servants, agents, employees, contractors, suppliers, workmen and invitees of
Tenant or any subtenant.
Tenant agrees to indemnify and save harmless, and upon request defend,
Landlord against and from any and all claims by or on behalf of any person,
arising out of or related to
(a) Tenant's use or occupancy of the Premises or the conduct of
its business, or any activity, work, or thing, permitted or suffered by Tenant,
in, on or about the Premises or the Property,
(b) any occurrence, in, on or about the Premises,
(c) any breach or default on Tenant's part in the performance or
observance of, or compliance with, any term, covenant or condition on Tenant's
part to be performed pursuant to the terms of this Lease, or
(d) any act or negligence of Tenant or any subtenant, or any of
their respective agents, contractors, servants, employees, invitees or
licensees,and from and against all costs, counsel fees, expenses penalties,
fines and liabilities which Landlord may suffer or incur in connection with any
such claim and any action or proceeding brought
<PAGE> 28
with respect thereto. In the event that any action or proceeding shall be
brought by reason of any such claim, against any party to be indemnified
hereunder, Tenant covenants that Tenant, upon notice from such party and at
Tenant's expense, shall resist and defend such action or proceeding by counsel
reasonably satisfactory to such party. Without limiting the generality of the
foregoing, Tenant specifically acknowledges that the indemnity undertaking
herein shall apply to the transportation, use, storage, maintenance, generation,
manufacturing, handling, disposal, release or discharge by Tenant of any
Hazardous Material (as defined in Paragraph 28 below). All of Tenant's
obligations under this Paragraph 12, and any and all sums due from Tenant
hereunder shall survive the expiration or termination of this Lease.
Notwithstanding anything in this Paragraph 12(b) to the contrary, Tenant shall
not be obligated to indemnify Landlord with respect to claims arising out of
Landlord's negligence or wilful misconduct except, and to the extent, such
indemnity is covered by Tenant's liability insurance.
(c) Except with respect to liabilities, costs and claims that are
waived pursuant to Paragraphs 10(d) or 12(a) above, Landlord agrees to defend,
protect, indemnify and save harmless Tenant from and against all liability to
third parties arising out of or related to any negligence or wilful misconduct
of Landlord or any of its agents, contractors, servants or employees and from
and against all costs, counsel fees, expenses, penalties, fines and liabilities
which Tenant may suffer or incur in connection with any such claim and any
action or proceeding brought with respect thereto. All of Landlord's obligations
under this Paragraph 12(c) and any and all sums due from Landlord hereunder
shall survive the expiration or termination of this Lese.
13. NONWAIVER. No waiver of any provision of this Lease shall be implied by
any failure of a party to enforce any remedy on account of the violation of such
provision, even if such violation be continued or repeated subsequently, and no
express waiver shall affect any provision other than the one specified in such
waiver and that one only for the time and in the manner specifically stated. No
payment by a party or receipt by the other party of a lesser amount that the
amount required herein shall be deemed to be other than on account of the amount
owed, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment due from either party be deemed an accord and
satisfaction, and the other party may accept such check or payment without
prejudice to the other party's right to recover the balance of such
<PAGE> 29
amount owed or pursue any other remedy provided in this Lease. No receipt of
moneys by Landlord from Tenant after the termination of this Lease shall in any
way alter the length of the Term or of Tenant's right of possession hereunder or
after the giving of any notice shall reinstate, continue or extend the Term or
affect any notice given Tenant prior to the receipt of such moneys, it being
agreed that after the service of notice or the commencement of a suit or after
final judgment for possession of the Premises, Landlord may receive and collect
any rent due, and the payment of said rent shall not waive or affect said
notice, suit or judgment.
14. CONDEMNATION. In the event that the whole of the Premises shall be
lawfully condemned or taken for a public or quasi-public use, this Lease shall
terminate as of the date that possession is to be surrendered to the condemnor
or taking authority. In the event that there shall be a lawful condemnation or
taking for any public or quasi-public use of any part of the Building, without
there being condemned or taken a material part of the Premises, then, at the
option of Landlord, exercisable by notice given to Tenant not later than 90 days
after the date upon which Landlord receives notice of the taking or
condemnation, this Lease shall terminate as of the date that possession of the
Premises taken is required to be surrendered to the condemnor or taking
authority. In the event that there shall be a lawful condemnation or taking for
any public or quasi-public use of all or a material part of the Premises, then,
at the option of either party, exercisable by notice given to the other party
not later than ninety (90) days after the date upon which Landlord receives
notice of the taking or condemnation, this Lease shall terminate as of the date
that possession of the Premises taken is required to be surrendered to the
condemning or taking authority. In the event of any such taking or condemnation,
of all or any part of the Premises or of all or any part of the Property, Tenant
shall have no claim against Landlord and shall not have any claim or right to
any portion of the amount that may be awarded as damages or paid as a result of
such taking or condemnation; and all rights of Tenant to damages therefore are
hereby assigned by Tenant to Landlord and Tenant shall have no claim against
Landlord or the condemnor for the value of the unexpired term of this Lease.
However, the foregoing provisions of this section shall not be construed to
deprive Tenant of the right to claim and receive payment from the condemnor or
taking authority for the then bookvalue of Tenant's trade fixtures and
improvements installed at Tenant's expense and moving and related expenses as
long as such claim or the payment thereof does not reduce the award which
Landlord would otherwise be
<PAGE> 30
entitled to receive. In the event of any such taking or condemnation of part of
he Premises, the Base Rent, the Tax Adjustment and the Operating Expense
Adjustment shall be proportionately reduced from the date that possession is
required to be surrendered to the condemnor or taking authority.
15. ASSIGNMENT AND SUBLETTING.
(a) Tenant shall not, without the prior written consent of Landlord
(which consent with respect to an assignment or subletting shall not be
unreasonably withheld as provided in Paragraph 15(f) below, (i) assign,
transfer, convey or mortgage this Lease of any interest hereunder; (ii) suffer
to occur or permit to exist any assignment of this Lease, or any lien or charge
upon Tenant's interest, involuntarily or by operation of law; (iii) sublet the
Premises or any part thereof, or (iv) permit the use of the Premises or any part
thereof by any parties other than Tenant and its employees. Any such action on
the part of Tenant shall be void and of no effect. Landlord's consent to any
transfer or Landlord's election to accept any transferee as the tenant hereunder
and to collect rent from such transferee shall be at Landlord's sole and
exclusive discretion (provided Landlord shall not unreasonably withhold its
consent to any assignment or subletting, as provided is subparagraph 15(f)
below) and shall not release Tenant or any subsequent tenant from any covenant
or obligation under this Lease. Landlord's consent to any assignment, subletting
or transfer shall not constitute a waiver of Landlord's right to withhold its
consent to any future assignment, subletting, or transfer. In no event shall
this Lease be assigned or assignable by voluntary or involuntary bankruptcy
proceedings or otherwise, and in no event shall this Lease or any rights or
privileges hereunder be an asset of Tenant under any bankruptcy, insolvency or
reorganization proceedings, except as provided by law.
(b) At least thirty (30) days prior to any proposed subletting or
assignment, Tenant shall submit to Landlord a statement seeking Landlord's
consent and containing the name and address of the proposed subtenant or
assignee, the terms of the proposed sublease or assignment and such financial
and other information with respect to the proposed subtenant as Landlord
reasonably may request. Landlord shall indicate its consent or non-consent
within ten (10) days of its receipt of said statement.
(c) If Landlord consents to any assignment or sublease
<PAGE> 31
of any portion of the Premises, as a condition of Landlord's consent, Tenant
shall pay to Landlord 50% of all profit derived by Tenant from such assignment
or sublease. Any rent in excess of that paid by Tenant hereunder realized by
reason of such assignment or sub-lease (after initially deducting therefrom the
amount of all reasonable brokerage commissions, cash allowances, tenant
improvement costs and legal fees actually paid by Tenant in connection with such
transfer) shall be deemed an item of such profit. Tenant shall furnish Landlord
with a sworn statement, certified by an officer of Tenant, setting forth in
detail the computation of profit (which computation shall be based upon
generally accepted accounting principles), and Landlord, or its representatives,
shall have access to the books, records and papers of Tenant in relation
thereto, and to make copies thereof. If a part of the consideration for such
assignment shall be payable other than in cash, the payment to Landlord shall be
payable in accordance with the foregoing percentage of the cash and other
non-cash considerations in such form as is satisfactory to Landlord. Such
percentage of Tenant's profits shall be paid to Landlord promptly by Tenant upon
Tenant's receipt from time to time of periodic payments from such assignee or
subtenant or at such other earlier time a Tenant shall realize its profits from
such assignment or sublease.
(d) If Tenant shall assign this Lease as permitted herein, the
assignee shall expressly assume all of the obligations of Tenant hereunder in a
written instrument satisfactory to Landlord and furnished to Landlord not later
than fifteen (15) days prior to the effective date of the assignment. If Tenant
shall sublease the Premises as permitted herein, Tenant shall obtain and furnish
to Landlord, not later than fifteen (15) days prior to the effective date of
such sublease and in form satisfactory to Landlord, the written agreement of
such subtenant to the effect that the subtenant will attorn to Landlord, at
Landlord's option and written request, in the event this Lease terminates before
the expiration of the sublease.
(e) If Tenant is a corporation (other than a corporation whose shares
are traded on a public securities exchange), a change or series of changes in
ownership of stock which would result in direct or indirect change in ownership
by the stockholders or an affiliated group of stockholders of more than forty
nine percent (49%) of the outstanding stock as of the date of the execution and
delivery of this Lease shall be deemed to be a transfer of this Lease for the
purpose of Paragraph 15(a). If Tenant is a
<PAGE> 32
partnership, joint venture, or a limited liability company, any transaction or
series of transactions (including, without limitation, any withdrawal or
admittance of a partner, or a member, as the case may be, or any change in any
partner's or member's interest, as the case my be in Tenant, whether voluntary,
involuntary or by operation of law, or any combination of any of the foregoing
transactions) resulting in the transfer of control of Tenant, shall be deemed to
be a transfer of Tenant's interest under this Lease for the purposes of
Paragraph 15(a). The term "control" as used in this Paragraph 15(e) means the
power to directly or indirectly direct or cause the direction of the management
or policies of Tenant.
(f) Notwithstanding anything contained in this Paragraph 15 to the
contrary, Landlord shall not unreasonably withhold its consent to any assignment
or sublease. In addition to any other reasonable basis Landlord may have for
withholding its consent to a proposed assignment or sublease, Landlord shall not
be deemed to have unreasonably withheld its consent if: (i) the transferee is of
a character or engaged in a business that is not in keeping with the standards
or criteria used by Landlord in leasing the Building; (ii) the financial
condition of the transferee is such that it may not be able to perform its
obligations in connection with this Lease; (iii) the purpose for which the
transferee intends to use the Premises or portion thereof is in violation of the
terms of this Lease or the lease of any other tenant in the Building; (iv) the
transferee (whether or not a tenant of the Building) has received a written
proposal from Landlord to lease space in the Building similar to the space
Tenant proposed to assign or sublease; (v) the transferee's business operations
will result in materially and substantially increase traffic in the Building; or
(vi) the transferee's business operations will result in a requirement for
significant (in Landlord's reasonable judgment) alterations or improvements to
the Building to comply with any applicable law, code, rule or regulation. If
Landlord wrongfully withholds its consent to any proposed assignment or
sublease, Tenant's sole and exclusive remedy therefor shall be to seek specific
performance of Landlord's obligation to consent to such assignment or sublease
(plus, if Tenant prevails, reimbursement for its reasonable fees and
out-of-pocket expenses of its counsel in connection with such dispute).
(g) Notwithstanding anything contained in this Paragraph 15 to the
contrary, provided Tenant is not then in Default under this Lease, Tenant shall
have the right to assign this Lease or
<PAGE> 33
sublease the Premises, or any part thereof, to an "Affiliate" (as defined below)
without prior written consent of Landlord and without Landlord having the right
to receive any profit, but only upon at least ten (10) days prior written notice
to Landlord and subject to all of the other provisions of this Lease,
specifically including, without limitation, the continuation of liability of
Tenant under this Lease. In the event of an assignment of this Lease to an
Affiliate, the Affiliate shall assume the obligations of the tenant under this
Lease from and after the effective date of such assignment pursuant to a written
assumption agreement executed and delivered to Landlord prior to the effective
date of such assignment. For purposes of this Section 15(g), the term
"Affiliate" shall mean any corporation or other entity controlling, controlled
by or under the common control with Tenant or the surviving entity formed as a
result of a merger of consolidation with Tenant. The word "control", as used
herein, shall mean the power to direct or cause the direction of the management
and policies of the controlled entity through ownership of more than fifty
percent (50%) of the voting securities in such controlled entity (or, with
respect to a company whose shares are traded on a public securities exchange,
the ownership of a sufficient percentage of the voting securities in such
company to direct the management and policies of the company). Nothing contained
in this Section 15(g) shall permit an assignment of this Lease or the subleasing
of the Premises to any Affiliate that is disreputable, non-creditworthy or
otherwise not in keeping with the nature or class of tenants in the Building, as
reasonably determined by Landlord.
16. HOLDOVER. If Tenant or any person claiming through Tenant shall retain
possession of the Premises or any part thereof, after the expiration or earlier
termination of the Term or of Tenant's right of possession, Tenant shall pay
Landlord (a) for the first thirty (30) days of such period during which such
possession continues, an amount equal to one hundred twenty-five percent (125%)
of the monthly installment of Base Rent applicable at the end of the Term and
one hundred twenty-five percent (125%) of the monthly installment of Tax
Adjustment Amount and Expense Adjustment Amount due for the last year of the
Term, and thereafter one hundred fifty percent (150%) of such monthly
installments of Base Rent, Tax Adjustment Amount and Expense Adjustment Amount,
and in all events plus all other sums which would have been payable hereunder
had the term continued during such retention of possession and (b) all other
damages sustained by Landlord, whether direct or consequential, by reason of
such retention of possession
<PAGE> 34
(including, without limitation, consequential damages sustained by Landlord as a
consequence of Landlord's inability to timely deliver any part of the Premises
to a successor tenant), provided, however, that Tenant shall have no liability
for damages referred to in clause (b) above if Tenant properly surrenders
possession of the Premises to Landlord in the condition required under this
Lease within thirty (30) days after written notice from Landlord requesting
Tenant to vacate the Premises and specifying the identity of another tenant that
has signed a letter of intent to lease all or a portion of the Premises. During
any such holdover period, all of Tenant's obligations with respect to the use,
occupancy and maintenance of the Premises shall continue. The provisions of this
Paragraph shall not be deemed to limit or constitute a waiver of any other
rights or remedies of Landlord provided herein or at law or in equity and
applicable to unlawful retention of possession or otherwise.
17. ESTOPPEL CERTIFICATE. Tenant shall from time to time, within ten days
after Tenant's receipt of Landlord's request therefor, execute, enseal,
acknowledge and deliver to Landlord, or as Landlord may direct, a written
instrument in recordable form (a) certifying (i) that this Lease is in full
force and effect and has not been modified, supplemented or amended in any way
(or, if there have been modifications, supplements or amendments thereto, that
it is in full force and effect as modified, supplemented or amended, and stating
such modifications, supplements and amendments) and that this Lease (as
modified, supplemented or amended, as aforesaid) represents the entire agreement
among Landlord and Tenant as to the Premises and the leasehold; (ii) the dates
to which the Base Rent, additional rent and other charges arising hereunder have
been paid; (iii) the amount of any prepaid rents or credits due to tenant, if
any; (iv) that if applicable, Tenant has entered into occupancy of the Premises;
(v) the date on which the Term shall have commenced and the corresponding
expiration date; and (b) stating, to the best knowledge of Tenant, whether or
not all conditions under this Lease to be performed by Landlord prior the date
of such certificate have been satisfied and whether or not Landlord is then in
default in the performance of any covenant, agreement or condition contained in
this Lease and specifying, if any, each such unsatisfied condition and each such
default; and (c) stating any other fact or certifying any other condition
reasonably requested by Landlord or by any mortgagee or prospective mortgagee or
purchaser of the Property or of any interest therein. In the event that Tenant
shall fail to complete, execute and deliver any such instrument within twenty
(20) days after Landlord's request
<PAGE> 35
therefor, in addition to constituting a Default hereunder, Tenant shall be
deemed to have irrevocably appointed Landlord or Beneficiary (if Landlord is a
trustee of a land trust) as Tenant's attorney-in-fact to execute and deliver any
such instrument or instruments in Tenant's name.
18. SUBORDINATION
(a) This Lease shall be subject and subordinate at all times to the
lien of any mortgage or deed of trust, heretofore or hereafter placed by
Landlord upon any or all of the Premises or the Building, the Land, the
Property, or any interest therein and of all renewals, modifications,
consolidations, replacements and extensions thereof (all of which are
hereinafter referred to collectively as a "Mortgage"), all automatically and
without the necessity of any further act on the part of Tenant to effectuate
such subordination. Tenant shall, at the request of the holder of a Mortgage
(the "Mortgagee"), upon foreclosure thereof attorn to the Mortgagee. Tenant
shall also execute, enseal, acknowledge and deliver, within twenty (20) days
after Tenant's receipt of demand from Landlord or the Mortgagee such further
instrument or instruments evidencing such subordination of Tenant's right, title
and interest under this Lease to the lien of the Mortgage, and such further
instrument or instruments of attornment, as shall be desired by the Mortgagee,
provided such instruments contain the agreement of the Mortgagee not to disturb
Tenant's right to possession of the Premises for so long as Tenant is not in
Default under this Lease. In the event that Tenant shall fail to complete,
execute and deliver any such instrument within twenty (20) days after Landlord's
request therefor, in addition to constituting a Default hereunder, Tenant shall
be deemed to have irrevocably appointed Landlord or Beneficiary (if Landlord is
a trustee of a land trust) as Tenant's attorney-in-fact to execute and deliver
any such instrument or instruments in Tenant's name.
(b) Anything contained in the foregoing provisions of this Paragraph
to the contrary notwithstanding, any Mortgagee may at any time subordinate its
Mortgage to this Lease, without the necessity of obtaining Tenant's consent, by
giving notice of the same in writing to Tenant, and thereupon the Lease shall be
deemed to be prior to such mortgage without regard to their respective dates of
execution, delivery or recordation and/or the date of commencement of Tenant's
possession, and in that event the Mortgagee shall have the same rights with
respect to this Lease as though this Lease shall have been executed, delivered
and recorded
<PAGE> 36
prior to the execution and delivery of the Mortgage.
(c) If Landlord is or becomes lessee of premises of which the Premises
are a part, Tenant agrees that, automatically and without the necessity of any
further act, Tenant's possession shall be as a subtenant and shall be
subordinate to the interest of Landlord's lessor, its heirs, personal
representatives, successors and assigns (which lessor, its heirs, personal
representatives, successors and assigns, or any of them, is hereinafter called
"Paramount Lessor"), but notwithstanding the foregoing, if Landlord's tenancy
shall terminate by expiration, by forfeiture or otherwise, then Tenant hereby
agrees, upon request of Paramount Lessor, to attorn to Paramount Lessor, and to
recognize such lessor as Tenant's landlord for the balance of the term of this
Lease and any extensions or renewals hereof (provided Tenant's rights hereunder
are not diminished by such subordination or attornment). Tenant shall execute,
enseal, acknowledge and deliver, upon demand by Landlord or Paramount Lessor,
such further instrument or instruments evidencing such subordination of Tenant's
right, title and interest under this Lease to the interest of such lessor, and
such further instrument or instruments of attornment, as shall be prescribed by
the Paramount Lessor, provided such instruments contain the agreement of the
Paramount Lessor not to disturb Tenant's right to possession of the Premises for
so long as Tenant is not in Default under this Lease.
(d) It is further agreed that if any Mortgage shall be foreclosed, or
if the lease of the Paramount Lessor be terminated, (A) the liability of the
Mortgagee or purchaser at such foreclosure sale, or the Paramount Lessor, as the
case may be, or the liability of a subsequent owner designated as landlord under
this Lease shall exist only so long as such Mortgagee, Paramount Lessor, or such
subsequent owner, as the case may be, is the owner of the Property, of any
portion thereof, and such liability shall not continue or survive after further
transfer of ownership; (B) the Mortgagee, or Paramount Lessor, or such
subsequent owner, as the case may be, and their respective successors or assigns
that succeed to the interest of Landlord in the Building or the Land, or
acquires the right to possession of the Property, or any portion thereof, shall
not be (1) liable for any act or omission of the party names above or any other
prior landlord as the Landlord under this Lease; (2) liable for the performance
of Landlord's covenants pursuant to the provisions of this Lease which arise and
accrue prior to such entity succeeding to the interest of Landlord under this
Lease or acquiring such right to possession; (3) subject to any offsets or
<PAGE> 37
defenses which Tenant may have at anytime against Landlord; and (4) bound by any
rent which Tenant may have paid previously for more than one month (provided
such Mortgagee shall be obligated to return to Tenant any security deposit
actually received by such Mortgagee, in accordance with, and subject to,
Paragraph 24 below); and (C) upon request of the Mortgagee, if the Mortgage
shall be foreclosed, Tenant will attorn, as Tenant under this Lease, to the
purchaser at any foreclosure sale under any Mortgage.
(e) Notwithstanding anything in this Paragraph 18 to the contrary,
Landlord agrees to procure a non-disturbance agreement from the present first
Mortgagee of the Building, in the form attached hereto as Exhibit "G," within
thirty (30) days after the date of full execution and delivery of this Lease.
19. CERTAIN RIGHTS RESERVED BY LANDLORD. Landlord shall have the following
rights, each of which Landlord may exercise without notice to Tenant (except as
otherwise specified herein) and without liability to Tenant for damage or injury
to property, person or business on account of the exercise thereof, and the
exercise of any such rights shall not be deemed to constitute an eviction or
disturbance of Tenant's use or possession of the Premises and shall not give
rise to any claim for set-off or abatement or any other claim: (a) To change the
Building's name or street address.
(b) To install, affix, and maintain any and all signs on the exterior
and on the interior of the Building.
(c) To decorate or to make repairs, alterations, additions, or
improvements, whether structural or otherwise (including alterations in the
configuration of the common area), in and about the Building, or any part
thereof, and for such purposes, upon not less than twenty-four (24) hours prior
notice to Tenant at the Premises (excluding emergencies, when no such notice
shall be required), to enter upon the Premises, and during the continuance of
any of said work, to temporarily close doors, entry ways, public space and
corridors in the Building and to interrupt or temporarily suspend services or
use of facilities. Landlord shall use reasonable efforts to minimize
interference with Tenant's business operations in connection with the exercise
of the rights described in this subparagraph (c).
(d) To furnish door keys for the entry door(s) in the Premises at the
commencement of this lease and to retain at all
<PAGE> 38
times, and to use in appropriate instances, keys to all doors within and into
the Premises. Tenant agrees to purchase only from Landlord or Landlord's
designee, additional duplicate keys as required, to change no locks, and to
affix no locks on doors without the prior written consent of Landlord.
Notwithstanding the provisions for Landlord's access to Premises, Tenant
relieves and releases Landlord of all responsibility arising out of theft,
robbery and pilferage (unless such theft, robbery or pilferage is due to
Landlord's negligence or wilful misconduct [but subject in all events to
Paragraph 10(d) above]). Upon the expiration of the Term or of Lessee's right to
possession, Tenant shall return all keys to Landlord and shall disclose to
Landlord the combination of any safes, cabinets or vaults left in the Premises.
(e) To designate and approve all window coverings used in the
Building.
(f) To approve (in the plans for the Work [as described in the Work
Letter Agreement] if set forth therein in particularity, or otherwise) the
weight, size and location of safes, vaults and other heavy equipment and
articles in and about the Premises and the Building so as not to exceed the live
load per square foot designated by the structural engineers for the Building,
and to require all such items and furniture and similar items to be moved into
or out of the Building and Premises only at such times and in such manner as
Landlord shall direct in writing. Tenant shall not install or operate machinery
or any mechanical devices of a nature not related to general office uses or
customarily found in general business offices without the prior written consent
of Landlord. Tenant's movements of property into or out of the Building or
Premises and within the Building are entirely at the risk and responsibility of
Tenant, and Landlord reserves the right to require permits before allowing any
property to be moved out of the Building or Premises.
(g) To establish controls for the purpose of regulating all property
and packages, both personal and otherwise, to be moved into or out of the
Building and Premises and all persons using the Building after normal office
hours.
(h) To regulate delivery and service of supplies in order to insure
the cleanliness and security of the Premises and to avoid congestion of
receiving areas and freight elevators.
(i) Upon not less than twenty-four (24) hours prior
<PAGE> 39
notice to Tenant at the Premises, to show the Premises to prospective lenders,
purchasers and investors at reasonable hours at any time during the Term and to
prospective tenants at reasonable hours during the last twelve months of the
Term and, if vacated or abandoned, to show the Premises at any time without
notice and to prepare the Premises for re-occupancy without notice.
