<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 9, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VIANT CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 7371 77-0427302
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Number) No.)
</TABLE>
VIANT CORPORATION
89 SOUTH STREET
BOSTON, MA 02111
(617) 531-3700
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------------
ROBERT L. GETT
PRESIDENT
VIANT CORPORATION
89 SOUTH STREET
BOSTON, MA 02111
(617) 531-3700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<S> <C>
HANK V. BARRY, ESQ. MARK G. BORDEN, ESQ.
ISSAC J. VAUGHN, ESQ. JEFFREY A. STEIN, ESQ.
Wilson Sonsini Goodrich & Rosati Hale and Dorr LLP
650 Page Mill Road 60 State Street
Palo Alto, California 94304 Boston, Massachusetts 02109
(650) 493-9300 (617) 526-6000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
------------------------
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM AGGREGATE
SECURITIES TO BE REGISTERED OFFERING PRICE(1) AMOUNT OF REGISTRATION FEE
<S> <C> <C>
Common Stock ($0.001 par value) $50,000,000.00 $13,900.00
</TABLE>
(1) Estimated solely for the purposes of determining the registration fee
pursuant to Rule 457(o) promulgated under the Securities Act.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PRELIMINARY
PROSPECTUS IS NOT AN OFFER TO SELL NOR DOES IT SEEK AN OFFER TO BUY THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION. DATED APRIL 9, 1999.
Shares
[VIANT LOGO]
Common Stock
-------------
This is an initial public offering of shares of the common stock of Viant
Corporation. All of the shares of common stock are being sold by
Viant.
At the request of Viant, the underwriters have reserved at the initial
public offering price up to shares of common stock for sale to .
Prior to this offering, there has been no public market for the common
stock. It is currently estimated that the initial public offering price per
share will be between $ and $ . Application has been made for
quotation of the common stock on the Nasdaq National Market under the symbol
"VIAN".
SEE "RISK FACTORS" ON PAGE 5 TO READ ABOUT CERTAIN FACTORS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF THE COMMON STOCK.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------
<TABLE>
<CAPTION>
Per Share Total
------------- -------------
<S> <C> <C>
Initial public offering price.................................. $ $
Underwriting discount.......................................... $ $
Proceeds, before expenses, to Viant............................ $ $
</TABLE>
The underwriters may, under certain circumstances, purchase up to an
additional shares from Viant at the initial public offering price
less the underwriting discount.
------------------
The underwriters expect to deliver the shares against payment in New York,
New York on , 1999.
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
BANCBOSTON ROBERTSON STEPHENS
-------------
WIT CAPITAL CORPORATION
FACILITATOR OF INTERNET DISTRIBITION
------------------
Prospectus dated , 1999.
<PAGE>
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION REGARDING US AND OUR COMMON STOCK BEING SOLD IN THIS OFFERING AND
OUR FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS
PROSPECTUS.
OUR BUSINESS
We are a leading Internet professional services firm helping companies to
capitalize on the Internet. We utilize a unique multi-disciplinary service
approach that combines three core disciplines, strategic consulting, creative
design and technology services. Some of the services that we provide for our
clients include the design and development of:
- Internet strategy solutions that help integrate a client's Internet
initiatives with its broader corporate strategies and business practices;
- electronic commerce solutions that enable a company to attract new
customers, and sell goods and services over a Web site;
- business partner solutions, or extranets, that allow companies to share
information and communicate efficiently with one another;
- internal information solutions, or intranets, that improve a company's
ability to capture, store, and distribute helpful information to its
employees; and
- new business ventures exclusively for the Internet.
We focus on Internet initiatives that are critical to our client's
organization. We have provided services to Global 1000 companies including
American Express Company, BankBoston Corporation, Compaq Computer Corporation,
Deutsche Bank AG, Hewlett-Packard Company, Kinko's Corporation, Lucent
Technologies Inc., Polo/Ralph Lauren Corporation and RadioShack.
OUR MARKET OPPORTUNITY
Explosive growth in the Internet has created numerous opportunities for
companies seeking revenue growth and increased operating efficiencies. Few
companies, however, possess the necessary skills to take advantage of these
opportunities. As a result, a growing number of companies are turning to
Internet professional service firms to design and implement their Internet
solutions. According to Forrester Research, the market for Internet professional
services is projected to grow from $5.4 billion in 1998 to $32.7 billion in
2002, representing a compound annual growth rate of more than 56%.
OUR SERVICE MODEL
We deliver Internet services through our proprietary Viant Service Model
which organizes and addresses the broad-ranging and complex needs of clients
seeking to transform their businesses through the Internet. This service model
integrates our three core disciplines and accelerates the design, development
and launch of an Internet initiative. We provide our services on a fixed-price,
fixed-time basis. This approach enables our clients to more accurately manage
their project costs and to align our interests with theirs.
2
<PAGE>
OUR STRATEGY
Our goal is to strengthen our position as a leading provider of Internet
professional services. To achieve this goal, we plan to:
- expand existing client relationships and attract new clients;
- grow organically, rather than by mergers and acquisitions;
- attract and retain the highest quality employees;
- enhance our unique, team-based employee culture;
- leverage company-wide knowledge to improve operating margins;
- expand geographically to service clients locally;
- strengthen our organizational infrastructure to support future growth; and
- continue to invest in research and development to enhance our core
disciplines.
OUR OFFICES
Our executive offices are located at Lincoln Plaza, 89 South Street, Boston,
MA 02111. Our telephone number is (617) 531-3700 and our Internet address is
WWW.VIANT.COM. This reference to our web site does not constitute incorporation
by reference of the information contained at our site.
THE OFFERING
<TABLE>
<S> <C>
Shares offered by Viant...................... shares
Shares outstanding after this offering(1).... shares
Proposed Nasdaq National Market symbol....... "VIAN"
Use of proceeds.............................. General corporate purposes, including working
capital, capital expenditures, and the
reduction of outstanding debt.
</TABLE>
- ------------------------------
(1) Based on shares outstanding as of January 1, 1999. Excludes:
shares of common stock issuable upon the exercise of outstanding options
with a weighted average exercise price of $ per share, shares
reserved for issuance under our benefit plans and shares of common
stock issuable upon exercise and conversion of outstanding warrants at an
exercise price of per share.
------------------------------
Except as otherwise indicated, we have presented information in this
prospectus based on the following assumptions:
- the underwriters do not exercise their over-allotment option;
- each outstanding share of preferred stock converts into one share of
common stock prior to the closing of this offering;
- our reincorporation into Delaware; and
- we filed an amended and restated certificate of incorporation.
3
<PAGE>
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED (1)
(INCEPTION) TO -------------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
-------------- ------------------ -----------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues..................................................... $ 642 $ 8,808 $ 20,043
Loss from operations............................................. (1,750) (4,178) (6,325)
Net loss......................................................... (1,659) (4,080) (6,487)
Net loss per share:
Basic and diluted............................................ $ (0.42) $ (1.18) $ (1.76)
Weighted average shares, basic and diluted................... 3,981 3,468 3,681
Pro forma net loss per share (2):
Basic and diluted............................................ $ (0.46)
Weighted average shares, basic and diluted................... 14,084
</TABLE>
<TABLE>
<CAPTION>
AT JANUARY 1, 1999
----------------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED (3)
--------- -----------------------
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.................................... $ 18,811
Working capital...................................................................... 17,622
Total assets......................................................................... 29,753
Long-term debt and capital lease obligations, net of current portion................. 2,237
Total stockholders' equity........................................................... 19,665
</TABLE>
- ------------------------------
(1) During 1998, we changed our fiscal year to the 52-week period ending on the
Friday closest to December 31. Prior to this, our fiscal year corresponded
to the calendar year.
(2) Unaudited pro forma net loss per share for the year ended January 1, 1999 is
computed using the weighted average number of common shares outstanding,
adjusted to include the pro forma effects of the conversion of preferred
stock to common stock as if such conversion had occurred on January 1, 1998,
or at the date of original issuance, if later.
(3) As adjusted to reflect the sale of shares of our common stock at an
assumed offering price of $ per share, after deducting estimated
underwriting discounts and offering expenses payable by us. The net proceeds
from the offering have been reflected as being used to repay $3,453,000
principal amount of debt and related accrued interest at January 1, 1999,
and the remainder have been added to working capital pending their future
use. See "Use of Proceeds."
4
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED. IN SUCH CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND
YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
OUR LIMITED OPERATING HISTORY IN A NEW AND EXPANDING MARKET INCREASES THE
POSSIBILITY THAT THE VALUE OF YOUR INVESTMENT WILL DECLINE
We were formed in 1996. Our limited operating history in the new and
expanding Internet professional services market makes it difficult to evaluate
our business. The uncertainty of our future performance and the uncertainties
regarding the Internet, such as taxation, technical limitations and competition,
increases the risk that the value of your investment will decline. Our failure
to accurately address the issues facing our business could have a material
adverse effect on our business, financial condition or results of operations.
TO SUCCEED IN OUR LABOR INTENSIVE BUSINESS, WE MUST RECRUIT AND RETAIN QUALIFIED
PROFESSIONALS, WHO ARE CURRENTLY IN HIGH DEMAND
The labor intensive Internet professional services industry currently faces
a shortage of qualified personnel, which is expected to continue. We compete
intensely with other companies to recruit and hire from this limited pool. If we
cannot continually hire and retain the qualified personnel necessary to meet
current and expected future client demand, our business, financial condition or
results of operations could be materially and adversely affected. Additionally,
if a significant number of our current employees leave, we may be unable to
complete or retain existing projects or bid for new projects of similar scope
and revenue. This loss of employees would have a material and adverse effect on
our business, financial condition and results of operations.
OUR BUSINESS MAY BE NEGATIVELY IMPACTED IF WE FAIL TO ACCURATELY ESTIMATE THE
TIME AND RESOURCES NECESSARY FOR THE PERFORMANCE OF OUR SERVICES
A key element of our strategy is to enter into fixed-price, fixed-time
contracts, rather than contracts in which the client pays us on a time and
materials basis. If we fail to accurately estimate the resources required for a
project or fail to satisfy our contractual obligations in a manner consistent
with the project plan, then our business, financial condition or results of
operations could be materially and adversely affected. We have occasionally had
to commit unanticipated additional resources to complete certain projects, and
we may have to take similar action in the future.
IF CLIENTS DO NOT REHIRE US FOR NEW PROJECTS OR TERMINATE EXISTING PROJECTS OUR
REVENUES MAY DECLINE
Substantially all of our revenues are derived from fixed-price, fixed-time
contracts for discrete client engagements. These engagements vary in size and
scope. If clients do not retain us for subsequent engagements, then our
business, financial condition or results of operations could be materially and
adversely affected. In addition, while our service model is designed as an
integrated approach, each sequential phase of that process represents a separate
contractual commitment. The client may elect not to proceed to the next phase.
The decision of clients not to proceed with a project to the next phase could
have a material adverse effect on our business, financial condition or results
of operations.
Most of our contracts cannot be terminated by a client, unless we have
materially breached the contract. However, a client may nevertheless attempt to
cancel or reduce the scope of a project. It is possible that in certain
circumstances we may agree to the cancellation or reduction in scope, or
5
<PAGE>
that in the event of a dispute over whether it has the right to cancel or reduce
the scope of a project, the client may prevail. The cancellation, or reduction
in scope, of a project could have a material adverse effect on our business,
financial condition or results of operations.
OUR REVENUES COULD BE NEGATIVELY AFFECTED BY THE LOSS OF A MAJOR CLIENT
We derive a significant portion of our revenues from large projects for a
limited number of clients. The loss of any major client could have a material
adverse effect on our business, financial condition or results of operations. In
1998, our five largest clients accounted for approximately 59% of our revenues.
Kinko's Corporation, Lucent Technologies Inc. and Compaq Computer Corporation
each accounted for more than 10% of our revenues and four other clients each
accounted for more than 5% of our revenues. In the first three months of 1999,
our five largest clients accounted for approximately % of our revenues.
and each accounted for more than 10% of our revenues and
other clients each accounted for more than 5% of our revenues.
FLUCTUATIONS IN OUR QUARTERLY REVENUES AND OPERATING RESULTS MAY LEAD TO REDUCED
PRICES FOR OUR STOCK
We believe that period-to-period comparisons of our operating results are
not necessarily meaningful. These comparisons cannot be relied upon as
indicators of future performance. However, if our operating results in any
future period fall below the expectations of securities analysts and investors,
the market price of our securities would likely decline.
Factors that may cause our results to fluctuate in the future include the
following:
- variability in market demand for Internet professional services;
- length of the sales cycle associated with our service offerings;
- the number, size and scope of our projects;
- our ability to estimate the pricing and costs of new engagements under our
fixed-price, fixed-time model;
- our ability to deliver complex projects on time;
- our client retention rate;
- the introduction of new services;
- changes in pricing policies by us or our competitors;
- the timing and cost of new office expansions;
- our ability to manage future growth;
- the efficiency with which we utilize our employees; and
- unanticipated cancellations or reductions in the scope of major projects.
OUR SYSTEMS, PROCEDURES AND CONTROLS MAY BE INADEQUATE TO HANDLE OUR GROWTH
To manage our growth, we must continue to improve our systems, procedures
and controls. We cannot assure you that we will successfully do so. There could
be a material adverse effect on our business, financial condition or results of
operations if our systems, procedures and controls are inadequate to support our
growth.
IF WE ARE NOT SUCCESSFUL IN OPENING AND GROWING NEW OFFICES OUR FINANCIAL
RESULTS MAY SUFFER
A key component of our organic growth strategy is to open offices in new
geographic locations. Once we select a new location, we typically devote
substantial financial and management resources to launch and grow that office.
We cannot assure you that we will select appropriate
6
<PAGE>
markets to enter, open new offices efficiently or manage new offices profitably.
Our failure to do any of these could have a material adverse effect on our
business, financial condition or results of operations.
WE MAY NEED ADDITIONAL CAPITAL IN THE FUTURE, WHICH MAY NOT BE AVAILABLE TO US.
THE RAISING OF ANY ADDITIONAL CAPITAL MAY DILUTE YOUR OWNERSHIP IN US
We may need to raise additional funds through public or private debt or
equity financings in order to:
- take advantage of opportunities, including more rapid expansion or
acquisitions of complementary businesses or technologies;
- develop new services; or
- respond to competitive pressures.
Any additional capital raised through the sale of equity may dilute your
ownership percentage in us. Furthermore, we cannot assure you that any
additional financing we may need will be available on terms favorable to us, or
at all. In such case, our business, financial condition or results of operations
would be materially adversely affected.
OUR MARKET IS HIGHLY COMPETITIVE AND IF WE CANNOT EFFECTIVELY COMPETE OUR
REVENUES MAY DECLINE
The Internet professional services market is relatively new and intensely
competitive. We expect competition to intensify even further as this market
evolves. Many of our competitors have longer operating histories, more clients,
longer relationships with their clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than we do. As a result, our competitors may be in a stronger position
to respond quickly to new or emerging technologies and changes in client
requirements. They may also develop and promote their products and services more
effectively than we do.
There are relatively low barriers to entry into the Internet professional
services market. As a result, new market entrants pose a threat to our business.
Additionally, we do not own any patented technology that precludes or inhibits
competitors from entering the Internet professional services market or from
providing services similar to ours. Existing or future competitors may develop
or offer services that are comparable or superior to ours at a lower price,
which would have a material adverse effect on our business, financial condition
or results of operations.
OUR BUSINESS WILL BE NEGATIVELY AFFECTED IF WE DO NOT KEEP UP WITH RAPID
TECHNOLOGICAL CHANGE, EVOLVING INDUSTRY STANDARDS OR CHANGING CLIENT
REQUIREMENTS
The Internet professional services market is characterized by rapidly
changing technology, evolving industry standards and changing client needs.
Accordingly, our future success will depend, in part, on our ability to:
- effectively use leading technologies;
- continue to develop our strategic and technical expertise;
- enhance our current services;
- develop new services that meet changing customer needs;
- advertise and market our services; and
- influence and respond to emerging industry standards and other
technological changes.
All of these tasks must be accomplished in a timely and cost-effective
manner. We cannot assure you that we will succeed in effectively doing any of
these tasks and our failure to do so
7
<PAGE>
could have a material and adverse effect on our business, financial condition or
results of operations.
OUR REVENUES MAY DECREASE IF GROWTH IN THE USE OF THE INTERNET DECLINES
Our business is dependent upon continued growth in the use of the Internet
by our clients, prospective clients and their customers and suppliers. Published
reports indicate that capacity constraints caused by growth in Internet usage
may, unless resolved, impede further growth in Internet use. If the number of
users on the Internet does not increase and commerce over the Internet does not
become more accepted and widespread, demand for our services may decrease and
our business, financial condition or results of operations could be materially
and adversely affected. The factors which may affect Internet usage or
electronic commerce adoption include:
- actual or perceived lack of security of information;
- lack of access and ease of use;
- congestion of Internet traffic;
- inconsistent quality of service;
- increases in access costs to the Internet;
- excessive governmental regulation;
- uncertainty regarding intellectual property ownership;
- reluctance to adopt new business methods; and
- costs associated with the obsolescence of existing infrastructure.
CONCENTRATION OF OWNERSHIP MAY LIMIT YOUR ABILITY TO INFLUENCE CORPORATE MATTERS
Immediately following this offering, the officers, directors and significant
stockholders set forth below, and the funds for whom they act as general
partner, collectively will own approximately % of the outstanding shares of
our common stock and will own individually the percentage set forth opposite
their respective names:
<TABLE>
<CAPTION>
OFFICERS, DIRECTORS AND/OR SIGNIFICANT STOCKHOLDERS OWNERSHIP %
- ----------------------------------------------------------------------------------------- ---------------
<S> <C>
William H. Davidow (Mohr, Davidow Ventures)
Kleiner Perkins Caufield & Byers
Venetia Kontogouris (Trident Capital Management)
Robert L. Gett
Technology Crossover Ventures
</TABLE>
If the stockholders listed above choose to act or vote together, they will
have the power to control the election of our directors, the appointment of new
management and the approval of any other action requiring the approval of our
stockholders, including any amendments to our certificate of incorporation and
mergers or sales of all of our assets. In addition, without the consent of these
stockholders, we could be prevented from entering into certain transactions that
could be beneficial to us. Also, third parties could be discouraged from making
a tender offer or bid to acquire our company at a price per share that is above
the then-current market price.
WE MAY FACE INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS THAT MAY BE COSTLY TO
RESOLVE OR LIMIT OUR ABILITY TO USE INTELLECTUAL PROPERTY IN THE FUTURE
We are obligated under certain agreements to indemnify other parties as a
result of claims that we infringe on the proprietary rights of third parties.
Although we do not believe that our Internet solutions infringe on any
third-party proprietary rights, we cannot assure you that third parties will not
assert infringement claims against us in the future or that these claims will
not be successful.
8
<PAGE>
We could incur substantial costs and diversion of management resources to defend
any claims relating to proprietary rights. These costs and diversions could have
a material adverse effect on our business, financial condition or results of
operations. If any party asserts a claim against us relating to proprietary
technology or information, we may need to obtain licenses to the disputed
intellectual property. We cannot assure you, however, that we will be able to
obtain these licenses on commercially reasonable terms or that we will be able
to obtain any licenses at all. The failure to obtain necessary licenses or other
rights could have a material adverse effect on our business, financial condition
or results of operations.
Our business often involves the development of software applications for
specific client engagements. We generally retain the right to use any
intellectual property that is developed during a client engagement that is of
general applicability and is not specific to the client's project. We also
develop software applications for our own internal use and we retain ownership
of these applications. There can be no assurance that clients will not demand
assignment of ownership or restrictions on our use of the work which we produce
for clients in the future. Issues relating to the ownership of and rights to use
software applications can be complicated and there can be no assurance that
disputes will not arise that affect our ability to resell or reuse these
applications.
MANAGEMENT MAY INVEST OR SPEND THE PROCEEDS OF THIS OFFERING IN WAYS WITH WHICH
YOU MAY NOT AGREE
Management intends to use a majority of the proceeds from this offering for
general corporate purposes. Because of the number and variability of factors
that determine our use of the net proceeds from this offering, we cannot assure
you that these uses will not vary substantially from our current intentions.
Pending these uses, we intend to invest the net proceeds from this offering in
short-term interest bearing investment grade and U.S. government securities.
OUR STOCK PRICE COULD BE EXTREMELY VOLATILE AND YOU MAY NOT BE ABLE TO RESELL
YOUR SHARES AT OR ABOVE THE INITIAL OFFERING PRICE
We cannot predict the extent to which investor interest in us will lead to
the development of a public trading market or how liquid that market might
become. The initial public offering price for the shares will be determined by
negotiations between us and representatives of the underwriters. This price may
not be indicative of prices that will prevail later in the market. The stock
market has experienced significant price and volume fluctuations, and the market
prices of technology companies, particularly Internet-related companies, have
been highly volatile. You may not be able to resell your shares at or above the
initial public offering price. Please see "Underwriting."
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted. A securities class action suit against us could result in
substantial costs and the diversion of management's attention and resources,
which could have a material and adverse effect on our business, financial
condition or results of operations.
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE
The market price of our common stock could drop as a result of sales of
substantial amounts of common stock in the public market after the closing of
this offering, or the perception that such sales could occur. In addition, these
factors could make it more difficult for us to raise funds through future
offerings of common stock. There will be shares of common stock
outstanding immediately after this offering, or shares if the
representatives of the underwriters exercise their over-allotment option in
full. All of the shares sold in the offering will be freely transferable without
restriction or further registration under the Securities Act, except for any
9
<PAGE>
shares purchased by our "affiliates," as defined in Rule 144 of the Securities
Act. The remaining shares of common stock outstanding, will be
"restricted securities" as defined in Rule 144. These shares may be sold in the
future without registration under the Securities Act to the extent permitted by
Rule 144 or other exemptions under the Securities Act. See "Shares Eligible for
Future Sale."
PROVISIONS OF OUR CHARTER AND BY-LAWS MAY DELAY OR PREVENT AN ACQUISITION OF US
Our amended and restated certificate of incorporation and amended and
restated bylaws state that any action that can be taken by stockholders must be
done at an annual or special meeting and may not be done by written consent, and
requires reasonable advance notice of a stockholder proposal or director
nomination. The chairman of the board, the chief executive officer, the
president or the board of directors are the only ones who may call a special
meeting. The amended and restated certificate of incorporation and amended and
restated bylaws also provide for a classified board of directors, and provide
that members of the board of directors may be removed by the vote of the holders
of at least two-thirds of the shares entitled to vote for that director. In
addition, the board of directors has the authority, without further action by
the stockholders, to fix the rights and preferences of and issue 5,000,000
shares of preferred stock. These provisions may have the effect of deterring
hostile takeovers or delaying or preventing changes in control of management,
including transactions in which you might otherwise receive a premium for your
shares. In addition, these provisions may limit your ability to approve other
transactions that you find to be in your best interests.
See "Description of Capital Stock--Preferred Stock" and "--Effect of Certain
Provisions of the Certificate of Incorporation and Bylaws and the Delaware
Anti-Takeover Statute".
DIFFICULTIES PRESENTED BY INTERNATIONAL ECONOMIC, POLITICAL, LEGAL, ACCOUNTING
AND BUSINESS
FACTORS COULD NEGATIVELY AFFECT OUR BUSINESS IN INTERNATIONAL MARKETS
One component of our strategy is to expand into international markets, as
evidenced by our plan to open a London office by the end of the second quarter
of 1999. The following risks, among others, are inherent in doing business
internationally:
- unexpected changes in regulatory requirements;
- export controls relating to encryption technology;
- tariffs and other trade barriers;
- difficulties in staffing and managing international operations;
- long payment cycles;
- problems in collecting accounts receivable;
- political instability;
- international currency issues, including fluctuations in currency exchange
rates and the conversion to the euro by several members of the European
Union;
- seasonal reductions in business activity; and
- potentially adverse tax consequences.
Any of these factors could have a material adverse effect on our business,
financial condition and results of operations.
YOU SHOULD NOT RELY ON OUR FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. Discussions containing forward-looking statements may be found in
the material set forth under
10
<PAGE>
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" as well as in the prospectus generally. We used words
such as "believes," "intends," "expects," "anticipates," "plans," and similar
expressions to identify forward-looking statements. This prospectus also
contains third party estimates regarding the size and growth of the Internet
professional services market and Internet usage in general. You should not place
undue reliance on these forward-looking statements. Our actual results could
differ materially from those anticipated in the forward-looking statements for
many reasons, including the risks described above and elsewhere in this
prospectus.
11
<PAGE>
USE OF PROCEEDS
The net proceeds to Viant from the sale of the shares of common
stock are estimated to be approximately $ at an assumed initial public
offering price of $ per share (approximately $ if the
underwriters' over-allotment option is exercised in full), after deducting the
estimated underwriting discounts and offering expenses payable by us.
Viant intends to use the net proceeds of the offering for the repayment of
approximately $3.5 million in principal debt outstanding plus accrued interest
under a revolving line of credit and an equipment line of credit and the
remainder for general corporate purposes, including capital expenditures and
working capital. Borrowings under the revolving line of credit become due and
payable on July 3, 1999 and bear interest at the bank's prime rate plus 0.5% per
annum. Borrowings under the equipment line of credit are payable in 36 equal
monthly installments and bear interest at the bank's prime rate plus 1.0% per
annum. Borrowings under these bank lines of credit may be prepaid in whole or in
part without penalty and are secured by substantially all of Viant's assets. In
addition, Viant may, if appropriate opportunities arise, use an undetermined
portion of the net proceeds to acquire or invest in complementary companies.
However, Viant is not currently discussing any such potential acquisition or
investment with any third party. Pending such uses, Viant will invest the net
proceeds in investment grade, interest-bearing securities.
DIVIDEND POLICY
Viant has never paid cash dividends on its common stock or any other
securities. Viant anticipates that it will retain all of its future earnings, if
any, for use in the expansion and operation of its business and does not
anticipate paying cash dividends in the foreseeable future. Under the terms of
its bank lines of credit, Viant may not declare or pay any dividends without the
prior consent of the bank.
12
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of January 1, 1999:
- on an actual basis;
- on a pro forma basis as of such date to reflect the conversion prior to
the closing of this offering of all outstanding shares of preferred stock
into 13,166,467 shares of common stock and the filing of an amended and
restated certificate of incorporation to increase the number of common
shares authorized and to authorize Viant to issue preferred stock; and
- on a pro forma as adjusted basis to reflect the sale of the common stock
offered by this prospectus at an assumed initial public offering price of
$ per share, after deducting the estimated underwriting discounts and
offering expenses payable by us, and to reflect the use of the offering
proceeds to repay $3,453,000 principal amount of debt and related interest
at January 1, 1999.
This information should be read in conjunction with Viant's financial
statements and related notes thereto included elsewhere in this prospectus.
<TABLE>
<CAPTION>
JANUARY 1, 1999
------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt and capital lease obligations, current portion.................... $ 3,266 $ 3,266 $ 416
---------- -------- ------------
---------- -------- ------------
Long-term debt and capital lease obligations, net of current portion............. 2,237 2,237 1,634
---------- -------- ------------
Stockholders' equity:
Convertible preferred stock, no par value:
Series D, 3,240,000 shares authorized: 3,160,043 shares issued and
outstanding, actual; none authorized, issued and outstanding, pro forma and
pro forma as adjusted...................................................... 20,125 -- --
Series A, 5,746,874 shares authorized, actual: 5,746,874 shares issued and
outstanding, actual; none authorized, issued and outstanding, pro forma and
pro forma as adjusted...................................................... 3,047 -- --
Series B, 1,499,925 shares authorized, actual: 1,499,925 shares issued and
outstanding, actual; none authorized, issued and outstanding, pro forma and
pro forma as adjusted...................................................... 987 -- --
Series C, 2,830,408 shares authorized, actual: 2,759,625 shares issued and
outstanding, actual; none authorized, issued and outstanding, pro forma and
pro forma as adjusted...................................................... 7,977 -- --
Preferred stock, $0.001 par value, no shares authorized, actual: 5,000,000
shares authorized, pro forma and pro forma as adjusted; no shares issued and
outstanding, actual, pro forma and pro forma as adjusted..................... -- -- --
Common Stock, $0.001 par value, 25,000,000 shares authorized, actual;
50,000,000 shares authorized, pro forma and pro forma as adjusted: 3,762,290
shares issued and outstanding, actual; 16,928,757 shares issued and
outstanding, pro forma; shares issued and outstanding, pro forma as
adjusted(1).................................................................. 4 17
Additional paid-in capital..................................................... 430 32,553
Accumulated deficit............................................................ (12,905) (12,905) (12,905)
---------- -------- ------------
Total stockholders' equity................................................. 19,665 19,665
---------- -------- ------------
Total capitalization..................................................... $ 21,902 $ 21,902 $
---------- -------- ------------
---------- -------- ------------
</TABLE>
- ------------------------
(1) At January 1, 1999, excludes 4,230,855 shares of common stock issuable upon
exercise of outstanding options with a weighted average exercise price of
$1.01 per share, and 41,503 shares of common stock issuable upon the
exercise of warrants. See "Management--Employee Benefit Plans."
13
<PAGE>
DILUTION
On a pro forma basis after giving effect to the conversion of all
outstanding shares of preferred stock into shares of common stock in connection
with this offering, our pro forma net tangible book value as of January 1, 1999
was $19,665,000 or $1.16 per share of common stock. Pro forma net tangible book
value per share represents the amount of our total tangible assets reduced by
the amount of our total liabilities and divided by the total number of shares of
common stock outstanding (pro forma to reflect the conversion of all outstanding
shares of preferred stock into shares of common stock upon the closing of this
offering). Without taking into account any other change in our pro forma net
tangible book value after January 1, 1999, other than to give effect to the sale
of shares of common stock offered by this prospectus at an assumed initial
public offering price of $ per share and receipt of the estimated net
proceeds therefrom, our pro forma net tangible book value as of January 1, 1999
would have been approximately $ or $ per share. This represents
an immediate increase in such net tangible book value of $ per share to
existing stockholders and an immediate dilution of $ per share to the new
investors. If the initial public offering price is higher or lower, the dilution
to new investors will be, respectively, greater or less. The following table
illustrates this per share dilution.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share
---------
Pro forma net tangible book value per share as of January 1, 1999,
before this offering............................................... $ 1.16
Increase per share attributable to new investors.....................
---------
Pro forma net tangible book value per share after this offering......
---------
Dilution per share to new investors.................................. $
---------
---------
</TABLE>
The following table summarizes, as of January 1, 1999, on a pro forma basis
to reflect the adjustments described above, the differences between the existing
stockholders and the new investors with respect to the number of shares of
common stock purchased from us, the total consideration paid (or to be paid) to
us, and the average price per share paid (or to be paid) by existing
stockholders and by new investors at the assumed initial public offering price
of $ per share, before deducting the estimated underwriting discounts and
offering expenses payable by us:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE PRICE
-------------------------- --------------------------- PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........................ 16,928,757 % $ 31,813,000 % $
New investors................................
------------- --- -------------- ---
Total........................................ 100% $ 100%
------------- --- -------------- ---
------------- --- -------------- ---
</TABLE>
This table also assumes that no options or warrants have been or are
exercised after January 1, 1999. As of January 1, 1999, there were outstanding
options to purchase an aggregate of 4,230,855 shares of common stock at a
weighted average exercise price of $1.01 per share (excluding warrants to
purchase 41,503 shares of common stock at $3.625 per share). If all such options
and warrants had been exercised on January 1, 1999, our pro forma net tangible
book value on such date would have been $24,089,000 or $1.14 per share, the
increase in net tangible book value attributable to new investors would have
been $ per share and the dilution in net tangible book value to new
investors would have been $ per share.
14
<PAGE>
SELECTED FINANCIAL DATA
The following tables contain selected financial data as of and for each of
the three fiscal periods ended December 31, 1996, December 31, 1997 and January
1, 1999 and have been derived from Viant's financial statements, which have been
audited by PricewaterhouseCoopers LLP, independent accountants. The selected
financial data are qualified by reference to, and should be read in conjunction
with, Viant's financial statements and the notes to those financial statements
included elsewhere in this prospectus.
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED
(INCEPTION) TO ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
-------------- -------------- -----------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Net revenues....................................................... $ 642 $ 8,808 $ 20,043
------- ------- -----------
Operating expenses:
Professional personnel........................................... 516 4,927 13,159
Sales and marketing.............................................. 461 1,531 2,904
General and administrative....................................... 1,077 6,044 9,199
Research and development......................................... 338 484 1,106
------- ------- -----------
Total operating expenses..................................... 2,392 12,986 26,368
------- ------- -----------
Loss from operations............................................... (1,750) (4,178) (6,325)
Interest and other income (expense), net........................... 91 98 (162)
------- ------- -----------
Net loss........................................................... $ (1,659) $ (4,080) $ (6,487)
------- ------- -----------
------- ------- -----------
Basic and diluted net loss per share............................... $ (0.42) $ (1.18) $ (1.76)
Weighted average shares used in computing basic and diluted net
loss per share................................................. 3,981 3,468 3,681
Unaudited pro forma basic and diluted net loss per share(1)........ $ (0.46)
Weighted average shares used in computing pro forma basic and
diluted net loss per share..................................... 14,084
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
-------------- -------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term investments.................. $ 2,145 $ 6,174 $ 18,811
Working capital.................................................... 2,179 4,517 17,622
Total assets....................................................... 2,806 10,318 29,753
Long-term debt and capital lease obligations, net of current
portion.......................................................... -- 670 2,237
Total stockholders' equity......................................... 2,394 6,006 19,665
</TABLE>
- ------------------------------
(1) Unaudited pro forma net loss per share for the year ended January 1, 1999 is
computed using the weighted average number of common shares outstanding,
adjusted to include the pro forma effects of the conversion of preferred
stock to common stock as if such conversion had occurred on January 1, 1998,
or at the date of original issuance, if later.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF VIANT SHOULD BE READ IN CONJUNCTION WITH "SELECTED FINANCIAL DATA"
AND VIANT'S FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, INCLUDED
ELSEWHERE IN THIS PROSPECTUS. EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED
HEREIN, THE DISCUSSION IN THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
THAT INVOLVE RISKS, UNCERTAINTIES AND ASSUMPTIONS SUCH AS STATEMENTS OF VIANT'S
PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE
IN THIS PROSPECTUS SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED
FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS PROSPECTUS. VIANT'S
ACTUAL RESULTS, LEVELS OF ACTIVITY, PERFORMANCE, ACHIEVEMENTS AND PROSPECTS
COULD DIFFER MATERIALLY FROM THOSE DISCUSSED BELOW. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED IN "RISK FACTORS," AS
WELL AS THOSE DISCUSSED ELSEWHERE HEREIN.
OVERVIEW
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the Internet. Viant creates value by helping clients rapidly
develop and deploy Internet solutions.
Viant derives substantially all of its revenues from services performed on a
fixed-price, fixed-time basis. To determine the proposed fixed price for an
engagement, Viant uses an estimation process which takes into account the type
and overall complexity of the project, the anticipated number of consultants
needed and their associated billing rates, and the estimated duration of and
risks associated with the engagement. All fixed-price proposals are approved by
a member of Viant's senior management team. Revenues from fixed-price
engagements are recognized using the percentage of completion method (based on
the ratio of costs incurred to the total estimated project costs). Provisions
for estimated losses on contracts are made during the period in which such
losses become probable and can be reasonably estimated. To date, such losses
have not been significant. Viant reports revenue net of reimbursable expenses.
Viant generally requires a client to pay 20% to 40% of the engagement fee in
advance. The remainder is billed to the client over the course of the
engagement.
Viant's revenues and earnings may fluctuate from quarter to quarter based on
such factors as the length of the sales cycle associated with our service
offerings, the number, size and scope of our projects, our ability to estimate
the pricing and costs of new engagements under our fixed-price model, our
ability to deliver complex projects on time, our client retention rate, our
efficient utilization of our employees and the rate at which clients hire us for
additional projects. See "Risk Factors -- Fluctuations in our quarterly revenues
and operating results may lead to reduced prices for our stock."
The number of Viant employees increased from 119 at the end of 1997 to 213
at the end of 1998. Viant expects the total number of employees to increase
significantly during 1999. Personnel compensation and facilities costs represent
a high percentage of Viant's operating expenses and are relatively fixed in
advance of each quarter. Accordingly, if revenues do not increase at a rate
equal to expenses, Viant's business, financial condition or results of
operations could be materially and adversely affected. In addition, Viant's
liquidity may also be adversely affected if revenues do not increase at a rate
equal to these additional expenses, to the extent Viant is unable to reduce
operating expenses.
During 1998, Viant changed its fiscal year to the 52-week period ending on
the Friday nearest the last day of December of that year. Prior to this, the
fiscal year of Viant was the calendar year. All
16
<PAGE>
references below to the results of operations for 1998 are the actual operating
results for the fiscal year ended January 1, 1999.
RESULTS OF OPERATIONS
The following table sets forth the percentage of net revenues of certain
items included in Viant's statement of operations for the periods indicated:
<TABLE>
<CAPTION>
PERCENTAGE OF NET REVENUES
---------------------------------------------------------
<S> <C> <C> <C>
PERIOD FROM APRIL 10,
1996 (INCEPTION) TO YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
----------------------- ----------------- -------------
Net revenues................................................. 100% 100% 100%
--- --- ---
--- --- ---
Operating expenses:
Professional personnel..................................... 80 56 66
Sales and marketing........................................ 72 17 14
General and administrative................................. 168 69 46
Research and development................................... 52 5 5
--- --- ---
Total operating expenses................................. 372 147 131
--- --- ---
Loss from operations......................................... (272) (47) (31)
Interest and other income (expense), net..................... 14 1 (1)
--- --- ---
Net loss..................................................... (258)% (46)% (32)%
--- --- ---
--- --- ---
</TABLE>
COMPARISON OF FISCAL YEARS 1996, 1997 AND 1998
NET REVENUES. Net revenues were $20.0 million in 1998, representing an
increase of 128% over 1997 revenues of $8.8 million. The increase in net
revenues reflected growing demand for Internet professional services and
increases in both the size and number of Viant's client engagements. Net
revenues increased from $642,000 for the period from April 10, 1996 to December
31, 1996 to $8.8 million in the full year ended December 31, 1997. The $8.2
million increase reflected increases in both the size and number of client
engagements as well as a full year of operations in 1997. Revenues derived from
Viant's three largest clients, as a percentage of total net revenues, were 71%
in 1996, 68% in 1997, and 42% in 1998.
Billings in advance of services performed are recorded as deferred revenues.
Viant had $99,000 in deferred revenues at December 31, 1996, $931,000 at
December 31, 1997, and $1.1 million at January 1, 1999. The increase in deferred
revenues from year to year reflects new client engagements as well as
contractual terms that allow Viant to bill clients in advance of performing
services. During 1997 and 1998, substantially all of Viant's revenues were
derived from fixed-price, fixed-time contracts. In 1996, substantially all of
Viant's revenues were derived from time and materials based contracts.
PROFESSIONAL PERSONNEL. Professional personnel expenses consist primarily
of compensation and benefits for employees engaged in the delivery of Internet
professional services and non-reimbursable expenses related to client projects.
Professional personnel expenses represented 80% of total net revenues in 1996,
56% in 1997 and 66% in 1998. The increase in professional personnel expenses as
a percentage of net revenues in 1998 compared to 1997 was primarily due to
Viant's strategy of increased hiring in anticipation of future growth as well as
higher salaries. The decrease in professional personnel expenses as a percentage
of net revenues in 1997 compared to 1996 reflects the higher revenues generated
in 1997 as compared to 1996. Professional personnel expenses increased by $4.4
million from 1996 to 1997 and $8.2 million from 1997 to 1998. These increases
were primarily due to the hiring of additional professionals.
17
<PAGE>
SALES AND MARKETING. Sales and marketing expenses consist primarily of
compensation, benefits, travel costs, marketing program costs and an allocation
of facilities costs. Sales and marketing expenses represented 72% of total net
revenues in 1996, 17% in 1997 and 14% in 1998. The decrease in sales and
marketing expenses as a percentage of revenues from 1997 to 1998 was primarily
due to higher revenues generated per sales employee as well as revenue growth.
The decrease in sales and marketing expenses as a percentage of revenues from
1996 to 1997 was primarily due to revenue growth. Sales and marketing expenses
increased by $1.0 million from 1996 to 1997 and $1.3 million from 1997 to 1998.
The increase in sales and marketing expenses from 1996 to 1997 was attributable
to the initiation of sales and marketing activities. The increase from 1997 to
1998 was attributable to the increase in the number of sales personnel and an
overall increase in Viant's marketing and branding efforts. Viant expects that
the dollar amount of sales and marketing expenses will continue to increase due
to increases in advertising and promotional activities.
GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of compensation, benefits and travel costs for employees in Viant's
management, human resources, finance and administration groups, and facilities
costs not allocated to sales and marketing or research and development. General
and administrative expenses represented 168% of total net revenues in 1996, 69%
in 1997 and 46% in 1998. General and administrative expenses increased by $5.0
million from 1996 to 1997 and $3.2 million from 1997 to 1998. These increases
were due primarily to an increase in lease expenditures in connection with the
opening of additional offices and the hiring of additional employees. After
adjustment to exclude non-recurring 1997 severance expenses of $1.5 million
related to an agreement between Viant and a former employee, general and
administrative expenses represented 52% of total net revenues in 1997.
RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of compensation, benefits and an allocation of facilities costs for
employees associated with Viant's innovation groups. The innovation groups
enhance the knowledge and expertise of the strategic consulting, creative design
and technology disciplines. Research and development expenses represented 53% of
total net revenues in 1996, 5% in 1997 and 6% in 1998. Research and development
expenses increased from 1997 to 1998 because of the addition of two innovation
groups. The decrease in research and development expenses as a percentage of
total net revenues from 1996 to 1997 was primarily due to revenue growth.
QUARTERLY RESULTS OF OPERATIONS. The following table sets forth a summary
of Viant's unaudited quarterly operating results for each of the eight quarters
in the two-year period ended January 1, 1999. This data has been derived from
our unaudited interim financial statements which, in our opinion, have been
prepared on substantially the same basis as the audited financial statements
contained elsewhere in this prospectus and include all normal recurring
adjustments necessary for a fair presentation of the financial information for
the periods presented. These unaudited quarterly results should be read in
conjunction with Viant's financial statements and notes thereto included
elsewhere in this prospectus. The operating results in any quarter are not
necessarily indicative of the results that may be expected for any future
period. The increase in general and administrative expenses in the second
quarter of 1997 was attributable primarily to severance costs related to the
departure of an employee.
18
<PAGE>
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30,
1997 1997 1997 1997 1998 1998 1998
----------- ----------- ----------- ----------- ----------- ----------- -----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues........................... $ 1,749 $ 2,232 $ 2,405 $ 2,422 $ 4,093 $ 4,512 $ 5,302
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operating expenses:
Professional personnel............... 762 1,143 1,428 1,594 2,637 2,724 3,510
Sales and marketing.................. 168 446 399 518 566 582 706
General and administrative........... 564 1,935 1,355 2,190 1,514 1,865 2,424
Research and development............. 97 97 103 187 83 235 293
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total operating expenses........... 1,591 3,621 3,285 4,489 4,800 5,406 6,933
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from operations.......... 158 (1,389) (880) (2,067) (707) (894) (1,631)
Interest and other income (expense),
net.................................. 13 32 20 33 27 (10) (79)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)...................... $ 171 $ (1,357) $ (860) $ (2,034) $ (680) $ (904) $ (1,710)
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
<CAPTION>
<S> <C>
JAN. 1,
1999
---------
<S> <C>
Net revenues........................... $ 6,136
---------
Operating expenses:
Professional personnel............... 4,288
Sales and marketing.................. 1,050
General and administrative........... 3,396
Research and development............. 495
---------
Total operating expenses........... 9,229
---------
Income (loss) from operations.......... (3,093)
Interest and other income (expense),
net.................................. (100)
---------
Net income (loss)...................... $ (3,193)
---------
---------
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, Viant has funded its operations and investments in property
and equipment through equity financings, bank borrowings and capital lease
financing arrangements.
Viant's cash and cash equivalents increased from $2.1 million at the end of
1996 to $5.6 million at the end of 1997 to $18.2 million at the end of 1998.
These increases were primarily from the net proceeds from the issuance of
convertible preferred stock for $3.5 million in 1996, $8.0 million in 1997 and
$20.1 million in 1998. These proceeds were offset primarily by cash used for
operating activities of $1.6 million in 1996, $2.5 million in 1997, and $8.9
million in 1998 and capital additions of $264,000 in 1996, $2.0 million in 1997
and $901,000 in 1998.
Viant has a revolving line of credit with a bank which provides for
borrowings of up to $5.0 million. Borrowings under this line of credit, which
expires on July 3, 1999, bear interest at the bank's prime rate plus 0.5% (8.25%
at January 1, 1999). Under the same bank agreement, Viant also has an equipment
line of credit which provides for borrowings up to $1,250,000, bears interest at
the bank's prime rate plus 1.0% (8.75% at January 1, 1999) and is repayable in
36 equal monthly installments. Borrowings under the bank lines of credit may be
prepaid in whole or in part without penalty and are secured by substantially all
of Viant's assets. The lines of credit require compliance with certain financial
covenants including the maintenance of certain financial ratios. Viant was in
default on a certain financial covenant at January 1, 1999, for which Viant has
received a waiver from the bank. Viant also has a capital lease facility with a
leasing company for total availability of $3.2 million secured by the capital
assets purchased with the borrowings. Outstanding borrowings under the above
credit facilities totaled $5.5 million as of January 1, 1999. Upon the
completion of this offering, Viant intends to repay approximately $3.5 million
outstanding under the bank lines of credit.
Viant believes that its current cash, cash equivalents and short-term
investments, available borrowings under its credit facilities and the net
proceeds from this offering will be sufficient to meet Viant's working capital
and capital expenditure requirements for at least the next 12 months. However,
there can be no assurance that Viant will not require additional financings
within this time frame or that such additional financing, if needed, will be
available on terms acceptable to Viant, if at all.
19
<PAGE>
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products worldwide
are coded to accept only two-digit entries to identify a year in the date code
field. Consequently, on January 1, 2000, many of these systems could fail or
malfunction because they may not be able to distinguish between the year 1900
and the year 2000. Accordingly, many companies, including Viant and Viant's
clients, potential clients, vendors and strategic partners, may need to upgrade
their systems to comply with applicable Year 2000 requirements.
Because Viant and its clients are dependent, to a very substantial degree,
upon the proper functioning of computer systems, a failure of these systems to
correctly recognize dates beyond January 1, 2000 could disrupt operations. Any
disruptions could materially and adversely affect Viant's business, financial
condition and results of operations. Additionally, our failure to provide Year
2000 compliant solutions to our clients could result in financial loss,
reputational harm and legal liability to us.
In 1998, Viant formed a Year 2000 assessment and contingency planning
committee, called the Y2K Committee, to review both its information technology
systems and its non-information technology systems, and where necessary to plan
for and supervise the remediation of those systems. The Y2K Committee is headed
by Viant's Chief Technology Officer. Viant believes it has identified all of its
critical hardware and software systems. Viant has obtained confirmations from
the providers of these systems that they are Year 2000 compliant. Viant has
conducted tests and expects to conduct additional tests of such systems as part
of its Year 2000 efforts.
Viant has initiated communication with other significant vendors to
determine the extent to which they are vulnerable to Year 2000 issues. Viant has
not yet received sufficient information on Year 2000 remediation plans of these
vendors in order to predict the outcome of their efforts.
Viant has not made a full assessment of the extent to which its clients
might be vulnerable to Year 2000 issues. Likewise, Viant has not made a full
assessment of the extent to which other third parties with which it transacts
business have determined their vulnerability to Year 2000 issues.
Viant is developing contingency plans for critical individual information
technology systems and non-information technology systems to address Year 2000
risks not fully resolved by Viant's Year 2000 program. Viant believes that the
Year 2000 risk will not present significant operational problems for Viant.
However, there can be no assurance that Viant's Year 2000 program will prevent
any material adverse effect on Viant's operations, financial condition or
customer relations. Viant believes that the total cost of its Year 2000 program
will not be material.
20
<PAGE>
BUSINESS
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the Internet. Viant creates value by helping clients rapidly
develop and deploy Internet solutions. Viant accomplishes this value creation
through a unique business model that emphasizes multi-disciplinary teams, an
integrated service model, organic growth that reinforces the firm's culture and
continuous innovation.
Viant believes it has gained considerable experience and market presence
from completing significant engagements for Global 1000 companies such as
American Express, BankBoston, Compaq, Deutsche Bank, Hewlett-Packard, Kinko's,
Lucent Technologies, Polo/Ralph Lauren and RadioShack.
INDUSTRY BACKGROUND -- INTERNET GROWTH AND OPPORTUNITIES
Over the past several years the number of Internet users worldwide has grown
rapidly. Increasing numbers of individuals and companies now use the Internet to
search for information, communicate with others, conduct business and seek
entertainment. According to International Data Corporation, the estimated number
of Internet users worldwide was 98 million at the end of 1998, and is projected
to grow to 320 million users by the end of 2002.
The broad acceptance of the Internet has created numerous opportunities for
companies that are seeking growth and are challenged by highly competitive and
rapidly changing markets, geographically dispersed operations and demands for
increased efficiencies. As a result, many senior executives now rank their
company's Internet strategy among their highest corporate priorities.
Internet solutions permit companies to acquire new customers, conduct
electronic commerce, and consistently manage customer relationships. These
solutions can also dramatically improve a company's ability to access, analyze
and distribute important information to suppliers, business partners, employees,
and customers. A manager can, for example, check suppliers' inventories for the
availability, pricing, and estimated delivery time for important parts needed to
fulfill orders. A sales person can perform research on her company's corporate
database even though she is thousands of miles from corporate headquarters.
Employees worldwide can verify their retirement account balances simply by
checking their company's website. A consumer can comparison shop and purchase an
item from the comfort of her own home. These examples translate into revenue
growth and improved operating efficiencies.
While there are numerous benefits that may be gained by utilizing the
Internet, the analysis, design, and implementation of an effective Internet
solution requires a range of skills and expertise which few businesses possess.
The successful design of Internet solutions requires careful analysis and
definition of the strategic implications of the Internet for a business, the
creative possibilities for brand, content and user experience and the technology
required to support the solution. The rapid development and launch of Internet
solutions, further requires substantial expertise to develop and integrate new
business processes with existing capabilities, to design and execute Internet
marketing communications plans and to evaluate, select, and implement the
appropriate technologies for the Internet solution.
The current supply of high quality, experienced Internet professionals is
relatively limited, making the market extremely competitive for these
individuals. Furthermore, it is costly and inefficient for companies seeking to
implement their own Internet solutions to hire, train and retain these
professionals. As a result, an increasing number of businesses, from start-ups
to Global 1000 companies, engage Internet professional services firms to help
them design and implement Internet solutions. The market for Internet
professional services is projected to grow dramatically. Forrester
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Research estimates that this market will grow from $5.4 billion in 1998 to $32.7
billion in 2002, representing a compound annual growth rate of 56.9%.
The rapidly growing demand for Internet professional services has attracted
many firms to this market. Viant believes that many of these firms suffer from
one or more of the following limitations:
- Strength in only one or two of the core competencies of strategic
consulting, creative design and technology. Many of these firms have
expertise in only one or two of these critical disciplines and therefore
must partner with other firms to deliver a complete Internet solution. As
a result, separate teams or firms with differing approaches, skill sets
and cultures work on the same project. This separation often results in
project delays, increased costs and other inefficiencies.
- A time and materials business model. Service providers who utilize a time
and materials model typically bill their clients for the time spent on a
project. As a result, these service providers have a reduced incentive to
complete a project early or on time as they will continue to be paid even
if a project takes longer than planned. Clients, therefore, generally
perceive that the time and materials model fails to align the service
provider's goals with the client's, namely the rapid, efficient delivery
of a working Internet solution.
- Dependence on acquisitions to add competencies and geographic reach.
Certain Internet professional services firms grow through acquisitions of
other firms in order to gain expertise in core disciplines or to expand
geographically. The mere acquisition of these additional disciplines may
not necessarily result in the creation of an integrated service approach.
In addition, the integration of an acquired firm's employees and business
systems is often difficult and time-consuming, resulting in inconsistent
and inefficient delivery of services and solutions to the client.
- Business incentives from providers of hardware and software. Some
providers of Internet professional services act as resellers of hardware
and software for third-party vendors. These service providers may receive
incentives to design solutions which incorporate a vendor's systems or
applications despite their potentially inferior technology or higher cost.
Accordingly, Viant believes that companies seeking to effectively capitalize
on the Internet require and seek a firm with expertise in strategic consulting,
creative design and technology to provide an integrated, seamless delivery of
Internet solutions.
THE VIANT SOLUTION
Viant is a leading Internet professional services firm providing strategic
consulting, creative design and technology services to companies seeking to
capitalize on the opportunities presented by the Internet. Viant has experienced
increased demand for its services. Viant's revenues have grown from $640,000 in
1996 to $8.8 million in 1997 and $20.0 million in 1998. Key elements of the
Viant solution are:
INTEGRATED APPROACH
Viant combines three core disciplines -- strategic consulting, creative
design and technology -- to help clients reevaluate their strategies and
transform their businesses to take advantage of the Internet. Viant delivers its
services for each project through a multi-disciplinary team of strategists,
creative designers and information technologists who typically work with key
client representatives in a local Viant office. Viant believes that this
integrated approach enables it to deliver comprehensive Internet solutions which
can be implemented seamlessly and quickly. This approach also reduces costs,
miscommunications and delays which can occur when the strategic consulting,
creative design and technology disciplines are handled by different teams or
firms.
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VIANT SERVICE MODEL
We created the proprietary Viant Service Model to organize and address the
broad-ranging and complex needs of clients hoping to utilize the Internet
effectively. The service model divides each engagement into three well-defined
phases -- Envision, Experience, and Launch -- which provide our consultants with
a consistent yet flexible service approach. The Viant Service Model takes a
client efficiently from strategy all the way through implementation. Our
approach identifies and prioritizes initiatives, rapidly delivers them to
market, captures valuable market experience and feedback, and immediately
applies this feedback to refine the solution. Viant executes this approach
through an iterative process, which results in Internet solutions that are
better suited to today's fast-changing market environment than solutions based
on a traditional, lengthy and non-iterative approach. The service model also
allows us to identify, capture, and reuse valuable Internet frameworks, designs,
processes and techniques which we develop in our client projects.
FIXED-PRICE AND FIXED-TIME
In substantially all of its engagements, Viant charges a fixed-price for its
services and provides the client with a substantive deliverable within a short,
predetermined timeframe. Viant believes that clients favor fixed-price,
fixed-time contracts because they focus on clearly defined deliverables and
permit the client to more accurately manage project costs. These contracts also
create incentives for Viant to finish within budgeted timeframes, thereby more
closely aligning Viant's interests with the client's. Furthermore, this model
creates the opportunity for Viant to achieve higher margins by delivering its
solutions more efficiently.
STRATEGIC BUSINESS FOCUS
Viant works with clients to reevaluate and transform their strategic
business processes and operations to take advantage of the Internet. Viant's
focus on initiatives that are critical to a client's strategy, operations and
organization enables Viant to work with a client's most senior executives. Viant
believes that its participation in and development of these critical initiatives
results in the opportunity to provide premium value services.
ORGANIC GROWTH MODEL
Viant believes its organic growth model is essential to its ability to
maintain quality while increasing revenues. Viant has built its business
entirely through the training and assimilation of new employees, as opposed to
adding employees and disciplines through mergers or acquisitions. A principal
element of this training and assimilation is the Quickstart program, an
intensive three-week program of activities and instruction attended by all new
employees.
In order to open new offices effectively and quickly, Viant staffs new
locations with employees who have relocated from other offices. This process
allows Viant to bring new offices on-line quickly, ready to service local
clients. Additionally, Viant believes this process maintains consistent
firm-wide quality and culture, and an ongoing entrepreneurial environment.
VIANT CULTURE
Viant's unique culture is founded on professional growth, rapid learning and
enterprise-wide knowledge-sharing. Employees are evaluated not only on their
individual performance, but also on how well they teach other employees and
share knowledge. Viant's integrated team approach and policy of servicing its
clients from local offices has reduced travel time and allowed Viant managers to
allocate work efficiently. In 1998, Viant's turnover rate was less than 9%.
Viant believes that this is approximately one-half of the average rate for
publically traded technology consulting firms in the United States.
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TECHNOLOGY INDEPENDENT
Viant has maintained a policy of technological independence from providers
of hardware or software, which it believes allows it to evaluate those products
in an unbiased manner. As a result, Viant selects technologies that best serve
the client's needs, without being influenced by potential financial incentives
from hardware and software vendors.
VIANT'S STRATEGY
Viant's goal is to build upon its position as a leading provider of Internet
professional services. To achieve this goal, Viant is pursuing the following
strategies:
EXPAND EXISTING CLIENT RELATIONSHIPS AND ATTRACT NEW CLIENTS
Viant continues to focus on delivering high quality solutions to help its
clients redefine and transform their businesses in order to capitalize on the
Internet. Viant believes this focus improves client satisfaction and results in
two distinct benefits: follow-on engagements with existing, satisfied clients
and referrals for engagements with new clients. Viant also plans to continue to
build its brand recognition, grow its sales efforts and expand its skill set to
acquire new clients seeking comprehensive Internet solutions.
CONTINUE ENHANCEMENT OF CORE DISCIPLINES
To enhance its knowledge and thought leadership in the core disciplines --
strategic consulting, creative design and technology -- Viant has established
the following research and innovation groups:
THE VIANT INSTITUTE, which is comprised of dedicated internal personnel
and outside advisors whose efforts are focused on thought-leading research
and writings on Internet-related issues. Viant uses this research
internally to enhance its knowledge and service offerings, and also
distributes this research to clients and prospective clients as a means of
increasing Viant's visibility in the marketplace.
THE DESIGN STUDIO, which has a dedicated staff that supports the creative
discipline. This group develops new ideas in creative design and user
experience, giving our clients innovative ways to attract and strengthen
relationships with customers over the Internet.
THE TECHNOLOGY CENTER, which is comprised of a dedicated team that
evaluates and tests new and emerging Internet technologies. This team
synthesizes new technologies in order to formulate innovative Internet
architectures. These activities benefit our clients by allowing them to
rapidly incorporate thoroughly-tested, leading edge technologies into
their Internet solutions.
Viant believes that the combination of new intellectual capital from its
innovation groups with its project-based experience will allow it to remain on
the leading edge of strategic consulting, creative design and Internet
technologies.
ATTRACT AND RETAIN THE HIGHEST QUALITY EMPLOYEES
Viant seeks to hire high quality employees with a broad range of experience
and knowledge. Consistent with its organic growth plan, Viant recruits a
majority of its new employees through an employee referral program. This program
rewards employees for new hires. The Quickstart training and orientation program
accelerates the dissemination of knowledge among new employees and instills an
understanding of Viant's culture and shared values. Viant's culture provides
long-term appeal for its employees by providing extensive client contact and
allowing them to pursue mastery
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of one discipline or gain a broad exposure across two or more disciplines. Viant
also encourages its employees to pursue entrepreneurial opportunities by helping
to launch new offices. Viant believes that equity ownership is an important
component of employee compensation. As a result, all Viant employees are granted
options upon commencement of employment to purchase Viant stock.
LEVERAGE COMPANY-WIDE KNOWLEDGE
Viant's multi-disciplinary teams gain valuable experience and knowledge
through client engagements. Viant's culture, systems and processes promote the
sharing of this knowledge throughout the company. Viant has developed a unique,
proprietary knowledge sharing and collaboration system, consisting of electronic
documents and shared workspaces, called FOCUS. During every client engagement,
Viant project teams seek to expand Viant's knowledge base by identifying
innovative processes, techniques and analyses that they believe will be valuable
to other project teams. The FOCUS system enables the:
- efficient distribution of company-wide knowledge and experience;
- reuse of processes and knowledge from past projects;
- acceleration and enhancement of professional development; and
- close collaboration and knowledge sharing with clients during projects.
The client benefits from Viant's FOCUS system which gives it access to a
broad array of proven assets, methods and project experience. Viant benefits
from this knowledge sharing strategy through the reuse of processes, components
and methodologies. This strategy accelerates the delivery of Internet solutions
and over time could result in improved operating margins.
STRENGTHEN ORGANIZATIONAL INFRASTRUCTURE
Viant has built a set of management processes and supporting systems that
streamline and standardize operations. These include systems and processes for:
- revenue forecasting;
- recruiting;
- project financial management;
- relationship management;
- career management;
- knowledge sharing;
- project staffing; and
- accounting.
Viant believes that its infrastructure has allowed and will continue to
allow it to scale its operations and compete effectively.
EXPAND GEOGRAPHICALLY
Viant believes that significant revenue growth opportunities exist from
expansion into new geographic markets. To date, Viant has opened offices in six
cities and has plans to expand to additional domestic and international markets.
Through its organic growth model, each office is initially staffed with
experienced employees from other Viant offices and then with new employees
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from the local geographic area. Viant believes this expansion strategy provides
ongoing entrepreneurial opportunities for employees and closer relationships
with clients.
PROVIDE SERVICES ACROSS A BROAD RANGE OF INDUSTRIES
Viant focuses on building knowledge of and skills relating to the design and
development of Internet solutions to help companies redefine and transform their
businesses. Viant believes the broad-based business knowledge and Internet
expertise it attains from its client engagements is scalable across a wide range
of industries. Clients have effectively utilized this expertise in a broad range
of industries which, to date, have included:
- financial services;
- retail;
- music and entertainment;
- pharmaceutical;
- high technology;
- utilities;
- distribution; and
- telecommunications.
VIANT SERVICES
Viant has focused on developing substantial expertise in five major service
areas. These service areas include:
INTERNET STRATEGY SOLUTIONS
Companies often pursue multiple Internet initiatives in an isolated and
un-coordinated manner, ignoring the opportunities to integrate these initiatives
with broader corporate strategy and business practices. Viant works closely with
a client to better understand its existing business strategy, processes and
needs in order to design a comprehensive and complementary Internet strategy.
Viant also works with a client to redesign its organizational structure and
processes to fully capitalize on the new, Internet-inclusive business strategy.
Viant then helps the client to focus, define, and prioritize its Internet
investments to ensure that they represent a unified strategy closely tied to the
client's overall business objectives and operations.
ELECTRONIC COMMERCE SOLUTIONS
As increasing numbers of people research and purchase goods and services
directly over the Internet, many companies have rushed to create their own
Internet storefront in what they view simplistically as a new distribution
channel. Viant helps clients move beyond this approach by focusing them on
critically important issues such as customer segmentation, online customer
behavior, the design and creation of positive user experiences, customer
information capture and analyses, and effective online customer service. This
focus helps clients to create electronic commerce solutions that attract,
satisfy, and retain loyal customers through the Internet.
BUSINESS PARTNER SOLUTIONS
Historically, business partners have largely interacted via multiple and
sometimes inefficient methods including faxed correspondence, telephone sales
and support, paper-based orders,
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invoicing and payment. Business partners can greatly improve the efficiency of
this process by using secure Internet-based transactions and correspondences
systems, often called extranets. Viant has gained substantial knowledge and
expertise in rapidly analyzing complex business operations and partner
interaction systems, redesigning business partner interactions around extranet
solutions, designing effective user interfaces and functionality, and
integrating extranet solutions with disparate hardware and software systems.
INTERNAL INFORMATION SOLUTIONS
As companies grow in headcount and geographic breadth, managers often face
the difficult and costly question of how to share information with large numbers
of employees, often in numerous geographic locations. For example, an updated
brochure or handbook that needs to be sent to 850 locations worldwide requires a
significant amount of time and resources. Viant helps clients to develop
corporate Internet solutions, often called intranets, which allow the secure
capture, storage, and distribution of information by and to a client's
authorized employees. Viant designs and deploys intranet solutions, for example,
that enable a global company to post documents, audio or video clips on a web
site for access by all employees worldwide. Viant's intranet solutions provide
tremendous value to clients who can now communicate important information to
those who need it in a cost and time efficient manner.
INTERNET-ONLY BUSINESS SOLUTIONS
The dramatic growth in Internet use has also given rise to a new class of
businesses which are designed specifically for the Internet. Viant works with
clients and managers to design and deploy the business strategy, operations, and
systems for these new Internet enterprises. Because market conditions shift
extremely quickly for Internet-based businesses -- for example with the entrance
of new competitors regulations or technologies -- clients value Viant's ability
to help them rapidly and effectively analyze conditions, anticipate and respond
to changes, and refine their business strategies and systems.
VIANT SERVICE MODEL
The Viant Service Model is comprised of three distinct, customizable and
iterative phases, which facilitate the rapid delivery of Internet solutions.
Viant works with the client to understand its specific business needs and
determine the most appropriate activities within each phase of the service
model. Each phase takes approximately 60-90 days, is provided on a fixed-price,
fixed-time basis and involves all three core disciplines. These three phases may
be repeated as required to
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refine and deliver an Internet solution. The Viant Service Model can be
illustrated graphically as follows:
(DIAGRAM DEPICTS VIANT SERVICE MODEL)
(A triangle with the words Strategy, Technology, and Creative, and three
boxes, labeled, "Envision: Explore and Develop the Internet Strategy";
"Experience: Design Prototypes to Test Approaches"; and "Launch: Build and
Deploy the Internet Solution". The words Ideas/Option, Blueprint/Market Tests
and Build/Refine will appear under the boxes)
ENVISION
During the first phase, ENVISION, project teams examine the client's
marketplace, including competitors, customer needs and brand identity. Viant
interprets the client's core value proposition and business practices for the
Internet environment based on Viant's integrated perspective of customer
behavior and needs, competitive dynamics and technology trends and issues. Viant
works with the client to establish a focused objective -- for example, increased
customer value, strengthened partner relationships or improved operating
efficiencies -- and a comprehensive set of business options to achieve this
objective.
Once this set of options is developed and articulated, Viant works with the
client to further analyze and prioritize the potential options by:
- defining the decision framework and criteria to select near-term and
long-term Internet investments;
- developing a profile of the client's capabilities and comparing those
capabilities against the requirements of the solution;
- performing a rigorous business case analysis to determine which option to
pursue; and
- creating a conceptual design to help visualize the options.