(j) To erect, use and maintain pipes, ducts, wiring and conduits, and
appurtenances thereto, in and through the Premises at reasonable locations.
(k) To enter the Premises at any reasonable time upon not less than
twenty-four (24) hours prior notice to Tenant at the Premises (excluding
emergencies, when no such notice shall be required), to inspect the Premises.
(l) To grant to any person or to reserve unto itself the exclusive
right to conduct any business or render any service in the Building, so long as
the granting of any such right does not materially and adversely affect Tenant's
ability to conduct its business in the Premises as permitted pursuant to
Paragraph 5 above. If Landlord elects to make available to tenants in the
Building any services relating to facilities available through the Building (for
example, cable television service or building riser management service) or any
supplies (for example bottled water), or arranges a master contract therefor,
Tenant agrees to obtain its requirements, if any, therefore from Landlord or
under any such contact, provided that the charges therefor are reasonable.
(m) To prescribe the location and style of the suite number and
identification sign or lettering for the Premises.
(n) To grant to anyone the right to conduct any business or render any
service in the Building, whether or not it is the same as or similar to the use
expressly permitted to Tenant by Paragraph 5 hereof.
(o) To require all persons entering or leaving the Building during
such hours as Landlord may from time to time reasonably determine to identify
themselves to security personnel by registration or otherwise in accordance with
Building security controls, and to establish their right to enter or leave in
accordance with Exhibit C attached to this Lease.
20. RULES AND REGULATIONS. Tenant shall, and shall cause all
<PAGE> 40
of its subtenants and occupants, its and their agents, employees, invitees and
licensees to, observe faithfully, and comply strictly with, the rules and
regulations attached to this Lease as Exhibit "C" (the "Rules"), as they may be
supplemented and revised by Landlord from time to time, and such other rules and
regulations promulgated from time to time by Landlord, as in Landlord's judgment
may be desirable to the safety, care and cleanliness of the Building and the
Premises, or for the preservation of good order therein, which do not materially
affect Tenant's use and enjoyment of the Premises for general office use.
Landlord shall not be liable to Tenant for violation of such rules and
regulations by, or for Landlord's failure to enforce the same against, any other
tenant, its subtenants and occupants and its and their agents, employees,
invitees or licensees, nor shall any violation or failure constitute, or be
treated as contributing to, an eviction, actual or constructive, or affect
Tenant's covenants and obligations hereunder, or allow Tenant to reduce, abate
or offset the payment of any rent under this Lease. Landlord shall not
unreasonably discriminate against Tenant in the enforcement of the rules and
regulations.
21. LANDLORD'S REMEDIES
(a) The occurrence of any one or more of the following events shall
constitute a "Default" by Tenant, which shall give rise to Landlord's remedies
set forth in Paragraph (b) below: (i) failure by Tenant to make when due any
payment of rent, unless such failure is cured within five (5) business days
after notice; provided, however, that once Landlord has given Tenant two (2)
such notices during any twelve (12)-month period, Tenant shall only be entitled
to three (3) days after notice to cure such a default; (ii) failure by Tenant to
observe or perform any of the terms or conditions of this Lease to be observed
or performed by Tenant other than the payment of rent, or as provided below,
unless such failure is cured within thirty (30) days after notice, or such
shorter period expressly provided elsewhere in this Lease (provided, if the
nature of Tenant's failure is such that more time is reasonably required in
order to cure, Tenant shall not be in Default if Tenant commences to cure within
such period and thereafter reasonably seeks to cure such failure to completion
and in all events completes such cure within ninety (90) days); (iii) failure by
Tenant to immediately remove any hazardous condition which Tenant has created or
permitted; (iv) vacation of all or a substantial portion of the Premises for
more than thirty (30) consecutive days, or the failure to take possession of, or
to
<PAGE> 41
commence construction of tenant improvements in any part of, the Premises within
sixty (60) days after the Space No. 1 Commencement Date; (v) (a) making by
Tenant or any guarantor of this Lease ("Guarantor") of any general assignment
for the benefit of creditors; (b) filing by or against Tenant or any Guarantor
of a petition to have Tenant or such Guarantor adjudged a bankrupt or a petition
for reorganization or arrangement under any law relating to bankruptcy (unless,
in the case of a petition filed against Tenant or such Guarantor, the same is
dismissed within sixty (60) days), (c) appointment of a trustee or receiver to
take possession of substantially all of Tenant's assets located on the Premises
or of Tenant's interest in this Lease, where possession is not restored to
Tenant within thirty (30) days, (d) attachment, execution or other judicial
seizure of substantially all of Tenant's assets located on the Premises or of
Tenant's interest in this Lease, (e) Tenant's or any Guarantor's convening of a
meeting of its creditors or any class thereof for the purpose of effecting a
moratorium upon or composition of its debts, or (f) Tenant's or any Guarantor's
insolvency or admission of an inability to pay its debts as they mature; (vi)
any material misrepresentation herein, or material misrepresentation or omission
in any financial statements or other materials provided by Tenant or any
Guarantor in connection with negotiating or entering this Lease or in connection
with any assignment or sub-letting under Paragraph 15, which in any case has a
material adverse affect upon Landlord; or (vii) cancellation of any guaranty of
this Lease by an Guarantor. The notice and cure periods provided herein are in
lieu of, and not in addition to, any notice and cure periods provided by law.
(b) If a Default occurs, Landlord shall have the rights and remedies
hereinafter set forth, which shall be distinct, separate and cumulative with and
in addition to any other right or remedy allowed under any law or, other
provisions of this Lease:
(i) Landlord may terminate this Lease, in which event the Term of
this Lease shall end, and repossess the Premises by detainer suit, summary
proceedings or other lawful means, and recover from Tenant all the fixed dollar
amounts of rent accrued and unpaid for the period up to and including such
termination date, as well as all other additional sums payable by Tenant, or for
which Tenant is liable or in respect of which Tenant has agreed to indemnify
Landlord under any of the provisions of this Lease, which may be then owing or
unpaid, and all costs and expenses, including without limitation court costs and
reasonable attorney's fees incurred by Landlord in the enforcement of its rights
and
<PAGE> 42
remedies hereunder, and, in addition, Landlord shall be entitled to recover as
damages for loss of the bargain and not as a penalty (i) the unamortized cost
(assuming level amortization at 10% interest over the Term) of leasehold
improvements, additions and alterations, if any, made by or paid for by Landlord
and/or construction allowance made pursuant to this Lease and the Work Letter,
(ii) the aggregate sum which at the time of such termination represents the
excess, if any, of the present value on the aggregate rents at the same annual
rate for the remainder of the Term pursuant to the applicable provisions of
Paragraph 2 and Paragraph 3 of this Lease, over the then present value of the
then aggregate fair rental value of the Premises for the balance of the Term
(taking into account any period required to re-lease the Premises and prepare
the Premises for occupancy for a new tenant), such present value to be computed
in each case on the basis of a six percent (6%) per annum discount from the
respective dates upon which such rentals would have been payable hereunder had
this Lease not been terminated, and (iii) any damages in addition thereto,
including the costs of re-letting (as defined below), reasonable attorneys' fees
and court costs, which Landlord shall have sustained by reason of the breach of
any of the covenants of this lease other than for the payment of rent. For
purposes of computing such damages, Tenant's Proportionate Share of Taxes and
Operating Expenses shall be projected, based upon the average rate in increase,
if any in such items from the Space No. 1 Commencement Date through the time of
termination.
(ii) If applicable law permits, Landlord may terminate Tenant's
right of possession and repossess the Premises by detainer suit, summary
proceedings or other lawful means, without terminating this Lease (and if such
Law permits, and Landlord shall not have expressly terminated this Lease in
writing, any termination shall be deemed a termination of Tenant's right of
possession only). In such event, Landlord may recover: (a) any unpaid rent as of
the date possession is terminated, including interest at the Default Rate, (b)
any unpaid rent which accrues during the Term from the date possession is
terminated through the time of award (or which may have accrued from the time of
any earlier award obtained by Landlord through the time of award), including
interest at the Default Rate, less any Net Re-Letting Proceeds (as defined in
Paragraph (g) received by Landlord during such period, and less such loss of
rent that Tenant proves could have been reasonably avoided, and (c) any other
amounts necessary to compensate Landlord for all damages proximately caused by
Tenant's failure to perform its obligations under this Lease,
<PAGE> 43
including without limitation, all Costs of Reletting (as defined in Paragraph
(g). Landlord may bring suits for such amounts or portions thereof, at anytime
or times as the same accrue or after the same have accrued, and no suit or
recovery of any portion due hereunder shall be deemed a waiver of Landlord's
right to collect all amounts to which Landlord is entitled hereunder, nor shall
the same serve as any defense to any subsequent suit brought for any amount not
theretofore reduced to judgment.
(iii) Remove from the Premises any furniture, fixtures, equipment
or personal property of Tenant, without liability for trespass or conversion,
and store such items either in the Building or elsewhere at the sole cost of
Tenant and without liability to Landlord. Any of such furniture, fixtures,
equipment and personal property not claimed within thirty (30) days from the
date of removal shall be deemed abandoned.
(c) If Landlord terminates this Lease or Tenant's right to possession,
Landlord shall attempt to mitigate Landlord's damages to the extent required by
applicable Law; provided, however, Landlord shall not be required to accept any
tenant offered by Tenant or to observe any instructions given by Tenant relative
to such reletting. Landlord is not obligated to give priority to leasing the
Premises over any other space Landlord desires to lease in the Building and
shall not be required in any case to offer rent, length of term or other term
for the Premises which are or would be less favorable to Landlord than being
offered for comparable space of Landlord in the Building. If Landlord has not
terminated this Lease or Tenant's right to possession, Landlord shall have no
obligation to mitigate, and may permit the Premises to remain vacant or
abandoned; in such case, Tenant may seek to mitigate damages by attempting to
sublease the Premises or assign this Lease (subject to Paragraph 15).
(d) Landlord shall at all times have the rights and remedies (which
shall be cumulative with each other and cumulative and in addition to those
rights and remedies available under Paragraph (b), above or any Law or other
provision of this Lease), without prior demand or notice except as required by
applicable law; (i) to seek any declaratory, injunctive or other equitable
relief, and specifically enforce this Lease, or restrain or enjoin a violation
or breach of any provision hereof, and (ii) to sue for and collect any unpaid
rent which has accrued.
(e) Tenant expressly waives the service of any notice of
<PAGE> 44
intention to terminate this Lease or to reenter the Premises and waives the
service of any demand for payment of rent or for possession and waives the
service of any and every other notice or demand prescribed by any ordinance,
statute or other law (except as expressly otherwise provided in this Lease) and
agrees that the breach of any covenants or agreements provided in this Lease
shall, in and of itself, without the service of any notice or demand whatever
(except as expressly otherwise provided in this Lease), constitute a forcible
detainer by Tenant of the Premises.
(f) Tenant shall pay, as additional rent, a service charge of Two
Hundred Dollars ($200.00) for bookkeeping and administrative expenses, if rent
is not received within five (5) business days after its due date. In addition,
any rent paid more than five (5) days after due shall accrue interest from the
due date at an annual rate (the "Default Rate") equal to three percent (3%) in
excess of the rate of interest announced from time to time by the First National
Bank of Chicago (or by any other bank selected by Landlord), as its prime,
reference or corporate base rate, changing as and when said rate changes as
announced by such bank, or the highest rate permitted by law, whichever is less,
until payment is received by Landlord. Landlord's acceptance of such service
charge and interest payments shall not be deemed consent by Landlord to late
payments, nor a waiver of Landlord's right to insist upon timely payments at
anytime, nor a waiver of any remedies to which Landlord is entitled as a result
of the late payment of rent.
(g) "Net Re-Letting Proceeds" shall mean the total amount of rent and
other consideration paid by any Replacement Tenants, less all Costs of
Re-Letting, during a given period of time. "Costs of Re-Letting" shall include
without limitation, all reasonable costs and expenses incurred by Landlord for
any repairs, maintenance, changes, alterations and improvements to the Premises,
brokerage commissions, advertising costs, attorneys' fees, any customary free
rent periods or credits, tenant improvement allowances, take-over lease
obligations and other customary, necessary or appropriate economic incentives
required to enter leases with Replacement Tenants, and costs of collecting rent
from Replacement Tenants. "Replacement Tenants" shall mean any persons to whom
Landlord relets the Premises or any portion thereof pursuant to this Paragraph.
(h) No re-entry or repossession, repairs, changes, alterations and
additions, reletting, acceptance of keys from
<PAGE> 45
Tenant, or any other action or omission by Landlord shall be construed as an
election by Landlord to terminate this Lease or Tenant's right to possession, or
accept a surrender of the Premises, nor shall the same operate to release Tenant
in whole or in part from any of Tenant's obligations hereunder, unless express
written notice of such intention is sent by Landlord or its agent to Tenant. To
the fullest extent permitted by law, all rent and other consideration paid by
any Replacement Tenants shall be applied: first to the Costs of Re-Letting,
second, to the payment of any rent theretofore accrued, and the residue, if any,
shall be held by Landlord and applied to the payment of other obligations of
Tenant to landlord as the same become due (with any remaining residue to be
retained by Landlord). Rent shall be paid without any prior demand or notice
therefor (except as expressly provided herein) and without any deduction,
set-off or counterclaim, or relief from any valuation or appraisement laws.
Landlord may apply payments received from Tenant to any obligations of Tenant
then accrued, without regard to such obligations as may be designated by Tenant.
Landlord shall be under no obligation to observe or perform any provision of
this Lease on its part to be observed or performed which accrues after the date
of any Default by Tenant hereunder. The times set forth herein for the curing of
defaults by Tenant are of the essence of this Lease. Tenant hereby irrevocably
waives any right otherwise available under any law to redeem or reinstate this
Lease.
22. EXPENSES OF ENFORCEMENT. The nonprevailing party shall pay the
prevailing party all costs and expenses, including reasonable attorneys' fees,
incurred by such prevailing party in successfully enforcing the nonprevailing
party's obligations or successfully defending the prevailing party's rights
under this Lease against the nonprevailing party. Each party hereto shall pay
the costs and expenses, including reasonable attorneys' fees, incurred by the
other party as a result of any litigation in which such first party causes such
second party, without such second party's fault to become involved as a result
of this Lease.
23. COVENANT OF QUIET ENJOYMENT. Landlord covenants that Tenant, on paying
the rent, charges for services and other payments herein reserved or required
and on keeping, observing and performing all the other material terms,
covenants, conditions, provisions and agreements herein contained on the part of
Tenant to be kept, observed and performed, shall, during the Term, peaceably and
quietly have, hold and enjoy the Premises subject to the terms, covenants,
conditions, provisions and agreements hereof.
<PAGE> 46
24. SECURITY DEPOSIT.
(a) Tenant shall not initially be required to pay a security deposit.
Not later than one (1) month prior to each Commencement Date (other than the
Space No. 1 Commencement Date), Tenant shall furnish Landlord with Tenant's then
most recent annual and quarterly financial statements. If such financial
statements reveal either (i) Tenant's market capitalization is less than
$200,000,000 or (ii) the ratio of Tenant's debts to the value of its tangible
assets is greater than 65:100, then Tenant shall promptly post a letter of
credit (a "LOC") in favor of Landlord in the amount (the "LOC Amount") of the
sum of (x) the Landlord's Contribution payable by Landlord for the applicable
Space (or portion thereof) to be leased, (y) amounts Landlord reasonably expects
to incur in connection with the leasehold improvements to be made to the
applicable Space (or portion thereof), plus (z) leasing commissions payable with
respect to the lease of the applicable Space (or portion thereof). If Tenant
fails to timely deposit a LOC as required herein, notwithstanding Landlord's
other available remedies, Landlord shall not be obligated to furnish any portion
of Landlord's Contribution unless and until Tenant deposits the applicable LOC.
The LOC shall be unconditional, irrevocable, freely assignable by Landlord,
issued by a "Qualified Issuer" approved by Landlord and in the form of the
letter of credit attached hereto as Exhibit "E".
(b) The LOC is to be retained by Landlord as security for the faithful
performance and observance by Tenant of the covenants, agreements and conditions
of this Lease. The LOC and any proceeds drawn thereunder or any other cash or
security deposited by Tenant with Landlord under this Lease is hereinafter
collectively called the "Security Deposit." Tenant grants to Landlord a security
interest in any cash portion of the Security Deposit to secure the payment of
all Rent and the performance of all covenants and obligations of Tenant under
this Lease owing under this Lease. This Lease shall constitute a security
agreement between Landlord and Tenant for the purpose of creating such security
interest. If and to the extent permitted by applicable law, (a) Tenant shall not
be entitled to any interest on the Security Deposit, (b) Landlord shall not be
obligated to hold the Security Deposit in trust or in a separate account, and
(c) Landlord shall have the right to commingle the Security Deposit with its
other funds. Landlord may use, apply or retain the whole or any part of the
Security Deposit to the extent required for the
<PAGE> 47
payment of any Rent payable hereunder as to which Tenant is in Default or to the
extent required for the reimbursement to Landlord of any sum which Landlord may
expend or may be required to expend by reason of Tenant's Default. Upon notice
by Landlord of Landlord's application of all or any portion of the Security
Deposit as aforesaid, with a reasonably detailed accounting of the amount of the
Security Deposit used by Landlord for the specific Default, Tenant shall
replenish the Security Deposit in full by promptly paying to Landlord in cash
the amount so applied.
(c) If Tenant shall fully and faithfully comply with all of the
covenants, agreements and conditions of this Lease, the Security Deposit (or
balance thereof) shall be returned to Tenant after the Termination Date and
surrender of the Premises to Landlord. If the Building is sold, Landlord shall
transfer the Security Deposit to the purchaser, and upon such transfer Landlord
shall be released from all liability for the return thereof, and Tenant shall
look solely to the new landlord for the return thereof. Landlord shall give
Tenant a written notice of any such transfer promptly thereafter, together with
an acknowledgment from the transferee of its receipt thereof.
(d) Tenant shall deposit with Landlord, not later than thirty (30)
days prior to the expiration date of the original LOC deposited by Tenant
hereunder (and not later than thirty (30) days prior to the expiration date of
each replacement LOC deposited by Tenant hereunder), a replacement LOC in form,
content and amount identical to the original LOC and issued by a "Qualified
Issuer" approved by Landlord. If Tenant fails to timely deposit any such
replacement LOC with Landlord and such failure continues for ten (10) days after
written notice to Tenant. (Tenant acknowledges that such failure is not subject
to any notice or cure period under Paragraph 21), then Landlord may draw the
entire proceeds of the LOC then on deposit with Landlord and the proceeds so
drawn shall constitute and comprise part of the Security deposit and may be
held, transferred and applied by Landlord in accordance with the provisions of
this Paragraph 24.
(e) Commencing on the first day of the month following the date that
Landlord has paid the entirety of the Landlord's Contribution for the applicable
Space (or portion thereof) to Tenant (a "First Reduction Date"), and on the
first day of each calendar month thereafter, the LOC Amount may reduce monthly,
by an amount equal to the quotient of (x) the LOC Amount divided by (y)
<PAGE> 48
the number of calendar months in the period commencing on the First Reduction
Date and expiring on the Termination Date.
(f) For purposes of this Lease, "Qualified Issuer" means any
commercial bank which, at the particular time its status as a Qualified Issuer
is relevant hereunder, has total assets of at least U.S. $5 billion and has an
overall financial rating of "B" or better from the Lace Company (and the Lace
Company has not given notice that such bank is on its "watch list" or that its
rating is under reconsideration or reevaluation). If at anytime after issuance
of the LOC (or any replacement LOC), the issuing bank fails to be a Qualified
Issuer or is not otherwise financially sound in Landlord's reasonable judgment,
the LOC or replacement LOC, as the case may be, upon written notice from
Landlord to Tenant, shall be immediately reissued by a Qualified Issuer approved
by Landlord, which reissuance shall be in accordance with the provisions of this
Lease.
25. REAL ESTATE BROKER. Tenant represents that Tenant has dealt with (and
only with) Fallon Hines & O'Connor ("FHO"), Tanquay-Burke-Stratton ("TBS") and
Amerimar Adams Management Company, Inc. ("Amerimar") as brokers in connection
with this Lease, and that insofar as Tenant knows, no other broker negotiated
this Lease or is entitled to any commission in connection therewith. Tenant
agrees to indemnify, defend and hold Landlord harmless from and against any
claims, for a commission or other compensation in connection with this Lease
(including, without limitation, any claim arising in connection with a broker's
lien), made by any broker or finder other than the brokers named above who
claims to have dealt with or communicated to Tenant in connection with this
Lease, provided that Landlord has not in fact retained such broker or finder.
Landlord represents that Landlord has dealt with (and only with) FHO, TBS and
Amerimar as brokers in connection with this Lease, and that insofar as Landlord
knows, no other broker negotiated this Lease or is entitled to any commission in
connection therewith. Landlord agrees to indemnify, defend and hold Tenant
harmless from and against any claims, for a commission or other compensation in
connection with this Lease (including, without limitation, any claim arising in
connection with a broker's lien), made by any broker, including FHO, TBS and
Amerimar, who claims to have dealt with or communicated to Landlord in
connection with this Lease, provided that Tenant has not in fact retained such
broker or finder.
26. MISCELLANEOUS.
<PAGE> 49
(a) RIGHTS CUMULATIVE. All rights and remedies of Landlord under this
Lease shall be cumulative and none shall exclude any other rights or remedies
allowed by law, in equity or otherwise.
(b) CAPTIONS AND USAGE. The titles appearing in connection with the
various sections and paragraphs of this lease are for convenience only; they are
not intended to indicate all of the subject matter in the text and they are not
to be used in interpreting this Lease nor for any purpose in the event of any
controversy. As used herein (i) the term "person" shall be deemed to include a
natural person, a trustee, a corporation, a joint venture, a partnership, a
limited liability company, a governmental unit and any other form of legal
entity; (ii) all usages in the singular or plural number shall be deemed to have
been made, respectively, in the plural or singular number as well; the use of
any gender includes all genders.
(c) BINDING EFFECT. Each of the provisions of this Lease shall extend
to and shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective successors or assigns,
provided this clause shall not permit any assignment by Tenant contrary to the
provisions of Paragraph 15 hereof.
(d) LEASE CONTAINS ALL TERMS. All of the representations and
obligations of Landlord are contained herein, and no modification, waiver or
amendment of this Lease or of any of its conditions or provisions shall be
binding upon Landlord unless in writing signed by Landlord or by a duly
authorized agent of Landlord empowered by a written authority signed by
Landlord.
(e) DELIVERY FOR EXAMINATION. Submission of the form of this Lease for
examination shall not bind Landlord in any manner, and no Lease or obligations
of Landlord shall arise until this instrument is signed by both Landlord and
Tenant and delivery is made to each; provided, however, the execution and
delivery by Tenant of this Lease to Landlord or Manager, or the leasing agent of
the Building shall constitute an irrevocable offer by Tenant to lease the
Premises on the terms and conditions herein contained, which offer may not be
revoked for five (5) business days after such delivery.
(f) NO AIR RIGHTS. No rights to any view or to light or
<PAGE> 50
air over any property, whether belonging to Landlord or any other person, are
granted to Tenant by this Lease.
(g) MODIFICATION OF LEASE. If any prospective Mortgagee or Paramount
Lessor requires that certain modifications be made to this Lease, which
modifications will not require Tenant to pay any additional amounts or otherwise
detrimentally change the rights or obligations of Tenant hereunder, Tenant
shall, within thirty (30) days following Landlord's request, execute and deliver
appropriate instruments effecting such modifications. Tenants failure to
complete, execute and deliver any such modifications within five (5) days after
Landlord's second request therefor shall, at Landlord's sole option (i) be
deemed a material Default under Paragraph 21 hereof or (ii) Tenant shall be
deemed to have irrevocably appointed Landlord or Beneficiary (if Landlord is a
trustee of a land trust) as Tenant's attorney-in-fact to execute and deliver
such modification in Tenant's name.
(h) INTENTIONALLY DELETED
(i) TRANSFER OF LANDLORD'S INTEREST. Notwithstanding anything
contained herein to the contrary, Tenant agrees that neither Landlord nor any
partner in Landlord or Beneficiary, as the case may be, nor any other person
having any interest, direct or indirect, immediate or more removed than
immediate, in Landlord or Beneficiary, as the case may be, shall have any
personal liability with respect to any of the provisions of this Lease and
Tenant shall look solely to the estate and property of Landlord in the Land and
the Building for the satisfaction of Tenant's remedies, including without
limitation, the collection of any judgment or the enforcement of other judicial
process requiring the payment or expenditure of money by Landlord, subject,
however, to the prior rights of any Mortgagee, and no other assets of Landlord
and Beneficiary (if Landlord is a trustee of a land trust) or its partners, or
of any other aforesaid person having an interest in Landlord or Beneficiary, as
the case may be, shall be subject to levy, execution or other judicial process
for the satisfaction of Tenant's claims. Without limitation of the foregoing,
upon each transfer of the Land and the Building and the landlord's interest in
this Lease, the transferor shall automatically be released from all liability
under this Lease. Tenant further acknowledges that Landlord may assign its
interest in this Lease to a mortgage lender as additional security and agrees
that such an assignment shall not release Landlord from its obligations
hereunder and that, subject to the other provisions of
<PAGE> 51
this Section, Tenant shall continue to look to Landlord for the performance of
its obligations hereunder.
(j) PROHIBITION AGAINST RECORDING
Neither this Lease, nor any memorandum, affidavit or other writing with respect
thereto, shall be recorded by Tenant or by anyone acting through, under or on
behalf of Tenant, and the recording thereof in violation of this provision shall
make this Lease null and void at Landlord's election.
(k) INTENTIONALLY DELETED
(l) RELATIONSHIP OF PARTIES. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of rent nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.
(m) APPLICATION OF PAYMENTS.
Landlord shall have the right to apply payments received from Tenant pursuant to
this Lease (regardless of Tenant's designation of such payments) to satisfy any
obligations of Tenant hereunder, in such order and amounts, as Landlord in its
sole discretion, may elect.
(n) PARTIAL INVALIDITY. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease (or the application of such term, provision or condition to
persons or circumstances other than those in respect of which it is invalid or
unenforceable) shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
(o) WAIVER OF TRIAL BY JURY; VENUE. LANDLORD AND TENANT HEREBY DO EACH
WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTER CLAIM BROUGHT BY EITHER
OF THE PARTIES HERETO AGAINST THE OTHER ON ANY MATTER WHATSOEVER ARISING OUT OF,
OR IN ANY WAY CONNECTED WITH, THIS LEASE, THE RELATIONSHIP OF LANDLORD AND
TENANT, TENANT'S USE OF OR OCCUPANCY OF THE PREMISES, OR ANY CLAIM
<PAGE> 52
OF INJURY OR DAMAGE IN ANY EMERGENCY STATUTORY OR ANY OTHER STATUTORY REMEDY. IF
LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR NON-PAYMENT OF RENT, TENANT WILL
NOT INTERPOSE ANY NON-COMPULSORY COUNTERCLAIM OF WHATEVER NATURE OR DESCRIPTION
IN ANY SUCH PROCEEDING (EXCLUDING ANY AFFIRMATIVE DEFENSE THAT MUST BE ASSERTED
IN SUCH PROCEEDING). IF EITHER LANDLORD OR TENANT DESIRES TO BRING AN ACTION
AGAINST THE OTHER IN CONNECTION WITH THIS LEASE, SUCH ACTION SHALL BE BROUGHT IN
THE FEDERAL OR STATE COURTS LOCATED IN CHICAGO, ILLINOIS. LANDLORD AND TENANT
CONSENT TO THE JURISDICTION OF SUCH COURTS AND WAIVE ANY RIGHT TO HAVE SUCH
ACTION TRANSFERRED FROM SUCH COURTS ON THE GROUNDS OF IMPROPER VENUE OR
INCONVENIENT FORUM.
(p) TENANT'S AUTHORITY. Tenant hereby represents that Tenant is a
corporation, duly organized pursuant to the laws of the State of Delaware, and
is authorized to conduct business in the State of Illinois. Upon the execution
of this Lease, Tenant shall furnish Landlord with a certified copy of
resolutions, certified by Tenant's Secretary as being a true and correct copy of
such resolutions, authorizing the actual signatories to execute leases. The
persons executing this Lease on behalf of Tenant further represent and warrant
that they are duly authorized to do so, and that they occupy the positions with
Tenant as delineated on the signature page(s) of this Lease.
27. NOTICES. All notices to be given under this Lease shall be in writing
and delivered personally or deposited in the United State mail, certified or
registered mail with return receipt requested, postage prepaid, addressed as
follows:
If to Landlord:
c/o Amerimar Adams Management Company, Inc.
200 West Adams Street, Suite 1201
Chicago, Illinois 60606
Attention: Building Manager
or to such other person or such other address designated by notice sent by
Landlord or Tenant.
If to Tenant:
Sapient Corporation
200 West Adams Street, 27th Floor
<PAGE> 53
Chicago, Illinois 60606
with a copy (in case of notices of default) to:
Sapient Corporation
One Memorial Drive
Third Floor
Cambridge, Massachusetts 02142
Attention Director of Operations
with a copy (in case of notices of default) to:
MacKenzie & Albritton
One Post Street, Suite 500
San Francisco, California 94104
Attention: Paul B. Albritton
or to such other address as is designated by Tenant in a notice to Landlord.
Notice by mail shall be deemed to have been given when deposited in the United
States mail as aforesaid. Notice from the building or property manager shall be
deemed to be notice from Landlord. If Tenant vacates the Premises and Landlord
has no other current notice address for Tenant, then notices maybe served on
Tenant's registered agent, or if there be no agent, then notices may be by
publication.
28. HAZARDOUS MATERIALS.
(a) Tenant shall not transport, use, store, maintain, generate,
manufacture, handle, dispose, release or discharge any "Hazardous Material" (as
defined below) upon or about the Property, nor permit Tenant's employees,
agents, contractors, and other occupants of the Premises to engage in such
activities upon or about the Property. However, the foregoing provisions shall
not prohibit the transportation to and from, and use, storage, maintenance and
handling within, the Premises of substances customarily used in offices (or such
other business or activity expressly permitted to be undertaken in the Premises
under Paragraph 5); provided that such substances shall be used and maintained
only in such quantities as are reasonably necessary for such permitted use of
the Premises, strictly in accordance with applicable law and the manufacturers'
instructions thereto, and any remaining such substances shall be completely,
properly and
<PAGE> 54
lawfully removed from the Property upon expiration or earlier termination of
this Lease.
(b) Tenant shall promptly notify Landlord of: (i) any enforcement,
cleanup or other regulatory action taken or threatened by any governmental or
regulatory authority with respect to the presence of any Hazardous Material on
the Premises or the migration thereof from or to other property, (ii) any
demands or claims made or threatened by any party against Tenant or the Premises
relating to any loss or injury resulting from any Hazardous Material, (iii) any
release, discharge or nonroutine, improper or unlawful disposal or
transportation of any Hazardous Material on or from the Premises, and (iv) any
matters where Tenant is required by law to give a notice to any governmental
regulatory authority respecting any Hazardous Materials on the Premises.
Landlord shall have the right (but not the obligation) to join and participate,
as a party, in any legal proceedings or actions affecting the Premises initiated
in connection with any environmental, health or safety law. At such times as
Landlord may reasonably request, Tenant shall provide Landlord with a written
list identifying any Hazardous Material then used, stored, or maintained upon
the Premises, the use and approximate quantity of each such material, a copy of
any material safety data sheet ("MSDS") issued by the manufacturer therefor,
written information concerning the removal, transportation and disposal of the
same, and such other information as Landlord may reasonably require or as may be
required by law. The term "Hazardous Material" for purposes hereof shall mean
any chemical, substance, material or waste or component thereof which is now or
hereafter listed, defined or regulated as a hazardous toxic chemical, substance,
material or waste or component thereof by any federal, state or local governing
or regulatory body having jurisdiction, or which would trigger any employee or
community "right-to-know" requirements adopted by any such body, for which any
such body has adopted any requirements of the preparation or distribution of an
MSDS.
(c) If any Hazardous Material is released, discharged or disposed of
by Tenant or any other occupant of the Premises, or their employees, agents or
contractors, on or about the Property in violation of the foregoing provisions,
Tenant shall immediately, properly and in compliance with applicable laws clean
up and remove the Hazardous Material from the Property and any other affected
property and clean or replace any affected personal property (whether or not
owned by Landlord), at Tenant's expense. Such clean up and removal work shall be
subject to Landlord's prior
<PAGE> 55
written approval (except in emergencies), and shall include, without limitation,
any testing, investigation, and the preparation and implementation of any
remedial action plan required by any governmental body having jurisdiction or
reasonably required by Landlord. If Tenant shall fail to comply with the
provisions of this Paragraph within five (5) days after written notice by
Landlord, or such shorter time as may be required by law or in order to minimize
any hazard to persons or property, Landlord may (but shall not be obligated to)
arrange for such compliance directly or as Tenant's agent through contractors or
other parties selected by Landlord, at Tenant's expense (without limiting
Landlord's other remedies under this Lease or applicable law).
(d) Landlord represents, warrants and agrees that (1) neither Landlord
nor, to Landlord's actual knowledge, any third party, has used, generated,
stored or disposed of, or permitted the use, generation, storage or disposal of,
any Hazardous Material on, under, about or within the Property in violation of
any law or regulation that has not heretofore been remedied, and (2) that
Landlord will not, and will not knowingly permit any third party to, use,
generate, store or dispose of any hazardous Material on, under, about or within
the Property in violation of any law or regulation.
29. ADA. The parties acknowledge that the Americans With Disabilities Act
of 1990 (42 U.S.C. 12101 et seq.) and regulations and guideline promulgated
thereunder, as amended and supplemented from time to time (collectively referred
to herein as the "ADA") establish requirements under Title III of the ADA
("Title III") pertaining to business operations, accessibility and barrier
removal, and that such requirements may be unclear and may or may not apply to
the Premises and the Building. The parties acknowledge and agree that Tenant has
been provided an opportunity to inspect the Premises and the Building sufficient
to determine whether or not the Premises and the Building in their condition as
of the date hereof deviate in any manner from the ADA Accessibility Guidelines
("ADAAG") or any other requirements under the ADA pertaining to the
accessibility of the Premises or the Building. Tenant further acknowledges and
agrees that except as may otherwise be specifically provided herein, Tenant
accepts the Premises and the Building in "as-is" condition and agrees that
Landlord makes no representation or warranty as to whether the Premises or the
Building conform to the requirements of the ADAAG or any other requirements
under the ADA pertaining to the accessibility of the Premises or the Building.
Tenant has prepared or reviewed the
<PAGE> 56
plans and specifications for the Work and has independently determined that such
plans and specifications are in conformance with the ADAAG and any other
requirements of the ADA. Tenant further acknowledges and agrees that to the
extent that Landlord prepared, reviewed or approved any of those plans and
specifications, such action shall in no event be deemed any representation or
warranty that the same comply with any requirements of the ADA. Notwithstanding
anything to the contrary in this Lease, the parties hereby agree to allocate
responsibility for Title III compliance as follows: (a) Tenant shall be
responsible for all Title III compliance and costs in connection with the
Premises, including structural work, if any, and including any leasehold
improvements or other work to be performed in the Premises under or in
connection with this Lease, and (b) Landlord shall perform, at Landlord's cost
(subject to inclusion in Operating Expenses to the extent allowed), any
so-called Title III "path of travel" requirements triggered by any construction
activities or alterations in the Premises. Except as set forth above with
respect to Landlord's Title III obligations, Tenant shall be solely responsible
for all other requirements under the ADA relating to Tenant or any affiliates or
persons or entities related to Tenant (collectively, "Affiliates"), operations
of Tenant or Affiliates, or the Premises, including, without limitation,
requirements under Title I of the ADA pertaining to Tenant's employees. Without
limiting the foregoing, Landlord shall be responsible for complying with the ADA
with respect to the common areas of the Building (and the costs thereof shall be
included in Operating Expenses to the extent otherwise allowed, excluding the
costs of remedying any violations existing as of the date hereof of the ADA as
enacted, interpreted and enforced as of the date hereof).
30 EXPANSION OPTION
(a) Tenant shall have the option (the "Expansion Option") to lease
certain additional space in the building contiguous to the Premises and
designated by Landlord (the "Expansion Space"), containing, at Landlord's
option, either (i) approximately 8,300 rentable square feet of space or (ii) a
rentable area such that the sum of the rentable areas of the Expansion Space and
the initial Premises is 48,286 rentable square feet, for a lease term to
commence effective as the date (the "Expansion Date") that is the day
immediately following the fifth (5th) anniversary of the Space No. 1
Commencement Date (providing that if Landlord shall, for any reason, be unable
to deliver
<PAGE> 57
possession of the Expansion Space to Tenant on such date, Landlord shall have no
liability for such failure (except as expressly provided in the last sentence of
this Paragraph 30(a)), but the lease term for the Expansion space shall not
commence until Landlord is able to deliver possession of the Expansion Space to
Tenant [unless the delay is attributable to Tenant]), and expiring on the
Termination Date. Tenant shall notify Landlord in writing of its exercise of the
Expansion Option not later than nine (9) months prior to the Expansion Date. If
Landlord shall, for any reason not attributable to Tenant, fail to make
available to Tenant possession of the Expansion Space within ninety (90) days
after the scheduled Expansion Date, then Tenant shall be entitled to abatement
of rent and possible delivery of temporary space as described in, and subject to
the terms and conditions of, Paragraph 3(b) above, as if the Expansion Space
were a Space described therein.
(b) If Tenant timely and properly exercises the Expansion Option:
(i) The Rent payable for the Expansion shall be equal to the
"market rate of rent" that Landlord reasonably anticipates will be in effect for
the Expansion Space as of the Expansion Date. "Market rate of rent" shall mean
the total rate of rent, as reasonably determined by Landlord, including
component parts of such rate of rent such as base rent, fixed and/or indexed
rental adjustments and all rental adjustments for Taxes and Operating Expenses
for the Building, taking into account Landlord contributions, if any, to Taxes
and Operating Expenses for the Building (and base years or stops), and tenant
concessions, if any, such as rent abatements and tenant improvement allowances,
which Landlord is offering to third party tenants for office space in the
Building comparable to the Expansion Space (taking into account the lengths of
the terms and the sizes and levels of improvement of the spaces). The Base Rent
payable for the Expansion Space shall be subject to adjustment during the Terms
as provided in Landlord's written notice setting forth the market rate of rent.
There shall be no abatement of Base Rent or Additional Rent for the Expansion
Space, except as may be specifically included in the market rate of rent for the
Expansion Space.
(ii) Landlord shall not be obligated to perform any leasehold
improvement work in the Expansion Space or give Tenant any allowance for any
such work or any other purposes, except as to any allowance which may be
specifically included in the market rate
<PAGE> 58
of rent for the Expansion Space.
(iii) Except for the rate of rent and except as otherwise
provided herein, all the terms and provisions of this Lease shall remain the
same and in full force and effect with respect to Tenant's lease of the
Expansion Space.
(c) It shall be a condition of Tenant's right to exercise the
Expansion Option that Tenant is not in Default under this Lease, either on the
date Tenant exercises the Expansion Option or on the Expansion Date, and this
Lease is in full force and effect both on the date Tenant exercises the
Expansion Option and on the Expansion Date. It shall be a further condition of
Tenant's right to lease the Expansion Space that if (i) Landlord is obligated to
perform any leasehold improvement work in the Expansion Space or to give Tenant
any allowance for any such work or any other purposes and (ii) Tenant's most
recent financial statements (which may be Tenant's annual report, if Tenant's
stock is traded on a public securities exchange) reveal either (I) Tenant's
market capitalization is less than $200,000,000 or (II) the ratio of Tenant's
debts to the value of its tangible assets is greater than 65:100, then Tenant
shall promptly deliver to Landlord a LOC in the LOC Amount, as described in
Paragraph 24, as if the Expansion Space were a Space (and Landlord shall not be
obligated to perform such work or disburse such allowance until Tenant has
delivered such LOC).
(d) If Tenant exercises the Expansion Option, Landlord and Tenant
shall execute and deliver an amendment to this Lease reflecting the lease of the
Expansion Space by Landlord to Tenant on the terms provided above, which
amendment shall be executed and delivered within thirty (30) days after Tenant
exercises the Expansion Option.
(e) The Expansion Option shall automatically terminate and become null
and void upon the first to occur of (i) the expiration or termination of this
Lease, (ii) the termination of Tenant's right to possession of all or any part
of the Premises, (iii) the assignment of this Lease by Tenant, in whole or in
part (other than to an Affiliate), (iv) the sublease by Tenant of all or any
part of the Premises (other than to an Affiliate), or (v) the failure of Tenant
to timely or properly exercise the Expansion Option.
31. RIGHT OF FIRST OPPORTUNITY.
<PAGE> 59
(a) For purposes of this Lease, at anytime the "Option Space" shall
mean any space in the Building that is (i) on the same floor and contiguous to
any part of the Premises at such time or (ii) on a contiguous floor and
immediately above or below any part of the Premises at such time.
(b) With respect to any lease which Landlord hereafter intends to
enter into with a third-party tenant for either (i) all or any portion of the
Option Space, or (ii) the space described in clause (i) above, plus any other
space in the Building (for purposes hereof, any such other space shall be deemed
to be part of the Option Space) and which has a lease term commencing at any
time prior to the fifth (5th) anniversary of the Space No. 1 Commencement Date
(but excluding any new or renewal lease or lease expansion with any then
existing tenant of all or any portion of the Option Space), Landlord shall give
Tenant written notice of such intent ("Landlord's Notice") prior to Landlord
entering into such lease. Landlord's Notice shall specify (i) the location and
rentable area of the portion of the Option Space which Landlord desires to lease
(which is henceforth referred to as the "Actual Option Space"), (ii) the
proposed lease term for the Actual Option Space, (iii) the date upon which the
Actual Option Space shall be available for occupancy, and (iv) the market rate
of rent for the Actual Option Space (which shall be determined by Landlord using
the same factors specified in Paragraph 30(b)(i) above with respect to the
Expansion Space). Item (iv) shall be quoted by Landlord in Landlord's Notice for
a lease having a lease term which would expire on the Termination Date.
Notwithstanding the foregoing, if the Actual Option Space constitutes one full
floor or more, Tenant may instead request Landlord to provide a Landlord's
Notice for less than the entire available Actual Option Space (which lesser
space shall then be deemed to be the "Actual Option Space"), provided such
lesser space must be either or both (i) an entire floor or floors and/or (ii) a
portion of a floor (provided that is less than one entire floor, (A) Tenant must
designate the rentable area desired by Tenant, which may not be less than 10,000
rentable square feet or more than 18,000 rentable square feet [and Landlord may
then designate the location and rentable area of the Actual Option Space,
provided such rentable area shall not deviate from the rentable area requested
by Tenant by more than 10%] and (B) the costs of demising the Actual Option
Space, making the remainder of the space on the floor marketable, creating a
common corridor and making all other improvements required to convert the floor
to a standard multi-tenant floor shall be considered by Landlord in
<PAGE> 60
determining the market rate of rent for the Actual Option Space). Tenant shall
thereupon have a right (a "Right of First Opportunity") to lease all, but not
less than all, of the Actual Option Space, subject to the following terms and
conditions:
(i) Tenant gives Landlord a written notice of its election to
exercise the Right of First Opportunity within seven (7) days after Landlord
gives Tenant Landlord's Notice;
(ii) If (i) Landlord is obligated to perform any leasehold
improvements work in the Actual Option Space or to give Tenant any allowance for
any such work or any other purposes and (ii) Tenant's most recent financial
statements (which may be Tenant's annual report, if Tenant's stock is traded on
a public securities exchange) reveal either (I) Tenant's market capitalization
is less than $200,000,000 or (II) the ratio of Tenant's debts to the value of
its tangible assets is greater than 65:100, then Tenant shall promptly deliver
to Landlord a LOC in the LOC Amount, as described in Paragraph 24, as if the
Expansion space were a Space (and Landlord shall not be obligated to perform
such work or disburse such allowance until tenant has delivered such LOC); and
(iii) Tenant is not in Default under this Lease, either on the
date Tenant exercises the Right of First Opportunity or on the proposed
commencement date of the lease term for the Actual Option Space, and this Lease
is in full force and effect both on the date Tenant exercises the Right of First
Opportunity and on the proposed commencement date of the lease term for the
Actual Option Space.
If Tenant does not timely or properly exercise any Right of First Opportunity,
Landlord may at any time thereafter lease all of the Actual Option Space to any
third-party tenant on such terms and provisions as Landlord may elect (provided
that all of the economic terms offered to such third-party tenant are not more
than five percent (5%) more favorable to such third party tenant than all of the
economic terms set forth in Landlord's written notice to Tenant), without any
further rights of Tenant to lease such space unless and until one hundred eighty
(180) days have elapsed without Landlord leasing the Actual Option Space or such
third-party has vacated such space and such space is again available for leasing
by a third-party.
(c) If Tenant exercises a Right of First Opportunity,
<PAGE> 61
the following terms and provisions shall apply:
(i) Landlord shall lease the Actual Option Space to Tenant for a
lease term commencing on the availability date specified in Landlord's Notice
(provided that if Landlord shall, for any reason, be unable to deliver
possession of the Actual Option Space to Tenant on such date, Landlord shall
have no liability for such failure, but the lease term of the Actual Option
Space shall not commence until Landlord is able to deliver possession of the
Actual Option Space to Tenant [unless the delay is attributable to Tenant] and
expiring on the Termination Date.
(ii) The base rent and rental adjustments payable for the Actual
Option Space shall be as set forth in the applicable Landlord's Notice.
(iii) Tenant shall not be entitled to any rental abatement for
the Actual Option Space, except as otherwise set forth in the applicable
Landlord's Notice.
(iv) Tenant shall accept the Option Space in an "as-is",
"where-is" physical condition, without any agreement, representation, credit or
allowance from Landlord with respect to the improvement or condition thereof,
except as otherwise set forth in the applicable Landlord's Notice.
(v) All of the terms and provisions of this Lease shall apply
with respect to Tenant's lease of the Actual Option Space, except as the same
may be inconsistent with the provisions of this Paragraph 31.
(d) If Tenant exercises a Right of First Opportunity, Landlord and
tenant shall execute and deliver an amendment to this Lease reflecting the lease
of the Actual Option Space by Landlord to Tenant on the terms provided above,
which amendment shall be executed and delivered within thirty (30) days after
Tenant exercises the Right of First Opportunity.
(e) Each Right of First Opportunity shall automatically terminate and
become null and void upon the first to occur of (i) the expiration or
termination of the Lease, (ii) the termination of Tenant's right to possession
of all or any part of the Premises, (iii) the assignment of this Lease by
Tenant, in whole or in part (other than to an Affiliate), (iv) the sublease by
Tenant of all or any part of the Premise (other than to an Affiliate) or (v) the
<PAGE> 62
failure of Tenant to timely or properly the Right of First Opportunity.
32. RENEWAL OPTION
(a) Tenant shall have an option (the "First Renewal Option") to renew
the Term with respect to all (but not less than all) of the Premises demised
under or pursuant to this Lease as of the expiration date of the initial Term,
for one additional term (the "First Renewal Term") of five (5) years.
(b) If Tenant exercise the First Renewal Option, Tenant shall have an
additional option (the "Second Renewal Option") to renew the Term with respect
to all (but not less than all) of the Premises demised under or pursuant to this
Lease as of the expiration date of the First Renewal Term, for one additional
Term (the "Second Renewal Term") of five (5) years.
(c) It shall be conditions of Tenant's exercise of each of the First
Renewal Option and the Second Renewal Option (each, a "Renewal Option"), that:
(i) Tenant shall give Landlord written notice of Tenant's
election to exercise the Renewal Option not later than nine (9) months prior to
the expiration date of the initial Term or the First Renewal Term (each,
"Renewal Term"), as applicable.
(ii) If (i) Landlord is obligated to perform any leasehold
improvements work in the Premises during the Renewal Term or to give Tenant any
allowance for any such work or any other purposes and (ii) Tenant's most recent
financial statements (which may be Tenant's annual report, if Tenant's stock is
traded on a public securities exchange) reveal either (I) Tenant's market
capitalization is less than $200,000,000 or (II) the ratio of Tenant's debts to
the value of its tangible assets is greater than 65:100, then Tenant shall
promptly deliver a LOC to Landlord in the LOC Amount, as described in Paragraph
24, as if the entire Premises during the Renewal Term were a Space (and Landlord
shall not be obligated to perform such work or disburse such allowance until
Tenant has delivered such LOC); and
(iii) Tenant is not in Default under this Lease, either on the
date Tenant exercises the Renewal Option or on the expiration date of the
initial Term of the First Renewal Term, as applicable, and this Lease is in full
force and effect of the date
<PAGE> 63
on which Tenant exercises the Renewal Option and on the proposed commencement
date of the Renewal Term.
(d) TERMS. If Tenant timely and properly exercises a Renewal Option:
(i) The rate of Base Rent payable for the applicable Renewal Term
shall be equal to the Renewal Base Rent. "Renewal Base Rent" means the gross
rent per rentable square foot per year that, as of the relevant date of
determination, is being offered by Landlords to tenants that are extending or
renewing their leases for space comparable to the Premises (i.e., with
comparable improvements, size and floor location) in the Building and in
comparable buildings in downtown Chicago, with lease terms of comparable length
and commencement as the applicable Renewal Term. By way of example only, if as
of the date Renewal Base Rent is to be determined, landlords are generally
offering to lease comparable space to existing tenants for a term equal to the
Renewal Term, at a rental rate of $22.00 per rentable square foot per year, with
a tenant improvement allowance of $5.00 per rentable square foot, then (assuming
a 10% interest rate), the Renewal Base Rent would be equal to $20.73 per
rentable square foot per year.