At the end of this phase, Viant delivers an action plan that is understood
and supported by key managers throughout the client organization and is grounded
in the client's business strategy. The action plan outlines specific Internet
solutions and their expected benefits. The plan also identifies the work needed
to determine the solution's requirements.
EXPERIENCE
In the second phase, Experience, the project team utilizes the action plan
from Envision and carefully investigates the Internet solutions through market
tests. The project team creates an initial layout and subsequent prototypes of
the Internet solution. These prototypes can then be tested with the client's
existing and potential customers. The testing process allows clients to
incorporate customer feedback into the Internet solution.
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Another important aspect of the Experience phase is the continued assessment
of prototypes against the client's broad business strategy, internal operations
and processes, marketing initiatives and technology systems. Viant helps the
client refine its initial strategy and action plan into a better defined
Internet solution and launch plan.
LAUNCH
In the third phase, Launch activities center on creating the capabilities
needed not only to implement an Internet solution, but also to establish that
Internet solution as an ongoing and integrated dimension of the client's
business operations. Project teams build and deploy Internet solutions through
incremental releases. Project teams perform rigorous testing on each release to
ensure proper functioning and reliability. Viant trains the client throughout
the Launch phase enabling the client to manage ongoing maintenance once the
Internet solution is complete. Activities in this phase include:
- development of Internet software applications;
- integration between the Internet solution and the client's existing
technology systems;
- refinement of the client's business and Internet strategy, based on
operational needs and ongoing customer feedback;
- management of changes in work processes;
- rigorous testing of an Internet solution to ensure reliability and proper
functionality;
- transitioning the Internet solution to client personnel for ongoing
maintenance and revision; and
- execution of the integrated marketing strategy.
The Viant Service Model's iterative build and release process provides a high
degree of flexibility to meet changing client needs and ensures a high-quality
solution.
BENEFITS OF THE VIANT SERVICE MODEL
The Viant Service Model provides us with considerable benefits and
advantages including:
- A consistent approach for the rapid, effective delivery of all of Viant's
services. This approach is taught to all Viant consultants through the
Quickstart program and subsequent training programs.
- Standard methods to identify and capture valuable reusable assets
developed in client projects. These reusable assets include proprietary
Internet frameworks, designs, tools, processes, techniques and software.
- A powerful means to facilitate sales forecasting and resource management.
Viant also believes that the service model provides tremendous benefits to
clients, which include:
- COMPLETENESS. The Viant Service Model incorporates all the elements needed
to design and implement an effective Internet solution, including the
creation of the business strategy, development of the marketing plan,
design of a business organization, layout of the technical architecture,
implementation of the Internet solution and the introduction of the
redesigned business. The Viant Service Model provides clients with an
integrated set of activities that effectively move them from analysis
through execution.
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- SPEED. The Viant Service Model takes a client efficiently from strategy
all the way through implementation, avoiding costly hand-offs that
typically occur when a client uses one consulting team or firm for
strategy and operations, another for creative design and marketing, and a
third for systems development and integration. Clients utilizing the Viant
Service Model gain a benefit by rapidly getting the right Internet
initiative to market.
- INNOVATION. The Viant Service Model draws on multi-disciplinary teams of
strategic consulting, creative design and technology experts. Clients
benefit by having innovative ideas formed from three, distinct
disciplinary perspectives, and from having these perspectives integrated
early and throughout all phases of the engagement.
- ALIGNMENT. The Viant Service Model draws on key representatives from
various functional areas within the client's organization, including
marketing, information technology, strategy and operations. As a result,
the Internet strategy and execution receives deep and broad support across
the client organization. This organizational support helps to ensure that
Internet initiatives and investments are aligned with the client's
business goals and operations.
- UNIQUENESS. The Viant Service Model is highly flexible and can incorporate
a client's prior Internet work and investments as well as its unique
brand, organization and technology requirements. As a result, each client
gets a unique work plan that is most efficient for its operations and
organization, as well as unique Internet initiatives to specifically
address that client's needs.
- RISK MITIGATION. The Viant Service Model relies on proven frameworks,
techniques and processes. As a result, clients benefit from reliable
mechanisms that can be used to identify and manage project risk and to
ensure the quality delivery of Internet initiatives, on time and within
budget.
SALES AND MARKETING
Viant markets its Internet professional services through sales professionals
located in Boston, Chicago, Dallas, Los Angeles, New York, and San Francisco.
Viant believes that this regional sales focus combined with our local service
approach allows Viant to develop strong market presence and name recognition in
each of our local markets. Viant's sales professionals operate through a
coordinated and structured process to evaluate large numbers of prospective
clients, target qualified prospects and secure new engagements.
Viant primarily markets its services to Global 1000 corporations. In
addition, Viant markets its services to early stage companies whose businesses
are designed and built around the Internet. Viant believes that the
opportunities and issues created by the Internet, including new brand
enhancement possibilities and dramatic shifts in product distribution
strategies, span a broad range of industries.
Our sales efforts are supplemented by marketing and communications
activities which we pursue to further build Viant's brand name and recognition
in the marketplace. These activities include direct mail campaigns targeting
corporate executives, public speaking opportunities, attendance at industry
conferences and business events, a public relations program, sales and marketing
materials and our own focused Internet brand initiative.
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SIGNIFICANT CLIENTS
Our clients include the following companies:
American Express Company
BankBoston Corporation
BlueTape, LLC
CMGI, Inc.
Compaq Computer Corporation
Della & James, Inc.
Deutsche Bank AG
Dreyfus Brokerage Services
Hewlett-Packard Company
Informix Software
J. Crew Group, Inc.
Kinko's Corporation
Lucent Technologies Inc.
Oncology Therapeutics Network, Corp., a subsidiary of Bristol-Myers
Squibb Co.
Polo/Ralph Lauren Corporation
RadioShack
Unum Corporation
COMPETITION
Viant competes in the Internet professional services market which is
relatively new and intensely competitive. Viant expects competition to intensify
as the market evolves. Viant believes that the competitors fall into several
categories, including the following:
- Internet service firms, such as AGENCY.COM, iXL, Organic Online, Proxicom
and USWeb/ CKS;
- technology integrators, such as Andersen Consulting, Cambridge Technology
Partners, Cap Gemini, EDS, IBM, and Sapient; and
- strategic consulting firms, such as Bain, Booz-Allen & Hamilton, Boston
Consulting Group, Diamond Technology Partners, McKinsey and Metzler Group.
Many of Viant's competitors have longer operating histories, larger client
bases, longer relationships with clients, greater brand or name recognition and
significantly greater financial, technical, marketing and public relations
resources than Viant. Viant believes that only a few of these competitors offer
an integrated package of professional Internet services. Several competitors,
however, have announced their intention to offer a broader range of services
than they currently provide.
Viant believes that the principal competitive factors in the Internet
professional services market are: the provision of an integrated services,
breadth of service offerings, cost certainty and a referenceable customer base.
Viant believes that its proprietary service model allows it to compete favorably
in all of the above areas.
There are relatively low barriers to entry into the Internet professional
services market. As a result, new market entrants pose a threat to Viant's
business. Existing or future competitors may develop or offer services that are
comparable or superior to ours at a lower price, which could have a material
adverse effect on our business, financial condition and results of operations.
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LEGAL PROCEEDINGS
From time to time, Viant may be involved in litigation incidental to the
conduct of its business. Viant is not currently party to any material legal
proceedings.
PEOPLE AND CULTURE
Viant had 27 employees at the end of 1996, 119 at the end of 1997, and 246
employees as of March 31, 1999. None of Viant's employees is represented by a
labor union and Viant believes its employee relations are excellent. Although
Viant has experienced rapid growth, it continues to grow organically and to
introduce every new employee into the Viant culture via its intensive three-week
Quickstart training program. Viant believes that this shared introductory
experience is critical to its corporate culture and service quality.
Viant recognizes that its employees are key to its future success. This
future success is based on the following factors:
- a highly effective recruiting program that attracts bright, creative and
entrepreneurial candidates;
- a strong corporate culture reinforced through our organic growth model;
- ongoing training and development; and
- equity ownership for all employees.
PHILOSOPHY
Viant's personnel and culture philosophy is simple: to provide every
employee with an environment for professional growth and development. Viant
believes that intelligent and motivated individuals achieve their fullest
potential by collaborating with high-caliber professionals in a work environment
charged with creativity and innovation. Viant also believes that individual
learning is accelerated when the firm's collective knowledge and experience is
shared in a team environment that is stimulating, challenging and fun.
RECRUITING
Viant dedicates significant resources to its recruiting efforts. A majority
of Viant's new hires come from referrals by current employees. Viant believes
that its existing employees are an excellent recruiting resource and rewards
employees that bring new people into the organization. Viant believes that the
success of its employee referral program is a direct reflection of current
employee satisfaction. Viant also actively recruits from many of the country's
leading graduate and undergraduate programs and through professional search
firms.
TRAINING AND DEVELOPMENT
Viant's training and professional development programs advance the skills of
its employees and enable Viant to deliver high-quality services to its clients.
A principal element of this training is Viant's Quickstart program. Quickstart
is an intensive three-week program attended by all new employees. In the
program, new employees learn about the culture and values of the firm, meet
other new employees from across the firm and gain first-hand experience with
Viant's Service Model. Additionally, Viant continues to develop programs that
ensure each consulting professional has the opportunity to develop skills in
each of Viant's core disciplines.
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COMPENSATION
Viant's compensation program has been structured to attract and retain
highly skilled professionals by offering competitive base salaries with annual
cash bonus opportunities. Each Viant employee receives stock options upon
commencement of employment and may receive additional options based upon
performance.
FACILITIES
Viant's headquarters are located in 20,000 square feet of leased office
space in Boston, Massachusetts. This facility is used by Viant's senior
management, administrative, human resources and training personnel as well as
the Boston business unit consultants. The lease term extends to March 31, 2003
with a five-year renewal at the option of Viant. Additionally, Viant leases
25,000 square feet in New York, 23,466 square feet in San Francisco and 5,003
square feet in Dallas. The New York lease term extends to July 28, 2007 with a
ten-year renewal at the option of Viant. The San Francisco lease term extends to
August 30, 2003 with a five-year renewal at the option of Viant. The Dallas
lease term extends to November 30, 1999 with a five-year option as elected by
Viant to rent 11,834 additional square feet of space. Viant has also entered
into short term leases for professional office space in Chicago and Los Angeles.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Our directors and executive officers as of April 9, 1999 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH VIANT
- ------------------------------ --- ------------------------------------------------------
<S> <C> <C>
Robert L. Gett 48 President and Chief Executive Officer, and Director
M. Dwayne Nesmith 37 Vice President and Chief Financial Officer
Richard J. Chavez 34 Vice President and Chief Strategy Officer
Francis X. Dudley 37 Vice President and Chief Creative Officer
Timothy A. Andrews 42 Vice President and Chief Technology Officer
Christopher Newell 48 Vice President and Chief Knowledge Officer
Diane M. Hall 36 Vice President and Chief People Officer
Sherwin A. Uretsky 41 Vice President, Worldwide Sales
Michael J. Tubridy 43 Vice President of Finance and Treasurer
Robbie O. Vann-Adibe 37 Vice President and General Manager, San Francisco
Edward J. Mello 41 Vice President and General Manager, Dallas
Chirag V. Patel 30 Vice President and General Manager, Boston
Lance L. Trebesch 33 Vice President and General Manager, Los Angeles
Paul R. Michaud 34 Vice President and General Manager, New York
William H. Davidow(1),(2) 64 Chairman of the Board of Directors
Kevin W. English 46 Director
Venetia Kontogouris(1),(2) 47 Director
</TABLE>
- ------------------------
(1) Member of the audit committee
(2) Member of the compensation committee
ROBERT L. GETT has served as President and Chief Executive Officer and
director of Viant since November 1996. From August 1990 to October 1996, Mr.
Gett was the President-North America and was on the board of directors for
Cambridge Technology Partners (Massachusetts), Inc., a technology consulting and
systems integration firm. From April 1988 to July 1990, Mr. Gett was President
of Fidelity Software Development Company, a subsidiary of Fidelity Investments,
a financial services company. From January 1982 to March 1988, Mr. Gett served
as Managing Director and Chief Information Officer of Smith Barney, Inc., a
financial services company. Mr. Gett currently serves on the board of directors
of Optika, Inc., an imaging and document management software company. Mr. Gett
holds a BS in Mathematics from Indiana University of Pennsylvania and an MS in
Technology Management from American University.
M. DWAYNE NESMITH has served as Vice President and Chief Financial Officer
of Viant since March 1999. From December 1996 to March 1999, Mr. Nesmith served
as Viant's Vice President of Operations and Planning, and from May 1996 to June
1998, Mr. Nesmith served as Viant's Vice President of Product Marketing. From
January 1992 to April 1996, Mr. Nesmith was a product manager for Compuware
Corporation, a technology consulting and software development company. From
August 1989 to December 1991, Mr. Nesmith was a product marketing manager for
Oracle Corporation, a database and technology company. From July 1984 to May
1987, Mr. Nesmith was a consultant for Arthur Andersen, an audit, tax and
consulting firm. Mr. Nesmith holds a BS in Computer Science from the University
of Mississippi and an MBA from the Harvard Business School.
RICHARD J. CHAVEZ has served as Vice President and Chief Strategy Officer of
Viant since February 1997. From January 1995 to January 1997, Mr. Chavez was a
Principal for CSC Index, a
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management consulting firm. From August 1994 to December 1994, Mr. Chavez was a
Senior Client Partner and Manager for Cambridge Technology Partners
(Massachusetts), Inc., a technology consulting and systems integration firm.
From January 1989 to June 1994, Mr. Chavez was the Chief Operating Officer and
President of Marble Associates, Inc., a technology consulting and systems
integration firm. Mr. Chavez holds an AB degree in Political Science from
Harvard College.
FRANCIS X. DUDLEY has served as Vice President and Chief Creative Officer of
Viant since April 1998. From April 1994 to present, Mr. Dudley has also served
as President of FX Dudley Communications, Inc., a creative consulting and media
production company. From November 1995 to December 1996, Mr. Dudley served as
Executive Director of Creative Affairs and New Media Development for MTI/The
Image Group, a television production company. From May 1992 to November 1993,
Mr. Dudley was an International Marketing Manager for Gannett/USA Today
International, a media company. Mr. Dudley holds a BA in English/Philosophy from
St. Joseph's University.
TIMOTHY A. ANDREWS has served as Chief Technical Officer of Viant since
August 1998. From July 1996 to July 1998, Mr. Andrews was a partner at Diamond
Technology Partners, Inc., a strategic management consulting firm. From July
1994 to July 1996, Mr. Andrews was the Vice President of Technology for the
consulting and systems integration unit of Computer Sciences Corporation, a
consulting and systems integration firm. From January 1986 to February 1994, Mr.
Andrews was the Chief Technical Officer of ONTOS, Inc., a software company. Mr.
Andrews holds an AB in Engineering Science from Dartmouth College and a Masters
in Computer Science and Electrical Engineering from Worcester Polytechnic
University.
CHRISTOPHER NEWELL has served as Vice President and Chief Knowledge Officer
of Viant since April 1999. From January 1994 to March 1999, Mr. Newell founded
and served as Executive Director for, the Lotus Institute, the research and
executive education division of Lotus Development Corporation, a software
company. From October 1988 to January 1994, Mr. Newell served as Director of
Organizational Development and Training for Lotus Development Corporation. Since
October 1998, Mr. Newell has served as the Co-Director of the IBM Institute for
Knowledge Management. Mr. Newell holds a BA in Psychology from Wheeling Jesuit
College, an MS in Counseling Education from Suffolk University, and a PhD in
Psychology from Massachusetts School of Professional Psychology.
DIANE M. HALL has served as Vice President and Chief People Officer of Viant
since April 1999. From January 1998 to April 1999, she served as Viant's Vice
President and Chief People and Knowledge Officer, and from March 1997 to January
1998, she served as Viant's Vice President and Chief Knowledge Officer. From
March 1996 to March 1997, Ms. Hall was an independent business and technology
consultant. From August 1993 to March 1996, Ms. Hall was a Senior Director at
Cambridge Technology Partners (Massachusetts), Inc. Ms. Hall holds a BS in
Computer Science from the University of Massachusetts--Lowell.
SHERWIN A. URETSKY has served as Vice President, Worldwide Sales of Viant
since August 1997. From February 1992 to August 1997, Mr. Uretsky was a Senior
Vice President for Technology Solutions Company, a systems consulting firm. Mr.
Uretsky holds a BS degree in Computer Science from the State University of New
York and an MBA from New York University.
MICHAEL J. TUBRIDY, CPA has served as Vice President of Finance and
Treasurer since March 1999. From December 1997 to March 1999, Mr. Tubridy served
as Viant's Chief Financial Officer and Vice President of Finance and
Administration. Prior to that, he served as a consultant to Physiometrix, Inc.,
a medical device company, from September to December 1997, and as Physiometrix's
Chief Financial Officer and Vice President of Finance and Administration from
November 1994 to September 1997. Mr. Tubridy served as Chief Financial Officer
and Vice President of Finance and Administration for Open Data Corp., a software
company, from June 1993
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<PAGE>
to November 1994. Mr. Tubridy holds a BS in Engineering from the University of
Rhode Island and an MS in Accounting from Northeastern University.
ROBBIE O. VANN-ADIBE has served as Vice President and General Manager, San
Francisco of Viant since January 1997. From April 1996 to January 1997, Mr.
Vann-Adibe served as the Senior Vice President of Financial Services of Viant.
From June 1995 to March 1996, Mr. Vann-Adibe served as Vice President of Product
Marketing at Illustra Information Technologies, a software product company. From
September 1992 to June 1995, Mr. Vann-Adibe served in a variety of positions at
Oracle Corporation, including Director of Oracle Industries. Mr. Vann-Adibe
holds a BSc in Mathematical Economics and Econometrics from The London School of
Economics and an MSc in Management Science and Operational Research from The
University of Warwick.
EDWARD J. MELLO has served as Vice President and General Manager, Dallas of
Viant since January 1998. From August 1988 to November 1997, Mr. Mello was a
Vice President and Managing Partner of the consulting and systems integration
division of Computer Sciences Corporation, a management and information systems
consulting firm. Mr. Mello began his career at Electronic Data Systems after
serving as an officer in the United States Corps of Engineers. Mr. Mello holds a
BA in Classics from the University of Notre Dame.
CHIRAG V. PATEL has served as Vice President and General Manager, Boston of
Viant since March 1998. From October 1996 to March 1998, Mr. Patel was a
consultant for Viant. From January 1995 to October 1996, Mr. Patel was a
Principal at Oracle Corporation, a database and technology company. From January
1992 to January 1995, Mr. Patel was an Assistant Vice President at Merrill Lynch
& Co., Inc., a financial services firm. Mr. Patel holds a BS in Computer Science
from Fairleigh Dickinson University.
LANCE L. TREBESCH has served as Vice President and General Manager, Los
Angeles of Viant since September 1998. From November 1997 to September 1998, Mr.
Trebesch was a client partner. From March 1996 to June 1997, Mr. Trebesch was
the Head of Strategic Alliances for Dimension X, Inc., a software company. From
June 1989 to February 1996, Mr. Trebesch was the Director of Information
Technology for APL Limited, a shipping company. Mr. Trebesch holds a joint BA in
History and Economics from the University of Washington.
PAUL R. MICHAUD has served as Vice President and General Manager, New York
of Viant since March 1999. From July 1996 to March 1999, Mr. Michaud was a
consultant for Viant. From October 1994 to July 1996, Mr. Michaud was the
Director of Consulting for Seer Technologies, Inc., a software consulting firm,
and from June 1990 through October 1994, Mr. Michaud was a Senior Consultant at
Seer Technologies, Inc. Mr. Michaud holds a BS in Computer Science from the
Massachusetts Institute of Technology.
WILLIAM H. DAVIDOW has served as the Chairman of Viant's board of directors
since July 1997. From May 1985 to the present, he has served as a General
Partner of Mohr, Davidow Ventures, a venture capital firm. Mr. Davidow is
currently serving on the board of directors of Rambus, Inc., Power Integrations,
Inc., and The Vantive Corporation. Mr. Davidow holds a BS and MS in electrical
engineering from Dartmouth College and a PhD in electrical engineering from
Stanford University.
KEVIN W. ENGLISH has served on Viant's board of directors since April 1999.
Since October 1998, Mr. English has served as Chief Executive Officer and
President of TheStreet.com and was appointed chairman of the board in December
1998. Before joining TheStreet.com, Mr. English served as Vice President and
General Manager of the Nexis Enterprise Group, a division of Lexis-Nexis, from
February 1998 to October 1998. From September 1997 to February 1998, Mr. English
served on a special assignment, reporting to the chairman of ReedElsevier, the
parent company of Lexis-Nexis. Mr. English served as Vice President of Sales and
Marketing of Lexis-Nexis from May
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<PAGE>
1995 to September 1997 and as a Senior Director from 1994 to May 1995. Mr.
English holds a BA in history from Stonehill College.
VENETIA KONTOGOURIS has served on Viant's board of directors since June
1996. Since July 1997, Ms. Kontogouris has served as the President of Enterprise
Associates, LLC, the venture capital unit of IMS Health, an information
solutions provider to the pharmaceutical and healthcare industries. From 1983 to
July 1997, Ms. Kontogouris held a variety of positions with The Dun & Bradstreet
Corporation, a business services company, and its affiliated entities including
Senior Vice President of Cognizant Corporation, a venture capital interest, head
of product development for Duns Marketing Services and Director of Marketing for
national accounts and financial services. Ms. Kontogouris serves on the board of
directors of Cognizant Technology Solutions Corporation, an information
technology consulting company and several private companies. Ms. Kontogouris
holds a BA from Northeastern University and an MBA from the University of
Chicago.
BOARD COMPOSITION
Viant currently has authorized five directors. In accordance with the terms
of Viant's amended and restated certificate of incorporation, the terms of
office of the members of the board of directors are divided into three classes:
Class I, whose term will expire at the annual meeting of stockholders to be held
in 2000, Class II, whose term will expire at the annual meeting of stockholders
to be held in 2001, and Class III, whose term will expire at the annual meeting
of stockholders to be held in 2002. The Class I director is Venetia Kontogouris,
the Class II directors are William H. Davidow and Kevin W. English, and the
Class III director is Robert L. Gett. At each annual meeting of stockholders
after the initial classification, the successors to directors whose term will
then expire will be elected to serve from the time of election and qualification
until the third annual meeting following election. In addition, Viant's amended
and restated bylaws provide that the authorized number of directors may be
changed only by resolution of the board of directors. Any additional
directorships resulting from an increase in the number of directors may be
changed only by resolution of the board of directors. Any additional
directorships resulting from an increase in the number of directors will be
distributed among the three classes so that, as nearly as possible, each class
will consist of one-third of the total number of directors. This classification
of the board of directors may have the effect of delaying or preventing changes
in control or management of Viant.
Each officer is elected by, and serves at the discretion of, the board of
directors. Each of Viant's officers and directors, other than non-employee
directors, devotes full time to the affairs of Viant. Viant's non-employee
directors devote such time to the affairs of Viant as is necessary to discharge
their duties. There are no family relationships among any of the directors,
officers or key employees of Viant.
BOARD COMMITTEES
The audit committee reviews Viant's audited financial statements and
accounting practices, and considers and recommends the employment of, and
approves the fee arrangements with, independent accountants for both audit
functions and for advisory and other consulting services. The current members of
the audit committee are William H. Davidow and Venetia Kontogouris.
The compensation committee reviews and approves the compensation and
benefits for our key executive officers, administers our employee benefit plans
and makes recommendations to the board of directors regarding grants of stock
options and any other incentive compensation arrangements. The current members
of the compensation committee are William H. Davidow and Venetia Kontogouris.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION INTERLOCKS
None of the members of the compensation committee of the board of directors
has at any time since the formation of Viant been an officer or employee of
Viant. No executive officer of Viant serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving on Viant's board of directors or compensation committee.
DIRECTOR COMPENSATION
The directors do not receive any compensation for their service as
directors, other than reimbursement of all reasonable out-of-pocket expenses for
attendance at board meetings.
CHANGE OF CONTROL ARRANGEMENTS
Shares subject to options granted under Viant's 1996 and 1999 Stock Option
Plans will generally vest over four years, with 25% of the shares vesting after
one year and the remaining shares vesting in installments based on full calendar
quarters over the next 36 months. Viant has granted an option to Robert L. Gett
that provides for accelerated vesting of option shares upon a "change of
control" as defined in the option agreement.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the compensation paid to
Viant's named executive officers, who are our Chief Executive Officer and each
of our four other most highly compensated executive officers, during the fiscal
year ended January 1, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
-------------------- ---------------
<S> <C> <C> <C>
SECURITIES
SALARY BONUS UNDERLYING
NAME AND PRINCIPAL POSITION ($) ($) OPTIONS (#)
- --------------------------------------------------------------------------- --------- --------- ---------------
Robert L. Gett, President and Chief Executive Officer, and Director........ $ 123,077 $ 100,000 0
Edward J. Mello, Vice President and General Manager, Dallas................ 195,408 55,576 95,000
Richard J. Chavez, Vice President and Chief Strategy Officer............... 210,073 51,282 0
Sherwin A. Uretsky, Vice President, Worldwide Sales........................ 158,538 49,683 10,000
Robbie O. Vann-Adibe, Vice President and General Manager, San Francisco.... 164,260 43,344 0
</TABLE>
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<PAGE>
The following table sets forth information with respect to stock options
granted during the fiscal year ended January 1, 1999 to each of the named
executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
---------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
NUMBER OF OPTIONS EXERCISE APPRECIATION
OPTIONS GRANTED PRICE OR OPTION TERM(2)
GRANTED (1) TO EMPLOYEES PER SHARE EXPIRATION --------------------
NAME (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------- ------------- --------------------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Gett, President and -- -- -- -- -- --
Chief Executive Officer, and
Director.....................
Edward J. Mello, Vice President 95,000 7.36% $ 1.50 2/12/08 $ 89,617 $ 227,108
and General Manager, Dallas..
Richard J. Chavez, Vice -- -- -- -- -- --
President and Chief Strategy
Officer......................
Sherwin A. Uretsky, Vice 10,000 0.77% 1.50 2/12/08 9,433 23,906
President, Worldwide Sales...
Robbie O. Vann-Adibe, Vice -- -- -- -- -- --
President and General
Manager, San Francisco.......
</TABLE>
- ------------------------
(1) All options were granted under Viant's 1996 Stock Option Plan. Options
granted under the Plan vest over a four-year period with 25% vesting at the
first anniversary date of the vest date and the remaining shares vesting in
installments based on full calendar quarters over the next 36 months. The
board retains discretion to modify the terms, including the price of
outstanding options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The assumed
5% and 10% annual rates of stock price appreciation from the date of grant
to the end of the option term are provided in accordance with rules of the
SEC and do not represent our estimate or projection of the future common
stock price. Actual gains, if any, on stock option exercises are dependent
on the future performance of the common stock, overall market conditions and
the option holders' continued employment through the vesting period. This
table does not take into account any actual appreciation in the price of the
common stock from the date of grant to the present.
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<PAGE>
The following table sets forth certain information regarding exercised stock
options during the fiscal year ended January 1, 1999 and unexercised options
held as of January 1, 1999 by each of the named executive officers:
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL
YEAR-END(#)(1) YEAR-END($)(3)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------- ------------ --------------- ------------- --------------
<S> <C> <C> <C> <C>
Robert L. Gett, President and Chief Executive Officer,
and Director(2)....................................... 740,000 0 $ 2,960,000 $ 0
Edward J. Mello, Vice President and General Manager,
Dallas................................................ 0 95,000 0 261,250
Richard J. Chavez, Vice President and Chief Strategy
Officer............................................... 70,000 90,000 280,000 360,000
Sherwin A. Uretsky, Vice President, Worldwide Sales..... 31,625 71,875 101,031 228,594
Robbie O. Vann-Adibe, Vice President and General
Manager, San Francisco................................ 390,625 234,375 1,640,625 984,375
</TABLE>
- ------------------------
(1) All options were granted under Viant's 1996 Stock Option Plan. Unless stated
otherwise, options granted under the Plan vest over a four-year period with
25% vesting at the first anniversary date of the vest date and the remaining
shares vesting in installments based on full calendar quarters over the next
36 months. The board of directors retains discretion to modify the terms,
including the price of outstanding options.
(2) These options are immediately exercisable in full at the date of grant, but
shares purchased on exercise of unvested options are subject to a repurchase
right in favor of Viant that entitles us to repurchase unvested shares at
their original exercise price on termination of the employee's services with
Viant. The repurchase right lapses as to 25% of the shares subject to the
option on November 4, 1996, 25% on November 4, 1997 and the balance, ratably
by calendar quarter, over the next three years. As of January 1, 1999,
options to purchase 506,667 shares of common stock, with an average original
issue price of $0.25 per share, were subject to repurchase.
(3) Calculated on the basis of the fair market value of the underlying
securities as of January 1, 1999 of $4.25 per share, minus the per share
exercise price, multiplied by the number of shares underlying the option.
EMPLOYEE BENEFIT PLANS
1996 STOCK OPTION PLAN
In June 1996 the board of directors adopted, and in July 1996 Viant's
stockholders approved, the 1996 Stock Option Plan. At that time, 2,771,876
shares of common stock were reserved for issuance under the 1996 Plan, which
number was increased to 4,291,876 in November 1996, and to 5,991,876 in November
1997. As of April 9, 1999, options to purchase 1,569,167 shares of common stock
had been exercised and options to purchase 3,510,220 shares of common stock were
outstanding under the 1996 Plan with an average exercise price of $1.24, and
912,489 shares were available for future grants. No further options will be
granted under the 1996 Plan after the effective date of the offering. Options
granted under the 1996 Plan prior to its termination will remain outstanding
according to their terms. In general, options vest over a four-year period.
Options under the 1996 Plan are subject to terms substantially similar to those
described below with respect to options to be granted under the 1999 Stock
Option Plan.
1999 STOCK OPTION PLAN
Viant's 1999 Stock Option Plan provides for the granting to employees of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, and for the granting to employees, directors
and consultants of nonstatutory stock options. The 1999 Plan was approved by the
board of directors in January 1999 and by the stockholders in April 1999. Unless
terminated sooner, the 1999 Plan will terminate automatically in 2009. A total
of
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<PAGE>
4,868,929 shares of common stock is currently reserved for issuance pursuant to
the 1999 Plan, plus annual increases equal to the lesser of: (1) shares,
(2) 4% of the outstanding shares on such date, or (3) an amount determined by
the board of directors. As of April 9, 1999, options to purchase 1,761,560
shares of common stock were outstanding under the 1999 Plan, with an average
exercise price of $5.83, and 3,107,369 shares were available for future grants.
The board of directors or a committee of the board of directors may serve as
administrator of the 1999 Plan. In the case of options intended to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the 1999 Plan must be administered by at least two or more "outside
directors" within the meaning of Section 162(m) of the Code. The administrator
has the power to determine the terms of the options granted, including the
exercise price, the number of shares subject to each option, the exercisability
thereof, and the form of consideration payable upon such exercise. The board of
directors has the authority to amend, suspend or terminate the 1999 Plan,
provided that no such action may affect any share of common stock previously
issued and sold or any option previously granted under the 1999 Plan.
Options granted under the 1999 Plan are not generally transferable by the
optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. Options granted under the 1999 Plan must generally be
exercised within three months of the optionee's separation of service from
Viant, or within twelve months after such optionee's termination by death or
disability, but in no event later than the expiration of the option's ten year
term. The exercise price of all incentive stock options granted under the 1999
Plan must be at least equal to the fair market value of the common stock on the
date of grant. The exercise price of nonstatutory stock options granted under
the 1999 Plan must be at least 85% of the fair market value, but with respect to
nonstatutory stock options intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the exercise
price must at least be equal to the fair market value of the common stock on the
date of grant. With respect to any participant who owns stock possessing more
than 10% of the voting power of all classes of Viant's outstanding capital
stock, the exercise price of any incentive stock option granted must equal at
least 110% of the fair market value on the grant date and the term of such
incentive stock option must not exceed five years. The term of all other options
granted under the 1999 Plan may not exceed ten years.
The 1999 Plan provides that in the event of a merger of Viant with or into
another corporation or a sale of substantially all of Viant's assets, each
option shall be assumed or an equivalent option substituted by the successor
corporation. If the outstanding options are not assumed or substituted as
described in the preceding sentence, the administrator shall notify the optionee
that he or she will have the right to exercise the option as to all of the
optioned stock, including shares as to which he or she would not otherwise be
exercisable, for a period of 15 days from the date of such notice. The option
will terminate upon expiration of such period.
1999 EMPLOYEE STOCK PURCHASE PLAN
Viant's 1999 Employee Stock Purchase Plan was adopted by the board of
directors in March 1999 and by the stockholders in April 1999. A total of
200,000 shares of common stock have been reserved for issuance under the 1999
Purchase Plan, plus annual increases equal to the lesser of: (1) 200,000 shares,
(2) 2% of the outstanding shares on such date, or (3) an amount determined by
the board of directors. As of the date of this prospectus, no shares have been
issued under the 1999 Purchase Plan.
The 1999 Purchase Plan, which is intended to qualify under Section 423 of
the Code contains successive six-month offering periods. The offering periods
generally start on the first trading day on or after May 15 and November 15 of
each year, except for the first such offering period which
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will commence within a reasonable time after the effective date of this offering
and ends on the last trading day on or before May 14, 2000.
Employees are eligible to participate if they are customarily employed by
Viant or any participating subsidiary for at least twenty hours per week and
more than five months in any calendar year. However, any employee who: (1)
immediately after grant owns stock possessing 5% or more of the total combined
voting power or value of all classes of the capital stock of Viant, or (2) whose
rights to purchase stock under all employee stock purchase plans of Viant
accrues at a rate which exceeds $25,000 worth of stock for each calendar year
may be not be granted an option to purchase stock under the 1999 Purchase Plan.
The 1999 Purchase Plan permits participants to purchase common stock through
payroll deductions of up to 15% of the participant's compensation. Compensation
is defined as the participant's base straight time gross earnings, commissions,
incentive compensation and bonuses, but exclusive of payments for overtime,
profit sharing payments, shift premium payments and incentive payments. The
maximum number of shares a participant may purchase during a single offering
period is 1,250 shares.
Amounts deducted and accumulated by the participant are used to purchase
shares of common stock at the end of each offering period. The price of stock
purchased under the 1999 Purchase Plan is 85% of the lower of the fair market
value of the common stock at the beginning or end of the offering period.
Participants may end their participation at any time during an offering period,
and they will be paid their payroll deductions to date. Participation ends
automatically upon termination of employment with Viant.
Rights granted under the 1999 Purchase Plan are not transferable by a
participant other than by will, the laws of descent and distribution, or as
otherwise provided under the 1999 Purchase Plan. The 1999 Purchase Plan provides
that, in the event of a merger of Viant with or into another corporation or a
sale of substantially all of Viant's assets, each outstanding option may be
assumed or substituted for by the successor corporation. If the successor
corporation refuses to assume or substitute for the outstanding options, the
offering period then in progress will be shortened and a new exercise date will
be set. The 1999 Purchase Plan will terminate in 2009. The board of directors
has the authority to amend or terminate the 1999 Purchase Plan, except that no
such action may adversely affect any outstanding rights to purchase stock under
the 1999 Purchase Plan.
401(K) RETIREMENT/SAVINGS PLAN
Viant's 401(k) plan covers its full-time employees located in the United
States. The 401(k) plan is intended to qualify under Section 401(k) of the Code.
Consequently, contributions to the 401(k) plan by employees or by Viant, and the
investment earnings thereon, are not taxable to employees until withdrawn from
the 401(k) plan. Further, contributions by Viant, if any, will be deductible by
Viant when made. Employees may elect to contribute up to 15% of their current
compensation to the 401(k), plan up to the statutorily prescribed annual limit,
which was $10,000 in 1998. The 401(k) plan permits, but does not require,
additional matching contributions to the 401(k) plan by Viant on behalf of all
participants in the 401(k) plan. To date, Viant has not made any contributions
to the 401(k) plan.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Viant's amended and restated certificate of incorporation limits the
liability of directors to the maximum extent permitted by Delaware law. Delaware
law provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except
liability for: (1) breach of their duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) unlawful payments of
dividends or unlawful stock repurchases or redemptions, or (4) any
42
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transaction from which the director derived an improper personal benefit. Such
limitation of liability does not apply to liabilities arising under the federal
or state securities laws and does not affect the availability of equitable
remedies such as injunctive relief or rescission.
Viant's bylaws provide that Viant shall indemnify its directors, officers,
employees and other agents to the fullest extent permitted by law. Viant
believes that indemnification under its bylaws covers at least negligence and
gross negligence on the part of indemnified parties. Viant's bylaws also permit
it to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in such capacity,
regardless of whether the bylaws permit such indemnification.
Viant intends to enter into agreements to indemnify its directors and
executive officers, in addition to the indemnification provided for in its
bylaws. These agreements, among other things, will indemnify Viant's directors
and executive officers for certain expenses (including attorneys' fees),
judgments, fines and settlement amounts incurred by any such person in any
action or proceeding, including any action by or in the right of Viant arising
out of such person's services as a director, officer, employee, agent or
fiduciary of Viant, any subsidiary of Viant or any other company or enterprise
to which the person provides services at the request of Viant. Viant believes
that these provisions and agreements are necessary to attract and retain
qualified persons as directors and executive officers.
At present, there is no pending litigation or proceeding involving a
director or officer of Viant in which indemnification is required or permitted,
and Viant is not aware of any threatened litigation or proceeding that may
result in a claim for such indemnification.
43
<PAGE>
CERTAIN TRANSACTIONS
On May 16, 1996, Viant sold an aggregate of 5,746,874 shares of Series A
preferred stock at a price of $0.5333 per share. On June 19, 1996 Viant sold an
aggregate of 1,499,925 shares of Series B preferred stock at a price of $0.6667
per share. On June 4, 1997 and October 10, 1997, Viant sold an aggregate of
2,759,591 shares of Series C preferred stock at a price of $2.8995 per share.
Between the dates of November 4, 1998 and February 1, 1999 Viant sold an
aggregate of 3,168,704 shares of Series D preferred stock at a price of $6.39
per share. As of April 9, 1999, the following directors, executive officers,
holders of more than 5% of a class of voting securities and members of such
person's immediate families purchased shares of Series A, Series B, Series C and
Series D preferred stock:
44
<PAGE>
In March 1998, at the request of Viant, Richard J. Chavez, Vice President
and Chief Strategy Officer, relocated to the Boston office. In connection with
Mr. Chavez's agreement to relocate, he was granted the following: (1) a
relocation bonus of $35,000, (2) reimbursement of all reasonable expenses
associated with the relocation of his family to the Boston area, (3) a housing
loan in the principal amount of $50,000, and (4) an employee loan in the amount
of $40,000. Interest on both of the loans accrues annually at the Prime Rate (as
of the loan execution date). Interest payments only are due on the housing loan
for the first four years; upon commencement of the fifth year, repayment of
principal and interest on the loan will be made in accordance with a monthly
repayment schedule in which principal and interest will be repaid and amortized
over a two year period. The housing loan becomes immediately due and payable if
Mr. Chavez: (1) ceases to be employed by Viant for any reason, (2) fails to
perform any of his obligations under the loan agreement, or (3) files for
bankruptcy or otherwise becomes insolvent, or upon the occurrence of the sixth
anniversary of the loan agreement. The housing loan is secured by Mr. Chavez's
option to purchase 30,000 shares of Viant common stock, or the stock itself if
the option is exercised. Viant will forgive 25% of Mr. Chavez's employee loan
annually commencing on the first anniversary of the loan and for the next three
anniversaries thereafter. The remaining principal balance of the employee loan
will become immediately due and payable if Mr. Chavez: (1) ceases to be employed
by Viant for any reason, (2) fails to perform any of his obligations under the
loan agreement, or (3) files for bankruptcy or otherwise becomes insolvent. The
employee loan is secured by Mr. Chavez's option to purchase 30,000 shares of
Viant common stock, or the stock itself if the option is exercised. This stock
collateral is separate from and in addition to the collateral for the housing
loan.
Under the terms of Viant's Key Employee Agreement with Robert L. Gett, if
Mr. Gett's employment is terminated by Viant without cause, Viant has agreed to
continue to pay Mr. Gett's salary for a period of one year from the date of such
termination. Mr. Gett will also continue to receive the same employee benefits
(deferred bonus eligibility, pension, group medical insurance, profit-sharing or
other employee benefits in place when Mr. Gett is terminated) which he had as an
employee until the earlier of: (1) one year from the date of such termination,
and (2) the date on which Mr. Gett is re-employed.
Viant, certain holders of preferred stock and certain holders of common
stock entered into the Amended and Restated Shareholders Rights Agreement, dated
as of November 13, 1998, which provides, among other things, for certain
registration rights to certain holders of common stock and preferred stock. See
"Description of Capital Stock--Registration Rights."
Upon the consummation of this offering, all outstanding shares of Series A
preferred stock, Series B preferred stock, Series C preferred stock and Series D
preferred stock will automatically convert into shares of common stock on a
one-for-one basis.
Viant intends to enter into indemnification agreements with each of its
directors and officers. Such indemnification agreements will require us to
indemnify such individuals to the fullest extent possible under Delaware law.
We believe that all transactions between Viant and its officers, directors,
principal stockholders and other affiliates have been and will be on terms no
less favorable to us than could be obtained from unaffiliated third parties.
45
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of our common stock
as of April 9, 1999 (assuming conversion of all outstanding shares of preferred
stock into common stock upon the closing of this offering and as adjusted to
reflect the sale of the shares offered by this prospectus) by:
- each person who is known by us to beneficially own more than 5% of our
common stock;
- each of the named executive officers and each of Viant's directors; and
- all of our officers and directors as a group.
Percentage of ownership is based on 17,477,394 shares outstanding as of
April 9, 1999, assuming conversion of the preferred stock, and
shares outstanding after this offering, assuming no exercise of the
underwriters' over-allotment options. Beneficial ownership is calculated based
on SEC requirements. All shares of the common stock subject to options currently
exercisable or exercisable within 60 days after April 9, 1999 are deemed to be
outstanding for the purpose of computing the percentage of ownership of the
person holding such options, but are not deemed to be outstanding for computing
the percentage of ownership of any other person. Unless otherwise indicated
below, each stockholder named in the table has sole voting and investment power
with respect to all shares beneficially owned, subject to applicable community
property laws.
<TABLE>
<CAPTION>
SHARES TO BE
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO OWNED AFTER OFFERING
OFFERING
---------------------- ----------------------
<S> <C> <C> <C> <C>
BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT
- ------------------------------------------------------- --------- ----------- --------- -----------
FIVE PERCENT STOCKHOLDERS
Mohr, Davidow Ventures(1).............................. 4,753,697 27.2%
Kleiner Perkins Caufield & Byers(2).................... 3,123,319 17.9%
Trident Capital Management(3).......................... 2,367,559 13.5%
Robert L. Gett(4)...................................... 2,292,443 12.8%
Technology Crossover Ventures(5)....................... 1,313,968 7.5%
Eric Greenberg(6)...................................... 886,883 5.1%
NAMED EXECUTIVE OFFICERS AND DIRECTORS
William H. Davidow(7).................................. 10,000 *
Venetia Kontogouris(8)................................. 10,000 *
Kevin W. English(9).................................... 10,000 *
Robert L. Gett(4)...................................... 2,292,443 12.8%
M. Dwayne Nesmith(10).................................. 118,500 *
Michael J. Tubridy(11)................................. 48,750 *
Richard J. Chavez(12).................................. 80,000 *
Francis X. Dudley(13).................................. 25,000 *
Timothy A. Andrews..................................... 0 *
Sherwin A. Uretsky(14)................................. 49,750 *
Robbie O. Vann-Adibe(15)............................... 617,187 3.4%
Edward J. Mello........................................ 23,750 *
Chirag V. Patel(16).................................... 31,156 *
Lance L. Trebesch(17).................................. 4,306 *
Paul R. Michaud(18).................................... 20,125 *
Diane M. Hall(19)...................................... 55,000 *
Christopher Newell..................................... 0
All directors and officers as a group (17
persons)(20)......................................... 3,395,967 18.2%
</TABLE>
- ------------------------
* Less than 1% of Viant's outstanding common stock.
46
<PAGE>
(1) Consists of 4,551,638 shares held of record by Mohr, Davidow Ventures IV,
L.P. and 202,059 shares held of records by MDV IV Entrepreneurs' Network
Fund, L.P. The address of Mohr, Davidow Ventures is 2775 Sand Hill Road,
Suite 240, Menlo Park, California 94025.
(2) Consists of 2,288,628 shares held of record by Kleiner Perkins Caufield &
Byers VIII, 624,162 shares held of record by KPCB Java Fund, 123,650 shares
held of record by KPCB VIII Founders Fund, 78,081 shares held of record by
KPCB Information Sciences Zaibatsu Fund II and 8,798 shares held of record
by KPCB VII Founders Fund. The address for Kleiner Perkins Caufield & Byers
is 2750 Sand Hill Road, Menlo Park, California 94025.
(3) Consists of 2,303,279 shares held of record by Information Associates, L.P.
and 64,280 shares held of record by Information Associates, C.V. Trident
Capital Management is a general partner of the Information Associates funds.
The address for Trident Capital Management is 2480 Sand Hill Road, Suite
100, Menlo Park, California 94025.
(4) Includes 443,335 shares subject to stock options that are exercisable within
60 days of April 9, 1999.
(5) Consists of 628,567 shares held of record by Technology Crossover Ventures
II, L.P., 483,252 shares held of record by TCV II (Q), L.P., 95,968 shares
held of record by Technology Crossover Ventures II, C.V., 85,761 shares held
of record by TCV II Strategic Partners, L.P. and 20,420 shares held of
record by TCV II, V.O.F. The address for Technology Crossover Ventures is
575 High Street, Suite 400, Palo Alto, California 94301.
(6) The address for Mr. Greenberg is One Front Street, 28th Floor, San
Francisco, California 94111.
(7) Consists of 10,000 shares subject to stock options that are exercisable
within 60 days of April 9, 1999. Mr. Davidow is a partner of Mohr, Davidow
Ventures and disclaims beneficial ownership of the shares held by Mohr,
Davidow Ventures except to the extent of his proportionate partnership
interest therein. The address for Mr. Davidow is c/o Mohr, Davidow Ventures,
2775 Sand Hill Road, Suite 240, Menlo Park, CA 94025.
(8) Consists of 10,000 shares subject to stock options that are exercisable
within 60 days of April 9, 1999. Ms. Kontogouris is President of Enterprise
Associates, LLC, a limited partner of Trident Capital Management, and
disclaims all beneficial ownership of the shares held by Trident Capital
Management. The address for Ms. Kontogouris is c/o Enterprise Associates,
LLC, 200 Nyala Farms, Westport, Connecticut 06880.
(9) Consists of 10,000 shares subject to stock options that are exercisable
within 60 days of April 9, 1999.
(10) Includes 6,000 shares subject to stock options that are exercisable within
60 days of April 9, 1999.
(11) Includes 6,250 shares subject to stock options that are exercisable within
60 days of April 9, 1999.
(12) Consists of 80,000 shares subject to stock options that are exercisable
within 60 days of April 9, 1999.
(13) Consists of 25,000 shares subject to stock options that are exercisable
within 60 days of April 9, 1999.
(14) Includes 39,750 shares subject to stock options that are exercisable within
60 days of April 9, 1999.
(15) Includes 429,687 shares subject to stock options that are exercisable
within 60 days of April 9, 1999.
(16) Includes 19,156 shares subject to stock options that are exercisable within
60 days of April 9, 1999.
(17) Consists of 4,306 shares subject to stock options that are exercisable
within 60 days of April 9, 1999.
47
<PAGE>
(18) Consists of 20,125 shares subject to stock options that are exercisable
within 60 days of April 9, 1999.
(19) Consists of 55,000 shares subject to stock options that are exercisable
within 60 days of April 9, 1999.
(20) Includes 1,158,609 shares subject to stock options that are exercisable
within 60 days of April 9, 1999. See notes (4) and (7) through (19).
48
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Viant's amended and restated certificate of incorporation, the filing of
which will occur at the closing of this offering, authorizes the issuance of up
to 50 million shares of common stock, par value $0.001 per share, and 5 million
shares of preferred stock, par value $0.001 per share, the rights and
preferences of which may be established from time to time by Viant's board of
directors. As of April 9, 1999, giving effect to the conversion of all preferred
stock into common stock, 17,477,394 shares of common stock were outstanding. As
of April 9, 1999, Viant had 72 stockholders.
COMMON STOCK
Each holder of common stock is entitled to one vote for each share on all
matters to be voted upon by the stockholders and there are no cumulative voting
rights. Subject to preferences to which holders of preferred stock issued after
the sale of the common stock offered hereby may be entitled, holders of common
stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the board of directors out of funds legally available
therefor. Please see "Dividend Policy." In the event of a liquidation,
dissolution or winding up of Viant, holders of common stock would be entitled to
share in Viant's assets remaining after the payment of liabilities and the
satisfaction of any liquidation preference granted to the holders of any
outstanding shares of preferred stock. Holders of common stock have no
preemptive or conversion rights or other subscription rights and there are no
redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are, and the shares of common stock offered
by Viant in this offering, when issued and paid for, will be, fully paid and
nonassessable. The rights, preferences and privileges of the holders of common
stock are subject to, and may be adversely affected by the rights of the holders
of shares of any series of preferred stock, which Viant may designate in the
future.
PREFERRED STOCK
Upon the closing of this offering, the board of directors will be
authorized, subject to any limitations prescribed by law, without stockholder
approval, from time to time to issue up to an aggregate of 5 million shares of
preferred stock, $0.001 par value per share, in one or more series, each of such
series to have such rights and preferences, including voting rights, dividend
rights, conversion rights, redemption privileges and liquidation preferences, as
shall be determined by the board of directors. The rights of the holders of
common stock will be subject to, and may be adversely affected by, the rights of
holders of any preferred stock that may be issued in the future. Issuance of
preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from attempting to acquire, a majority of the outstanding voting
stock of Viant. Viant has no present plans to issue any shares of preferred
stock.
WARRANTS
As of April 9, 1999, giving effect to the conversion of all preferred stock
into common stock, Viant had outstanding a warrant to purchase 5,517 shares of
common stock at an exercise price of $3.625 per share and a warrant to purchase
35,986 shares of common stock at an exercise price of $3.625 per share. Each
warrant has a net exercise provision under which the holder may, in lieu of
payment of the exercise price in cash, surrender the warrant and receive a net
amount of shares, based on the fair market value of Viant's stock at the time of
the exercise of the warrant, after deducting the aggregate exercise price. The
warrant for 5,517 shares will expire upon the closing of
49
<PAGE>
this offering. The warrant for 35,986 shares will expire five years from the
effective date of this offering.
REGISTRATION RIGHTS
Pursuant to the Amended and Restated Shareholders' Rights Agreement, dated
November 13, 1998, the holders of approximately 15,762,230 shares of common
stock will have certain rights to register those shares under the Securities Act
of 1933. If Viant registers any of its common stock for its own account or for
the account of other security holders, the parties to the Rights Agreement are
entitled to include their shares of common stock in the registration, subject to
the ability of the underwriters to limit the number of shares included in the
offering. In addition, subject to certain limitations in the Rights Agreement,
some of the holders, whose shares total 14,510,347, may require, on one occasion
at least six months after this offering, that Viant use its best efforts to
register such shares for public resale, provided that the holders of at least
30% of those shares make the request. Furthermore, these holders of the
14,510,347 shares may require Viant to register all or a portion of their
registrable securities on Form S-3 when Viant is eligible to use such form,
provided, among other limitations, that the proposed aggregate price to the
public is at least $1,000,000. Viant will bear all fees, costs and expenses of
such registration, other than underwriting discounts and commissions. Upon the
effectiveness of any registration statement filed to register our common stock,
such shares would become freely tradable, without any restrictions imposed by
the Securities Act.
EFFECT OF CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS AND
THE DELAWARE ANTI-TAKEOVER STATUTE
Certain provisions of Viant's amended and restated certificate of
incorporation and bylaws may have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of Viant. Such provisions could limit the price that certain
investors might be willing to pay in the future for shares of Viant's common
stock. Certain of these provisions allow Viant to issue preferred stock without
any vote or further action by the stockholders, eliminate the right of
stockholders to act by written consent without a meeting and eliminate
cumulative voting in the election of directors. These provisions may make it
more difficult for stockholders to take certain corporate actions and could have
the effect of delaying or preventing a change in control of Viant. In addition,
Viant is subject to Section 203 of the Delaware General Corporation Law which,
subject to certain exceptions, prohibits a Delaware corporation from engaging in
any business combination with any interested stockholder, unless: (1) prior to
such date, the board of directors of the corporation approved either the
business combination or the transaction which resulted in the stockholder
becoming an interested stockholder, (2) upon consummation of the transaction
which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by persons who
are directors and also officers and by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer, or (3)
on or subsequent to such date, the business combination is approved by the board
of directors and authorized at an annual or special meeting of stockholders, and
not by written consent, by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder.
Viant's amended and restated certificate of incorporation provides that,
upon the closing of this offering, the board of directors will be divided into
three classes of directors with each class serving a staggered three-year term.
The classification system of electing directors may tend to discourage
50
<PAGE>
a third party from making a tender offer or otherwise attempting to obtain
control of Viant and may maintain the incumbency of the board of directors, as
the classification of the board of directors generally increases the difficulty
of replacing a majority of the directors. Viant's amended and restated
certificate of incorporation eliminates the right of stockholders to act by
written consent without a meeting, and Viant's bylaws eliminate the right of
stockholders to call special meetings of stockholders. The amended and restated
certificate of incorporation and bylaws do not provide for cumulative voting in
the election of directors. The authorization of undesignated preferred stock
makes it possible for the board of directors to issue preferred stock with
voting or other rights or preferences that could impede the success of any
attempt to change control of Viant. These and other provisions may have the
effect of deferring hostile takeovers or delaying changes in control or
management of Viant. The amendment of any of these provisions would require
approval by holders of at least 66 2/3% of the outstanding common stock.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for our common stock is Boston EquiServe.
51
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Immediately prior to this offering, there was no public market for our
common stock. Future sales of substantial amounts of common stock in the public
market could adversely affect the market price of our common stock.
Upon completion of this offering, we will have outstanding an aggregate of
shares of common stock, assuming the issuance of shares of
common stock offered hereby and no exercise of options after March 31, 1999. Of
these shares, the shares sold in this offering will be freely
tradable without restriction or further registration under the Securities Act,
except for any shares purchased by "Affiliates" of Viant as that term is defined
in Rule 144 under the Securities Act (whose sales would be subject to certain
limitations and restrictions described below).
The remaining 17,477,394 shares of common stock held by existing
stockholders were issued and sold by us in reliance on exemptions from the
registration requirements of the Securities Act. Of these shares, shares
will be subject to "lock-up" agreements described below on the effective date of
this offering. Upon expiration of the lock-up agreements 180 days after the
effective date of this offering, shares will become eligible for sale
pursuant to Rule 144(k), and the remaining shares will become eligible for sale
subject in most cases to the limitations of Rule 144. In addition, holders of
stock options could exercise such options and sell certain of the shares issued
upon exercise as described below.
<TABLE>
<CAPTION>
DAYS AFTER DATE OF SHARES ELIGIBLE
THIS PROSPECTUS FOR SALE COMMENT
- ------------------------------ --------------- ----------------------------------------------------------------
<S> <C> <C>
Upon Effectiveness............ Shares sold in the offering
Upon Effectiveness............ Freely tradable shares salable under Rule 144(k) that are not
subject to the Lock-up
90 days....................... Shares saleable under Rules 144 and 701
180 days...................... Lock-up released; shares salable under Rules 144 and 701
Thereafter.................... Restricted securities held for one year or less
</TABLE>
As of April 9, 1999 there were a total of 5,271,780 shares of common stock
subject to outstanding options under our 1996 Stock Option Plan and 1999 Stock
Option Plan, approximately 1,564,868 of which were vested and exercisable.
However, all of these shares are subject to lock-up agreements. All options held
by officers and directors of Viant are subject to 180 day lock-up agreements
described below. Immediately after the completion of this offering, we intend to
file registration statements on Form S-8 under the Securities Act to register
all of the shares of common stock issued or reserved for future issuance under
the 1996 Stock Option Plan, 1999 Stock Option Plan and 1999 Employee Stock
Purchase Plan. On the date 180 days after the effective date of this offering, a
total of approximately shares of common stock subject to outstanding
options will be vested and exercisable. After the effective dates of the
registration statements on Form S-8, shares purchased upon exercise of options
granted pursuant to the 1996 Stock Option Plan, 1999 Stock Option Plan and 1999
Employee Stock Purchase Plan generally would be available for resale in the
public market.
All officers and directors and substantially all of our existing
stockholders agreed not to sell or otherwise dispose of any of their shares for
a period of 180 days after the date of this offering. Goldman, Sachs & Co.,
however, may in its sole discretion, at any time without notice, release all or
any portion of the shares subject to lock-up agreements.
52
<PAGE>
RULE 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell in "broker's
transactions" or to market makers, within any three-month period, a number of
shares that does not exceed the greater of:
- 1% of the number of shares of common stock then outstanding (which will
equal approximately shares immediately after this offering);
or
- the average weekly trading volume in the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to such sale.
Sales under Rule 144 are generally subject to the availability of current
public information about Viant.
RULE 144(K)
Under Rule 144(k), a person who is not deemed to have been an affiliate of
Viant at any time during the 90 days preceding a sale, and who has beneficially
owned the shares proposed to be sold for at least two years, is entitled to sell
such shares without having to comply with the manner of sale, public
information, volume limitation or notice filing provisions of Rule 144.
Therefore, unless otherwise restricted, "144(k) shares" may be sold immediately
upon the completion of this offering.
RULE 701
In general, under Rule 701, any of our employees, directors, officers,
consultants or advisors who purchase shares from us in connection with a
compensatory stock or option plan or other written agreement before the
effective date of this offering is entitled to sell such shares 90 days after
the effective date of this offering in reliance on Rule 144, without having to
comply with the holding period and notice filing requirements of Rule 144 and,
in the case of non-affiliates, without having to comply with the public
information, volume limitation or notice filing provisions of Rule 144.
The SEC has indicated that Rule 701 will apply to typical stock options
granted by an issuer before it becomes subject to the reporting requirements of
the Securities Exchange Act of 1934, along with the shares acquired upon
exercise of such options (including exercises after the date of this
prospectus). Securities issued in reliance on Rule 701 are restricted securities
and, subject to the contractual restrictions described above, beginning 90 days
after the date of this prospectus, may be sold by persons other than
"affiliates" (as defined in Rule 144) subject only to the manner of sale
provisions of Rule 144 and by "affiliates" under Rule 144 without compliance
with its one year minimum holding period requirements.
53
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Viant by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto, California. Certain
legal matters will be passed upon for the underwriters by Hale and Dorr LLP,
Boston, Massachusetts. As of the date of this prospectus, WS Investment Company
97A, an investment partnership composed of certain current and former members of
and persons associated with Wilson Sonsini Goodrich & Rosati, P.C., and a
certain member of Wilson Sonsini Goodrich & Rosati, P.C., beneficially own an
aggregate of 51,717 shares of Viant stock.
EXPERTS
Viant's financial statements as of December 31, 1997 and January 1, 1999 and
for the period from April 10, 1996 (inception) through December 31, 1996 and for
the years ended December 31, 1997 and January 1, 1999 included in this
prospectus have been so included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Viant has filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including exhibits and schedules) under the Securities
Act, with respect to the shares to be sold in this offering. This prospectus
does not contain all of the information set forth in the registration statement.
For further information with respect to Viant and the common stock offered in
this prospectus, reference is made to the registration statement, including the
exhibits thereto, and the financial statements and notes filed as a part
thereof. With respect to each such document filed with the SEC as an exhibit to
the registration statement, reference is made to the exhibit for a more complete
description of the matter involved.
We will be filing quarterly and annual reports, proxy statements and other
information with the SEC. You may read and copy any document that we file at the
public reference facilities of the SEC in Washington, D.C. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http:\\www.sec.gov.
54
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Report of Independent Accountants.......................................................................... F-2
Statement of Operations for the Period Ended December 31, 1996 and the Years Ended December 31, 1997 and
January 1, 1999.......................................................................................... F-3
Balance Sheet as of December 31, 1997 and January 1, 1999.................................................. F-4
Statement of Cash Flows for the Period Ended December 31, 1996 and the Years Ended December 31, 1997 and
January 1, 1999.......................................................................................... F-5
Statement of Stockholders' Equity for the Period Ended December 31, 1996 and the Years Ended December 31,
1997 and January 1, 1999................................................................................. F-6
Notes to Financial Statements.............................................................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Viant Corporation:
In our opinion, the accompanying balance sheet and the related statements of
operations, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Viant Corporation at January 1,
1999 and December 31, 1997, and the results of its operations and its cash flows
for each of the years ended January 1, 1999 and December 31, 1997 and the period
from April 10, 1996 (Inception) to December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of Viant's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
March 16, 1999
F-2
<PAGE>
VIANT CORPORATION
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED
(INCEPTION) TO ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
------------------- -------------- -----------
<S> <C> <C> <C>
Net revenues.................................................... $ 642 $ 8,808 $ 20,043
------- ------- -----------
Operating expenses:
Professional personnel........................................ 516 4,927 13,159
Sales and marketing........................................... 461 1,531 2,904
General and administrative.................................... 1,077 6,044 9,199
Research and development...................................... 338 484 1,106
------- ------- -----------
Total operating expenses.................................... 2,392 12,986 26,368
------- ------- -----------
Loss from operations........................................ (1,750) (4,178) (6,325)
Interest income................................................. 91 160 234
Interest expense................................................ -- (25) (371)
Other expense, net.............................................. -- (37) (25)
------- ------- -----------
Net loss.................................................... $ (1,659) $ (4,080) $ (6,487)
------- ------- -----------
------- ------- -----------
Basic and diluted net loss per share............................ $ (0.42) $ (1.18) $ (1.76)
Weighted average shares used in computing basic and diluted net
loss per share................................................ 3,981 3,468 3,681
Unaudited pro forma basic and diluted net loss per share........ $ (0.46)
Weighted average shares used in computing unaudited pro forma
basic and diluted net loss per share.......................... 14,084
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
VIANT CORPORATION
BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
--------------- ----------- UNAUDITED
PRO FORMA
JANUARY 1,
1999
-----------
(NOTE 1)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 5,559 $ 18,209
Short-term investments................................ 615 602
Accounts receivable, net.............................. 1,820 5,472
Prepaid expenses and other current assets............. 165 1,190
--------------- -----------
Total current assets................................ 8,159 25,473
Property and equipment, net............................. 2,011 4,048
Other assets............................................ 148 232
--------------- -----------
Total assets........................................ $ 10,318 $ 29,753
--------------- -----------
--------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt..................... $ 349 $ 2,850
Current portion of capital lease obligation........... -- 416
Accounts payable...................................... 1,165 626
Accrued expenses...................................... 1,197 2,907
Deferred revenues..................................... 931 1,052
--------------- -----------
Total current liabilities........................... 3,642 7,851
Long-term debt, less current portion.................... 670 603
Capital lease obligations, less current portion......... -- 1,634
--------------- -----------
Total liabilities................................... 4,312 10,088
--------------- -----------
Commitments (Note 6).................................... -- --
Stockholders' equity:
Convertible preferred stock:
Series D: no par value; 3,240,000, 3,240,000 and 0
shares authorized, respectively; 0, 3,160,043 and
0 shares issued and outstanding, respectively..... -- 20,125 $ --
Series A: no par value; 5,746,874, 5,746,874 and 0
shares authorized, respectively; 5,746,874,
5,746,874 and 0 shares issued and outstanding,
respectively...................................... 3,047 3,047 --
Series B: no par value; 1,499,925, 1,499,925 and 0
shares authorized, respectively; 1,499,925,
1,499,925 and 0 shares issued and outstanding,
respectively...................................... 987 987 --
Series C: no par value; 2,830,408, 2,830,408 and 0
shares authorized, respectively; 2,759,625,
2,759,625 and 0 shares issued and outstanding,
respectively...................................... 7,977 7,977 --
Preferred stock, $0.001 par value; 0, 0 and 5,000,000
shares authorized, respectively; no shares issued
and outstanding..................................... -- -- --
Common stock; $0.001 par value; 25,000,000, 25,000,000
and 50,000,000 shares authorized, respectively;
3,556,258, 3,762,290 and 16,928,757 shares issued
and outstanding, respectively....................... 4 4 17
Additional paid-in capital............................ 409 430 32,553
Accumulated deficit................................... (6,418) (12,905) (12,905)
--------------- ----------- -----------
Total stockholders' equity.......................... 6,006 19,665 $ 19,665
--------------- ----------- -----------
Total liabilities and stockholders' equity.......... $ 10,318 $ 29,753
--------------- -----------
--------------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
VIANT CORPORATION
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED
(INCEPTION) TO ---------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
-------------- -------------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................................... $ (1,659) $ (4,080) $ (6,487)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization.................................... 49 205 1,065
Compensation expense on employee arrangement..................... -- 200 --
Changes in operating assets and liabilities:
Accounts receivable, net....................................... (384) (1,436) (3,652)
Prepaid expenses and other assets.............................. (62) (251) (1,109)
Accounts payable............................................... 86 1,079 (539)
Accrued expenses............................................... 227 970 1,710
Deferred revenues.............................................. 99 832 121
------- ------- -----------
Net cash used in operating activities........................ (1,644) (2,481) (8,891)
------- ------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments................................ -- (615) (602)
Maturity of short-term investments................................. -- -- 615
Purchases of property and equipment................................ (264) (2,001) (901)
------- ------- -----------
Net cash used in investing activities........................ (264) (2,616) (888)
------- ------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible notes payable................ 500 -- --
Proceeds from issuance of convertible preferred stock, net......... 3,534 7,977 20,125
Proceeds from issuance of common stock, net........................ 19 195 21
Proceeds from borrowings on lines of credit........................ -- 1,046 2,749
Principal payments on borrowings on lines of credit................ -- (27) (315)
Principal payments on capital lease obligations.................... -- -- (151)
Repurchase of common stock......................................... -- (680) --
------- ------- -----------
Net cash provided by financing activities.................... 4,053 8,511 22,429
------- ------- -----------
Net increase in cash and cash equivalents............................ 2,145 3,414 12,650
Cash and cash equivalents at beginning of period..................... -- 2,145 5,559
------- ------- -----------
Cash and cash equivalents at end of period........................... $ 2,145 $ 5,559 $ 18,209
------- ------- -----------
------- ------- -----------
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest............................................. $ -- $ 22 $ 371
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of notes payable into preferred stock................... $ 500 $ -- $ --
Equipment acquired under capital lease obligations................. $ -- $ -- $ 2,201
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
VIANT CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------------- ------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT
---------- ----------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock........... 3,981,250 $ 4 $ 15
Issuance of Series A preferred
stock, net of issuance costs of
$16.............................. 4,809,369 $ 2,547
Issuance of Series A preferred
stock upon conversion of notes
payable.......................... 937,505 500
Issuance of Series B preferred
stock, net of issuance costs of
$13.............................. 1,499,925 987
Net loss for the period from April
10, 1996 (Inception) to December
31, 1996......................... $ (1,659)
--
---------- ----------- ---------- ----- -------------
Balance at December 31, 1996....... 7,246,799 4,034 3,981,250 4 15 (1,659)
Issuance of common stock upon
exercise of stock options........ 823,125 1 194
Issuance of Series C preferred
stock, net of issuance costs of
$25.............................. 2,759,625 7,977
Common stock repurchased and
retired.......................... (1,248,117) (1) (679)
Compensation expense on employee
severance arrangement............ 200
Net loss........................... (4,080)
--
---------- ----------- ---------- ----- -------------
Balance at December 31, 1997....... 10,006,424 12,011 3,556,258 4 409 (6,418)
Issuance of common stock upon
exercise of stock options........ 206,032 21
Issuance of Series D preferred
stock, net of issuance costs of
$68.............................. 3,160,043 20,125
Net loss........................... (6,487)
--
---------- ----------- ---------- ----- -------------
Balance at January 1, 1999......... 13,166,467 $ 32,136 3,762,290 $ 4 $ 430 $ (12,905)
--
--
---------- ----------- ---------- ----- -------------
---------- ----------- ---------- ----- -------------
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
---------------
<S> <C>
Issuance of common stock........... $ 19
Issuance of Series A preferred
stock, net of issuance costs of
$16.............................. 2,547
Issuance of Series A preferred
stock upon conversion of notes
payable.......................... 500
Issuance of Series B preferred
stock, net of issuance costs of
$13.............................. 987
Net loss for the period from April
10, 1996 (Inception) to December
31, 1996......................... (1,659)
---------------
Balance at December 31, 1996....... 2,394
Issuance of common stock upon
exercise of stock options........ 195
Issuance of Series C preferred
stock, net of issuance costs of
$25.............................. 7,977
Common stock repurchased and
retired.......................... (680)
Compensation expense on employee
severance arrangement............ 200
Net loss........................... (4,080)
---------------
Balance at December 31, 1997....... 6,006
Issuance of common stock upon
exercise of stock options........ 21
Issuance of Series D preferred
stock, net of issuance costs of
$68.............................. 20,125
Net loss........................... (6,487)
---------------
Balance at January 1, 1999......... $ 19,665
---------------
---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Viant Corporation ("Viant") is a leading Internet professional services firm
providing strategic consulting, creative design and technology services to
companies seeking design and technology services to companies seeking to
capitalize on the Internet. Viant's current customers are based in the United
States and Europe and include primarily Fortune 1000 companies.