Landlord shall notify Tenant of Landlord's determination of Renewal Base
Rent for the applicable Renewal Term within thirty (30) days after Tenant's
exercise of the Renewal Option. Tenant shall have thirty (30) days ("Tenant's
Review Period") after receipt of Landlord's notice within which to accept such
proposed Renewal Base Rent of to reasonably object thereto in writing. If Tenant
so objects, Landlord and Tenant shall attempt in good faith to agree upon such
Renewal Base Rent. If Landlord and Tenant fail to reach agreement by the date
that is twenty (20) days following the expiration of Tenant's Review Period (the
"Outside Agreement Date"), then each party's good faith determination of Renewal
Base Rent shall be submitted to arbitration in accordance with the following
procedure:
(x) (A) Not later than twenty (20) days following the Outside
Agreement Date, Landlord and Tenant shall each appoint one independent
arbitrator who shall by profession be a real estate appraiser (with the
professional designation of M.A.I. or, if M.A.I. ceases to exist, a comparable
designation from an equivalent professional appraiser organization) or office
leasing broker who shall have been active over the ten (10) year period ending
on the date of such appointment in appraising or leasing of commercial
<PAGE> 64
office properties in downtown Chicago.
(B) The two arbitrators so appointed shall within ten (10) days
of the date of the appointment of the last appointed arbitrator agree upon and
appoint a third arbitrator, who shall be qualified under the same criteria set
forth hereinabove for qualification of the initial two arbitrators.
(C) The determination of the arbitrators shall be limited solely
to the issue of whether Landlord's or Tenant's submitted Renewal Base Rent for
the Renewal Term is the most accurate. The three arbitrators shall reach such
decision and notify Landlord and Tenant thereof within thirty (30) days after
the appointment of the third arbitrator. The decision of the majority of the
three arbitrators shall be binding upon Landlord and Tenant.
(D) If the two arbitrators fail to timely agree upon and appoint
a third arbitrator, both arbitrators shall be dismissed and Landlord and Tenant
each shall promptly select and appoint one new arbitrator possessing the
qualifications described above. Such new arbitrators shall promptly follow he
procedure outlined above to select a third arbitrator.
(E) The cost of arbitration shall be paid by Landlord if Tenant's
submittal Renewal Base Rent is selected and by Tenant if Landlord's submitted
Renewal Base Rent is selected.
(F) Notwithstanding the foregoing, if either Landlord or Tenant
fails to appoint an arbitrator within thirty (30) days after the Outside
Agreement Date as provided above and such failure to appoint an arbitrator is
not cured within five (5) days after delivery of written demand to do so by the
other party (provided such other party has appointed its arbitrator prior to
sending such written demand), then the arbitrator appointed by the party sending
such demand, acting alone, shall reach a decision on the applicable Renewal Base
Rent and notify Landlord and Tenant in writing thereof, and such arbitrator's
decision shall be binding on Landlord and Tenant.
(y) If for any reason whatsoever the applicable Renewal base Rent has
not been determined by the commencement date of the applicable Renewal Term,
then the Renewal Base Rent proposed by Landlord shall be utilized as the rate of
Base Rent during the applicable Renewal Term until such time as the final
Renewal Base
<PAGE> 65
Rent has been conclusively determined (at which time, if Tenant's submitted
Renewal Base Rent is selected as the rate of Base Rent for the applicable
Renewal Term, Landlord shall credit against Base Rent next coming due the excess
amount paid by Tenant, if any, for the period during the applicable Renewal Term
during which the Landlord's proposed Renewal Base Rent was utilized as the rate
of Base Rent).
(ii) Tenant shall remain obligated to pay Expense Adjustment
Amount and Tax Adjustment Amount, as provided in this Lease, during the Renewal
Term, provided that for the Renewal Term, the "Base Year" shall be deemed to be
the calendar year in which the applicable Renewal Term commences.
(iii) Tenant shall have no further options to renew the Term of
this Lease beyond the expiration date of the Second Renewal Term.
(iv) Landlord shall not be obligated to perform any leasehold
improvement work in the Premises or give Tenant any allowance for any such work
or any other purposes during or for a Renewal Term, except as specifically
included in the Renewal Base Rent.
(v) Except for the rate of rent and except as otherwise provided
herein, all of the terms and provisions of this Lease shall remain the same and
in full force and effect during a Renewal Term. There shall be no abatement of
Base Rent or Additional Rent for the Premises during a Renewal Term, except as
specifically included in the Renewal Base Rent.
(e) If Tenant exercises a Renewal Option, Landlord and Tenant shall
execute and deliver an amendment to this Lease reflecting the lease of the
Premises by Landlord to Tenant for the Renewal Term on the terms provided above,
which amendment shall be executed and delivered within thirty (30) days after
Tenant exercises the Renewal Option.
(f) Each Renewal Option shall automatically terminate and become null
and void upon the first to occur of (i) the expiration or termination of this
Lease, (ii) the termination of Tenant's right to possession of all or any part
of the Premises, (iii) the assignment of this Lease by Tenant, in whole or in
part (other than to an Affiliate), (iv) the sublease by Tenant of all or any
part of the Premises (other than to an Affiliate), or (v) the
<PAGE> 66
failure of Tenant to timely or properly exercise the Renewal Option.
IN WITNESS WHEREOF, Landlord and Tenant, intending to be legally bound
hereby, have executed this Office Lease as of the day and year first above
written.
TENANT: LANDLORD:
SAPIENT CORPORATION, a Delaware ADAMS FAMILY, L.L.C., a Delaware
corporation limited liability company, as
beneficiary of Cole TaylorBank,
not personally, but solely as
Trustee under Trust Agreement
dated June 26, 1995 and known as
Trust No. 95-6300
By: By: AMERIMAR ADAMS
------------------------------- MANAGEMENT COMPANY
Its: INC., as Agent
------------------------------
(Title)
By:
------------------------------
Its:
-----------------------------
(Title)
<PAGE> 1
EXHIBIT 10.3
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (this "Second Amendment") is made as of
April , 1997, by and between ONE MEMORIAL DRIVE LIMITED PARTNERSHIP
("Landlord"), a Massachusetts limited partnership, and SAPIENT CORPORATION
("Tenant"), a Delaware corporation.
WITNESSETH:
WHEREAS, Landlord and Tenant have heretofore entered into a Lease, dated
as of March 30, 1994 (the "Original Lease"), for certain premises comprising
24,909 rentable square feet on the second floor and 20,670 rentable square feet
on the third floor (collectively, the "Original Premises") in One Memorial
Drive, Cambridge, Massachusetts (the "Building"); and
WHEREAS, Landlord and Tenant have heretofore amended the Original Lease by
that certain First Amendment to Lease, dated as of December 5, 1995 (the "First
Amendment to Lease") whereby Landlord and Tenant agreed to add the entire
rentable area of the fifth floor of the Building (the "Fifth Floor Space")
comprising 20,670 rentable square feet to the Original Premises, and to make
certain other modifications to the Original Lease; and
WHEREAS, Landlord and Tenant have now agreed that Tenant shall surrender
the Fifth Floor Space and, in lieu thereof, the entire rentable area of the
seventh (7th) and eighth (8th) floors of the Building, comprising 20,960
rentable square feet and 21,422 square feet respectively (collectively, the
"Expansion Premises"), shall be added to the Original Premises and that certain
other modifications to the Original Lease, as heretofore amended, shall be made
as more particularly herein set forth.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and legal sufficiency
of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. Capitalized Terms: All capitalized terms not otherwise modified or
defined herein shall have the same meanings as are ascribed to them in the
Original Lease. For purposes of this Second Amendment, the Original Lease, as
amended by the First Amendment to Lease and this Second Amendment, shall be
hereinafter referred to as the "Amended Lease".
2. Delivery of Expansion Premises. On the date that is the later of: (i)
November 1, 1997 or (ii) the date that Landlord delivers possession of the
Expansion Premises to Tenant (the "Expansion Premises Effective Date"), the
Expansion Premises shall be included in the Premises for all purposes of the
Amended Lease, Landlord shall have no liability to Tenant should Landlord fail
to cause the Expansion Premises Effective Date to occur by November 1, 1997,
except that Tenant shall be entitled to liquidated damages equal to one (1) day
of free rent with respect to the Expansion Premises for each day later than
November 1. 1997 the Expansion Premises Effective Date occurs, unless such delay
is due to Tenant's negligence or wrongful conduct.
<PAGE> 2
3. Surrender of the Fifth Floor Space. On the last day of the Build-out
Period defined in Section 7(d) below (the "Fifth Floor Surrender Date"), Tenant
shall surrender the Fifth Floor Space in the condition required by Section 6.1.2
of the Original Lease, upon such terms and conditions as if such date were the
last day of the Term, whereupon the Fifth Floor Space shall be deleted from the
Premises for all purposes of the Amended Lease. Notwithstanding anything to the
contrary set forth in paragraphs 7, 8, 9 and 10 of this Second Amendment, all
rental and additional rental amounts payable under the First Amendment to Lease,
allocable to the Fifth Floor Space, shall accrue and be due and payable as
contemplated therein during the period from the Expansion Premises Effective
Date until the Fifth Floor Surrender Date. Any holding over in the Fifth Floor
Space after the Fifth Floor Surrender Date shall constitute an Event of Default
under the Amended Lease, and the terms of Section 10.4 of the Original Lease
shall apply to any such holding over in the Fifth Floor Space.
4. Definition of the Premises. For all purposes of the Amended Lease, the
Premises shall (i) on and after the Expansion Premises Effective Date, include
the 42,382 rentable square feet comprising the entire rentable area of the
seventh (7th) and eighth (8th) floors of the Building and (ii) on and after the
Fifth Floor Surrender Date, exclude the 20,670 rentable square feet comprising
the entire rentable area of the fifth (5th) floor of the Building. The Original
Premises and the Expansion Premises shall hereinafter be referred to in the
aggregate as the "Combined Premises."
5. Term. The term of the Amended Lease is hereby extended to June 30,
2004. For all purposes of the Amended Lease, the term "Original Term" shall
refer to the period from the Term Commencement Date until March 31, 1999.
6. Preparation of the Expansion Premises for Occupancy. Tenant has
inspected the Expansion Premises, and the leasehold improvements which have
heretofore been made thereto, and acknowledges that the Expansion Premises shall
be delivered to Tenant in their existing "as is" condition, reasonable wear and
tear excepted but otherwise broom clean, except that any of the existing
leasehold improvements which the existing tenant of the Expansion Premises
desires to remove may be removed prior to the Expansion Premises Effective Date.
Tenant agrees that such property is acceptable in "as is" condition, subject to
such additional wear and tear as may take place. Landlord shall have no
obligation to perform any work in the Expansion Premises to prepare the same for
Tenant's occupancy, provided however, that Landlord shall make an allowance (the
"Combined Premises Tenant Improvements Allowance") available for purposes of
reimbursing Tenant for any costs and expenses incurred in making leasehold
improvements in accordance with Section 3.2 to prepare the Expansion Premises
for Tenant's initial occupancy, as well as to renovate the premises demised
under the Original Lease (collectively, the 'Combined Premises Tenant
Improvements"). The amount of the aforesaid Combined Premises Tenant Improvement
Allowance shall equal the aggregate of (i) $12 per r.s.f of the premises demised
under the Original Lease, (ii) $20 per r.s.f. of the portion of the Expansion
Premises located on the seventh (7th) floor of the Building, (iii) $23 per
r.s.f. of the portion of the Expansion Premises located on the eighth (8th)
floor of the Building and (iv) $3 per r.s.f. of the portion of the Expansion
Premises located on the seventh (7th) floor of the Building for application
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exclusively to Tenant's moving expenses from the Fifth Floor Space to the
Expansion Premises. Landlord shall reimburse Tenant for costs incurred in
constructing the Combined Premises Tenant Improvements, including, without
limitation, architectural and engineering fees, from time to time (but not more
frequently than monthly) upon Tenant's furnishing Landlord with invoices
reasonably satisfactory to Landlord. Tenant shall prepare complete working
drawings and specifications, including, but not limited to, structural,
architectural and mechanical systems, as applicable (the "Plans") which shall
govern the performance of the Combined Premises Tenant Improvements to be
performed by the Tenant and its architects, engineers and contractors. The Plans
shall conform to applicable government requirements and to sound and generally
accepted engineering practices and shall be submitted to Landlord for its
approval. Within five (5) business days after receipt of the Plans, Landlord
shall give Tenant written notice of such approval or disapproval based upon any
reasonable objections. If Landlord disapproves, Tenant shall revise the Plans
and shall resubmit them to Landlord, Landlord agreeing to approve or disapprove
in the case of such resubmission within five (5) business days of receipt of
such revised Plans. Notwithstanding anything contained in Section 3.3 of the
Original Lease, Tenant shall cause its general contractor for the Combined
Premises Tenant Improvements to carry an umbrella policy of commercial public
liability insurance, written by companies rated not less than A+ by Best's
Insurance Report, in an amount not less than $5,000,000.00 and cause all of the
subcontractors performing the Combined Premises Tenant Improvements to carry
commercial public liability insurance, written not less than A+ by Best's
Insurance Reports, in an amount not less than $2,000,000. Notwithstanding and in
limitation of the foregoing, Tenant shall not be entitled to be reimbursed more
than twenty percent (20%) of the Combined Premises Tenant Improvement Allowance
for expenses associated with the following: (i) Tenant's relocation from the
Fifth Floor Space to the Expansion Premises, (ii) engineering and architectural
fees, (iii) cabling and (iv) other soft costs related to the Combined Premises
Tenant Improvements. If Tenant does not draw down the entire Combined Premises
Tenant Allowance, Tenant shall notify Landlord in writing of same and Landlord
shall calculate and notify Tenant of the amount that Tenant may deduct from the
Annual Fixed Rent each month for the next succeeding twelve months on account of
such remaining Combined Premises Tenant Allowance, which amount shall equal the
remaining balance of the Combined Premises Tenant Allowance divided by twelve
(12).
7. Annual Fixed Rent.
(a) Commencing on the Expansion Premises Effective Date (subject to clause
(d) below) and continuing through March 31, 1999, the Annual Fixed Rent payable
with respect to the Combined Premises shall be as follows: (i) Nine Hundred
Fifty-Three Thousand Seven Hundred Ninety-One Dollars ($953.791) per annum
(Seventy-Nine Thousand Four Hundred Eighty-Two Dollars and 59/100 ($79,489.59)
per month) with respect to the Original Premises based on $20.93/r.s.f times the
rentable square footage thereof; (ii) Five Hundred Sixty-Five Thousand Nine
Hundred Twenty Dollars and 00/100 ($565,920.00) per annum (Forty-Seven Thousand
One Hundred Sixty Dollars and 00/100 ($47,160.00) per month) with respect to the
portion of the Expansion Premises located on the seventh floor, based on
$27/r.s.f. times the rentable square footage thereof; and (iii) Six Hundred
Eighty Five Thousand Five Hundred Four Dollars and 00/100 ($685,504.00) per
annum (Fifty-Seven Thousand One hundred Twenty-Five
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Dollars and 33/100 ($57,125.33) per month) with respect to the portion of the
Expansion Premises located on the eighth floor, based on $32.00/r.s.f. times the
rentable square footage thereof.
(b) Commencing on April 1, 1999 and continuing through September 30, 2002,
the Annual Fixed Rent payable with respect to the Combined Premises shall be Two
Million Eight Hundred Fourteen Thousand Seven Hundred Fifty-Two Dollars and
00/100 ($2,814,752.00) per annum (Two Hundred Thirty-Four Thousand Five Hundred
Sixty-Two Dollars and 67/100 ($234,562.67) per month) based on $32.00/r.s.f.
times the rentable square footage in the Combined Premises.
(c) Commencing on October 1, 2002 and continuing through June 30, 2004 the
Annual Fixed Rent payable with respect to the Combined Premises shall be Two
Million Nine Hundred Ninety Thousand Six Hundred Seventy-Four Dollars and 00/100
($2,990,674.00) per annum (Two Hundred Forty-Nine Thousand Two Hundred
Twenty-two Dollars and 83/100 ($249,222.83) per month) based on $34.00/r.s.f.
times the rentable square footage in the Combined Premises.
(d) Provided that Tenant is not then in default beyond any applicable cure
period, for the ninety (90) day period commencing upon the Expansion Premises
Effective Date (the "Build-out Period"), no Annual Fixed Rent payable under
clauses (ii) and (iii) of subparagraph (a) of this paragraph 6 shall accrue with
respect to the Expansion Premises.
8. Included Share of Real Estate Taxes. The definition of "Tenant's
Included Share of Real Estate Taxes" set forth in Section 1.1 of the Lease
shall be amended as follows:
(a) Commencing on the Expansion Premises Effective Date and continuing
until March 31, 1999, the definition of Tenant's Included Share of Real Estate
Taxes set forth in Section 1.1 of the Original Lease shall be supplemented by
adding the following words after the words "Additional Second Floor Space": "and
100% of the actual real estate taxes per r.s.f with respect to the Expansion
Premises during the tax fiscal year 1998 (i.e. July 1, 1997-June 30, 1998).
(b) Commencing on April 1, 1999 and continuing until the expiration of the
Term, the definition of Tenant's Included Share of Real Estate Taxes set forth
in Section 1.1 of the Original Lease, as supplemented in accordance with
subparagraph 7(a) above, shall be deleted in its entirety and the following
definition of Tenant's Included Share of Real Estate Taxes shall be inserted in
lieu thereof: "100% of the actual real estate taxes per r.s.f. of the Combined
Premises during the tax fiscal year 1998 (i.e. July 1, 1997-June 30, 1998).
9. Included Share of Operating Expenses.
(a) Commencing on the Expansion Premises Effective Date and continuing
until March 31, 1999, the definition of Tenant's Included Share of Operating
Expenses set forth in Section 1.1 of the Original Lease shall be supplemented by
adding the following words after the words "Additional Second Floor Space": "and
100% of the actual operating expenses per r.s.f with
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respect to the Expansion Premises during the calendar year 1997 (i.e. January 1,
1997-December 31, 1997).
(b) Commencing on April 1, 1999 and continuing until the expiration of the
Term, the definition of Tenant's Included Share of Operating Expenses set forth
in Section 1.1 of the Original Lease, as supplemented in accordance with
subparagraph 8(a) above, shall be deleted in its entirety and the following
definition of Tenant's Included Share of Operating Expenses shall be inserted in
lieu thereof: "100% of the actual operating expenses per r.s.f. of the Combined
Premises during the calendar year 1997 (i.e. January 1, 1997 - December 31,
1997).
10. Tenant's Proportionate Share of Real Estate Taxes and Operating
Expenses. Effective as of the Expansion Premises Effective Date, Section 4.2.4
of the Original Lease shall be deleted in its entirety and the following
inserted in lieu thereof with respect to the periods referred to herein below:
(a) Commencing on the Expansion Premises Effective Date and continuing
until March 31, 1999: Tenant's proportionate share of real estate taxes pursuant
to Section 4.2.1 shall be the excess of real estate taxes allocable to the
Premises over Tenant's Included Share of Real Estate Taxes, where real estate
taxes allocable to the Premises means the real estate taxes for the Property
multiplied by a fraction, the numerator of which is the number of r.s.f. of the
Premises and the denominator of which is the number of r.s.f. determined by
multiplying the Total Rentable Floor Area of the Building by ninety-five percent
(95%). Tenant's proportionate share of operating expenses pursuant to Section
4.2.3 shall be the excess of operating expenses allocable to the Premises over
Tenant's Included Share of Operating Expenses, where operating expenses
allocable to the Premises means the operating expenses for the Property
multiplied by a fraction, the numerator of which is the number of r.s.f. of the
Premises and the denominator of which is the number of r.s.f. determined by
multiplying the Total Rentable Floor Area of the Building by ninety-five percent
(95 %). Tenant's proportionate share of real estate taxes pursuant to Section
4.2.1 shall be calculated by making three separate calculations in accordance
with this Section 4.2.4: (i) the first calculation using Tenant's Included Share
of Real Estate Taxes for the Third Floor Space and the Initial Second Floor
Space, (ii) the second calculation using Tenant's Included Share of Real Estate
Taxes for the Additional Second Floor Space and (iii) the third calculation
using Tenant's Included Share of Real Estate Taxes for the Expansion Premises;
the positive results such calculations shall be added together to produce
Tenant's proportionate share of real estate taxes payable pursuant to Section
4.2.1. Tenant's proportionate share of operating expenses pursuant to Section
4.2.1 shall be calculated by making three separate calculations in accordance
with this Section 4.2.4: (X) the first calculation using Tenant's Included Share
of Operating Expenses for the Third Floor Space and the Initial Second Floor
Space, (y) the second calculation using Tenant's Included Share of Operating
Expenses for the Additional Second Floor Space and (z) the third calculation
using Tenant's Included Share of Operating Expenses for the Expansion Premises;
the positive results of such calculations shall be added together to produce
Tenant's proportionate share of operating expenses payable pursuant to Section
4.2.1. The annual adjustment of Tenant's proportionate share of real estate
taxes and operating expenses, as provided for hereunder, shall be made on each
anniversary of the Third Floor Rent Commencement Date.
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(b) Commencing on April 1, 1999 and continuing until the expiration of the
Term: Tenant's proportionate share of real estate taxes pursuant to Section
4.2.1 shall be the -excess of real estate taxes allocable to the Premises over
Tenant's Included Share of Real Estate Taxes, where real estate taxes allocable
to the Premises means the real estate taxes for the Property multiplied by a
fraction, the numerator of which is the number of r.s.f. of the Premises and the
denominator of which is the number of r.s.f. determined by multiplying the Total
Rentable Floor Area of the Building by ninety-five percent (95%). Tenant's
proportionate share of operating expenses pursuant to Section 4.2.3 shall be the
excess of operating expenses allocable to the Premises over Tenant's Included
Share of Operating Expenses, where operating expenses allocable to the Premises
means the operating expenses for the Property multiplied by a fraction, the
numerator of which is the number of r.s.f. of the Premises and the denominator
of which is the number of r.s.f. determined by multiplying the Total Rentable
Floor Area of the Building by ninety-five percent (95 %). The annual adjustment
of Tenant's proportionate share of real estate taxes and operating expenses, as
provided for hereunder shall be made on each anniversary of the Third Floor Rent
Commencement Date.
11. Parking. Commencing on the Expansion Premises Effective Date, the
maximum number of parking spaces to which Tenant shall be entitled under the
Amended Lease shall be increased by 21 parking spaces, so that Tenant shall be
entitled to up to 87 parking spaces in the aggregate. The Tenant shall pay the
prevailing market rate which may be adjusted from time to time, for each parking
space used by Tenant in the Building. The prevailing market rate is currently
$175.00 per month. Notwithstanding anything to the contrary contained in the
Amended Lease, Tenant may sublet one (1) parking space per one thousand square
feet of subleased rentable area; provided such sublease is first approved by
Landlord; and further provided that Tenant shall not charge any such sublessee
of parking spaces more than the rent charged therefor by Landlord.
12. Expansion Option. Section 2.6 of the Original Lease shall be amended
by deleting the words; first floor currently occupied by National Computer
Systems, Inc., or any of the space in the Building currently occupied by David
L. Babson or the EF Company" and inserting therefor the words "first, ninth,
fifteenth, sixteenth or seventeenth floor".
13. Extension Option. For all purposes of the extension option to which
reference is made in Section 1.1 and Section 2.5 of the Original Lease, the five
(5) year period with respect to which Tenant may extend the Term shall mean the
five (5) year period commencing on July 1, 2004, and the term "Extension Term"
set forth in the Original Lease is hereby so amended. Consequently, Section 2.5
of the Original Lease shall also be amended by deleting the date "May 31, 1998"
in the eighth line thereof and inserting in lieu thereof the date "June 30,
2003," deleting the date "May 1, 1998" in the nineteenth line thereof and
inserting in lieu thereof the date "July 1, 2003," and deleting the word
"Original" in the sixth line thereof. Additionally, the words "the day following
the expiration of the Original Term" on the fortieth line thereof shall be
deleted and inserted in lieu thereof shall be the date "July 1, 2004. "
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14. Security Deposit. The Letter of Credit shall be maintained by
Tenant at its current level of $275,000 for the remainder of the term of the
Amended Lease, as extended pursuant to this Second Amendment.
15. Plan Showing Tenant's Space. Effective as of the Fifth Floor
Surrender Date, Exhibit B to the Original Lease shall be replaced with the
plan showing the Combined Premises attached hereto as Schedule 1.
16. Signs. Landlord has agreed to allow Tenant to have additional
signage in or about the Building on terms and conditions satisfactory to
Landlord. Tenant acknowledges that all signage must be approved by Landlord,
the City of Cambridge, any other applicable governing authority and Congress
Group Ventures.
17. Relocation. Section 10.22 of the Original Lease is hereby deleted
in its entirety.