FISCAL YEAR
During 1998, Viant changed its fiscal year to the 52-week period ending on
the Friday nearest to the last day of December of that year. Prior to this, the
fiscal year of Viant was the calendar year. Viant's fiscal year 1998 ended on
January 1, 1999.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Viant considers all highly liquid instruments with an original maturity of
three months or less to be cash equivalents. At December 31, 1997 and January 1,
1999, Viant's short-term investments consisted primarily of certificates of
deposit and money market funds secured by U.S. Government-backed securities and
commercial paper with maturities of 60 to 201 days.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject Viant to concentrations of
credit risk consist primarily of cash equivalents, short-term investments and
accounts receivable. Substantially all of Viant's cash equivalents and
short-term investments are held at high credit quality financial institutions.
Accounts receivable are typically unsecured and are derived from revenue earned
from customers primarily located in the United States. Viant performs ongoing
credit evaluations of its customers' financial condition and maintains reserves
for potential credit losses based upon the expected collectibility of total
accounts receivable. To date, Viant has not experienced material losses
resulting from uncollected receivables.
At December 31, 1997 and January 1, 1999, three customers and two customers
accounted for 56% and 39% of total accounts receivable, respectively. Three
customers accounted for 43%, 16% and 12% of total net revenues in the period
from April 10, 1996 (Inception) to December 31, 1996. Three customers accounted
for 30%, 27% and 11% of total net revenues in 1997. Three customers accounted
for 15%, 14% and 13% of total net revenues in 1998.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments that are subject to fair value disclosure requirements
are carried in the financial statements at amounts that approximate fair value
and include cash and cash equivalents, short-term investments, accounts
receivable, accounts payable and capital lease obligations.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets, generally 3-5 years. Equipment under capital leases is amortized over
the shorter of the useful life of the equipment or the lease term. Leasehold
improvements are amortized over the shorter of the lease period or the useful
life of the improvement.
F-7
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
UNAUDITED PRO FORMA PRESENTATIONS
Under the terms of Viant's agreement with the holders of the convertible
preferred stock (see Note 8), all of such preferred stock will be converted
automatically into shares of common stock prior to the closing of an
underwritten public offering of common stock with an offering price of at least
$10.00 per share and gross proceeds of at least $20,000,000, or upon the vote of
the holders of a majority of the outstanding shares of preferred stock. The
unaudited pro forma stockholders' equity included on the balance sheet reflects
the conversion of such preferred stock into 13,166,467 shares of common stock as
if the conversion had occurred on January 1, 1999. Upon the closing of its
initial public offering of common stock, Viant will file an amended and restated
certificate of incorporation to increase the number of common shares authorized
to 50,000,000 and to authorize Viant to issue 5,000,000 shares of preferred
stock, $0.001 par value. The unaudited pro forma stockholders' equity included
on the balance sheet also reflects these changes.
Unaudited pro forma net loss per share for the year ended January 1, 1999
included in the statement of operations is computed using the weighted average
number of common shares outstanding, adjusted to include the pro forma effects
of the conversion of preferred stock to common stock as if such conversion had
occurred on January 1, 1998, or at the date of original issuance, if later.
REVENUE RECOGNITION
Substantially all of Viant's revenues are derived from professional services
which are generally provided to clients on a fixed-price basis. Revenues on
fixed-price engagements are recognized using the percentage of completion method
(based on the ratio of costs incurred to the total estimated project cost at
completion). Billings received in advance of services performed are recorded as
deferred revenues. Provisions for estimated losses on contracts are made during
the period in which such losses become probable and can be reasonably estimated.
To date, such losses have not been significant. Viant reports revenues net of
reimbursable expenses which are billed to and collected from clients.
PROFESSIONAL PERSONNEL
Professional personnel expenses consist primarily of compensation and
benefits costs for employees engaged in the delivery of professional services
and non-reimbursable expenses related to client projects.
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of compensation,
benefits and travel costs for employees in Viant's management, human resources,
finance and administration groups and facilities costs not allocated to sales
and marketing or research and development.
RESEARCH AND DEVELOPMENT
Viant's research and development efforts focus on evaluating and testing
technologies to be deployed to clients. Accordingly, all research and
development costs are charged to expense as incurred.
STOCK-BASED COMPENSATION
Viant accounts for stock-based compensation in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
Accordingly, no compensation
F-8
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
expense is recorded for options issued to employees in fixed amounts and with
fixed exercise prices at least equal to the fair market value of Viant's common
stock at date of grant. Viant follows the disclosure requirements of Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation" (Note 10). All stock-based awards to non-employees are accounted
for at their fair value in accordance with SFAS No. 123.
NET LOSS PER SHARE
Viant computes net loss per share in accordance with SFAS No. 128, "Earnings
Per Share." Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based upon the
weighted average number of common shares outstanding, including dilutive common
stock equivalents, if dilutive. Basic and diluted net loss per share were the
same for all periods since the potential dilutive common stock equivalents were
anti-dilutive due to the losses. For all periods presented, the assumed exercise
of stock options and the assumed conversion of convertible preferred stock is
anti-dilutive and has been excluded from the calculation.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reported
period. Actual results could differ from those estimates.
2. ACCOUNTS RECEIVABLE
Accounts receivable consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
--------------- -----------
<S> <C> <C>
Billed.......................................... $ 1,788 $ 5,116
Unbilled........................................ 345 1,265
Allowance for doubtful accounts................. (313) (909)
------- -----------
$ 1,820 $ 5,472
------- -----------
------- -----------
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
--------------- -----------
<S> <C> <C>
Computer equipment and software................. $ 1,064 $ 2,319
Furniture and equipment......................... 366 936
Leasehold improvements.......................... 835 2,112
------- -----------
2,265 5,367
Less: accumulated depreciation and
amortization.................................. (254) (1,319)
------- -----------
$ 2,011 $ 4,048
------- -----------
------- -----------
</TABLE>
Depreciation expense for the period ended December 31, 1996 and for the
years ended December 31, 1997 and January 1, 1999 was $49,000, $205,000 and
$1,065,000, respectively.
F-9
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Included in the above is equipment and leasehold improvements acquired under
capital leases of $0 and $2,201,000 at December 31, 1997 and January 1, 1999,
respectively. Accumulated amortization on equipment and leasehold improvements
acquired under capital lease was $0 and $456,000 at December 31, 1997 and
January 1, 1999, respectively.
4. ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
--------------- -----------
<S> <C> <C>
Payroll and related............................. $ 473 $ 2,238
Professional services........................... 267 137
Other........................................... 457 532
------- -----------
$ 1,197 $ 2,907
------- -----------
------- -----------
</TABLE>
5. CREDIT FACILITIES
In September 1996, Viant secured a revolving line of credit with a bank
which provides for borrowings of up to $1,250,000. In July 1997, the revolving
line of credit was increased to $3,000,000. In March 1998, Viant amended the
revolving line of credit to provide for borrowings up to $5,000,000 including a
$2,000,000 letter of credit facility. Borrowings under the revolving line of
credit are limited to 80% of eligible accounts receivable plus $1,000,000.
Borrowings under the revolving line of credit bear interest at the bank's prime
rate plus 0.5% (8.25% at January 1, 1999). The revolving line of credit is
secured by substantially all of Viant's assets. The revolving line of credit
expires on July 3, 1999, at which time all outstanding amounts are due. Warrants
to purchase 5,517 shares of Series C preferred stock at $3.625 per share were
issued as part of the agreement. The warrants expire upon the conversion of the
Series C Preferred Stock. The value ascribed to these warrants was not material
to Viant's financial position or results of operations. The line of credit
agreement, as amended, requires Viant to comply with certain financial
covenants, including the maintenance of specified minimum ratios. Viant was in
default on a certain financial covenant at January 1, 1999, for which Viant has
received a waiver from the bank. At January 1, 1999, $2,434,000 was outstanding
under the revolving line of credit and letters of credit totaling $1,500,000
were guaranteed under the revolving line of credit. The letters of credit expire
periodically through July 3, 1999. At January 1, 1999, $1,066,000 remained
available under the revolving line of credit.
In September 1996, under the same bank agreement, Viant also secured an
equipment line of credit which provides for borrowings of up to $750,000. In
July 1997, the equipment line of credit was amended to provide for borrowings up
to $1,250,000. Borrowings under the equipment line of credit are based on actual
capital expenditures, subject to a maximum of $250,000 in purchased software,
and bear interest at the bank's prime rate plus 1.0% (8.75% at January 1, 1999).
The equipment line of credit is also secured by substantially all of Viant's
assets. At January 1, 1999, $1,019,000 was outstanding under the equipment line
of credit. Borrowings are payable in 36 equal monthly installments of principal,
plus accrued interest. Principal amounts outstanding at January 1, 1999 are due
as follows: $416,000 in 1999; $389,000 in 2000; and $214,000 in 2001.
6. LEASE COMMITMENTS
Viant leases office facilities and certain equipment under operating and
capital leases, respectively. Viant entered into lease agreements for facilities
in Boston, San Francisco, New York
F-10
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
and Dallas which expire in 2003, 2003, 2007 and 2004, respectively. Rent expense
under operating leases for the period ended December 31, 1996 and for the years
ended December 31, 1997 and January 1, 1999 was $67,000, $535,000 and
$1,718,000, respectively. Viant is party to letters of credit in support of
their minimum future lease payments under leases for permanent office space
amounting to $1,500,000 as of January 1, 1999, declining annually.
In March 1998, Viant entered into an agreement with a leasing company which
provides for capital lease borrowings related to equipment purchases up to
$3,250,000, and which expires in March 2000. Pursuant to the agreement, Viant
issued warrants to purchase 35,986 shares of Series C preferred stock at $3.625
per share which expires five years from the effective date of an underwritten
initial public offering of common stock. The value ascribed to these warrants
was not material to Viant's financial position or results of operations.
Minimum future lease commitments under noncancelable capital and operating
leases at January 1, 1999 are as follows (in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
----------- -----------
<S> <C> <C>
1999................................................... $ 629 $ 1,916
2000................................................... 629 2,079
2001................................................... 629 2,124
2002................................................... 607 2,168
2003................................................... -- 1,534
Thereafter............................................. -- 3,600
----------- -----------
Total minimum lease payments........................... 2,494 $ 13,421
-----------
-----------
Less amount representing interest...................... 444
-----------
Present value of minimum capital lease payments........ $ 2,050
-----------
-----------
</TABLE>
7. RELATED PARTY TRANSACTIONS
In March 1998, Viant entered into two agreements with one of its executives
for a housing loan of $50,000 and a personal loan of $40,000. Interest on both
loans accrue annually at 8.5%. Interest payments only are due on the housing
loan for the first four years. Upon commencement of the fifth year, repayment of
principal and interest on the housing loan will be made in accordance with a
monthly repayment schedule in which principal and interest will be repaid and
amortized over a two-year period. Viant will forgive 25% of the personal loan
principal and accrued interest annually commencing on the first anniversary of
the loan and for the next three anniversaries thereafter. The housing loan
becomes immediately due and payable and the remaining principal balance of the
personal loan will become immediately due and payable if the employee ceases to
be employed by Viant for any reason, fails to perform any of their obligations
under the loan agreements, or files for bankruptcy or otherwise becomes
insolvent.
During 1996, Viant provided consulting services to a holder of approximately
19% of Viant's common stock at December 31, 1996. All services rendered were
billed on a nondiscounted basis and Viant recognized revenue on this project of
$23,000 during the period ended December 31, 1996.
8. CONVERTIBLE PREFERRED STOCK
Viant's Articles of Incorporation, as amended, authorize Viant to issue
13,317,207 shares of preferred stock, no par value, of which 5,746,874,
1,499,925, 2,830,408 and 3,240,000 shares are designated as Series A, B, C and D
preferred stock, respectively.
F-11
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In May 1996, Viant issued 5,746,874 shares of Series A preferred stock
("Series A") for net cash proceeds of $2,547,000 and the conversion of a
$500,000 note payable to a third party investor. In June 1996, Viant issued
1,499,925 shares of Series B preferred stock ("Series B") for net cash proceeds
of $987,000. In May and September 1997, Viant issued a total of 2,759,625 shares
of Series C preferred stock ("Series C") for net cash proceeds of $7,977,000. In
November 1998, Viant issued a total of 3,160,043 shares of Series D preferred
stock ("Series D") for net cash proceeds of $20,125,000. The rights with respect
to the Series A, B, C and D preferred stock are as follows:
VOTING RIGHTS
Each share of Series A, B, C and D preferred stock has voting rights equal
to an equivalent number of shares of common stock into which it is convertible
and votes together as one class with common stock.
As long as 3,000,000 and 750,000 shares of Series A and Series B preferred
stock are outstanding, respectively, the holders of the shares of Series A and
Series B preferred stock are each entitled to elect one director. The holders of
shares of common stock, voting as one class, are also entitled to elect one
director and the remaining directors shall be elected by the holders of
preferred and common stock voting together as a single class. The rights of the
preferred stockholders to elect directors expire upon the closing of an
underwritten initial public offering of common stock ("IPO").
Additionally, as long as any preferred stock is outstanding, Viant must
obtain approval from the holders of a majority of the outstanding shares of
Series A, B, C and D preferred stock in order to alter the Articles of
Incorporation as related to preferred stock, change the authorized number of
shares of preferred stock, declare or pay any dividends on common stock other
than dividends payable in common stock, redeem or purchase shares of common
stock unless resulting from employment termination, or effect a merger,
consolidation or sale of assets where the existing stockholders retain less than
50% of the voting stock of the surviving entity.
DIVIDENDS
Holders of Series A, B, C and D preferred stock are entitled to receive
noncumulative dividends at the per annum rate of $0.0533, $0.0667, $0.289958 and
$0.639 per share, respectively, when and if declared by the Board of Directors.
Viant shall make no distribution to holders of common stock until Series A, B, C
and D preferred stock dividends have been paid. No dividends were declared by
the Board of Directors through January 1, 1999.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of Viant,
including a consolidation, reorganization or merger of Viant where the
beneficial owners of Viant's common stock and preferred stock own less than 51%
of the resulting voting power of the surviving entity, the Series A, B, C and D
preferred stockholders are entitled to receive $0.533333, $0.666667, $2.899499
and $0.639 per share, respectively, plus any declared but unpaid dividends prior
to and in preference to any distribution to the holders of common stock. The
remaining assets, if any, shall be distributed ratably among the holders of the
common stock and Series A and B preferred stock, based on the number of shares
held on an as-if-converted basis. However, participation of the preferred
shareholders in the additional ratable distribution is limited to an aggregate
liquidation distribution
F-12
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
of $1.066666 and $1.33334 per share for Series A and B preferred stock,
respectively. The holders of Series C and D preferred stock will not participate
in the ratable distribution of the remaining assets among the holders of Series
A and Series B preferred stock and common stock.
CONVERSION
Each share of Series A, B, C and D preferred stock is convertible into
common stock, at the option of the holder, according to a conversion ratio,
subject to adjustment for dilution, and which is currently at one-for-one. Each
share of preferred stock automatically converts into common stock at the then
effective conversion ratio prior to the closing of an IPO with an offering price
of at least $10.00 per share and gross proceeds of at least $20,000,000, or upon
the vote of the holders of a majority of the outstanding shares of preferred
stock. At January 1, 1999, Viant reserved 5,746,874, 1,499,925, 2,830,408 and
3,240,000 shares of common stock for the conversion of Series A, B, C and D
preferred stock, respectively.
IPO ALLOCATION
In the event of an IPO, Viant shall require that the managing underwriters
of the IPO make an allocation of shares to be sold in the IPO to the Series D
preferred stockholders. The allocation shall consist of at least the number of
shares of common stock determined by dividing $3,000,000 by the IPO price (the
"IPO Shares"). Viant shall cause the managing underwriters (subject to the
consent of such underwriters, which consent shall not be unreasonably withheld)
to give priority to the Series D preferred stockholders with respect to the IPO
shares in allocating the shares available for purchase.
9. COMMON STOCK
During 1996, Viant sold 3,981,250 shares of common stock to an employee of
Viant and other nonrelated parties. The 2,500,000 shares sold to the employee
were subject to a right of repurchase by Viant subject to a specified vesting
schedule.
In June 1997, under a severance agreement, Viant paid to this employee
$1,766,000 in cash, which included $680,000 for the repurchase of 1,248,117
shares of vested and unvested shares of common stock. Viant also agreed to pay
one year's salary as severance, on a monthly basis, for a total amount of
$175,000. In addition, Viant extended the vesting of an additional 200,000
shares of common stock, ratably over four quarters, which would have otherwise
been subject to repurchase. Accordingly, Viant recognized compensation expense
of $200,000 as the estimated fair value of such shares. With respect to all of
these arrangements, Viant recognized total severance related expenses of
$1,461,000 in the year ended December 31, 1997.
10. STOCK OPTIONS
In June 1996, the Board of Directors and stockholders adopted the 1996 Stock
Option Plan (the "Plan") which provides for granting incentive stock options
("ISOs") and nonqualified stock options ("NSOs") for up to 4,291,876 shares of
common stock to employees and consultants of Viant. In November 1997, the Plan
was amended to authorize options for up to 5,991,876 shares. The amended Plan
also provides for early exercise of options for certain employees, the stock for
which is subject to the same vesting and repurchase terms under the Plan. In
accordance with the Plan, the stated exercise price shall not be less than 100%
of the fair market value of common stock on the date of grant for ISOs and shall
be at least 85% of the fair market value for NSOs. The
F-13
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Plan provides that the options shall be exercisable over a period not to exceed
ten years. Options generally vest 25% after one year of service and quarterly
for the three years thereafter.
Activity under the Plan is summarized as follows:
<TABLE>
<CAPTION>
PERIOD FROM APRIL 10,
1996 (INCEPTION) TO YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 JANUARY 1, 1999
------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
OPTION EXERCISE OPTION EXERCISE OPTION EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- ------------- ---------- ------------- ---------- -------------
Outstanding at beginning
of period............... -- $ -- 2,931,000 $ 0.15 3,296,250 $ 0.37
Granted................... 2,931,000 0.15 1,292,250 0.74 1,290,350 2.48
Exercised................. -- -- (823,125) 0.24 (206,032) 0.10
Cancelled................. -- -- (103,875) 0.10 (149,713) 0.75
---------- ---------- ----------
Outstanding at end of
year.................... 2,931,000 $ 0.15 3,296,250 $ 0.37 4,230,855 $ 1.01
---------- ---------- ----------
---------- ---------- ----------
Options exercisable at end
of year................. 380,000 $ 0.25 415,563 $ 0.07 1,254,812 $ 0.33
Weighted-average fair
value of options granted
during the year......... $ 0.03 $ 0.16 $ 0.45
Options available for
future grant............ 1,360,876 1,872,501 731,864
</TABLE>
The following summarizes information about Viant's stock options outstanding
at January 1, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------ -------------------------
<S> <C> <C> <C> <C> <C>
WEIGHTED AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICE OUTSTANDING LIFE (IN YEARS) PRICE EXERCISABLE PRICE
- ---------- ------------ --------------------- ----------- ------------ -----------
$0.05-0.99 2,736,880 7.91 $ 0.28 1,175,837 $ 0.24
1.00-1.99 651,175 9.02 1.55 76,975 1.50
2.00-2.99 537,000 9.46 2.40 1,500 2.46
3.00-3.99 136,000 9.67 3.50 250 3.50
4.00-4.99 169,800 9.83 4.25 250 4.25
------------ ------------
4,230,855 8.41 $ 1.01 1,254,812 $ 0.33
------------ ------------
------------ ------------
</TABLE>
In accordance with the provisions of Accounting Principles Board Opinion No.
25, Viant has recognized no compensation expense for options granted under the
Plan. Had compensation expense been determined based on the fair value at the
grant dates, consistent with the
F-14
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
methodology prescribed under SFAS No. 123, Viant's pro forma net loss would have
been as follows:
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10,
1996 YEAR ENDED
(INCEPTION) TO ----------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
--------------- --------------- -----------
<S> <C> <C> <C>
Net loss (in thousands):
As reported................................... $ (1,659) $ (4,080) $ (6,487)
Pro forma..................................... (1,670) (4,128) (6,632)
Net loss per share:
As reported................................... (0.42) (1.18) (1.76)
Pro forma..................................... $ (0.42) $ (1.19) $ (1.80)
</TABLE>
The following assumptions were used by Viant to determine the fair value of
stock options granted under the Black-Scholes options-pricing model for all
periods presented: expected volatility of 0%, average expected option life of 4
years, and dividend yield of 0%; and risk free interest rate of 6.0%, 6.1% and
5.2% for the period ended December 31, 1996 and for the years ended December 31,
1997 and January 1, 1999, respectively.
Because additional stock options are expected to be granted each year and
the pro forma net loss only includes the effect of options granted in 1996, 1997
and 1998, the above pro forma disclosures are not representative of the pro
forma effects on reported financial results for future years.
In January 1999, the Board of Directors authorized, subject to stockholder
approval, the 1999 Stock Option Plan which provides for the granting of ISOs to
employees, and for the granting of NSOs and stock purchase rights to employees,
directors and consultants of Viant. A total of 4,868,929 shares of common stock
are authorized for issuance pursuant to the 1999 Stock Option Plan.
In March 1999, the Board of Directors authorized, subject to stockholder
approval, the 1999 Employee Stock Purchase Plan, which provides for the issuance
of a maximum of 200,000 shares of common stock.
11. EMPLOYEE SAVINGS PLAN
Viant's Retirement/Savings Plan (the "401(k) Plan") under Section 401(k) of
the Internal Revenue Code covers all full-time employees. The 401(k) Plan allows
eligible employees to make contributions up to a specified annual maximum
contribution, as defined. Under the 401(k) Plan, Viant may, but is not obligated
to, match a portion of the employee contributions up to a defined maximum. Viant
did not contribute to the 401(k) Plan in 1997 or 1998.
F-15
<PAGE>
VIANT CORPORATION
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
12. INCOME TAXES
Because Viant has incurred net operating losses since inception, no
provisions have been made for current or deferred income taxes through January
1, 1999. Deferred tax assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JANUARY 1,
1997 1999
--------------- -----------
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts............................... $ 125 $ 364
Accrued expenses.............................................. 224 52
Loss carryforwards............................................ 1,866 4,539
Other......................................................... 31 --
------- -----------
Gross deferred tax assets..................................... 2,246 4,955
Deferred tax asset valuation allowance........................ (2,246) (4,735)
------- -----------
Total deferred tax assets................................... -- 220
------- -----------
Deferred tax liabilities:
Property and equipment........................................ -- 220
------- -----------
Total deferred tax liabilities.............................. -- 220
------- -----------
Net deferred tax asset.......................................... $ -- $ --
------- -----------
------- -----------
</TABLE>
Realization of deferred tax assets is contingent upon the generation of
future taxable income. Due to the uncertainty of realization of these tax
benefits, Viant has provided a valuation allowance for the full amount of its
net deferred tax asset.
At January 1, 1999, Viant had net operating loss carryforwards of
approximately $11,348,000 available for federal purposes to reduce future
taxable income. If not utilized, these carryforwards will expire at various
dates ranging from 2011 to 2018. Under the provisions of the Internal Revenue
Code, certain substantial changes in Viant's ownership may have limited, or may
limit in the future, the amount of net operating loss carryforwards which could
be utilized annually to offset future taxable income. The amount of any annual
limitation is determined based upon Viant's value prior to an ownership change.
Income taxes computed using the federal statutory income tax rate differs
from Viant's effective tax rate as follows (in thousands):
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 10, 1996 YEAR ENDED
(INCEPTION) TO ----------------------------
DECEMBER 31, DECEMBER 31, JANUARY 1,
1996 1997 1999
----------------- --------------- -----------
<S> <C> <C> <C>
U.S. federal statutory rate..................... $ (564) $ (1,387) $ (2,206)
State income tax, net of federal income tax
effect........................................ (96) (237) (373)
Change in valuation allowance................... 629 1,617 2,489
Other........................................... 31 7 90
------ ------- -----------
Provision for income taxes...................... $ -- $ -- $ --
------ ------- -----------
------ ------- -----------
</TABLE>
F-16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on
any unauthorized information or representations. This prospectus is an offer to
sell only the shares offered hereby, but only under circumstances and in
jurisdictions where it is lawful to do so. The information contained in this
prospectus is current only as of its date.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Prospectus Summary.......................... 2
Risk Factors................................ 5
Use of Proceeds............................. 12
Dividend Policy............................. 12
Capitalization.............................. 13
Dilution.................................... 15
Selected Financial Data..................... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 17
Business.................................... 22
Management.................................. 36
Certain Transactions........................ 44
Principal Stockholders...................... 49
Description of Capital Stock................ 51
Shares Eligible for Future Sale............. 54
Legal Matters............................... 56
Experts..................................... 56
Where You Can Find More Information......... 56
Index to Financial Statements............... F-1
Underwriting................................ U-1
</TABLE>
------------------
Through and including , 1999 (the 25(th)day after the date of this
prospectus), all dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to a dealer's obligation to deliver a prospectus when acting
as an underwriter and with respect to an unsold allotment or subscription.
Shares
VIANT CORPORATION
Common Stock
----------
[LOGO]
----------
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
BANCBOSTON ROBERTSON STEPHENS
Representatives of the Underwriters
------------------
WIT CAPITAL CORPORATION
FACILITATOR OF INTERNET DISTRIBUTION
------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
The following table sets forth all expenses to be paid by the Registrant,
other than the underwriting discounts and commissions payable by the Registrant
in connection with the sale of the common stock being registered. All amounts
shown are estimates except for the registration fee and the NASD filing fee.
<TABLE>
<CAPTION>
AMOUNT TO BE
PAID
-------------
<S> <C>
Registration fee............................................................... $
NASD filing fee................................................................
Nasdaq National Market.........................................................
Blue sky qualification fees and expenses.......................................
Printing and engraving expenses................................................
Legal fees and expenses........................................................
Accounting fees and expenses...................................................
Director and Officer liability insurance.......................................
Transfer agent and registrar fees..............................................
Miscellaneous expenses.........................................................
Total...................................................................... $
-------------
-------------
</TABLE>
- ------------------------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145 of the Delaware General Corporation Law permits indemnification
of officers, directors and other corporate agents under certain circumstances
and subject to certain limitations. The Registrant's Certificate of
Incorporation and Bylaws provide that the Registrant shall indemnify its
directors, officers, employees and agents to the full extent permitted by
Delaware General Corporation Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant intends to enter into separate indemnification agreements with its
directors, officers and certain employees which would require the Registrant,
among other things, to indemnify them against certain liabilities which may
arise by reason of their status or service (other than liabilities arising from
willful misconduct of a culpable nature). The Registrant also intends to
maintain director and officer liability insurance, if available on reasonable
terms.
These indemnification provisions and the indemnification agreement to be
entered into between the Registrant and its officers and directors may be
sufficiently broad to permit indemnification of the Registrant's officers and
directors for liabilities (including reimbursement of expenses incurred) arising
under the Securities Act.
The Registrant intends to obtain in conjunction with the effectiveness of
the Registration Statement a policy of directors' and officers' liability
insurance that insures the Registrant's directors and officers against the cost
of defense, settlement or payment of a judgment under certain circumstances.
The underwriting agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act, or otherwise.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since our incorporation in April 1996, we have sold and issued the following
securities:
(1) On April 15, 1996 we issued 5,509,391 shares of common stock to one
founder for an aggregate consideration of $550.94. On May 16, 1996 we issued
1,293,750 shares of common stock to one investor for an aggregate consideration
of $129.38.
(2) On May 16, 1996 we issued 5,746,874 shares of Series A preferred stock
to ten investors for an aggregate consideration of $3,064,997.55.
(3) On June 19, 1996 we issued 1,499,925 shares of Series B preferred stock
to two investors for an aggregate consideration of $1,000,000.00.
(4) On June 4, 1997 we issued 2,080,103 shares of Series C preferred stock
to 32 investors for an aggregate consideration of $6,031,258.61. On October 10,
1997 we also issued 679,488 shares of Series C preferred stock to 32 investors
and employees for an aggregate consideration of $1,970,174.91.
(5) On December 11, 1997 we issued 187,500 shares of common stock to one
investor for an aggregate consideration of $18,750.00.
(6) On March 25, 1998 we issued a warrant for 35,986 shares of Series C
preferred stock to an equipment lessor in connection with an equipment lease
agreement, and on March 26, 1998 we issued a warrant for 5,517 shares of Series
C preferred stock to another equipment lessor in connection with an equipment
lease agreement. Such warrants have an exercise price of $3.625 per share.
(7) From November 4, 1998 to February 1, 1999 we issued 3,168,704 shares of
Series D preferred stock to 31 investors and employees for an aggregate
consideration of $20,248,018.56.
(8) Since our incorporation, we have issued, and there remain outstanding,
options to purchase an aggregate of 5,271,780 shares of common stock with
exercise prices ranging from $0.05 to $9.00 per share. Since our incorporation,
options to purchase 1,569,167 shares of common stock have been exercised for an
aggregate consideration of $448,344.20.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
The issuances of securities described in Items 15(1) through 15(7) were
deemed to be exempt from registration under the Securities Act in reliance on
Section 4(2) of the Securities Act as transactions by an issuer not involving a
public offering. The issuances of securities described in Item 15(8) were deemed
to be exempt from registration under the Securities Act in reliance on Section
4(2) or Rule 701 promulgated thereunder as transactions pursuant to compensatory
benefit plans and contracts relating to compensation. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either received adequate information about the Registrant or had access, through
employment or other relationships, to such information.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement
3.1 Amended and Restated Articles of Incorporation as currently in effect
3.2 Certificate of Incorporation of Viant Delaware, including an amendment dated March 25, 1999
3.3* Form of Amended and Restated Certificate of Incorporation (to be filed with the Delaware Secretary of
State prior to the closing of the offering covered by this Registration Statement)
3.4 Bylaws as currently in effect
3.5 Bylaws of Viant Delaware
3.6* Form of Bylaws (to be adopted immediately prior to the closing of the offering covered by this
Registration Statement)
4.1 Form of Specimen Stock Certificate
4.2 Amended and Restated Shareholder Rights Agreement, dated as of November 13, 1998
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, regarding legality of the
securities being issued
10.1 Allocation Agreement, dated as of November 13, 1998
10.2 Form of Master Services Agreement
10.3+ Master Services Agreement with BlueTape LLC, dated as of June 21, 1998
10.4+ License Agreement, including attachments, with Bluetape LLC, dated as of February 15, 1999
10.5 Key Employee Agreement with Robert Gett, dated as of November 4, 1996; Confidential Information and
Invention Assignment Agreement with Robert Gett, dated as of November 4, 1996
10.6 Relocation Agreement and Employee Agreement with Richard Chavez, dated March 31, 1998
10.7 Form of Indemnification Agreement to be entered into between the Registrant and each of its directors
and officers, to become effective upon the closing of the offering made under this Registration
Statement
10.8 1996 Stock Option Plan
10.9 1999 Stock Option Plan
10.10 1999 Employee Stock Purchase Plan
10.11 Sublandlord's Consent to Assignment of Sublease, for property located at 520 Madison Avenue, New York,
New York dated as of March 6, 1997
10.12 Lease Agreement with Chelsea Green Associates, L.P., for property located at 625 Avenue of the Americas,
New York, New York, dated July 28, 1997
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C>
10.13 Subordination, Nondisturbance and Attornment Agreement with Lehman Brothers Holdings, Inc., for property
located at 625 Avenue of the Americas, New York, New York dated August 26, 1997
10.14 First Amendment of Lease with Chelsea Green Associates, L.P., for property located at 625 Avenue of the
Americas, New York, New York dated November 1997
10.15 Instruction Letter for Rental Payments, for 625 Avenue of the Americas, New York, New York dated
November 18, 1997
10.16 Standard Form Commercial Lease with Lincoln Plaza Limited Partnership, for property located at 89 South
Street, Boston, Massachusetts, dated May 2, 1997
10.17 Notice of Lease with Lincoln Plaza Limited Partnership, for property located at 89 South Street, Boston,
Massachusetts, dated May 2, 1997
10.18 Subordination, Nondisturbance and Attornment Agreement with Lincoln Plaza Limited Partnership and
BHF-BANK Aktiengesellschaft, for property located at 89 South Street, Boston, Massachusetts, dated
September 23, 1997
10.19 First Amendment to Lease with Lincoln Plaza Limited Partnership, for property located at 89 South
Street, Boston, Massachusetts, dated as of October 1, 1998
10.20 Revocable License Agreement with Omnioffices, Inc., dated September 29, 1998
10.21 Lease Agreement with CENTRUM G.S. LTD, for property located at 3102 Oak Lawn, Dallas, Texas, dated
August 15, 1998
10.22 Lease Agreement with Zoro, LLC for property located at 699 Eighth Street, San Francisco, California,
dated April 8, 1997
10.23 First Addendum to Lease with Zoro, LLC for property located at 699 Eighth Street, San Francisco,
California, dated April 1997
10.24 Month-to-Month Lease Agreement with Zoro, LLC for property located at 699 Eighth Street, San Francisco,
California, dated June 5, 1997
10.25 Office Lease with Zoro, LLC for property located at 699 Eighth Street, San Francisco, California, dated
June 26, 1997
10.26 First Amendment to Office Lease with Zoro, LLC for property located at 699 Eighth Street, San Francisco,
California, dated October 14, 1997
10.27 Amendment to Lease with Zoro, LLC for property located at 699 Eighth Street, San Francisco, California,
dated January 29, 1998
10.28 Subordination Agreement; Acknowledgment Of Lease Assignment, Estoppel, Attornment and Non-Disturbance
Agreement with Zoro, LLC and Wells Fargo Bank, National Association, for property located at 699 Eighth
Street, San Francisco, California, dated August 21, 1998
10.29 Summary Plan Description of Registrant's 401(k) Retirement/Savings Plan
10.30 Master Lease Agreement and Addendum with Comdisco, Inc., dated March 25, 1998
10.31 Amended and Restated Loan and Security Agreement with Venture Banking Group, dated as of March 25, 1998
11.1 Statement of Computation of Earnings per Share (This exhibit has been omitted because the information is
shown in the financial statements or notes thereto.)
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C>
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (contained in Exhibit 5.1)
24.1 Power of Attorney (contained in the signature page to this Registration Statement).
27.1 Financial Data Schedule
</TABLE>
- ------------------------
* to be filed by amendment
+ confidential treatment requested
(B) FINANCIAL STATEMENT SCHEDULE.
Schedule II-Valuation and Qualifying Accounts
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 14 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective; and
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of Prospectus shall be deemed
to be a new Registration Statement relating to the securities offered therein,
and the Offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Boston, Massachusetts, on the
day of 1999.
<TABLE>
<S> <C> <C>
VIANT CORPORATION
By: /s/ ROBERT L. GETT
-----------------------------------------
Robert L. Gett
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Robert L. Gett and M. Dwayne Nesmith, and
each of them acting individually, as his true and lawful attorneys-in-fact and
agents, each with full power of substitution, for him in any and all capacities,
to sign any and all amendments to this Registration Statement (including
post-effective amendments or any abbreviated registration statement and any
amendments thereto filed pursuant to Rule 462(b) increasing the number of
securities for which registration is sought), and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, with full power of each to act alone, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully for all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<S> <C> <C>
President and Chief
/s/ ROBERT L. GETT Executive Officer, and
- ------------------------------ Director (PRINCIPAL
Robert L. Gett EXECUTIVE OFFICER)
Vice President and Chief
/s/ M. DWAYNE NESMITH Financial Officer
- ------------------------------ (PRINCIPAL FINANCIAL AND
M. Dwayne Nesmith ACCOUNTING OFFICER)
/s/ WILLIAM H. DAVIDOW
- ------------------------------ Director
William H. Davidow
- ------------------------------ Director
Kevin W. English
/s/ VENETIA KONTOGOURIS
- ------------------------------ Director
Venetia Kontogouris
</TABLE>
II-6
<PAGE>
Exhibit 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
VIANT CORPORATION
Robert Gett and Henry V. Barry certify that:
1. They are President and Secretary, respectively, of Viant Corporation, a
California corporation (hereinafter referred to as the "Corporation").
2. The Articles of Incorporation of this Corporation are amended and
restated in their entirety to read as follows:
I
The name of this Corporation is Viant Corporation.
II
The purpose of this Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the General Corporation Law of
California other than the banking business, the trust company business or the
practice of a profession permitted to be incorporated by the California
Corporations Code.
III
(a) This Corporation is authorized to issue two classes of shares, to
be designated, respectively, "Preferred Stock" and "Common Stock." The
total number of shares which this Corporation shall have authority to issue
is 40,000,000, of which 25,000,000 shares shall be Common Stock and
15,000,000 shares shall be Preferred Stock. Of the Preferred Stock,
5,746,874 of such shares shall be designated Series A Preferred Stock (the
"Series A Preferred"); 1,499,925 of such shares shall be designated Series
B Preferred Stock (the "Series B Preferred"); 2,830,408 of such shares
shall be designated Series C Preferred Stock (the "Series C Preferred"),
and 3,240,000 of such shares shall be designated Series D Preferred Stock
(the "Series D Preferred").
(b) A statement of the rights, preferences, privileges and
restrictions granted to or imposed on the Series A Preferred, the Series B
Preferred, the Series C Preferred and the Series D Preferred, and the
holders thereof is as follows:
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(1) DIVIDENDS. The holders of (a) the Series A Preferred shall be entitled
to receive, out of any funds legally available therefor, dividends at the rate
of $0.053333 per share, per annum, (b) the Series B Preferred shall be entitled
to receive, out of any funds legally available therefor, dividends at the rate
of $0.066667 per share, per annum, (c) the Series C Preferred shall be entitled
to receive, out of any funds legally available therefor, dividends at the rate
of $0.289950 per share, per annum, and (d) the Series D Preferred shall be
entitled to receive, out of any funds legally available therefor, dividends at
the rate of $0.6390 per share, per annum. Any such dividend shall be payable in
preference and priority to any payment of any dividend on Common Stock and only
when, as and if declared by the Board of Directors. After payment of such
dividends, any additional dividends declared shall be distributed among all
holders of Common Stock in proportion to the number of shares of Common Stock
held by them. The right to such dividends on the Preferred Stock shall not be
cumulative, and no right shall accrue to holders of Preferred Stock by reason of
the fact that dividends on such shares are not declared or paid in any prior
year.
In the event that there shall be any declared but unpaid dividends
outstanding immediately prior to, and in the event of, a conversion of the
Preferred Stock (as provided in paragraph 3 hereof), the Corporation shall, at
the option of each holder, pay in cash to each holder of Preferred Stock subject
to conversion the full amount of any such dividends or allow such dividends to
be converted into Common Stock in accordance with, and pursuant to the terms
specified in, paragraph 3 hereof.
(2) LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the following shall apply:
(i) The holders of the Series D Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the
assets or surplus funds of the Corporation to any other holders of the
Preferred Stock or Common Stock by reason of their ownership thereof,
the amount of $6.39 per share (as adjusted for stock splits, stock
dividends, recapitalizations,
combinations and the like) then held by such holder(s). If, upon
occurrence of such event the assets and funds thus distributed among
the holders of the Series D Preferred shall be insufficient to permit
the payment to the holders of the Series D Preferred the full
preferential amounts to which they shall be entitled pursuant to this
Section 2(a)(i), then the entire assets and funds of the Corporation
legally available for distribution shall be distributed ratably, on an
equal priority, PARI PASSU basis among the holders of Series D
Preferred based on their relative preferential amounts;
(ii) Next, the holders of the Series A Preferred, Series B
Preferred and Series C Preferred shall be entitled to receive, prior
and in preference to any distribution of any of the assets or surplus
funds of the Corporation to the holders of the Common Stock by reason
of their ownership thereof, the amount of $0.533333 per share (as
adjusted for stock splits, reverse stock splits, stock dividends,
recapitalizations,
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combinations and the like) of Series A Preferred, $0.666667 per share
(as adjusted for stock splits, reverse stock splits, stock dividends,
recapitalizations, combinations and the like) of Series B Preferred,
and $2.899499 per share (as adjusted for stock splits, reverse stock
splits, stock dividends, recapitalizations, combinations and the like)
of Series C Preferred, then held by such respective holder(s). If,
upon occurrence of such event the assets and funds thus distributed
among the holders of the Series A Preferred, Series B Preferred and
Series C Preferred shall be insufficient to permit the payment to the
holders of the Series A Preferred, Series B Preferred and Series C
Preferred the full preferential amounts to which they respectively
shall be entitled pursuant to this Section 2(a)(ii), then, after the
payments required by Section 2(a)(i) above shall have been made, the
entire assets and funds of the Corporation legally available for
distribution shall be distributed ratably, on an equal priority, PARI
PASSU basis among the holders of the Series A Preferred, Series B
Preferred and Series C Preferred based on their relative preferential
amounts;
(iii) Next, the holders of the Series D Preferred shall then be
entitled to receive, prior and in preference to any distribution of
any of the assets or surplus funds of the Corporation to the holders
of the Common Stock or the Series A Preferred, Series B Preferred and
Series C Preferred by reason of their ownership thereof, an amount
equal to all declared but unpaid dividends on such shares of Series D
Preferred then held by such holders. If, upon occurrence of such event
the assets and funds thus distributed among the holders of the Series
D Preferred shall be insufficient to permit the payment to the holders
of the Series D Preferred the full preferential amounts to which they
respectively shall be entitled pursuant to this Section 2(a)(iii),
then, after the payments required by Sections 2(a)(i) and 2(a)(ii)
above shall have been made, the entire assets and funds of the
Corporation legally available for distribution shall be distributed
ratably, on an equal priority, PARI PASSU basis among the holders of
Series D Preferred based on their relative preferential amounts; and
(iv) Next, the holders of the Series A Preferred, Series B
Preferred and Series C Preferred shall then be entitled to receive,
prior and in preference to any distribution of any of the assets or
surplus funds of the Corporation to the holders of the Common Stock an
amount equal to all declared but unpaid dividends on such shares of
the Series A Preferred, Series B Preferred and Series C Preferred then
held by such holders. If, upon occurrence of such event the assets and
funds thus distributed among the holders of the Series A Preferred,
Series B Preferred and Series C Preferred shall be insufficient to
permit the payment to the holders of the Series A Preferred, Series B
Preferred and Series C Preferred the full preferential amounts to
which they respectively shall be entitled pursuant to this Section
2(a)(iv), then, after the payments required by Sections 2(a)(i),
2(a)(ii) and 2(a)(iii) above shall have been made, the entire assets
and funds of the Corporation legally available for distribution shall
be distributed ratably, on an equal priority, PARI PASSU basis among
the holders of the Series A Preferred, Series B Preferred and Series C
Preferred based on their relative preferential amounts.
(b) After payment has been made to the holders of the
Preferred Stock of the amounts to which they shall be entitled as
provided in Section 2(a) above, the remaining assets of the
Corporation available for distribution to shareholders shall be
distributed among the holders of Common Stock pro rata based on
the number of shares of Common Stock then outstanding.
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(c) For purposes of this paragraph 2, a liquidation,
dissolution or winding up of the Corporation shall be deemed to
be occasioned by, and to include, (i) the Corporation's sale of
all or substantially all of its assets or (ii) any transaction or
series of related transactions (including, without limitation,
any reorganization, merger or consolidation) which results in the
transfer of fifty percent (50%) or more of the outstanding voting
power of the Corporation.
(d) For purposes of this paragraph 2, the amount of assets
and/or proceeds available for distribution upon a liquidation,
dissolution or winding up of this Corporation shall be determined
as follows:
(i) insofar as it consists of cash, be computed at the
aggregate amount of cash held by this Corporation or payable
to the shareholders at the time of the liquidation,
dissolution or winding up; and
(ii) insofar as it consists of securities and unless
otherwise explicitly specified in a merger agreement or
acquisition agreement (if applicable), (A) if the securities
are then traded on a national securities exchange or the
NASDAQ Stock Market (or a similar national quotation
system), then such amount of assets and/or proceeds
available for distribution shall be computed based on the
closing price on such exchange or system at the time of the
liquidation, dissolution or winding up, (B) if the
securities are actively traded over-the-counter, then the
value shall be computed based on the closing price at the
time of the liquidation, dissolution or winding up, and (C)
if there is no public market for the securities, then the
value shall be computed based on fair market value thereof,
as determined in good faith by the Board of Directors of the
Corporation at the time of liquidation, dissolution or
winding up; and
(iii) insofar as it consists of property other than
cash or securities, such amount of assets and/or proceeds
available for distribution shall be computed at the fair
market value thereof at the time of the liquidation,
dissolution or winding up, as determined in good faith by
the Board of Directors of the Corporation.
(3) CONVERSION. The holders of the Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT.
Each share of Preferred Stock shall be convertible, at the option
of the holder thereof, at any time into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing
$.533333 (with respect to the Series A Preferred), $0.666667 (with
respect to the Series B Preferred), $2.899499 (with respect to the
Series C Preferred), or $6.39 (with respect
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to the Series D Preferred) (the "Original Purchase Price,"
respectively) by the then-applicable Conversion Price (as defined
below), determined as hereinafter provided.
The price at which shares of Common Stock shall be deliverable
upon conversion of the Series A Preferred (the "Series A Conversion
Price") shall initially be $0.533333 per share of Common Stock. The
price at which shares of Common Stock shall be deliverable upon
conversion of the Series B Preferred (the"Series B Conversion Price")
shall initially be $0.666667 per share of Common Stock. The price at
which shares of Common Stock shall be deliverable upon conversion of
the Series C Preferred (the "Series C Conversion Price") shall
initially be $2.899499 per share of Common Stock. The price at which
shares of Common Stock shall be deliverable upon conversion of the
Series D Preferred (the "Series D Conversion Price") shall initially
be $6.39 per share of Common Stock. Each such initial Conversion Price
shall be subject to adjustment as hereinafter provided.
Each share of Preferred Stock shall automatically be converted
into shares of Common Stock at the then effective Conversion Price (i)
in the event of the effectiveness of a firm commitment underwritten
public offering pursuant to an effective registration statement under
the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the Corporation to the public at a
price per share of at least $10.00 (as adjusted for any stock splits,
reverse stock splits, stock dividends, recapitalizations, combinations
and the like after the date a share of Series D Preferred is first
issued) and an aggregate offering price (net of underwriters'
commissions and discounts) to the public of not less than $20,000,000
(a "Qualified Public Offering"), or (ii) at the election of the
holders of a majority of the outstanding shares of the Series A
Preferred, Series B Preferred, Series C Preferred and Series D
Preferred, voting as a single class and on an as-converted basis,
which vote must include the affirmative vote of the holders of a
majority of the Series D Preferred. In the event of a Qualified Public
Offering, the person(s) entitled to receive the Common Stock issuable
upon such conversion of Preferred Stock shall not be deemed to have
converted such Series A Preferred, Series B Preferred, Series C
Preferred or Series D Preferred until immediately prior to the closing
of such underwritten public offering.
(b) MECHANICS OF CONVERSION. No fractional shares of Common Stock
shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional share to which a holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the
fair market value of the Common Stock as determined in good faith by
the Board of Directors. Before any holder of Preferred Stock shall be
entitled to convert the same into full shares of Common Stock, he
shall surrender the certificate or certificates therefor, duly
endorsed, at the office of the Corporation or of any transfer agent
for the Preferred Stock, and shall give written notice to the
Corporation at such office that he elects to convert the same. Such
notice shall also state whether the holder elects, pursuant to
paragraph (b)(1) of this Article III, to receive declared but unpaid
dividends on the Preferred Stock proposed to be converted in cash, or
to convert such dividends into shares of Common Stock at the fair
market value of such shares as determined in good faith by the Board
of Directors. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such
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office to such holder of Preferred Stock, a certificate or
certificates for the number of shares of Common Stock to which he
shall be entitled as aforesaid and a check payable to the holder in
the amount of any cash amounts payable as the result of a conversion
into a fractional share of Common Stock, and any declared but unpaid
dividends on the converted Preferred Stock which the holder elected to
receive in cash. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such
surrender of the shares of Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock on such date.
If the conversion is in connection with a Qualified Public Offering,
then the conversion shall be conditioned upon the closing of such
Qualified Public Offering, in which event the person(s) entitled to
receive the Common Stock issuable upon such conversion of the
Preferred Stock shall not be deemed to have converted such Preferred
Stock until immediately prior to such closing.
(c) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this paragraph 3,
the following definitions shall apply.
(1) "OPTIONS" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(2) "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares (other than Common Stock and Preferred
Stock) or other securities convertible into or exchangeable for
Common Stock.
(3) "ORIGINAL ISSUE DATE" shall mean the date on which the
first share of Series D Preferred was first issued.
(4) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all
shares of Common Stock issued (or, pursuant to paragraph
3(c)(iii), deemed to be issued) by the Corporation after the
Original Issue Date other than shares of Common Stock issued or
issuable:
(A) upon conversion of shares of the Series A Preferred,
Series B Preferred, Series C Preferred or Series D Preferred;
(B) to officers, directors or employees of, or consultants
to, the Corporation pursuant to a stock grant, option plan or
purchase plan or other employee stock incentive program (each a
"Plan" and, collectively, the "Plans") or an agreement so long as
any such Plan or agreement is unanimously approved by the Board
of Directors;
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(C) as a dividend or distribution on the Series A Preferred,
Series B Preferred, Series C Preferred or Series D Preferred;
(D) upon exercise or conversion of warrants to purchase
shares of Common Stock issued in connection with equipment lease
financing transactions or bank financing transactions unanimously
approved by the Board of Directors, where the issuance of such
warrants is not principally for the purpose of raising additional
equity capital for the Corporation; and
(E) in connection with a split or subdivision of the
outstanding shares of Common Stock.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment
in the Conversion Prices of the respective series of
Preferred Stock shall be made in respect of the issuance of
Additional Shares of Common Stock unless the consideration
per share for an Additional Share of Common Stock issued or
deemed to be issued by the Corporation is less than the
Conversion Price for such series in effect on the date of,
and immediately prior to such issue. No adjustment in the
Conversion Price shall be made pursuant to paragraph (iv)
below as a result of any stock dividend or subdivision which
causes an adjustment in the Conversion Price for such series
pursuant to Section 3(d) below.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK. In the event the Corporation at any time or from time
to time after the Original Issue Date shall issue any
Options or Convertible Securities or shall fix a record date
for the determination of holders of any class of securities
entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set forth
in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of
such number) of Common Stock issuable upon the exercise of
such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional
Shares of Common Stock issued as of the time of such issue
or, in case such a record date shall have been fixed, as of
the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to
have been issued unless the consideration per share
(determined pursuant to paragraph 3(c)(v) hereof) of such
Additional Shares of Common Stock would be less than the
Conversion Price of the respective series of Preferred Stock
in effect on the date of and immediately prior to such
issue, or such record date, as the case may be, and provided
further that in any case in which Additional Shares of
Common Stock are deemed to be issued:
(A) no further adjustment in the applicable Conversion
Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of
such Options or conversion or exchange of such Convertible
Securities;
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(B) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for
any increase or decrease in the consideration payable to the
Corporation, or increase or decrease in the number of shares
of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the applicable Conversion Price computed
upon the original issue thereof (or upon the occurrence of a
record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such
increase or decrease insofar as it affects such Options or
the rights of conversion or exchange under such Convertible
Securities; and
(C) on the expiration or cancellation of any Options or
the termination of the right to convert or exchange any
Convertible Securities which shall have not been exercised,
if the applicable Conversion Price shall have been adjusted
upon the original issuance thereof or shall have been
subsequently adjusted pursuant to clause (B) above, the
applicable Conversion Price shall be recomputed as if:
(1) in the case of Convertible Securities or Options
for Common Stock, the only Additional Shares of Common Stock
issued were shares of Common Stock, if any, actually issued
upon the exercise of such Options or the conversion or
exchange of such Convertible Securities, and the
consideration received therefor was the consideration
actually received by the corporation for the issue of all
such Options, whether or not exercised, plus the
consideration actually received by the Corporation upon such
exercise, or for the issue of all such Convertible
Securities whether or not actually converted or exchanged,
plus the consideration actually received by the corporation
upon such conversion or exchange, if any, and
(2) in the case of Options for Convertible Securities,
only the Convertible Securities, if any, actually issued
upon the exercise thereof were issued at the time of issue
of such Options and the consideration received by the
Corporation for the Additional Shares of Common Stock deemed
to have been then issued was the consideration actually
received by the corporation for the issue of all such
Options, whether or not exercised, plus the consideration
actually received by the Corporation upon the issue of the
Convertible Securities with respect to which such Options
were actually exercised;
(D) no readjustment pursuant to clauses (B) and (C)
above shall have the effect of increasing the applicable
Conversion Price to an amount which exceeds the lower of (i)
such Conversion Price on the original adjustment date, or
(ii) the applicable Conversion Price that has resulted from
any issuance of Additional Shares of Common Stock between
the original adjustment date and such readjustment date.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event this
Corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be
issued pursuant to Section 3(c)(iii)) without consideration
or for a consideration per share less than the applicable
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Series A Conversion Price, Series B Conversion Price,
Series C Conversion Price or Series D Conversion Price in
effect on the date of and immediately prior to such issue,
then and in such event, the Series A Conversion Price,
Series B Conversion Price, Series C Conversion Price, or
Series D Conversion Price, as applicable, shall be reduced,
concurrently with such issue, to a price (calculated to the
nearest cent) determined by multiplying the Series A
Conversion Price, Series B Conversion Price, Series C
Conversion Price or Series D Conversion Price, as
applicable, by a fraction, the numerator of which shall be
the sum of (i) the number of shares of Common Stock
outstanding (after giving effect to the conversion of all
outstanding Preferred Stock and the exercise of all
outstanding stock options) and (ii) the number of shares of
Common Stock which the aggregate consideration received by
the Corporation for the total number of Additional Shares of
Common Stock so issued would purchase at the Series A
Conversion Price, Series B Conversion Price, Series C
Conversion Price or Series D Conversion Price, as
applicable; and the denominator of which shall be the sum of
(A) the number of shares of Common Stock outstanding (after
giving effect to the conversion of all outstanding Preferred
Stock and the exercise of all outstanding stock options) and
(B) the number of such Additional Shares of Common Stock so
issued.
(v) DETERMINATION OF CONSIDERATION. For purposes of
this paragraph 3(c), the consideration received by the
Corporation for the issue of any Additional Shares of Common
Stock shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration shall:
(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Corporation;
(B) insofar as it consists of securities (i) if the
securities are then traded on a national securities exchange
or the NASDAQ Stock Market (or a similar national quotation
system), then the value shall be computed based on the
average of the closing prices of the securities on such
exchange or system over the thirty-day period ending three
(3) days prior to receipt by the Corporation, (ii) if the
securities are actively traded over-the-counter, then the
value shall be computed based on the average of the closing
bid prices over the thirty-day period ending three (3) days
prior to the receipt by the Corporation, and (iii) if there
is no active public market, then the value shall be computed
based on the fair market value thereof on the date of
receipt by the Corporation, as determined in good faith by
the Board of Directors of the Corporation;
(C) insofar as it consists of property other than cash
and securities, be computed at the fair value thereof at the
time of such issue, as determined in good faith by the Board
of Directors; and
(D) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other
assets of the Corporation
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for consideration which covers both, be the proportion of
such consideration so received, computed as provided in
clauses (A), (B) and (C) above, as determined in good faith
by the Board of Directors.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued
pursuant to paragraph 3(c)(iii), relating to Options and
Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration (as set forth
in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the
exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of
such Convertible Securities by
(y) the maximum number of shares of Common Stock (as
set forth in the instrument relating thereto, without regard
to any provision contained therein for a subsequent
adjustment of such number) issuable upon the exercise of
such Options or the conversion or exchange of such
Convertible Securities.
(d) ADJUSTMENTS FOR STOCK DIVIDENDS, SUBDIVISIONS,
COMBINATIONS, OR CONSOLIDATIONS. In the event the
Corporation shall pay a stock dividend on the Common Stock,
or the outstanding shares of Common Stock shall be
subdivided, combined or consolidated, by reclassification,
stock split or otherwise, into a greater or lesser number of
shares of Common Stock, the applicable Conversion Price in
effect immediately prior to such dividend, subdivision,
combination or consolidation shall, concurrently with the
effectiveness of such dividend, subdivision, combination or
consolidation, be proportionately adjusted.
(e) NO IMPAIRMENT. The Corporation will not, by
amendment of its Amended and Restated Articles of
Incorporation or through any reorganization, transfer of
assets, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed
or performed hereunder by the Corporation but will at all
times in good faith assist in the carrying out of all the
provisions of this paragraph 3 and in the taking of all such
action as may be necessary or appropriate in order to
protect the conversion rights of the holders of the Series A
Preferred, Series B Preferred, Series C Preferred and Series
D Preferred against impairment.
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(f) NOTICES OF RECORD DATE. In the event that this
Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other
securities, whether or not a regular cash dividend and
whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders
of any class or series of its stock any additional shares of
stock of any class or series or other rights;
(iii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a
change in the Common Stock; or
(iv) to merge with or into any other corporation, or
sell, lease or convey all or substantially all its property
or business, or to liquidate, dissolve or wind up;
then, in connection with each such event, this
Corporation shall send to the holders of the Series A
Preferred, Series B Preferred, Series C Preferred and Series
D Preferred at least twenty (20) days' prior written notice
of the date on which a record shall be taken for such
dividend, distribution or subscription rights (and
specifying the date on which the holders of Common Stock
shall be entitled thereto) or for determining rights to vote
in respect of the matters referred to in (iii) and (iv)
above; and in the case of the matters referred to in (iii)
and (iv) above, at least twenty (20) days' prior written
notice of the date when the same shall take place (and
specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for
securities or other property deliverable upon the occurrence
of such event). Each such written notice shall be given by
first class mail, postage prepaid, addressed to the holders
of Preferred Stock shares at the address for each such
holder as shown on the books of this Corporation.
(g) RECAPITALIZATION. If at any time or from time to
time there shall be a recapitalization of the Common Stock
(other than a subdivision or combination provided for in
paragraph 3(d) or a merger, reorganization, consolidation or
sale of assets transaction which is deemed to be a
liquidation, dissolution or winding up pursuant to paragraph
2) provision shall be made so that the holders of the
Preferred Stock shall thereafter be entitled to receive upon
conversion of the Preferred Stock the number of shares of
stock or other securities or property of the Corporation to
which a holder of Common Stock deliverable upon conversion
of each share of such series would have been entitled on
such recapitalization. In any such case, appropriate
adjustment shall be made in the application of the
provisions of this paragraph 3 with respect to the rights of
the holders of the Preferred Stock after the
recapitalization to the end that the provisions of this
paragraph 3 (including adjustment of the Conversion Price
then in effect and the number of shares purchasable upon
conversion of the applicable Preferred Stock) shall be
applicable after that event as nearly equivalent as may be
practicable.
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(h) OTHER DISTRIBUTIONS. In the event this Corporation
shall declare a distribution payable in securities of other
persons, evidences of indebtedness issued by this
Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in paragraph
3(d), then, in each such case for the purpose of this
paragraph 3(h), the holders of the Preferred Stock shall be
entitled to a proportionate share of any such distribution
as though they were the holders of the number of shares of
Common Stock of this corporation into which their shares of
Preferred Stock are convertible as of the record date fixed
for the determination of the holders of Common Stock of this
Corporation entitled to receive such distribution.
(i) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This
Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock,
solely for the purpose of effecting the conversion of the
shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the
Preferred Stock; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient
to effect the conversion of all then outstanding shares of
the Preferred Stock, in addition to such other remedies as
shall be available to the holder of such Preferred Stock,
this Corporation will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its
authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to
obtain the requisite shareholder approval of any necessary
amendment to these Articles of Incorporation.
(4) VOTING RIGHTS AND DIRECTORS.
(a) Except as otherwise required by law and as provided in paragraph
(b) below and paragraph (5) below, the holders of Preferred Stock and the
holders of Common Stock shall be entitled to notice of any shareholders'
meeting and to vote as a single class upon any matter submitted to the
shareholders for a vote, as follows: (i) each holder of Preferred Stock
shall have one vote for each full share of Common Stock into which its
respective shares of Preferred Stock would be convertible on the record
date for the vote and (ii) the holders of Common Stock have one vote per
share of Common Stock.
(b) For so long as at least 3,000,000 shares of Series A Preferred
Stock are outstanding (as adjusted for stock splits, reverse stock splits,
stock dividends, recapitalizations, combinations and the like), the holders
of shares of Series A Preferred Stock, voting as a class, shall be entitled
to elect one director. For so long as at least 750,000 shares of Series B
Preferred Stock are outstanding (as adjusted for stock splits, reverse
stock splits, stock dividends, recapitalizations, combinations and the
like), the holders of the Series B Preferred Stock, voting as a class,
shall have the right to elect one director. The holders of shares of Common
Stock voting as a class shall be entitled to elect one director, and the
remaining directors shall be elected by the holders of the Preferred Stock
and the holders of Common Stock, voting together as a single class as
provided in Section (4)(a) above. In the case of a vacancy in the office of
any director occurring among the
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directors elected by the Series A Preferred Stock, Series B Preferred
Stock, or the Common Stock, as the case may be, such vacancy shall be
filled by the affirmative vote of a majority of the outstanding shares of
such Series A Preferred Stock, Series B Preferred Stock, or such Common
Stock, as the case may be, given at an annual meeting of shareholders, a
special meeting of shareholders duly called for that purpose, or by an
action by written consent. Any director elected by the holders of a
particular class or series of stock may be removed during such director's
term of office, either for or without cause, by and only by the affirmative
vote of the holders of a majority of the outstanding shares of such
particular class or series of stock given at a special meeting of
shareholders duly called or by an action by written consent for that
purpose.
(5) PROTECTIVE PROVISIONS. In addition to any other rights provided by law,
so long as any Preferred Stock shall be outstanding, this Corporation shall not,
without first obtaining the affirmative vote or written consent of the holders
of a majority of the outstanding shares of Series A Preferred, Series B
Preferred, Series C Preferred and Series D Preferred voting together as a single
class on an as-converted basis:
(a) authorize, designate or issue shares of any class of stock having
any preference or priority as to voting, dividends or upon liquidation
superior to or on a parity with any such preference or priority of the
Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred or authorize or issue shares of stock of any class or any bonds,
debentures, notes or other obligations convertible into or exchangeable
for, or having option rights to purchase, any shares of stock of this
Corporation having any preference or priority as to voting, dividends or
upon liquidation superior to or on a parity with any such preference or
priority of the Series A Preferred, Series B Preferred, Series C Preferred
or Series D Preferred, as applicable;
(b) declare or pay any dividends on the Common Stock other than
dividends payable solely in Common Stock;
(c) redeem or purchase any of the Common Stock or Series C Preferred
held by employees of the Corporation, provided, however, that this
restriction shall not apply to (i) the repurchase of shares of Common Stock
at cost from employees, officers, directors, consultants or other persons
performing services for the Corporation upon the termination of the
employment, consulting or other relationship between the Corporation and
such persons, or (ii) the repurchase of shares of Series C Preferred (or
Common Stock issuable upon conversion thereof) at cost from employees of
the Corporation upon the termination of the employment relationship between
the Corporation and such persons;
(d) increase or decrease (other than by redemption or conversion) the
total number of authorized shares of Series A Preferred, Series B
Preferred, Series C Preferred or Series D Preferred;
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(e) amend or repeal any provision of, or add any provision to, this
Corporation's Articles of Incorporation or Bylaws if such action would
alter or change adversely the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of, the Series A Preferred,
Series B Preferred, Series C Preferred or Series D Preferred;
(f) increase or decrease the authorized number of directors;
(g) consummate a sale of all or substantially all of the Corporation's
assets or any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation) which
would result in the transfer of fifty percent (50%) or more of the
outstanding voting power of the Corporation;
(h) permit any subsidiary of the Corporation to issue or sell, except
to the Corporation or to any wholly owned subsidiary of the Corporation,
any stock of such subsidiary;
(i) effect a dissolution, liquidation or winding up of the
Corporation; or
(j) effect any change in the rights, preferences or privileges of the
Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred.
(6) OTHER PROTECTIVE PROVISIONS. In addition to the protective provisions
set forth in Section (5) above, the Corporation may not, without first obtaining
the affirmative vote or written consent of the holders of a majority of the
outstanding shares of Series D Preferred:
(a) authorize, designate or issue shares of any class of stock having
any preference or priority as to voting, dividends or upon liquidation
superior to any such preference or priority of the Series D Preferred or
authorize or issue shares of stock of any class or any bonds, debentures,
notes or other obligations convertible into or exchangeable for, or having
option rights to purchase, any shares of stock of this Corporation having
any preference or priority as to voting, dividends or upon liquidation
superior to any such preference or priority of the Series D Preferred;
(b) increase or decrease (other than by redemption or conversion) the
total number of authorized shares of Series D Preferred;
(c) amend, waive or repeal any provision of, or add any provision to,
this Corporation's Articles of Incorporation or Bylaws if such action would
alter or change adversely the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of, the Series D Preferred; or
(d) consummate a sale of all or substantially all of the Corporation's
assets or any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation) which
would result in the transfer of fifty percent (50%) or more of the
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outstanding voting power of the Corporation. Notwithstanding the foregoing
provisions of this Section 6(d), no such separate vote or consent of the
Series D Preferred shall be required if the consideration received per
share of the Corporation in such transaction is at least $10.00 (as
adjusted for any stock splits, reverse stock splits, stock dividends,
recapitalizations, combinations and the like).
(7) STATUS OF CONVERTED STOCK. In the event any shares of any series of
Preferred Stock shall be converted into Common Stock pursuant to paragraph 3
hereof, the shares of Preferred Stock so converted shall be canceled and shall
not be issuable by the Corporation, and the Amended and Restated Articles of
Incorporation of this Corporation shall be appropriately amended to effect the
corresponding reduction in the Corporation's authorized capital stock.
(8) RESIDUAL RIGHTS. All rights accruing to the outstanding shares of this
Corporation not expressly provided for to the contrary herein shall be vested in
the Common Stock.
(9) CONSENT FOR CERTAIN REPURCHASES OF COMMON STOCK DEEMED TO BE
DISTRIBUTIONS. Each holder of Preferred Stock shall be deemed to have consented,
for purposes of Section 502, 503 and 506 of the California Corporations Code, to
distributions made by the Corporation in connection with the repurchase of
shares of Common Stock or Series C Preferred issued to or held by employees or
consultants upon termination of their employment or services pursuant to
agreements providing for such right of repurchase between the Corporation and
such persons.
IV
(a) LIMITATION OF DIRECTORS' LIABILITY. The liability of the directors
of this Corporation for monetary damages shall be eliminated to the fullest
extent permissible under California law.
(b) INDEMNIFICATION OF CORPORATE AGENTS. This Corporation is
authorized to indemnify the directors and officers of the Corporation to
the fullest extent permissible under California law.
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(c) REPEAL OR MODIFICATION. Any repeal or modification of the
foregoing provisions of this Article IV by the shareholders of the
Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
* * *
3. The foregoing Amended and Restated Articles of Incorporation have been
duly approved by the Board of Directors.
4. The foregoing Amended and Restated Articles of Incorporation have been
duly approved by the required vote of shareholders in accordance with Sections
902 and 903 of the California Corporations Code. The total number of outstanding
shares of the Corporation is 3,697,008 shares of Common Stock and 10,006,390
shares of Preferred Stock. The number of shares voting in favor of the amendment
equaled or exceeded the vote required. The percentage vote required was more
than fifty percent (50%) of the outstanding shares of Common Stock and more than
fifty percent (50%) of the outstanding shares of Preferred Stock, each class
voting separately.
* * *
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The undersigned declares under penalty of perjury that the matters set
forth in the foregoing certificate are true of his own knowledge.
IN WITNESS WHEREOF, the undersigned has executed this certificate in
_____________, California, this _____ day of November, 1998.
--------------------------
Robert Gett, President and
Chief Executive Officer
Henry V. Barry, Secretary
-------------------------
<PAGE>
Exhibit 3.2
CERTIFICATE OF INCORPORATION
OF VIANT CORPORATION
ARTICLE I.
The name of this corporation is Viant Corporation.
ARTICLE II.
The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
ARTICLE III.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
ARTICLE IV.
This corporation is authorized to issue two classes of stock, to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which this corporation shall have authority to issue is 40,000,000, of
which 25,000,000 shares shall be Common Stock, with a par value of $0.001, and
15,000,000 shares shall be Preferred Stock, with a par value of $0.001. Of the
Preferred Stock, 5,746,874 of such shares shall be designated Series A Preferred
Stock (the "SERIES A PREFERRED"); 1,499,925 of such shares shall be designated
Series B Preferred Stock (the "SERIES B PREFERRED"); 2,830,408 of such shares
shall be designated Series C Preferred Stock (the "SERIES C PREFERRED"), and
3,240,000 of such shares shall be designated Series D Preferred Stock (the
"SERIES D PREFERRED").
ARTICLE V.
The rights, preferences, privileges and restrictions granted to or
imposed upon the Series A Preferred, the Series B Preferred, the Series C
Preferred, the Series D Preferred and the Common Stock, and the holders thereof
are as follows:
(1) DIVIDENDS. The holders of: (a) the Series A Preferred shall be entitled to
receive, out of any funds legally available therefor, dividends at the rate of
$0.053333 per share, per
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annum; (b) the Series B Preferred shall be entitled to receive, out of any funds
legally available therefor, dividends at the rate of $0.066667 per share, per
annum; (c) the Series C Preferred shall be entitled to receive, out of any funds
legally available therefor, dividends at the rate of $0.289950 per share, per
annum; and (d) the Series D Preferred shall be entitled to receive, out of any
funds legally available therefor, dividends at the rate of $0.6390 per share,
per annum. Any such dividend shall be payable in preference and priority to any
payment of any dividend on Common Stock and only when, as and if declared by the
Board of Directors. After payment of such dividends, any additional dividends
declared shall be distributed among all holders of Common Stock in proportion to
the number of shares of Common Stock held by them. The right to such dividends
on the Preferred Stock shall not be cumulative, and no right shall accrue to
holders of Preferred Stock by reason of the fact that dividends on such shares
are not declared or paid in any prior year.
In the event that there shall be any declared but unpaid dividends
outstanding immediately prior to, and in the event of, a conversion of the
Preferred Stock (as provided in Section 3 hereof), the corporation shall, at the
option of each holder, pay in cash to each holder of Preferred Stock subject to
conversion, the full amount of any such dividends or allow such dividends to be
converted into Common Stock in accordance with, and pursuant to the terms
specified in, Section 3 hereof.
(2) LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding
up of the corporation, either voluntary or involuntary, the following shall
apply:
(i) The holders of the Series D Preferred shall be
entitled to receive, prior and in preference to any distribution of any of the
assets or surplus funds of the corporation to any other holders of the Preferred
Stock or Common Stock by reason of their ownership thereof, the amount of $6.39
per share (as adjusted for stock splits, stock dividends, recapitalizations,
combinations and the like) then held by such holder(s). If, upon occurrence of
such event the assets and funds thus distributed among the holders of the Series
D Preferred shall be insufficient to permit the payment to the holders of the
Series D Preferred of the full preferential amounts to which they shall be
entitled pursuant to this Section 2(a)(i), then the entire assets and funds of
the corporation legally available for distribution shall be distributed ratably,
on an equal priority, PARI PASSU basis, among the holders of Series D Preferred
based on their relative preferential amounts;
(ii) Next, the holders of the Series A Preferred, Series
B Preferred and Series C Preferred shall be entitled to receive, prior and in
preference to any distribution of any of the assets or surplus funds of the
corporation to the holders of the Common Stock by reason of their ownership
thereof, the amount of $0.533333 per share (as adjusted for stock splits,
reverse stock splits, stock dividends, recapitalizations, combinations and the
like) of Series A Preferred, $0.666667 per share (as adjusted for stock splits,
reverse stock splits, stock dividends, recapitalizations, combinations and the
like) of Series B Preferred and $2.899499 per share (as adjusted for stock
splits, reverse stock splits, stock dividends, recapitalizations, combinations
and the
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like) of Series C Preferred, then held by such respective holder(s). If, upon
occurrence of such event the assets and funds thus distributed among the holders
of the Series A Preferred, Series B Preferred and Series C Preferred shall be
insufficient to permit the payment to the holders of the Series A Preferred,
Series B Preferred and Series C Preferred of the full preferential amounts to
which they respectively shall be entitled pursuant to this Section 2(a)(ii),
then, after the payments required by Section 2(a)(i) above shall have been made,
the entire assets and funds of the corporation legally available for
distribution shall be distributed ratably, on an equal priority, PARI PASSU
basis, among the holders of the Series A Preferred, Series B Preferred and
Series C Preferred based on their relative preferential amounts;
(iii) Next, the holders of the Series D Preferred shall
then be entitled to receive, prior and in preference to any distribution of any
of the assets or surplus funds of the corporation to the holders of the Common
Stock or the Series A Preferred, Series B Preferred and Series C Preferred by
reason of their ownership thereof, an amount equal to all declared but unpaid
dividends on such shares of Series D Preferred then held by such holders. If,
upon occurrence of such event the assets and funds thus distributed among the
holders of the Series D Preferred shall be insufficient to permit the payment to
the holders of the Series D Preferred of the full preferential amounts to which
they respectively shall be entitled pursuant to this Section 2(a)(iii), then,
after the payments required by Sections 2(a)(i) and 2(a)(ii) above shall have
been made, the entire assets and funds of the corporation legally available for
distribution shall be distributed ratably, on an equal priority, PARI PASSU
basis, among the holders of Series D Preferred based on their relative
preferential amounts; and
(iv) Next, the holders of the Series A Preferred, Series
B Preferred and Series C Preferred shall then be entitled to receive, prior and
in preference to any distribution of any of the assets or surplus funds of the
corporation to the holders of the Common Stock by reason of their ownership
thereof, an amount equal to all declared but unpaid dividends on such shares of
the Series A Preferred, Series B Preferred and Series C Preferred then held by
such holders. If, upon occurrence of such event the assets and funds thus
distributed among the holders of the Series A Preferred, Series B Preferred and
Series C Preferred shall be insufficient to permit the payment to the holders of
the Series A Preferred, Series B Preferred and Series C Preferred of the full
preferential amounts to which they respectively shall be entitled pursuant to
this Section 2(a)(iv), then, after the payments required by Sections 2(a)(i),
2(a)(ii) and 2(a)(iii) above shall have been made, the entire assets and funds
of the corporation legally available for distribution shall be distributed
ratably, on an equal priority, PARI PASSU basis, among the holders of the Series
A Preferred, Series B Preferred and Series C Preferred based on their relative
preferential amounts.
(b) After payment has been made to the holders of the
Preferred Stock of the amounts to which they shall be entitled as provided in
Section 2(a) above, the remaining assets; of the corporation available for
distribution to stockholders shall be distributed among the holders of Common
Stock, pro rata, based on the number of shares of Common Stock then outstanding.
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(c) For purposes of this Section 2, a liquidation,
dissolution or winding up of the corporation shall be deemed to be occasioned
by, and to include: (i) the corporation's sale of all or substantially all of
its assets; or (ii) any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
which results in the transfer of fifty percent (50%) or more of the outstanding
voting power of the corporation.
(d) For purposes of this Section 2, the amount of assets
and/or proceeds available for distribution upon a liquidation, dissolution or
winding up of this corporation shall be determined as follows:
(i) insofar as it consists of cash, be computed at the
aggregate amount of cash held by this corporation or payable to the stockholders
at the time of the liquidation, dissolution or winding up; and
(ii) insofar as it consists of securities and unless
otherwise explicitly specified in a merger agreement or acquisition agreement
(if applicable): (A) if the securities are then traded on a national securities
exchange or the NASDAQ Stock Market (or a similar national quotation system),
then such amount of assets and/or proceeds available for distribution shall be
computed based on the closing price on such exchange or system at the time of
the liquidation, dissolution or winding up; (B) if the securities are actively
traded over-the-counter, then the value shall be computed based on the closing
price at the time of the liquidation, dissolution or winding up; and (C) if
there is no public market for the securities, then the value shall be computed
based on fair market value thereof, as determined in good faith by the Board of
Directors of the corporation at the time of liquidation, dissolution or winding
up; and
(iii) insofar as it consists of property other than cash
or securities, such amount of assets and/or proceeds available for distribution
shall be computed at the fair market value thereof at the time of the
liquidation, dissolution or winding up, as determined in good faith by the Board
of Directors of the corporation.
(3) CONVERSION. The holders of the Preferred Stock shall have
conversion rights as follows (the "CONVERSION RIGHTS"):
(a) RIGHT TO CONVERT. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time into such number
of fully paid and nonassessable shares of Common Stock as is determined by
dividing $.533333 (with respect to the Series A Preferred), $0.666667 (with
respect to the Series B Preferred), $2.899499 (with respect to the Series C
Preferred), or $6.39 (with respect to the Series D Preferred) (the "ORIGINAL
PURCHASE PRICE," respectively) by the then-applicable Conversion Price (as
defined below), determined as hereinafter provided. The price at which shares of
Common Stock shall be deliverable upon conversion of the Series A Preferred (the
"SERIES A CONVERSION PRICE") shall initially be $0.533333 per share of Common
Stock. The price at which shares of Common Stock shall be deliverable upon
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conversion of the Series B Preferred (the "SERIES B CONVERSION PRICE") shall
initially be $0.666667 per share of Common Stock. The price at which shares of
Common Stock shall be deliverable upon conversion of the Series C Preferred (the
"SERIES C CONVERSION PRICE") shall initially be $2.899499 per share of Common
Stock. The price at which shares of Common Stock shall be deliverable upon
conversion of the Series D Preferred (the "SERIES D CONVERSION PRICE") shall
initially be $6.39 per share of Common Stock. Each such initial Conversion Price
shall be subject to adjustment as hereinafter provided.
(b) AUTOMATIC CONVERSION. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the then effective
Conversion Price: (i) in the event of the effectiveness of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the corporation to the public at a price per
share of at least $10.00 (as adjusted for any stock splits, reverse stock
splits, stock dividends, recapitalizations, combinations and the like after the
date a share of Series D Preferred is first issued) and an aggregate offering
price (net of underwriters' commissions and discounts) to the public of not less
than $20,000,000 (a "QUALIFIED PUBLIC OFFERING"); or (ii) at the election of the
holders of a majority of the outstanding shares of Series A Preferred, Series B
Preferred, Series C Preferred and Series D Preferred, voting as a single class
and on an as-converted basis, which vote must include the affirmative vote of
the holders of a majority of the Series D Preferred. In the event of a Qualified
Public Offering, the person(s) entitled to receive the Common Stock issuable
upon such conversion of Preferred Stock shall not be deemed to have converted
such Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred until immediately prior to the closing of such underwritten public
offering.
(c) MECHANICS OF CONVERSION. No fractional shares of Common
Stock shall be issued upon conversion of the Preferred Stock. In lieu of any
fractional share to which a holder would otherwise be entitled, the corporation
shall pay cash equal to such fraction multiplied by the fair market value of the
Common Stock as determined in good faith by the Board of Directors. Before any
holder of Preferred Stock shall be entitled to convert the same into full shares
of Common Stock, the holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the corporation or of any transfer
agent for the Preferred Stock, and shall give written notice to the corporation
at such office that the holder elects to convert the same. Such notice shall
also state whether the holder elects, pursuant to Section 1 of this Article V,
to receive declared but unpaid dividends on the Preferred Stock proposed to be
converted in cash, or to convert such dividends into shares of Common Stock at
the fair market value of such shares, as determined in good faith by the Board
of Directors. The corporation shall, as soon as practicable thereafter, issue
and deliver at such office to such holder of Preferred Stock, a certificate or
certificates for the number of shares of Common Stock to which the holder shall
be entitled as aforesaid and a check payable to the holder in the amount of any
cash amounts payable as the result of a conversion into a fractional share of
Common Stock, and any declared but unpaid dividends on the converted Preferred
Stock which the holder elected to receive in cash. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of
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Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of Common Stock on
such date. If the conversion is in connection with a Qualified Public Offering,
then the conversion shall be conditioned upon the closing of such Qualified
Public Offering, in which event the person(s) entitled to receive the Common
Stock issuable upon such conversion of the Preferred Stock shall not be deemed
to have converted such Preferred Stock until immediately prior to such closing.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this Section 3,
the following definitions shall apply.
(A) "OPTIONS" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(B) "CONVERTIBLE SECURITIES" shall mean any
evidences of indebtedness, shares (other than Common Stock and Preferred Stock)
or other securities convertible into or exchangeable for Common Stock.
(C) "ORIGINAL ISSUE DATE" shall mean the date
on which the first share of Series D Preferred was first issued.
(D) "ADDITIONAL SHARES OF COMMON STOCK" shall
mean all shares of Common Stock issued (or, pursuant to Section 3(d)(iii),
deemed to be issued) by the corporation after the Original Issue Date other than
shares of Common Stock issued or issuable:
1. upon conversion of shares of the Series
A Preferred, Series B Preferred, Series C Preferred or Series D Preferred;
2. to officers, directors or employees of,
or consultants to, the corporation pursuant to a stock grant, option plan or
purchase plan or other employee stock incentive program (each a "PLAN" and,
collectively, the "PLANS") or an agreement, so long as any such Plan or
agreement is unanimously approved by the Board of Directors;
3. as a dividend or distribution on the
Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred;
4. upon exercise or conversion of warrants
to purchase shares of Common Stock issued in connection with equipment lease
financing transactions or bank financing transactions unanimously approved by
the Board of Directors, where the issuance of such warrants is not principally
for the purpose of raising additional equity capital for
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the corporation; and
5. in connection with a split or
subdivision of the outstanding shares of Common Stock.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in
the Conversion Prices of the respective series of Preferred Stock shall be made
in respect of the issuance of Additional Shares of Common Stock unless the
consideration per share for an Additional Share of Common Stock issued or deemed
to be issued by the corporation is less than the Conversion Price for such
series in effect on the date of, and immediately prior to such issue. No
adjustment in the Conversion Price shall be made pursuant to paragraph (iv)
below as a result of any stock dividend or subdivision which causes an
adjustment in the Conversion Price for such series pursuant to Section 3(e)
below.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
In the event the corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then the maximum number
of shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, PROVIDED that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to paragraph 3(d)(v) hereof) of
such Additional Shares of Common Stock would be less than the Conversion Price
of the respective series of Preferred Stock in effect on the date of and
immediately prior to such issue, or such record date, as the case may be, and
PROVIDED, FURTHER, that in any case in which Additional Shares of Common Stock
are deemed to be issued:
(A) no further adjustment in the applicable
Conversion Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(B) if such Options or Convertible Securities
by their terms provide, with the passage of time or otherwise, for any increase
or decrease in the consideration payable to the corporation, or increase or
decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the applicable Conversion Price computed upon
the original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon any such
increase or decrease becoming effective, be recomputed to reflect such increase
or decrease insofar as it affects such
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Options or the rights of conversion or exchange under such Convertible
Securities; and
(C) on the expiration or cancellation of any
Options or the termination of the right to convert or exchange any Convertible
Securities which shall have not been exercised, if the applicable Conversion
Price shall have been adjusted upon the original issuance thereof or shall have
been subsequently adjusted pursuant to clause (B) above, the applicable
Conversion Price shall be recomputed as if:
1. in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of Common Stock issued were
shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities, and the
consideration received therefor was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the corporation upon such exercise, or
for the issue of all such Convertible Securities whether or not actually
converted or exchanged, plus the consideration actually received by the
corporation upon such conversion or exchange, if any, and
2. in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options and the
consideration received by the corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the corporation for the issue of all such Options, whether or not exercised,
plus the consideration actually received by the corporation upon the issue of
the Convertible Securities with respect to which such Options were actually
exercised;
(D) no readjustment pursuant to clauses (B) and
(C) above shall have the effect of increasing the applicable Conversion Price to
an amount which exceeds the lower of: (i) such Conversion Price on the original
adjustment date; or (ii) the applicable Conversion Price that has resulted from
any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event this corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 3(d)(iii)) without consideration or for
a consideration per share less than the applicable Series A Conversion Price,
Series B Conversion Price, Series C Conversion Price or Series D Conversion
Price in effect on the date of and immediately prior to such issue, then and in
such event, the Series A Conversion Price, Series B Conversion Price, Series C
Conversion Price, or Series D Conversion Price, as applicable, shall be reduced,
concurrently with such issue, to a price (calculated to the nearest cent)
determined by multiplying the Series A Conversion Price, Series B Conversion
Price, Series C Conversion Price or Series D Conversion Price, as applicable, by
a fraction, the numerator of which shall be the sum of: (i) the number of shares
of Common Stock outstanding (after giving effect to the conversion of all
outstanding Preferred Stock and the exercise of all
8
<PAGE>
outstanding stock options); and (ii) the number of shares of Common Stock which
the aggregate consideration received by the corporation for the total number of
Additional Shares of Common Stock so issued would purchase at the Series A
Conversion Price, Series B Conversion Price, Series C Conversion Price or Series
D Conversion Price, as applicable; and the denominator of which shall be the sum
of: (A) the number of shares of Common Stock outstanding (after giving effect to
the conversion of all outstanding Preferred Stock and the exercise of all
outstanding stock options); and (B) the number of such Additional Shares of
Common Stock so issued.
(v) DETERMINATION OF CONSIDERATION. For purposes of this
Section 3(d), the consideration received by the corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(A) CASH AND PROPERTY. Such consideration
shall:
1. insofar as it consists of cash, be
computed at the aggregate amount of cash received by the corporation;
2. insofar as it consists of securities:
(i) if the securities are then traded on a national securities exchange or the
NASDAQ Stock Market (or a similar national quotation system), then the value
shall be computed based on the average of the closing prices of the securities
on such exchange or system over the thirty-day period ending three (3) days
prior to receipt by the corporation; (ii) if the securities are actively traded
over-the-counter, then the value shall be computed based on the average of the
closing bid prices over the thirty-day period ending three (3) days prior to the
receipt by the corporation; and (iii) if there is no active public market, then
the value shall be computed based on the fair market value thereof on the date
of receipt by the corporation, as determined in good faith by the Board of
Directors of the corporation;
3. insofar as it consists of property other
than cash and securities, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Board of Directors; and
4. in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses 1., 2. and 3. above,
as determined in good faith by the Board of Directors.
(B) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to paragraph 3(d)(iii),
relating to Options and Convertible Securities, shall be determined by dividing:
1. the total amount, if any, received or
receivable by the corporation as consideration for the issue of such Options or
Convertible
9
<PAGE>
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities by:
2. the maximum number of shares of Common
Stock (as set forth in the instrument relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(e) ADJUSTMENTS FOR STOCK DIVIDENDS, SUBDIVISIONS,
COMBINATIONS, OR CONSOLIDATIONS. In the event the corporation shall pay a stock
dividend on the Common Stock, or the outstanding shares of Common Stock shall be
subdivided, combined or consolidated, by reclassification, stock split or
otherwise, into a greater or lesser number of shares of Common Stock, the
applicable Conversion Price in effect immediately prior to such dividend,
subdivision, combination or consolidation shall, concurrently with the
effectiveness of such dividend, subdivision, combination or consolidation, be
proportionately adjusted.
(f) NO IMPAIRMENT. The corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, merger, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the corporation but will at all times
in good faith assist in the carrying out of all the provisions of this Section 3
and in the taking of all such action as may be necessary or appropriate in order
to protect the conversion rights of the holders of the Series A Preferred,
Series B Preferred, Series C Preferred and Series D Preferred against
impairment.
(g) NOTICES OF RECORD DATE. In the event that this
corporation shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) to offer for subscription pro rata to the holders of
any class or series of its stock any additional shares of stock of any class or
series or other rights;
(iii) to effect any reclassification or recapitalization
of its Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge with or into any other corporation, or
sell, lease or
10
<PAGE>
convey all or substantially all its property or business, or to liquidate,
dissolve or wind up;
then, in connection with each such event, this
corporation shall send to the holders of the Series A Preferred, Series B
Preferred, Series C Preferred and Series D Preferred at least twenty (20) days'
prior written notice of the date on which a record shall be taken for such
dividend, distribution or subscription rights (and specifying the date on which
the holders of Common Stock shall be entitled thereto) or for determining rights
to vote in respect of the matters referred to in (iii) and (iv) above; and in
the case of the matters referred to in (iii) and (iv) above, at least twenty
(20) days' prior written notice of the date when the same shall take place (and
specifying the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
the occurrence of such event). Each such written notice shall be given by first
class mail, postage prepaid, addressed to the holders of Preferred Stock shares
at the address for each such holder as shown on the books of this corporation.
(h) RECAPITALIZATION. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision
or combination provided for in Section 3(e) or a merger, reorganization,
consolidation or sale of assets transaction which is deemed to be a liquidation,
dissolution or winding up pursuant to Section (2) provision shall be made so
that the holders of the Preferred Stock shall thereafter be entitled to receive
upon conversion of the Preferred Stock the number of shares of stock or other
securities or property of the corporation to which a holder of Common Stock
deliverable upon conversion of each share of such series would have been
entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 3 with
respect to the rights of the holders of the Preferred Stock after the
recapitalization to the end that the provisions of this Section 3 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of the applicable Preferred Stock) shall be
applicable after that event as nearly equivalent as may be practicable.
(i) OTHER DISTRIBUTIONS. In the event this corporation shall
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by this corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in Section 3(e), then, in each
such case for the purpose of this Section 3(i); the holders of the Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock of this
corporation into which their shares of Preferred Stock are convertible as of the
record date fixed for the determination of the holders of Common Stock of this
corporation entitled to receive such distribution.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of
11
<PAGE>
all then outstanding shares of the Preferred Stock, in addition to such other
remedies as shall be available to the holder of such Preferred Stock, this
corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including, without limitation, engaging in best efforts to obtain the requisite
stockholder approval of any necessary amendment to these Certificate of
Incorporation.
(4) VOTING RIGHTS AND DIRECTORS.
(a) Except as otherwise required by law and as provided in
Sections 4(b) and (5) below, the holders of Preferred Stock and the holders of
Common Stock shall be entitled to notice of any stockholders' meeting and to
vote as a single class upon any matter submitted to the stockholders for a vote,
as follows: (i) each holder of Preferred Stock shall have one vote for each full
share of Common Stock into which its respective shares of Preferred Stock would
be convertible on the record date for the vote; and (ii) the holders of Common
Stock shall have one vote per share of Common Stock.
(b) For so long as at least 3,000,000 shares of Series A
Preferred are outstanding (as adjusted for stock splits, reverse stock splits,
stock dividends, recapitalizations, combinations and the like), the holders of
shares of Series A Preferred, voting as a single series, shall be entitled to
elect one (1) director. For so long as at least 750,000 shares of Series B
Preferred are outstanding (as adjusted for stock splits, reverse stock splits,
stock dividends, recapitalizations, combinations and the like), the holders of
the Series B Preferred, voting as a single series, shall have the right to elect
one (1) director. The holders of shares of Common Stock, voting as a class,
shall be entitled to elect one (1) director, and the remaining directors shall
be elected by the holders of the Preferred Stock and the holders of Common
Stock, voting together as a single class, as provided in Section (4)(a) above.
In the case of a vacancy in the office of any director occurring among the
directors elected by the Series A Preferred, Series B Preferred or the Common
Stock, as the case may be, such vacancy shall be filled by the affirmative vote
of a majority of the outstanding shares of such Series A Preferred, Series B
Preferred or such Common Stock, as the case may be, given at an annual meeting
of stockholders, a special meeting of stockholders duly called for that purpose,
or by an action by written consent. Any director elected by the holders of a
particular class or series of stock may be removed during such director's term
of office, either for or without cause, by and only by the affirmative vote of
the holders of a majority of the outstanding shares of such particular class or
series of stock given at a special meeting of stockholders duly called or by an
action by written consent for that purpose.
(5) PROTECTIVE PROVISIONS. In addition to any other rights
provided by law, so long as any Preferred Stock shall be outstanding, this
corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of a majority of the outstanding shares of Series A
Preferred, Series B Preferred, Series C Preferred and Series D Preferred, voting
together as a single class on an as-converted basis:
12
<PAGE>
(a) authorize, designate or issue shares of any class of
stock having any preference or priority as to voting, dividends or upon
liquidation superior to or on a parity with any such preference or priority of
the Series A Preferred, Series B Preferred, Series C Preferred or Series D
Preferred or authorize or issue shares of stock of any class or any bonds,
debentures, notes or other obligations convertible into or exchangeable for, or
having option rights to purchase, any shares of stock of this corporation having
any preference or priority as to voting, dividends or upon liquidation superior
to or on a parity with any such preference or priority of the Series A
Preferred, Series B Preferred, Series C Preferred or Series D Preferred, as
applicable;
(b) declare or pay any dividends on the Common Stock other
than dividends payable solely in Common Stock;
(c) redeem or purchase any of the Common Stock or Series C
Preferred held by employees of the corporation, PROVIDED, HOWEVER, that this
restriction shall not apply to: (i) the repurchase of shares of Common Stock at
cost from employees, officers, directors, consultants or other persons
performing services for the corporation upon the termination of the employment,
consulting or other relationship between the corporation and such persons; or
(ii) the repurchase of shares of Series C Preferred (or Common Stock issuable
upon conversion thereof) at cost from employees of the corporation upon the
termination of the employment relationship between the corporation and such
persons;
(d) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series A Preferred, Series
B Preferred, Series C Preferred or Series D Preferred;
(e) amend or repeal any provision of, or add any provision
to, this corporation's Certificate of Incorporation or Bylaws if such action
would alter or change adversely the preferences, rights, privileges or powers
of, or the restrictions provided for the benefit of, the Series A Preferred,
Series B Preferred, Series C Preferred or Series D Preferred;
(f) increase or decrease the authorized number of directors;
(e) consummate a sale of all or substantially all of the
corporation's assets or any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
which would result in the transfer of fifty percent (50%) or more of the
outstanding voting power of the corporation;
(f) permit any subsidiary of the corporation to issue or
sell, except to the corporation or to any wholly owned subsidiary of the
corporation, any stock of such subsidiary;
(g) effect a dissolution, liquidation or winding up of the
corporation; or
(h) effect any change in the rights, preferences or
privileges of the Series A Preferred, Series B Preferred, Series C Preferred or
Series D Preferred.
13
<PAGE>
(6) OTHER PROTECTIVE PROVISIONS. In addition to the
protective provisions set forth in Section (5) above, the corporation may not,
without first obtaining the affirmative vote or written consent of the holders
of a majority of the outstanding shares of Series D Preferred:
(a) authorize, designate or issue shares of any class of
stock having any preference or priority as to voting, dividends or upon
liquidation superior to any such preference or priority of the Series D
Preferred or authorize or issue shares of stock of any class or any bonds,
debentures, notes or other obligations convertible into or exchangeable for, or
having option rights to purchase, any shares of stock of this corporation having
any preference or priority as to voting, dividends or upon liquidation superior
to any such preference or priority of the Series D Preferred;
(b) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Series D Preferred;
(c) amend, waive or repeal any provision of, or add any
provision to, this corporation's Certificate of Incorporation or Bylaws if such
action would alter or change adversely the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the Series D
Preferred; or
(d) consummate a sale of all or substantially all of the
corporation's assets or any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
which would result in the transfer of fifty percent (50%) or more of the
outstanding voting power of the corporation. Notwithstanding the foregoing
provisions of this Section 6(d), no such separate vote or consent of the Series
D Preferred shall be required if the consideration received per share of the
corporation in such transaction is at least $10.00 (as adjusted for any stock
splits, reverse stock splits, stock dividends, recapitalizations, combinations
and the like).
(7) STATUS OF CONVERTED STOCK. In the event any shares of any
series of Preferred Stock shall be converted into Common Stock pursuant to
Section 3 hereof, the shares of Preferred Stock so converted shall be canceled
and shall not be issuable by the corporation, and the Certificate of
Incorporation of this corporation shall be appropriately amended to effect the
corresponding reduction in the corporation's authorized capital stock.
(8) RESIDUAL RIGHTS. All rights accruing to the outstanding
shares of this corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.
14
<PAGE>
ARTICLE VI.
To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or as may hereafter be amended, a director of the corporation
shall not be personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. The corporation
shall indemnify to the fullest extent permitted by the law, any person made or
threatened to be made a party, to any action or proceeding, whether criminal,
civil, administrative or investigative, by reason of the fact the he or she, or
his or her testator or intestate, is or was a director or officer of the
corporation or any predecessor of the corporation, or serves or served at any
other enterprise as a director or officer at the request of the corporation or
any predecessor to the corporation. Neither any amendment nor repeal of this
Article VI, nor the adoption of any provision of this Certificate of
Incorporation inconsistent with this Article VI, shall eliminate or reduce the
effect of this Article VI in respect of any matter occurring, or any cause of
action, suit or claim that, but for this Article VI, would accrue or arise,
prior to such amendment, repeal or adoption of an inconsistent provision.
ARTICLE VII.
The corporation is to have perpetual existence.
ARTICLE VIII.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the corporation.
ARTICLE IX.
The election of directors need not be by written ballot unless
the Bylaws of the corporation shall so provide.
ARTICLE X.
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the corporation.
15
<PAGE>
ARTICLE XI.
Holders of stock of any class or series of the corporation shall not be
entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders, unless such cumulative voting is
required pursuant to Sections 2115 and/or 301.5 of the California Corporations
Code, in which event each such holder shall be entitled to as many votes as
shall equal the number of votes which (except for this provision as to
cumulative voting) such holder would be entitled to cast for the election of
directors with respect to the holder's shares of stock multiplied by the number
of directors to be elected by such holder, and the holder may cast all of such
votes for a single director or may distribute them among the number of directors
to be voted for, or for any two or more of them as such holder may see fit, so
long as such holder shall have complied with the provision of the corporation's
bylaws regarding cumulative voting and the name of the candidate for director
shall have been placed in nomination prior to the voting and the stockholder, or
any other holder of the same class or series of stock, has given notice at the
meeting, prior to the voting, of the intention to cumulate votes.
ARTICLE XII.
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
ARTICLE XIII.
The name and mailing address of the incorporator are:
Hank V. Barry
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
16
<PAGE>
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying,
under penalties of perjury, that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 12th day of
March, 1999.
------------------------------
Carol A. Timm, Incorporator
<PAGE>
CERTIFICATE OF AMENDMENT
BEFORE PAYMENT OF CAPITAL
OF
VIANT CORPORATION
The undersigned, Carol A. Timm, hereby certifies that:
1. She is the Incorporator of Viant Corporation, a Delaware
corporation.
2. The original Certificate of Incorporation of this Corporation was
filed with the Secretary of State of Delaware on March 12, 1999.
3. Pursuant to Section 241 of the General Corporation Law of the State
of Delaware, the amendment of this corporation's Certificate of Incorporation
contained herein was adopted by the Incorporator of this corporation prior to
the receipt of any payment for the corporation's stock and prior to the election
of a board of directors.
4. Article IV of the Certificate of Incorporation of this corporation
is amended to read as follows:
"ARTICLE IV.
This corporation is authorized to issue two classes of stock, to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which this corporation shall have authority to issue is 65,000,000, of
which 50,000,000 shares shall be Common Stock, with a par value of $0.001, and
15,000,000 shares shall be Preferred Stock, with a par value of $0.001. Of the
Preferred Stock, 5,746,874 of such shares shall be designated Series A Preferred
Stock (the "SERIES A PREFERRED"); 1,499,925 of such shares shall be designated
Series B Preferred Stock (the "SERIES B PREFERRED"); 2,830,408 of such shares
shall be designated Series C Preferred Stock (the "SERIES C PREFERRED"), and
3,240,000 of such shares shall be designated Series D Preferred Stock (the
"SERIES D PREFERRED")."
The undersigned further declares under penalty of perjury under the
laws of the State of Delaware that the matters set forth in this Certificate of
Amendment are true and correct of her own knowledge.
Dated: March 25, 1999
------------------------------
Carol A. Timm, Incorporator
<PAGE>
Exhibit 3.4
BYLAWS
OF
VIANT CORPORATION
<PAGE>
BYLAWS OF
VIANT CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I - CORPORATE OFFICES........................................................................................1
1.1 PRINCIPAL OFFICE................................................................................1
1.2 OTHER OFFICES...................................................................................1
ARTICLE II - MEETINGS OF SHAREHOLDERS................................................................................1
2.1 PLACE OF MEETINGS...............................................................................1
2.2 ANNUAL MEETING..................................................................................1
2.3 SPECIAL MEETING.................................................................................2
2.4 NOTICE OF SHAREHOLDERS' MEETINGS................................................................2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE....................................................3
2.6 QUORUM..........................................................................................3
2.7 ADJOURNED MEETING; NOTICE.......................................................................3
2.8 VOTING..........................................................................................4
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT...............................................5
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT
A MEETING ......................................................................................5
2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING
CONSENTS........................................................................................6
2.12 PROXIES.........................................................................................6
2.13 INSPECTORS OF ELECTION..........................................................................7
ARTICLE III - DIRECTORS..............................................................................................8
3.1 POWERS..........................................................................................8
3.2 NUMBER OF DIRECTORS.............................................................................8
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS........................................................8
3.4 RESIGNATION AND VACANCIES.......................................................................8
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE........................................................9
3.6 REGULAR MEETINGS................................................................................9
3.7 SPECIAL MEETINGS; NOTICE.......................................................................10
3.8 QUORUM.........................................................................................10
3.9 WAIVER OF NOTICE...............................................................................10
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
3.10 ADJOURNMENT....................................................................................11
3.11 NOTICE OF ADJOURNMENT..........................................................................11
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING..............................................11
3.13 FEES AND COMPENSATION OF DIRECTORS.............................................................11
3.14 APPROVAL OF LOANS TO OFFICERS..................................................................11
ARTICLE IV - COMMITTEES.............................................................................................12
4.1 COMMITTEES OF DIRECTORS........................................................................12
4.2 MEETINGS AND ACTION OF COMMITTEES..............................................................12
ARTICLE V - OFFICERS................................................................................................13
5.1 OFFICERS.......................................................................................13
5.2 ELECTION OF OFFICERS...........................................................................13
5.3 SUBORDINATE OFFICERS...........................................................................13
5.4 REMOVAL AND RESIGNATION OF OFFICERS............................................................13
5.5 VACANCIES IN OFFICES...........................................................................14
5.6 CHAIRMAN OF THE BOARD..........................................................................14
5.7 PRESIDENT......................................................................................14
5.8 VICE PRESIDENTS................................................................................14
5.9 SECRETARY......................................................................................14
5.10 CHIEF FINANCIAL OFFICER........................................................................15
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND
OTHER AGENTS..................................................................................15
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS......................................................15
6.2 INDEMNIFICATION OF OTHERS......................................................................16
6.3 PAYMENT OF EXPENSES IN ADVANCE.................................................................16
6.4 INDEMNITY NOT EXCLUSIVE........................................................................16
6.5 INSURANCE INDEMNIFICATION......................................................................16
6.6 CONFLICTS......................................................................................16
ARTICLE VII - RECORDS AND REPORTS...................................................................................17
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER...................................................17
</TABLE>
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<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
7.2 MAINTENANCE AND INSPECTION OF BYLAWS...........................................................18
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS .........................................18
7.4 INSPECTION BY DIRECTORS........................................................................18
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER..........................................................18
7.6 FINANCIAL STATEMENTS...........................................................................19
7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.................................................19
ARTICLE VIII - GENERAL MATTERS......................................................................................20
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING .........................................20
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS......................................................20
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED ............................................20
8.4 CERTIFICATES FOR SHARES........................................................................20
8.5 LOST CERTIFICATES..............................................................................21
8.6 CONSTRUCTION; DEFINITIONS......................................................................21
ARTICLE IX - AMENDMENTS.............................................................................................21
9.1 AMENDMENT BY SHAREHOLDERS......................................................................21
9.2 AMENDMENT BY DIRECTORS.........................................................................21
</TABLE>
-iii-
<PAGE>
BYLAWS
OF
VIANT CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 PRINCIPAL OFFICE
The board of directors shall fix the location of the principal
executive office of the corporation at any place within or outside the State of
California. If the principal executive office is located outside such state and
the corporation has one or more business offices in such state, then the board
of directors shall fix and designate a principal business office in the State of
California.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS
Meetings of shareholders shall be held at any place within or outside
the State of California designated by the board of directors. In the absence of
any such designation, shareholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of shareholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of shareholders shall be held on the second
Monday of April in each year at 2:00 p.m.. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding full business day. At the meeting, directors shall be elected, and
any other proper business may be transacted.
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2.3 SPECIAL MEETING
A special meeting of the shareholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the shareholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.
2.4 NOTICE OF SHAREHOLDERS' MEETINGS
All notices of meetings of shareholders shall be sent or otherwise
given in accordance with Section 2.5 of these bylaws not less than ten (10) (or,
if sent by third-class mail pursuant to Section 2.5 of these bylaws, thirty
(30)) nor more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the shareholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California (the
"Code"), (ii) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (iii) a reorganization of the corporation, pursuant to Section
1201 of the Code, (iv) a voluntary dissolution of the corporation, pursuant to
Section 1900 of the Code, or (v) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of the Code, then the notice shall also state the general nature of that
proposal.
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2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of shareholders shall be given either (i)
personally or (ii) by first-class mail or (iii) by third-class mail but only if
the corporation has outstanding shares held of record by five hundred (500) or
more persons (determined as provided in Section 605 of the Code) on the record
date for the shareholders' meeting, or (iv) by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that shareholder by mail or telegraphic or other written communication
to the corporation's principal executive office, or if published at least once
in a newspaper of general circulation in the county where that office is
located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, then all future notices or reports shall be deemed to have been
duly given without further mailing if the same shall be available to the
shareholder on written demand of the shareholder at the principal executive
office of the corporation for a period of one (1) year from the date of the
giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 QUORUM
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote thereat constitutes a quorum for the transaction of
business at all meetings of shareholders. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
2.7 ADJOURNED MEETING; NOTICE
Any shareholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the vote of the majority of
the shares represented at that meeting, either in person or by proxy. In the
absence of a quorum, no other business may be transacted at that meeting except
as provided in Section 2.6 of these bylaws.
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When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at the meeting at which the
adjournment is taken. However, if a new record date for the adjourned meeting is
fixed or if the adjournment is for more than forty-five (45) days from the date
set for the original meeting, then notice of the adjourned meeting shall be
given. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 2.4 and 2.5 of these bylaws. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
2.8 VOTING
The shareholders entitled to vote at any meeting of shareholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 702 through 704 of the Code (relating to
voting shares held by a fiduciary, in the name of a corporation or in joint
ownership).
The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the last paragraph of this Section 2.8, or as may
be otherwise provided in the articles of incorporation, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote of the shareholders. Any shareholder entitled to vote on any matter may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or, except when the matter is the election of directors, may
vote them against the proposal; but, if the shareholder fails to specify the
number of shares which the shareholder is voting affirmatively, it will be
conclusively presumed that the shareholder's approving vote is with respect to
all shares which the shareholder is entitled to vote.
If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or a vote by
classes is required by the Code or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elected, a
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) if the candidates' names have been placed in nomination
prior to commencement of the voting and the shareholder has given notice prior
to commencement of the voting of the shareholder's intention to cumulate votes.
If any shareholder has given such a notice, then every shareholder entitled to
vote may cumulate votes for candidates in nomination either (i) by giving one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that shareholder's shares are
normally entitled or (ii) by distributing the shareholder's votes on the same
principle among any or all of the
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candidates, as the shareholder thinks fit. The candidates receiving the highest
number of affirmative votes, up to the number of directors to be elected, shall
be elected; votes against any candidate and votes withheld shall have no legal
effect.
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT
The transactions of any meeting of shareholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after regular call and notice,
if a quorum be present either in person or by proxy, and if, either before or
after the meeting, each person entitled to vote, who was not present in person
or by proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. The waiver of notice or consent
or approval need not specify either the business to be transacted or the purpose
of any annual or special meeting of shareholders, except that if action is taken
or proposed to be taken for approval of any of those matters specified in the
second paragraph of Section 2.4 of these bylaws, the waiver of notice or consent
or approval shall state the general nature of the proposal. All such waivers,
consents, and approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by the Code to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted.
In the case of election of directors, such a consent shall be effective
only if signed by the holders of all outstanding shares entitled to vote for the
election of directors. However, a director may be elected at any time to fill
any vacancy on the board of directors, provided that it was not created by
removal of a director and that it has not been filled by the directors, by the
written consent of the holders of a majority of the outstanding shares entitled
to vote for the election of directors.
All such consents shall be maintained in the corporate records. Any
shareholder giving a written consent, or the shareholder's proxy holders, or a
transferee of the shares, or a personal representative of the shareholder, or
their respective proxy holders, may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.
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If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders has not been received, then the secretary shall give prompt notice
of the corporate action approved by the shareholders without a meeting. Such
notice shall be given to those shareholders entitled to vote who have not
consented in writing and shall be given in the manner specified in Section 2.5
of these bylaws. In the case of approval of (i) a contract or transaction in
which a director has a direct or indirect financial interest, pursuant to
Section 310 of the Code, (ii) indemnification of a corporate "agent," pursuant
to Section 317 of the Code, (iii) a reorganization of the corporation, pursuant
to Section 1201 of the Code, and (iv) a distribution in dissolution other than
in accordance with the rights of outstanding preferred shares, pursuant to
Section 2007 of the Code, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS
For purposes of determining the shareholders entitled to notice of any
meeting or to vote thereat or entitled to give consent to corporate action
without a meeting, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in such event only shareholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the Code.
If the board of directors does not so fix a record date:
(a) the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held; and
(b) the record date for determining shareholders entitled to
give consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action by the board has been taken, shall
be at the close of business on the day on which the board adopts the resolution
relating to that action, or the sixtieth (60th) day before the date of such
other action, whichever is later.
The record date for any other purpose shall be as provided in Article
VIII of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and
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filed with the secretary of the corporation. A proxy shall be deemed signed if
the shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the shareholder or the
shareholder's attorney-in-fact. A validly executed proxy which does not state
that it is irrevocable shall continue in full force and effect unless (i) the
person who executed the proxy revokes it prior to the time of voting by
delivering a writing to the corporation stating that the proxy is revoked or by
executing a subsequent proxy and presenting it to the meeting or by voting in
person at the meeting, or (ii) written notice of the death or incapacity of the
maker of that proxy is received by the corporation before the vote pursuant to
that proxy is counted; provided, however, that no proxy shall be valid after the
expiration of eleven (11) months from the date of the proxy, unless otherwise
provided in the proxy. The dates contained on the forms of proxy presumptively
determine the order of execution, regardless of the postmark dates on the
envelopes in which they are mailed. The revocability of a proxy that states on
its face that it is irrevocable shall be governed by the provisions of Sections
705(e) and 705(f) of the Code.
2.13 INSPECTORS OF ELECTION
Before any meeting of shareholders, the board of directors may appoint
an inspector or inspectors of election to act at the meeting or its adjournment.
If no inspector of election is so appointed, then the chairman of the meeting
may, and on the request of any shareholder or a shareholder's proxy shall,
appoint an inspector or inspectors of election to act at the meeting. The number
of inspectors shall be either one (1) or three (3). If inspectors are appointed
at a meeting pursuant to the request of one (1) or more shareholders or proxies,
then the holders of a majority of shares or their proxies present at the meeting
shall determine whether one (1) or three (3) inspectors are to be appointed. If
any person appointed as inspector fails to appear or fails or refuses to act,
then the chairman of the meeting may, and upon the request of any shareholder or
a shareholder's proxy shall, appoint a person to fill that vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
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(g) do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Code and any limitations in the
articles of incorporation and these bylaws relating to action required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be not less than four
(4) nor more than seven (7). The exact number of directors shall be five (5)
until changed, within the limits specified above, by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the shareholders. The
indefinite number of directors may be changed, or a definite number may be fixed
without provision for an indefinite number, by a duly adopted amendment to the
articles of incorporation or by an amendment to this bylaw duly adopted by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that an amendment reducing the fixed number
or the minimum number of directors to a number less than five (5) cannot be
adopted if the votes cast against its adoption at a meeting, or the shares not
consenting in the case of an action by written consent, are equal to more than
sixteen and two-thirds percent (16-2/3%) of the outstanding shares entitled to
vote thereon. No amendment may change the stated maximum number of authorized
directors to a number greater than two (2) times the stated minimum number of
directors minus one (1).
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Directors shall be elected at each annual meeting of shareholders to
hold office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES
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Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute a majority of the required quorum), or by the unanimous written
consent of all shares entitled to vote thereon. Each director so elected shall
hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist (i) in the event of the death, resignation or removal of any director,
(ii) if the board of directors by resolution declares vacant the office of a
director who has been declared of unsound mind by an order of court or convicted
of a felony, (iii) if the authorized number of directors is increased, or (iv)
if the shareholders fail, at any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be elected at that
meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election
other than to fill a vacancy created by removal, if by written consent, shall
require the consent of the holders of a majority of the outstanding shares
entitled to vote thereon.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of California that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of California that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
if the times of such meetings are fixed by the board of directors.
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3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.10 of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of
Section 310 of the Code (as to approval of contracts or transactions in which a
director has a direct or indirect material financial interest), Section 311 of
the Code (as to appointment of committees), Section 317(e) of the Code (as to
indemnification of directors), the articles of incorporation, and other
applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.
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3.10 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting to another time and place.
3.11 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need not
be given unless the meeting is adjourned for more than twenty-four (24) hours.
If the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board.
3.13 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.14 APPROVAL OF LOANS TO OFFICERS*
The corporation may, upon the approval of the board of directors alone,
make loans of money or property to, or guarantee the obligations of, any officer
of the corporation or its parent or subsidiary, whether or not a director, or
adopt an employee benefit plan or plans authorizing such loans or guaranties
provided that (i) the board of directors determines that such a loan or guaranty
or plan may reasonably be expected to benefit the corporation, (ii) the
corporation has outstanding shares held of record by 100 or more persons
(determined as provided in Section 605 of the Code) on the date of approval by
the board of directors, and (iii) the approval of the board of directors is by a
vote sufficient without counting the vote of any interested director or
directors.
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* This section is effective only if it has been approved by the
shareholders in accordance with Sections 315(b) and 152 of the Code.
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ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have all the authority of
the board, except with respect to:
(a) the approval of any action which, under the Code, also
requires shareholders' approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or in
any committee;
(c) the fixing of compensation of the directors for serving on
the board or any committee;
(d) the amendment or repeal of these bylaws or the adoption of
new bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation,
except at a rate or in a periodic amount or within a price range determined by
the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members of such committees.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by
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resolution of the board of directors or by resolution of the committee, that
special meetings of committees may also be called by resolution of the board of
directors, and that notice of special meetings of committees shall also be given
to all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and
a chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.3 of these bylaws. Any number of offices may be held by the same person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board, subject to the rights, if any, of an
officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not
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be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and the officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and
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the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at shareholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the Code, indemnify each of its directors and officers against
expenses (as defined in Section 317(a) of the Code), judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection
with any proceeding (as defined in Section 317(a) of the Code), arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.1, a
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"director" or "officer" of the corporation includes any person (i) who is or was
a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the Code, to indemnify each of its employees and agents (other than
directors and officers) against expenses (as defined in Section 317(a) of the
Code), judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding (as defined in Section 317(a) of the
Code), arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Section 6.2, an "employee" or "agent" of the
corporation (other than a director or officer) includes any person (i) who is or
was an employee or agent of the corporation, (ii) who is or was serving at the
request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending any civil or criminal action or
proceeding for which indemnification is required pursuant to Section 6.1 or for
which indemnification is permitted pursuant to Section 6.2 following
authorization thereof by the Board of Directors shall be paid by the corporation
in advance of the final disposition of such action or proceeding upon receipt of
an under taking by or on behalf of the indemnified party to repay such amount if
it shall ultimately be determined that the indemnified party is not entitled to
be indemnified as authorized in this Article VI.
6.4 INDEMNITY NOT EXCLUSIVE
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the Articles of
Incorporation.
6.5 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation against any liability asserted against or incurred by such
person in such capacity or arising out of such person's status as
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such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article VI.
6.6 CONFLICTS
No indemnification or advance shall be made under this Article VI,
except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance
where it appears:
(1) That it would be inconsistent with a provision of the
Articles of Incorporation, these bylaws, a resolution of the shareholders or an
agreement in effect at the time of the accrual of the alleged cause of the
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER
The corporation shall keep either at its principal executive office or
at the office of its transfer agent or registrar (if either be appointed), as
determined by resolution of the board of directors, a record of its shareholders
listing the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation who holds at least
five percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (l%) of such voting shares and has
filed a Schedule 14B with the Securities and Exchange Commission relating to the
election of directors, may (i) inspect and copy the records of shareholders'
names, addresses, and shareholdings during usual business hours on five (5)
days' prior written demand on the corporation, (ii) obtain from the transfer
agent of the corporation, on written demand and on the tender of such transfer
agent's usual charges for such list, a list of the names and addresses of the
shareholders who are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which that list has been
compiled or as of a date specified by the shareholder after the date of demand.
Such list shall be made available to any such shareholder by the transfer agent
on or before the later of five (5) days after the demand is received or five (5)
days after the date specified in the demand as the date as of which the list is
to be compiled.
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The record of shareholders shall also be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate.
Any inspection and copying under this Section 7.1 may be made in person
or by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.
7.2 MAINTENANCE AND INSPECTION OF BYLAWS
The corporation shall keep at its principal executive office or, if its
principal executive office is not in the State of California, at its principal
business office in California the original or a copy of these bylaws as amended
to date, which bylaws shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
corporation is outside the State of California and the corporation has no
principal business office in such state, then the secretary shall, upon the
written request of any shareholder, furnish to that shareholder a copy of these
bylaws as amended to date.
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS
The accounting books and records and the minutes of proceedings of the
shareholders, of the board of directors, and of any committee or committees of
the board of directors shall be kept at such place or places as are designated
by the board of directors or, in absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.
The minutes and accounting books and records shall be open to
inspection upon the written demand of any shareholder or holder of a voting
trust certificate, at any reasonable time during usual business hours, for a
purpose reasonably related to the holder's interests as a shareholder or as the
holder of a voting trust certificate. The inspection may be made in person or by
an agent or attorney and shall include the right to copy and make extracts. Such
rights of inspection shall extend to the records of each subsidiary corporation
of the corporation.
7.4 INSPECTION BY DIRECTORS
Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind as well as the physical
properties of the corporation and each of its subsidiary corporations. Such
inspection by a director may be made in person or by an agent or attorney. The
right of inspection includes the right to copy and make extracts of documents.
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER
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The board of directors shall cause an annual report to be sent to the
shareholders not later than one hundred twenty (120) days after the close of the
fiscal year adopted by the corporation. Such report shall be sent at least
fifteen (15) days (or, if sent by third-class mail, thirty-five (35) days)
before the annual meeting of shareholders to be held during the next fiscal year
and in the manner specified in Section 2.5 of these bylaws for giving notice to
shareholders of the corporation.
The annual report shall contain (i) a balance sheet as of the end of
the fiscal year, (ii) an income statement, (iii) a statement of changes in
financial position for the fiscal year, and (iv) any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the statements were prepared without audit from
the books and records of the corporation.
The foregoing requirement of an annual report shall be waived so long
as the shares of the corporation are held by fewer than one hundred (100)
holders of record.
7.6 FINANCIAL STATEMENTS
If no annual report for the fiscal year has been sent to shareholders,
then the corporation shall, upon the written request of any shareholder made
more than one hundred twenty (120) days after the close of such fiscal year,
deliver or mail to the person making the request, within thirty (30) days
thereafter, a copy of a balance sheet as of the end of such fiscal year and an
income statement and statement of changes in financial position for such fiscal
year.
If a shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, the statements referred to in the first paragraph of
this Section 7.6 shall likewise be delivered or mailed to the shareholder or
shareholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the certificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of
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directors or the president or a vice president, is authorized to vote,
represent, and exercise on behalf of this corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of
this corporation. The authority herein granted may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any other lawful
action (other than action by shareholders by written consent without a meeting),
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
shareholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided in the Code.
If the board of directors does not so fix a record date, then the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
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8.4 CERTIFICATES FOR SHARES
A certificate or certificates for shares of the corporation shall be
issued to each shareholder when any of such shares are fully paid. The board of
directors may authorize the issuance of certificates for shares partly paid
provided that these certificates shall state the total amount of the
consideration to be paid for them and the amount actually paid. All certificates
shall be signed in the name of the corporation by the chairman of the board or
the vice chairman of the board or the president or a vice president and by the
chief financial officer or an assistant treasurer or the secretary or an
assistant secretary, certifying the number of shares and the class or series of
shares owned by the shareholder. Any or all of the signatures on the certificate
may be facsimile.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certificate ceases to be that
officer, transfer agent or registrar before that certificate is issued, it may
be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Code shall govern the construction of these
bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a corporation and a natural person.
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ARTICLE IX
AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS
New bylaws may be adopted or these bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the articles of incorporation of
the corporation set forth the number of authorized directors of the corporation,
then the authorized number of directors may be changed only by an amendment of
the articles of incorporation.
9.2 AMENDMENT BY DIRECTORS
Subject to the rights of the shareholders as provided in Section 9.1 of
these bylaws, bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors (except to fix the authorized number of directors
pursuant to a bylaw providing for a variable number of directors), may be
adopted, amended or repealed by the board of directors.
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CERTIFICATE OF ADOPTION OF BYLAWS
OF
VIANT CORPORATION
ADOPTION BY INCORPORATOR
The undersigned person appointed in the Articles of Incorporation to
act as the Incorporator of VIANT CORPORATION hereby adopts the foregoing bylaws,
comprising twenty-two (22) pages, as the Bylaws of the corporation.
Executed this ____ day of April 1996.
--------------------------------------
Robert T. Clarkson, Incorporator
CERTIFICATE BY SECRETARY OF ADOPTION BY INCORPORATOR
The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary of VIANT CORPORATION and that the foregoing
Bylaws, comprising twenty-two (22) pages, were adopted as the Bylaws of the
corporation on , 1996, by the person appointed in the Articles of Incorporation
to act as the Incorporator of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this ____ day of April 1996.
--------------------------------------
Henry V. Barry, Secretary
<PAGE>
Exhibit 3.5
BYLAWS
OF
VIANT CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
CORPORATE OFFICES......................................................1
1.1 REGISTERED OFFICE..............................................1
1.2 OTHER OFFICES..................................................1
ARTICLE II
MEETINGS OF STOCKHOLDERS...............................................1
2.1 PLACE OF MEETINGS..............................................1
2.2 ANNUAL MEETING.................................................1
2.3 SPECIAL MEETING................................................1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS...............................2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS........2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE...................3
2.7 QUORUM.........................................................3
2.8 ADJOURNED MEETING; NOTICE......................................4
2.9 CONDUCT OF BUSINESS............................................4
2.10 VOTING.........................................................4
2.11 WAIVER OF NOTICE...............................................4
2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING........5
2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS....5
2.14 PROXIES........................................................6
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE..........................6
ARTICLE III
DIRECTORS..............................................................6
3.1 POWERS.........................................................6
3.2 NUMBER OF DIRECTORS............................................7
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS........7
3.4 RESIGNATION AND VACANCIES......................................7
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.......................8
3.6 REGULAR MEETINGS...............................................8
3.7 SPECIAL MEETINGS; NOTICE.......................................8
3.8 QUORUM.........................................................8
3.9 WAIVER OF NOTICE...............................................9
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING..............9
3.11 FEES AND COMPENSATION OF DIRECTORS.............................9
3.12 APPROVAL OF LOANS TO OFFICERS..................................9
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
3.13 REMOVAL OF DIRECTORS...........................................9
ARTICLE IV
COMMITTEES............................................................10
4.1 COMMITTEES OF DIRECTORS.......................................10
4.2 COMMITTEE MINUTES.............................................10
4.3 MEETINGS AND ACTION OF COMMITTEES.............................10
ARTICLE V
OFFICERS..............................................................11
5.1 OFFICERS......................................................11
5.2 APPOINTMENT OF OFFICERS.......................................11
5.3 SUBORDINATE OFFICERS..........................................11
5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES........11
5.5 CHAIRMAN OF THE BOARD.........................................12
5.6 CHIEF EXECUTIVE OFFICER.......................................12
5.7 PRESIDENT.....................................................12
5.8 VICE PRESIDENTS...............................................12
5.9 SECRETARY.....................................................12
5.10 CHIEF FINANCIAL OFFICER.......................................13
5.11 ASSISTANT SECRETARY...........................................13
5.12 ASSISTANT TREASURER...........................................13
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS................14
5.14 AUTHORITY AND DUTIES OF OFFICERS..............................14
ARTICLE VI
INDEMNITY.............................................................14
6.1 THIRD PARTY ACTIONS...........................................14
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.................14
6.3 SUCCESSFUL DEFENSE............................................15
6.4 DETERMINATION OF CONDUCT......................................15
6.5 PAYMENT OF EXPENSES IN ADVANCE................................15
6.6 INDEMNITY NOT EXCLUSIVE.......................................15
6.7 INSURANCE INDEMNIFICATION.....................................16
6.8 THE CORPORATION...............................................16
6.9 EMPLOYEE BENEFIT PLANS........................................16
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES...16
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
ARTICLE VII
<S> <C> <C>
RECORDS AND REPORTS...................................................17
7.1 MAINTENANCE AND INSPECTION OF RECORDS.........................17
7.2 INSPECTION BY DIRECTORS.......................................17
7.3 ANNUAL STATEMENT TO STOCKHOLDERS..............................17
ARTICLE VIII
GENERAL MATTERS.......................................................18
8.1 CHECKS........................................................18
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS..............18
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES........................18
8.4 SPECIAL DESIGNATION ON CERTIFICATES...........................19
8.5 LOST CERTIFICATES.............................................19
8.6 CONSTRUCTION; DEFINITIONS.....................................19
8.7 DIVIDENDS.....................................................19
8.8 FISCAL YEAR...................................................20
8.9 SEAL..........................................................20
8.10 TRANSFER OF STOCK.............................................20
8.11 STOCK TRANSFER AGREEMENTS.....................................20
8.12 REGISTERED STOCKHOLDERS.......................................20
ARTICLE IX
AMENDMENTS............................................................20
</TABLE>
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<PAGE>
BYLAWS
OF
VIANT CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any
place or places where the corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, either within or
without the State of Delaware, as may be designated by the board of directors or
in the manner provided in these bylaws. In the absence of any such designation,
stockholders' meetings shall be held at the registered office of the corporation
in the State of Delaware.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the second
Tuesday of May of each year at 10:00 a.m. However, if such day falls on a legal
holiday, then the meeting shall be held at the same time and place on the next
succeeding business day. At the meeting, directors shall be elected and any
other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more stockholders holding shares in the aggregate entitled to cast not
less than ten percent of the votes at that meeting.
<PAGE>
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of such
meeting and the general nature of the business proposed to be transacted, and
shall be delivered personally or sent by registered mail or by telegraphic or
other facsimile transmission to the chairman of the board, the president or the
secretary of the corporation. No business may be transacted at such special
meeting otherwise than specified in such notice. The officer receiving the
request shall cause notice to be promptly given to the stockholders entitled to
vote, in accordance with the provisions of Sections 2.4 and 2.5 of this Article
II, that a meeting will be held at the time requested by the person or persons
calling the meeting, not less than ten (10) nor more than sixty (60) days after
the receipt of the request. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting
of stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings with stockholders shall be in writing and shall
be sent or otherwise given in accordance with Section 2.5 of these bylaws not
less than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. The notice shall specify
the place, date, and hour of the meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER
BUSINESS
Subject to the rights of holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation,
(i) nominations for the election of directors, and
(ii) business proposed to be brought before any
stockholder meeting
may be made by the board of directors or proxy committee appointed by the board
of directors or by any stockholder entitled to vote in the election of directors
generally if such nomination or business proposed is otherwise proper business
before such meeting. However, any such stockholder may nominate one or more
persons for election as directors at a meeting or propose business to be brought
before a meeting, or both, only if such stockholder has given timely notice in
proper written form of their intent to make such nomination or nominations or to
propose such business. To be timely, such stockholder's notice must be delivered
to or mailed and received at the principal executive offices of the corporation
not less than one hundred twenty (120) calendar days in advance of the date
specified in the corporation's proxy statement released to stockholders in
connection with the previous year's annual meeting of stockholders; provided,
however, that in the event that no annual meeting was held in the previous year
or the date of the annual meeting has been changed by more than thirty (30) days
from the date contemplated at the time of the previous year's proxy state ment,
notice by the stockholder to be timely must be so received a
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reasonable time before the solicitation is made. To be in proper form, a
stockholder's notice to the secretary shall set forth:
(a) the name and address of the stockholder who
intends to make the nominations or propose the business and, as the
case may be, of the person or persons to be nominated or of the
business to be proposed;
(b) a representation that the stockholder is a holder
of record of stock of the corporation entitled to vote at such meeting
and, if applicable, intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice;
(c) if applicable, a description of all arrangements
or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the stockholder;
(d) such other information regarding each nominee or
each matter of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission had the nominee
been nominated, or intended to be nominated, or the matter been
proposed, or intended to be proposed by the board of directors; and
(e) if applicable, the consent of each nominee to
serve as director of the corporation if so elected.