18. Brokerage. Each party hereto represents and warrants to the other
party that it has not dealt with any real estate broker or agent in connection
with this Second Amendment or the Lease or either of their negotiation, except
for Fallon, Hines & O'Connor. Each party hereto shall indemnify the other party
and hold the other party harmless from any cost, expense or liability (including
costs of suit and reasonable attorneys' fees) for any compensation, commission
or fees claimed by any other real estate broker or agent in connection with this
Second Amendment or the Amended Lease or either of their negotiation by reason
of any of its acts. Landlord shall be responsible for any brokerage commission
payable to Fallon, Hines & O'Connor in connection with this Second Amendment,
pursuant to a separate agreement.
19. Authority. Landlord and Tenant each warrant tO the other that the
person or persons executing this Second Amendment on its behalf has or have
authority to do so and that such execution has fully obligated and bound such
party to all terms and provisions of this Second Amendment.
20. Ratification. As modified by this Second Amendment, the Lease is in
full force and effect and Landlord and Tenant ratify and confirm the same.
21. Interpretation and Partial Invalidity. If any term of this Second
Amendment, or the application thereof to any person or circumstances, shall to
any extent be invalid or unenforceable, the remainder of this Second Amendment,
or the application of such term to persons or circumstances other than those as
to which it is invalid or unenforceable, shall not be affected thereby, and each
term of this Second Amendment shall be valid and enforceable to the fullest
extent permitted by law. The titles for the paragraphs are for convenience only
and not to be considered in construing this Second Amendment. This Second
Amendment contains all of the agreements of the parties with respect to the
subject matter hereof, and supersedes all prior dealings between them with
respect to such subject matter.
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IN WITNESS WHEREOF, the parties have executed this Second Amendment as a
sealed instrument, in two or more counterparts, as of the day and year first
above written.
Landlord:
ONE MEMORIAL DRIVE LIMITED
PARTNERSHIP
By: One Memorial Drive Property
Management, Inc., its agent
By: /s/ Dean F. Stratouly
-----------------------------
Dean F. Stratouly,
President
Hereunto duly authorized
Tenant:
SAPIENT CORPORATION
By: /s/ Gerard D. Kiley .
-------------------------------------
Name:Gerard D. Kiley
Title: Director of Operations
Hereunto duly authorized
By:
-------------------------------------
Name:
-----------------------------
Title:
----------------------------
Hereunto duly authorized
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EXHIBIT 10.4
ASSIGNMENT AND ASSUMPTION OF 101 CALIFORNIA LEASE
THIS ASSIGNMENT AND ASSUMPTION OF 101 CALIFORNIA LEASE (the "Assignment"),
is made as of this 9 day of December, 1996, by and between TRI VALLEY GROWERS, a
California cooperative association ("Tri Valley") and SAPIENT CORPORATION, a
Delaware corporation ("Sapient").
RECITALS:
WHEREAS, TVG is the tenant under that certain 101 California Lease
attached hereto as Exhibit A (the "Lease"), under which TVG has leased from 101
California Venture ("Landlord") approximately 64,277 square feet of net rentable
office space (the "Leased Premises") within the office building located at 101
California Street, San Francisco, California, 94111 (the "Building"). The Leased
Premises consists of the entire fourth floor Building (the "Fourth Floor Space")
(consisting of approximately 32,283 rentable square feet) and the entire fifth
floor of the Building (the "Fifth Floor Space") (consisting of approximately
31,994 rentable square feet),
WHEREAS, TVG has agreed to assign its interest in the Lease and the Leased
Premises to Sapient, and Sapient has agreed to assume and accept TVG's interest
in the Lease and the Leased Premises, all in accordance with the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the above recitals, the mutual
promises and covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. ASSIGNMENT, ASSUMPTION AND DELIVERY OF LEASE AND LEASED PREMISES.
(a) Fifth Floor Space. TVG hereby assigns to Sapient all of TVG's
right, title and interest in and to the Lease as it relates to the Fifth Floor
Space, and the Fifth Floor Space; and Sapient agrees that, commencing on the
First Delivery Date (as defined below), Sapient shall be responsible for all of
TVG's duties and obligations under the Lease as it relates to the Fifth Floor
Space.
The term "First Delivery Date" is defined herein to mean the date that TVG
delivers the Fifth Floor Space to Sapient. TVG shall deliver the Fifth Floor
Space to Sapient, and Sapient shall accept the Fifth Floor Space no later than
January 27, 1997. TVG may extend its delivery of the Fifth Floor Space, without
penalty, for up to five (5) business days past January 27, 1997, provided that
TVG delivers written notice of such extension to Sapient and Landlord on or
before January 17, 1997.
<PAGE> 2
For each day after February 1, 1997 that TVG has not delivered the Fifth
Floor Space to Sapient, TVG shall be obligated to pay to Sapient a penalty equal
to two days rent for said Fifth Floor Space. Additionally, if TVG has not
delivered the Fifth Floor Space to Sapient by April 8, 1997, then Sapient may
terminate this Agreement and receive back all prepaid rent paid to TVG
hereunder. Prior to the First Delivery Date, TVG agrees that it shall continue
to be obligated to pay all amounts that are, or become, owing under the Lease
that are attributable to the Fifth Floor Space and that TVG shall pay all such
amounts directly to the Landlord when due, and TVG agrees that if it fails to
pay any amounts owing as to the Fifth Floor Space prior to the First Delivery
Date, then Sapient may pay such amounts directly to the Landlord and thereafter,
Sapient shall be entitled to collect such amounts from TVG on demand and with
any interest permitted to be charged by the Landlord under the Lease. TVG also
agrees that it shall defend and hold Sapient harmless from and against any and
all claims, demands, causes of action, losses, costs (including, without
limitation, court costs and reasonable attorneys' fees), liabilities and damages
of any kind or nature whatsoever with respect to acts, occurrences or omissions
relating to the Fifth Floor Space and that originate from TVG's occupancy of the
Fifth Floor Space.
Sapient agrees that it is obligated to begin paying all amounts owing
under the Lease that are attributable to the Fifth Floor Space, including,
without limitation, Base Rent, Additional Rent, Tenant's Proportionate Share of
Estimated Basic Operating Costs, and Basic Operating Cost Adjustments on the
First Delivery Date and thereafter, all in accordance
with the terms of the Lease.
For purposes of determining the amounts payable under the Lease which are
attributable to the Fifth Floor Space, the parties agree that: (1) the Net
Rentable Area of the Fifth Floor Space is 31,994 square feet; and (2) the
Tenant's Proportionate Share for the Fifth Floor Space is 0.028263%.
(b) Fourth Floor Space. TVG hereby assigns to Sapient all of TVG's right,
title and interest in and to the Lease as it relates to the Fourth Floor Space,
and the Fourth Floor Space; and Sapient agrees that, commencing on the Second
Delivery Date (as defined below), Sapient shall be responsible for all of TVG's
duties and obligations under the Lease as it relates to the Fourth Floor Space.
The term "Second Delivery Date" is defined herein to mean the date that
TVG delivers the Fourth Floor Space to Sapient. TVG shall deliver the Fourth
Floor Space to Sapient, and Sapient shall accept the Fourth Floor Space no later
than January 1, 1998 and no earlier than January 1, 1998 unless requested by
Sapient as set forth below. Should Sapient determine that it needs the Fourth
Floor Space before January 1, 1998, Sapient shall provide TVG and Landlord with
a written notice requesting the Fourth Floor Space prior to January 1, 1998, and
TVG agrees that it shall attempt to accommodate Sapient's request.
For each day after January 1, 1998 that TVG has not delivered the Fourth
Floor Space to Sapient, TVG shall be obligated to pay to Sapient a penalty equal
to two days rent for said Fourth
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Floor Space, and for each day after March 1, 1998 that TVG has not delivered the
Fourth Floor Space to Sapient, TVG shall be obligated to pay to Sapient a
penalty equal to three days rent for said Fourth Floor Space.
If, however, the date on which TVG is able to take possession of its new
leased premises is delayed due to fire, act of God, government act, strike,
labor dispute, unavailability of standard building materials or any other cause
outside of TVG's control that prevents TVG from actually taking possession of
its new leased space, then the Second Delivery Date shall be extended for a
period equivalent to the period of such delay, interruption or prevention, and
Sapient shall not be obligated to pay rent on the Fourth Floor Space until TVG
delivers possession of said space to Sapient (and TVG shall not be obligated to
pay a penalty for any such delay).
Sapient agrees that it is obligated to begin paying all amounts owing
under the Lease that are attributable to the Fourth Floor Space, including,
without limitation, Base Rent, Additional Rent, Tenant's Proportionate Share of
Estimated Basic Operating Costs, and Basic Operating Cost Adjustments on the
Second Delivery Date and thereafter, all in accordance with the terms of the
Lease. Prior to the Second Delivery Date, TVG agrees that it shall continue to
be obligated to pay all amounts that are, or become, owing under the Lease that
are attributable to the Fourth Floor Space and that TVG shall pay all such
amounts directly to the Landlord when due, and TVG agrees that if it fails to
pay any amounts owing as to the Fourth Floor Space prior to the Second Delivery
Date, then Sapient may pay such amounts directly to the Landlord and thereafter,
Sapient shall be entitled to collect such amounts from TVG on demand and with
any interest permitted to be charged by the Landlord under the Lease. TVG also
agrees that it shall defend and hold Sapient harmless from and against any and
all claims, demands, causes of action, losses, costs (including, without
limitation, court costs and reasonable attorneys' fees), liabilities and damages
of any kind or nature whatsoever with respect to acts, occurrences or omissions
relating to the Fourth Floor Space and that originate from TVG's occupancy of
the Fourth Floor Space.
Additionally, if Landlord exercises its remedies under the Lease and
removes TVG from the Fourth Floor Space prior to the Second Delivery Date, then
TVG and Sapient agree that Sapient may assume possession of the Fourth Floor
Space prior to the Second Delivery Date and thereupon shall become obligated to
pay to Landlord all amounts that become owing under the Lease relative to the
Fourth Floor Space from and after the date that Sapient occupies the Fourth
Floor Space.
For purposes of determining the amounts attributable to the Fourth Floor
Space, the parties agree that: (1) the Net Rentable Area of the Fourth Floor
Space is 32,283 square feet; and (2) the Tenant's Proportionate Share for the
Fourth Floor Space is 0.028518%.
(c) Suspension of Rent During Tenant Improvements. Notwithstanding the
foregoing, TVG agrees that: (1) Sapient's obligation to begin paying all amounts
owing under the Lease which are applicable to the Fifth Floor Space shall not
commence until ninety (90) days after the First Delivery Date; and (2) Sapient's
obligation to begin paying all amounts owing under
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the Lease which are applicable to the Fourth Floor Space shall not commence
until the earlier of (i) Sapient's occupancy of the Fourth Floor Space for
business operations, or (ii) sixty (60) days after the Second Delivery Date.
Additionally, either applicable rent commencement date shall be further delayed
for any delays in Sapient's occupancy of the Leased Premises that are actually
caused by TVG, such as TVG's failure to timely remove its personal property from
the Leased Premises or restore the Leased Premises in accordance with Sections
5.5 and 5.18 of the Lease. Following the delivery of the space to Sapient,
Sapient's obligation to begin paying amounts under the Lease at the times
described above, shall not be delayed for any events occurring outside of the
control of TVG or Sapient, such as acts of God, war, nature, or other acts
offorce majeure.
(d) Rights to Extend, Expand, and of First Opportunity. This Assignment
includes TVG's assignment to Sapient of the right to extend the term of the
Lease under Section 3.3 of the Lease; the right to expand into additional space
under Section 2.3 of the Lease; and the right of first opportunity under Section
2.4 of the Lease, PROVIDED THAT AND IF AND ONLY If THE FOLLOWING EXPRESS
CONDITIONS PRECEDENT HAVE BEEN SATISFIED TO TVG'S SOLE SATISFACTION PRIOR TO
SAPIENT'S EXERCISE OF ANY SUCH RIGHT: (1) that the Landlord shall release TVG
from all liability and obligations under the Lease prior to Sapient's exercise
of the right to extend the term of the Lease, and (2) the Landlord shall agree
that TVG shall not be liable to Landlord for the additional obligations incurred
by Sapient by reason of its request to expand into additional space or Sapient's
request to exercise a right of first opportunity. If Sapient exercises any right
enumerated in this Section without first obtaining the prior written consent of
the Landlord to releaseor hold TVG harmless as required by this Section, then
such action by Sapient shall not be effective as between Sapient and TVG, and
Sapient shall indemnify and hold TVG harmless from and against any and all
claims, demands, causes of action, losses, costs (including, without limitation,
court costs and reasonable attorneys' fees), liabilities and damages of any kind
or nature whatsoever that originate as a result of Sapient's exercise of such
right(s).
In TVG's sole and complete discretion, any of the foregoing conditions may
be waived by a writing signed by TVG and Sapient, in whole or in part, in the
event that Sapient is willing and able to provide TVG with security that is
satisfactory to TVG in its sole and complete discretion for Sapient's
performance of the obligations created by the exercise of the extension,
expansion and/or right of first opportunity rights granted under Sections 3.3,
2.3, and 2.4, respectively, of the Lease, and which such security must be in
place prior to Sapient's exercise of any one or more of the rights enumerated
above.
2. CONDITION OF LEASED PREMISES. Subject to the limitations set forth in
this Section 2, Sapient agrees that it shall accept the Fifth Floor Premises in
a broom clean condition, and in its "AS IS, WHERE IS CONDITION, AND WITH ALL
FAULTS" as of the First Delivery Date, and agrees that it shall accept the
Fourth Floor Premises in its "AS IS, WHERE IS CONDITION, AND WITH ALL FAULTS" as
of the Second Delivery Date. Sapient understands and agrees that TVG may make
certain minor alterations to the Fourth Floor Space to accommodate TVG's
relocation of some of its employees from the Fifth Floor Space to the Fourth
Floor Space. Such minor modifications shall be done only with the prior consent
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and approval of Landlord. SAPIENT AGREES AND UNDERSTANDS THAT TVG HAS NOT MADE
AND IS NOT MAKING ANY REPRESENTATION, EXPRESS OR IMPLIED, CONCERNING ANY
PHYSICAL ASPECT OR CONDITION OF THE BUILDING OR THE LEASED PREMISES, INCLUDING,
WITHOUT LIMITATION, THE OPERATION OR CONDITION OF THE MECHANICAL SYSTEMS LOCATED
THEREIN, OR THE COMPLIANCE OF THE BUILDING OR THE LEASED PREMISES WITH
APPLICABLE CODES, REGULATIONS, AND STATUTES, AND SAPIENT ACKNOWLEDGES TO TVG
THAT IT IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER,
EXPRESS OR IMPLIED, FROM TVG OR ANY OTHER PARTY. TVG'S SOLE REPRESENTATION TO
SAPIENT IS THAT THE CONDITION OF THE LEASED PREMISES SHALL NOT DEVIATE
SUBSTANTIALLY FROM ITS PRESENT CONDITION, EXCEPT FOR INCIDENTAL ITEMS THAT MAY
REASONABLY RESULT FROM TVG'S REMOVAL OF ITS PROPERTY FROM THE LEASED PREMISES,
MINOR CHANGES TO THE FOURTH FLOOR SPACE RESULTING FROM TVG'S RELOCATION OF SOME
OF ITS EMPLOYEES FROM THE FIFTH FLOOR SPACE TO THE FOURTH FLOOR SPACE, AND FOR
ITEMS OF ORDINARY WEAR AND TEAR.
Prior to the respective Delivery Dates, Sapient shall advise TVG what
personal property, if any, it would like to purchase from TVG. Any such personal
property shall be conveyed to Sapient by means of a Bill of Sale acceptable to
both TVG and Sapient, to be executed and delivered by TVG at the time that it
delivers the applicable portion of the Leased Premises to Sapient. TVG shall
remove all other movable personal property from the Leased Premises prior to the
date that such space is to be delivered to Sapient.
TVG shall make the restorations to the Leased Premises that are described
on Exhibit B attached hereto, which Landlord has represented to TVG are the only
restorations required by Sections 5.5 and 5.18 of the Lease with respect to the
removal of TVG's improvements in the Leased Premises.
3. TENANT IMPROVEMENT ALLOWANCE. TVG will provide Sapient with an
improvement allowance of $18.00 per rentable square foot of the Fifth Floor
Space and the Fourth Floor Space. Such allowance may be used by Sapient to
complete any required construction work in the Leased Premises, including,
without limitation, the right to use such funds for items such as compliance
with the Americans with Disabilities Act, upgrade of the fire/life safety
systems of the Leased Premises, and for compliance with other local, municipal,
county, state and federal codes, regulations, rules, laws and ordinances;
compliance with which shall be Sapient's sole and complete responsibility.
The improvement allowance for the Fifth Floor Space shall be funded no more
often than monthly and in three (3) equal installments, with the first funding
to occur no earlier than thirty (30) days after the First Delivery Date. The
improvement allowance for the Fourth Floor Space shall be funded no more often
than monthly and in two (2) equal installments, with the first funding to occur
no earlier than thirty (30) days after the Second Delivery Date. The foregoing
notwithstanding, no distribution of funds shall be made until Sapient has
commenced work on the Leased Premises. All distributions shall be made by TVG to
Sapient no later than ten (10) business
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days after receipt by TVG of a written request for such funds, which written
request must include copies of the general contractor's invoices and conditional
lien waivers; and unconditional lien waivers from the general contractor prior
to the final distribution for each floor.
All construction to the Leased Premises shall be the sole responsibility of
Sapient and shall follow the guidelines contained in the Lease. Sapient shall be
entitled to select the architect, engineer and contractor of its choice for the
tenant improvements, subject to the terms contained in the Lease and subject to
approval of the selected providers by the Landlord.
4. PREPAID RENT. Upon the execution of this Assignment, Sapient shall pay
to TVG the following amounts, which sums shall be held by TVG for application to
the payment obligations of Sapient for its first full month of occupancy of the
Fifth Floor Space: (i) $25,328.58 (Base Rent for the Fifth Floor Space); and
(ii) $32,847.17 (Monthly Proportionate Share of Operating Expenses attributable
to the Fifth Floor Space. Sapient shall also pay to TVG on the Second Delivery
Date the sum of $25,557.38 (Base Rent for the Fourth Floor Premises). All such
amounts shall be held by TVG until such time as they become owing by Sapient
under the terms of this Assignment, at which time TVG shall pay such sums to
Landlord or credit such sums against any amount already paid by TVG to Landlord.
Sapient is obligated to pay any shortfall in the Proportionate Share of
Operating Expenses owing to Landlord over and above the amount paid to TVG under
this Section.
5. PRORATIONS. TVG and Sapient agree that TVG shall be entitled to receive
or obligated to pay (as the case may be) the Basic Operating Cost Adjustment
which is attributable to the Leased Premises for calendar year 1996. TVGis
obligated to pay all amounts accruing for the Fourth Floor Space until the
Second Delivery Date. Additionally, TVG and Sapient agree that TVG shall be
entitled to receive or obligated to pay (as the case may be) the Basic Operating
Cost Adjustment as it relates to the Fourth Floor Space for calendar year 1997;
unless Sapient takes possession of the Fourth Floor Space prior to January 1,
1998, in which event the Basic Operating Cost Adjustment as it relates to the
Fourth Floor Space for calendar year 1997 shall be prorated by and between
Sapient and TVG as of the date that Sapient becomes obligated to pay rent for
the Fourth Floor Space as determined under Section l(c) herein. If the dates on
which Sapient becomes obligated to pay all amounts owing under the Lease,
relative to the Fifth Floor Space and the Fourth Floor Space, falls on a day
other than the first day of a calendar month, then Sapient shall reimburse TVG
for the pro rata amount of rent and other charges applicable to the remaining
portion of such calendar month.
6. PARKING. The Lease provides TVG with four (4) automobile parking spaces
and space for parking up to twelve (12) bicycles in the Building. These parking
spaces will be delivered to Sapient as follows:
(a) One (1) automobile parking space and one-half of all bicycle spaces
presently available to TVG, if any, shall be assigned to Sapient at such time as
Sapient actually occupies the Fifth Floor Space; and
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(b) Three (3) automobile parking spaces and all remaining bicycle spaces,
if any, shall be assigned to Sapient at such time as Sapient actually occupies
the Fourth Floor Space.
7. USE OF STAIRWAY. TVG currently uses a key pad security system for
travel between the Fourth Floor Space and the Fifth Floor Space via the
Building's core stairways. TVG shall leave the security system with the Leased
Premises and Sapient shall be allowed to use the interior security system when
both floors are occupied by Sapient. Prior to that time, the two floors shall be
independently secured.
8. TVG'S REPRESENTATIONS, WARRANTIES AND COVENANTS. TVG, for itself and
its legal representatives, successors and assigns, covenants, represents, and
warrants to Sapient and agrees as follows:
(a) TVG has full right, authority and power to assign its rights and
interests in and under the Lease.
(b) No other assignment of the Lease has been made by TVG, and the rights
and interests of TVG in and under the Lease are free and clear of any liens and
encumbrances made by TVG.
(c) TVG is not on the date hereof in default under any of the terms of the
Lease, TVG having performed all of the obligations imposed upon TVG as lessee
under the Lease, and TVG agrees that it has or shall perform all obligations
under Sections 5.5 and 5.18 of the Lease with respect to the removal of TVG's
improvements in the Leased Premises.
(d) TVG has no knowledge of any default in the performance and observance
of obligations contained in the Lease to be kept, observed and performed by
Landlord.
(e) TVG has not executed or otherwise entered into subleases, tenancies,
occupancy Assignments or other Assignments with respect to rights affecting
possession of the Leased Premises or any portion thereof and there are no such
Assignments entered into or executed by any third party.
(f) TVG shall indemnify and hold Sapient harmless from and defend Sapient
against any and all claims, demands, causes of action, losses, costs (including,
without limitation, court costs and reasonable attorneys' fees and any default
charges paid by Sapient under the Lease), liabilities and damages of any kind or
nature whatsoever that originate prior to the First Delivery Date with respect
to acts, occurrences or omissions relating to the Fifth Floor Space and that
arise out of the TVG's obligations under the Lease prior to that date. TVG
further agrees to indemnify and hold Sapient harmless from and defend Sapient
against any and all claims, demands, causes of action, losses, costs (including,
without limitation, court costs and reasonable attorneys' fees and any default
charges paid by Sapient under the Lease), liabilities and damages of any kind or
nature whatsoever that arise after the Second Delivery Date with respect
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to acts, occurrences or omissions relating to the Fourth Floor Space and that
originate from TVG's occupancy of the Fourth Floor Space.
(g) The copy of the Lease attached hereto as Exhibit A is a true and
accurate copy of the Lease as currently in effect.
(h) The Lease is, and will as of the Delivery Dates, be in full effect
with respect to the portion of the Leased Premises transferred, and no default
exists or will exist under the Lease as of the Delivery Dates, nor any acts or
events which, with the passage of time or the giving of notice or both, could
become defaults.
(i) Other than those items described in Exhibit B attached hereto, TVG has
not installed any improvements, alterations, moveable equipment, furniture,
trade fixtures and other personal property within the Leased Premise which,
pursuant to the terms of Sections 5.5 and 5.18 of the Lease, must be removed
from the Leased Premises on or before the expiration of the term of the Lease.
(j) From and after the execution of this Assignment by TVG and Sapient,
TVG shall provide Sapient with copies of any and all notices received from the
Landlord, in connection with the Lease or the Leased Premises.
(k) From and after the execution of this Assignment by TVG and Sapient,
TVG shall provide Sapient with copies of any and all notices being provided to
Landlord under the Lease.
9. SAPIENT'S REPRESENTATIONS, WARRANTIES, AND COVENANTS. Sapient, for
itself and its legal representatives, successors and assigns, covenants and
represents to TVG and agrees as follows:
(a) Sapient has the authority to enter into this Assignment and the
persons signing this Assignment on behalf of Sapient are duly authorized to sign
this Assignment on its behalf.
(b) Sapient shall indemnify and hold TVG harmless from and defend TVG
against any and all claims, demands, causes of action, loses, costs (including,
without limitation, court costs and reasonable attorneys' fees and any default
charges paid by TVG under the Lease), liabilities and damages of any kind or
nature whatsoever that originate after the First Delivery Date with respect to
acts, occurrences or omissions relating to the Fifth Floor Space and that arise
out of the Sapient's obligations under the Lease or occupancy of the Fifth Floor
Space. Sapient further agrees to indemnify and hold TVG harmless from and defend
TVG against any and all claims, demands, causes of action, loses, costs
(including, without limitation, court costs and reasonable attorneys' fees and
any default charges paid by TVG under the Lease), liabilities and damages of any
kind or nature whatsoever that arise after the Second Delivery Date with respect
to acts, occurrences or omissions relating to the Fourth Floor Space and that
originate out of Sapient's obligations under the Lease or occupancy of the
Fourth Floor Space.
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(c) From and after the execution of this Assignment by TVG and Sapient,
Sapient shall provide TVG with copies of any and all notices received from the
Landlord, in connection with the Lease or the Leased Premises.
(d) From and after the execution of this Assignment by TVG and Sapient,
Sapient shall provide TVG with copies of any and all notices being provided to
Landlord under the Lease.
(e) Sapient agrees that it may not sublease, assign, transfer, convey or
encumber its interest in the Lease or the Leased Premises without the prior
written consent of TVG, which consent will not be unreasonably withheld.
(f) Sapient shall observe and perform all of the terms and conditions of
the Lease with respect to the Fifth Floor Space on and after the First Delivery
Date and with respect to the Fourth Floor Space on and after the Second Delivery
Date, as and when required, except as such obligations have been assumed by TVG
by this Assignment.
10. LESSOR'S CONSENT. This Assignment and the respective obligations of
the parties hereunder, is expressly conditioned upon TVG's receipt of Landlord's
written consent to this Assignment (in a form acceptable to TVG) on or before
5:00 P.M. (Pacific Time) on Friday, January 3, 1997.
11. NOTICES. Any notice to be given pursuant to this Assignment shall be
in writing and shall be served by hand or private express mail carrier, or by
United States certified or registered mail.
(a) Unless otherwise directed in writing by Sapient, all notices to
Sapient shall be mailed to Sapient at the following addresses.
Prior to the First Delivery Date:
Sapient Corporation
One Memorial Drive
Cambridge, Massachusetts 02142
After the First Delivery Date:
Sapient Corporation
One Memorial Drive
Cambridge, Massachusetts 02142
And to:
Sapient Corporation
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101 California Street, Fifth Floor
San Francisco, California 94120
And with a copy to:
Paul B. Albritton
MacKenzie & Albritton
One Post Street, Suite 500
San Francisco, California 94104
(b) Unless otherwise directed in writing by TVG, all notices to TVG shall be
mailed to TVG at the following addresses:
Prior to the First Delivery Date:
Tri Valley Growers
101 California Street
P.O. Box 7114
San Francisco, California 94120-7114
After the First Delivery Date:
Tri Valley Growers
S&W Plaza
P.O. Box 5580
San Ramon, California 94583
After the Second Delivery Date:
Tri Valley Growers
Bishop Ranch 15
12667 Alcosta Blvd.
San Ramon, California 94583
And with a copy to:
Dean L. Bussey
Doherty, Rumble & Butler, P.A.
3500 Fifth Street Towers
150 South Fifth Street
Minneapolis, Minnesota 55402
12. BROKERAGE COMMISSION. TVG agrees to pay a brokerage commission to
Cushman Realty Corporation / Fallon Hines & O'Connor. The commission will be
calculated from the date on which rent becomes owing by Sapient relative to each
floor of the Building to
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April 21, 2004, at the rate of $1.00 per rentable square foot per year for the
first five (5) years of remaining lease term and $.40 per rentable square foot
per year from the beginning of the sixth year through April 21, 2004, prorated
for any partial years. One half of this commission shall be payable when this
Assignment has been signed by all parties and all of the required consents from
the Landlord have been signed and received by TVG; and the remaining one-half
shall be paid equally between the dates when Sapient starts paying rent for each
floor of the Building, as provided herein.
13. PROTECTION OF TVG'S INTERESTS. In the event that Sapient should fail
to perform or observe any covenant or agreement contained in the Lease or in
this Assignment which causes a default under the Lease, TVG may (after providing
five (5) days written notice to Sapient, except in the event of an emergency or
the possibility of an imminent loss, in which event no notice shall be
required), but without obligation to do so or liability for failure to do so,
and without releasing Sapient from any obligation hereunder, make or do the same
in such manner and to such extent as TVG may deem appropriate to protect the
security hereof, including, specifically, without limiting its general powers,
the right to appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of TVG, and also the right to
perform and discharge each and every obligation, covenant and agreement of TVG
contained in the Lease, and in exercising any such powers to pay necessary costs
and expenses, employ counsel and pay reasonable attorneys' fees. TVG shall be
entitled to draw on the Letter of Credit described in Section 14 herein for the
purpose of curing such default by Sapient, but only after having provided the
notice required above. In the event that TVG draws on the Letter of Credit
described in Section 14 herein, Sapient shall replenish all amounts drawn under
the Letter of Credit within thirty (30) days of TVG's request for replenishment.
Additionally, upon any breach or default by Sapient under this Assignment
or under the Lease, TVG shall be entitled to recover from Sapient any and all
damages incurred by TVG as a result of such breach, or TVG may seek specific
performance of this Assignment, or TVG may seek to terminate some or all of the
rights of Sapient under this Agreement, or TVG may pursue such other remedies as
may be available to TVG at law, in equity or otherwise.
TVG agrees that upon any breach or default by TVG under this Assignment or
under the Lease, Sapient shall be entitled to recover from TVG any and all
damages incurred by Sapient as a result of such breach, or Sapient may seek
specific performance of this Assignment, or Sapient may seek to terminate some
or all of the rights of TVG under this Agreement, or Sapient may pursue such
other remedies as may be available to Sapient at law, in equity or otherwise.
14. LETTER OF CREDIT. Sapient shall obtain, from an issuing bank that is
acceptable for TVG, an irrevocable standby letter of credit ("LC"), in
substantially the same form as the LC attached hereto as Exhibit C. The LC shall
be for the benefit of TVG, shall be in the amount of $300,000.00 and shall be
delivered to TVG upon the execution of this Assignment. The LC shall serve as a
collateral for the full and complete performance by Sapient of the terms and
conditions of the Lease and of this Assignment as they relate to Sapient's
performance of the Lease terms, and may be drawn upon by TVG upon a breach or
default by Sapient under the
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Lease or for a breach of any term in this Assignment that results in a default
under the Lease, after providing Sapient with the notice described in Section 13
above.
After January 1, 1999, the amount of the LC may be reduced from $300,000
to $100,000.00. The LC shall remain in full force and effect until April 21,
2004.
TVG shall pay up to one percent (1 %) annually of the amount of the LC as
and for the issuer's reasonable cost of issuing the LC. This amount shall be
reimbursed to Sapient by way of a credit to Sapient for rent owing under the
Lease that would otherwise be payable by Sapient under the terms hereof.
15. BINDING EFFECT, CHOICE OF LAW. This Assignment shall inure to
the benefit of and be binding upon the parties hereto and their respective
heirs, legal representatives, successors and assigns. This Assignment shall
be governed by the laws of the State of California.
16. CAPTIONS, AMENDMENTS, NOTICES. The captions and headings of the
paragraphs of this Assignment are for convenience only and shall not be used to
interpret or define the provisions of this Assignment. This Assignment can be
amended only in writing signed by TVG and Sapient. Any notice under this
Assignment shall be deemed to have been given when personally delivered or
mailed to each party at its address set forth in the first paragraph.
17. DEFINED TERMS. All defined terms in this Assignment shall have the
meaning set forth in the Lease and the Exhibits attached thereto. To the extent
any defined term in this Assignment contradicts the definition of that term as
contained in the Lease, the definition used in the Lease shall control.
18. COUNTERPARTS. This Assignment may be executed in any number of
counterparts, each of which shall be considered one and the same Assignment
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
IN WITNESS WHEREOF, the undersigned has executed this Assignment of Lease
as of the day and year first above written.
TRI VALLEY GROWERS
By /s/ Richard A. Baker
------------------------------
Name Richard A. Baker
-----------------------------
Title Chief Operating Officer
----------------------------
By
------------------------------
Name
-----------------------------
Title
----------------------------
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IN WITNESS WHEREOF, the undersigned has executed this Assignment of Lease
as of the day and year first above written.
SAPIENT CORPORATION
By /s/ Gerard D. Kiley
------------------------------
Name Gerard D. Kiley
-----------------------------
Title Director of Operations
----------------------------
By
------------------------------
Name
-----------------------------
Title
----------------------------
13
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EXHIBIT 10.5
SUBLEASE
SUBLEASE (this "Sublease") made as of December 20, 1996, between DREMAN
VALUE ADVISORS, INC. ("Sublessor"), a New York corporation, having an office 280
Park Avenue, New York, New York 10022, and SAPIENT CORPORATION ("Sublessee"), a
Delaware corporation, having an office at One Memorial Drive, Cambridge,
Massachusetts 02142.
W I T N E S S E T H :
WHEREAS, Sublessor is the current tenant under a lease, dated June 27,
1989, from S.P.N.W. Management Associates Limited Partnership (the "Landlord"),
to Sublessor, (which lease, is referred to in this Sublease as the "Underlying
Lease"), which Underlying Lease demises to Sublessor a portion of the 20th floor
(the "Underlyinq Premises") in the building known as 10 Exchange Place, Jersey
City, New Jersey (the "Building"), for a term ending on October 31, 1999;
WHEREAS, Sublessee wishes to sublease from Sublessor the entire
Underlying Premises (shown on the floor plan attached to this Sublease as
Exhibit A and referred to as the "Demised Premises"); and
WHEREAS, Sublessor is willing to sublease the Demised Premises to
Sublessee on the terms and conditions set forth in this Sublease.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual obligations hereinafter set forth, and for other valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, Sublessor
and Sublessee agree as follows:
1. Term. Sublessor hereby subleases the Demised Premises to Sublessee,
and Sublessee hereby sublets the Demised Premises from Sublessor, for a term
(the "Term"), commencing on the date upon which the consent of the Landlord to
this Sublease is obtained (the "Sublease Commencement Date"), and ending on
October 30, 1999 (the "Sublease Expiration Date").
2. Demised Premises Sublet "As Is". Sublessee has inspected the Demised
Premises and is fully familiar and satisfied with the condition thereof.
Sublessee shall take the Demised Premises "as is" and acknowledges that
Sublessor has made no representation or warranty concerning the condition of the
Demised Premises.
<PAGE> 2
3. Condition Precedent to Effectiveness of this Sublease. This Sublease
shall not be effective unless and until the Landlord shall have delivered to
Sublessor Landlord's written consent to this Sublease, in accordance with the
provisions of the Underlying Lease, it being the intention of the parties hereto
that this Sublease shall be expressly conditioned upon such consent of the
Landlord first being obtained. If such consent is not received by Sublessor and
possession of the Demised Premises is not delivered to Sublessee on or before
January 23, 1997, this Sublease shall be deemed null and void, all monies
delivered by Sublessee to Sublessor on signing this Sublease shall be returned
to Sublessee and neither party shall have any further obligation to the other.
4. Use of Demised Premises. Sublessee covenants that it shall use the
Demised Premises for the purposes permitted under the Underlying Lease and for
no other purpose.
5. Fixed Rent: Escalation Rent. (a) Commencing thirty (30) days
following the Sublease Commencement Date, if the Sublease Commencement Date
shall occur on or before December 26, 1996, or forty-five (45) days following
the Sublease Commencement Date if the Sublease Commencement Date shall occur
after December 26, 1996, (the "Sublease Rent Commencement Date"), Sublessee
shall pay Sublessor for the Demised Premises fixed rent in the amount of
$250,780 per annum in equal monthly installments due on the first day of each
calendar month during the Term (the "Sublease Fixed Rent") .
Provided that Sublessee is not in default under this Sublease, the
Sublease Fixed Rent payable for the period from the Sublease Commencement Date
to the Sublease Rent Commencement Date shall be abated. Nothing in this
paragraph shall affect the amounts payable by Sublessee pursuant to Article 6 of
this Sublease.
All installments of the Sublease Fixed Rent (and any additional rent
payable by Sublessee to Sublessor hereunder) shall be paid by check, drawn on a
member bank of the New York Clearinghouse Association, to the order of Sublessor
and shall be delivered or mailed to Sublessor at its address first above set
forth, or at such other address as Sublessor may from time to time in writing
designate. If the date on which Sublessee's obligation to pay the Sublease Fixed
Rent or additional rent shall commence on a date other than the first day of a
calendar month or shall end on a date other than the last day of a calendar
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month or shall end on a date other than the last day of a calendar month, then
the Sublease Fixed Rent and additional rent payable by Sublessee shall be
apportioned based upon the portion of such calendar month included within the
Term. On the date of this Sublease, Sublessee has paid Sublessor the first
monthly installment of the Sublease Fixed Rent payable under this Sublease, the
receipt of which is hereby acknowledged.
(b) Sublessee shall pay its proportionate share of all Additional Rent
payable by Sublessor pursuant to the Underlying Lease, except that the base
"Operating Expenses" as defined in Section 3.5 of the Underlying Lease shall be
the Operating Expenses (as defined in the Underlying Lease) for the calendar
year l997. Sublessee is aware that real estate taxes are includes in the
Operating Expenses. The parties acknowledge that, in keeping with the Underlying
Lease; (i) commencing in December 1997, Sublessor shall provide Sublessee with
"Sublessor's Estimate" which shall be the functional equivalent and calculated
in the same manner as "Landlord's Estimate" as provided in Section 3.5(2)(iii)
of the Underlying Lease; and (ii) Sublessee's first payment of Sublessee's
Percentage of estimated Operating Expenses shall not be due until January 1998.
6. Electricity.
(a) Sublessee covenants to purchase electric current for the Demised
Premises in accordance with the Underlying Lease and by whatever method electric
current may be furnished to Sublessor thereunder. Promptly after its receipt of
Sublessor's written demand therefor, Sublessee shall reimburse Sublessor, as
additional rent hereunder, an amount equal to the amount paid by Sublessor for
electric current supplied to the Underlying Premises, without administrative
charges from Sublessor. Sublessee's obligation to reimburse Sublessor under this
Article 6 shall survive the expiration or earlier termination of this Sublease.
(b) Sublessor shall not be liable in any way to Sublessee for any
interruption or failure of or defect in the supply or character of electric
energy furnished to the Demised Premises or for any loss, damage or expense
Sublessee may sustain if either the quantity or character of electric service is
changed or is no longer suitable for Sublessee's
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requirements, whether by reason of any requirement, act or omission of the
public utility serving the Building with electricity or for any other reason.
7. Sublease Subordinate to the Underlying Lease; Sublessee's Covenant
Respecting the Underlying Lease. A true and complete copy of the Underlying
Lease is annexed hereto as Exhibit B. and Sublessee acknowledges that it has
read the Underlying Lease and is fully familiar with the terms and conditions
thereof. This Sublease is subject and subordinate to the Underlying Lease (and
to all matters to which the Underlying Lease is subject and subordinate), and
Sublessee covenants that it shall so conduct itself and its operations in and
about the Demised Premises as not to cause Sublessor to be in default under the
Underlying Lease. Sublessor represents and warrants that: (a) the Underlying
Lease is in full force and effect and has not been modified or amended, except
for letter dated June 28, 1995; and (b) Sublessor has not received any notice of
default from the Landlord and is not aware of any claim by the Landlord that
Sublessor is in default under the Underlying Lease.
8. Incorporation by Reference, with Certain Exceptions, of the Terms
and Conditions of the Underlying Lease. The terms, covenants, provisions and
conditions of the Underlying Lease are hereby incorporated in this Sublease, and
to the extent applicable to the Demised Premises and not inconsistent with any
express provisions of this Sublease, shall be binding upon, and inure to the
benefit of, both parties in this Sublease, those applying to the Landlord in the
Underlying Lease, applying, in this Sublease, to Sublessor, and those applying
to Sublessor, as tenant under the Underlying Lease, applying, in this Sublease,
to Sublessee, with the following exceptions, modifications and supplements:
(a) For the purposes of this Sublease, Articles V, XXIII, XXVI
and XXVII, Sections 1.2, 2.1, 2.2, 2.3, 2.4, 3.1(a), 9.1, 24.3, 24.6, the last
sentence of Section 19.1 and Exhibits A, A-1, B and F of the Underlying Lease
shall not be deemed incorporated in or made a part hereof.
(b) The benefit of all repairs, restorations, materials and
services to be provided to the Demised Premises by the Landlord under the
Underlying Lease shall accrue to Sublessee; but, notwithstanding anything to the
contrary in
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this Sublease or in the Underlying Lease, Sublessor shall under no circumstances
be obligated to make any repairs or restorations or to supply any materials or
services to the Demised Premises; and Sublessor shall under no circumstances be
liable to Sublessee for the failure of the Landlord or others so to do. Upon
Sublessee's written request, Sublessor shall present to the Landlord, in the
name of Sublessor, any demand requested by Sublessee for any such repairs,
restorations, materials or services required to be furnished to the Demised
Premises by the Landlord. Sublessee shall have the right to exercise, in
Sublessor's name, but at Sublessee's sole cost and expense, all of the rights
available to Sublessor to enforce performance of the obligations of the Landlord
to make any such repairs and restorations and to supply any such materials and
services to the Demised Premises. At the option of Sublessee, Sublessee shall
also have the right to require Sublessor, at Sublessor's cost and expense, to
commence an action to enforce the Landlord's obligations under the Underlying
Lease. No failure by the Landlord to make any such repairs or restorations or to
supply any such materials and services to the Demised Premises, and no
cessation, interruption or suspension of any service provided by the Landlord,
shall entitle Sublessee to any diminution or abatement of fixed or additional
rent or other compensation under this Sublease, nor shall this Sublease be
affected by reason of any such failure, cessation, interruption or suspension.
Sublessor covenants to comply with its obligations under the Underlying Lease in
order to avoid a default thereunder.
(c) The concept of "Landlord's Work" set forth in the
Underlying Lease (and all references in the Underlying Lease to Landlord's Work)
shall have no application to this Sublease, it being agreed that neither
Sublessor nor the Landlord shall have any obligation to alter, improve, decorate
or otherwise prepare the Demised Premises for Sublessee's occupancy.
(d) The Base Rent amounts set forth in the Underlying Lease
shall have no application to this Sublease, it being agreed that Sublessee shall
pay fixed rent under this Sublease equal to the Sublease Fixed Rent in
accordance with Article 5 of this Sublease.
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(e) Notwithstanding any provisions contained in the Underlying
Lease to the contrary, Sublessee shall not, without the prior written consents
of both the Landlord and Sublessor in each instance, by operation of law or
otherwise, assign, mortgage or encumber this Sublease, nor the estate and/or
Term hereby granted, nor sublet or permit the Demised Premises or any part
thereof to be used by others. Sublessor's consent to any such sublease or
assignment shall not be unreasonably withheld or delayed. The consent of
Sublessor shall not be required with respect to an assignment or sublease to any
entity which controls, is controlled by or under common control with Sublessee;
provided, however, that Sublessee shall promptly notify Sublessor of any such
sublease or assignment and provide Sublessor with a copy of an agreement
pursuant to which such entity agrees to be bound by the provisions of this
Sublease and, provided further, that Sublessor's consent shall be required if at
any time during the term of this Sublease such affiliation with Sublessee ceases
to exist. The consent of Sublessor shall not be required to a transfer of this
Sublease to an entity resulting from the merger of Sublessee with another
entity; provided, however, that the new entity shall have a net worth equal to
or greater than the net worth of Sublessee on the date of this Sublease and such
entity provides Sublessor with an agreement pursuant to which such entity agrees
to be bound by the provisions of this Sublease.
(f) In the event of the termination or cancellation of the
Underlying Lease for any reason whatsoever, or of the surrender of the
Underlying Lease, whether voluntary, involuntary or by operation of law, prior
to the Sublease Expiration Date, Sublessee, at the option of the Landlord, which
may be exercised at any time during Sublessee's occupancy of the Demised
Premises, shall make full and complete attornment to the Landlord for the
balance of the Term of this Sublease, on the same terms as are contained in this
Sublease. Such attornment shall be evidenced by an agreement in form and
substance satisfactory to the Landlord, which Sublessee shall execute and
deliver within ten (10) days after the request of the Landlord, its successors
or assigns. Sublessee waives the provisions of any law now or hereafter in
effect that may give Sublessee any right of election to terminate this Sublease
or to surrender possession of the Demised Premises in the event any proceeding
is brought by the Landlord under the Underlying Lease to terminate the
Underlying Lease.
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(g) Any covenants, representations and other undertakings of
the Landlord under the Underlying Lease shall not be deemed to be made by, or
otherwise constitute obligations of, Sublessor under this Sublease.
9. Indemnity. In addition to the obligation to indemnify set forth in
the Underlying Lease, Sublessee shall indemnify and hold harmless Sublessor and
the Landlord from and against any and all liabilities, losses, damages, suits,
penalties, claims, demands and judgments of every kind and nature, including,
without limitation, attorneys' fees and disbursements and attorneys' fees and
disbursements incurred in establishing liability and in collecting amounts
payable hereunder (collectively "Liabilities"), arising from the use or
occupancy of the Demised Premises or of any business conducted therein, or from
any work or thing whatsoever done or any condition created by or any other act
or omission of Sublessee, its assignees or subtenants, or its or their
respective employees, agents, contractors, visitors or licensees, in or about
the Demised Premises or any other part of the Building (including, without
limitation, any Liabilities which Sublessor or the Landlord may incur by reason
of any injuries to persons occurring in, on or about the Demised Premises),
unless such Liabilities result from or in connection with any default by
Sublessor under the terms hereof or of the Underlying Lease or the negligence or
intentional acts of Sublessor or the Landlord (as the case may be).
10. Notices. All notices to Sublessee shall be sent to Sublessee's
address first above set forth, and to the Demised Premises, with a copy to
Mackenzie & Albritton, One Post Street, Suite 500, San Francisco, CA 94104
Attention: Paul B. Albritton, Esq. or to such other place(s) or to the attention
of such other individual(s) as Sublessee may hereafter by written notice to
Sublessor designate. All notices to Sublessor shall be sent to Sublessor at the
address first above set forth, with a copy to Kemper Financial Services, Inc.,
120 South LaSalle Street, Chicago, Illinois 60603 Attention: Robert F.
Wetherald, First Vice President, Facilities Management or to such other place(s)
or to the attention of such other individual(s) as Sublessor may hereafter by
written notice to Sublessee designate. Notices from either party to the other
shall be in writing and, notwithstanding anything contained in Article 24 of the
Underlying Lease to the contrary, (i) shall be deemed to have
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been properly given, rendered or made if delivered personally to an officer of
the addressee, with receipt acknowledged, or mailed, postage prepaid, by
registered or certified mail, return receipt requested, and (ii) if delivered
personally shall be deemed given on the day delivered and if sent by registered
or certified mail shall be deemed given on the second business day after
mailing.
11. Repairs, Alterations, Improvements and Other Work. Except as set
forth in Section 9.3 of the Underlying Lease regarding Non-Structural
Improvements, Sublessee shall at no time make any alterations or improvements to
the Demised Premises or install any signs in the lobby or in any of the common
areas of the Building (i) without the prior written consents of both the
Landlord and Sublessor, and (ii) unless Sublessee complies with the requirements
of the Underlying Lease. If Sublessee elects to make improvements or
alterations, Sublessor covenants not to unreasonably withhold or delay its
consent to the same, provided that Sublessee has obtained from the Landlord any
consent which, under the terms of the Underlying Lease or this Sublease, is
required of the Landlord as a condition precedent to the making of such
alterations or improvements. If any such improvements are consented to as
aforesaid, the same shall be performed by Sublessee at its sole cost and expense
in accordance with the terms and provisions of the Underlying Lease.
Sublessee improvements which are to be removed upon the expiration of
the Term shall be identified at the time of approval by Landlord and Sublessor.
If the Landlord shall require Sublessor to remove, after the expiration of the
term of the Underlying Lease, any walls, entrances or other leasehold
improvements made to the Demised Premises by or on behalf of Sublessee,
Sublessor shall so notify Sublessee and Sublessee, prior to the expiration of
the Term of this Sublease, shall remove the same and restore the Demised
Premises and the Building to their condition existing immediately prior to the
installation of such walls, entrances or other leasehold improvements,
reasonable wear and tear and damage due to fire or other casualty to the
Building excepted.
The foregoing notwithstanding, Sublessee shall not be responsible for
removal of any Tenant Trade Fixtures, Non-Structural Improvements, improvements
or alterations installed by or on behalf of Sublessor, nor for the repair of any
damage
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to the Demised Premises solely caused by Sublessor prior to delivery of
possession of the Demised Premises to Sublessee and all liability for removal of
such items under Articles IX and XX of the Underlying Lease shall remain with
Sublessor.
12. Sublessee's Rights. Sublessee shall not have any rights in respect
of the Demised Premises which are greater than the rights of Sublessor under the
Underlying Lease.
13. Time Periods. The time limits provided in the Underlying Lease for
the giving of notices, the making of demands, the performance of any act,
condition or covenant, or the exercise of any right, remedy or option are
changed for the purposes of this Sublease by shortening the same by six (6) days
in each instance, unless such time limit is ten (10) days or less, in which
event it shall be shortened by two (2) days (but in no event less than
twenty-four (24) hours), so that notices may be given, demands made, any act,
condition or covenant performed, or any right, remedy or option hereunder
exercised within the time limit relating thereto contained in the Underlying
Lease.