The chairman of the meeting shall refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.7 QUORUM
The holders of a majority of the stock issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the
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transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the Chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present or represented. At such adjourned meeting at which a quorum is present
or represented, any business may be transacted that might have been transacted
at the meeting as originally noticed.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.9 CONDUCT OF BUSINESS
The chairman of any meeting of stockholders shall determine the order
of business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of business.
2.10 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.13 of these bylaws,
subject to the provisions of Sections 217 and 218 of the Delaware General
Corporation Law (relating to voting rights of fiduciaries, pledgors and joint
owners of stock and to voting trusts and other voting agreements).
Except as provided in the last paragraph of this Section 2.10, or as
may be otherwise provided in the certificate of incorporation, each stockholder
shall be entitled to one vote for each share of capital stock held by such
stockholder.
At a stockholders' meeting at which directors are to be elected, each
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such stockholder normally
is entitled to cast) if the candidates' names have been properly placed in
nomination (in accordance with these bylaws) prior to commencement of the voting
and the stockholder requesting cumulative voting or any other stockholder voting
at the meeting in person or by proxy has given notice prior to commencement of
the voting of the stockholder's intention to cumulate votes. If cumulative
voting is properly requested, each holder of stock, or of any class or classes
or of a series or series thereof, who elects to cumulate votes shall be entitled
to as many votes as equals the number of votes which (absent this provision as
to cumulative voting) such person would be entitled to cast for the election of
directors with respect to his shares of stock multiplied by the number of
directors to be elected by such person, and that such person may cast all of
such votes for a single director or may distribute them among the number to be
voted for, or for any two or more of them, as such person may see fit.
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2.11 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law or of the certificate of incorporation or these
bylaws, a written waiver, signed by the person entitled to notice, whether
before or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the certificate
of incorporation or these bylaws.
2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any
action required to be taken at any annual or special meeting of stockholders of
a corporation, or any action that may be taken at any annual or special meeting
of such stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted.
Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the
Delaware General Corporation Law if such action had been voted on by
stockholders at a meeting thereof, then the certificate filed under such section
shall state, in lieu of any statement required by such section concerning any
vote of stockholders, that written notice and written consent have been given as
provided in Section 228 of the Delaware General Corporation Law.
2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without a
meeting, or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix, in advance, a record date, which shall
not be more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held.
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(ii) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting, when no prior
action by the board of directors is necessary, shall be the first date on which
a signed written consent is delivered to the corporation.
(iii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.14 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for such stockholder by a written
proxy, signed by such stockholder and filed with the secretary of the
corporation, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if such stockholder's name is placed on the proxy by any
reasonable means including, but not limited to, by facsimile signature, manual
signature, typewriting, telegraphic transmission or otherwise, by such
stockholder or such stockholder's attorney-in-fact. The revocability of a proxy
that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the Delaware General Corporation Law.
2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Such list shall
presumptively determine the identity of the stockholders entitled to vote at the
meeting and the number of shares held by each of them.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Delaware General Corporation Law and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or
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by the outstanding shares, the business and affairs of the corporation shall be
managed and all corporate powers shall be exercised by or under the direction of
the board of directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be five (5) until
changed by a bylaw amending this Section 3.2, duly adopted by the board of
directors or by the stockholders.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Directors need not be stockholders unless so required by the
certificate of incorporation or these bylaws, wherein other qualifications for
directors may be prescribed. Each director, including a director elected to fill
a vacancy, shall hold office until his successor is elected and qualified or
until his earlier resignation or removal.
Elections of directors need not be by written ballot.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the
attention of the Secretary of the corporation. When one or more directors shall
resign from the board of directors, effective at a future date, a majority of
the directors then in office, including those who have so resigned, shall have
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective, and each director so
chosen shall hold office as provided in this section in the filling of other
vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the certificate of
incorporation, vacancies and newly created directorships of such class or
classes or series may be filled by a majority of the directors elected by such
class or classes or series thereof then in office, or by a sole remaining
director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder,
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may call a special meeting of stockholders in accordance with the provisions of
the certificate of incorporation or these bylaws, or may apply to the Court of
Chancery for a decree summarily ordering an election as provided in Section 211
of the Delaware General Corporation Law.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the
Delaware General Corporation Law as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both
regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or
these bylaws, members of the board of directors, or any committee designated by
the board of directors, may participate in a meeting of such board of directors,
or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting pursuant to this section shall
constitute presence in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time and at such place as shall from time to time be determined by the
board.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two (2) directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 QUORUM
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At all meetings of the board of directors, a majority of the
authorized number of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by statute, the certificate of
incorporation, or these bylaws. If a quorum is not present at any meeting of the
board of directors, then the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
Delaware General Corporation Law, the certificate of incorporation, or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when such person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.10 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or
these bylaws, any action required or permitted to be taken at any meeting of the
board of directors, or of any committee thereof may be taken without a meeting
if all members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
3.11 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or
these bylaws, the board of directors shall have the authority to fix the
compensation of directors.
3.12 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiary, including any officer or employee who is a director of the
corporation or its subsidiary, whenever, in the judgment of the directors, such
loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
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3.13 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors; provided, however,
that, so long as stockholders of the corporation are entitled to cumulative
voting, if less than the entire board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect such director if then cumulatively voted at an election of the entire
board of directors or, if there be classes of directors, at an election of the
class of directors of which such director is a part.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of such director's term
of office.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the
whole board, designate one or more committees, with each committee to consist of
one or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the board of directors, or in the bylaws of the corporation, shall
have and may exercise all the powers and authority of the board of directors in
the management of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers that may require it; but
no such committee shall have the power or authority (i) approving or adopting or
recommending to the stockholders, any action or matter expressly required by the
Delaware General Corporation Law to be submitted to stockholders for approval or
(ii) adopting, amending, or repealing any bylaws of the corporation; and, unless
the board resolution establishing the committee, the bylaws or the certificate
of incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
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Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings and meetings by telephone), Section 3.6 (regular
meetings), Section 3.7 (special meetings and notice), Section 3.8 (quorum),
Section 3.9 (waiver of notice), and Section 3.10 (action without a meeting),
with such changes in the context of those bylaws as are necessary to substitute
the committee and its members for the board of directors and its members;
provided, however, that the time of regular meetings of committees may be
determined either by resolution of the board of directors or by resolution of
the committee, that special meetings of committees may also be called by
resolution of the board of directors and that notice of special meetings of
committees shall also be given to all alternate members, who shall have the
right to attend all meetings of the committee. The board of directors may adopt
rules for the government of any committee not inconsistent with the provisions
of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and
a chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant vice presidents, one or more assistant secretaries, one or
more assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these bylaws. Any number of
offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Sections 5.3 or 5.5 of these
bylaws, shall be appointed by the board of directors, subject to the rights, if
any, of an officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the president to
appoint, such other officers and agents as the business of the corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these bylaws or as the board of
directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS; FILLING VACANCIES
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
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Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
Any vacancy occurring in any office of the corporation shall be filled
by the board of directors.
5.5 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to the
chairman of the board by the board of directors or as may be prescribed by these
bylaws. If there is no president and no one has been appointed chief executive
officer, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.6 of these bylaws.
5.6 CHIEF EXECUTIVE OFFICER
The board of directors shall select a chief executive officer of the
corporation who shall be subject to the control of the board of directors and
have general supervision, direction and control of the business and the officers
of the corporation. The chief executive officer shall preside at all meetings of
the stockholders and, in the absence or nonexistence of a chairman of the board,
at all meetings of the board of directors.
5.7 PRESIDENT
The president shall have the general powers and duties of management
usually vested in the office of president of a corporation and shall have such
other powers and duties as may be prescribed by the board of directors or these
bylaws. In addition and subject to such supervisory powers, if any, as may be
given by the board of directors to the chairman of the board, if no one has been
appointed chief executive officer, the president shall be the chief executive
officer of the corporation and shall, subject to the control of the board of
directors, have the powers and duties described in Section 5.6.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
5.9 SECRETARY
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The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors, and stockholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register, or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. The secretary shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all moneys and other
valuables in the name and to the credit of the corporation with such
depositories as may be designated by the board of directors. The chief financial
officer shall disburse the funds of the corporation as may be ordered by the
board of directors, shall render to the president and directors, whenever they
request it, an account of all his transactions as chief financial officer and of
the financial condition of the corporation, and shall have other powers and
perform such other duties as may be prescribed by the board of directors or
these bylaws.
The chief financial officer shall be the treasurer of the corporation.
5.11 ASSISTANT SECRETARY
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as may be
prescribed by the board of directors or these bylaws.
5.12 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers, in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the
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order of their election), shall, in the absence of the chief financial officer
or in the event of his or her inability or refusal to act, perform the duties
and exercise the powers of the chief financial officer and shall perform such
other duties and have such other powers as may be prescribed by the board of
directors or these bylaws.
5.13 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the
chief financial officer, the secretary or assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent, and exercise on
behalf of this corporation all rights incident to any and all shares of any
other corporation or corporations standing in the name of this corporation. The
authority granted herein may be exercised either by such person directly or by
any other person authorized to do so by proxy or power of attorney duly executed
by such person having the authority.
5.14 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
ARTICLE VI
INDEMNITY
6.1 THIRD PARTY ACTIONS
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the corporation, which approval shall not be unreasonably
withheld) actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be in or not
opposed to the best interest of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that the person's
conduct was unlawful.
6.2 ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
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The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person is or was a director, officer, employee or
agent of corporation, or is or was serving at the request of the corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including attorneys'
fees) and amounts paid in settlement (if such settlement is approved in advance
by the corporation, which approval shall not be unreasonably withheld) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Delaware Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Delaware Court of
Chancery or such other court shall deem proper. Notwithstanding any other
provision of this Article VI, no person shall be indemnified hereunder for any
expenses or amounts paid in settlement with respect to any action to recover
short-swing profits under Section 16(b) of the Securities Exchange Act of 1934,
as amended.
6.3 SUCCESSFUL DEFENSE
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 6.1 and 6.2, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
6.4 DETERMINATION OF CONDUCT
Any indemnification under Sections 6.1 and 6.2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that the indemnification of the director, officer, employee
or agent is proper in the circumstances because such person has met the
applicable standard of conduct set forth in Sections 6.1 and 6.2. Such
determination shall be made (1) by the Board of Directors or the Executive
Committee by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding or (2) or if such quorum is not
obtainable or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders. Notwithstanding the foregoing, a director, officer, employee or
agent of the Corporation shall be entitled to contest any determination that the
director, officer, employee or agent has not met the applicable standard of
conduct set forth in Sections 6.1 and 6.2 by petitioning a court of competent
jurisdiction.
6.5 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending a civil or criminal action, suit or
proceeding, by an individual who may be entitled to indemnification pursuant to
Section 6.1 or 6.2, shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on
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behalf of the director, officer, employee or agent to repay such amount if it
shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this Article VI.
6.6 INDEMNITY NOT EXCLUSIVE
The indemnification and advancement of expenses provided by or granted
pursuant to the other sections of this Article VI shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office.
6.7 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
such person and incurred by such person in any such capacity or arising out of
such person's status as such, whether or not the corporation would have the
power to indemnify such person against such liability under the provisions of
this Article VI.
6.8 THE CORPORATION
For purposes of this Article VI, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under and subject to the provisions of this Article VI (including,
without limitation the provisions of Section 6.4) with respect to the resulting
or surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.
6.9 EMPLOYEE BENEFIT PLANS
For purposes of this Article VI, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this Article
VI.
6.10 CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
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The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive officer or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent so to act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
The officer who has charge of the stock ledger of the corporation
shall prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten (10)
days prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting, or,
if not so specified, at the place where the meeting is to be held. The list
shall also be produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is present.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
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7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at
any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by
resolution which person or persons may sign or endorse all checks, drafts, other
orders for payment of money, notes or other evidences of indebtedness that are
issued in the name of or payable to the corporation, and only the persons so
authorized shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the chief
financial officer or an assistant treasurer, or the secretary or an assistant
secretary of such corporation representing the number of shares registered in
certificate form. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate has ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if such person were
such officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as
partly paid and subject to call for the remainder of the consideration to be
paid therefor. Upon the face or back of each stock certificate issued to
represent any such partly paid shares, upon the books and records of the
corporation in the case
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of uncertifi cated partly paid shares, the total amount of the consideration to
be paid therefor and the amount paid thereon shall be stated. Upon the
declaration of any dividend on fully paid shares, the corporation shall declare
a dividend upon partly paid shares of the same class, but only upon the basis of
the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules
of construction, and definitions in the Delaware General Corporation Law shall
govern the construction of these bylaws. Without limiting the generality of this
provision, the singular number includes the plural, the plural number includes
the singular, and the term "person" includes both a corporation and a natural
person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions
contained in (i) the Delaware General Corporation Law or (ii) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.
The directors of the corporation may set apart out of any of the funds
of the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such
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purposes shall include but not be limited to equalizing dividends, repairing or
maintaining any property of the corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The corporation may adopt a corporate seal, which shall be adopted and
which may be altered by the board of directors, and may use the same by causing
it or a facsimile thereof to be impressed or affixed or in any other manner
reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any
agreement with any number of stockholders of any one or more classes of stock of
the corporation to restrict the transfer of shares of stock of the corporation
of any one or more classes owned by such stockholders in any manner not
prohibited by the Delaware General Corporation Law.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of
a person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE IX
AMENDMENTS
The bylaws of the corporation may be adopted, amended or repealed by
the stockholders entitled to vote; provided, however, that the corporation may,
in its certificate of incorporation, confer the power to adopt, amend or repeal
bylaws upon the directors. The fact that such power has been so conferred upon
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the directors shall not divest the stockholders of the power, nor limit their
power to adopt, amend or repeal bylaws.
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CERTIFICATE OF ADOPTION OF BYLAWS
OF
VIANT CORPORATION
ADOPTION BY INCORPORATOR
The undersigned person appointed in the Certificate of Incorporation to
act as the incorporator of hereby adopts the foregoing Bylaws, comprising twenty
(20) pages, as the Bylaws of the corporation.
Executed his day of , 199 .
---- -------- -
-------------------------------------
CERTIFICATE BY SECRETARY OF ADOPTION BY INCORPORATOR
The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary of and that the foregoing Bylaws, comprising
twenty (20) pages, were adopted as the Bylaws of the corporation on ,
199 by the incorporator of the corporation. -----------
-
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this day of 199 .
---- ------------ -
-------------------------------------
, Secretary
<PAGE>
Exhibit 4.1
NUMBER VIANT CORPORATION * * SHARES
A DELAWARE CORPORATION -------
INCORPORATED IN DELAWARE
MARCH 12, 1999
*****SPECIMEN ONLY*****
THIS CERTIFIES THAT *__________* is the registered holder of *_________
(_________)* fully paid and nonassessable Shares of the Common Stock of VIANT
CORPORATION, a Delaware corporation, transferable only on the books of the
Corporation by the holder hereof in person or by duly authorized attorney, upon
surrender of this certificate properly endorsed or assigned.
This certificate and the shares represented hereby are issued and shall
be held subject to all the provisions of the Certificate of Incorporation and
the Bylaws of the Corporation and any amendments thereto, to all of which the
holder of this certificate, by acceptance hereof, assents. The Corporation is
authorized to issue two classes of stock as Common Stock and Preferred Stock
respectively. A statement of all of the rights, preferences, privileges and
restrictions granted to or imposed upon these classes or series of shares of
stock of the Corporation and upon the holder thereof as established by the
Certificate of Incorporation may be obtained by any stockholder upon request at
the principal office of the Corporation, and the Corporation will furnish any
stockholder, upon request and without charge, a copy of such statement.
IN WITNESS WHEREOF, the said corporation has caused this certificate to
be signed by its duly authorized officers and its corporate seal to be hereunto
affixed this day of , .
----- ------ ------
- ------------------------------------ ---------------------------------
Secretary President
<PAGE>
FOR VALUE RECEIVED __________ HEREBY SELLS, ASSIGNS, AND TRANSFERS UNTO
_________ SHARES REPRESENTED BY THE WITHIN CERTIFICATE AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT _________, ATTORNEY WITH FULL POWER OF SUBSTITUTION IN
THE PREMISES.
DATED ,
--------------- -----------
IN PRESENCE OF
------------------------------ -----------------------------
(Witness) (Stockholder)
NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THIS CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION, ENLARGEMENT OR ANY CHANGE WHATSOEVER.
-------------------------------------------
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER IS IN COMPLIANCE THEREWITH.
---------------------------------
<PAGE>
Exhibit 4.2
AMENDED AND RESTATED
SHAREHOLDER RIGHTS AGREEMENT
This Amended and Restated Shareholder Rights Agreement (this
"Agreement") is made as of this 13th day of November 1998 by and among Viant
Corporation, a California corporation (the "Company"), the persons and entities
listed on the signature pages hereto as purchasers of the Company's Series D
Preferred Stock (the "Series D Preferred") (the "Purchasers"), the holders of
Series A Preferred Stock ("Series A Preferred") of the Company (the "Series A
Holders"), the holders of Series B Preferred Stock ("Series B Preferred") of the
Company ("Series B Holders"), the holders of Series C Preferred Stock ("Series C
Preferred") of the Company (the "Series C Holders"), CKS Group, Inc. ("CKS"),
Robert Gett ("Gett") and Eric Greenberg (the "Founder"). The Series A Holders,
Series B Holders, Series C Holders, CKS, Gett and the Founder are hereinafter
referred to as the "Prior Rights Holders."
RECITALS
A. The Prior Rights Holders and the Company are parties to that certain
Amended and Restated Shareholder Rights Agreement dated as of June 19, 1996, and
amended November 4, 1996 and June 6, 1997 (the "Prior Agreement"), pursuant to
which the Company granted to the Prior Rights Holders certain registration and
information rights and rights of first refusal; and
B. In connection with the Company's issuance of Series D Preferred
pursuant to the Series D Preferred Stock Purchase Agreement between the Company
and the Purchasers dated as of even date herewith (the "Purchase Agreement"), a
majority of the holders of Demand Registrable Securities (as defined in the
Prior Agreement) have agreed to amend and restate the Prior Agreement in
exchange for being granted the registration and information rights and the
rights of first refusal set forth in this Agreement;
C. In consideration of the mutual agreements, covenants and conditions
contained herein, the Company and each of the Purchasers and Prior Rights
Holders hereby agree as follows:
AGREEMENT
1. TERMINATION OF PRIOR RIGHTS. Effective and contingent upon execution
of this Agreement by holders of a majority of the Shares of Demand Registrable
Securities (as such term is defined in Section 1 of the Prior Agreement) and
upon the closing of the transactions contemplated by the Purchase Agreement, the
Prior Agreement is hereby declared null and void and is amended and restated in
its entirety to read as set forth in this Agreement, and the Company, the
Purchasers and the Prior Rights Holders hereby agree to be bound by the
provisions hereof as the sole agreement of the Company, the
<PAGE>
Purchasers and the Prior Rights Holders with respect to registration and
information rights and Rights of First Refusal set forth herein.
2. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or
any successor agency.
"DEMAND HOLDER" shall mean each of the Purchasers, the Series A
Holders, the Series B Holders, the Series C Holders, CKS, Gett and any
transferee of Registrable Securities who, pursuant to Section 16 below, is
entitled to registration rights hereunder.
"DEMAND REGISTRABLE SECURITIES" shall mean (i) shares of the
Company's Common Stock (the "Common Stock") issued or issuable upon the
conversion of the Series A Preferred, the Series B Preferred, the Series C
Preferred, or the Series D Preferred; (ii) the shares of Common Stock held by
CKS at any time, (iii) the shares of Common Stock held by Gett that were
purchased from CKS, (iv) any Common Stock of the Company or other securities
issued or issuable in respect of shares of the Series A Preferred, the Series B
Preferred, the Series C Preferred, the Series D Preferred or the shares held by
CKS or the shares held by Gett that were purchased from CKS; and (v) shares of
the Company's Common Stock or other securities issued or issuable upon any
conversion of the Shares upon any stock split, stock dividend, recapitalization,
combination or similar event; PROVIDED, HOWEVER, that any shares described in
clauses (i)-(iv) above which have been resold to the public shall cease to be
Registrable Securities upon such resale and any shares as to which registration
rights have terminated pursuant to Section 11 below shall cease to be
Registrable Securities upon such termination.
"FOUNDER SHARES" shall mean all shares of Common Stock now held by
the Founder, all shares of Common Stock issued to the Founder in the future and
all shares of Common Stock issuable to Founder in the future upon exercise of
options granted or to be granted to the Founder.
"HOLDER" shall mean the Demand Holders and the Founder.
"REGISTRABLE SECURITIES" shall mean the Founder Shares and the
Demand Registrable Securities.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 6, 7 and 10 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, reasonable fees
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and disbursements of one counsel for the Holders, blue sky fees and expenses,
and the expense of any special audits incident to or required by any such
registration.
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legend set forth in Section 4 hereof (or any similar
legend).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
"SHARES" shall mean (i) the shares of the Company's Series A
Preferred issued pursuant to the Series A Preferred Stock Purchase Agreement
between the Company and the Series A Holders dated as of May 16, 1996, (ii) the
shares of Series B Preferred issued pursuant to the Series B Preferred Stock
Purchase Agreement between the Company and the Series B Holders dated as of June
19, 1996, (iii) the shares of the Company's Series C Preferred issued pursuant
to the Series C Preferred Stock Purchase Agreement between the Company and the
Series C Holders dated as of June 6, 1997, and (iv) the shares of the Company's
Series D Preferred sold to the Purchasers under the Purchase Agreement,
PROVIDED, HOWEVER, that for purposes of Sections 16 and 17 hereof, the term
"Shares" shall also be deemed to include the shares of Common Stock purchased by
Gett from CKS.
3. RESTRICTIONS ON TRANSFERABILITY. The Shares and any Common Stock
into which the Shares may be convertible shall not be transferable except upon
the conditions specified in this Agreement, which conditions are intended to
ensure compliance with the provisions of the Securities Act. Each holder of
Shares will cause any proposed transferee of the Restricted Securities held by
such Holder to agree to take and hold such Shares subject to the provisions and
upon the conditions specified in this Agreement.
4. RESTRICTIVE LEGEND. Each certificate representing (i) the Shares,
(ii) shares of the Company's Common Stock issued upon conversion of the Shares,
and (iii) any other securities issued in respect of the Shares or Common Stock
issued upon conversion of the Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 5 below) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THESE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND
RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF
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THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
5. NOTICE OF PROPOSED TRANSFERS. The Holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 5. Prior to any proposed transfer
of any Restricted Securities, unless there is in effect a registration statement
under the Securities Act covering the proposed transfer, the Holder thereof
shall give written notice to the Company of such Holder's intention to effect
such transfer. Each such notice shall describe the manner and circumstances of
the proposed transfer in sufficient detail, and shall, if the Company so
requests, be accompanied (except in transactions in compliance with Rule 144) by
either (i) a written opinion of legal counsel addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act, or (ii) a "No Action" letter from
the Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the Holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the Holder to the
Company; PROVIDED, HOWEVER, that no opinion or No Action letter need be obtained
with respect to a transfer to (A) a partner, active or retired, of a Holder of
Restricted Securities, (B) the estate of any such partner, (C) an "affiliate" of
a Holder of Restricted Securities as that term is defined in Rule 405
promulgated by the Commission under the Securities Act, or (D) the spouse,
children, grandchildren or spouse of such children or grandchildren of any
Holder or to trusts for the benefit of any Holder or such persons, if the
transferee agrees to be subject to the terms hereof. Each certificate evidencing
the Restricted Securities transferred as above provided shall bear the
appropriate restrictive legend set forth in Section 4 above, except that such
certificate shall not bear such restrictive legend if in the opinion of counsel
for the Company such legend is not required in order to establish compliance
with any provisions of the Securities Act.
6. DEMAND REGISTRATION.
(a) DEMAND FOR REGISTRATION. If at any time after six months
following the effective date of the Company's initial registration statement
filed under the Securities Act, the Company shall receive from any Demand Holder
or group of Demand Holders holding at least 30% of the Demand Registrable
Securities then outstanding a written request that the Company effect any
registration, quali fication or compliance with respect to Demand Registrable
Securities and the reasonably anticipated aggregate proceeds of such offering
exceed $3,000,000, the Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all Demand Holders; and
(ii) use its best efforts to effect as soon as practicable such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other
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governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Demand Registrable Securities as are specified in such request, together with
all or such portion of the Demand Registrable Securities of any Demand Holder or
Demand Holders joining in such request as are specified in a written request
received by the Company within 20 business days after receipt of such written
notice from the Company; PROVIDED, HOWEVER, that the Company shall not be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this Section 6:
(A) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act;
(B) After the Company has effected one such registration
pursuant to this Section 6(a), such registration has been declared or ordered
effective and the securities offered pursuant to such registration have been
sold; or
(C) Within three months following the effective date of a
registration statement previously filed by the Company.
Subject to the foregoing clauses (A), (B) and (C), the Company shall
file a registration statement covering the Demand Registrable Securities so
requested to be registered as soon as practicable after receipt of the request
or requests of any Demand Holder or Demand Holders. If, however, the Company
shall furnish to the Demand Holder or Holders requesting a registration
statement pursuant to this Section 6 a certificate signed by the President of
the Company stating that, in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than 120 days after
receipt of the request of the Demand Holder or Demand Holders requesting such
registration; PROVIDED, HOWEVER, that the Company may not utilize this right
more than once in any consecutive twelve-month period.
(b) UNDERWRITING. If the Demand Holders intend to distribute the
Demand Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 6(a) and the Company shall include such information in the
written notice referred to in Section 6(a)(i). The right of any Demand Holder to
registration pursuant to Section 6 shall be conditioned upon such Demand
Holder's participation in such underwriting and the inclusion of such Demand
Holder's Demand Registrable Securities in the underwriting to the extent
requested (unless otherwise mutually agreed by a majority in interest of the
Demand Holders) to the extent provided herein.
The Company shall (together with all Demand Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing
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underwriter selected for such underwriting by a majority in interest of the
Demand Holders. Notwithstanding any other provision of this Section 6, if the
managing underwriter advises the Demand Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten, then,
subject to the provisions of Section 6(a), the Company shall so advise all
Demand Holders and the number of shares of Demand Registrable Securities that
may be included in the registration and underwriting shall be allocated among
all Demand Holders requesting inclusion in the registration in proportion, as
nearly as practicable, to the respective amounts of Demand Registrable
Securities held by such Demand Holders at the time of filing the registration
statement; PROVIDED, HOWEVER, that the number of shares of Demand Registrable
Securities to be included in such underwriting shall not be reduced unless all
other securities that would have otherwise been included in the underwriting are
first entirely excluded from the underwriting. No Demand Registrable Securities
excluded from the underwriting by reason of the managing underwriter's marketing
limitation shall be included in such registration.
If any Demand Holder of Demand Registrable Securities disapproves of
the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the other Demand
Holders. The Demand Registrable Securities and/or other securities so withdrawn
shall also be withdrawn from registration; PROVIDED, HOWEVER, that if by the
withdrawal of such Demand Registrable Securities a greater number of Demand
Registrable Securities held by other Demand Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Demand Holders who have included Demand
Registrable Securities in the registration the right to include additional
Demand Registrable Securities in the same proportion used in determining the
underwriter limitation in this Section 6(b). If the registration does not become
effective due to the withdrawal of Demand Registrable Securities, then either
(1) the Demand Holders requesting registration shall reimburse the Company for
expenses incurred in complying with the request or (2) the aborted registration
shall be treated as effected for purposes of Section 6(a)(B).
7. COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If the Company shall determine to
register any of its securities, either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights, other than (i) a registration relating solely to employee benefit plans
or (ii) a registration relating solely to a Commission Rule 145 transaction, the
Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 20 business days after receipt of such written notice from
the Company, by any Holder or Holders, PROVIDED THAT to the extent that the
underwriters determine that the amount of Registrable Securities requested by
Holders to be included in such offering is incompatible with the success of the
offering, the Company may limit the amount of Registrable
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Securities to be included by the Holders to an amount no less than 30% of the
shares to be so registered and may exclude, if the underwriters make the
determination described above (and so long as no other shareholder's securities
are included), all Registrable Securities entirely from the registration
relating to the Company's initial public offering.
(b) In any registration in which the Company limits the number of
Registrable Securities included therein pursuant to Section 7(a)(ii), the amount
of Registrable Securities of Holders which are included in such registration
shall be allocated to the Holders in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held, or issuable upon
conversion of other securities held, by each of such Holders as of the date of
the notice given pursuant to Section 7(a)(i); provided, however, that Company
shall first limit or exclude Registrable Securities held by Demand Holders other
than Purchasers.
8. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 6(a), Section 7 and Section 10 below shall be borne by the Company. All
Selling Expenses relating to securities registered by the Holders shall be borne
by the Holders of such securities pro rata on the basis of the number of shares
so registered.
9. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Securities and Exchange Commission a
registration statement with respect to the Registrable Securities and use its
best efforts to cause such registration statement to become effective;
(b) Keep such registration, qualification or compliance effective
for a period of 120 days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs;
(c) Furnish such number of prospectuses, including a preliminary
prospectus, in conformity with the requirements of the Act, and other documents
incident thereto as a Holder from time to time may reasonably request;
(d) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(e) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection
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therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions;
(f) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement;
(g) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(h) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to Section 6 of this Agreement, on the date that
such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to Section 6, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities, and (ii) a letter dated such date, from
the independent certified public accountants of the Company, in form and
substance as is customarily given by certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities;
(i) The Company shall cause all such Registrable Securities
registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed; and
(j) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
10. REGISTRATION ON FORM S-3. In addition to the rights set forth in
Section 6, if any holder or holders of the Demand Registrable Securities request
that the Company file a registration statement on Form S-3 (or any successor
thereto) for a public offering of shares of Demand Registrable Securities the
reasonably anticipated aggregate price to the public of which would equal or
exceed $1,000,000, and the Company is a registrant entitled to use Form S-3 to
register securities for such an offering, the Company shall use its best efforts
to cause such shares to be registered for the offering on such form (or
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any successor thereto). The Company shall be obligated to file only two
registration statements in any consecutive twelve (12) month period under this
Section 10.
11. TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Agreement shall terminate (i) as to all Holders on the fourth
anniversary of the closing of the Company's initial public offering, (ii) as to
any Holder, at such time after the Company's initial public offering as the
Registrable Securities held by such Holder represent 1% or less of the
outstanding Common Stock of the Company or as such Holder is able to sell all
Registrable Securities held by it (and any affiliated Holder with which it would
be aggregated for purposes of Rule 144) in any three month period without
registration in compliance with Rule 144 of the Securities Act or (iii) upon the
written consent of the holders of a majority of the Registrable Securities then
outstanding or issuable upon conversion or exercise of other securities then
outstanding.
12. LOCKUP AGREEMENT. In consideration for the Company agreeing to its
obligations under this Agreement each Holder of Registrable Securities and each
transferee pursuant to Section 16 hereof hereby agrees, in connection with the
first registration of the Company's securities, not to sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company and, if such registration is
underwritten, the managing underwriter of the offering, for such period of time
(not to exceed 180 days) from the effective date of such registration as the
Company or such managing underwriter may specify; provided, however, that (i)
all directors and officers of the Company and all persons or entities holding
more than 1% of the capital stock of the Company shall have agreed to identical
restrictions, and (ii) any discretionary waiver or termination of the
restrictions set forth in this Section or in any like agreement containing
similar restrictions by the Company or its underwriters shall apply to all
persons or entities subject to such restrictions pro rata based on the number of
shares held. Each Holder agrees that the Company shall have the right to
instruct its transfer agent to place stop transfer notations in its records to
enforce the provisions of this Section 12.
13. INDEMNIFICATION.
(a) The Company will indemnify each Holder, the officers, directors
and partners of each Holder and each Holder's legal counsel and independent
accountants, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to the Company and
relating to action or
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inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, the officers,
directors and partners of each such Holder and such Holder's legal counsel and
independent accountants, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers and its legal counsel and independent accountants, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Securities Act, and each other such Holder, each of its
officers and directors and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, and will
reimburse the Company, such Holders, such directors, officers, legal counsel,
independent accountants, underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability or action, in each case to
the extent, but only to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the obligations of such Holders hereunder shall be
limited to an amount equal to the gross proceeds before expenses and commissions
to each such Holder of Registrable Securities sold as contemplated herein.
(c) Each party entitled to indemnification under this Section 13
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement, except to the extent, but only to the
extent, that the Indemnifying Party's ability to defend against such claim or
litigation is
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impaired as a result of such failure to give notice. The omission so to deliver
notice to the Indemnifying Party will not relieve it of any liability that it
may have to the Indemnified Party otherwise than under this Section 13. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 13 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission
14. INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may reasonably request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Agreement.
15. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any time
after it has become subject to such reporting requirements);
(c) Furnish to Holders of Registrable Securities forthwith upon
request, a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time after 90 days after the
effective date of the first registration statement filed by the Company for an
offering of its securities to the general public), and of the Securities Act and
the Securities Exchange Act
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of 1934, as amended (at any time after it has become subject to such reporting
requirements) or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), a copy of the
most recent annual or quarterly report of the Company, and such other reports
and documents of the Company as a Holder of Registrable Securities may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such Holder to sell any such securities without
registration.
16. TRANSFER OF REGISTRATION RIGHTS. The right to cause the Company to
register securities granted the Holders hereunder may be assigned to a
transferee or assignee who acquires at least 150,000 Shares (or Common Stock
issued on conversion of Shares) (adjusted for stock splits, reverse stock splits
or similar events after the date hereof) provided that the Company is given
written notice of such assign ment within a reasonable time after such
assignment. In addition, rights to cause the Company to register securities may
be freely assigned (a) to any constituent partner of a Holder of Registrable
Securities, where such Holder is a partnership, (b) to any affiliate (as that
term is defined in Rule 405 promulgated by the Commission under the Securities
Act), (c) to any officer, director or principal shareholder thereof, where such
Holder is a corporation or (d) to the spouse, children, grandchildren or spouse
of such children or grandchildren of any Holder or to trusts for the benefit of
any Holder or such persons.
17. COMPANY COVENANTS. The Company hereby covenants and agrees as
follows:
(a) ANNUAL FINANCIAL INFORMATION. The Company will furnish to each
holder of Shares and for so long as such holder is a holder of any shares of
Common Stock or Shares purchased by such person (or Common Stock issued upon
conversion of the Shares) as soon as practicable after the end of each fiscal
year, and in any event within 120 days thereafter, (i) consolidated balance
sheets of the Company and its subsidiaries, if any, as of the end of such fiscal
year, (ii) consolidated statements of income of the Company and its
subsidiaries, if any, (iii) consolidated statements of cash flows of the Company
and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles consistently applied and setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and audited and certified by independent public accountants
of national standing selected by the Company and (iv) lists of the Company's
shareholders and optionees as of year end, showing securities held by each.
(b) QUARTERLY AND MONTHLY FINANCIAL INFORMATION; FINANCIAL PLAN.
The Company shall furnish to each holder of Shares, so long as such holder then
holds not less than 200,000 shares of Common Stock (after giving effect to the
conversion of all outstanding Shares), the following reports:
(i) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the Company and in
any event within 45 days thereafter, an unaudited consolidated balance sheet of
the Company and its subsidiaries, if any, as of the end of each such quarterly
period, and unaudited consolidated statements of income and unaudited
consolidated statements of cash flows of the Company and its subsidiaries for
such period and for the current fiscal year to date, prepared in accordance with
generally accepted accounting principles consistently applied,
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all in reasonable detail and signed, subject to changes resulting from year-end
audit adjustments, by the principal financial or accounting officer of the
Company.
(ii) As soon as practicable after the end of each month, and in
any event within 30 days thereafter, consolidated balance sheets of the Company
and its subsidiaries, if any, as of the end of such month, and cash flow
statements and consolidated statements of income for each month and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles consistently applied, all in reasonable detail and signed,
subject to changes resulting from year-end audit adjustments, by the principal
financial or accounting officer of the Company, together with a comparison of
such statements to the Company's operating plan then in effect and approved by
its Board of Directors.
(iii) As soon as available (but in any event before the
beginning of each fiscal year), a summary of the financial plan of the Company
for each fiscal year, including (but not limited to) a cash flow projection and
operating budget, calculated monthly, as contained in its operating plan
approved by the Company's Board of Directors.
(iv) With reasonable promptness, such other information and
data (including, without limitation, current and future business plans) with
respect to the Company and its subsidiaries as any such Holder may from time to
time reasonably request.
(v) For purposes of determining whether Series D Holders are
entitled to receive the aforesaid reports, Series D Holders who are affiliated
entities may aggregate their respective shares of Series D Preferred for
purposes of complying with the requirements set forth in the preamble to this
Section (b).
(c) INSPECTION. For so long as a holder of Shares is eligible to
receive reports under Section 17(b), it shall also have the right, at its
expense, to visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss their affairs, finances and accounts with their
officers, all at such reasonable times and as often as may be reasonably
requested.
(d) ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights to
receive information pursuant to Section 17(a) may be assigned or otherwise
conveyed by any Holder or subsequent transferee to any transferee of Shares (or
Common Stock issued upon conversion thereof). The rights specified in Sections
17(b) and 17(c) may be assigned or otherwise conveyed by a Holder or subsequent
transferee only to a transferee who acquires at least 150,000 Shares (or Common
Stock issued upon conversion thereof) (adjusted for stock splits, reverse stock
splits or similar events after the date hereof).
(e) MATERIALS TO BE PROVIDED TO KAHN. The Company will provide
Philippe Kahn with copies of all notices, minutes, information, and other
materials of meetings of the Company's Board of Directors that the Company
provides to its directors, when and as such materials are delivered to the
directors; provided, however, that the Company shall not be required to provide
such materials if (i) such provision of materials or access thereto would
adversely affect the attorney-client privilege between the
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<PAGE>
Company and its counsel, or (ii) if the provision of such materials is likely to
result in a conflict of interest between the Company and Kahn or his affiliates.
(f) PROPRIETARY INFORMATION AGREEMENT. The Company will require
each person employed by the Company, whether at present or in the future, to
execute a Proprietary Information Agreement in a form approved by the Company's
Board of Directors as a condition of such employment.
(g) CONFIDENTIALITY AGREEMENT. Each holder of Shares and any
successor or assign of such holder, who receives from the Company or its agents,
directly or indirectly, any information which the Company has not made generally
available to the public, pursuant to the preparation and execution of this
Agreement or disclosure in connection therewith or pursuant to the provisions of
this Section 17, acknowledges and agrees that such information is confidential
and for its use only in connection with evaluating its investment in the
Company, and further agrees that it will not disseminate such information to any
person other than its accountant, investment advisor or attorney and that such
dissemination shall be only for purposes of evaluating its investment. With
respect to information related to the business or financial affairs of the
Company received by holders of Shares from and after the date of this Agreement,
each holder of Shares agrees that, except with prior written permission of the
Company, it shall keep confidential any information that has been specifically
designated by the Company as confidential.
(h) KEY-PERSON INSURANCE. The Company shall obtain and maintain in
full force and effect for a period of five (5) years from June 6, 1997 term life
insurance in the amount of $1,000,000 on the life of Robert Gett with proceeds
payable to the Company.
(i) ADDITIONAL REGISTRATION RIGHTS. The Company shall not grant
additional registration rights to others without the consent of the holders of a
majority of the Series A Preferred, the Series B Preferred, the Series C
Preferred and the Series D Preferred, voting together as a single class;
PROVIDED, HOWEVER, the Company may provide its employees, consultants and
directors participation in the registration rights for Company initiated
registrations described in Section 7 above, so long as such participation does
not diminish the numbers of shares that could otherwise be included by the
Series A Holders, the Series B Holders, the Series C Holders and the Purchasers
in any registration.
(j) TERMINATION OF COVENANTS. Notwithstanding anything to the
contrary set forth herein, the covenants set forth in this Section 17 (except
for those set forth in Section 17(f) which shall survive) shall terminate and be
of no further force or effect after the date upon which the first registration
statement filed by the Company under the Securities Act in connection with an
underwritten public offering of its securities first becomes effective.
18. RIGHTS OF FIRST REFUSAL. The Company hereby grants to each holder
of Shares, CKS, Gett and the Founder the right of first refusal to purchase, pro
rata, all (or any part) of "New Securities" (as defined in this Section 18) that
the Company may, from time to time propose to sell and issue. Such pro rata
share, for purposes of this right of first refusal, is the ratio of (X) the
total of the number of shares
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<PAGE>
of Common Stock then owned by such holder or Founder, the number of shares of
Common Stock then issuable upon the conversion of the Shares then owned by such
holder or Founder and the number of shares of Common Stock then issuable upon
exercise of options or warrants held by such holder or Founder, to (Y) the total
number of shares of Common Stock then outstanding, after giving effect to the
conversion of all outstanding convertible securities and the exercise of all
outstanding options and warrants. This right of first refusal shall be subject
to the following provisions:
(a) "NEW SECURITIES" shall mean any Common Stock and Preferred
Stock of the Company whether or not authorized on the date hereof, and rights,
options, or warrants to purchase Common Stock or Preferred Stock and securities
of any type whatsoever that are, or may become, convertible into Common Stock or
Preferred Stock; provided, however, that "New Securities" does not include the
following:
(i) shares of Common Stock, or options to purchase shares of
Common Stock, issued or granted to officers, directors and employees of, or
consultants to, the Company pursuant to a stock grant, employee restricted stock
purchase agreement, option plan or purchase plan or other stock incentive
program (collectively, the "Plans") or issuance, which issuance or sale is
unanimously approved by the Board of Directors;
(ii) shares of Common Stock issuable upon conversion of the
Series A Preferred, Series B Preferred, Series C Preferred, or Series D
Preferred (including any Series D Preferred issued after the date hereof at
subsequent closings, if any, under the Purchase Agreement);
(iii) securities of the Company offered to the public pursuant
to a registration statement filed under the Securities Act where the price per
share is at least $10 (as adjusted for stock splits, stock dividends,
recapitalizations, combinations and the like) and the aggregate offering price
to the public (net of underwriting commissions and discounts) is not less than
$20,000,000;
(iv) securities of the Company issued pursuant to the
acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets, or other reorganization whereby the Company
owns more than fifty percent (50%) of the voting power of such other
corporation;
(v) securities issued to corporate partners or in connection
with other strategic alliances if the Board of Directors unanimously agrees that
such transaction should be excluded from operation of this Section 18;
(vi) shares of Common Stock or Preferred Stock issued in
connection with any stock split, stock dividend, or recapitalization by the
Company; and
(vii) the issuance of shares of Series D Preferred Stock
pursuant to the Purchase Agreement.
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<PAGE>
(b) In the event that the Company proposes to undertake an issuance
of New Securities, it shall give each holder of Shares, CKS, Gett and the
Founder written notice of its intention, describing the type of New Securities,
the price, and the general terms upon which the Company proposes to issue the
same. Each such holder, CKS, Gett and the Founder shall have twenty (20)
business days after receipt of such notice to agree to purchase his or its pro
rata share of such New Securities at the price and upon the terms specified in
the notice by giving written notice to the Company and stating therein the
quantity of New Securities to be purchased. If any holder of Shares, CKS, Gett
or the Founder fails to agree to purchase his or its full pro rata share within
such twenty (20) business day period, the Company will give the holders of
Shares who did so agree (the "Electing Purchasers") notice of the number of
shares which were not subscribed for by the non-electing persons or entities
(but not by CKS, Gett or the Founder). Such notice may be by telephone if
followed by written confirmation within two days. The Electing Purchasers shall
have ten (10) business days from the date of such notice to agree to purchase
pro rata all of the New Securities not purchased by such non-purchasing
Purchasers (but not any New Securities which CKS, Gett or the Founder elects not
to purchase).
(c) To the extent that holders of Shares, CKS, Gett and the Founder
fail to exercise in full the right of first refusal within the twenty (20)
business plus ten (10) business day period specified above, the Company shall
have ninety (90) days thereafter to sell (or enter into an agreement pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within sixty (60) days from the date of said agreement) the New Securities
respecting which the rights of the holders of Shares, CKS, Gett and the Founder
were not exercised at a price and upon terms no more favorable to the purchasers
thereof than specified in the Company's notice. In the event the Company has not
sold the New Securities within such ninety (90) day period (or sold and issued
New Securities in accordance with the foregoing within sixty (60) days from the
date of such agreement) the Company shall not thereafter issue or sell any New
Securities, without first offering such New Securities to the holders of Shares,
CKS, Gett and the Founder in the manner provided above.
(d) The right of first refusal granted under this Section 18 shall
expire upon the first sale of Common Stock to the public that is effected
pursuant to a registration statement filed with, and declared effective by, the
Commission under the Securities Act, covering the offer and sale of Common Stock
with an aggregate offering price to the public of not less than $20,000,000 (net
of underwriting commissions and discounts) and at a price per share not less
than $10.00 (adjusted for any stock splits or reverse stock splits).
(e) This right of first refusal is nonassignable by the Founder. As
to the holders of Shares, CKS and Gett, this right of first refusal is
non-assignable except to any transferee to whom registration rights may be
transferred pursuant to Section 16 of this Agreement.
19. GOVERNING LAW. This Agreement and the legal relations between the
parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of California. The parties hereto agree to submit to
the jurisdiction of the federal and state courts of the State of California with
respect to the breach or interpretation of this Agreement or the enforcement of
any and
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<PAGE>
all rights, duties, liabilities, obligations, powers, and other relations
between the parties arising under this Agreement.
20. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties regarding rights to
registration. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
21. NOTICES. ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon delivery to the party to be notified in person or by courier service or
five days after deposit with the United States mail, by registered or certified
mail, postage prepaid, addressed (a) if to a holder of Shares, to the address or
addresses set forth on the Exhibit A attached hereto, or at such other address
as such holder shall have furnished to the Company in writing, or (b) if to any
other holder of any Registrable Securities, to such address as such holder shall
have furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Securities who has so furnished an address to the Company, or (c) if to the
Company, to its address set forth on the signature page of this Agreement to the
attention of the Corporate Secretary, or at such other address as the Company
shall have furnished to the Holders, or (d) if to the Founder, to the address
set forth on the signature page of this Agreement, or at such other addresses as
the Founder shall have furnished to the Holders.
22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
23. AMENDMENT.
(a) Any provision of this Agreement may be amended, waived or
modified upon the written consent of the (i) Company, (ii) holders of a majority
of the shares of Demand Registrable Securities (and Common Stock issued upon
conversion thereof) (excluding for all purposes in such computation any Common
Stock resold to the public), (iii) the Founder, if such amendment, waiver or
modification affects the rights of the Founder hereunder, and (iv) Gett, if such
amendment, waiver or modification affects the rights of Gett hereunder; PROVIDED
that any such amendment, waiver or modification shall be binding upon and apply
by its terms to each such holder and the Founder. Any party to this Agreement
may waive any of his or her rights or the Company's obligations hereunder
without obtaining the consent of any other person. In addition, the Company may
waive performance of any obligation owing to it, as to some or all of the
Holders of Registrable Securities, or agree to accept alternatives to such
performance, without obtaining the consent of any Holder of Registrable
Securities. In the event that an underwriting agreement is entered into between
the Company and any Holder, and such underwriting agreement contains terms
differing from this Agreement, as to any such Holder the terms of such
underwriting agreement shall govern. Notwithstanding the foregoing, purchasers
of shares of the Company's Series D Preferred under the Purchase Agreement or an
addendum thereto after the date of this Agreement may be subsequently added as a
party to this Agreement as a Holder and shall
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<PAGE>
be bound by and entitled to the terms, benefits and conditions herein by the
execution of a signature page to this Agreement.
(b) EFFECT OF AMENDMENT OR WAIVER. Each Holder and its successors
and assigns acknowledge that by the operation of Sections 1, 2 and 23 hereof the
holders of a majority of the Demand Registrable Securities, acting in
conjunction with the Company, Gett and the Founder, will have the right and
power to diminish or eliminate all rights pursuant to this Agreement.
(c) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
(d) NO THIRD PARTY BENEFICIARY. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(e) AGGREGATION OF STOCK. All Shares held or acquired by affiliated
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
[SIGNATURE PAGES FOLLOW]
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<PAGE>
Exhibit 5.1
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
TELEPHONE 650-493-9300 FACSIMILE 650-493-6811
WWW.WSGR.COM
PALO ALTO, CALIFORNIA JOHN ARNOT WILSON
KIRKLAND, WASHINGTON RETIRED
AUSTIN, TEXAS
April 9, 1999
Viant Corporation
89 South Street
Boston, MA 02111
RE: REGISTRATION STATEMENT ON FORM S-1
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 filed with
the Securities and Exchange Commission on April 9, 1999 (as such may be
amended or supplemented, the "Registration Statement"), in connection with
the registration under the Securities Act of 1933, as amended, of shares of
Common Stock of Viant Corporation (the "Shares"). The Shares, which include
shares of Common Stock issuable pursuant to an over-allotment option granted
to the underwriters, are to be sold to the underwriters as described in such
Registration Statement for the sale to the public or issued to the
Representatives of the underwriters. As your counsel in connection with this
transaction, we have examined the proceedings proposed to be taken in
connection with said sale and issuance of the Shares.
It is our opinion that, upon approval by the pricing committee duly
authorized by the Company's Board of Directors, the Shares when issued and sold
in the manner referred to in the Registration Statement will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement, including the prospectus constituting a part hereof, and
any amendment thereto.
Very truly yours,
/s/ Wilson Sonsini Goodrich & Rosati
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE>
Exhibit 10.1
ALLOCATION AGREEMENT
This ALLOCATION AGREEMENT (this "Agreement") is made as of the 13th day
of November 1998, by and among Viant Corporation, a California corporation (the
"Company") and the purchasers of the Company's Series D Preferred Stock ("Series
D Preferred"), whose names appear on Exhibit A attached hereto (the
"Purchasers").
RECITALS
WHEREAS, the Company and the Purchasers are parties to that certain
Series D Preferred Stock Purchase Agreement dated of even date herewith (the
"Stock Purchase Agreement"); and
WHEREAS, in connection with the Company's issuance of Series D
Preferred pursuant to the Stock Purchase Agreement, the Company has agreed to
enter into this Agreement in order to further induce the Purchasers to enter
into the Stock Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, covenants
and conditions contained herein, the Company and each of the Purchasers hereby
agree as follows:
1. ALLOCATION OF SHARES TO PURCHASERS. In connection with the
first offering of the Company's securities in a firmly underwritten public
offering on Form S-1 or SB-2, if any (the "Offering"), the Company shall require
that the managing underwriters for such Offering offer to Purchasers the right
to purchase, at the Offering Price (as defined below), a number of shares in
such Offering in the manner set forth in this Agreement. Such requirement shall
be subject to the consent of the managing underwriters, which consent shall not
be unreasonably withheld. Subject to such consent, the number of shares that
shall be subject to Purchasers' rights (the "Allocation Shares") shall be
determined by dividing $3,000,000 by a price per share equal to the share price
in the Offering (the "Offering Price").
2. NOTICE; PRO-RATA PORTION OF ALLOCATION SHARES. The Company
shall give each Purchaser written notice of the number of Allocation Shares and
the Offering Price promptly after such time as the Company first determines
same. The Purchasers shall have forty-eight (48) hours after receipt of such
notice to indicate their interest in purchasing all or part of their respective
"pro-rata portion" of the Allocation Shares. A particular Purchaser's "pro-rata
portion" of the Allocation Shares shall be determined by multiplying the number
of Allocation Shares by a fraction, the numerator of which shall be the number
of shares of Series D Preferred (determined on an as-converted basis) held by a
particular Purchaser and the denominator of which shall be the total number of
shares of Series D Preferred (determined on an as-converted basis) then
outstanding.
<PAGE>
3. NOTICE OF PURCHASE; PURCHASE OF ALLOCATION SHARES The
Purchasers that are interested in purchasing all or part of their respective
pro-rata portion of the Allocation Shares shall advise the Company of their
interest no later than the end of the aforesaid forty-eight (48) hour period,
specifying the quantity of the applicable Purchaser's pro-rata portion of
Allocation Shares that the Purchaser is interested in purchasing. If a
particular Purchaser shall have indicated its interest in purchasing all of such
Purchaser's pro-rata portion of the Allocation Shares (an "Allocation
Purchaser"), each such Allocation Purchaser shall be offered the right to
purchase such Allocation Purchaser's respective pro-rata portion of the
Allocation Shares that other Purchasers have not indicated an interest in
purchasing. Company will give the Allocation Purchasers notice of the
then-remaining number of Allocation Shares that other Purchasers were not
interested in purchasing ("Available Allocation Shares") promptly following the
expiration of the aforesaid forty-eight (48) hour period. Such notice may be by
telephone.
4. AVAILABLE ALLOCATION SHARES; PRO-RATA PORTION OF AVAILABLE
ALLOCATION SHARES. The Allocation Purchasers shall have twenty-four (24) hours
from the date of such notice to indicate their interest in purchasing up to
their respective pro-rata portion of the Available Allocation Shares; for
purposes of determining the pro-rata portion of the Available Allocation Shares
available for purchase by the Allocation Purchasers, the number of Available
Allocation Shares shall be multiplied by a fraction, the numerator of which
shall be the number of shares of Series D Preferred (determined on an
as-converted basis) held by a particular Allocation Purchaser who shall have
indicated its interest in purchasing Available Allocation Shares, and the
denominator of which shall be the total number of shares of Series D Preferred
(determined on an as-converted basis) then outstanding held by all of the
Allocation Purchasers who shall have indicated their interest in purchasing the
Available Allocation Shares.
5. SHARES AVAILABLE TO TECHNOLOGY CROSSOVER VENTURES.
Notwithstanding the foregoing the number of Allocation Shares offered to
Technology Crossover Ventures II, L.P. and its affiliated funds (collectively,
"TCV") shall in no event be less than that number of Allocation Shares that when
multiplied by the Offering Price equals $1,500,000, rounded to the nearest whole
number.
6. MISCELLANEOUS PROVISIONS.
(a) Any notice required or permitted to be given to a
party pursuant to the provisions of this Agreement shall be in writing and shall
be effective upon personal delivery or upon deposit in the U.S. mail, registered
or certified, with postage prepaid and properly addressed to the party to be
notified as set forth on Exhibit A attached hereto or at such other address as
such party may designate by ten (10) days advance written notice to the other
parties hereto.
(b) This Agreement and the rights and obligations of
the parties hereunder shall inure to the benefit of, and be binding upon, their
respective successors, assigns and legal representatives.
2
<PAGE>
(c) In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
(d) Any amendment, modification or waiver of any
provision of this Agreement shall be effective if in writing and approved by the
Company and the holder or holders of at least a majority of the shares of Series
D Preferred held by Purchasers; provided, however, that the provisions of
Section 5, and the Company's obligations with respect thereto, may be amended,
modified or waived only with the written consent of TCV.
(e) This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
the conflicts of laws principles thereof.
(f) This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original; and all such counterparts together shall constitute one and the same
instrument.
(g) Notwithstanding anything in the foregoing to the
contrary, all actions taken pursuant to this Agreement shall be in accordance
with all federal and state securities laws, including Rule 134 of the Securities
Act of 1933, as amended.
(h) Each Purchaser shall have the right to apportion
its participation herein among any of its partners, members or affiliates.
[SIGNATURE PAGES FOLLOW.]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Allocation
Agreement as of the date first set forth above.
"COMPANY"
VIANT CORPORATION
a California corporation
Robert Gett, President and
Chief Executive Officer
(ALLOCATION AGREEMENT SIGNATURE PAGE)
<PAGE>
[LOGO]
VIANT
VIANT Corporation Master Services Agreement
89 South Street
Boston, MA 02111
617-531-3700 main
617-531-3803 fax
http://www.VIANT.com
MSA Number: Effective Date:
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Customer:
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Administrative Technical Contact:
Contact:
Name: Name:
-------------------------- --------------------------
Title: Title:
-------------------------- --------------------------
Phone: Phone:
-------------------------- --------------------------
Fax: Fax:
-------------------------- --------------------------
E-mail: E-mail:
-------------------------- --------------------------
Address (if Address (if
different): different):
-------------------------- --------------------------
Legal Contact: Invoices:
Name: Name:
-------------------------- --------------------------
Title: Title:
-------------------------- --------------------------
Phone: Phone:
-------------------------- --------------------------
Fax: Fax:
-------------------------- --------------------------
E-mail: E-mail:
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Address (if Address (if
different): different):
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<PAGE>
MASTER SERVICES AGREEMENT
BETWEEN
VIANT
AND
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This MASTER SERVICES AGREEMENT ("Agreement") is made as of the Effective
Date set forth on the cover of this document by and between VIANT, having its
principal place of business at 89 South Street, Boston, MA 02111 ("VIANT") and
the party whose name and address is set forth on the cover of this document as
Customer ("Customer").
WHEREAS, Customer wishes to engage VIANT to provide it with certain
services as described in the applicable Work Order or Engagement Letter (each as
defined below) and the Exhibits, if any, attached thereto;
WHEREAS, VIANT is willing to provide such services on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
hereby agree as follows:
1. Definitions
(a) "Confidential Information" shall have the meaning set forth in
Section 5(a) below.
(b) "Course Materials" shall mean any and all reference manuals, student
guides, demonstration software and other training materials provided by VIANT in
connection with Training Services including, without limitation, materials
provided by third party vendors to VIANT specifically for VIANT Training
Services.
(c) "Deliverables" shall mean any and all materials, including without
limitation, any information, designs, specifications, instructions, software,
data, Course Materials, computer programming code, reusable routines, computer
software applications, and any documentation relating to any of the foregoing,
that Customer has contracted VIANT to develop and as more fully specified in a
Work Order.
(d) "Facilities" shall mean the equipment and other resources which
together constitute a reasonable work environment in which VIANT may perform the
Services hereunder, including without limitation, reasonable workspace,
telephone and facsimile capabilities, computer network connectivity and any
other resources set forth on a Work Order.
(e) "Framework Software" shall mean the software described in the
Framework Software License attached hereto, if any.
(f) "Services" shall mean the Consulting Services and/or Training Services
(as defined in Sections 2(a) and 2(b) below, respectively) performed by VIANT
for Customer under the terms of this Agreement, pursuant to and as described in
a Work Order.
(g) "Work Order" shall mean VIANT's standard form for ordering Services,
which sets forth and describes the obligations of Customer and VIANT, including
any Services to be performed by VIANT and all applicable fees. Unless otherwise
specified on a Work Order, each Work Order shall be governed by the terms of
this Agreement and shall be incorporated herein. VIANT shall, in its sole
discretion, use Work Orders on a per project basis where the Services that VIANT
is to perform and the Deliverables are specifically identifiable. Work Orders
shall be in substantially the form attached hereto as Exhibit_A.
(h) "Work Product" means the results and proceeds of VIANT's Services
hereunder, including without limitation, any and all Deliverables and other
materials provided to Customer hereunder.
2. Services
(a) Consulting Services. VIANT will provide consulting services as
specified in the Work Order, according to the terms of this Agreement
("Consulting Services"). If a Framework Software License between the parties is
attached hereto, VIANT will also provide Customer with copies of the Framework
Software described therein.
(b) Training Services. VIANT will provide Customer with training courses
if, and as, specified in the applicable Work Order ("Training Services").
Training Services shall only be available to Customer's employees and to
contractors who have signed a non-disclosure agreement with VIANT that is at
least as equally protective of VIANT's interests as this Agreement and which
requires the contractor to use any information or training received only in
conjunction with Customer's business.
(c) Customer Obligations. Customer will provide VIANT with adequate
Facilities and accurate information regarding its business and needs in
connection with the Services in a timely fashion.
(d) Changes to Services. All changes to Work Orders requested by Customer
will be subject to VIANT's prior written approval. VIANT will notify Customer in
writing of its acceptance or rejection of Customer's request. If VIANT accepts
the requested change, the notification will be accompanied by an estimate of the
additional costs and delays resulting from the requested changes.
Page 2 of 8
<PAGE>
Customer will notify VIANT in writing of its acceptance or rejection of such
estimate. If accepted, the terms of such estimate shall replace the relevant
sections of the applicable Work Order.
(e) Delays. In the event of (i) a delay by Customer in performing any
obligation hereunder, (ii) a delay due to Customer's request for changes to the
applicable Work Order, (iii) a dispute in good faith between the parties as to
whether a particular Deliverable meets the relevant specifications, (iv) a delay
due to any third party's act, failure to act or delay in performing any
obligation whatsoever, or (v) any other delay incurred as a result of Customer's
actions, the delivery of the remaining Deliverables shall be deemed postponed
for an equivalent period and any time schedule set forth in the applicable Work
Order shall be deemed amended accordingly. Except for delays incurred under
(iii), no such delay shall relieve or suspend Customer's obligation to pay
VIANT, under Section 4 below and, in addition to such payment obligations,
Customer shall pay for any and all expenses incurred by VIANT in connection with
any such delay.
(f) Nonexclusive Services. VIANT's services under this Agreement shall be
nonexclusive.
(g) Subcontracting. VIANT reserves the right to subcontract any and all of
its Services hereunder to qualified third parties that have skills similar to
those described in any VIANT proposal.
3. Fees
(a) Consulting Services. In consideration for VIANT's performance of the
Consulting Services, Customer shall pay to VIANT the fee(s) set forth in the
applicable Work Order. Unless otherwise indicated on the applicable Work Order,
Consulting Services shall be provided on a time and materials basis and billed
at the hourly or daily rates shown therein. Amounts set forth in the applicable
Work Order represent an estimate of the hours required to complete the work
outlined therein. VIANT will make every effort to complete the work within the
estimated time frames. In the event that actual hours incurred to complete the
work exceed those included in the applicable Work Order, VIANT will communicate
this to Customer, and either (i) bill the additional hours or days at the same
rates as specified in the applicable Work Order, or (ii) the parties will
negotiate an additional Work Order for such additional hours or days. Any
additional Consulting Services that Customer requests and VIANT agrees to
provide shall be provided on terms to be mutually agreed upon by the parties. If
Consulting Services are to be provided on a fixed fee basis, the applicable Work
Order must so indicate and must describe the scope and charges for such
Consulting Services.
(b) Training Services. If applicable and unless the applicable Work Order
specifies otherwise, VIANT will provide Training Services based on a per
student, per day charge plus materials basis. If Training Services are to be
provided on a fixed fee basis, the applicable Work Order or Engagement Letter
must so indicate and must describe the scope and charges for such Training
Services.
(c) Framework Software. Customer shall pay VIANT the license fees set
forth in the Framework Software License, if any such license is attached hereto.
(d) Expenses. Unless otherwise specified in the applicable Work Order,
Customer shall reimburse VIANT for all reasonable travel, communications and
out-of-pocket expenses (including, without limitation, transportation,
communication, lodging and meal expenses) incurred in connection with VIANT's
performance of the Services. Customer shall also reimburse VIANT for all
reasonable expenses incurred in connection with VIANT's procurement of any
Facilities not provided to VIANT by Customer pursuant to Section 2.(c) above.
(e) Prepayment. Customer shall prepay a nonrefundable and noncancellable
amount equal to the lesser of (i) twenty five percent (25%) of the total amount
specified in the applicable Work Order or (ii) the sum of the amounts of the
first three (3) months of Services.
(f) Invoicing and Payment. VIANT will invoice Customer (i) monthly for
Consulting Services rendered during the preceding month (ii) upon completion of
each course for Training Services and (iii) upon delivery of the Framework
Software, if any. Payment of all invoices are due and payable within thirty (30)
days of the invoice date. Customer will make all payments without right of
set-off or chargeback. All payments made pursuant to this Agreement shall be
made in U.S. dollars.
(g) Taxes. Fees do not include any present or future sales, use, value
added, excise or similar taxes applicable to the Services or associated
expenses. VIANT will separately itemize any applicable taxes on each invoice, or
in lieu thereof, Customer shall furnish VIANT a properly executed tax exemption
certificate, if applicable. Customer shall be responsible for paying any
applicable taxes later assessed by a government agency.
(h) Interest & Charges.
(i) If Customer does not pay invoices when due, VIANT may elect to
charge interest on the unpaid amounts up to the maximum amount allowed by law.
(ii) If Customer cancels or reschedules Training Services less than
five (5) days before its scheduled start date, there will be a cancellation fee
of fifty percent (50%) of the specified Training Services fee. Such cancellation
fee shall be due and payable at the same time as the fee for the applicable
Training Services.
4. Proprietary Rights
(a) Title.
(i) Customer shall own all right, title and interest (including all
intellectual property rights) in and to its company information disclosed
hereunder, and to any Deliverable specifically created by VIANT which is unique
to Customer's business and written at Customer's exclusive expense.
(ii) Except as set forth in Section 4(a)(i) above, VIANT shall own
all right, title and interest (including all intellectual property rights) in
and to all Work Product. VIANT shall have the right to use without restriction
all methods, techniques, documents, algorithms, knowledge, code and other Work
Product created as part of Services rendered, including all Deliverables, that
are of general applicability and not unique to Customer.
(iii) VIANT hereby grants Customer a nonexclusive nontransferable,
limited license, without right of sublicense, to use and reproduce the
Deliverables, solely for Customer's internal business purposes. Notwithstanding
the foregoing, Customer's use of the Framework Software, if any, shall be solely
governed by the terms of the Framework Software License attached hereto.
(b) Future Uses. Nothing contained herein shall prohibit VIANT from
producing, modifying, repackaging and/or reselling any Deliverable so long as
such use does not constitute a disclosure of Customer's Confidential Information
(as defined in Section 5(a) below).
5. Confidentiality
(a) Defined. "Confidential Information" shall mean all information
disclosed by either party to the other party in oral, written or
machine-readable form, which has value because it is not generally
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known and the owner uses reasonable efforts to protect it and identify it in
writing as confidential. Confidential Information also includes information that
has been disclosed by a third party that is required to be treated as
confidential. All Confidential Information shall be marked as such or designated
as such in writing within thirty (30) days following disclosure to either party.
Confidential Information does not include any information which: (i) is or
becomes a part of the public domain through no act or omission of the other
party; (ii)_was in the other party's lawful possession prior to the disclosure
and had not been obtained by the other party either directly or indirectly from
the disclosing party; (iii)_is lawfully disclosed to the other party by a third
party without restriction on disclosure; (iv)_is independently developed by the
other party; or (v)_is disclosed by operation of law. All Confidential
Information shall remain the exclusive property of the discloser or its
licensors.
(b) Preserving Confidentiality. Each party hereby agrees that it shall not
use any Confidential Information received from the other party other than as
expressly permitted under the terms of this Agreement or expressly authorized in
writing by the other party. Each party shall use the same degree of care to
protect the other party's Confidential Information as it uses to protect its own
Confidential Information of like nature, but in no circumstances less than
reasonable care. Neither party shall disclose the other party's Confidential
Information to any person or entity other than its officers, employees and
independent contractors who are directly involved in performing the Services and
have a specific need to know such information in order to effect the intent of
this Agreement and who have entered into written confidentiality agreements with
that party consistent with and no less restrictive than this Section_5.
(c) Mutual Cooperation. Each party will notify and cooperate with the
other party in enforcing the disclosing party's rights if it becomes aware of a
threatened or actual violation of the disclosing party's confidentiality
requirements by a third party. Upon reasonable request by the disclosing party,
the receiving party will provide copies of the confidentiality agreements
entered into with its agents or independent contractors.
(d) Residuals. VIANT is free to use and incorporate into its products and
services any ideas, know-how and/or techniques that are disclosed to VIANT by
Customer in the course of VIANT's provision of the Services or are developed in
the performance of the Services. Nothing in this Agreement shall, or is intended
to, limit VIANT's ability to develop or enhance its products and Services in any
manner whatsoever, including the use of residual knowledge gained as a result of
the disclosure by Customer of Confidential Information in connection with the
Agreement, provided that VIANT does not disclose Customer Confidential
Information.
(e) Injunctive Relief. Customer acknowledges that any breach of the
provisions of this Section 5 may cause irreparable harm and significant injury
to an extent that may be extremely difficult to ascertain. Accordingly, Customer
agrees that VIANT will have, in addition to any other rights or remedies
available to it at law or in equity, the right to seek injunctive relief to
enjoin any breach or violation of this Section 5.
6. Indemnity, Warranty and Liability
(a) Indemnity. Each party will, at its expense, defend and indemnify the
other party against a claim that any information, design, specification,
instruction, software, data or other material furnished to the other party
infringes a United States copyright or patent and will pay all losses,
liabilities, damages, claims and related expenses (including attorney fees)
either awarded by court or agreed to in an outofcourt settlement.
Notwithstanding the above, VIANT shall have no liability under this Section 6(a)
for any claim of infringement based on (i) modifications, adaptations or changes
to any Deliverable not made by VIANT, (ii) the combination or use of any
Deliverable with any materials not furnished by VIANT, if such infringement
would have been avoided by use of the Deliverable alone, or (iii) the use or
incorporation of any materials supplied to VIANT by Customer. In the event any
Deliverable is held to, or VIANT believes is likely to be held to, infringe the
intellectual property rights of a third party, VIANT shall have the right at its
sole option and expense to (x) substitute or modify the Deliverable so that it
is non-infringing, (y) obtain for Customer a license to continue using the
Deliverable, or (z) require the return of the infringing Deliverable from
Customer. If such return materially effects Customer's ability to conduct its
business, then Customer may at its option and upon thirty (30) days prior
written notice to VIANT, terminate the applicable Work Order and shall be
entitled to recover the fees paid by Customer, if any, for such infringing
Deliverable under the applicable Work Order, prorated over a two year period
from the effective date of the applicable Work Order. If such return materially
effects VIANT`s ability to meet its obligations under the relevant Work Order,
then VIANT may, at its option and upon thirty (30) days prior written notice to
Customer, terminate the applicable Work Order and Customer shall pay VIANT for
the services rendered through the date of termination on a time and materials or
percent completion basis, as applicable. This Section 6(a) sets forth Customer's
sole and exclusive remedy for intellectual property infringement by VIANT.
(b) Indemnification Procedures. If either party becomes aware of a claim
which may require indemnification, the indemnified party will promptly notify
the other party in writing of the claim and will allow the other party to assume
full control of the defense and settlement of the claim. The indemnified party
will provide the other party with the assistance and information necessary to
defend and settle the claim.
(c) Warranty. Each party represents and warrants to the other party that
it has the full power, right and authority to enter into and perform this
Agreement with the other party. VIANT further represents and warrants that the
Services will be performed in a professional manner, consistent with generally
accepted industry standards. For any breach of such warranty, Customer's
exclusive remedy and VIANT's entire liability shall be the reperformance of the
Services. Customer must request such remedy from VIANT in writing not more than
fifteen (15) business days following the completion of the Services. Customer
warrants that it owns or has the right to provide to VIANT Customer's
Confidential Information. EXCEPT AS SET FORTH IN THIS SUBSECTION 6(C), VIANT
MAKES NO WARRANTY, EXPRESS OR IMPLIED IN CONNECTION WITH THE SERVICES AND
DELIVERABLES, INCLUDING THE RESULTS AND PERFORMANCE THEREOF, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, NONINFRINGEMENT OR FITNESS
FOR A PARTICULAR PURPOSE.
(d) Limitation of Liability. THE MAXIMUM LIABILITY OF VIANT TO CUSTOMER
FOR DAMAGES RELATING TO VIANT'S FAILURE TO PERFORM THE (A)_CONSULTING SERVICES
SHALL BE LIMITED TO REIMBURSEMENT OF THE TOTAL CONSULTING FEES PAID BY CUSTOMER
TO VIANT PURSUANT TO THE APPLICABLE WORK ORDER AND (B)_TRAINING SERVICES SHALL
BE LIMITED TO REIMBURSEMENT OF THE TOTAL TRAINING FEES PAID BY CUSTOMER, IF ANY,
PURSUANT TO THE APPLICABLE WORK ORDER. NOTWITHSTANDING THE FOREGOING, THE
MAXIMUM LIABILITY OF VIANT TO CUSTOMER FOR DAMAGES FOR ANY AND ALL OTHER CAUSES
WHATSOEVER, AND CUSTOMER'S MAXIMUM REMEDY, REGARDLESS OF THE FORM OF ACTION,
WHETHER IN CONTRACT, TORT OR OTHERWISE, SHALL BE LIMITED TO REIMBURSEMENT OF THE
TOTAL FEES PAID BY CUSTOMER TO VIANT PURSUANT TO THE APPLICABLE WORK ORDER.
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<PAGE>
IN NO EVENT SHALL VIANT BE LIABLE FOR (X) ANY LOST DATA OR CONTENT, LOST
PROFITS, BUSINESS INTERRUPTION OR FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING OUT OF OR RELATING TO THE
SOFTWARE OR THE SERVICES PROVIDED HEREUNDER, EVEN IF VIANT HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES, OR OTHERWISE FOR ANY SUCH CLAIM, OR (Y) FOR ANY
DAMAGES OR COSTS ARISING FROM ANY THIRD PARTY'S ACTIONS, FAILURE TO ACT, OR
DELAY IN PERFORMING ANY OBLIGATION WHATSOEVER. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, VIANT SHALL NOT BE LIABLE FOR PERSONAL INJURY OR PROPERTY
DAMAGE.
7. Term and Termination
(a) Term. The term of this Agreement shall commence on the Effective Date
shown on page 1 of this Agreement and shall continue until terminated pursuant
to this Section 7.
(b) Termination for Breach. Either party may terminate this Agreement or
any outstanding Work Order if the other party is in material breach of the terms
of this Agreement or such Work Order and has not remedied the breach within
thirty (30) days of written notice specifying the breach.
(c) Effect of Termination. Upon termination of such Work Order, the
following shall apply:
(i) Services for such Work Order shall cease at that time.
(ii) Customer shall pay all amounts due and payable under this
Agreement for all Services rendered by VIANT through the date of termination.
With respect to Services provided by VIANT on a fixed fee basis, if any,
Customer shall pay VIANT a portion of such fixed fee amount equal to the portion
of the Services completed as of the date of such termination.
(iii) All rights and obligations provided under Sections 3 (to the
extent any fees or taxes remain unpaid or expenses have not been reimbursed), 4,
5, 6 and 8 shall survive such termination for any reason; provided that Section
5(b) shall survive for a period of three (3) years following such termination
for any reason.
(iv) Neither party will be liable to the other for damages, losses,
costs or expenses whatsoever on account of such termination arising from or in
connection with the loss of prospective sales, expenses incurred or investments
made with the establishment, development or maintenance of either party's
business.
(v) Termination will not affect any claim, demand, liability or
right of Customer or VIANT made prior to such termination, except as described
in subsection (iv) above.
8. Miscellaneous
(a) No Hiring. Both parties agree not to hire, or directly or indirectly
solicit or employ, any employee of the other who is involved in the development,
use or provision of Services to Customer for a period of six (6) months after
such employee's termination of employment without the prior written consent of
the other party.
(b) Assignment. Customer shall not assign, transfer or pledge this
Agreement without the prior written consent of VIANT. The consent of VIANT to
any assignment shall apply only to the given instance, and shall not be deemed a
consent to any subsequent act. Subject to the foregoing, this Agreement inures
to the benefit of and is binding upon the successors and assignees of the
parties hereto.
(c) Relationship between the Parties. Neither Customer nor VIANT is a
legal representative, agent, or a partner of the other. Each party will be
solely responsible for payment of all compensation owed to its employees, as
well as employment related taxes. Each party will maintain appropriate worker's
compensation for its employees as well as general liability insurance.
(d) Force Majeure. Except for obligations to pay money, neither party
shall be liable for any failure or delay in performance of its obligations
hereunder on account of strikes, riots, fires, explosions, acts of God, war,
governmental action, or any other cause which is beyond that party's reasonable
control.
(e) Entirety. This Agreement and all applicable Work Orders incorporated
herein constitute the complete agreement between the parties and supersedes all
previous and contemporaneous agreements, proposals, or representations, written
or oral, concerning the subject matter of this Agreement. This Agreement may not
be modified or amended except in a writing signed by a duly authorized
representative of each party. Subject to this Section 8(e) and Section 2(d)
above, no other act, document, usage, or customer shall be deemed to amend or
modify this Agreement or any Work Order, as applicable. It is expressly agreed
that any terms and conditions of any prior communications between VIANT and
Customer, shall be superseded by the terms and conditions of this Agreement and
the applicable Work Order.
(f) Severability. In the event any provision of this Agreement is held to
be invalid or unenforceable, the remaining provisions of this Agreement will
remain in full force.
(g) Beneficiaries. VIANT and Customer shall be a third party beneficiary
of all confidentiality agreements contemplated by Section 5(b) above.
(h) Governing Law. This Agreement shall be construed in accordance with
the laws of the State of California, excluding conflict of laws provisions,
applicable to agreements made and fully performed therein.
(i) Settlement Attempt - Arbitration. Any and all claims, disputes, or
controversies arising under, out of, or in connection with this Agreement or the
breach thereof, (herein "dispute") shall be submitted to the chief operating
officer of each party (or their designee) for a good faith attempt to resolve
the dispute. The position of each party shall be submitted, and the individuals
promptly thereafter shall meet at a neutral site. If the parties are unable to
reach agreement within thirty (30) days following such meeting, then any dispute
which has not been resolved within said thirty (30) days by good faith
negotiations between the parties shall be resolved at the request of either
party by final and binding arbitration, and neither party may terminate the
Agreement based upon any such dispute except in accordance with the decision of
the panel of arbitrators. Arbitration shall be conducted in Suffolk County,
Massachusetts, by three (3) arbitrators. The arbitrators shall be knowledgeable
in the commercial aspects of custom software development, Internet applications,
technical consulting services and copyright law and otherwise in accordance with
the Commercial Arbitration Rules of the American Arbitration Association. The
parties shall select the arbitrators within fifteen (15) days after the receipt
by the noticed party of the demand for arbitration delivered in the manner set
forth herein for providing notice to the parties. If the arbitrators are not
selected by the parties within said fifteen (15) days, then the American
Arbitration Association shall select the arbitrators. The arbitrators shall make
detailed written findings to support their award. The arbitrators shall render
their decision no more than forty-five (45) days after the parties finally
submit the claim, dispute or controversy to the panel. Judgment upon the
arbitration award may be entered in any court having
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<PAGE>
jurisdiction. As part of any award rendered the arbitrators shall determine the
prevailing party on any claim or counterclaim and shall award to such prevailing
party the costs and fees (including filing fees and other costs, as well as
attorney consulting, accounting and expert witness fees) incurred by such party
with respect to the claim or counterclaim on which such party prevailed.
(j) Waiver. The failure by either party to enforce at any time any of the
provisions of this Agreement, or to exercise any election or option provided
herein, shall in no way be construed as a waiver of such provisions or options,
nor in any way to affect the validity of this Agreement or any part thereof, or
the right of either party thereafter to enforce each and every such provision.
(k) Publicity. VIANT shall be allowed to use Customer's name on its
customer lists and disclose the same to its present and potential customers
after execution of this Agreement. Both parties may announce the execution of
this Agreement without disclosing the terms thereof. Any press release issued by
either party which contains more than the mere announcement of the execution of
this Agreement shall require approval in writing of the press release copy by
the other party, which shall not be unreasonably withheld.
(l) Notice. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing and shall be sent
by registered or certified mail, postage prepaid or transmitted by telegram or
telefax if confirmed by such mailing, to Customer and VIANT at their respective
addresses set forth on page 1 of this Agreement. Either party may change its
address by written notice to the other.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
representatives, have set forth their signatures as of the date first set forth
above.
VIANT CUSTOMER
By: By:
---------------------------- ----------------------------
Name: Name:
-------------------------- --------------------------
Title: Title:
------------------------- -------------------------
Date: Date:
-------------------------- --------------------------
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<PAGE>
Exhibit A: Form of Work Order
VIANT
VIANT
89 South Street
Boston, MA 02111
http://www.VIANT.com
Work Order XXXX999
================================================================================
This Work Order is incorporated into and governed by the Master Services
Agreement number MSANumber dated MSADate between VIANT, 89 South Street, Boston,
MA 02111 (`VIANT") and CustomerName ("Customer").
1. Consulting Services Description.
Description.
2. Location where Services are rendered.
Location.
3. Principal Contacts.
The principal contact for VIANT for this Work Order is VIANTContact.
The principal contact for Customer for this Work Order is CustomerContact.
4. Schedule.
This Work Order will expire ExpirationDate.
5. Charges for the Services.
- --------------------------------------------------------------------------------
Consulting Start Date End Date Duration Rate Total Cost
Category
- --------------------------------------------------------------------------------
Category StartDate EndDate Duration Rate Cost
================================================================================
Total TotalCost
- --------------------------------------------------------------------------------
DescriptionOfExpenses
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Accepted by:
VIANT Customer
Signature: Signature:
-------------------------- --------------------------
Name: Name:
-------------------------- --------------------------
Title: Title:
-------------------------- --------------------------
Date: Date:
-------------------------- --------------------------
This Work Order is "Confidential Information," as defined in Section 5(a)
of the Master Services Agreement, and can only be modified in accordance with
the terms set forth in Section 2(d) thereof.
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<PAGE>
Exhibit 10.5
KEY EMPLOYEE AGREEMENT
This Agreement (the "Agreement") sets forth the terms of your
employment by Silicon Valley Internet Partners, a California corporation (the
"Company"), as follows:
1. POSITION AND RESPONSIBILITIES.
1.1 The Company will employ you and you shall serve in an executive
capacity as President and Chief Executive Officer and perform the duties
customarily associated with such capacity from time to time. It is understood
and agreed that, unless you agree otherwise, you will be based in the Boston,
Massachusetts area but that you will travel to and perform your duties at such
place or places as the Company shall reasonably designate or as shall be
reasonably appropriate and necessary in connection with such employment.
1.2 Subject to Section 4 below, you will, to the best of your
ability, devote your full time and best efforts to the performance of your
duties hereunder and the business and affairs of the Company. You will perform
such executive duties as may be assigned to you by the Company's Board of
Directors from time to time consistent with your capacity as President and Chief
Executive Officer. The Board of Directors shall appoint you as a member of and
you agree to serve on, the Board of Directors of the Company. The Company shall
nominate and use its best efforts to elect you to the Company's Board of
Directors for so long as you remain Chief Executive Officer of the Company. You
will report to the Company's Board of Directors, and all employees of the
Company, except Eric Greenberg (who will also report to the Board of Directors)
will report to you.
1.3 You will duly, punctually and faithfully perform and observe any
and all rules and regulations which the Company may now or shall hereafter
establish governing the conduct of its business, except to the extent that such
rules and regulations may be inconsistent with your executive position.
2. TERM OF EMPLOYMENT; TERMINATION.
2.1 The effective date of this Agreement is November 4, 1996.
2.2 Unless otherwise mutually agreed in writing, this Agreement and
your employment by the Company pursuant to this Agreement shall be terminated on
the earliest of:
(a) your death, or any illness, disability or other
incapacity in such a manner that you are physically rendered unable regularly to
perform your duties hereunder for a period in excess of two hundred seventy
(270) days in any fiscal year of the Company;
(b) thirty (30) days after you, for any reason, give written
notice to the Company of your termination;
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(c) thirty (30) days after the Company, with or without
cause, gives written notice to you of your termination; and
The determination regarding whether you are physically unable to regularly
perform your duties under subsection (a) above shall be made by the Board of
Directors on the basis of an examination of you by a physician selected by the
Board of Directors. Your inability to be physically present on the Company's
premises shall not constitute a presumption that you are unable to perform such
duties.
Any notice required to be given pursuant to this Section 2 shall be given in
accordance with the provisions of Section 11 hereof. The exercise of either
party's right to terminate this Agreement pursuant to subsections (b) or (c)
above shall not abrogate the rights and remedies of the terminating party
regarding the breach, if any, giving rise to such termination. Termination by
the Company under Section (c) above shall be determined by a vote of a majority
of the disinterested members of the Board of Directors.
2.3 You may be terminated for cause if, in the reasonable
determination of the Company's Board of Directors, you are convicted of a felony
involving the Company or its property or of any crime involving moral turpitude,
participate in any fraud against the Company, willfully and materially breach
your duties to the Company, intentionally damage any property of the Company,
wrongfully disclose any trade secrets or other confidential information of the
Company, materially fail to perform your duties as President and Chief Executive
Officer of the Company, or materially breach Section 4 of this Agreement or any
material provision of the Confidential Information and Invention Assignment
Agreement, dated as of November 4, 1996, between you and the Company (the
"Proprietary Information Agreement").
3. COMPENSATION.
3.1 The Company shall pay to you for the services to be rendered
hereunder a base salary of $10,416.67 per month, payable on a semi-monthly
basis. You shall so be entitled to all rights and benefits for which you shall
be eligible under deferred bonus, pension, group medical insurance,
profit-sharing or other Company benefits which may be in force from time to time
and provided to you or for the Company's employees generally.
3.2 At the end of the fiscal period ending June 30, 1997, you will be
eligible to receive a performance bonus to be determined by the compensation
committee of the Board of Directors, targeted between $100,000 and $200,000 and
based on the financial performance of the Company on a revenue and profitability
basis.
3.3 You shall also be granted an option to purchase 1,520,000 shares
of the Common Stock of the Company, under the Company's 1996 Stock Option Plan.
Such options shall have an exercise price of twenty-five cents ($0.25) per
share, and twenty-five percent (25%), or 380,000, of the shares subject to the
option will be vested upon commencement of your employment. An additional
twenty-five percent (25%), or 380,000, of the shares subject to the option will
be vested after one year. The remaining fifty percent (50%), or 760,000, of the
shares subject to the option shall vest at the end of each quarter thereafter
for three years, at a rate of 63,333 shares per quarter,
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so that all of the shares subject to the option shall be completely vested in
four (4) years (November 4, 2000).
3.4 Notwithstanding the provisions of Subsection 3.3 above, one
hundred percent (100%) of the shares subject to the option will fully vest and
be fully exercisable immediately prior to the closing of either (i) an
acquisition in which the Company shall not be the continuing or surviving entity
of such acquisition, or (ii) any transaction, or series of transactions, or
issuance or series of issuances in which ownership of greater than fifty percent
(50%) of the voting shares of the Company is transferred; PROVIDED, HOWEVER,
that the foregoing acceleration of vesting shall not be triggered by the closing
of the initial public offering of the Company's securities pursuant to a
registration statement under the Securities Act of 1933, as amended, or any
other public offering of the Company's securities by the Company.
3.5 You shall be entitled to vacation, holidays, and illness days
during the term of this Agreement consistent with the Company's standard
practice for its employees generally.
3.6 In the event you are terminated without cause pursuant to Section
2.2(c) hereof, the Company shall continue to pay your salary as provided in
subsection (a) above for a period of one (1) year following any such termination
and you shall continue to be entitled to the benefits listed in Section 3.1
hereof until the earlier of (i) one (1) year from date of such termination and
(ii) the date on which you are re-employed.
4. OTHER ACTIVITIES DURING EMPLOYMENT.
4.1 Except with the prior written consent of the Company's Board of
Directors, you will not during the term of this Agreement undertake or engage in
any other employment, occupation or business enterprise, other than ones in
which you are a passive investor. You may engage in civic and not-for-profit
activities and you may serve as a director of another corporation which is not
competitive with the Company so long as such activities do not materially
interfere with the performance of your duties hereunder.
4.2 Except as permitted by Section 4.3, you will not acquire, assume
or participate in, directly or indirectly, any position, investment or interest
known by you to be adverse or antagonistic to the Company, its business or
prospects, financial or otherwise.
4.3 During the term of your employment by the Company except on
behalf of the Company, you will not directly or indirectly, whether as an
officer, director, stockholder, partner, proprietor, associate, representative,
consultant, or in any capacity whatsoever engage in, become financially
interested in, be employed by or have any business connection with any other
person, corporation, firm, partnership or other entity whatsoever which were
known by you to directly compete with the Company, throughout the world, in any
line of business engaged in (or planned to be engaged in) by the Company;
provided, however, that anything above to the contrary notwithstanding, you may
own, as a passive investor, securities of any competitor corporation, so long as
your direct holdings in any one such corporation shall not in the aggregate
constitute more than 1% of the voting stock of such corporation; PROVIDED that
you may continue to own shares in
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Cambridge Technology Partners, Inc. notwithstanding that such shares constitute
greater than 1% of its voting stock so long as (i) you do not accumulate any
shares of Cambridge Technology Partners in addition to those held by you as of
the date hereof and (ii) your interests in connection with Cambridge Technology
Partners do not conflict with your duties to the Company.
5. FORMER EMPLOYMENT.
5.1 You represent and warrant that you do not possess confidential
information arising out of prior employment which, in your best judgment, would
be utilized in connection with your employment by the Company, except in
accordance with agreements between your former employer and the Company.
5.2 If, in spite of the second sentence of Section 5.1, you should
find that confidential information belonging to any former employer might be
usable in connection with the Company's business, you will not intentionally
disclose to the Company or use on behalf of the Company any confidential
information belonging to any of your former employers (except in accordance with
agreements between the Company and any such former employer); but during your
employment by the Company you will use in the performance of your duties all
information which is generally known and used by persons with training and
experience comparable to your own and all information which is common knowledge
in the industry or otherwise legally in the public domain.
6. NON-SOLICITATION. You agree that for a period of twelve (12) months
immediately following the termination of your relationship with the Company for
any reason, whether with or without cause, you shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage, take away or hire employees of the Company, either
for yourself or for any other person or entity.
7. PROPRIETARY INFORMATION AND INVENTIONS. You agree to be bound by the
provisions of the Proprietary Information Agreement.
8. REMEDIES. Your duties under the Proprietary Information Agreement shall
survive termination of your employment with the Company. You acknowledge that a
remedy at law for any breach or threatened breach by you of the provisions of
the Proprietary Information Agreement would be inadequate and you therefore
agree that the Company shall be entitled to injunctive relief in case of any
such breach or threatened breach.
9. ASSIGNMENT. Neither this Agreement nor any rights or obligations hereunder
may be assigned by the Company or by you. Any transaction resulting in a change
of control of the Company through the sale of outstanding stock or the sale of
newly issued stock constituting a controlling interest in the Company to an
investor or related group of investors not primarily engaged in the business of
making passive investments shall be considered an assignment of the rights and
obligations of the Company hereunder.
4
<PAGE>
10. SEVERABILITY. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
the other provisions of this Agreement, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein. If moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, it shall be construed by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable law as it shall then appear.
11. NOTICES. Any notice which the Company is required or may desire to give you
shall be given by personal delivery or registered or certified mail, return
receipt requested, addressed to you at the address of record with the Company,
or at such other place as you may from time to time designate in writing. Any
notice which you are required or may desire to give to the Company hereunder
shall be given by personal delivery or by registered or certified mail, return
receipt requested, addressed to the Company at its principal office, or at such
other office as the Company may from time to time designate in writing. The date
of personal delivery or the date of mailing any such notice shall be deemed to
be the date of delivery thereof.
12. GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This Agreement will be
governed by the laws of the Commonwealth of Massachusetts. You hereby expressly
consent to the personal jurisdiction of the state and federal courts located in
Massachusetts for any lawsuit filed there against you by the Company arising
from or relating to this Agreement.
13. WAIVER. If either party should waive any breach of any provisions of this
Agreement, he or it shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provision of this Agreement.
14. COMPLETE AGREEMENT; AMENDMENTS. The foregoing, together with the Proprietary
Information Agreement, is the entire agreement of the parties with respect to
the subject matter hereof and thereof and may not be amended, supplemented,
canceled or discharged except by written instrument executed by both parties
hereto.
15. HEADINGS. The headings of the sections hereof are inserted for convenience
only and shall not be deemed to constitute a part hereof nor to affect the
meaning thereof.
16. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon your heirs,
executors, administrators and other legal representatives and will be for the
benefit of the Company, its successors, and its assigns.
Silicon Valley Internet Partners
By:
-----------------------------------------
5
<PAGE>
Name:
---------------------------------------
Title:
--------------------------------------
Accepted and agreed as of this
4th day of November, 1996.
- ---------------------------------
Robert Gett
6
<PAGE>
SILICON VALLEY INTERNET PARTNERS
CONFIDENTIAL INFORMATION AND
INVENTION ASSIGNMENT AGREEMENT
As a condition of my employment with SILICON VALLEY INTERNET PARTNERS,
its subsidiaries, affiliates, successors or assigns (together the "Company"),
and in consideration of my employment with the Company and my receipt of the
compensation now and hereafter paid to me by Company, I agree to the following:
1. AT-WILL EMPLOYMENT. I UNDERSTAND AND ACKNOWLEDGE THAT MY EMPLOYMENT
WITH THE COMPANY IS FOR AN UNSPECIFIED DURATION AND CONSTITUTES "AT-WILL"
EMPLOYMENT, AND THAT THE TERMS OF SUCH EMPLOYMENT ARE SUBJECT TO THAT CERTAIN
KEY EMPLOYEE AGREEMENT DATED AS OF NOVEMBER 4, 1996 (THE "KEY EMPLOYEE
AGREEMENT").
2. CONFIDENTIAL INFORMATION.
(a) COMPANY INFORMATION. I agree at all times during the term
of my employment and thereafter, to hold in strictest confidence, and not to
use, except for the benefit of the Company, or to disclose to any person, firm
or corporation without written authorization of the Board of Directors of the
Company, any Confidential Information of the Company. I understand that
"Confidential Information" means any Company proprietary information, technical
data, trade secrets or know-how, including, but not limited to, research,
product plans, products, services, customer lists and other customer information
(including, but not limited to, customers of the Company on whom I called or
with whom I became acquainted during the term of my employment), markets,
software, developments, inventions, processes, formulas, technology, designs,
drawings, engineering, hardware configuration information, marketing, finances
or other business information disclosed to me by the Company either directly or
indirectly in writing, orally or by drawings or observation of parts or
equipment. I further understand that Confidential Information does not include
any of the foregoing items which has become publicly known and made generally
available through no wrongful act of mine or of others who were under
confidentiality obligations as to the item or items involved.
(b) FORMER EMPLOYER INFORMATION. I agree that I will not,
during my employment with the Company, improperly use or disclose any
proprietary information or trade secrets of any former or concurrent employer or
other person or entity and that I will not bring onto the premises of the
Company any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such employer,
person or entity.
(c) THIRD PARTY INFORMATION. I recognize that the Company has
received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for
<PAGE>
certain limited purposes. I agree to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out my work for
the Company consistent with the Company's agreement with such third party.
3. INVENTIONS.
(a) INVENTIONS RETAINED AND LICENSED. I have attached hereto,
as EXHIBIT A, a list describing all inventions, original works of authorship,
developments, improvements, and trade secrets which were made by me prior to my
employment with the Company (collectively referred to as "Prior Inventions"),
which belong to me, which relate to the Company's proposed business, products or
research and development, and which are not assigned to the Company hereunder;
or, if no such list is attached, I represent that there are no such Prior
Inventions. If in the course of my employment with the Company, I incorporate
into a Company product, process or machine a Prior Invention owned by me or in
which I have an interest, the Company is hereby granted and shall have a
nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make,
have made, modify, use and sell such Prior Invention as part of or in connection
with such product, process or machine.
(b) ASSIGNMENT OF INVENTIONS. I agree that I will promptly
make full written disclosure to the Company, will hold in trust for the sole
right and benefit of the Company, and hereby assign to the Company, or its
designee, all my right, title, and interest in and to any and all inventions,
original works of authorship, developments, concepts, improvements or trade
secrets, whether or not patentable or registrable under copyright or similar
laws, which I may solely or jointly conceive or develop or reduce to practice,
or cause to be conceived or developed or reduced to practice, during the period
of time I am in the employ of the Company (collectively referred to as
"Inventions"), except as provided in Section 3(f) below. I further acknowledge
that all original works of authorship which are made by me (solely or jointly
with others) within the scope of and during the period of my employment with the
Company and which are protectible by copyright are "works made for hire," as
that term is defined in the United States Copyright Act.
(c) INVENTIONS ASSIGNED TO THE UNITED STATES. I agree to
assign to the United States government all my right, title, and interest in and
to any and all Inventions whenever such full title is required to be in the
United States by a contract between the Company and the United States or any of
its agencies.
(d) MAINTENANCE OF RECORDS. I agree to keep and maintain
adequate and current written records of all Inventions made by me (solely or
jointly with others) during the term of my employment with the Company. The
records will be in the form of notes, sketches, drawings, and any other format
that may be specified by the Company. The records will be available to and
remain the sole property of the Company at all times.
(e) PATENT AND COPYRIGHT REGISTRATIONS. I agree to assist the
Company, or its designee, at the Company's expense, in every proper way to
secure the Company's rights in the
-2-
<PAGE>
Inventions and any copyrights, patents, mask work rights or other intellectual
property rights relating thereto in any and all countries, including the
disclosure to the Company of all pertinent information and data with respect
thereto, the execution of all applications, specifications, oaths, assignments
and all other instruments which the Company shall deem necessary in order to
apply for and obtain such rights and in order to assign and convey to the
Company, its successors, assigns, and nominees the sole and exclusive rights,
title and interest in and to such Inventions, and any copyrights, patents, mask
work rights or other intellectual property rights relating thereto. I further
agree that my obligation to execute or cause to be executed, when it is in my
power to do so, any such instrument or papers shall continue after the
termination of this Agreement. If the Company is unable because of my mental or
physical incapacity or for any other reason to secure my signature to apply for
or to pursue any application for any United States or foreign patents or
copyright registrations covering Inventions or original works of authorship
assigned to the Company as above, then I hereby irrevocably designate and
appoint the Company and its duly authorized officers and agents as my agent and
attorney in fact, to act for and in my behalf and stead to execute and file any
such applications and to do all other lawfully permitted acts to further the
prosecution and issuance of letters patent or copyright registrations thereon
with the same legal force and effect as if executed by me.
4. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving
the employ of the Company, I will deliver to the Company (and will not keep in
my possession, recreate or deliver to anyone else) any and all devices, records,
data, notes, reports, proposals, lists, correspondence, specifications, drawings
blueprints, sketches, materials, equipment, other documents or property, or
reproductions of any aforementioned items developed by me pursuant to my
employment with the Company or otherwise belonging to the Company, its
successors or assigns. In the event of the termination of my employment after
which I am obligated not to compete as provided in Section 7 below, I agree to
sign and deliver the "Termination Certification" attached hereto as EXHIBIT B.
5. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ
of the Company, I hereby grant consent to notification by the Company to my new
employer about my rights and obligations under this Agreement.
6. SOLICITATION OF EMPLOYEES. I agree that for a period of twelve (12)
months immediately following the termination of my relationship with the Company
for any reason, whether with or without cause, I shall not either directly or
indirectly solicit, induce, recruit or encourage any of the Company's employees
to leave their employment, or take away such employees, or attempt to solicit,
induce, recruit, encourage, take away or hire employees of the Company, either
for myself or for any other person or entity.
7. NON-COMPETITION. I agree that for a period of twelve (12) months
immediately following (i) the termination of my employment by the Company for
cause (as the term "cause" is defined in Section 2.3 of the Key Employee
Agreement), or (ii) my resignation from the Company, I shall not, either
directly or indirectly, serve in any capacity with any firm, company or other
business enterprise, or the organization of any business enterprise, that is or
will be engaging in any activity
-3-
<PAGE>
that shall have the direct or indirect effect of putting into the stream of
commerce goods or services substantially similar to those produced and/or
offered for sale by the Company. I further agree that the geographic scope of
this non-compete provision shall extend throughout the United States. I
acknowledge that in the course of and due to the nature of my employment by the
Company, I will have access to Confidential Information of the Company which
would result in irreparable harm to the Company if disclosed to third parties.
8. CONFLICT OF INTEREST GUIDELINES. I agree to diligently adhere to the
Conflict of Interest Guidelines attached as EXHIBIT C hereto; PROVIDED that,
where this Agreement or the Key Employee Agreement specifies a standard of
conduct, such standard and not the Conflict of Interest Guidelines, shall govern
my conduct and the consequences.
9. REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I represent
that my performance of all the terms of this Agreement will not breach any
agreement to keep in confidence proprietary information acquired by me in
confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in
conflict herewith.
10. GENERAL PROVISIONS.
(a) GOVERNING LAW; CONSENT TO PERSONAL JURISDICTION. This
Agreement will be governed by the laws of the Commonwealth of Massachusetts. I
hereby expressly consent to the personal jurisdiction of the state and federal
courts located in the Commonwealth of Massachusetts for any lawsuit filed there
against me by the Company arising from or relating to this Agreement.
(b) EQUITABLE REMEDIES. I agree that it would be impossible or
inadequate to measure and calculate the Company's damages from any breach of the
covenants set forth in Sections 2, 3, 4, 6 and 7 herein. Accordingly, I agree
that if I breach any of such sections, the Company will have available, in
addition to any other right or remedy available, the right to obtain an
injunction from a court of competent jurisdiction restraining such breach or
threatened breach and to specific performance of any such provision of this
agreement. I further agree that no bond or other security shall be required in
obtaining such equitable relief and I hereby consent to the issuance of such
injunction and to the ordering of specific performance.
(c) ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement and understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No modification of or
amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not
affect the validity or scope of this Agreement.
-4-
<PAGE>
(d) SEVERABILITY. If one or more of the provisions in this
Agreement are deemed void by law, then the remaining provisions shall continue
in full force and effect.
(e) SUCCESSORS AND ASSIGNS. This Agreement will be binding
upon my heirs, executors, administrators and other legal representatives and
will be for the benefit of the Company, its successors, and its assigns.
Date as of November 4, 1996
Silicon Valley Internet Partners --------------------------
Robert Gett
By:
-----------------------------------------
Eric Greenberg, Chairman
-5-
<PAGE>
EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
<TABLE>
<CAPTION>
Identifying Number
Title Date or Brief Description
------------------- -------------- ---------------------
<S> <C> <C>
</TABLE>
______ No inventions or improvements
______ Additional Sheets Attached
Signature of Employee:
-------------------------------
Print Name of Employee: Robert Gett
Date:
-------------------------------
<PAGE>
EXHIBIT B
SILICON VALLEY INTERNET PARTNERS
TERMINATION CERTIFICATION
This is to certify that I do not have in my possession, nor have I
failed to return, any devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials,
equipment, other documents or property, or reproductions of any aforementioned
items belonging to SILICON VALLEY INTERNET PARTNERS, its subsidiaries,
affiliates, successors or assigns (together, the "Company").
I further certify that I have complied with all the terms of the
Company's Confidential Information and Invention Assignment Agreement signed by
me, including the reporting of any inventions and original works of authorship
(as defined therein), conceived or made by me (solely or jointly with others)
covered by that agreement.
I further agree that, in compliance with the Confidential Information
and Invention Assignment Agreement, I will preserve as confidential all trade
secrets, confidential knowledge, data or other proprietary information relating
to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of
authorship, customer lists, business plans, financial information or other
subject matter pertaining to any business of the Company or any of its
employees, clients, consultants or licensees.
I further agree that for twelve (12) months from this date, I will not
hire any employees of the Company and I will not solicit, induce, recruit or
encourage any of the Company's employees to leave their employment.
I further agree that for a period of twelve (12) months from this date,
I will not, either directly or indirectly, serve in any capacity with any firm,
company or other business enterprise, or the organization of any business
enterprise, that is or will be engaging in any of the following activities with
respect to goods or services similar to those produced and/or offered by the
Company: (a) design; (b) production; (c) marketing; (d) distribution; or (e) any
other activity that shall have the direct or indirect effect of putting into the
stream of commerce goods or services similar to those produced and/or offered
for sale by the Company.
Date:
------------------------------ -------------------------
(Employee's Signature)
-------------------------
Robert Gett
<PAGE>
EXHIBIT C
SILICON VALLEY INTERNET PARTNERS
CONFLICT OF INTEREST GUIDELINES
It is the policy of SILICON VALLEY INTERNET PARTNERS to conduct its
affairs in strict compliance with the letter and spirit of the law and to adhere
to the highest principles of business ethics. Accordingly, all officers,
employees and independent contractors must avoid activities which are in
conflict, or give the appearance of being in conflict, with these principles and
with the interests of the Company. The following are potentially compromising
situations which must be avoided. Any exceptions must be reported to the
President and written approval for continuation must be obtained.
1. Revealing confidential information to outsiders or misusing
confidential information. Unauthorized divulging of information is a violation
of this policy whether or not for personal gain and whether or not harm to the
Company is intended. (The Confidential Information and Invention Assignment
Agreement elaborates on this principle and is a binding agreement.)
2. Accepting or offering substantial gifts, excessive entertainment,
favors or payments which may be deemed to constitute undue influence or
otherwise be improper or embarrassing to the Company.
3. Participating in civic or professional organizations that might
involve divulging confidential information of the Company.
4. Initiating or approving personnel actions affecting reward or
punishment of employees or applicants where there is a family relationship or is
or appears to be a personal or social involvement.
5. Initiating or approving any form of personal or social harassment of
employees.
6. Investing or holding outside directorship in suppliers, customers,
or competing companies, including financial speculations, where such investment
or directorship might influence in any manner a decision or course of action of
the Company.
7. Borrowing from or lending to employees, customers or suppliers.
8. Acquiring real estate of interest to the Company.
<PAGE>
9. Improperly using or disclosing to the Company any proprietary
information or trade secrets of any former or concurrent employer or other
person or entity with whom obligations of confidentiality exist.
10. Unlawfully discussing prices, costs, customers, sales or markets
with competing companies or their employees.
11. Making any unlawful agreement with distributors with respect to
prices.
12. Improperly using or authorizing the use of any inventions which are
the subject of patent claims of any other person or entity.
Each officer, employee and independent contractor must take every
necessary action to ensure compliance with these guidelines and to bring problem
areas to the attention of higher management for review.
-2-
March 31, 1998
Rick Chavez
Silicon Valley Internet Partners
Austin, TX
RE: RELOCATION PACKAGE
Dear Rick:
Subject to your agreement to relocate to the Boston area, Silicon Valley
Internet Partners (the "Company") agrees to provide you with the following
relocation package:
RELOCATION BONUS
- ----------------
The Company will provide you with a one time Relocation Bonus in the amount of
$35,000.00.
RELOCATION EXPENSES
- -------------------
You will be reimbursed for all reasonable expenses associated with the
relocation of you and your family to the Boston area in accordance with the
Company's expense reimbursement policy.
HOUSING LOAN
- ------------
To assist you in the purchase of a home in the Boston area, the Company will
extend to you a loan in the principal amount of $50,000.00. Interest on the loan
will accrue annually at the Prime Rate (as quoted in the Wall Street Journal on
the loan execution date), and shall be due and payable by you within thirty (30)
days following each anniversary of the loan. For the first four (4) years of the
loan, you will only be responsible for payment of interest due on the loan at
the rate set forth above. Upon commencement of the fifth (5th) year of the loan,
you will commence repayment of principal and interest on the loan in accordance
with a monthly repayment schedule in which the principal and interest will be
repaid and amortized over a two (2) year period. If any of the following events
occur while the loan remains outstanding, the loan will become immediately due
and payable: (i) you cease to be employed by the Company for any reason; (ii)
you fail to perform any of your obligations under any of the loan documents;
(iii) you file for bankruptcy or otherwise become insolvent; or (iv) upon the
occurrence of the sixth (6th) anniversary of the loan agreement. 30,000 shares
of stock and stock options in the Company held by you or granted to you will
serve as collateral for the loan until full repayment to the company has been
made by you of the loan principal and accrued interest. The terms of this loan
will be set forth in a loan agreement, which shall be executed by you, your
spouse and the Company. You and your
<PAGE>
spouse shall also be required to execute and acknowledge, as applicable, for the
benefit of the Company, the following additional documents as collateral for the
loan: (i) a promissory note; (ii) a pledge agreement pledging your interest in
30,000 shares of stock and stock options in the Company held by you or granted
to you as referred to above; and (iii) an employee certificate certifying that
the proceeds of the loan will be used to purchase a new principal residence in
the Boston area, due to your employment relocation to Boston, Massachusetts.
Very truly yours,
Michael Tubridy
Chief Financial Officer
Silicon Valley Internet Partners
/s/ Signature Illegible 31 May 98
Agreed and Accepted Date
<PAGE>
Exhibit 10.7
VIANT CORPORATION
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("AGREEMENT") is effective as of March
___, 1999 by and between Viant Corporation, a Delaware corporation (the
"COMPANY"), and FIELD(1) ("INDEMNITEE").
WHEREAS, effective as of the date hereof, Viant Corporation, a
California corporation, is reincorporating into Delaware;
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and its
related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services
to the Company, the Company wishes to provide for the indemnification of, and
the advancement of expenses to, Indemnitee to the maximum extent permitted by
law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for the Company's directors, officers,
employees, agents and fiduciaries, the sig nificant increases in the cost of
such insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, in connection with the Company's reincorporation, the Company
and Indemnitee desire to continue to have in place the additional protection
provided by an indemnification agreement, with such changes as are required to
conform the existing agreement to Delaware law and to provide indemnification
and advancement of expenses to the Indemnitee to the maximum extent permitted by
Delaware law;
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified and advanced expenses by the
Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth
below.
1. CERTAIN DEFINITIONS.
a. "CHANGE IN CONTROL" shall mean, and shall be deemed to have
occurred if, on or after the date of this Agreement: (i) any "PERSON" (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), other than a trustee or other fiduciary holding
<PAGE>
securities under an employee benefit plan of the Company acting in such capacity
or a corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company, becomes the "BENEFICIAL OWNER" (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing more
than 50% of the total voting power represented by the Company's then outstanding
Voting Securities; (ii) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company and any new director whose election by the Board of
Directors or nomination for election by the Company's stockholders was approved
by a vote of at least two thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof, (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least ______% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
related transactions) all or substantially all of the Company's assets.
b. "CLAIM" shall mean with respect to a Covered Event: any
threatened, pending or completed action, suit, proceeding or alternative dispute
resolution mechanism, or any hearing, inquiry or investigation that Indemnitee
in good faith believes might lead to the institution of any such action, suit,
proceeding or alternative dispute resolution mechanism, whether civil, criminal,
administrative, investigative or other.
c. References to the "COMPANY" shall include, in addition to
Viant Corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger to which Viant Corporation
(or any of its wholly owned subsidiaries) is a party which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees, agents or fiduciaries, so that if Indemnitee is
or was a director, officer, employee, agent or fiduciary of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee, agent or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise,
Indemnitee shall stand in the same position under the provisions of this
Agreement with respect to the resulting or surviving corporation as Indem nitee
would have with respect to such constituent corporation if its separate
existence had continued.
d. "COVERED EVENT" shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
-2-
<PAGE>
e. "EXPENSES" shall mean any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, to be a witness in or to
participate in, any action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld) of any Claim and any
federal, state, local or foreign taxes imposed on the Indemnitee as a result of
the actual or deemed receipt of any payments under this Agreement.
f. "EXPENSE ADVANCE" shall mean a payment to Indemnitee
pursuant to Section 3 of Expenses in advance of the settlement of or final
judgement in any action, suit, proceeding or alternative dispute resolution
mechanism, hearing, inquiry or investigation which constitutes a Claim.
g. "INDEPENDENT LEGAL COUNSEL" shall mean an attorney or firm
of attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three (3) years (other than with respect to matters concerning
the rights of Indemnitee under this Agreement, or of other Indemnitees under
similar indemnity agreements).
h. References to "OTHER ENTERPRISES" shall include employee
benefit plans; references to "FINES" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "SERVING
AT THE REQUEST OF THE COMPANY" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "NOT OPPOSED TO THE
BEST INTERESTS OF THE COMPANY" as referred to in this Agreement.
i. "REVIEWING PARTY" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
j. "SECTION" refers to a section of this Agreement unless
otherwise indicated.
k. "VOTING SECURITIES" shall mean any securities of the
Company that vote generally in the election of directors.
2. INDEMNIFICATION.
a. INDEMNIFICATION OF EXPENSES. Subject to the provisions of
Section 2(b) below,
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the Company shall indemnify Indemnitee for Expenses to the fullest extent
permitted by law if Indemnitee was or is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or witness or other
participant in, any Claim (whether by reason of or arising in part out of a
Covered Event), including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses.
b. REVIEW OF INDEMNIFICATION OBLIGATIONS. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law: (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party; and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid to Indemnitee to which Indemnitee is not entitled hereunder
under applicable law; PROVIDED, HOWEVER, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee is entitled to be indemnified hereunder
under applicable law, any determination made by any Reviewing Party that
Indemnitee is not entitled to be indemnified hereunder under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expenses theretofore paid in indemnifying Indemnitee until a
final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Indemnitee's
obligation to reimburse the Company for any Expenses shall be unsecured and no
interest shall be charged thereon.
c. INDEMNITEE RIGHTS ON UNFAVORABLE DETERMINATION; BINDING
EFFECT. If any Reviewing Party determines that Indemnitee substantively is not
entitled to be indemnified hereunder in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and, subject to the provisions of Section 15, the Company hereby
consents to service of process and to appear in any such proceeding. Absent such
litigation, any determination by any Reviewing Party shall be conclusive and
binding on the Company and Indemnitee.
d. SELECTION OF REVIEWING PARTY; CHANGE IN CONTROL. If there
has not been a Change in Control, any Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's Certificate of Incorporation or
Bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent Indemnitee would be
entitled to be indemnified hereunder under applicable law and the Company agrees
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to abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto. Notwithstanding any other provision of this Agreement, the
Company shall not be required to pay Expenses of more than one Independent Legal
Counsel in connection with all matters concerning a single Indemnitee, and such
Independent Legal Counsel shall be the Independent Legal Counsel for any or all
other Indemnitees unless: (i) the employment of separate counsel by one or more
Indemnitees has been previously authorized by the Company in writing; or (ii) an
Indemnitee shall have provided to the Company a written statement that such
Indemnitee has reasonably concluded that there may be a conflict of interest
between such Indemnitee and the other Indemnitees with respect to the matters
arising under this Agreement.
e. MANDATORY PAYMENT OF EXPENSES. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
3. EXPENSE ADVANCES.
a. OBLIGATION TO MAKE EXPENSE ADVANCES. Upon receipt of a
written undertaking by or on behalf of the Indemnitee to repay such amounts if
it shall ultimately be determined that the Indemnitee is not entitled to be
indemnified therefore by the Company hereunder under applicable law, the Company
shall make Expense Advances to Indemnitee.
b. FORM OF UNDERTAKING. Any obligation to repay any Expense
Advances hereunder pursuant to a written undertaking by the Indemnitee shall be
unsecured and no interest shall be charged thereon.
c. DETERMINATION OF REASONABLE EXPENSE ADVANCES. The parties
agree that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. PROCEDURES FOR INDEMNIFICATION AND EXPENSE ADVANCES.
a. TIMING OF PAYMENTS. All payments of Expenses (including
without limitation Expense Advances) by the Company to the Indemnitee pursuant
to this Agreement shall be made to the fullest extent permitted by law as soon
as practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than thirty (30) business days after such written
demand by Indemnitee is presented to the Company, except in the case of Expense
Advances, which shall be made no later than ten (10) business days after such
written demand by Indemnitee is presented to the Company.
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b. NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing, as soon as practicable, of any Claim made against Indemnitee for
which indemnification will or could be sought under this Agreement. Notice to
the Company shall be directed to the Chief Executive Officer of the Company at
the address shown on the signature page of this Agreement (or such other address
as the Company shall designate in writing to Indemnitee). In addition,
Indemnitee shall give the Company such information and cooperation as it may
reasonably require and as shall be within Indemnitee's power.
c. NO PRESUMPTIONS; BURDEN OF PROOF. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of NOLO
CONTENDERE, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement under applicable law, shall be a
defense to Indemnitee's claim or create a presumption that Indemnitee has not
met any particular standard of conduct or did not have any particular belief. In
connection with any determination by any Reviewing Party or otherwise as to
whether the Indemnitee is entitled to be indemnified hereunder under applicable
law, the burden of proof shall be on the Company to establish that Indemnitee is
not so entitled.
d. NOTICE TO INSURERS. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
e. SELECTION OF COUNSEL. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently retained by
or on behalf of Indemnitee with respect to the same Claim; PROVIDED, that: (i)
Indemnitee shall have the right to employ Indemnitee's separate counsel in any
such Claim at Indemnitee's expense; and (ii) if (A) the employment of separate
counsel by Indemnitee has been previously authorized by the Company, (B)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not
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<PAGE>
continue to retain such counsel to defend such Claim, then the fees and expenses
of Indemnitee's separate counsel shall be Expenses for which Indemnitee may
receive indemnification or Expense Advances hereunder.
5. ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
a. SCOPE. The Company hereby agrees to indemnify the
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of direc tors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
b. NONEXCLUSIVITY. The indemnification and the payment of
Expense Advances provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company's Certificate of
Incorporation, its Bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as to Indemnitee for any action taken or not
taken while serving in an indemnified capacity even though subsequent thereto
Indemnitee may have ceased to serve in such capacity.
6. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's Certificate of
Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.
7. PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. MUTUAL ACKNOWLEDGMENT. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
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<PAGE>
9. LIABILITY INSURANCE. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. EXCEPTIONS. Notwithstanding any other provision of this Agreement,
the Company shall not be obligated pursuant to the terms of this Agreement:
a. EXCLUDED ACTIONS OR OMISSIONS. To indemnify or make Expense
Advances to Indemnitee with respect to Claims arising out of acts, omissions or
transactions for which Indemnitee is prohibited from receiving indemnification
under applicable law.
b. CLAIMS INITIATED BY INDEMNITEE. To indemnify or make
Expense Advances to Indemnitee with respect to Claims initiated or brought
voluntarily by Indemnitee and not by way of defense, counterclaim or crossclaim,
except: (i) with respect to actions or proceedings brought to establish or
enforce a right to indemnification under this Agreement or any other agreement
or insurance policy or under the Company's Certificate of Incorporation or
Bylaws now or hereafter in effect relating to Claims for Covered Events; (ii) in
specific cases if the Board of Directors has approved the initiation or bringing
of such Claim, or (iii) as otherwise required under Section 145 of the Delaware
General Corporation Law, regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, Expense Advances, or
insurance recovery, as the case may be.
c. LACK OF GOOD FAITH. To indemnify Indemnitee for any
Expenses incurred by the Indemnitee with respect to any action instituted: (i)
by Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous; or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.
d. CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for
Expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal
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representatives. The Company shall require and cause any successor (whether
direct or indirect, and whether by purchase, merger, consolidation or otherwise)
to all, substantially all, or a substantial part, of the business or assets of
the Company, by written agreement in form and substance satisfactory to
Indemnitee, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform if
no such succession had taken place. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as a director, officer,
employee, agent or fiduciary (as applicable) of the Company or of any other
enterprise at the Company's request.
13. EXPENSES INCURRED IN ACTION RELATING TO ENFORCEMENT OR
INTERPRETATION. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the
Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee with
respect to such action (including without limitation attorneys' fees),
regardless of whether Indemnitee is ultimately successful in such action, unless
as a part of such action a court having jurisdiction over such action makes a
final judicial determination (as to which all rights of appeal therefrom have
been exhausted or lapsed) that each of the material assertions made by
Indemnitee as a basis for such action was not made in good faith or was
frivolous; provided, however, that until such final judicial determination is
made, Indemnitee shall be entitled under Section 3 to receive payment of Expense
Advances hereunder with respect to such action. In the event of an action
instituted by or in the name of the Company under this Agreement to enforce or
interpret any of the terms of this Agreement, Indemnitee shall be entitled to be
indemnified for all Expenses incurred by Indemnitee in defense of such action
(including without limitation costs and expenses incurred with respect to
Indemnitee's counterclaims and cross-claims made in such action), unless as a
part of such action a court having jurisdiction over such action makes a final
judicial determination (as to which all rights of appeal therefrom have been
exhausted or lapsed) that each of the material defenses asserted by Indemnitee
in such action was made in bad faith or was frivolous; provided, however, that
until such final judicial determination is made, Indemnitee shall be entitled
under Section 3 to receive payment of Expense Advances hereunder with respect to
such action.
14. PERIOD OF LIMITATIONS. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two (2) years from the date of accrual
of such cause of action, and any claim or cause of action of the Company shall
be extinguished and deemed released unless asserted by the timely filing of a
legal action within such two (2) year period; PROVIDED, HOWEVER, that if any
shorter period of limitations is otherwise applicable to any such cause of
action, such shorter period shall govern.
15. NOTICE. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given: (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery; or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third (3rd) business day after the date postmarked.
Addresses for notice to either party are as shown on the signature page of this
Agreement, or as subsequently modified by written notice.
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16. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
17. SEVERABILITY. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
18. CHOICE OF LAW. This Agreement, and all rights, remedies,
liabilities, powers and duties of the parties to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Delaware
as applied to contracts between Delaware residents entered into and to be
performed entirely in the State of Delaware without regard to principles of
conflicts of laws.
19. SUBROGATION. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
20. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
21. INTEGRATION AND ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
22. NO CONSTRUCTION AS EMPLOYMENT AGREEMENT. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
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IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
VIANT CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address: 89 South Street
Boston, MA 02111
AGREED TO AND ACCEPTED
INDEMNITEE:
------------------------------------
(signature)
FIELD(1)
------------------------------------
Name
------------------------------------
Address
------------------------------------
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Exhibit 10.8
VIANT CORPORATION
1996 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and any Parent or Subsidiary and to promote the success of the
Company's business. Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options, as determined by the Administrator at the
time of grant of an option and subject to the applicable provisions of Section
422 of the Code and the regulations promulgated thereunder.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(e) "COMMON STOCK" means the Common Stock of the Company.
(f) "COMPANY" means Silicon Valley Internet Partners, a California
corporation.
(g) "CONSULTANT" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services and is
compensated for such services, and any director of the Company whether
compensated for such services or not. If and in the event the Company registers
any class of any equity security pursuant to the Exchange Act, the term
Consultant shall thereafter not include directors who are not compensated for
their services or are paid only a director's fee by the Company.
(h) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
employment or consulting relationship with the Company, any Parent or Subsidiary
is not interrupted or terminated. Continuous Status as an Employee or Consultant
shall not be considered interrupted in the case of (i) any leave of absence
approved by the Company or (ii) transfers between locations of the Company or
between the Company, its Parent, any Subsidiary, or any successor. A leave of
absence approved by the Company shall include sick leave, military leave, or any
other personal leave. For purposes of Incentive Stock Options, no such leave may
exceed 90 days, unless reemployment upon expiration of such leave is guaranteed
by statute or contract, including
<PAGE>
Company policies. If reemployment upon expiration of a leave of absence approved
by the Company is not so guaranteed, on the 181st day of such leave any
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option.
(i) "DISABILITY" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(j) "EMPLOYEE" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(k) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(l) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(m) "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
(n) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(o) "OPTION" means a stock option granted pursuant to the Plan.
(p) "OPTIONED STOCK" means the Common Stock subject to an Option.
(q) "OPTIONEE" means an Employee or Consultant who receives an
Option.
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(r) "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(s) "PLAN" means this 1996 Stock Option Plan.
(t) "SECTION 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(u) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 11 below.
(v) "SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 5,991,876 Shares. The Shares may be authorized, but unissued,
or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an option exchange program
authorized by the Administrator, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated); PROVIDED, however, that Shares that have actually been
issued under the Plan shall not be returned to the Plan and shall not become
available for future distribution under the Plan, except that if unvested Shares
are repurchased by the Company at their original purchase price, and the
original purchaser of such Shares did not receive any benefits of ownership of
such Shares, such Shares shall become available for future grant under the Plan.
For purposes of the preceding sentence, voting rights shall not be considered a
benefit of Share ownership.
4. ADMINISTRATION OF THE PLAN.
(a) INITIAL PLAN PROCEDURE. Prior to the date, if any, upon which
the Company becomes subject to the Exchange Act, the Plan shall be administered
by the Board or a committee appointed by the Board.
(b) PLAN PROCEDURE AFTER THE DATE, IF ANY, UPON WHICH THE COMPANY
BECOMES SUBJECT TO THE EXCHANGE ACT.
(i) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
SUBJECT TO SECTION 16(b). With respect to Option grants made to Employees who
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in a manner complying with the rules under Rule 16b-3 relating to the
disinterested administration of employee benefit plans under which Section 16(b)
exempt discretionary grants and awards of equity securities are to be made, or
(B) a committee designated by the Board to administer the Plan, which committee
shall be constituted to comply with the rules
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under Rule 16b-3 relating to the disinterested administration of employee
benefit plans under which Section 16(b) exempt discretionary grants and awards
of equity securities are to be made. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by the rules under Rule 16b-3 relating to the disinterested
administration of employee benefit plans under which Section 16(b) exempt
discretionary grants and awards of equity securities are to be made.
(ii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to Option grants made to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A) the
Board or (B) a committee designated by the Board, which committee shall be
constituted to satisfy the legal requirements, if any, relating to the
administration of incentive stock option plans of state corporate and securities
laws, of the Code, and of any stock exchange or national market system upon
which the Common Stock is then listed or traded (the "Applicable Laws"). Once
appointed, such Committee shall serve in its designated capacity until otherwise
directed by the Board. The Board may increase the size of the Committee and
appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by Applicable Laws.
(c) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities,
including the approval, if required, of any stock exchange or national market
system upon which the Common Stock is then listed, the Administrator shall have
the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(l) of the Plan;
(ii) to select the Consultants and Employees to whom Options
may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions may include, but are not limited to, the exercise price, the time or
times when Options may be exercised, any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any
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Option or the Shares relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vii) to determine whether and under what circumstances an
Option may be settled in cash under Section 9(e) instead of Common Stock;
(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted;
(ix) to provide for the early exercise of Options for the
purchase of unvested Shares, subject to such terms and conditions as the
Administrator may determine; and
(x) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(d) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.
(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options.
For purposes of this Section 5(b), Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
(c) The Plan shall not confer upon any Optionee any right with
respect to the continuation of the Optionee's employment or consulting
relationship with the Company, nor shall it interfere in any way with the
Optionee's right or the Company's right to terminate the Optionee's employment
or consulting relationship at any time, with or without cause.
(d) Upon the Company or a successor corporation issuing any class of
common equity securities required to be registered under Section 12 of the
Exchange Act or upon the Plan being assumed by a corporation having a class of
common equity securities required to be registered
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under Section 12 of the Exchange Act, the following limitations shall apply to
grants of Options to Employees:
(i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 1,000,000 Shares.
(ii) In connection with his or her initial employment, an
Employee may be granted Options to purchase up to an additional 1,000,000 Shares
which shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 11.
(iv) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with a transaction
described in Section 11), the cancelled Option will be counted against the limit
set forth in subsection (i) above. For this purpose, if the exercise price of an
Option is reduced, the transaction will be treated as a cancellation of the
Option and the grant of a new Option.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the shareholders of
the Company, as described in Section 17 of the Plan. It shall continue in effect
for a term of ten (10) years unless sooner terminated under Section 13 of the
Plan.
7. TERM OF OPTION. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
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(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be no
less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per share
exercise price shall be determined by the Administrator.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option have been owned by the Optionee for more
than six months on the date of surrender and (y) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) delivery of a properly executed
exercise notice together with such other documentation as the Administrator and
the broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price, or (6) any combination of the foregoing methods of payment. In
making its determination as to the type of consideration to accept, the
Administrator shall consider if acceptance of such consideration may be
reasonably expected to benefit the Company.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Administrator, consist of
any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
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Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. Upon
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is specified in the
Notice of Grant, and only to the extent that the Optionee was entitled to
exercise it at the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). In
the absence of a specified time in the Notice of Grant, the Option shall remain
exercisable for three (3) months following the Optionee's termination. In the
case of an Incentive Stock Option, such period of time for exercise shall not
exceed three (3) months from the date of termination. If, on the date of
termination, the Optionee is not entitled to exercise the Optionee's entire
Option, the Shares covered by the unexercisable portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not exercise his or
her Option within the time specified by the Administrator, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
Notwithstanding the above, in the event of an Optionee's change in
status from Consultant to Employee or Employee to Consultant, an Optionee's
Continuous Status as an Employee or Consultant shall not automatically terminate
solely as a result of such change in status. However, in such event, an
Incentive Stock Option held by the Optionee shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory
Stock Option three months and one day following such change of status.
(c) DISABILITY OF OPTIONEE. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a result of his or
her Disability, the Optionee may, but only within twelve (12) months from the
date of such termination (and in no event later than the expiration date of the
term of his or her Option as set forth in the Option Agreement), exercise the
Option to the extent the Optionee was otherwise entitled to exercise it on the
date of such termination. To the extent that the Optionee is not entitled to
exercise the Option on the date of termination, or if the Optionee does not
exercise the Option to the extent so entitled within the time specified herein,
the Option shall terminate, and the Shares covered by the Option shall revert to
the Plan.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who has acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death. If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan. If, after death, the
Optionee's estate or a person who acquires the right to exercise the Option by
bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
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(e) BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
(f) RULE 16b-3. Options granted to persons subject to Section 16(b)
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
10. NON-TRANSFERABILITY OF OPTIONS. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the extent it has not been previously exercised, an
Option will terminate immediately prior to the consummation of such proposed
action.
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(c) MERGER OR ASSET SALE. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be exercisable. If an Option is exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets was
not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option, for each Share
of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other applicable law or regulation,
including the requirements of any stock exchange or national market system upon
which the Common Stock is then listed), the Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
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14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange or national market system
upon which the Common Stock is then listed or traded, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
16. AGREEMENTS. Options shall be evidenced by written agreements in such
form as the Administrator shall approve from time to time.
17. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange or national market system upon which the Common
Stock is then listed or traded.
<PAGE>
Exhibit 10.9
VIANT CORPORATION
1999 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" means the Board or any of its Committees as
shall be administering the Plan in accordance with Section 4 hereof.
(b) "APPLICABLE LAWS" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options are granted under the Plan.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CODE" means the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" means a committee of Directors appointed by the
Board in accordance with Section 4 hereof.
(f) "COMMON STOCK" means the Common Stock of the Company.
(g) "COMPANY" means Viant Corporation, a California
corporation.
(h) "CONSULTANT" means any person who is engaged by the Company
or any Parent or Subsidiary to render consulting or advisory services to such
entity.
(i) "DIRECTOR" means a member of the Board of Directors of the
Company.
(j) "DISABILITY" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or
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(ii) transfers between locations of the Company or between the Company, its
Parent, any Subsidiary, or any successor. For purposes of Incentive Stock
Options, no such leave may exceed ninety days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 181st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
THE WALL STREET JOURNAL or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, its Fair
Market Value shall be the mean between the high bid and low asked prices for the
Common Stock on the last market trading day prior to the day of determination;
or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.
(n) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to the Plan.
(r) "OPTION AGREEMENT" means a written or electronic agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
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(s) "OPTION EXCHANGE PROGRAM" means a program whereby
outstanding Options are exchanged for Options with a lower exercise price.
(t) "OPTIONED STOCK" means the Common Stock subject to an
Option.
(u) "OPTIONEE" means the holder of an outstanding Option
granted under the Plan.
(v) "PARENT" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(w) "PLAN" means this 1999 Stock Option Plan.
(x) "SECTION 16(B)" means Section 16(b) of the Securities
Exchange Act of 1934, as amended.
(y) "SERVICE PROVIDER" means an Employee, Director or
Consultant.
(z) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.
(aa) "SUBSIDIARY" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of Shares which may be subject to
option and sold under the Plan is 4,868,929 Shares. The Shares may be authorized
but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Option, shall not be returned to the Plan and shall not
become available for future distribution under the Plan, except that if Shares
of Restricted Stock are repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) ADMINISTRATOR. The Plan shall be administered by the Board
or a Committee appointed by the Board, which Committee shall be constituted to
comply with Applicable Laws.
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(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan and, in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, the Administrator shall have the authority in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options
may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered
by each such award granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions, of any
Option granted hereunder. Such terms and conditions include, but are not limited
to, the exercise price, the time or times when Options may be exercised (which
may be based on performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option
or the Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;
(vi) to determine whether and under what circumstances
an Option may be settled in cash under subsection 9(e) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option that number of Shares having a Fair Market
Value equal to the amount required to be withheld. The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Optionees to have Shares
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable; and
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(xi) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan.
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.
5. ELIGIBILITY.
(a) Nonstatutory Stock Options may be granted to Service
Providers. Incentive Stock Options may be granted only to Employees.
(b) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option shall confer upon any
Optionee any right with respect to continuing the Optionee's relationship as a
Service Provider with the Company, nor shall it interfere in any way with his or
her right or the Company's right to terminate such relationship at any time,
with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon its adoption by
the Board. It shall continue in effect for a term of ten (10) years unless
sooner terminated under Section 14 of the Plan.