14. Broker. Sublessee represents that the only brokers with which it
has dealt in connection with this Sublease are Julien J. Studley, Inc. and
Fallon Hines & O'Connor, Inc. (collectively, the "Brokers"). Sublessor shall pay
the Brokers pursuant to a separate written agreement. Sublessee shall indemnify
and hold harmless Sublessor from and against all loss, cost, damage and expense
(including, but not limited to, reasonable legal fees and disbursements and any
legal fees and disbursements incurred either in establishing liability or
collecting monies pursuant to this indemnity provision) incurred by Sublessor by
reason of a breach of the foregoing representation. The provisions of this
paragraph shall survive the expiration or earlier termination of this Sublease.
Sublessor represents that the only brokers with which it has dealt in
connection with this Sublease are Julien J. Studley, Inc. and Fallon Hines &
O'Connor, Inc. (collectively, the "Brokers"). Sublessor shall pay the Brokers
pursuant to a separate written agreement. Sublessor shall indemnify and hold
harmless Sublessee from and against all loss, cost, damage and expense
(including, but not limited to, reasonable legal fees and disbursements and any
legal fees and disbursements incurred either in establishing liability or
collecting monies pursuant
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to this indemnity provision) incurred by Sublessee by reason of a breach of the
foregoing representation. The provisions of this paragraph shall survive the
expiration or earlier termination of this Sublease.
15. Successors and Assigns. Subject to the restrictions on assignment
and subletting in this Sublease and in the Underlying Lease, this Sublease and
the covenants and agreements herein contained and incorporated herein by
reference shall bind and inure to the benefit of the respective successors and
assigns of the parties.
16. Entire Agreement; Amendments: Waiver. This Sublease and Exhibits A
and B hereto set forth the entire agreement of the parties, and shall not be
modified or amended except by a writing signed by the party against whom
enforcement is sought. Neither the waiver of any breach by either party of any
provisions of this Sublease, nor any indulgence by either party in respect of
any payment due it hereunder shall be construed as a waiver of any subsequent
breach or imply any future indulgence.
17. Costs and Expenses. Sublessee shall reimburse Sublessor, on demand,
for all costs and expenses (including attorneys' fees and disbursements and
court costs) incurred by Sublessor in connection with enforcing Sublessee's
obligations under this Sublease, whether incurred in connection with an action
or proceeding commenced by Sublessor, by Sublessee, by a third party or
otherwise. All such amounts shall be deemed to be additional rent, and shall be
collectible whether incurred before or after the expiration or termination of
this Sublease.
Sublessor shall reimburse Sublessee, on demand, for all costs and
expenses (including attorneys' fees and disbursements and court costs) incurred
by Sublessee in connection with enforcing Sublessor's obligations under this
Sublease, whether incurred in connection with an action or proceeding commenced
by Sublessee, by Sublessor, by a third party or otherwise. All such amounts
shall be collectible whether incurred before or after the expiration or
termination of this Sublease.
18. Governing Law. The laws of the State of New Jersey applicable to
contracts made and to be performed wholly within the State of New Jersey shall
govern and control the validity, interpretation, performance and enforcement of
this Sublease.
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19. Termination of Underlying Lease. If the Underlying Lease terminates
as a result of a default or breach by Sublessor or Sublessee under this Sublease
or the Underlying Lease, the defaulting party shall be liable to the
non-defaulting party for the damage suffered as a result of the termination.
20. Corporate Sublessee. Each person executing this Sublease on behalf
of Sublessee hereby covenants, represents and warrants that Sublessee is a duly
incorporated or duly qualified (if foreign) corporation and is authorized to do
business in the State of New Jersey (a copy of evidence thereof to be supplied
to Sublessor upon request); and that each person executing this Sublease on
behalf of Sublessee is an officer of Sublessee and that he or she is duly
authorized to execute, acknowledge and deliver this Sublease to Sublessor (a
copy of a resolution to that effect to be supplied to Sublessor upon request).
21. Captions. The captions are inserted only as a matter of convenience
and for reference and in no way define, limit or describe the scope of this
Sublease nor the intent of any provision hereof.
IN WITNESS WHEREOF, the parties have duly executed this Sublease the day
and year first above written.
SUBLESSOR
DREMAN VALUE ADVISORS,INC.
By: /s/James R. Neel
-----------------
Name:James R. Neel
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Title:President & CEO
-----------------
SUBLESSEE
SAPIENT CORPORATION
By: /s/Gerard D. Kiley
-------------------
Name:Gerard D. Kiley
---------------
Title:Director of Operations
----------------------
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EXHIBIT 10.6
SUBLEASE
This Agreement is made as of the 6 day of August, 1997, by and between
FLEET BANK, NATIONAL ASSOCIATION, a national banking association, having an
address at One Federal Street, MA O1803, Boston, Massachusetts 02110 Attention:
Corporate Facilities, Transaction Group ("Sublessor") and SAPIENT CORPORATION, a
Delaware corporation, having an address at One Memorial Drive, Cambridge,
Massachusetts 02142 ("Sublessee").
W I T N E S S E T H:
WHEREAS, Sublessor is the Tenant (as successor-in-interest to FJN
Corporation) under that certain Lease dated as of October 9, 1987 with Exchange
Place Urban Renewal Associates Limited Partnership ("Landlord"), as amended by
three amendments dated, respectively, October 9, 1987, August 29, 1989 and
October 31, 1995 (the "Prime Lease"), for certain space (the "Premises") at 10
Exchange Place, Jersey City, New Jersey (the "Building"); and
WHEREAS, Sublessee wishes to sublet from Sublessor and Sublessor wishes
to sublet to Sublessee a portion of the Premises leased by Sublessor;
NOW, THEREFORE, in consideration of the premises and other valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS
All capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Prime Lease.
2. SUBLEASE
Subject to the approval of the Landlord, Sublessor hereby subleases to
Sublessee and Sublessee hereby subleases from Sublessor, subject to the terms,
provisions and covenants set forth herein and in the Prime Lease, the portion of
the Premises located on the twenty-fifth floor of the Building (the "Subleased
Premises") (see floor plan annexed hereto as Exhibit A). The parties hereto
agree that for the purposes of this Sublease, the Subleased Premises consist of
32,328 rentable square feet.
3. TERM
(a) The term of this Sublease shall commence on September 1, 1997 (the
"Commencement Date") and, unless earlier terminated pursuant to the terms hereof
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pursuant to the terms of the Prime Lease, shall expire at 11:59 p.m. on
February 27, 2014 ("Sublease Termination Date").
(b) If Sublessor is unable to deliver possession to the Subleased
Premises to Sublessee on or before October 1, 1997, then Sublease Base Rent (as
defined below) shall be abated two days for each full day after October 1, 1997
that the Subleased Premises are not delivered to Sublessee.
(c) If the Landlord's approval of Sublessee and this Sublease pursuant
to Section 7.1 of the Prime Lease is not obtained on or before January 30, 1998,
Sublessor and Sublessee shall each have the right to cancel this Sublease upon
five days written notice to the other.
4. USE
Sublessee shall be able to use the Subleased Premises for any use
permitted under Article VI of the Prime Lease. Further, Sublessee shall not
lease, sublease or assign or otherwise permit all or any portion of the Sublease
Premises to be used as or by a retail or branch banking facility for consumer
use.
5. RENT
(a) Base Sublease Rent: Sublessee shall pay monthly installments of
Base Sublease Rent to Sublessor for the Subleased Premises, in advance, on or
before the first day of each calendar month. Each monthly installment shall be
calculated on the basis of the following:
(i) Commencing on September 1, 1997 to and including August
31, 2000, $25.00 per square foot ($67,350 per month);
(ii) Commencing on September 1, 2000 to and including August
31, 2003, $28.00 per square foot ($75,432 per month);
(iii) Commencing on September 1, 2003 to and including August
31, 2007, $31.00 per square foot ($83,514 per month);
(iv) Commencing on September 1, 2007 to and including February
27, 2014, $32.50 per square foot ($87,555 per month).
The Base Sublease Rent for any partial month shall be pro-rated based
upon the actual number of days in such month.
Rent shall be payable to the attention of Sublessor at R.M. Bradley &
Co., Inc., 19 Pleasant Street, MAMLSB46A, Woburn, MA 01801-4124.
(b) Sublease Additional Rent: Sublessee shall also pay to Sublessor in
the same manner and at the same time as the Base Sublease Rent, Sublessee's
proportionate share of all
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Additional Rent (as same is defined in the Prime Lease) then due and payable
under the Prime Lease and which is applicable to the Subleased Premises by
reason of (a) Operating Expenses, (b) Taxes, and (c) any other amounts (other
than Base Rent and any other amounts expressly excluded by this Sublease) which,
by the terms of the Prime Lease, become due and payable by Sublessor to Landlord
as Additional Rent under the Prime Lease, and which shall exceed Additional Rent
for the year 1997 ("Sublease Base Year"). For purposes of this Sublease,
"Sublessee's Proportionate Share" is 16.15% and was determined by the parties
on the basis of the relationship between the rentable area, which the parties
agree is 32,328 square feet, to the rentable area of the Premises. Sublessee's
Proportionate Share of all Additional Rent, is hereinafter referred to as
"Sublease Additional Rent. Sublessee's obligation to pay Sublease Additional
Rent shall commence on January 1, 1998.
Commencing in December 1997 and continuing annually thereafter (or
within a reasonable time after Sublessor receives the Operating Statement for a
given year from the Landlord, whichever is later), Sublessor shall render to
Sublessee a statement showing in reasonable detail (but in no event will
Sublessor be required to provide more detail than Sublessor received from
Landlord) the estimated amount of the Sublease Additional Rent for the next
ensuing Calendar Year and the Sublease Additional Rent payment, if any, due from
Sublessee for such Calendar Year. The Sublease Additional Rent payment shown on
such statement may, at Sublessor's option, be payable in full or in such
installments (but not more frequent than monthly) as Sublessor may determine.
Sublessee shall pay the amount of the Sublease Additional Rent payment shown on
such statement (or the balance of a proportionate installment thereof, if only
an installment is involved) concurrently with the installment of the Sublease
Base Rent then or next due, or if such statement shall be rendered at or after
the termination of this Sublease, within twenty (20) days after such rendition.
Sublessor's failure to prepare and deliver any statements or bills, or
Sublessor's failure to make a demand under this Article or under any other
provision of this Sublease shall not in any way be deemed to be a waiver of, or
cause Sublessor to forfeit or surrender, its rights to collect any items of
Sublease Additional Rent which may have become due pursuant to this Article 5
during the term of this Sublease. Sublessee's liability for the Sublease
Additional Rent due under this Article 5 shall survive the expiration or sooner
termination of this Sublease.
The payment of Sublease Additional Rent under this Article 5 is an
obligation supplemental to Sublessee's obligation to pay Base Sublease Rent.
(c) Abatement of Rent: Notwithstanding Section 5(a) above, provided
Sublessee is otherwise not in default under this Sublease, Sublessee's
obligation to pay the Base Sublease Rent shall be abated to and commence on
January 1, 1998. Sublessee shall also be entitled to an abatement of the Base
Sublease Rent and Sublease Additional Rent for the four months commencing
September 1 through and including December 31 for each of 1998 and 1999 and such
rent shall not be due on the first of each month during such four month period.
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(d) Payment of Rent: If Sublessee fails to make any payment of Base
Sublease Rent or Sublease Additional Rent within two business days after the
date such payment is due and payable, Sublessee shall pay to Sublessor a late
charge of 2% above the prime interest rate (the "Prime Rate") then being charged
by The Chase Manhattan Bank, N.A., as published at the main branch bank in New
York City, of the amount of such payment. Nothing contained herein shall be
construed as permitting Sublessor to charge or receive interest in excess of the
maximum legal rate then allowed by law. Such late charge and interest shall
constitute Rent due and payable hereunder with the next installment of Base
Sublease Rent due hereunder. This section 5(d) supersedes the late fee provision
contained in Section 19.5 of the Prime Lease.
Sublessor shall have the same rights and remedies in the event of
non-payment by Sublessee of Sublease Additional Rent as are available to
Landlord and at law for the non-payment of fixed rent or of any monthly
installment thereof.
6. CONDITION OF PREMISES
(a) Possession of the Subleased Premises shall be delivered to
Sublessee in "broom clean" condition, but otherwise in "as is" condition.
(b) Upon the Sublease Termination Date, Sublessee shall deliver the
Subleased Premises to Sublessor free of all of Sublessee's furniture and
personal property, and otherwise in accordance with the provisions of the Prime
Lease. The foregoing sentence notwithstanding, Sublessee shall not be
responsible for removal of any Tenant Trade Fixtures, Non-Structural
Improvements, or improvements or alterations installed by or on behalf of
Sublessor, nor for the repair of any damage to the Subleased Premises occurring
prior to the delivery of possession of the Subleased Premises to Sublessee.
(c) Sublessee shall take good care of the Subleased Premises and the
fixtures and appurtenances therein, and shall make all repairs thereto required
by Tenant under the Prime Lease and excluding those provided in the Prime Lease
to be made by the Landlord. Sublessee shall not look to Sublessor for nor shall
Sublessor be responsible for any such repairs unless caused solely by the act or
omission of Sublessor.
(d) All alterations, installations and improvements made in the
Subleased Premises by either Sublessee or Sublessor shall, subject to the terms
of the Prime Lease and to the rights, if any, of the Landlord, become the
property of the Sublessor and shall remain upon and be surrendered with the
Subleased Premises upon expiration of the term hereof. Notwithstanding the
foregoing, and subject to Schedule A of Exhibit D hereto, Sublessor expressly
reserves the right to require Sublessee at Sublessee's cost and expense, to
remove any Structural Improvements or Non-Structural Improvements made by
Sublessee to the Subleased Premises unless prior to Sublessee making any such
Structural Improvements or Non-Structural Improvements, Sublessor has agreed in
writing that it shall not require Sublessee to remove such Structural
Improvements or Non-Structural Improvements.
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7. BROKER
Each of the parties hereto represents and warrants to the other that it
has not dealt with any broker other than Insignia/Edward S. Gordon Company
Incorporated ("Gordon") and Somerset Realty Services, Inc. ("Somerset") in the
case of the Sublessor and Fallon Hines & O'Connor ("FHO") in the case of
Sublessee in connection with negotiation and approval of this Sublease. Each of
the parties agrees to indemnify and hold harmless the other against any claim
for brokerage fees or commissions by their respective brokers. Any broker's fee
or commission payable to Gordon in connection with this Sublease transaction
shall be paid by Sublessor, and upon receipt of such fee or commission Gordon
shall pay a commission to FHO and to Somerset pursuant to separate agreements
between Gordon and FHO and Gordon and Somerset, both dated July 16, 1997.
8. FURTHER ASSIGNMENT OR SUBLETTING
During the term of the Sublease, Sublessee may assign this Sublease or
sublet the Subleased Premises to a subtenant or assignee whose use will not
violate Article 3 hereof and whose use does not compete, directly or indirectly,
with any business of Sublessor, provided Sublessee first furnishes to Sublessor
all of the information and documentation required by the terms of Article VII of
the Prime Lease and thereafter obtains the approval of the Landlord to the
extent required under the terms of the Prime Lease. After receipt by Sublessor
of such information and documentation, Sublessor agrees to submit to the
Landlord a request by Sublessor to sublease or assign this Sublease as set forth
in said Article. Sublessee understands and agrees that any such sublease or
assignment is subject to the Landlord's approval under Article VII of the Prime
Lease and Sublessor shall have no obligation or liability whatsoever to
Sublessee for the Landlord's refusal or failure to comply with its obligations
under Article VII of the Prime Lease with respect to any sublease or assignment.
The foregoing notwithstanding, subject to the terms of Article VII of
the Prime Lease, Sublessee shall be permitted to assign this Sublease without
the prior consent of Sublessor to a subtenant which controls or is controlled by
or is under common control with Sublessee or any entity which results from the
merger of Sublessee upon 60 days written notice to Sublessor, which notice shall
contain the name and relationship of the proposed assignee to Sublessee.
In no event shall Sublessee sublet or assign this Sublease to more than
three subtenants or assignees, as the case may be.
No assignment or subletting under this Article 8 shall relieve
Sublessee of any obligation under this Sublease.
9. ALTERATIONS
9.1 Sublessee shall not make, nor shall Sublessee permit anyone to
make, any Structural Improvements or Non-Structural Improvements to the
Subleased Premises without
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first (a) submitting copies of all plans, drawings and specifications for all
such proposed Structural Improvements and Non-Structural Improvements to
Sublessor (with respect to Non-Structural Improvements, only if required to be
submitted to the Landlord under the terms of the Prime Lease), (b) with respect
to Structural Improvements only, obtaining the prior written consent of
Sublessor, which consent shall not be unreasonably withheld, and (c) obtaining
the written consent of Landlord for all such Structural Improvements and
Non-Structural Improvements to the extent such consent is required under the
Prime Lease. Sublessor shall submit to Landlord a request by Sublessee for
consent to a Structural or Non-Structural Improvement made in accordance with
this Article 9 if such consent is required under the Prime Lease. All permitted
Structural Improvements and Non-Structural Improvements to the Subleased
Premises shall be made by Sublessee in accordance with the terms of the Prime
Lease, including, without limitation, Article IX thereof. Sublessor shall submit
to the Landlord on behalf of Sublessee a request prepared by Sublessee in
compliance with such Article to make a Structural Improvement consented to by
Sublessor or a Non-Structural Improvement, but Sublessee understands and agrees
that Sublessor has no further obligation with respect to such Structural
Improvement or Non-Structural Improvement or request for Landlord's consent to
same and any such Structural Improvement or Non-Structural Improvement is
subject to the terms of the Prime Lease and any other conditions imposed by the
Landlord under the terms of the Prime Lease. Sublessor shall have no obligation
or liability whatsoever to Sublessee for the Landlord's refusal or failure to
consent to such a Structural Improvement or Non-Structural Improvement.
9.2 Sublessor hereby consents to the plans and specifications for the
Subleased Premises contained in Exhibit D annexed hereto and Sublessee agrees to
remove from the Subleased Premises those Structural Improvements and
Non-Structural Improvements contained in said plans which are listed on Schedule
A thereto upon expiration or earlier termination of this Sublease.
10. PRIME LEASE
(a) Sublessor represents to Sublessee that attached hereto as Exhibit B
is a true and complete copy of the Prime Lease. Sublessee represents to
Sublessor that it has read the Prime Lease and understands and accepts the terms
and conditions thereof and Sublessee covenants that it will not do any act or
thing which will be, result in or constitute a violation or breach of or a
default under the Prime Lease; and any such violation, breach or default shall
constitute a violation and the breach by Sublessee of a substantial obligation
under this Sublease. Sublessor represents to Sublessee that it shall make its
best efforts not to intentionally do any act or thing which will result in or
constitute a violation or breach of or a default under the Prime Lease; and if
any such violation, breach or default shall occur and results in termination of
the Prime Lease, then Sublessor shall be liable to Sublessee for reasonable
damages actually incurred by Sublessee as a direct result thereof, provided,
however, that Sublessor shall not be liable for any consequential damages.
Sublessee shall make its best efforts to mitigate its damages in the event of
termination of the Prime Lease.
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(b) Except as may be inconsistent with the terms hereof, all of the
terms, provisions, covenants and conditions contained in the Prime Lease are
incorporated herein by reference and are hereby made a part of this Sublease
with the same force and effect as if Sublessor were the Landlord under the Prime
Lease and Sublessee were the Tenant thereunder from and after the Commencement
Date. In the event of any breach or violation by Sublessee of any of the terms,
provisions, covenants or conditions of the Prime Lease or of any rules or
regulations promulgated and enforced by the Landlord, or of this Sublease,
including, without limitation, any default in the payment of Sublease Base Rent
or Sublease Additional Rent, or any other violation of this Sublease by
Sublessee, Sublessor shall have and may exercise against Sublessee all of the
rights and remedies available to the Landlord under the Prime Lease in the event
of a default by Sublessor as Tenant thereunder, with the same force and effect
as if each of the terms, provisions, covenants and conditions of the Prime
Lease, except as herein specified to the contrary, were expressly set forth
herein. No waiver of any such violation by either Sublessor or the Landlord
shall be deemed a waiver of the right to thereafter enforce the term, provision,
covenant, condition, rule or regulation in question or a waiver of any
subsequent violation thereof.
(c) Sublessee shall promptly give Sublessor written notice (and a copy)
of any notices served by the Landlord upon Sublessee pursuant to the terms,
provisions and conditions of the Prime Lease. Sublessor shall promptly deliver
to Sublessee written notice and a copy of any notice of default, bill,
communication or any other type of notice served by the Landlord upon Sublessor
pursuant to the terms, provisions and conditions of the Prime Lease, not later
than one business day after Sublessor's receipt of such notice, bill or
communication from the Landlord. Wherever the Prime Lease requires Sublessor, as
tenant thereunder, to take any action or to cure any default (other than a
default in the payment of fixed rent or additional rent) applicable to the
Subleased Premises, then if the need for such action, or if such default is
caused by Sublessee or its agents, employees or invitees, then within a period
of time therein stated, Sublessee shall complete such action or cure such
default not later than 72 hours prior to the expiration of such period and shall
immediately furnish notice of compliance to Sublessor.
(d) Sublessee shall have no rights under this Sublease or the Prime
Lease to exercise any of the following provisions of the Prime Lease without the
prior written consent of the Sublessor which may be granted or withheld for any
reason:
(i) SECTIONS 2.1, 2.2, 2.3 AND 2.4 - TERM
(ii) ARTICLE V - OPTION TO RENEW OR EXTEND
(iii) SECTION 9.1 - TENANT ALTERATIONS
(iv) ARTICLE XI - TENANT SPECIAL ELEVATOR
(v) SECTION 22.2 - COVENANTS OF LANDLORD
(vi) ARTICLE XXIII AND SECTION 1.4 - PARKING
(vii) SECTIONS 24.3 AND 24.6 - GENERAL PROVISIONS
(viii) ARTICLE XXVIII - EXPANSION OF SPACE
(ix) EXHIBIT B
7
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(e) Sublessee shall not do anything which would cause a default under
the Prime Lease or that would cause the Prime Lease to be terminated or
forfeited, and Sublessee shall indemnify and hold Sublessor harmless from and
against any and all claims, liabilities, losses, damage, demands, expenses
(including without limitation reasonable attorneys' fees), actions and causes of
action of any kind whatsoever resulting from Sublessee's (i) failure to observe
the terms and conditions of the Prime Lease or this Sublease and/or (ii) causing
the Prime Lease to be terminated or forfeited.
(f) Sublessor shall not be liable for any damage to persons or property
sustained by Sublessee and others by reason of Sublessee's use and occupancy of
the Subleased Premises or by reason of any act, accident or occurrence in the
Subleased Premises, unless such act, accident or occurrence was the result of
the negligence or misconduct of Sublessor, its agents or employees. Sublessee
agrees to indemnify and to hold Sublessor harmless from and against any and all
claims arising by reason of the use and occupancy of the Subleased Premises by
Sublessee or Sublessee's agents, employees or invitees.
(g) This Sublease is separate from and subordinate to the Prime Lease,
and Sublessor shall not be liable for any act or failure to act caused by the
default of the Landlord under the Prime Lease.
(h) Notwithstanding anything herein contained, the only services or
rights to which Sublessee is entitled hereunder are those to which Sublessor is
entitled under the Prime Lease and for all such services and rights Sublessee
shall look to the Landlord under the Prime Lease, and Sublessor shall have no
obligation to supply any such services or perform any other obligation of
Landlord. Sublessor agrees that in the event the Landlord fails to perform an
obligation or provide a service required of Landlord under the Prime Lease which
directly affects the Subleased Premises, then after written notice from
Sublessee to Sublessor specifying the nature and duration of such failure,
Sublessor shall send written notice to the Landlord requesting such service or
such obligation be provided, as the case may be. If after receipt of such notice
the Landlord still fails to perform such obligation or provide such service,
then Sublessor shall cooperate with any reasonable action proposed or undertaken
by Sublessee to obtain such service or obligation from the Landlord, at
Sublessee's sole cost and expense.
11. Sublessor warrants to Sublessee that the Prime Lease has not been
amended or modified except as expressly set forth in this Sublease; that to its
knowledge, Sublessor is not now, and as of the Commencement Date will not be, in
default or breach of any of the provisions of the Prime Lease; and that
Sublessor has no knowledge of any claim by Landlord that Sublessor is in default
or breach of any of the provisions of the Prime Lease.
12. INSURANCE/CASUALTY/CONDEMNATION
Sublessee shall at its own cost and expense obtain and carry such
insurance with respect to the Subleased Premises as is required of Sublessor
under Section 13.1 of the Prime Lease throughout the term of this Sublease
covering the Landlord, Sublessor and Sublessee,
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as their interests may appear. In the event of damage, destruction or taking of
or the interruption of services to the Subleased Premises which results in an
abatement of rent under the Prime Lease, such abatement shall inure to the
benefit of the Sublessee hereunder. In the event of condemnation, Sublessor
shall be entitled to the amount of any condemnation award to which Sublessor is
entitled in connection with the Subleased Premises and Sublessee may make such
separate claims as are permitted under Section 18.2 of the Prime Lease.
13. ELECTRICITY
The Subleased Premises are separately submetered for electricity. From
and after the Commencement Date and for the term of this Sublease, Sublessee
covenants and agrees to pay to Sublessor, as and when billed, all charges, fees
and expenses for electric current charged by the electrical utility and
attributable to the Subleased Premises.
14. CREDIT FACILITY FOR SUBLESSEE'S IMPROVEMENTS
(a) Credit Facility: During the first year of the term of this
Sublease, Sublessor shall provide Sublessee with a Credit Facility equal to up
to $40 per square foot or $1,293,120. Sublessee shall have the right to draw
down on the Credit Facility for payment of the Approved Sublessee Expenses (as
defined below) in accordance with the terms of this Article 13.
(b) Payment Requests: The Credit Facility shall be made available to
fund written and itemized payment requests (individually, a "Payment Request"
and collectively "Payment Requests") submitted by Sublessee within 15 days after
such request or 15 days after issuance of the Letter of Credit, if required
pursuant to Section 14(e) below. Any Payment Requests must be delivered by
Sublessee to Sublessor on either or both April 15, 1998 and October 15, 1998 for
Approved Sublessee Expenses completed on or before August 31, 1998.
Each Payment Request shall be accompanied by itemized invoices for the
improvement(s) subject thereto and Sublessee's most recent annual or quarterly
report to shareholders, which report shall be promptly updated and delivered to
Sublessor thereafter as soon as available to Sublessee's shareholders.
A payment from the Credit Facility is called a "Credit Facility
Allowance Payment." Sublessor shall have no obligation to provide a Credit
Facility Allowance Payment for an expense which has not been requested by
October 15, 1998 or which is for an expense incurred after July 31, 1998. The
Credit Facility shall be used only to fund Approved Sublessee Expenses.
(c) Allowance Repayment: Each Credit Facility Allowance Payment shall
be amortized (as additional rent hereunder) from the date such Credit Facility
Allowance Payment is made to Sublessee (the "Amortization Start Date") over the
then unexpired portion of the term of this Sublease with interest thereon at a
fixed interest rate equal to 100 basis points over the Prime Rate as of the date
of such Credit Facility Allowance Payment.
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Sublessee shall repay each Credit Facility Allowance Payment, as so amortized
and with interest, in equal monthly installments (the "Sublease Allowance
Repayment") starting on the first day of the calendar month following the
Amortization Start Date for each such Credit Facility Allowance Payment. Failure
to make a Sublease Allowance Repayment when due shall, if not cured within ten
(10) days after written notice, be a default under this Sublease and Sublessor
shall have the same rights and remedies upon such non-payment by Sublessee of
the Sublease Allowance Repayment as are available to Landlord and at law for the
non-payment of fixed rent or any monthly installment thereof.
(d) Approved Sublessee Expenses: For the purposes of this Section,
Approved Sublessee Expenses shall include leasehold improvements, which shall
not include, among other things, personal property or trade fixtures, and shall
include permanent improvements and fixtures and soft costs (but in no event
shall soft costs exceed such 25% of the entire Credit Facility).
(e) Letter of Credit: If at any time that Sublessee submits a Payment
Request or its quarterly financial condition is such that (i) Sublessee's market
capitalization is less than $400,000,000, or (ii) the ratio of Sublessee's debts
to the value of its tangible assets is greater than 55:100, Sublessee shall
immediately post a letter of credit (the "Letter of Credit") equal to the amount
of such Credit Facility Allowance Payment plus the then unamortized balance of
the funds taken down under the Credit Facility substantially similar in form and
substance to Exhibit C annexed hereto as security for the Sublease Allowance
Repayments. If for at least two consecutive quarters after Sublessee has posted
the Letter of Credit Sublessee's quarterly financial condition is such that (z)
Sublessee's market capitalization is more than $400,000, AND (y) the ratio of
Sublessee's debts to the value of its tangible assets is less than 35:100,
Sublessee may terminate the Letter of Credit. If at any time thereafter
Sublessee's quarterly financial condition is such that (i) Sublessee's market
capitalization is less than $400,000,000 or (ii) the ratio of Sublessee's debts
to the value of its tangible assets is greater than 55: 100, then a new Letter
of Credit shall be posted.
If a Sublease Allowance Repayment is not paid within ten (10) days
after written notice that such payment is overdue, Sublessor may, at its
discretion, notify the issuing bank in accordance with the terms of the Letter
of Credit and thereupon receive that portion of the monies represented by the
Letter of Credit to the extent required for the payment of such overdue Sublease
Allowance Repayment(s). Sublessor may then use, apply or retain such monies to
the extent required for payment of the overdue Sublease Allowance Repayments and
Sublessor shall forthwith restore the amount of the Letter of Credit so applied
to the amount required under this Article.
15. RIGHT TO TERMINATE
(a) Subject to the provisions of this Article 15, Sublessee shall have
the right (the "Termination Right") to terminate this Sublease, effective as of
October 31, 2006 (the "Termination Effective Date"), provided that:
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<PAGE> 11
(i) Sublessee shall give Sublessor written notice (the
"Termination Notice") of Sublessee's election to exercise the
Termination Right on or prior to a date that is twelve months prior to
October 31, 2006, Termination Effective Date;
(ii) In consideration of Sublessee's exercise of the
Termination Right, Sublessee shall pay to Sublessor with the
Termination Notice, $ 1,000,000.00 plus the amount of the unamortized
balance of the Credit Facility Fund as of the Termination Effective
Date, if any (the "Termination Payment"); and
(iii) No event of default for which notice has been given by
Sublessor shall have occurred and be continuing (y) on the date that
Sublessee delivers the Termination Notice to Sublessor or (z) on or
before the Termination Effective Date. The failure or delay of
Sublessor in giving notice of a default to Sublessee shall not be
construed as a waiver of Sublessor's right to subsequently give such
notice.
(b) If Sublessee properly exercises the Termination Right, then,
effective as of the Termination Effective Date, this Sublease shall terminate
and end as fully and completely as if the Termination Effective Date was the
last date of the term. Accordingly, and without limiting the generality of the
foregoing (i) on or prior to the Termination Effective Date, Sublessee shall
(and shall cause each of its subtenants, if any) to vacate and surrender the
Subleased Premises in accordance with the provisions of this Sublease, (ii) as
of the Termination Effective Date, Base Sublease Rent and Sublease Additional
Rent shall be apportioned in the same manner and to the same extent as if the
Termination Effective Date was the end of the Sublease term and (iii) from and
after the Termination Effective Date, neither party shall have any further
rights against or obligations to the other by reason of this Sublease or the
estate created hereby, except for such rights and obligations which by the terms
of this Sublease survive the expiration or termination hereof.
1 6. MISCELLANEOUS
(a) All prior understandings and agreements between the parties are
merged within this Sublease which alone fully sets forth the understandings of
the parties. This Sublease may not be changed or terminated orally or in any
manner other than by an agreement in writing and signed by the party against
whom enforcement of the change or termination is sought.
(b) Any notice, demand or other communication required or permitted to
be given or made by either party under this Sublease shall be in writing and
shall be deemed properly given if sent by registered or certified mail, return
receipt requested, addressed to the parties at the addresses set forth below.
Either party may, by notice aforesaid, designate a different address for
communications intended for it.
To Sublessor: Fleet Bank, National Association
One Federal Street, MAOF0803
Boston, MA 02110
Attention: Terence Farrell
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with a copy to: Gabriel Miller, Esq.
Fleet Legal Department
One Federal Street, MABOF31B
Boston,MA 02110
To Sublessee: Sapient Corporation
One Memorial Drive
Cambridge, MA 02142
with a copy to: MacKenzie & Albritton
One Post Street, Suite 500
San Francisco, CA 94104
Attention: Paul Albritton, Esq.
(c) This Sublease will be binding on, and inure to the benefit of, the
parties hereto and their respective successors and permitted assigns.
(d) The parties hereto agree that this Sublease shall not be recorded,
but Sublessor and Sublessee hereby agree to enter into a Memorandum of Sublease
in recordable form, setting forth the terms and provisions of this Sublease,
except the rental provisions.
(e) This Sublease shall not be effective until executed and delivered
by Sublessor and Sublessee and approved to by Landlord as provided below.
IN WITNESS WHEREOF, the parties have executed this Sublease as of the
day and year first above written.
FLEET BANK, NATIONAL ASSOCIATION
By: /s/Terence J. Ferrell
---------------------
Terence J. Farrell
Title: Vice President
SAPIENT CORPORATION
By: /s/Susan Johnson
----------------
Title: CFO
-------------
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EXHIBIT 10.7
SUB-SUBLEASE AGREEMENT
THIS AGREEMENT is made and entered into as of the Is' day of April,
1997 by and between METRO PROVIDER SERVICE CORPORATION, AN ILLINOIS CORPORATION
("Sublessor") and SAPIENT CORPORATION, a Delaware corporation ("Sublessee").
WITNESSETH:
WHEREAS, pursuant to that certain Office Lease Agreement dated February
1, 1987, between Chicago Title and Trust Company as Trustee under a Trust
Agreement dated December 7, 1973 and known as Trust No. 63493 ("Trust No.
63493"), as the original landlord, and Bank of America National Trust and
Savings Association ("B of A"), as tenant (the "Original Lease"), as amended by
the First Amendment to Lease dated March 28, 1995 (the "First Amendment"),
between Rio Grand Properties IV, L.P., a Delaware Limited Partnership, as
successor landlord, and B of A (the Original Lease and the First Amendment are
collectively referred to as the "Master Lease"), copies of which have been
furnished to Sublessee and form a part of this Sub-Sublease Agreement (this
"Sublease"), B of A leased certain leased premises in the office building known
as 200 West Adams Street, Chicago, Illinois (the "Building") located on the real
property (the "Land") described in the Master Lease; and
WHEREAS, Adams Family, L.L.C., a Delaware limited liability company, as
beneficiary, is now the Landlord under the Master Lease ("Landlord"); and
WHEREAS, pursuant to that certain Sublease Agreement dated as of April,
1996 between B of A and Sublessor (the "Prior Sublease"), Sublessor sublet
approximately 27,563 square feet of net rentable area on the 27~ and 28~ floors
of the Building (the "Metro Subleased Premises"); and
WHEREAS, Sublessee desires to sub-sublet approximately Five Hundred
Sixty (560) square feet of net rentable area as shown in Exhibit A (the
"Subleased Premises") of the Metro Subleased Premises on the 27th floor of the
Building identified on Exhibit A attached hereto and made a part hereof and
Sublessor has agreed to sub-sublet the same, on the rates, terms and conditions
hereinafter set forth.
NOW, THEREFORE, Sublessor, for and in consideration of the rents,
covenants, and agreements hereinafter contained on the part of Sublessee to be
paid, kept and performed, does hereby sublet and demise unto Sublessee, and
Sublessee hereby takes and hires from Sublessor, the Subleased Premises.
TO HAVE AND TO HOLD the same unto Sublessee, its successors and
assigns, for a term (the "Sublease Term") to commence on April 1, 1997 (the
"Commencement Date") and to expire on December 31, 1997 subject to the
provisions of the Prior Sublease and the Master Lease, as incorporated herein in
Section 4.2 and upon the rentals, terms, covenants, and provisions set forth in
this Sublease.
AND Sublessor and Sublessee hereby agree as follows:
<PAGE> 2
1. Sublessee covenants and agrees to pay to Sublessor a total rental
for the term of Three Thousand Nine Hundred Ninety-six Dollars ($3,996.00)
payable in equal monthly installments of Four Hundred Forty-four Dollars
($444.00) each in advance, commencing on the Commencement Date and continuing
thereafter on the first day of each month during the term hereof, without notice
or demand and without abatement, deduction, or setoff of any amount whatsoever.
In the event that a month during the Sublease Term is less than a full calendar
month, the monthly rent shall be determined by multiplying the monthly rent by
the actual number of days of the month in the Sublease Term divided by the total
number of days in such month.
2. Sublessee agrees to accept the Subleased Premises in an "as is"
condition, except for latent or hidden, structural, mechanical or electrical
defects or deficiencies.
3. Sublessor and Sublessee agree that, if Sublessor is required by the
Landlord to pay any additional charge for additional electricity (i.e., for
after-hours air conditioning and heating) and such charge is caused by
Sublessee's use, Sublessee will timely pay its proportionate share of such
charges directly to Landlord or reimburse Sublessor therefor upon notice in
writing, as Sublessor shall direct. Sublessee agrees to pay Sublessor its pro
rata share of electricity which is not separately metered. Such share shall be
determined on the basis of the square feet of Subleased Premises divided by the
total square feet which is included in such meter. In the event such proration
is not equitable, either party may request and the parties shall agree to an
equitable adjustment to such proration.
4. Sublessee hereby agrees to lease and occupy the Subleased Premises
subject and subordinate to the terms and provisions of the Master Lease and the
Prior Sublease. The Master Lease is incorporated herein by reference in Section
4.2 on the following understandings:
4.1 For the purpose of the incorporation by reference of
certain provisions of the Master Lease in this Sublease, the term "Landlord" as
used therein shall refer to Sublessor hereunder, its successors and assigns and
the term "Tenant" as used therein shall refer to Sublessee hereunder, its
successors and assigns.
4.2 The following sections of the Master Lease shall be
incorporated herein by reference with respect to the Subleased Premises:
Original Lease Sections: 1.02, 1.19, 7, 8, 9, 10, 12,
13, 14, 15, 16, 17, 20, 21 (with the exception of
21;01(a), 21.01(e) and 21.06(x)), 22, 24, 25, 26,
4.3 Notwithstanding anything contained herein or in the Master
Lease or Prior Sublease to the contrary all other sections, exhibits and riders
of the Master Lease shall not be applicable to this Sublease.
4.4 Each party hereto agrees to perform and comply with the applicable
terms, provisions, covenants and conditions of the Master Lease as incorporated
herein and not to do or suffer or permit anything to be done that would result
in a default under or cause the Master Lease or the Prior Sublease to be
terminated or forfeited.
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4.5 Where the Landlord reserves the right under Sections 16 and 17 of
the Master Lease to enter the Subleased Premises during normal business hours
with prior notice and with minimal disruption of normal business, use and
occupancy of the Subleased Premises, said right shall inure to the benefit of
each Landlord, B of A and Sublessor as regards to the Subleased Premises with
the exception of: Landlord's rights under Sections 16 to exhibit the Premises to
prospective tenants which shall not inure to Sublessor; and with respect to any
areas designated by Sublessee to be "secure" portions of the Subleased Premises
which shall not be accessible to Sublessor except in the event of an emergency.
4.6 With respect to facilities, work, services, maintenance, repairs
and restoration or the performance of other obligations required of the Landlord
and/or B of A under the Master Lease, without limiting Sublessor's obligations
under 4.2, Sublessor shall initially request the same from B of A, upon request
in writing from Sublessee, and shall use all reasonable efforts to obtain the
same from B of A and/or Landlord. Sublessee shall also have the right to request
the same directly from B of A and/or Landlord.
4.7 In connection with any alterations, improvements or additions (as
such terms are used in the Master Lease) desired to be made by Sublessee, the
terms of the Master Lease shall be applicable to this Sublease. Sublessor, B of
A and Landlord hereby consent to the installation of Sublessee's improvements as
shown in attached Exhibit A. Sublessee shall be solely responsible for all costs
involved in the design and construction of subsequent renovations to the
Subleased Premises. Upon execution of this Sublease and prior to commencement of
the Sublease Term and any rent obligation hereunder, Sublessor grants Sublessee
immediate access to the Subleased Premises and Sublessee may commence the
installation of fixtures, equipment and any of Sublessee's leasehold work and
Sublessee shall pursue such installations to completion. During the installation
period prior to the commencement of the Sublease Term, Sublessee agrees to be
bound by the terms and provisions of this Sublease except with respect to the
payment of rent or other charges due hereunder.
4.8 In connection with any assignment or subletting (as used in Section
20 of the Master Lease) desired to be made by Sublessee, the terms of said
Section 20 shall be applicable to this Sublease. Sublessee shall also obtain
Sublessor's proper written consent to any such assignment or subletting, which
consent Sublessor agrees not to unreasonably withhold, and if the consent of the
Sublessor is obtained, Sublessee shall contact B of A and Landlord directly for
B of A's and Landlord's consent, if required, and if either such party refuses
to consent to such assignment or subletting, Sublessor shall, upon request in
writing from Sublessee, use reasonable efforts to secure such consent from B of
A and Landlord. Notwithstanding the foregoing, Sublessee may assign or sublet
the Premises without Sublessor, B of A or Landlord consent, to any entity which
controls, is controlled by, or is under the common control with Sublessee, or to
any entity resulting from any merger or consolidation with Sublessee.
4.9 This Sublease is subordinate and subject to the Master Lease and
the Prior Sublease.
4.10 Sublessor and Sublessee hereby agree that Sublessee shall be
responsible for completion of and payment for the following work to be completed
in accordance with the Plans:
3
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(i) Demising of the Subleased Premises from the portion of the
27th Floor retained by Sublessor; and
(ii) The improvement work shown in Exhibit A.
4.11 The parties acknowledge that Sublessee shall occupy the Sublease
Premises following the expiration of the Sublease term pursuant to a separate
lease agreement executed between Sublessee and Landlord dated March 31, 1997
(the "Sapient Lease") and that Sublessee shall not be obligated to remove the
improvements or alterations made to the Sublease Premises by Sublessee except as
set forth in said lease. In the event Landlord obligates B of A or Sublessor to
remove any improvements alterations made to the Sublease Premises by B of A or
Sublessor from the Subleased Premises, Sublessee shall be responsible for any
modifications to those improvements or alterations by Sublessee, but all other
Sublessor or B of A improvements or alterations shall be removed and restoration
work shall be the obligation of Sublessor or B of A.
5. (a) Sublessor's rights under the Prior Sublease and Master Lease
(excepting such rights as are personal to Sublessor) may be enforceable against
B of A or Landlord by Sublessee on behalf of Sublessor, and Sublessee shall
advise Sublessor, in writing, before taking any action to enforce such rights;
provided, however, the provisions of this Section shall not excuse Sublessor
from seeking to enforce any of tenant's rights under the Prior Sublease or
Master Lease if requested by Sublessee.
(b) If Sublessee shall default in fulfilling any of the terms,
covenants or agreements hereof, or of the Master Lease or the Prior Sublease as
herein incorporated, Sublessor may give Sublessee notice of such default and, if
Sublessee does not cure any rent or additional rent default other than
additional rent that is under dispute, within three (3) days after receipt of
written notice by Sublessee from Sublessor, or any other default within twenty
(20) days, after the receipt of written notice by Sublessee for Sublessor (or if
such default is of such nature that it cannot be cured within such twenty (20)
days and if Sublessee does not commence such curing within such twenty (20) days
and thereafter proceed with reasonable diligence and in good faith to cure such
default), then Sublessor may, at its option, pursue any of the remedies of
Landlord set forth in the Master Lease, including without limitation, the right
to terminate the Sublease, and Sublessee shall remain liable to the extent
provided for therein.
7. In the event Sublessor defaults in keeping, observing or performing
any of the terms, provisions, covenants and conditions contained in the Prior
Sublease or this Sublease, and such default is not cured (or proper corrective
measures to cure such default commenced) by Sublessor within the period
specified for the curing of such defaults, Sublessee shall have the right to
remedy such default after it gives Sublessor written notice thereof. In the
event Sublessor defaults in keeping, observing or performing any of the terms,
provisions, covenants and conditions contained in the Prior Sublease or this
Sublease, and as a result, Sublessee suffers any damage, loss cost or expense,
Sublessor shall indemnify and hold Sublessee harmless from and against any and
all such loss cost and expense incurred or suffered by Sublessee in connection
with such default.
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8. Except for changes or modifications of the Prior Sublease not
relating to the Subleased Premises, Sublessor agrees that Sublessor shall not
modify the Prior Sublease without first obtaining the written consent of
Sublessee to such modification.
9. Sublessee may use the Subleased Premises for general office purposes
and such other common and usual purposes pertaining to the Sublessee's business.
10. Any notice or document required or permitted to be delivered
pursuant to this Sublease and shall be sent to Sublessor or Sublessee,
respectively, at the following addresses, or at such other address as either
such party shall designate by written notice to the other party.
Sublessor: METRO PROVIDER SERVICE
200 West Adams
Chicago, Illinois 60606
with a copy to: Metro Powder Service
200 West Adams, Suite 2800
Chicago, IL 60606
Telephone: (312) 368-0168
Telecopy: (312)
Sublessee: SAPIENT CORPORATION
One Memorial Drive, Third Floor
Cambridge, Massachusetts 02142
Attn: Gerard Kiley
with copy to: MACKENZIE & ALBRITTON
One Post Street, Suite 500
San Francisco, California 94104
Attn: Paul Albritton, Esq.
Telephone: (415) 288-4000
Telecopy: (415) 288-4010
Any notice or document given hereunder shall be in writing and shall be deemed
to be delivered when actually hand delivered if delivered by personal delivery,
three (3) days after mailing if sent by certified mail, return receipt
requested, or the next business day if sent by overnight courier. Sublessor
shall provide Sublessee with any notice of default received from B of A or
Landlord.
11. This Sublease Agreement, the Prior Sublease and the portions of the
Master Lease incorporated herein, and any subsequent written agreement(s) and
modification(s), constitute and are intended to constitute, the entire agreement
of the parties to this Sublease. No terms, conditions, warranties, promises or
understandings of any nature whatever, expressed or implied, exist between the
parties except as may be expressly set forth.
......12. Sublessee and Sublessor hereby agree to indemnify and hold
each other harmless against all costs, expenses, attorneys fees or other
liability for commissions or other compensation
5
<PAGE> 6
of charges claimed, by any broker, consultant or agent regarding this Sublease
Agreement, claiming by, through or under such indemnifying party.
13. (a) The provisions of this Sublease Agreement shall be binding upon
the parties hereto, their successors and assigns and Sublessor shall not enter
into any agreement which shall assign or modify this Sublease Agreement or
Sublessee's rights hereunder without the signed written consent of Sublessee.
Any such successor or assignee shall enter into an agreement at the time of such
succession or other transfer, acknowledging Sublessee's rights and agreeing to
fully perform its obligations to Sublessee hereunder.
(b) The foregoing notwithstanding, the parties acknowledge that,
regardless of any other provision of this Agreement, this Sub-sublease Agreement
shall be of no force and effect in the event the Sapient Lease is not executed
within ten (10) days of the date hereof.
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this Sublease
Agreement in several identical counterparts as of the day and the year first
above written.
SUBLESSOR: METRO PROVIDER SUBLESSEE: SAPIENT CORPORATION,
SERVICE COLORATION, an Illinois a Delaware corporation
corporation
By: /s/ James Chao By: /s/ Susan Johnson
-------------------- --------------------
Name: James Chao Name: Susan Johnson
Title: President Title: Chief Financial Officer
Metroc Provider Service Corp.
6
<PAGE> 1
Exhibit 11.1
Sapient Corporation
Article 6.01 of Regulation S-K
<TABLE>
<CAPTION>
Computation of Shares Used in Computing Net Income Per Share
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1997 1996 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common Stock, beginning of period 9,231,390 11,594,970 8,831,730 11,492,760
Weighted average options exercised
during the period 17,670 57,322 420,330 115,409
Weighted average options
outstanding,
other than those exercised during
the
period, using the treasury stock 1,159,585 1,097,420 1,082,202 1,044,917
method
Stock issued for initial public 1,695,000 - 1,111,374 -
offering
---------- ---------- ---------- ----------
12,103,645 12,749,712 11,445,636 12,653,086
---------- ---------- ---------- ----------
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 38,783,287 38,783,287
<SECURITIES> 18,519,133 18,519,133
<RECEIVABLES> 21,390,058 21,390,058
<ALLOWANCES> 350,000 350,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 79,568,850 79,568,850
<PP&E> 8,263,070 8,263,070
<DEPRECIATION> 3,269,901 3,269,901
<TOTAL-ASSETS> 84,623,107 84,623,107
<CURRENT-LIABILITIES> 6,730,400 6,730,400
<BONDS> 0 0
0 0
0 0
<COMMON> 116,367 116,367
<OTHER-SE> 75,553,096 75,553,096
<TOTAL-LIABILITY-AND-EQUITY> 84,623,107 84,623,107
<SALES> 0 0
<TOTAL-REVENUES> 21,990,391 57,318,849
<CGS> 0 0
<TOTAL-COSTS> 17,580,747 45,337,960
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 504,731 1,612,934
<INCOME-PRETAX> 4,914,375 13,593,823
<INCOME-TAX> 1,847,633 5,088,737
<INCOME-CONTINUING> 3,066,742 8,505,086
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,066,742 8,505,086
<EPS-PRIMARY> .24 .67
<EPS-DILUTED> .24 .67
</TABLE>