7. TERM OF OPTION. The term of each Option shall be stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. In the case of an Incentive Stock
Option granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Option shall
be five (5) years from the date of grant or such shorter term as may be provided
in the Option Agreement.
8. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per share exercise price for the Shares to be issued
upon exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
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(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time
of grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.
(B) granted to any other Employee, the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a Service Provider who, at
the time of grant of such Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.
(B) granted to any other Service Provider,
the per Share exercise price shall be no less than 85% of the Fair Market Value
per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price other than as required above pursuant to
a merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 20% per year over five (5) years from the date the Options are
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granted. Unless the Administrator provides otherwise, vesting of Options granted
hereunder shall be tolled during any unpaid leave of absence. An Option may not
be exercised for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(c) DISABILITY OF OPTIONEE. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent the Option is vested
on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after
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termination, the Optionee does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(d) DEATH OF OPTIONEE. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (of at least six (6) months) to the extent that the
Option is vested on the date of death (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement) by the
Optionee's estate or by a person who acquires the right to exercise the Option
by bequest or inheritance. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, at the time of death, the Optionee is not vested
as to the entire Option, the Shares covered by the unvested portion of the
Option shall immediately revert to the Plan. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan.
(e) BUYOUT PROVISIONS. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. NON-TRANSFERABILITY OF OPTIONS. The Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
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(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until fifteen (15) days prior to
such transaction as to all of the Optioned Stock covered thereby, including
Shares as to which the Option would not otherwise be exercisable. In addition,
the Administrator may provide that any Company repurchase option applicable to
any Shares purchased upon exercise of an Option shall lapse as to all such
Shares, provided the proposed dissolution or liquidation takes place at the time
and in the manner contemplated. To the extent it has not been previously
exercised, an Option will terminate immediately prior to the consummation of
such proposed action.
(c) MERGER OR ASSET SALE. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, the Optionee shall
fully vest in and have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option shall be fully exercisable for a period of fifteen (15) days from the
date of such notice, and the Option shall terminate upon the expiration of such
period. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or sale of assets, the option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Service Provider to whom an
Option is so granted within a reasonable time after the date of such grant.
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13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) SHAREHOLDER APPROVAL. The Board shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.
14. CONDITIONS UPON ISSUANCE OF SHARES.
(a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with Applicable Laws and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
(b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.
15. INABILITY TO OBTAIN AUTHORITY. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
16. RESERVATION OF SHARES. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
17. SHAREHOLDER APPROVAL. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.
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18. INFORMATION TO OPTIONEES AND PURCHASERS. The Company shall provide
to each Optionee and to each individual who acquires Shares pursuant to the
Plan, not less frequently than annually during the period such Optionee or
purchaser has one or more Options outstanding, and, in the case of an individual
who acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. The Company shall not be
required to provide such statements to key employees whose duties in connection
with the Company assure their access to equivalent information.
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VIANT CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the
intention of the Company to have the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that section
of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Viant Corporation, a Delaware corporation, and
any Designated Subsidiary of the Company.
(e) "COMPENSATION" shall mean all base straight time gross earnings and
commissions, exclusive of payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses and other compensation.
(f) "DESIGNATED SUBSIDIARY" shall mean any Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(g) "EMPLOYEE" shall mean any individual who is an Employee of the Company
for tax purposes whose customary employment with the Company is at least
twenty (20) hours per week and more than five (5) months in any calendar year.
For purposes of the Plan, the employment relationship shall be treated as
continuing intact while the individual is on sick leave or other leave of
absence approved by the Company. Where the period of leave exceeds 90 days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship shall be deemed to have terminated on the
91st day of such leave.
(h) "ENROLLMENT DATE" shall mean the first day of each Offering Period.
(i) "EXERCISE DATE" shall mean the last day of each Offering Period.
(j) "FAIR MARKET VALUE" shall mean, as of any date, the value of Common
Stock determined as follows:
<PAGE>
(1) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system for the last market
trading day on the date of such determination, as reported in THE WALL STREET
JOURNAL or such other source as the Board deems reliable, or;
(2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Common Stock on
the date of such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable, or;
(3) In the absence of an established market for the Common Stock, the
Fair Market Value thereof shall be determined in good faith by the Board.
(k) "OFFERING PERIOD" shall mean a period of approximately six (6) months
during which an option granted pursuant to the Plan may be exercised, commencing
on the first Trading Day on or after [MAY 15TH] and terminating on the last
Trading Day in the period ending the following [NOVEMBER 14TH], or commencing on
the first Trading Day on or after [NOVEMBER 15TH] and terminating on the last
Trading Day in the period ending the following [MAY 14TH]; provided, however,
that the first Offering Period under the Plan shall commence with the first
Trading Day on or after the date on which the Securities and Exchange Commission
declares the Company's Registration Statement effective and ending on the last
Trading Day on or before [MAY 14, 2000]. The duration of Offering Periods may be
changed pursuant to Section 4 of this Plan.
(l) "PLAN" shall mean this 1999 Employee Stock Purchase Plan.
(m) "PURCHASE PRICE" shall mean an amount equal to 85% of the Fair Market
Value of a share of Common Stock on the Enrollment Date or on the Exercise Date,
whichever is lower; provided, however, that the Purchase Price may be adjusted
by the Board pursuant to Section 20.
(n) "RESERVES" shall mean the number of shares of Common Stock covered by
each option under the Plan which have not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
(o) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company or a Subsidiary.
(p) "TRADING DAY" shall mean a day on which national stock exchanges and
the Nasdaq System are open for trading.
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3. ELIGIBILITY.
(a) Any Employee who shall be employed by the Company on a given
Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) to the extent that,
immediately after the grant, such Employee (or any other person whose stock
would be attributed to such Employee pursuant to Section 424(d) of the Code)
would own capital stock of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Subsidiary, or (ii) to the extent that his or her rights to purchase stock
under all employee stock purchase plans of the Company and its subsidiaries
accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of
stock (determined at the fair market value of the shares at the time such option
is granted) for each calendar year in which such option is outstanding at any
time.
4. OFFERING PERIODS. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after [MAY 15 TH] and [NOVEMBER 15 TH] each year, or on such other date as
the Board shall determine, and continuing thereafter until terminated in
accordance with Section 20 hereof; provided, however, that the first Offering
Period under the Plan shall commence with the first Trading Day on or after the
date on which the Securities and Exchange Commission declares the Company's
Registration Statement effective and ending on the last Trading Day on or before
[MAY 15, 2000]. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is announced at
least five (5) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the Company's payroll office prior
to the applicable Enrollment Date.
6. PAYROLL DEDUCTIONS.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each pay day
during the Offering Period in an amount not exceeding fifteen percent (15%) of
the Compensation which he or she receives on each pay day during the Offering
Period.
(b) All payroll deductions made for a participant shall be credited
to his or her account under the Plan and shall be withheld in whole percentages
only. A participant may not make any additional payments into such account.
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<PAGE>
(c) A participant may discontinue his or her participation in the
Plan as provided in Section 10 hereof, or may increase or decrease the rate of
his or her payroll deductions during the Offering Period by completing or filing
with the Company a new subscription agreement authorizing a change in payroll
deduction rate. The Board may, in its discretion, limit the number of
participation rate changes during any Offering Period. The change in rate shall
be effective with the first full payroll period following five (5) business days
after the Company's receipt of the new subscription agreement unless the Company
elects to process a given change in participation more quickly. A participant's
subscription agreement shall remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's
payroll deductions may be decreased to zero percent (0%) at any time during an
Offering Period. Payroll deductions shall recommence at the rate provided in
such participant's subscription agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at
the time some or all of the Company's Common Stock issued under the Plan is
disposed of, the participant must make adequate provision for the Company's
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock. At any time,
the Company may, but shall not be obligated to, withhold from the participant's
compensation the amount necessary for the Company to meet applicable withholding
obligations, including any withholding required to make available to the Company
any tax deductions or benefits attributable to sale or early disposition of
Common Stock by the Employee.
7. GRANT OF OPTION. On the Enrollment Date of each Offering Period, each
eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than 1,250
shares (subject to any adjustment pursuant to Section 19), and provided further
that such purchase shall be subject to the limitations set forth in
Sections 3(b) and 12 hereof. Exercise of the option shall occur as provided in
Section 8 hereof, unless the participant has withdrawn pursuant to Section 10
hereof. The Option shall expire on the last day of the Offering Period.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
provided in Section 10 hereof, his or her option for the purchase of shares
shall be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the
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<PAGE>
participant's account for the subsequent Offering Period, subject to earlier
withdrawal by the participant as provided in Section 10 hereof. Any other
monies left over in a participant's account after the Exercise Date shall be
returned to the participant. During a participant's lifetime, a participant's
option to purchase shares hereunder is exercisable only by him or her.
9. DELIVERY. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, the shares purchased upon exercise of his or
her option.
10. WITHDRAWAL.
(a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by giving written notice to the Company in
the form of Exhibit B to this Plan. All of the participant's payroll deductions
credited to his or her account shall be paid to such participant promptly after
receipt of notice of withdrawal and such participant's option for the Offering
Period shall be automatically terminated, and no further payroll deductions for
the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the
beginning of the succeeding Offering Period unless the participant delivers to
the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.
11. TERMINATION OF EMPLOYMENT. Upon a participant's ceasing to be an
Employee for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such participant's account
during the Offering Period but not yet used to exercise the option shall be
returned to such participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 15 hereof, and such participant's
option shall be automatically terminated. The preceding sentence
notwithstanding, a participant who receives payment in lieu of notice of
termination of employment shall be treated as continuing to be an Employee for
the participant's customary number of hours per week of employment during the
period in which the participant is subject to such payment in lieu of notice.
12. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.
13. STOCK.
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of the
Company's Common Stock which shall be made available for sale under the Plan
shall be 200,000 shares, plus an annual increase to be added on the first day of
the Company's fiscal year beginning in 2000 equal to the
-5-
<PAGE>
lesser of (i) 200,000 shares, (ii) 2% of the outstanding shares on such date or
(iii) an amount determined by the Board. If, on a given Exercise Date, the
number of shares with respect to which options are to be exercised exceeds the
number of shares then available under the Plan, the Company shall make a pro
rata allocation of the shares remaining available for purchase in as uniform a
manner as shall be practicable and as it shall determine to be equitable.
(b) The participant shall have no interest or voting right in shares
covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be
registered in the name of the participant or in the name of the participant and
his or her spouse.
14. ADMINISTRATION. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all parties.
15. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to an Exercise Date
on which the option is exercised but prior to delivery to such participant of
such shares and cash. In addition, a participant may file a written designation
of a beneficiary who is to receive any cash from the participant's account under
the Plan in the event of such participant's death prior to exercise of the
option. If a participant is married and the designated beneficiary is not the
spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such shares and/or
cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
16. TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
-6-
<PAGE>
17. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
18. REPORTS. Individual accounts shall be maintained for each participant
in the Plan. Statements of account shall be given to participating Employees at
least annually, which statements shall set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
19. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, LIQUIDATION,
MERGER OR ASSET SALE.
(a) CHANGES IN CAPITALIZATION. Subject to any required action by the
stockholders of the Company, the Reserves, the maximum number of shares each
participant may purchase per Offering Period (pursuant to Section 7), as well as
the price per share and the number of shares of Common Stock covered by each
option under the Plan which has not yet been exercised shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been Aeffected
without receipt of consideration@. Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an option.
(b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period then in progress
shall be shortened by setting a new Exercise Date (the ANew Exercise Date@), and
shall terminate immediately prior to the consummation of such proposed
dissolution or liquidation, unless provided otherwise by the Board. The New
Exercise Date shall be before the date of the Company's proposed dissolution or
liquidation. The Board shall notify each participant in writing, at least
ten (10) business days prior to the New Exercise Date, that the Exercise Date
for the participant's option has been changed to the New Exercise Date and that
the participant's option shall be exercised automatically on the New Exercise
Date, unless prior to such date the participant has withdrawn from the Offering
Period as provided in Section 10 hereof.
(c) MERGER OR ASSET SALE. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each outstanding option shall be assumed or an
equivalent option substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the option, the Offering Period
then in progress shall be shortened by setting a new Exercise Date (the "New
Exercise Date"). The New Exercise Date shall be before
-7-
<PAGE>
the date of the Company's proposed sale or merger. The Board shall notify each
participant in writing, at least ten (10) business days prior to the New
Exercise Date, that the Exercise Date for the participant's option has been
changed to the New Exercise Date and that the participant's option shall be
exercised automatically on the New Exercise Date, unless prior to such date the
participant has withdrawn from the Offering Period as provided in Section 10
hereof.
20. AMENDMENT OR TERMINATION.
(a) The Board of Directors of the Company may at any time and for any
reason terminate or amend the Plan. Except as provided in Section 19 hereof, no
such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Board of Directors on any Exercise Date
if the Board determines that the termination of the Offering Period or the Plan
is in the best interests of the Company and its stockholders. Except as
provided in Section 19 and Section 20 hereof, no amendment may make any change
in any option theretofore granted which adversely affects the rights of any
participant. To the extent necessary to comply with Section 423 of the Code (or
any other applicable law, regulation or stock exchange rule), the Company shall
obtain shareholder approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation of
the Plan may result in unfavorable financial accounting consequences, the Board
may, in its discretion and, to the extent necessary or desirable, modify or
amend the Plan to reduce or eliminate such accounting consequence including, but
not limited to:
(1) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;
(2) shortening any Offering Period so that Offering Period ends
on a new Exercise Date, including an Offering Period underway at the time of the
Board action; and
(3) allocating shares.
Such modifications or amendments shall not require stockholder approval or the
consent of any Plan participants.
-8-
<PAGE>
21. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
23. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the BOARD of Directors or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 20 hereof.
-9-
<PAGE>
EXHIBIT A
VIAN CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date: __________
_____ Change in Payroll Deduction Rate
_____ Change of Beneficiary(ies)
1. _____________________________________ hereby elects to participate in
the Viant Corporation 1999 Employee Stock Purchase Plan (the AEmployee
Stock Purchase Plan@) and subscribes to purchase shares of the
Company's Common Stock in accordance with this Subscription Agreement
and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my Compensation on each payday (from 1 to 15%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise
my option.
4. I have received a copy of the complete Employee Stock Purchase Plan.
I understand that my participation in the Employee Stock Purchase Plan
is in all respects subject to the terms of the Plan. I understand
that my ability to exercise the option under this Subscription
Agreement is subject to stockholder approval of the Employee Stock
Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should
be issued in the name(s) of (Employee or Employee and Spouse only):
.
6. I understand that if I dispose of any shares received by me pursuant
to the Plan within 2 years after the Enrollment Date (the first day of
the Offering Period during which I purchased such shares), I will be
treated for federal income tax purposes as having received ordinary
income at the time of such disposition in an amount equal to the
excess of the fair market value of the shares at the time such shares
were purchased by me over the price which I paid for the shares. I
HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE
DATE OF ANY DISPOSITION OF SHARES AND I WILL MAKE ADEQUATE PROVISION
FOR FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH
ARISE UPON THE DISPOSITION OF THE COMMON STOCK. The
<PAGE>
Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to sale or
early disposition of Common Stock by me. If I dispose of such shares
at any time after the expiration of the 2-year holding period, I
understand that I will be treated for federal income tax purposes as
having received income only at the time of such disposition, and that
such income will be taxed as ordinary income only to the extent of an
amount equal to the lesser of (1) the excess of the fair market value
of the shares at the time of such disposition over the purchase price
which I paid for the shares, or (2) 15% of the fair market value of
the shares on the first day of the Offering Period. The remainder of
the gain, if any, recognized on such disposition will be taxed as
capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent
upon my eligibility to participate in the Employee Stock Purchase
Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) ______________________________________________
(First) (Middle) (Last)
_________________________ ____________________________________________
Relationship
____________________________________________
(Address)
Employee's Social
Security Number: ____________________________________________
Employee's Address: ____________________________________________
____________________________________________
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<PAGE>
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated: ____________ __________________________________________
Signature of Employee
__________________________________________
Spouse's Signature (If beneficiary other than spouse)
-3-
<PAGE>
EXHIBIT B
VIANT CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Viant Corporation
1999 Employee Stock Purchase Plan which began on ___________, ______ (the
"Enrollment Date") hereby notifies the Company that he or she hereby withdraws
from the Offering Period. He or she hereby directs the Company to pay to the
undersigned as promptly as practicable all the payroll deductions credited to
his or her account with respect to such Offering Period. The undersigned
understands and agrees that his or her option for such Offering Period will be
automatically terminated. The undersigned understands further that no further
payroll deductions will be made for the purchase of shares in the current
Offering Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
____________________________________
____________________________________
____________________________________
Signature:
____________________________________
Date: _______________________________
<PAGE>
SUBLANDLORD'S CONSENT TO ASSIGNMENT OF SUBLEASE
BANQUE PARIBAS, a French banking corporation, having an office at 787
Seventh Avenue, New York, New York ("Sublandlord") hereby consents to the
Subleasehold Assignment Agreement (the "Assignment") dated as of February 20,
1997 by ADOBE SYSTEMS INCORPORATED, a California corporation duly authorized to
conduct business in New York State, having an office at 345 Park Avenue, San
Jose, California 95110 ("Assignor") to SILICON VALLEY INTERNET PARTNERS, a
California corporation duly authorized to conduct business in the State of New
York, having an address at 950 Tower Lane, Foster City, California 94404
("Assignee") pertaining to the assignment of the sublease dated as of July 27,
1993 (the "Sublease") between Credit Du Nord (predecessor-in-interest to
Sublandlord), as sublessor, and Assignor, as subtenant, for a portion of the
thirty-fifth (35) floor (the "Sublet Space") in the building known as 520
Madison Avenue, New York, New York (the "Building"), which Sublease is subject
and subordinate to that certain lease now between 520 MADISON VENTURE
(successor-in-interest to Tishman Speyer 520 Venture) ("Landlord") and
Sublandlord (successor-in-interest to Credit Du Nord) dated as of November 30,
1981 (which lease, as the same was amended by letter agreements dated November
30, 1981, December 4, 1981 and January 27, 1983, is hereinafter called the
"Lease"), such consent being subject to and upon the following terms and
conditions, to each of which Assignor and Assignee consents and agrees to be
bound:
1. Sublandlord hereby consents to the unconditional assignment of all of
Assignor's right, title and interest as subtenant under the Sublease effective
as of the date (the "Effective Date") which is the latest of (i) the date of
full execution and unconditional delivery of this Agreement by the parties
hereto, (ii) the effective date set forth in the Assignment, and (iii) the
receipt of Landlord's consent to the Assignment as required under the Lease.
2. The Assignment (and all amendments and modifications thereof) shall
continue to be subject and subordinate at all times to all of the covenants,
agreements, terms, provisions and conditions of the Sublease, the Lease, the
Consent to Sublet dated November 4, 1993 between Landlord, Sublandlord and
Assignor, this Agreement and the consent agreement of Landlord executed by the
parties in connection with the Assignment ("Landlord's Consent"). Neither
Assignor nor Assignee shall do or permit anything to be done in connection with
the Sublease or the Assignee's occupancy of the Sublet Space which will violate
the Lease or the Sublease.
3. Assignee will not, without the prior written consent of Sublandlord in
each instance, assign the Sublease or this Agreement or sublet the Sublet Space
or any part thereof. This Agreement shall not be construed as a consent by
Sublandlord to, or as permitting, any other or further licensing, subletting or
assignment by Assignor or Assignee or any amendment of the Assignment.
4. Sublandlord is not a party to the Assignment and is not bound by its
provisions; however, any modification or amendment to the Assignment without the
prior written consent of Sublandlord in each instance shall be deemed a material
default under the Sublease. Nothing contained herein shall be construed as a
consent
<PAGE>
to, or approval or ratification by Sublandlord of, any of the particular
provisions of the Assignment or as a representation or warranty by Sublandlord.
Sublandlord shall not be bound or estopped in any way by the provisions of this
Agreement.
5. Assignee will use the Sublet Space for the purposes set forth in the
Lease and the Sublease and for no other purposes. No alterations, additions
(including those affecting electric power) or physical changes will be made in
the Sublet Space or any part thereof without the prior written consent of
Landlord and Sublandlord in each instance, on the terms and subject to the
conditions set forth in the Sublease.
6. Assignor hereby represents and warrants to Sublandlord that Assignor has
not at any time heretofore permitted or suffered any act, deed, matter or thing
whatsoever whereby the Sublet Space, or any part thereof, has been in any way
impeached, charged, affected or encumbered, and that the Sublet Space will not
be so encumbered on the Effective Date.
7. Assignor and Assignee agree that they shall pay any brokerage
commissions payable in connection with the Assignment, and Sublandlord shall
have no responsibility with respect thereto. Assignor and Assignee, jointly and
severally, agree to indemnify and hold harmless Sublandlord from and against any
claims for any such brokerage commissions and all costs, expenses and
liabilities in connection therewith, including without limitation, attorneys'
fees and expenses. Nothing contained in this Section 7 shall limit the
respective rights or obligations of Assignor and Assignee to or against each
other under the Assignment.
8. Assignee assumes jointly and severally with Assignor the due performance
of the Sublease on the part of the subtenant thereunder to be performed to the
full end of the term of the Sublease, notwithstanding any other or further
assignment. Assignee and Assignor jointly and severally indemnify Sublandlord
against and hold it harmless from any and all losses, costs, expenses, claims
and liabilities, including, but not limited to, reasonable counsel fees for
which Sublandlord may be liable or claimed to be liable under Articles 13 or 14
of Landlord's Consent. Nothing in this paragraph shall be deemed to limit any of
the rights Assignor and Assignee may have against each other, including, but not
limited to, the right to seek contribution from each other.
9. Assignor shall reimburse Sublandlord on demand for any reasonable
out-of-pocket costs that may be incurred by Sublandlord in connection with the
consummation of the Assignment and the delivery of Landlord's and Sublandlord's
consent thereto, including, without limitation, the costs of making
investigations as to the acceptability of Assignee, and legal costs incurred in
connection with the granting of any requested consent.
10. If any provisions of this Agreement shall be at variance with the
provisions of the Sublease or the Assignment, the provisions of this Agreement
shall prevail. This Consent shall not be changed orally but only by an agreement
in writing signed by the party against whom enforcement of such change is
sought.
2
<PAGE>
11. The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly executed as of the 6th day of March, 1997.
ADOBE SYSTEMS INCORPORATED,
Witness: Assignor
/s/ Signature Illegible By: /s/ Angelo A. Garcia
Name: ANGELO A. GARCIA
Title: VP REAL ESTATE
SILICON VALLEY INTERNET
PARTNERS, Assignee
Witness:
/s/ Signature Illegible By: Robert L. Gett
Name: Robert L. Gett
Title: CEO
Witness: BANQUE PARIBAS, Sublandlord
____________________________ By: /s/ Signature Illegible
By: /s/ Signature Illegible
3
<PAGE>
EXECUTION
LEASE AGREEMENT
BETWEEN
CHELSEA GREEN ASSOCIATES, L.P., LANDLORD
AND
SILICON VALLEY INTERNET PARTNERS, TENANT
DATED: JULY 28, 1997
PREMISES: 625 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK
LEASE: A PORTION OF THE THIRD (3RD) FLOOR
EXHIBITS: A - FLOOR PLAN
B - LANDLORD'S WORK
<PAGE>
TABLE OF CONTENTS
PAGE
----
Article 1 Rent
Article 2 Commencement of Term
Article 3 Adjustments of Rent
Article 4 Electricity
Article 5 Use
Article 6 Alterations and Installations
Article 7 Repairs
Article 8 Requirements of Law
Article 9 Insurance, Loss, Reimbursement,
Liability
Article 10 Damage by Fire or Other Cause
Article 11 Assignment, Mortgaging, Subletting,
Etc.
Article 12 Certificate of Occupancy
Article 13 Adjacent Excavation - Shoring
Article 14 Condemnation
Article 15 Access to Demised Premises; Changes
Article 16 Conditions of Limitation
Article 17 Re-entry by Landlord, Injunction
Article 18 Damages
Article 19 Landlord's Right to Perform Tenant's
Obligations
Article 20 Quiet Enjoyment
Article 21 Services and Equipment
Article 22 Definitions
Article 23 Invalidity of any Provision
Article 24 Brokerage
Article 25 Subordination
Article 26 Certificates
Article 27 Legal Proceedings, Waiver of Jury Trial.
Article 28 Surrender of Premises
Article 29 Rules and Regulations
Article 30 Consents and Approvals
Article 31 Notices
Article 32 No Waiver
Article 33 Captions
Article 34 Inability to Perform
Article 35 No Representations by Landlord
Article 36 Arbitration
Article 37 Indemnity
Article 38 Memorandum of Lease
Article 39 Signs
Article 40 Security Deposit
<PAGE>
Article 41 Additional Space
Article 42 Renewal Option
Article 43 Miscellaneous
<PAGE>
LEASE AGREEMENT made as of this 28th day of July, 1997, between CHELSEA
GREEN ASSOCIATES, L.P., having an office at 675 Avenue of the Americas, New
York, New York 10010 (hereinafter referred to as "Landlord") and Silicon Valley
Internet Partners, having an office at 950 Tower Lane, Suite 300, Foster City,
California 94404 (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, Landlord is the owner of the building (the "Building") and
premises known as 625 Avenue of the Americas, New York, New York (the
"Premises"); and
WHEREAS, Tenant desires to hire from Landlord and Landlord desires to lease
to Tenant a portion of the Premises;
NOW, THEREFORE, Landlord hereby leases and Tenant hereby rents from Landlord a
portion of the third (3rd) floor of the Premises which the parties hereto have
mutually agreed to consider as containing approximately 25,000 rentable square
feet, as shown on the plan annexed hereto as Exhibit A (the "demised premises")
for a term (the "Term") commencing on
---------
the "Commencement Date" and ending on the "Expiration Date" (as said terms are
defined in Article 2 hereof), unless the Term shall sooner cease and terminate
as hereinafter provided.
The parties hereby covenant and agree as follows:
ARTICLE 1
RENT
1.01. Tenant agrees to pay to Landlord a fixed annual rent (the "fixed
annual rent") as follows:
<TABLE>
<CAPTION>
Year Fixed Annual Rent Monthly Installment
- ------------------------ ------------------------- -------------------------
<S> <C> <C>
Rent Commencement Date -
Month 12 $650,000.00 $54,166.67
Months 13 - 24 663,000.00 55,250.00
Months 25 - 36 676,000.00 56,333.33
Months 37 - 48 689,000.00 57,416.67
Months 49 - 60 702,000.00 58,500.00
Months 61 - 72 752,000.00 62,666.67
<PAGE>
Months 73 - 84 766,000.00 63,833.33
Months 85 - 96 780,000.00 65,000.00
Months 97 - 108 794,000.00 66,166.67
Months 109 - 120 808,000.00 67,333.33
</TABLE>
All monthly installments of fixed annual rent shall be paid in advance on
the first day of each calendar month during the Term, at the office of Landlord
or such other place as Landlord may designate, without any setoff or deduction
whatsoever, except such deductions as are specifically referred to in Articles
10 and 14 hereof. The payment of fixed annual rent shall commence on the day
which is four (4) months after the Commencement Date (the "Rent Commencement
Date"). Notwithstanding the previous sentence, the first full month's
installment of fixed annual rent (which shall be applied against the first full
month's payment of fixed annual rent) shall be paid by Tenant to Landlord upon
the execution of this Lease. Should the Rent Commencement Date fall on any day
other than the first of a month, then the fixed annual rent for such month shall
be prorated on a per diem basis, and Tenant agrees to pay the amount thereof for
such partial month on the Rent Commencement Date.
1.02. Tenant shall pay the fixed annual rent and all additional rent
payable hereunder in lawful money of the United States by check (subject to
collection) drawn to Landlord's order. All sums, other than fixed annual rent,
payable by Tenant hereunder shall be deemed additional rent and shall be payable
on ten (10) days' written notice demand unless other payment dates are
hereinafter provided. Landlord shall have the same rights and remedies
(including, without limitation, the right to commence a summary proceeding) for
a default in the payment of additional rent as for a default in the payment of
fixed annual rent notwithstanding the fact that Tenant may not then also be in
default in the payment of fixed annual rent.
1.03. If Tenant shall fail to pay when due any installment of fixed annual
rent or any payment of additional rent for a period of five (5) days after such
installment or payment shall have become due, Tenant shall pay interest thereon
at the Interest Rate (as such term is defined in Article 22 hereof), from the
date when such installment or payment shall have become due to the date of the
payment thereof, and such interest shall be deemed additional rent. The
provisions of this Section 1.03 are in addition to all other remedies available
to Landlord for nonpayment of fixed annual rent or additional rent.
1.04. If any of the fixed annual rent or additional rent payable under this
Lease shall be or become uncollectible, reduced or required to be refunded
because of any Legal Requirement (as such term is defined in Article 22 hereof),
Tenant shall enter into such agreement(s) and take such other legally
permissible steps as Landlord may reasonably request to permit Landlord to
collect the maximum rents which from time to time during the continuance of such
Legal Requirement may be legally permissible and not in excess of the amounts
reserved therefor
2
<PAGE>
under this Lease. Upon the termination of such Legal Requirement, (a) the rents
hereunder shall be payable in the amounts reserved herein for the periods
following such termination and (b) Tenant shall pay to Landlord, to the maximum
extent legally permissible, an amount equal to (i) the rents which would have
been paid pursuant to this Lease but for such Legal Requirement less (ii) the
rents paid by Tenant during the period such Legal Requirement was in effect.
ARTICLE 2
COMMENCEMENT OF TERM
2.01. (a) The "Commencement Date" shall be the execution date of the Lease.
(b) The "Expiration Date" shall be the last day of the month in which
occurs the tenth anniversary of the Rent Commencement Date.
2.02. Landlord shall deliver the demised premises to Tenant on the
Commencement Date, vacant, broom clean, and with the HVAC system in working
order. Landlord shall perform only the work set forth on EXHIBIT B annexed
hereto (hereinafter referred to as "Landlord's Work"). Landlord's Work shall be
performed in a good workmanlike manner in compliance with all Legal Requirements
and shall be completed no later than the completion of Tenant's Extra Work.
Except for the Landlord's Work, Landlord shall not be required to perform any
work or expend any services to prepare the demised premises or the Building for
Tenant's occupancy. All other installations, materials and work which may be
required by Tenant to prepare, equip, decorate and furnish the demised premises
for Tenant's occupancy shall be done by Tenant at Tenant's expense and are
hereinafter called "Tenant's Extra Work". All Tenant's Extra Work shall be
subject to, and conform with, the provisions of this Lease, including, but not
limited to, Article 6. Landlord shall reimburse Tenant for the cost of certain
of Tenant's Extra Work, as set forth in Section 6.09. Tenant's free rent period
shall be extended by one day for each day that Tenant is prevented or materially
hindered from performing Tenant's Extra Work solely due to the wrongful action,
wrongful inaction or gross negligence of Landlord, its agents or contractors.
ARTICLE 3
ADJUSTMENTS OF RENT
3.01. A. For purposes hereof, the following definitions shall apply:
(a) The term "Base Tax" shall mean the Taxes actually payable
with respect to the Premises for the 1998 Calendar Year.
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(b) The term "Tax Year" shall mean each period of twelve months
which includes any part of the Term which now or hereafter is or may be duly
adopted as the fiscal year for real estate tax purposes of the City of New York.
(c) The term "Taxes" shall mean (i) all real estate taxes,
assessments, governmental levies, municipal taxes, county taxes or any other
governmental charge, general or special, ordinary or extraordinary, unforeseen
as well as foreseen, of any kind or nature whatsoever, which are or may be
assessed, levied or imposed upon all or any part of the Premises and the
sidewalks, plazas or streets adjacent thereto, including any tax, excise or fee
measured by or payable with respect to any rent (other than any occupancy or
rent tax payable by Tenant pursuant to Section 3.03), and levied against
Landlord and/or the Premises under the laws of the United States, the City or
State of New York, or any political subdivision thereof, and (ii) any expenses
incurred by Landlord, including reasonable payments to attorneys and appraisers,
in contesting any of the items set forth in clause (i) of this sentence, or the
assessed valuations of all or any part of the Premises. There shall be excluded
from Taxes all income, estate, succession, inheritance, transfer and franchise
taxes imposed upon Landlord; provided, however, that if at any time during the
Lease Term the method of taxation of real estate shall be changed and as a
result any other tax or assessment shall be imposed upon Landlord or the
Premises in addition to or in substitution for, in whole or in part, any of the
taxes or assessments listed in the preceding sentence, such other tax or
assessment shall be included in and deemed part of Taxes, but only to the extent
that the same would be payable if the Premises were the only property of
Landlord. The amount of any special assessments for public improvements or
benefits to be included in Taxes for any year, in the case where the same may,
at the option of the taxpayer, be paid in installments, shall be limited to the
amount of the installment due in respect of such year, together with any
interest payable in connection therewith (other than interest and penalties
payable by reason of the delinquent payment of such installment).
(d) The term "Tenant's Tax Share" shall mean 18.116%.
(e) The term "Escalation Statement" shall mean a statement
setting forth the amount payable by Tenant for a specified Tax Year or calendar
year, as the case may be, or for some portion thereof pursuant to this Article
3, which shall be accompanied with a copy of the most recent available tax
bill(s).
B. Tenant shall pay to Landlord as additional rent for each Tax Year a
sum equal to Tenant's Tax Share of the amount by which the Taxes for such Tax
Year exceed the Base Tax (hereinafter referred to as "Tenant's Tax Payment").
Landlord shall furnish to Tenant an annual Escalation Statement (subject to
revision as hereinafter provided) for each Tax Year setting forth Tenant's Tax
Payment for such Tax Year. Tenant's Tax Payment shall be due and payable as
follows: two semi-annual installments, in advance, on the first day of each June
and December of each calendar year but in no event sooner than 15 days after
Tenant's receipt of the Escalation Statement. If an annual Escalation Statement
is furnished to Tenant after the commencement of the Tax Year to which it
relates, then (a) until such Escalation Statement is rendered, Tenant
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shall pay Tenant's Tax Payment for such Tax Year in installments based upon the
last Escalation Statement rendered to Tenant with respect to Taxes and (b)
Tenant shall, within 15 days after such annual Escalation Statement is furnished
to Tenant, pay to Landlord an amount equal to any underpayment of the
installments of Tenant's Tax Payment theretofore paid by Tenant for such Tax
Year and, in the event of an overpayment by Tenant, Landlord shall promptly
refund the amount of such overpayment to Tenant. If there shall be any increase
in Taxes for any Tax Year, whether during or after such Tax Year, Landlord shall
furnish a revised Escalation Statement for such Tax Year to Tenant, and Tenant's
Tax Payment for such Tax Year shall be adjusted and paid in the same manner as
provided in the preceding sentence. If during the Term, Taxes are required to be
paid (either to the appropriate taxing authorities or as tax escrow payments to
a superior mortgagee) in full or in monthly, quarterly, or other installments,
on any other date or dates than as presently required, then at Landlord's
option, Tenant's Tax Payments shall be correspondingly accelerated or revised so
that said Tenant's Tax Payments are due at least 30 days prior to the date
payments are due to the taxing authorities or the superior mortgagee. The
benefit of any discount for any early payment or prepayment of Taxes shall be
subtracted from Taxes, provided that Tenant has theretofore made all Tenant's
Tax Payments with respect to the tax period for which such prepayment was made.
C. If Landlord shall receive a refund of Taxes for any Tax Year,
Landlord shall permit Tenant to credit against subsequent payments under this
Section 3.01, Tenant's Tax Share of the refund, but not in excess of Tenant's
Tax Payment paid for such Tax Year.
3.02. Intentionally Omitted.
3.03. Tenant shall pay to Landlord upon demand, as additional rent, any
occupancy tax or rent tax now in effect or hereafter, which Landlord is required
to pay with respect to the demised premises or this Lease.
3.04. If the Commencement Date shall be other than the first day of a Tax
Year or if the date of the expiration or other termination of this Lease shall
be a day other than the last day of a Tax Year, then Tenant's Tax Payment for
such partial year shall be equitably adjusted taking into consideration the
portion of such Tax Year falling within the Term. Landlord shall, as soon as
reasonably practicable, cause an Escalation Statement with respect to Taxes for
the Tax Year in which the Term expires to be prepared and furnished to Tenant.
3.05. In no event shall the fixed annual rent ever be reduced by operation
of this Article 3. The rights and obligations of Landlord and Tenant under the
provisions of this Article 3 shall survive the termination of this Lease, and
payments shall be made pursuant to this Article 3 notwithstanding the fact that
an Escalation Statement is furnished to Tenant after the expiration or other
termination of the Term.
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3.06. Landlord's failure to render an Escalation Statement with respect to
any Tax Year shall not prejudice Landlord's right to thereafter render an
Escalation Statement with respect thereto or with respect to any subsequent Tax
Year.
3.07. Each Escalation Statement shall be conclusive and binding upon Tenant
unless within 30 days after receipt of such Escalation Statement Tenant shall
notify Landlord that it disputes the correctness of such Escalation Statement,
specifying the particular respects in which such Escalation Statement is claimed
to be incorrect. Any dispute relating to any Escalation Statement, not resolved
within 45 days after the giving of such notice by Tenant, may be submitted to
arbitration by either party pursuant to Article 36 hereof. Pending the
determination of such dispute, Tenant shall pay additional rent in accordance
with the Escalation Statement that Tenant is disputing, without prejudice to
Tenant's position.
ARTICLE 4
ELECTRICITY
4.01. For the period commencing on the Commencement Date, Tenant covenants
and agrees to pay directly to the utility company supplying electric current for
the demised premises, the amounts due for electric current consumed, including
by use of the HVAC system, as indicated by meters measuring Tenant's consumption
thereof.
4.02. Any additional risers, feeders or other equipment or service proper
or necessary to supply Tenant's electrical requirements, upon written request of
Tenant, may be installed by Tenant at the sole cost and expense of Tenant, if in
Landlord's reasonable judgment the same are necessary and will not cause
permanent damage or injury to the Premises or the demised premises or cause or
create a dangerous or hazardous condition or entail excessive or unreasonable
alterations, repairs or expense or interfere with or disturb other tenants or
occupants.
4.03. INTENTIONALLY OMITTED.
4.04. Tenant's use of electric current in the demised premises shall not at
any time exceed the capacity of any of the electrical conductors and equipment
in or otherwise serving the demised premises which capacity shall satisfy the
provisions of Section 4.08 hereof. Tenant shall not make or perform or permit
the making or performing of, any alterations to wiring, installations or other
electrical facilities in or serving the demised premises without the prior
consent of Landlord in each instance which consent shall not be unreasonably
withheld or delayed. Should Landlord grant any such consent, all additional
risers or other equipment required therefor shall be installed by Tenant and the
cost thereof shall be paid by Tenant.
4.05. Landlord shall not be liable in any way to Tenant for any failure or
defect in the supply or character of electric energy furnished to the demised
premises by reason of any
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requirement, act or omission of the public utility providing the Premises with
electricity or for any other reason whatsoever, other than the gross negligence
of Landlord, its agents or contractors.
4.06. INTENTIONALLY OMITTED.
4.07. At Landlord's option, Tenant shall purchase from Landlord or
Landlord's agent all lighting tubes, lamps, bulbs and ballasts used in the
demised premises and Tenant shall pay Landlord's reasonable charges for
providing and installing same on demand as additional rent.
4.08. Tenant covenants and agrees that at no time will the connected
electrical load in the demised premises exceed six (6) watts per rentable square
foot, unless otherwise specifically consented to by Landlord. Landlord
represents and warrants that the demised premises has an electrical capacity of
6 watts per rentable square foot exclusive of electricity needed for HVAC.
ARTICLE 5
USE
5.01. The demised premises shall be used as and for executive and general
offices, software development, sales calls, periodic "workshops" (20-30 clients,
1 or 2 times per month), and for no other purpose except as aforesaid.
5.02. Tenant shall not use or permit the use of the demised premises or any
part thereof in any way which would violate any of the covenants, agreements,
terms, provisions and conditions of this Lease or for any unlawful purposes or
in any unlawful manner or in violation of the Certificate of Occupancy for the
demised premises of the Building; and Tenant shall not permit the demised
premises or any part thereof to be used in any manner or anything to be done,
brought into or kept therein which shall impair or interfere with (because of
noise level, traffic or otherwise) (i) the character, reputation or appearance
of the Building as a high quality office building, (ii) any of the Building
services or the proper and economic heating, cleaning, air conditioning or other
servicing of the Building or the demised premises, or (iii) the use of any of
the other areas of the Building by, or occasion discomfort, inconvenience or
annoyance to, any of the other tenants or occupants of the Building. Tenant
shall not install any electrical or other equipment of any kind which, in the
reasonable judgment of Landlord, might cause any such impairment, interference,
discomfort, inconvenience or annoyance or which might overload the risers or
feeders servicing the demised premises or other portions of the Building.
Landlord shall have the right to require Tenant, at Tenant's expense and to the
reasonable satisfaction of Landlord, to install curtains or blinds on the inside
of windows in the demised premises facing the atrium of the Building.
5.03 A. Tenant shall not use, play or operate or permit to be used, played
or operated any sound making or sound producing device in the demised premises
except in such manner
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and under such conditions as shall prevent any noise from emanating from the
demised premises to other areas in the Building or to street areas outside of
the Building;
B. Whenever necessary, Tenant at its expense, will cause such
exterminating procedures as may be necessary, including exterminating against
vermin, rodents, rats, insects, termites and otherwise, to be effected within
the demised premises. Tenant further agrees to prevent waste matter or refuse to
accumulate in or about the demised premises and shall keep same in a clean and
orderly fashion. Tenant shall arrange for the removal from the demised premises
and the Building of all of its refuse and rubbish, at Tenant's sole cost and
expense.
C. Tenant shall not suffer or permit any occupancy or use thereof for
any purpose which shall be unlawful, obscene or pornographic.
ARTICLE 6
ALTERATIONS AND INSTALLATIONS
6.01. Tenant shall make no alterations, installations, additions or
improvements in or to the demised premises, including but not limited to,
Tenant's Extra Work, without Landlord's prior written consent and then only by
contractors or mechanics first approved by Landlord, such consent and approval
not to be unreasonably withheld or delayed. All such work, alterations,
installations, additions and improvements shall be done at Tenant's sole expense
during business hours and at such other times as Landlord may from time to time
reasonably designate.
Tenant's Extra Work and any future work in the demised premises
shall be done solely in accordance with plans and specifications first approved
in writing by Landlord. Tenant shall reimburse Landlord promptly upon demand for
any reasonable and actual out of pocket costs and expenses incurred by Landlord
in connection with Landlord's review of such Tenant's plans and specifications.
Landlord will not unreasonably withhold or delay its consent to requests for
nonstructural alterations, additions and improvements (provided they will not
interfere with Landlord's work or the operation of the Building nor affect the
outside of the Building nor adversely affect its structure, electrical, HVAC,
plumbing or mechanical systems).
Any such approved alterations and improvements shall be performed
in accordance with the foregoing and the following provisions of this Article 6:
1. All work shall be done in a good and workmanlike manner.
2. (a) Any contractor employed by Tenant to perform any work
permitted by this Lease, and all of its subcontractors, shall
agree to employ only such labor as will not result in
jurisdictional disputes or strikes or cause disharmony with other
workers employed at the Building. Tenant will inform Landlord in
writing of the names of any contractors or subcontrac-
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tors Tenant proposes to use in the demised premises at least ten
(10) days prior to the beginning of work by such contractors or
subcontractors, and Landlord shall not unreasonably withhold or
delay its consent to such contractors or subcontractors.
(b) Tenant covenants and agrees to pay to the contractor, as the
work progresses, the entire cost of supplying the materials and
performing the work shown on Tenant's approved plans and
specifications.
3. All such alterations shall be performed in compliance with all
Legal Requirements (as defined in Article 22 hereof) including,
without limitation, those imposed by the New York City Building
Department, the New York City Fire Department and O.S.H.A.
4. Tenant shall keep the Building and the demised premises free and
clear of all liens for any work or material claimed to have been
furnished to Tenant or to the demised premises on Tenant's
behalf, and all work to be performed by Tenant shall be done in a
manner which will not unreasonably interfere with or disturb
other tenants or occupants of the Building.
5. During the progress of the work to be done by Tenant, said work
shall be subject to inspection by representatives of Landlord who
shall be permitted access and the opportunity to inspect, at all
reasonable times, but this provision shall not in any way
whatsoever create any obligation on Landlord to conduct such an
inspection.
6. INTENTIONALLY OMITTED.
7. Prior to commencement of any work, Tenant shall furnish to
Landlord certificates evidencing the existence of:
(a) worker's compensation insurance covering all persons employed
for such work with statutorily required limits; and
(b) Employer's liability coverage including bodily injury caused
by disease with limits of not less than $100,000 per employee;
(c) Comprehensive general liability insurance including but not
limited to completed operations coverage, products liability
coverage, contractual coverage, broad from property damage,
independent contractor's coverage and personal injury coverage
naming Landlord, as well as such representatives and consultants
of them as Landlord shall reasonably specify (collectively
"Landlord's Consultants"), as well as Tenant, as additional
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insureds, with coverage of not less than $3,000,000 combined
single limit coverage (or such higher limits as Landlord may from
time to time impose in its reasonable judgment);
(d) Tenant shall require all contractors engaged or employed by
the Tenant to indemnify and hold Tenant. Landlord, and Landlord's
Consultants harmless in accordance with the following clauses
(with such modifications therein as may be required from time to
time by reason of a change in the parties constituting Landlord's
Consultants):
"The contractor hereby agrees to the fullest extent permitted by
law to assume the entire responsibility and liability for and
defense of and to pay and indemnify Landlord, Tenant, and
Landlord's Consultants against any loss, cost, expense, liability
or damage and will hold each of them harmless from and pay any
loss, cost, expense, liability or damage (including, without
limitation, judgments, attorney's fees, court costs, and the cost
of appellate proceedings), which any and each of them incur
because of injury to or death of any person or on account of
damage to property, including loss of use thereof, or any other
claim arising out of, in connection with, or as a consequence of
the performance of the work by the contractor and/or any acts or
omissions of the contractor or any of its officers, directors,
employees, agents or sub-contractors or anyone directly or
indirectly employed by the contractor or anyone for whose acts
the contractor may be liable as it relates to the scope of this
Contract, whether such injuries to person or damage to property
are due or claimed to be due to any negligence of the Landlord,
Landlord's Consultants, and/or Tenant, its or their employees or
agents or any other person."
The contractor's insurance shall specifically insure the
foregoing hold harmless provision verbatim.
(e) Such insurance shall be placed with solvent and responsible
companies reasonably satisfactory to the Landlord and licensed or
authorized to do business in the State of New York, with a
general policy holder's rating of not less than "A" and a
financial rating of not less than "Class X" as rated in the most
current available "Best's" Insurance Reports or such other
comparable publication as may be acceptable to Landlord in the
event that "Best's" Insurance Reports ceases to publish such
information, and the policies shall provide that they may not be
cancelled without 30 days' prior written notice in writing to
Landlord.
8. Movement of all men and materials shall only be done at the
direction, the times and in the manner reasonably designated by
Landlord.
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9. No improvements estimated to cost more than $50,000 (as estimated
by Landlord's architect or engineer or general contractor) shall
be undertaken (i) except under the supervision of a licensed
architect or licensed professional engineer reasonably
satisfactory to Landlord, and (ii) except after at least 10 days'
prior written notice to Landlord.
6.02. Notice is hereby given that Landlord shall not be liable for any
labor or materials furnished to or to be furnished to Tenant upon credit, and
that no mechanic's or other lien for any such labor or materials shall attach to
or affect the reversion or other estate or interest of Landlord in and to the
demised premises. Any mechanic's lien filed against the demised premises or the
Building for work claimed to have been done for or materials claimed to have
been furnished to Tenant shall be discharged by Tenant at its expense within
thirty (30) days after such filing, by payment, filing of the bond required by
law or otherwise. Failure to comply with the provisions of this Section 6.02
shall constitute a material default by Tenant under this Lease entitling
Landlord to exercise any or all of the remedies provided in this Lease in the
event of Tenant's default.
6.03. All alterations, installations, additions and improvements made and
installed by Landlord at its expense, including without limitation all work
referred to in Article 2 hereof and in EXHIBIT B hereto, shall be the property
of Landlord and shall remain upon and be surrendered with the demised premises
as a part thereof at the end of the Term.
6.04 .All Tenant's Extra Work and all alterations, installations, additions
and improvements made and installed by Tenant, or at Tenant's expense upon or in
the demised premises which are of a permanent nature and which cannot be removed
without damage to the demised premises or Building shall become the property of
the Landlord, and shall remain upon and be surrendered with the demised premises
as a part thereof at the end of the Term, except that (a) Landlord shall have
the right at the time Landlord approves plans for installation of same to serve
notice upon Tenant that any such alterations, installations, additions and
improvements shall be removed or (b) Tenant may elect to remove the same and, in
the event of service of such notice or such election by Tenant, Tenant will, at
Tenant's own cost and expense, remove the same in accordance with such request,
and restore the demised premises to a condition substantially the same as and
when delivered to Tenant. Tenant shall not be required to remove usual office
alterations. Tenant shall not be deemed to have surrendered the demised premises
until such work has been completed and until the provisions of Section 6.05 have
been complied with, whether by Tenant or by Landlord at Tenant's expense, and
Tenant shall continue to pay rent, after the expiration of the Term, at the then
fair rental value for the demised premises, and otherwise in accordance with the
provisions of this Lease until such completion and compliance.
6.05. Where furnished by or at the expense of Tenant, all non-structural
furniture, furnishings and trade fixtures, including without limitation, murals,
machines and equipment, counters, screens, grille work, special paneled doors,
cages, partitions, metal railings, closets, paneling, free standing lighting
fixtures and equipment, drinking fountains and air handling
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equipment, and any other movable property shall remain the property of Tenant
which may at its option remove all or any part thereof at any time prior to the
expiration of the Term. As to such property which Tenant does not remove, the
same shall be, if left by Tenant, deemed abandoned by Tenant and thereupon the
same shall become the property of Landlord.
6.06. If any alterations, installations, additions, improvements or other
property which Tenant shall have the right to remove or be requested by Landlord
to remove as provided in Sections 6.04 and 6.05 hereof (herein in this Section
6.06 called the "property") are not removed on or prior to the expiration of the
Term, Landlord shall have the right to remove the property and to dispose of the
same without accountability to Tenant and at the sole cost and expense of
Tenant. In case of any damage to the demised premises or the Building resulting
from the removal of the property, Tenant shall repair such damage or, in default
thereof, shall reimburse Landlord for Landlord's cost in repairing such damage.
This obligation shall survive any termination of this Lease.
6.07. INTENTIONALLY OMITTED.
6.08. Tenant shall keep records of each of Tenant's alterations,
installations, additions and improvements costing in excess of $25,000, and of
the cost thereof. Tenant shall, within thirty (30) days after demand by
Landlord, furnish to Landlord copies of such records if Landlord shall require
same in connection with any proceeding to reduce the assessed valuation of the
Building, or in connection with any proceeding instituted pursuant to Article 14
hereof.
6.09. (a) Landlord shall reimburse Tenant, from time to time, upon
completion of portions of Tenant's Extra Work, up to an aggregate amount equal
to $375,000. Reimbursement by Landlord to Tenant for Tenant's Extra Work shall
be made in installments within thirty (30) days of Tenant making a progress
payment to Tenant's contractors (but not more than once in each calendar month),
in accordance with the contract documents between Tenant and such contractor,
copies of which contract and checks evidencing payment by Tenant shall have been
furnished to Landlord, and each such installment shall be in an amount equal to
$375,000 multiplied by a fraction, the numerator of which shall be the amount of
Tenant's progress payment (without reduction for any Tenant's retainage, such
retainage not to exceed 10%), with respect to which Tenant is being reimbursed
and the denominator of which shall be the total completed cost of Tenant's Extra
Work. Up to 15% of the cost of Tenant's Extra Work may be for architectural fees
and disbursements and other "soft" costs. Tenant may direct Landlord to make
Landlord's payment otherwise due to Tenant directly to Tenant's contractor, in
which event copies of the checks evidencing payment by Tenant to Contractor for
the work for which Landlord is paying Contractor directly, shall not be
required. Landlord shall retain 10% of each such payment which retainage shall
be paid to Tenant only upon completion of Tenant's Extra Work in accordance with
the terms of this Lease and upon submission to landlord of documents reasonably
satisfactory to Landlord evidencing that such Tenant's Extra Work has been fully
and properly completed, that all amounts due for materials and labor have been
paid in full and that all other conditions reasonably imposed by Landlord as a
condition to such payment have been
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satisfied in full. To the extent that Tenant's Extra Work costs less than
$375,000, Landlord shall pay to Tenant, up to the aggregate amount of such
deficiency, at such time or times that Tenant does work in or to the demised
premises which would have constituted Tenant's Extra Work had it been done at
the commencement of this Lease. In such event, the computation for such
reimbursement shall be made in accordance with this Section 6.09 as if such work
was a continuation of Tenant's Extra Work.
(b) If Tenant's Extra Work costs in excess of $375,000, then Tenant
shall have the right to so notify Landlord of same at least 10 days prior to the
Rent Commencement Date, and Landlord shall increase the $375,000 reimbursement
amount to the actual cost of Tenant's Extra Work. Tenant shall provide Landlord
with copies of all contract documents between Tenant and its contractors and
such other documents as Landlord may reasonably request so as to verify the
actual cost of Tenant's Extra Work. If the reimbursement amount is increased
above $375,000, then the fixed annual rent for each lease year throughout the
Term shall be increased by $1.00 for each $6.00 of increase in the reimbursement
amount. For example, if Landlord reimburses Tenant for a total of $450,000 of
Tenant's Extra Work, the fixed annual rent for each lease year throughout the
Term shall be increased by $12,500.
ARTICLE 7
REPAIRS
7.01. Except as set forth in Section 7.05, Tenant shall, at its sole cost
and expense, make all repairs to the demised premises and the fixtures and
appurtenances therein, including but not limited to the HVAC system serving the
demised premises, including those necessitated by the use, act, omission,
occupancy or negligence of Tenant or by the use of the demised premises in a
manner contrary to the purposes for which same are leased to Tenant, as and when
needed to preserve them in good working order and condition. Except as otherwise
provided in Section 9.05 hereof, all damage or injury to the Building or
Premises, including demised premises, and to its fixtures, appurtenances and
equipment caused by Tenant moving property in or out of the Building or by
installation or removal of furniture, fixtures or other property, shall be
repaired, restored or replaced promptly by Tenant at its sole cost and expense,
which repairs, restorations and replacements shall be in quality and class
substantially equal to the original work or installations prior to such damage
or injury. If Tenant fails to make such repairs, restoration or replacements
within thirty (30) days after written notice thereof from Landlord, same may be
made by Landlord at the expense of Tenant and such expense shall be collectible
as additional rent and shall be paid by Tenant within thirty days after
rendition of a bill therefor.
The exterior walls of the Building, the portions of any window
sills outside the windows and the windows are not part of the premises demised
by this Lease and Landlord reserves all rights to such parts of the Building,
but the foregoing shall not relieve Tenant of any obligation to restore, repair,
or replace same in accordance with the immediately preceding paragraph.
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7.02. Tenant shall not place a load upon any floor of the demised premises
exceeding the floor load per square foot area which such floor was designed to
carry and which is allowed by law. The floor of the demised premises will carry
100 pounds live load per square foot of floor space.
7.03. Business machines and mechanical equipment used by Tenant which cause
vibration, noise, cold or heat that may be transmitted to the Building structure
or to any leased space to such a degree as to be objectionable to Landlord or to
any other tenant in the Building shall be placed and maintained by Tenant at its
expense in settings of cork, rubber or spring type vibration eliminators
sufficient to absorb and prevent such vibration or noise, or prevent
transmission of such cold or heat. The parties hereto recognize that the
operation of elevators, air conditioning and heating equipment will cause some
vibration, noise, heat or cold which may be transmitted to other parts of the
Building and demised premises. Landlord shall be under no obligation to endeavor
to reduce such vibration, noise, heat or cold beyond what is customary in
current good building practice for buildings of the same type as the Building.
7.04. Except as otherwise specifically provided in this Lease, there shall
be no allowance to Tenant for a diminution of rental value and no liability on
the part of Landlord by reason of inconvenience, annoyance or injury to business
arising from the making of any repairs, alterations, additions or improvements
in or to any portion of the Building or the demised premises or in or to
fixtures, appurtenances or equipment thereof. Landlord shall exercise reasonable
diligence so as to minimize any interference with Tenant's business operations,
but shall not be required to perform the same on an overtime or premium pay
basis.
7.05 Landlord shall make all repairs (including replacements) to each of
the two (2) HVAC units serving the demised premises which (i) as to any single
item of repair to a particular unit will cost in excess of $10,000; and (ii) are
not caused by the act, omission, occupancy or negligence of Tenant or by the use
of the demised premises in a manner contrary to the purposes for which same are
leased to Tenant. Subject to the foregoing sentence, Landlord shall maintain the
structural, mechanical (other than mechanical located in and exclusively serving
the demised premises), exterior, roof and common areas of the Building and
Premises in good condition and in compliance with all Legal Requirements, except
for any repairs or replacements caused by the act, omission, occupancy or
negligence of Tenant or by the use of the demised premises in a manner contrary
to the purposes for which same are leased to Tenant.
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ARTICLE 8
REQUIREMENTS OF LAW
8.01. Tenant shall comply with all Legal Requirements which shall impose
any violation, order or duty upon Landlord or Tenant with respect to the demised
premises, or arising out of Tenant's use or occupation thereof.
8.02. Notwithstanding the provisions of Section 8.01 hereof, Tenant, at its
own cost and expense, in its name and/or (whenever necessary) Landlord's name,
may contest, in any manner permitted by law (including appeals to a court, or
governmental department or authority having jurisdiction in the matter), the
validity or the enforcement of any Legal Requirements with which Tenant is
required to comply pursuant to this Lease, and may defer compliance therewith
provided that:
(a) such non-compliance shall not subject Landlord to
criminal prosecution or subject the Premises to lien or sale;
(b) such non-compliance shall not be in violation of any
mortgage, or of any ground or underlying lease or any mortgage thereon;
(c) Tenant shall first deliver to Landlord a surety bond
issued by a surety company of recognized responsibility, or other security
satisfactory to Landlord, indemnifying and protecting Landlord against any loss
or injury by reason of such non-compliance; and
(d) Tenant shall promptly, diligently and continuously
prosecute such contest.
Landlord, without expense or liability to it, shall cooperate
with Tenant and execute any documents or pleadings required for such purpose,
provided that Landlord shall reasonably be satisfied that the facts set forth in
any such documents or pleadings are accurate.
ARTICLE 9
INSURANCE, LOSS, REIMBURSEMENT, LIABILITY
9.01. Tenant shall not do or permit to be done any act or thing upon or
about the demised premises, which will invalidate or be in conflict with New
York standard fire insurance policies covering the Building, and fixtures and
property therein, or which would increase the rate of fire insurance applicable
to the Building to an amount higher than it otherwise would be if the demised
premises were used for executive and general offices; and Tenant shall neither
do nor permit to be done any act or thing upon the demised premises which shall
or might subject
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Landlord to any liability or responsibility for injury to any person or persons
or to property by reason of any business or operation being carried on within
the demised premises; but nothing in this Section 9.01 shall prevent Tenant's
use of the demised premises for the purposes stated in Article 5 hereof.
9.02. If, as a result of any act or omission by Tenant or violation of this
Lease, the rate of fire insurance applicable to the Building shall be increased,
Tenant shall reimburse Landlord for all increases of Landlord's and other
tenants' fire insurance premiums so caused; such reimbursement to be additional
rent payable within five days after demand therefor by Landlord. Any disputes
under Section 9.02 shall be resolved in accordance with Article 36.
9.03. Landlord or its agent shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water, rain or snow or leaks from any part of the Building, or from
the pipes, appliances or plumbing works or from the roof, street or subsurface
or from any other place or by dampness or by any other cause of whatsoever
nature, unless any of the foregoing shall be caused by or due to the negligence,
of Landlord, its agents, servants or employees.
9.04. Landlord or its agents shall not be liable for any damage which
Tenant may sustain, if at any time any window of the demised premises is broken,
or temporarily or permanently closed, darkened or bricked upon for any reason
whatsoever, except only Landlord's negligent or arbitrary acts and Tenant shall
not be entitled to any compensation therefor or abatement of rent or to any
release from any of Tenant's obligations under this Lease, nor shall the same
constitute an eviction or constructive eviction.
9.05. Tenant shall reimburse Landlord for all reasonable expenses, damages
or fines incurred or suffered by Landlord, by reason of any act, breach,
violation or non-performance by Tenant, or its agents, servants or employees, of
any covenant or provision of this Lease, or by reason of damage to persons or
property caused by moving property of or for Tenant in or out of the Building,
or by the installation or removal of furniture or other property of or for
Tenant, or by reason of or arising out of any act of Tenant, or its agents,
servants or employees, in the use or occupancy of the demised premises. Subject
to compliance with the provisions of Section 8.02 hereof, where applicable,
Tenant shall have the right, at Tenant's own cost and expense, to participate in
the defense of any action or proceeding brought against Landlord, and in
negotiations for settlement thereof if, pursuant to this Section 9.05, Tenant
would be obligated to reimburse Landlord for expenses, damages or fines incurred
or suffered by Landlord.
9.06. Tenant shall give Landlord notice in case of fire or accidents in the
demised premises promptly after Tenant becomes aware of such event.
9.07. Tenant agrees to look solely to Landlord's interest in the Premises,
for the satisfaction of any right or remedy of Tenant for the collection of a
judgment (or other judicial process) requiring the payment of money by Landlord,
in the event of any liability by Landlord,
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and no other property or assets of Landlord shall be subject to levy, execution,
attachment, or other enforcement procedure for the satisfaction of Tenant's
remedies under or with respect to this Lease, the relationship of Landlord and
Tenant hereunder, or Tenant's use and occupancy of the demised premises, or any
other liability of Landlord to Tenant.
9.08. (a) Notwithstanding anything to the contrary contained in this Lease,
Tenant agrees that it will, at its sole cost and expense, include in its
property insurance policies appropriate clauses pursuant to which the insurance
companies (i) waive all right of subrogation against Landlord and any tenant of
space in the Building with respect to losses payable under such policies and
(ii) agree that such policies shall not be invalidated should the insured waive
in writing prior to a loss any or all right of recovery against any party for
losses covered by such policies. Tenant shall furnish Landlord, upon demand,
evidence satisfactory to Landlord evidencing the inclusion of said clauses in
Tenant's property insurance policies.
(b) Provided that Landlord's right of full recovery under its
property insurance policies is not adversely affected or prejudiced thereby,
Landlord hereby waives any and all right of recovery which it might otherwise
have against Tenant, its servants, agents and employees, for loss or damage
occurring to the Building and the fixtures, appurtenances and equipment therein,
to the extent the same is covered by Landlord's insurance, notwithstanding that
such loss or damage may result from the negligence or fault of Tenant, its
servants, agents or employees. Tenant hereby waives any and all right of
recovery which it might otherwise have against Landlord, its servants, and
employees, and against every other tenant in the Building who shall have
executed a similar waiver as set forth in this Section 9.08(b) for loss or
damage to Tenant's furniture, furnishings, fixtures and other property removable
by Tenant under the provisions hereof to the extent that same is covered by
Tenant's insurance, notwithstanding that such loss or damage may result from the
negligence or fault of Landlord, its servants, agents or employees, or such
other tenant and the servants, agents or employees thereof.
9.09. Tenant covenants and agrees to provide at its expense on or before
the Commencement Date and to keep in force during the Term naming Landlord and
Tenant as insured parties a comprehensive general liability insurance policy
including but not limited to premises operation blanket contractual insurance,
broad form property damage, independent contractor's coverage and personal
injury coverage protecting Landlord and Tenant against any liability whatsoever,
occasioned by any occurrence on or about the demised premises or any
appurtenances thereto. Such policy is to be written by good and solvent
insurance companies licensed to do business in the State of New York reasonably
satisfactory to Landlord, and shall be in such limits as Landlord may reasonably
require. As of the date of this Lease Landlord reasonably requires limits of
liability thereunder of not less than $3,000,000 per occurrence for bodily or
personal injury (including death) and in the amount of $1,000,000 per occurrence
in respect of property damage. Such insurance may be carried under a blanket
policy covering the demised premises and other locations of Tenant, if any,
provided that each such policy shall in all respects, comply with this Article
and shall specify that the portion of the total coverage of such policy that is
allocated to the demised premises is in the amount required pursuant to this
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Section 9.09. Prior to the time such insurance is first required to be carried
by Tenant and thereafter, at least 15 days prior to the effective date of any
such policy, Tenant agrees to deliver to Landlord a certificate evidencing the
aforesaid policy, and a copy of the actual policy upon request of Landlord. Said
policy shall contain an endorsement that such insurance may not be cancelled
except upon 30 days' prior notice to Landlord. Such policy shall also have the
indemnity clause referred to in Article 37 hereof typed on the policy evidencing
that the "hold harmless" clause has been insured. Tenant's failure to provide
and keep in force the aforementioned insurance shall be regarded as a material
default hereunder entitling Landlord to exercise any or all of the remedies
provided in this Lease in the event of Tenant's default. Notwithstanding
anything to the contrary contained in this Lease, the carrying of insurance by
Tenant in compliance with this Section shall not modify, reduce, limit or impair
Tenant's obligations and liability under Article 37 hereof.
ARTICLE 10
DAMAGE BY FIRE OR OTHER CAUSE
10.01. If the Building or the demised premises shall be partially or
totally damaged or destroyed by fire or other cause (and if this Lease shall not
have been terminated as in this Article 10 hereinafter provided), Landlord shall
repair the damage and restore and rebuild the Building and/or the demised
premises, at its expense with reasonable dispatch after notice to it of the
damage or destruction.
10.02. If the Building or the demised premises shall be damaged or
destroyed by fire or other causes, then the rents payable hereunder shall be
abated to the extent that the demised premises shall have been rendered
untenantable for the period from the date of such damage or destruction to the
date the damage shall be repaired or restored; provided, however, that should
Tenant reoccupy a portion of the demised premises during the period the
restoration work is taking place and prior to the date that the whole of said
demised premises are made tenantable, fixed annual rent and additional rents
allocable to such portion shall be payable by Tenant from the date of such
reoccupancy.
10.03. If the Building shall be so damaged or destroyed by fire or other
cause (whether or not the demised premises are damaged or destroyed) as to
require a reasonably estimated expenditure made by Landlord or a reputable
contractor designated by Landlord of more than 25% of the full insurable value
of the Building immediately prior to the casualty, then Landlord may terminate
this Lease by giving Tenant notice to such effect within 120 days after the date
of the casualty. In case of any damage or destruction mentioned in this Article
10 which Landlord is required to repair and restore, Tenant may terminate this
Lease by notice to Landlord if Landlord has not completed the making of the
required repairs and restorations within 15 months after the date of such damage
or destruction, or within such period after such date (not exceeding 3 months)
as shall equal the aggregate period Landlord may have been delayed in
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doing so by adjustment of insurance, labor trouble, governmental controls, act
of God, or any other cause beyond Landlord's reasonable control.
10.04. No damages, compensation or claim shall be payable by Landlord for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the demised premises or of the Building pursuant
to this Article 10.
10.05. Notwithstanding any of the foregoing provisions of this Article 10,
if Landlord or the lessor of any superior lease or the holder of any superior
mortgage shall be unable to collect all of the insurance proceeds (including
rent insurance proceeds) applicable to damage or destruction of the demised
premises or the Building by fire or other cause, by reason of some action or
inaction on the part of Tenant or any of its employees, agents or contractors,
then, without prejudice to any other remedies which may be available against
Tenant, there shall be no abatement of Tenant's rents, but the total amount of
such rents not abated (which would otherwise have been abated) shall not exceed
the amount of uncollected insurance proceeds.
10.06. Landlord will not carry separate insurance of any kind on Tenant's
property and, except as provided by law, Landlord shall not be obligated to
repair any damage thereto or replace or clear the same. Tenant shall maintain
such fire and casualty insurance as it deems advisable.
10.07. The provisions of this Article 10 shall be considered an express
agreement governing any cause of damage or destruction of the demised premises
by fire or other casualty, and Section 227 of the Real Property Law of the State
of New York, providing for such a contingency in the absence of an express
agreement, and any other law of like import, now or hereafter in force, shall
have no application in such case.
ARTICLE 11
ASSIGNMENT, MORTGAGING, SUBLETTING, ETC.
11.01. Except as otherwise expressly provided in this Article 11, Tenant
shall not without, in each instance, obtaining the prior consent of Landlord,
which consent shall not be unreasonably withheld or delayed, (a) assign or
otherwise transfer this Lease or the term and estate hereby granted, (b) sublet
all or part of the demised premises or allow the same to be used or occupied by
others or in violation of Article 5, (c) mortgage, pledge or encumber this Lease
or all or part of the demised premises in any manner by reason of any act or
omission on the part of Tenant, or (d) advertise, or authorize a broker to
advertise, for a subtenant for all or part of the demised premises or for an
assignee of this Lease. For purposes of this Article 11, (i) the transfer of a
majority of the issued and outstanding capital stock of any corporate tenant or
subtenant, or the transfer of a majority of the total interest in any other
entity (partnership or otherwise) which is a tenant or subtenant, however
accomplished, whether in a single transaction or in a series of related or
unrelated transactions, shall be deemed an assignment of this Lease,
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or such sublease, as the case may be, (ii) a takeover agreement shall be deemed
a transfer of this Lease, (iii) any person or legal representative of Tenant, to
whom Tenant's interest under this Lease passes by operation of law, or
otherwise, shall be bound by the provisions of this Article 11, and (iv) a
modification, amendment or extension without Landlord's prior written consent of
a sublease previously consented to by Landlord shall be deemed a new sublease.
Tenant agrees to furnish to Landlord upon demand at any time and from time to
time such information and assurances as Landlord may reasonably request that
neither Tenant, nor any subtenant, shall have violated the provisions of this
Section 11.01.
11.02. The provisions of clauses (a) and (b) of Section 11.01 hereof shall
not apply to transactions entered into by Tenant with a Tenant Affiliate.
"Tenant Affiliate" shall mean (i) an entity into which the Tenant is merged or
consolidated, or to which all or substantially all of the stock or assets of
Tenant are transferred, or to which all or substantially all of Tenant's
business at the Premises is transferred, provided such merger or consolidation
or transfer involves the transfer of the Tenant as an ongoing business entity
and the successor has a net worth at least equal to or in excess of the net
worth of Tenant as of the date hereof; (ii) a corporation which controls, is
controlled by or is under common control with Tenant (the term "control" meaning
ownership of not less than 51% of the outstanding voting stock of a
corporation); or (iii) a partnership in which and for so long as Tenant or a
Tenant Affiliate shall be a general partner and of which Tenant (or one or more
Tenant Affiliates) shall own not less than 51% of the legal equitable interest.
11.03. Any assignment or transfer, whether made with Landlord's consent as
required by Section 11.01 or without Landlord's consent pursuant to Section
11.02, shall not be effective unless and until (a) the assignee shall execute,
acknowledge and deliver to Landlord a recordable agreement, in form and
substance reasonably satisfactory to Landlord, whereby the assignee shall (i)
assume the obligations and performance of this Lease and agree to be personally
bound by all of the covenants, agreements, terms, provisions and conditions
hereof on the part of Tenant to be performed or observed on and after the
effective date of any such assignment and (ii) agree that the provisions of this
Article 11 shall, notwithstanding such assignment or transfer, continue to be
binding upon it in the future, and (b) in the case of an assignment or transfer
pursuant to Section 11.02, Tenant or its successor shall have delivered to
Landlord financial statements certified by a reputable firm of certified public
accountants evidencing satisfaction of the net worth requirements referred to in
Section 11.02. Tenant covenants that, notwithstanding any assignment or
transfer, whether or not in violation of the provisions of this Lease, and
notwithstanding the acceptance of fixed annual rent by Landlord from an assignee
or transferee or any other party, Tenant shall remain fully and primarily and
jointly and severally liable for the payment of the fixed annual rent and all
additional rent due and to become due under this Lease and for the performance
and observance of all of the covenants, agreements, terms, provisions and
conditions of this Lease on the part of Tenant to be performed or observed.
11.04. The liability of Tenant, and the due performance by Tenant of the
obligations on its part to be performed under this Lease, shall not be
discharged, released or
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impaired in any respect by an agreement or stipulation made by the Landlord or
any grantee or assignee of Landlord, by way of mortgage, or otherwise, extending
the time of, or modifying any of the obligations contained in this Lease, or by
any waiver or failure of Landlord to enforce any of the obligations on Tenant's
part to be performed under this Lease, and Tenant shall continue to be liable
hereunder. If any such agreement or modification operates to increase the
obligations of a tenant under this Lease, the liability under this Section 11.04
of the tenant named in the Lease or any of its successors in interest (unless
such party shall have expressly consented in writing to such agreement or
modification) shall continue to be no greater than if such agreement or
modification had not been made.
11.05. Landlord shall not unreasonably withhold or delay its consent to an
assignment of this Lease or a subletting of the whole or a part of the demised
premises for substantially the remainder of the term of this Lease, provided:
(a) Tenant shall furnish Landlord with the name and business
address of the proposed subtenant or assignee, information with respect to the
nature and character of the proposed subtenant's or assignee's business, or
activities, such references and current financial information with respect to
net worth, credit and financial responsibility as are reasonably satisfactory to
Landlord, and an executed counterpart of the sublease or assignment agreement;
(b) The proposed subtenant or assignee is a reputable party whose
financial net worth, credit and financial responsibility is, considering the
responsibilities involved, reasonably satisfactory to Landlord; and in no event
less than the financial net worth, credit and financial responsibility of Tenant
at the Commencement Date;
(c) The nature and character of the proposed subtenant or
assignee, its business, activities and general business reputation and intended
use of the demised premises are, in Landlord's reasonable judgment, in keeping
with the standards of the Building;
(d) If, as of the effective date of the sublease or assignment or
up to ninety (90) days prior thereto, Landlord shall have or have had comparable
space available in the Building, the proposed subtenant or assignee is not then
an occupant of any part of the Building or a party who dealt with Landlord or
Landlord's agent (directly or through a broker) with respect to space in the
Building, during the twelve (12) months immediately preceding Tenant's request
for Landlord's consent;
(e) All costs incurred with respect to providing reasonably
appropriate means of ingress and egress from the sublet space or to separate the
sublet space from the remainder of the demised premises shall, subject to the
provisions of Article 6 with respect to alterations, installations, additions or
improvements, be borne by Tenant;
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(f) Each assignment or sublease shall specifically state that (i)
it is subject to all of the terms, covenants, agreements, provisions, and
conditions of this Lease, (ii) the subtenant or assignee, as the case may be,
will not have the right to further assign or sublet all or part of the demised
premises or to allow same to be used by others, without the consent of Landlord
in each instance, (iii) a consent by Landlord thereto shall not be deemed or
construed to modify, amend or affect the terms and provisions of this Lease, or
Tenant's obligations hereunder, which shall continue to apply to the premises
involved, and the occupants thereof, as if the sublease or assignment had not
been made, (iv) if Tenant defaults in the payment of any rent, Landlord is
authorized to collect any rents due or accruing from any assignee, subtenant or
other occupant of the demised premises and to apply the net amounts collected to
the fixed annual rent and additional rent due hereunder, (v) the receipt by
Landlord of any amounts from an assignee or subtenant, or other occupant of any
part of the demised premises shall not be deemed or construed as releasing
Tenant from Tenant's obligations hereunder or the acceptance of that party as a
direct tenant; and (vi) the subtenant shall be required to pay its proportionate
share of Tenant's Tax payment;
(g) Tenant, together with requesting Landlord's consent
hereunder, shall have paid Landlord any reasonable and actual out of pocket
costs incurred by Landlord to review the requested consent including any
reasonable attorneys' fees incurred by Landlord;
(h) In the case of a subletting of a portion of the demised
premises, the portion so sublet shall be regular in shape and suitable for
normal renting purposes;
(i) INTENTIONALLY OMITTED.
(j) The subletting or assignment shall not be at a lower
aggregate rental than that being charged by Landlord at the time for similar
space then available for rental in the Building;
(k) The proposed assignment or sublease shall provide that it is
subject to the Landlord's rights under Section 11.06 hereof. Tenant shall have
complied with the provisions of said Section 11.06 and Landlord shall not have
made any of the elections provided for therein; and
(l) The total number of tenants and subtenants occupying the
demised premises shall not exceed three (3).
11.06 (a) Should Tenant agree to assign this Lease or to sublet all or any
portion of the demised premises (other than by an assignment or sublease
permitted by Section 11.02 hereof), Tenant shall, as soon as any such agreement
is consummated but no later than 30 days prior to the effective date thereof
(the "Effective Date") deliver to Landlord executed counterparts of any such
agreement and of all ancillary agreements with the proposed assignee or
sublessee, as applicable, and Landlord shall then have the right to elect by
notice to Tenant
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given within 30 days after such delivery to (i) consent (which consent shall
have been deemed granted by Landlord if Landlord shall not have disapproved of
the transaction in writing, within 30 days of Landlord's actual receipt of
within notice from Tenant advising Landlord of Tenant's intention to assign or
sublet along with such other documents and information as is required under this
Article 11), or (ii) refuse to consent to such assignment or sublease in
accordance with the terms of this Lease.
(b) Intentionally Omitted.
(c) If the Landlord shall give its consent to any assignment of
this Lease or to any sublease, Tenant shall in consideration therefor, pay to
Landlord, as additional rent:
(i) in the case of an assignment, an amount equal to 50% of
all sums and other considerations paid to Tenant by the assignee for or by
reason of such assignment (including, but not limited to, sums paid for the
sale of Tenant's fixtures (other than trade fixtures) and leasehold
improvements, sums paid for the sale of Tenant's trade fixtures, equipment,
furniture, furnishings or other personal property in excess of the then
depreciated value of same as carried on the books of Tenant), less direct
and actual costs incurred by Tenant in connection with such assignment,
such as real estate commissions and alterations made at Tenant's expense
pursuant to an assignment agreement, but not including any alterations
which would be required to return the space to Building Standard, and not
including the unamortized cost of any of Tenant's fixtures, leasehold
improvements, equipment, fixtures, furnishings or other items, except as
set forth above, and
(ii) in the case of a sublease, 50% of any rents,
additional charges or other consideration payable under the sublease to
Tenant by the subtenant which is in excess of the fixed annual rent and
additional rent accruing during the term of the sublease in respect of the
subleased space pursuant to the terms hereof (including, but not limited
to, sums paid for the sale or rental of Tenant's fixtures (other than trade
fixtures) and lease-hold improvements, sums paid for the sale or rental of
Tenant's trade fixtures, equipment, furniture or furnishings or other
personal property in excess of the then depreciated value of same as
carried on the books of Tenant, less direct and actual costs incurred by
Tenant in connection with such sublease, such as real estate commissions
and alterations made at Tenant's expense pursuant to a sublease agreement,
but not including any alterations which would be required to return the
space to Building Standard, and not including the unamortized cost of any
of Tenant's fixtures, leasehold improvements, equipment fixtures,
furnishings or other items, except as set forth above.
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The sums payable under this Section 11.06(e) shall be paid to Landlord, within
fifteen (15) days after payment by the assignee or subtenant to Tenant. Nothing
contained in this Section shall restrict Tenant from selling any personal
property of Tenant to any person or entity, not an assignee or subtenant, as
described above, or retaining all of the proceeds of any such sale.
ARTICLE 12
CERTIFICATE OF OCCUPANCY
12.01. Landlord does not represent that the Certificate of Occupancy issued
for the Building permits the use of the demised premises for the purposes
specified in this Lease.
ARTICLE 13
ADJACENT EXCAVATION - SHORING
13.01. If an excavation or other substructure work shall be made upon land
adjacent to the demised premises, or shall be authorized to be made, Tenant
shall afford to the person causing or authorized to cause such excavation,
license to enter upon the demised premises for the purpose of doing such work as
shall be necessary to preserve the wall of or the Building of which the demised
premises form a part from injury or damage and to support the same by proper
foundations without any claim for damages or indemnity against Landlord, or
diminution or abatement of rent.
ARTICLE 14
CONDEMNATION
14.01. In the event that the whole of the demised premises shall be
lawfully condemned or taken in any manner for any public or quasi-public use,
this Lease and the term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title. In the event that only a part of
the demised premises shall be so condemned or taken, then, effective as of the
date of vesting of title, the fixed annual rent under Article 1 hereof and
additional rents under Article 3 hereof shall be abated proportionately
according to the reduction in the rentable area of the demised premises
resulting from such condemnation or taking. In the event that only a part of the
Building shall be so condemned or taken, then (a) Landlord (whether or not the
demised premises shall be affected) may, at Landlord's option, terminate this
Lease and the term and estate hereby granted as of the date of such vesting of
title by notifying Tenant in writing of such termination within 60 days
following the date on which Landlord shall have received notice of vesting of
title, or (b) if such condemnation or taking shall be of a substantial part of
the demised premises or of a substantial part of the means of access thereto,
Tenant may, at Tenant's option, by delivery of notice in writing to Landlord
within 30 days following the date
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on which Tenant shall have received notice of vesting of title, terminate this
Lease and the term and estate hereby granted as of the date of vesting of title,
or (c) if neither Landlord nor Tenant elects to terminate this Lease, as
aforesaid, this Lease shall be and remain unaffected by such condemnation or
taking, except that the fixed annual rent payable under Article 1 and additional
rents payable under Article 3 shall be abated to the extent hereinbefore
provided in this Article 14.
14.02. In the event of termination of this Lease in any of the cases
hereinbefore provided, this Lease and the term and estate hereby granted shall
expire as of the date of such termination with the same effect as if that were
the Expiration Date, and the fixed annual rent and additional rents payable
hereunder shall be apportioned as of such date.
14.03. In the event of any condemnation or taking of all or a part of the
Building, Landlord shall be entitled to receive the entire award in the
condemnation proceeding, including any award made for the value of the estate
vested by this Lease in Tenant. Tenant hereby expressly assigns to Landlord
(subject to the preceding sentence), any and all right, title and interest of
Tenant now or hereafter arising in or to any such award or any part thereof, and
agrees that it shall not be entitled to receive any part of such award.
Notwithstanding the foregoing, Tenant may make a separate claim for a
condemnation award provided such claim or award could not and does not in any
way diminish Landlord's claim or award.
14.04. In the event of any taking of less than the whole of the Building
which does not result in a termination of this Lease, Landlord, at its expense,
shall proceed with reasonable diligence to repair, alter and restore the
remaining parts of the Building and the demised premises to substantially their
former condition to the extent that the same may be feasible and so as to
constitute a complete and tenantable Building and demised premises.
14.05. In the event any part of the demised premises be taken to effect
compliance with any law or requirement of public authority other than in the
manner hereinabove provided in this Article 14, then (i) if such compliance is
the obligation of Tenant under this Lease, Tenant shall not be entitled to any
diminution or abatement of rent or other compensation from Landlord therefor,
but (ii) if such compliance is the obligation of Landlord under this Lease, the
fixed annual rent hereunder shall be reduced and additional rents under Article
3 shall be adjusted in the same manner as is provided in Section 14.01 according
to the reduction in rentable area of the demised premises resulting from such
taking.
ARTICLE 15
ACCESS TO DEMISED PREMISES; CHANGES
15.01. (a) Tenant shall permit Landlord to erect, use and maintain pipes,
ducts and conduits in and through the demised premises, provided the same are
installed adjacent to or concealed behind walls and ceilings of the demised
premises. Landlord shall to the extent
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practicable install such pipes, ducts and conduits by such methods and at such
locations as will not materially interfere with or impair Tenant's layout or use
of the demised premises. Landlord or its agents or designees shall have the
right, but only upon five (5) days prior written notice to Tenant or any
authorized employee of Tenant at the demised premises, except no notice shall be
required for an emergency, to enter the demised premises (a) for the making of
such repairs or alterations as Landlord may deem necessary for the Building or
which Landlord shall be required to or shall have the right to make by the
provisions of this Lease or any other lease in the Building, and (b) for the
purpose of inspecting them or exhibiting them to existing or prospective
purchasers, mortgagees or, upon not less than twenty-four (24) hours notice,
within the last twelve (12) months only of the term, lessees of all or part of
the Building or the Premises or to prospective assignees, agents or designees of
any such parties. Landlord shall be allowed to take all material into and upon
the demised premises that may be required for the repairs or alterations above
mentioned without the same constituting an actual or constructive eviction of
Tenant in whole or in part, and the rent reserved hereunder shall not abate
while said repairs or alterations are being made by reason of loss or
interruption of the business of Tenant because of the prosecution of any such
work. Landlord shall exercise reasonable diligence so as to minimize the
disturbance to Tenant but nothing contained herein shall be deemed to require
Landlord to perform any work on an overtime or premium pay basis.
(b) Notwithstanding anything to the contrary contained in the
preceding paragraph, it is specifically agreed that Landlord reserves the
absolute right for itself and its agents, employees or designees to enter upon
the demised premises at such times, and with such frequency, as Landlord shall
determine in its sole and absolute discretion, without notice in the case of an
emergency and upon at least forty-eight (48) hours notice in non-emergency
situations, for the purposes of installing, inspecting, adjusting, maintaining,
repairing or replacing all or any portion of the Building's structural,
electrical, plumbing, elevators and mechanical and HVAC systems as are or are to
be located in the demised premises and, in connection therewith, to take all
material into and upon the demised premises as Landlord deems necessary in its
sole and reasonable discretion to accomplish the foregoing purposes. The rights
herein reserved by Landlord shall include, without limitation and without the
exercise of such rights by Landlord or its agents, employees or designee as
herein permitted constituting an actual or constructive eviction, or giving rise
to any liability whatsoever on the part of Landlord, or any claim by Tenant for
damages or abatement of rents, the following:
(i) Access through the demised premises to stairways and elevators at
any time for any purpose set forth in or contemplated by this
Lease;
(ii)Access to all conduits, pipes, wires, ducts and valves located
in or accessible through, the demised premises, including,
without limitation, all water valves relating to the Building's
plumbing, mechanical and HVAC systems.
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Without limiting the rights of Landlord as expressly reserved above, Landlord
shall:
(x) Unless otherwise required by emergency or any other cause
beyond the control of Landlord, use reasonable efforts as are practical under
the circumstances to exercise its rights hereunder in such a manner as to
minimize the disturbance to Tenant, but nothing contained herein shall be deemed
to require Landlord to perform work on an overtime or premium pay basis; and
(y) Repair any damage done to any portion of the demised premises
which is damaged or destroyed as a result of Landlord's exercise of the rights
reserved in this paragraph 15.01(b).
15.02. Landlord reserves the right, without the same constituting an actual
or constructive eviction and without incurring liability to Tenant therefor, to
change the arrangement and/or location of public entrances, passageways, doors,
doorways, corridors, elevators, stairways, toilets and other public parts of the
Building; provided, however, that access to the Building shall not be cut off
and that there shall be no unreasonable obstruction of access to the demised
premises or unreasonable interference with the use or enjoyment thereof.
15.03. Landlord reserves the right to light from to time all or any portion
of the demised premises at night for display purposes without paying Tenant
therefor provided all contractors are instructed to turn off lights when
leaving.
15.04. If Tenant shall not be personally present to open and permit an
entry into the demised premises at any time when for any reason an entry therein
shall be urgently necessary by reason of fire or emergency, Landlord or
Landlord's agents may forcibly enter the same (upon such notice, if any, as may
be practicable under the circumstances) without rendering Landlord or such
agents liable therefor (if during such entry Landlord or Landlord's agents shall
accord reasonable care to Tenant's property) and without in any manner affecting
the obligations and covenants of this Lease.
ARTICLE 16
CONDITIONS OF LIMITATION
16.01. This Lease and the term and estate hereby granted are subject to the
limitation that whenever Tenant shall make an assignment of the property of
Tenant for the benefit of creditors, or if a petition shall be filed by or
against Tenant under any provisions of the United States Bankruptcy Code or
under the provisions of any other bankruptcy or insolvency law or any law of
like import, or whenever a permanent receiver of Tenant or of or for the
property of Tenant shall be appointed, then, Landlord may (a) at any time after
receipt of notice of the occurrence of any such event, or (b) if such event
occurs without the acquiescence of Tenant, at any time after the event continues
for thirty (30) days, give Tenant
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a notice of intention to end the Term of this Lease at the expiration of 5 days
from the date of service of such notice of intention, and upon the expiration of
said 5 day period this Lease and the Term and estate hereby granted, whether or
not the Term shall theretofore have commenced, shall terminate with the same
effect as if that day were the Expiration Date, but Tenant shall remain liable
for damages as provided in Article 18.
16.02. This Lease and the Term and estate hereby granted are subject to
further limitation as follows:
(a) whenever Tenant shall fail to pay any installment of fixed
annual rent or any additional rent or any other charge payable by Tenant to
Landlord within five (5) days after written notice that the same is due and
payable pursuant to the terms hereof, or
(b) whenever Tenant shall do or permit anything to be done,
whether by action or inaction, contrary to any of Tenant's obligations
hereunder, and if such situation shall continue and shall not be remedied by
Tenant within twenty (20) days after Landlord shall have given Tenant a notice
specifying the same or, in the case of a happening or default which cannot with
due diligence be cured within a period of twenty (20) days and the continuation
of the period required for cure will not subject Landlord to the risk of
criminal liability (as more particularly described in Article 8 hereof) or any
superior lease or foreclosure of any superior mortgage, if Tenant shall not (i)
within said twenty (20) day period advise Landlord of Tenant's intention to duly
institute all steps necessary to remedy such situation, (ii) duly institute
within said twenty (20) day period, and thereafter diligently and continuously
prosecute to completion all steps necessary to remedy the same, and (iii)
complete such remedy within such time after the date of the giving of said
notice of Landlord as shall reasonably be necessary, or
(c) whenever any event shall occur or any contingency shall
arise whereby this Lease or the estate hereby granted or the unexpired balance
of the Term hereof would, by operation of law or otherwise, devolve upon or pass
to any person, firm or corporation other than Tenant, except as expressly
permitted by Article 11, or
(d) whenever the demised premises shall be abandoned, then in
any of said cases set forth in the foregoing Subsections (a), (b), (c) or (d),
Landlord may give to Tenant a notice of intention to end the Term at the
expiration of 10 days from the date of the service of such notice of intention,
and upon the expiration of said 10 days this Lease and the Term and estate
hereby granted, whether or not the Term shall theretofore have commenced, shall
terminate with the same effect as if that day were the Expiration Date, but
Tenant shall remain liable for damages as provided in Article 18.
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ARTICLE 17
RE-ENTRY BY LANDLORD, INJUNCTION
17.01. If this Lease shall terminate as in Article 16 provided, Landlord or
Landlord's agents and employees may immediately or at any time thereafter
re-enter the demised premises, or any part thereof, either by summary dispossess
proceedings or by any suitable action or proceeding at law, without being liable
to indictment, prosecution or damages therefrom. The word re-enter, as herein
used, is not restricted to its technical legal meaning.
17.02. In the event of a breach or threatened breach by Tenant of any of
its obligations under this Lease, Landlord shall also have the right of
injunction. The special remedies to which Landlord may resort hereunder are
cumulative and are not intended to be exclusive of any other remedies or means
of redress to which Landlord may lawfully be entitled at any time and Landlord
may invoke any remedy allowed at law or in equity as if specific remedies were
not provided for herein.
17.03. If this Lease shall terminate under the provisions of Article 16, or
if Landlord shall re-enter the demised premises under the provisions of this
Article 17, or in the event of the termination of this Lease, or of re-entry by
or under any summary dispossess or other proceeding or action or any provision
of law by reason of default hereunder on the part of Tenant, then (a) Tenant
shall thereupon pay to Landlord the fixed annual rent and additional rent
payable by Tenant to Landlord up to the time of such termination of this Lease,
or of such recovery of possession of the demised premises by Landlord, as the
case may be, and shall also pay to Landlord damages as provided in Article 18,
and (b) Landlord shall be entitled to retain all moneys and to draw upon all
letters of credit, if any, paid or given by Tenant to Landlord, whether as
advance rent, security or otherwise, but such moneys shall be credited by
Landlord against any fixed annual rent or additional rent due from Tenant at the
time of such termination or re-entry or, at Landlord's option against any
damages payable by Tenant under Articles 16 and 18 or pursuant to law.
17.04. Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Tenant being
evicted or dispossessed for any cause, or in the event of Landlord obtaining
possession of the demised premises by reason of the violation by Tenant of any
of the convenants and conditions of this Lease or otherwise.
ARTICLE 18
DAMAGES
18.01. If this Lease is terminated under the provisions of Article 16, or
if Landlord shall re-enter the demised premises under the provisions of Article
17, or in the event of the termination of this Lease or of re-entry by or under
any summary dispossess or other proceeding
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or action or any provision of law by reason of default hereunder on the part of
Tenant, Tenant shall pay to Landlord as damages (i) the amount required to
restore the demised premises to Building Standard; plus (ii) all additional rent
accrued but unpaid to such date; plus (iii) the unamortized portion of any real
estate brokerage commission paid by Landlord in connection with this Lease (to
be amortized on a straight line basis over the Term); plus (iv) the unamortized
portion of any rent abatement granted by Landlord to Tenant amortized over the
term; plus (v) at the election of Landlord, either:
(a) a sum which at the time of such termination of this Lease or
at the time of any such re-entry by Landlord, as the case may be, is the excess,
if any, of the present value (determined using a discount rate equal to the
prime rate then announced by Citibank, N.A.), of
(1) the aggregate of the fixed annual rent and the additional rent
payable hereunder which would have been payable by Tenant
(conclusively presuming the additional rent to be the same as was
payable for the year immediately preceding such termination
except that additional rent on account of increases in Real
Estate Taxes shall be presumed to increase at the average of the
rates of increase thereof previously experienced by Landlord
during the period (not to exceed 3 years) prior to such
termination) for the period commencing with such earlier
termination of this Lease or the date of any such re-entry, as
the case may be, and ending with the Expiration Date, had this
Lease not so terminated or had Landlord not so re-entered the
demised premises, over
(2) the aggregate rental value of the demised premises for the same
period, or
(b) sums equal to the fixed annual rent and the additional rent
payable hereunder which would have been payable by Tenant had this Lease not so
terminated, or had Landlord not so re-entered the demised premises, payable upon
the due dates therefor specified herein following such termination or such
re-entry and until the Expiration Date, provided, however, that if Landlord
shall re-let the demised premises during said period, Landlord shall credit
Tenant with the net rents received by Landlord from such re-letting, such net
rents to be determined by first deducting from the gross rents as and when
received by Landlord from such re-letting, the expenses incurred or paid by
Landlord in terminating this Lease or in re-entering the demised premises and in
securing possession thereof, as well as the expenses of re-letting, including
altering and preparing the demised premises for new tenants (including tenant
work letters), brokers' commissions, legal fees, and all other expenses properly
chargeable against the demised premises and the rental thereof; it being
understood that any such re-letting may be for a period shorter or longer than
the remaining term of this Lease. In no event shall Tenant be entitled to
receive any excess of such net rents over the sums payable by Tenant to Landlord
hereunder for the period of such re-letting, nor shall Tenant be entitled in any
suit for collection of damages pursuant to this subsection to a credit in
respect of any net rents
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from re-letting, except to the extent that such net rents are actually received
by Landlord. If the demised premises or any part thereof should be re-let in
combination with other space, then proper apportionment on a square foot basis
shall be made of the rent received from such re-letting and of the expenses of
re-letting. If the demised premises or any part thereof be re-let by Landlord
for the unexpired portion of the term of this Lease, or any part thereof, before
presentation of proof of such damages to any court, commission or tribunal, the
amount of rent payable pursuant to such re-letting shall, prima facie, be the
fair and reasonable rental value for the demised premises, or part thereof, so
re-let during the term of the re-letting.
18.02 Suit or suits for the recovery of such damages, or any installments
thereof, may be brought by Landlord from time to time at its election, and
nothing contained herein shall be deemed to require Landlord to postpone suit
until the date when the Term would have expired if it had not been so terminated
under the provisions of Article 16, or under any provision of law, or had
Landlord not re-entered the demised premises. Nothing herein contained shall be
construed to limit or preclude recovery by Landlord against Tenant of any sums
or damages to which, in addition to the damages particularly provided above,
Landlord may lawfully be entitled by reason of any default hereunder on the part
of Tenant.
ARTICLE 19
LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS
19.01 If Tenant shall default in the observance or performance of any term
or covenant on Tenant's part to be observed or performed under any of the terms
or provisions of this Lease, (a) Landlord may remedy such default for the
account of Tenant, immediately and without notice in case of emergency, or in
any other case if Tenant shall fail to remedy such default with all reasonable
dispatch after Landlord shall have notified Tenant in writing of such default
and the applicable grace period for curing such default shall have expired; and
(b) if Landlord makes any expenditures or incurs any obligations for the payment
of money in connection with such default including, but not limited to,
reasonable attorneys' fees in instituting, prosecuting or defending any action
or proceeding, such sums paid or obligations incurred, with interest at the
Interest Rate, shall be deemed to be additional rent hereunder and shall be paid
by Tenant to Landlord upon rendition of a bill to Tenant therefor.
The provisions of this Article 19 shall survive the expiration or other
termination of this Lease.
ARTICLE 20
QUIET ENJOYMENT
20.01 Landlord covenants and agrees that subject to the terms and
provisions of this Lease, if, and so long as, Tenant is not in default hereunder
beyond any applicable notice and/or cure period and keeps and performs each and
every covenant, agreement, term, provision and condition herein contained on the
part or on behalf of Tenant to be kept or performed, then
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Tenant shall be entitled to the quiet enjoyment of the demised premises and
Tenant's rights under this Lease shall not be cut off or ended before the
expiration of the term of this Lease, subject however, to: (i) the obligations
of this Lease, and (ii) the provisions of Article 25 hereof with respect to
Superior Instruments (as defined in Article 25 hereof) which affect this Lease.
ARTICLE 21
SERVICES AND EQUIPMENT
21.01. So long as Tenant is not in default under any of the covenants of
this Lease, Landlord shall:
(a) Provide two passenger elevators 24 hours per day, and use (when
not in use by others), of one freight elevator from 9:00 a.m. to 5:00 p.m. on
Business Days.
(b) Furnish hot and cold water for lavatory and drinking and office
cleaning purposes. If Tenant requires, uses or consumes water for any other
purposes, Tenant agrees that Landlord may install a meter or meters or other
means to measure Tenant's water consumption, and Tenant further agrees to
reimburse Landlord for the cost of the meter or meters and the installation
thereof, and to pay for the maintenance of said meter equipment and/or to pay
Landlord's cost of other means of measuring such water consumption by Tenant.
Tenant shall reimburse Landlord for the cost of all water consumed other than
for lavatory and drinking and office cleaning purposes, as measured by said
meter or meters or as otherwise measured, including sewer rents imposed as a
result of use other than for lavatory, drinking and office cleaning purposes.
(c) Furnish heat to the demised premises from 8 A.M. to 6 P.M. on
Business Days sufficient to maintain temperatures at all times of the year,
substantially in the range set forth on Exhibit B. Tenant shall control the HVAC
systems located at the demised premises, subject to Landlord's right to install,
inspect, adjust, maintain, repair or replace such systems pursuant to Section
15.1 hereof.
21.02 Landlord reserves the right without any liability whatsoever, or
abatement of fixed annual rent, or additional rent, to stop the heating, air
conditioning, elevator, plumbing, electric and other systems when necessary by
reason of accident or emergency or for repairs, alterations, replacements or
improvements, provided that except in case of emergency, Landlord will notify
Tenant in advance, if possible, of any such stoppage and, if ascertainable, its
estimated duration, and will proceed diligently with the work necessary to
resume such service as promptly as possible and in a manner so as to minimize
interference with the Tenant's use and enjoyment of the demised premises, but
Landlord shall not be obligated to employ overtime or premium labor therefor.
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21.03. Tenant shall arrange for the cleaning of the demised premises and
the removal of its own refuse and rubbish.
21.04. Landlord shall provide one person in the lobby for security
purposes, from 8:00 a.m. to 6:00 p.m. Business Days who shall provide such
security services as are generally provided in similar office buildings (i.e.,
sign-in-book). Tenant shall have access to the demised premises twenty-four (24)
hours a day, seven (7) days a week.
21.05. Landlord will not be required to furnish any other services, except
as otherwise provided in this Lease.
ARTICLE 22
DEFINITIONS
22.01. The term "Landlord" as used in this Lease means only the owner, or
the mortgagee in possession, at any time, of the Building (or the owner of a
lease of the Building or of the Premises and Building), so that in the event of
any transfer of title to said Premises and Building or said lease, or in the
event of a lease of the Building, or of the Premises and Building, upon
notification to Tenant of such transfer or lease the said transferor Landlord
shall be and hereby is entirely freed and relieved of all existing or future
covenants, obligations and liabilities of Landlord hereunder, and it shall be
deemed and construed as a covenant running with the land without further
agreement between the parties or their successors in interest, or between the
parties and the transferee of title to said Premises and Building or said lease,
or the said lessee of the Building or of the Premises and Building, that the
transferee or the lessee, as applicable, has assumed and agreed in writing to
carry out any and all such covenants, obligations and liabilities of Landlord
hereunder.
22.02. The term "Business Days" as used in this Lease shall exclude
Saturdays, Sundays and all days observed as legal holidays and defined as Public
Holidays in the Official Directory of the City of New York as well as all other
days recognized as holidays under applicable union contracts.
22.03. The term "Interest Rate" shall mean a rate per annum equal to the
lesser of (a) 2% above the "base rate" of Citibank, N.A., as publicly announced
from time to time or if Citibank, N.A. shall cease to exist or cease to announce
such rate, any similar rate designated by Landlord which is publicly announced
from time to time by any other bank in the City of New York having combined
capital and surplus in excess of $100,000,000 or (b) the maximum rate of
interest, if any, which Tenant may legally contract to pay.
22.04. The term "Legal Requirements" shall mean laws, statutes and
ordinances including building codes and zoning regulations and ordinances and
the orders, rules,
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regulations, directives and requirements of all federal, state, county, city and
borough departments, bureaus, boards, agencies, offices, commissions and other
subdivisions thereof, or of any official thereof, or of any other governmental,
public or quasi-public authority, whether now or hereafter in force, which may
be applicable to the Premises or Building or the demised premises or any part
thereof, or the sidewalks, curbs or areas adjacent thereto and all requirements,
obligations and conditions of all instruments of record on the date of this
Lease.
ARTICLE 23
INVALIDITY OF ANY PROVISION
23.01. If any term, covenant, condition or provision of this Lease or the
application thereof to any circumstance or to any person, firm or corporation
shall be invalid or unenforceable to any extent, the remaining terms, covenants,
conditions and provisions of this Lease shall not be affected thereby and each
remaining term, covenant, condition and provision of this Lease shall be valid
and shall be enforceable to the fullest extent permitted by law.
ARTICLE 24
BROKERAGE
24.01. Tenant and Landlord covenant, represent and warrant to each other
that each has had no dealings or negotiations with any broker or agent other
than Insignia/ESG in connection with the consummation of this Lease, and each
party hereto covenants and agrees to pay, hold harmless and indemnify the other
from and against any and all cost, expense (including reasonable attorney's fees
and court costs), loss and liability for any compensation, commissions or
charges claimed by any broker or agent, other than the broker set forth in this
Section 24.01, with respect to this Lease or the negotiation thereof if such
claim or claims by any such broker or agent are based in whole or in part on
dealing with the party from which such indemnification is sought. Landlord
agrees to pay to the broker specified in this Section 24.01 such compensation,
commissions or charges to which it is entitled pursuant to a separate agreement
between said broker and Landlord.
ARTICLE 25
SUBORDINATION
25.01. This Lease is and shall be subject and subordinate to all ground or
underlying leases which may now or hereafter affect the Premises or the Building
and to all mortgages which may now or hereafter affect such leases, the Premises
or the Building, and to all renewals, refinancings, modifications, replacements
and extensions thereof (hereinafter called "Superior Instruments"). Upon
execution of this Lease, Landlord shall request and use its reasonable
commercial efforts to obtain prior to the date which is thirty (30) days after
the date
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hereof, for the benefit of Tenant, a "non-disturbance agreement" in the form
then utilized by the holder of the Superior Instrument. In confirmation of such
subordination and non-disturbance, Tenant shall promptly execute and deliver at
its own cost and expense any instrument, in recordable form if required, that
Landlord, the holder of any Superior Instrument or any of their respective
successors in interest may reasonably request to evidence such subordination and
non-disturbance. If such non-disturbance agreement is not obtained by Landlord
within thirty (30) days from the Commencement Date, Tenant shall have the right,
within thirty-five (35) days of the Commencement Date to terminate this Lease
upon notice to Landlord, and all parties shall thereupon be released form all
obligations to each other under this Lease.
25.02. In the event of a termination of any ground or underlying lease, or
if the interests of Landlord under this Lease are transferred by reason of, or
assigned in lieu of, foreclosure or other proceedings for enforcement of any
mortgage, or if the holder of any mortgage acquires a lease in substitution
therefor, then Tenant under this Lease may be requested to, at the option to be
exercised in writing by the holder of any such Superior Instrument or any
purchaser, assignee or lessee, as the case may be, and if so requested shall,
either (i) attorn to it and perform for its benefit all the terms, covenants and
conditions of this Lease on Tenant's part to be performed with the same force
and effect as if it were the landlord originally named in this Lease, or (ii)
enter into a new lease with it for the remaining term of this Lease and
otherwise on the same terms and conditions and with the same options, if any,
then remaining. The foregoing provisions of clause (i) of this Section 25.02
shall enure to the benefit of such holder of a Superior Instrument, purchaser,
assignee or lessee, shall be self-operative upon the exercise of such option,
and no further instrument shall be required to give effect to said provisions.
Tenant, however, upon demand of any such holder of a Superior Instrument,
purchaser, assignee or lessee agrees to execute, from time to time, reasonable
instruments in confirmation of the foregoing provisions of this Section 25.02,
satisfactory to any such holder of a Superior Instrument, purchaser, assignee or
lessee, acknowledging such attornment and setting forth the terms and conditions
of its tenancy.
25.03. Anything herein contained to the contrary notwithstanding, under no
circumstances shall any such holder of a Superior Instrument, purchaser,
assignee or lessee, as the case may be, whether or not it shall have succeeded
to the interests of Landlord under this Lease, be
(a) liable for any act, omission or default of any prior
landlord; or
(b) subject to any offsets, claims or defenses which the Tenant
might have against any prior landlord; or
(c) bound by any rent or additional rent which Tenant might have
paid to any prior landlord for more than one month in advance or for more than
three months in advance where such rent payments are payable at intervals of
more than one month; or
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(d) bound by any modification, amendment or abridgment of this
Lease, or any cancellation or surrender of the same, made without its prior
written approval.
25.04. If, in connection with the financing of the Building, the holder of
any mortgage shall request reasonable modifications in this Lease as a condition
of approval thereof, Tenant will not unreasonably withhold, delay or defer
making such modifications provided the same do not (i) increase the fixed annual
rent or additional rents payable by Tenant (ii) reduce the Term hereof (iii)
extend the Term hereof except as otherwise provided in Article 41 or (iv)
materially reduce Tenant's rights.
ARTICLE 26
CERTIFICATES
26.01. Each party shall, without charge, at any time and from time to time,
within ten (10) days after request by the other party, execute, acknowledge and
deliver to the requesting party, the holder of a Superior Instrument or any
other person, firm or corporation, a written instrument (an "Estoppel
Certificate") in such form as may be reasonably required by the requesting party
or the holder of any Superior Instrument. Prior to taking occupancy of the
demised premises, and as a condition precedent thereto, Tenant shall execute,
acknowledge and deliver an estoppel certificate to Landlord.
26.02. Tenant agrees that, except for the first month's rent hereunder, it
will pay no rent under this Lease more than thirty (30) days in advance of its
due date, if so restricted by any existing or future Superior Instrument or by
an assignment of this Lease to the holder of such Superior Instrument, and, in
the event of any act or omission by Landlord which would give Tenant the right
to terminate this Lease, Tenant will not exercise such right until Tenant shall
have first given written notice of such act or omission to the holder of any
Superior Instrument who shall have furnished such holder's last address to
Tenant, and until a reasonable period, for remedying such act or omission shall
have elapsed following the giving of such notices, during which time such holder
shall have the right, but shall not be obligated, to remedy or cause to be
remedied such act or omission. Tenant further agrees not to exercise any such
right if the holder of any such Superior Instrument commences to cure such act
or omission within a reasonable time after having received notice thereof and
diligently prosecutes such cure thereafter.
26.03. Tenant shall, without charge, at any time and from time to time
deliver to Landlord within ten (10) days alter request therefor (a) copies of
the most current financial statements of Tenant and of any guarantor of Tenant's
obligations under the Lease certified by an independent certified public
accountant and (b) such further detailed financial information with respect to
Tenant and any such guarantors as Landlord or the holder of any Superior
Instrument may request.
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ARTICLE 27
LEGAL PROCEEDINGS, WAIVER OF JURY TRIAL
27.01. Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other on any matters whatsoever arising out of or in any way in connection with
this Lease, the relationship of Landlord and Tenant arising out of this Lease,
Tenant's use or occupancy of the demised premises, and/or any other claims
(except claims for personal injury or property damages), and any statutory
emergency or any other statutory remedy. It is further mutually agreed that in
the event Landlord commences any summary proceeding for non-payment of rent,
Tenant will not interpose and does hereby waive the right to interpose any
non-compulsory counterclaim of whatever nature or description in any such
proceeding. Tenant shall reimburse Landlord upon demand for all costs and
expenses (including reasonable attorney's fees and disbursements and court
costs) incurred by Landlord in connection with enforcing Tenant's obligations
hereunder or in protecting Landlord's rights hereunder whether incurred in
connection with an action or proceeding commenced by Landlord, by Tenant, by a
third party or otherwise. All such amounts shall be deemed to be additional rent
and shall be collectible in the same manner as provided in Section 1.02 hereof.
ARTICLE 28
SURRENDER OF PREMISES
28.01. Upon the expiration or other termination of the Term, Tenant shall
quit and surrender to Landlord the demised premises, broom clean, in good order
and in the condition required by the Lease, ordinary wear and tear and damage by
fire, the elements or other casualty excepted, other than such damage caused by
Tenant, and Tenant shall remove all of its property as herein provided. Tenant's
obligation to observe or perform this covenant shall survive the expiration or
other termination of the Term.
28.02. If Tenant shall, without the written consent of Landlord, hold over
the expiration of the Term such tenancy shall be deemed a month-to-month
tenancy, which tenancy may be terminated as provided by applicable law. During
such tenancy, Tenant agrees to (a) pay to Landlord, each month, the greater of
the fair market rental value for the demised premises or one hundred twenty
(120) percent of the fixed annual rent and all additional rent payable by Tenant
for the last month of the Term and (b) be bound by all of the terms, covenants
and conditions herein specified except those pertaining to the Term. Nothing
contained in this Section 28.02 shall be deemed in limitation of Landlord's
rights and remedies against Tenant for Tenant's failure to have surrendered the
demised premises prior to the expiration of the Term.
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ARTICLE 29
RULES AND REGULATIONS
29.01. Tenant and Tenant's servants, employees, agents, licensees,
invitees, visitors and patrons shall observe faithfully and comply with such
reasonable Rules and Regulations as Landlord or Landlord's agents may from time
to time adopt and uniformly enforce, provided, however, that in case of any
conflict or inconsistency between the provisions of this Lease and of any of the
Rules and Regulations as originally or as hereafter adopted, the provisions of
this Lease shall control. Reasonable written notice of any additional Rules and
Regulations shall be given to Tenant.
Nothing in this Lease contained shall be construed to impose upon
Landlord any duty or obligation to enforce the Rules and Regulations or the
terms, covenants or conditions in any other lease, against any other tenant of
the Building, and Landlord shall not be liable to Tenant for violation of the
same by any other tenant, its servants, employees, agents, visitors or
licensees.
Tenant shall be entitled to have its name placed in the directory of
the Building located in the lobby, with the number of listings to be in
proportion with the other tenants in the Building.
ARTICLE 30
CONSENTS AND APPROVALS
30.01. Wherever in this Lease Landlord's consent or approval is required,
if Landlord shall delay or refuse such consent or approval, then unless Landlord
is acting with malice or manifest bad faith, Tenant in no event shall be
entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any
claim, for money damages (nor shall Tenant claim any money damages by way of
set-off, counterclaim or defense) based upon any claim or assertion by Tenant
that Landlord unreasonably withheld or unreasonably delayed its consent or
approval. Tenant's sole remedy shall be an action or proceeding to enforce any
such provision, for specific performance, injunction or declaratory judgment.
ARTICLE 31
NOTICES
31.01. Any notice or demand, consent, approval or disapproval, or statement
(collectively called "Notices") required or permitted to be given by the terms
and provisions of this Lease, or by any law or governmental regulation, either
by Landlord to Tenant or by Tenant to Landlord, shall be in writing and unless
otherwise required by such law or regulation, shall
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be sent by United States mail postage prepaid as registered or certified mail,
return receipt requested. Any Notice shall be addressed to Landlord at its
address set forth on page 1 of this Lease with a copy to David S. Lester, Esq.,
Cooperman Levitt Winikoff Lester & Newman, P.C., 1129 Northern Boulevard,
Manhasset, New York 11030 and any notice to Tenant shall be sent to Tenant at
950 Tower Lane, Suite 300, Foster City, California 94406, Attention: Dwayne
Nesmith with a copy to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One
Financial Center, Boston, MA 02111, Attention Stuart A. Offner, Esq. After
Tenant shall occupy the demised premises, the address of Tenant for Notices
shall be the Building. By giving the other party at least ten days prior written
notice, either party may, by Notice given as above provided, designate a
different address or addresses for Notices.
31.02 Any Notice shall be deemed given as of the date of delivery as
indicated on the return receipt; and in the case of failure to delivery by
reason of changed address of which no Notice was given or refusal to accept
delivery, as of the date of such failure as indicated on the return receipt or
by notice of the postal department.
31.03. In addition to the foregoing, either Landlord or Tenant may, from
time to time, request in writing that the other party serve a copy of any Notice
on one other person or entity designated in such request, such service to be
effected as provided in Section 31.01 hereof.
ARTICLE 32
NO WAIVER
32.01. No agreement to accept a surrender of this Lease shall be valid
unless in writing signed by Landlord. No employee of Landlord or of Landlord's
agents shall have any power to accept the keys of the demised premises prior to
the termination of this Lease. The delivery of keys to any employee of Landlord
or of Landlord's agent shall not operate as a termination of this Lease or a
surrender of the demised premises. In the event of Tenant at any time desiring
to have Landlord sublet the premises for Tenant's account, Landlord or
Landlord's agents are authorized to receive said keys for such purpose without
releasing Tenant from any of the obligations under this Lease. The failure of
Landlord to seek redress for violation of, or to insist upon the strict
performance of, any covenant or condition of this Lease or, as to Landlord, any
of the Rules and Regulations set forth herein or hereafter adopted by Landlord,
shall not prevent a subsequent act, which would have originally constituted a
violation, from having all the force and effect of an original violation. The
receipt by Landlord of rent with knowledge of the breach of any covenant of this
Lease shall not be deemed a waiver of such breach. The failure of Landlord to
enforce any of the Rules and Regulations set forth herein, or hereafter adopted,
against Tenant and/or any other tenant in the Building shall not be deemed a
waiver of any such Rules and Regulations. No provision of this Lease shall be
deemed to have been waived by Landlord, unless such waiver be in writing signed
by such party. No payment by Tenant or receipt by Landlord of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on the
account of the earliest stipulated rent, nor shall any endorsement or
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statement on any check or any letter accompanying any check or payment of rent
be deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord's right to recover the balance of such
rent or pursue any other remedy in this Lease provided and Tenant may deliver
such check without prejudice to Tenant's right to pursue any other remedy.
32.02. This Lease contains the entire agreement between the parties, and
any executory agreement hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of it in whole or in part unless such
executory agreement is in writing and signed by the party against whom
enforcement of the change, modification, discharge or abandonment is sought.
ARTICLE 33
CAPTIONS
33.01. 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 Lease nor
the intent of any provision hereof.
ARTICLE 34
INABILITY TO PERFORM
34.01. If, by reason of (1) strike, (2) labor troubles, (3) governmental
preemption in connection with a national emergency, (4) any rule, order or
regulation of any governmental agency, (5) conditions of supply or demand which
are affected by war or other national, state or municipal emergency, or any
other cause or (6) any cause beyond Landlord's reasonable control, Landlord
shall be unable to fulfill its obligations under this Lease or shall be unable
to supply any service which Landlord is obligated to supply, this Lease and
Tenant's obligation to pay rent hereunder shall in no wise be affected, impaired
or excused.
ARTICLE 35
NO REPRESENTATIONS
35.01. Landlord or Landlord's agents have made no representations or
promises with respect to the Building or demised premises except as herein
expressly set forth. Landlord represents that there is no asbestos in the
demised premises.
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ARTICLE 36
ARBITRATION
36.01. In each case specified in this Lease in which resort to arbitration
shall be required, such arbitration (unless otherwise specifically provided in
other Sections of this Lease) shall be in New York City in accordance with the
Commercial Arbitration Rules of the American Arbitration Association and the
provisions of this Lease. The decision and award of the arbitrators shall be in
writing, shall be final and conclusive on the parties, and counterpart copies
thereof shall be delivered to each of the parties. In rendering such decision
and awards, the arbitrators shall not add to, subtract from or otherwise modify
the provisions of this Lease. Judgment may be had on the decision and award of
the arbitrators so rendered in any court of competent jurisdiction.
ARTICLE 37
INDEMNITY
37.01. Tenant shall indemnify Landlord and save it harmless from and
against any and all liability, damages, costs or expenses, including attorneys'
fees, arising from any wrongful act, omission, or negligence of Tenant or its
officers, contractors, licensees, agents, employees, guests, invitees, or
visitors in or about the Building or arising from any breach or default under
this Lease by Tenant, or arising from any accident, injury, or damage, howsoever
and by whomsoever caused, to any person or property, occurring in or about the
Building or the Premises. This provision shall not be construed to make Tenant
responsible for loss, damage, liability or expense resulting from injuries to
third parties caused by the negligence of Landlord, or its officers,
contractors, licensees, agents, employees or invitees.
ARTICLE 38
MEMORANDUM OF LEASE
38.01. Either party shall, at the request of the other, execute and deliver
a statutory form of memorandum of this Lease for the purpose of recording, but
said memorandum of this Lease shall not in any circumstances be deemed to modify
or to change any of the provisions of this Lease.
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ARTICLE 39
SIGNS
39.01. Tenant shall not erect or install any signs in the Building, on the
Premises or in the third floor lobby, or any signs visible from the exterior of
the Building, unless such signs have been approved in writing by Landlord. It is
understood and agreed that Landlord will not approve any sign if, in Landlord's
sole judgment, such sign does not conform to the decor and character of the
Building. Landlord hereby approves Tenant's signage as set forth on Exhibit D
hereto.
ARTICLE 40
SECURITY DEPOSIT
40.01. Tenant shall deposit with Landlord upon execution hereof an
irrevocable and unconditional sight-draft Letter of Credit in form and substance
reasonably acceptable to Landlord, issued by a banking institution reasonably
acceptable to Landlord in an initial amount equal to $537,500, with an
expiration date of the first anniversary of the Rent Commencement Date, as
security for the full and faithful performance and observance by Tenant of
Tenant's covenants and obligations under this Lease (the "Security"). Such
Letter of Credit shall be renewed annually by Tenant not less than 30 days prior
to its expiration, in such amount as shall be required for the next twelve month
period in the following amount:
<TABLE>
<CAPTION>
Anniversary of Rent Commencement Date Amount
------------------------------------- ------
<S> <C>
1 $375,500
2 322,000
3 268,500
4 161,000
5 117,000
6 and thereafter an amount
equal to two (2) months
fixed annual rent, as in
effect from time to time
</TABLE>
In the event Tenant fails to timely renew such Letter of Credit, notwithstanding
any other provision contained in this Lease to the contrary, Landlord may
immediately draw upon the existing Letter of Credit without notice to Tenant.
Should Tenant default beyond any applicable notice and grace period in respect
of any of the terms, provisions and conditions of this Lease, including, but not
limited to, the payment of fixed annual rent and additional rent, Landlord may
use, apply or retain the whole or any part of the Security to the extent
required for the payment
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of any fixed annual rent and additional rent or any other sum as to which Tenant
is in default or for any sum which Landlord may expend or may be required to
expend by reason of Tenant's default in respect of any of the terms, covenants
and conditions of this Lease, including but not limited to, any damages or
deficiency accrued before or after summary proceedings or other reentry by
Landlord. In the event of a sale of the demised premises and Building, Landlord
has the right to transfer the Security to the vendee and Landlord shall
thereupon be released by Tenant from all liability for the return of such
Security, and Tenant agrees to look to the new Landlord solely for the return of
said Security; and it is agreed that the provisions hereof shall apply to every
transfer or assignment made of the Security to a new landlord.
40.02 If Landlord shall so use, apply or retain the whole or any part of
the Security, Tenant shall, upon demand, immediately deposit a replacement
irrevocable and unconditional Letter of Credit in the full amount required
hereunder or increase the Security held by Landlord to the amount then required
hereunder.
40.03 If Landlord's reimbursement for Tenant's Extra Work shall exceed
$375,000, as provided in Section 6.09, then the amount of the Letter of Credit
as set forth in the Schedule set forth in Section 40.01 hereof (the "Scheduled
L/C Amount"), shall be increased, prior to the Rent Commencement Date, by the
amount in excess of $375,000 (the "Excess Amount"), and the Scheduled L/C
Amount, as increased by the Excess Amount shall be reduced (in addition to the
reductions to the Scheduled L/C Amount already provided for in Section 40.01),
on each anniversary of the Rent Commencement Date by 14.28% of the Excess
Amount, but in no event to less than two (2) months fixed annual rent. For
example, if the Excess Amount is $75,000, the Scheduled L/C Amount shall reduce
by $10,714.28 on each anniversary of the Rent Commencement Date, but in no event
to less than two (2) months fixed annual rent.
ARTICLE 41
ADDITIONAL SPACE
41.01. Subject to the rights of any other tenant in the Building who shall
have executed a Lease with Landlord prior to the date of this Lease, and
provided Tenant is then a tenant in the Building and is not in default under
this Lease, and if Landlord shall have available for rental any space on the
third floor of the Building or on the second or fourth floor which can be
directly connected to the demised premises by an internal stairway, or if
Landlord shall be aware that such space in the Building is becoming available to
be put on the market, Landlord shall give notice (the "Notice") to Tenant, which
Notice shall set forth the terms and conditions on which Landlord intends to
offer such space for rental to the public. Tenant shall then have 10 days to
enter into a lease with Landlord for such space, which shall be on the same
terms and conditions as this Lease, except as otherwise set forth in the Notice.
If Tenant shall not enter into such Lease with Landlord within said 10 day
period, time being of the essence, Tenant's rights under this Article 41 shall
terminate. Tenant's right hereunder shall not apply to any renewal, extension or
new lease with a tenant in the building relating to space then occupied by said
tenant.
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ARTICLE 42
RENEWAL OPTION
42.01. If Tenant is not in default under this Lease, Tenant shall have an
option (the "Option") to extend the term of this Lease for one (1) additional
term of ten (10) years (the "Renewal Term") commencing on the first day next
succeeding the Expiration Date upon the same terms, conditions and provisions as
are provided for in this Lease other than the provisions of this Article 42 (and
further provided that there shall be no rent abatement or continuation by
Landlord for any work to be performed by Tenant), except that the fixed annual
rent payable pursuant to Article 1 hereof for the Renewal Term shall be the
greater of (i) the fixed annual rent payable thereunder immediately prior to the
Expiration Date or (ii) the fair market rent for the demised premises as of such
Expiration Date determined in the manner hereinafter provided.
42.02. The Option shall be exercised by Tenant giving written notice to
Landlord of Tenant's exercise of said Option by certified mail, return receipt
requested, not less than twelve (12) months prior to the Expiration Date of the
Term (the "Exercise Notice"). Upon Tenant's giving of the Exercise Notice, the
term of this Lease shall be extended automatically upon the terms and conditions
herein specified, including, without limitation, the same Base Tax set forth in
Article 3 hereof, without the execution of an extension agreement or other
instrument. If Tenant shall not give Landlord the Exercise Notice at the time
and in the manner set forth above, the Option shall terminate and be deemed
waived by Tenant. Time is of the essence as to the date for the giving of the
Exercise Notice.
42.03. After Landlord receives the Exercise Notice, and if in Landlord's
opinion an increase in the fixed annual rent for the Renewal Term is warranted
because the fair market rent for the demised premises has increased, Landlord
shall send Tenant a notice (the "Revised Rent Notice") stating the amount which,
in Landlord's opinion, shall constitute the fair market rent for the demised
premises as of the Expiration Date. The increased fixed annual rent set forth in
the Revised Rent Notice shall be effective as of the first day of the Renewal
Term.
42.04. (a) If Landlord gives a Revised Rent Notice, then at any time within
30 days after the giving of such Revised Rent Notice, Tenant may dispute the
fair market rent for the demised premises as determined by Landlord by giving
notice to Landlord that it is initiating the appraisal process provided for
herein and specifying in such Notice the name and address of the appraiser
designated by Tenant to act on its behalf. Within 15 days after the designation
of Tenant's appraiser, Landlord shall give notice to Tenant specifying the name
and address of Landlord's appraiser. The two appraisers so chosen shall meet
within 10 days after the second appraiser is appointed and if, within 20 days
after the second appraiser is appointed, the two appraisers shall not agree upon
a determination in accordance with Paragraph (c) of this Section 42.04 they
shall together appoint a third appraiser. If said two appraisers cannot agree
upon the appointment of a third appraiser within 10 days after the expiration of
such 20 day period, then
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either party, on behalf of both, and on notice to the other may request such
appointment by the President of the Real Estate Board of New York, Inc. (or any
successor organization) in accordance with its then-prevailing rules. If said
President shall fail to appoint said third appraiser within 10 days after such
request is made, then either party, on behalf of both, and on notice to the
other may request such appointment by the American Arbitration Association (or
any successor organization) in accordance with its then prevailing rules. If the
American Arbitration Association shall fail to appoint said third appraiser
within 10 days after such request is made, then either party may apply, on
notice to the other, to the Supreme Court, New York County, New York (or any
other court having jurisdiction and exercising functions similar to those now
exercised by the foregoing court) for the appointment of such third appraiser.
(b) Each of the appraisers selected as herein provided shall have at
least five years experience in the leasing or management of space in the Borough
of Manhattan. Each party shall pay the fees and expenses of the appraiser
selected by it. The fees and expenses of the third appraiser and all other
expenses (not including the attorney's fees, witness fees and similar expenses
of the parties which shall be borne separately by each of the parties) of the
arbitration shall be borne equally by the parties hereto.
(c) The majority of the appraisers shall determine the fair market
rent of the demised premises as of the Expiration Date and render a decision and
award as to their determination to both Landlord and Tenant within 20 days after
the appointment of the third appraiser. In rendering such decision and award,
the appraisers shall assume or take into consideration as appropriate all of the
following: (i) the Landlord and prospective tenant are typically motivated; (ii)
the Landlord and prospective tenant are well informed and well advised and each
is acting in what it considers its own best interest; (iii) a reasonable time
under then-existing market conditions is allowed for exposure of the demised
premises on the open market; (iv) the rent is unaffected by concessions, special
financing amounts and/or terms, or unusual services, fees, costs or credits in
connection with the leasing transaction; (v) the demised premises are fit for
immediate occupancy and use "as is" and require no additional work by Landlord
and that no work has been carried out thereon by the Tenant, its subtenant, or
their predecessors in interest during the Term which has diminished the rental
value of the demised premises; (vi) in the event the demised premises have been
destroyed or damaged by fire or other casualty, they have been fully restored;
(vii) the demised premises are to be let with vacant possession and subject to
the provisions of this Lease for a 10 year term; and (viii) market rents then
being charged for comparable space in other similar office buildings in the same
area. In rendering such decision and award, the appraisers shall not modify the
provisions of this Lease. The decision and award of the appraisers shall be in
writing and be final and conclusive on all parties and counterpart copies
thereof shall be delivered to each of said parties. Judgment may be had on the
decision and award of the appraisers so rendered in any court of competent
jurisdiction.
(d) Prior to the determination of the appraisers, Tenant shall pay as
the fixed annual rent it is obligated to pay under this Lease the amount set
forth in the Revised Rent
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Notice and in the event the appraisers determine that the fixed annual rent
payable pursuant to this Article 42 is greater than that set forth in the
Revised Rent Notice, then Tenant shall promptly pay to Landlord the amount of
its underpayment of fixed annual rent for the period commencing on the first day
of the Renewal Term, or if the appraisers determine that the fixed annual rent
payable pursuant to this Article 42 is less than that set forth in the Revised
Rent Notice, then Tenant shall be entitled to a credit in the amount of its
overpayment for the period commencing on the first day of the Renewal Term
against subsequent payments of fixed annual rent due hereunder.
(e) Nothing contained in this Article 42 shall be deemed in any way
to alter or modify the provisions of Article 3 hereof.
(f) In no event shall the fixed annual rent (as the same may have
been increased from time to time in accordance with this Lease) be reduced
pursuant to this Article 42.
42.05. Notwithstanding the foregoing provisions of this Article 42, if on
the date that Tenant exercises the Option, or if on any subsequent date up to
and including the date upon which the extension of the term commences, Tenant is
in default, beyond any applicable notice and grace periods, in the payment of
fixed annual rent or additional rent hereunder, or is in default in the
performance of any of the other terms, conditions or provisions of this Lease,
Tenant's exercise of such Option and the extension of the Term covered by this
Lease contemplated thereby shall, at the option of Landlord exercised by written
notice to Tenant, be rendered null and void and shall be of no further force and
effect and Tenant shall have no other additional right to exercise such option,
which shall be deemed waived by Tenant.
42.06. If Tenant exercises the Option, then, at Landlord's request, Tenant
agrees within ten (10) days after such request is made to execute, acknowledge
and deliver to Landlord an instrument in form and substance satisfactory to
Landlord, confirming (i) the fixed annual rent payable under this Lease pursuant
to Article 42, unless Tenant is then, in good faith, disputing same in
accordance with the provision of this Article 42, in which case Tenant agrees to
execute, acknowledge and deliver a separate instrument satisfactory to Landlord
confirming the fixed annual rent as finally determined, (ii) the expiration date
of the Term, and (iii) the other modifications provided for in this Article 42,
but no such instrument shall be required in order to make the provisions hereof
effective.
42.07. Notwithstanding anything contained in this Article 42, the fixed
annual rent as determined by the appraisers, shall be increased by Fifty
Thousand and 00/100 ($50,000.00) Dollars commencing on the fifth anniversary of
the commencement of the Renewal Term, consistent with the similar increase
applicable during the Initial Term, as provided in Section 1.01 hereof. In
making the determination of fixed annual rent, the appraisers shall deem that
this Section 42.02 is not contained in the Lease, and shall not consider the
increase provided for in this Section 42.07.
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ARTICLE 43
MISCELLANEOUS
43.01. Irrespective of the place of execution or performance, this Lease
shall be governed by and construed in accordance with the laws of the State of
New York.
43.02. This Lease shall be construed without regard to any presumption or
other rule requiring construction against the party causing this Lease to be
drafted.
43.03. Except as otherwise expressly provided in this Lease, each covenant,
agreement, obligation or other provision of this Lease on Tenant's part to be
performed shall be deemed and construed as a separate and independent covenant
of Tenant, not dependent on any other provision of this Lease.
43.04. All terms and words used in this Lease, regardless of the number or
gender in which they are used, shall be deemed to include any other number and
any other gender as the context may require.
43.05. Time shall be of the essence with respect to the exercise of any
Option on the part of Tenant to extend the term of this Lease.
43.06. Except as otherwise provided herein, whenever payment of interest is
required by the terms hereof it shall be at the Interest Rate.
43.07. Subject to the provisions of Article 2, if the demised premises or
any additional space to be included within the demised premises shall not be
available for occupancy by Tenant on the specific date hereinbefore designated
for the commencement of the Term of this Lease or for the inclusion of such
space for any reason whatsoever, then this Lease shall not be affected thereby
but, in such case, said specific date shall be deemed to be postponed until the
date when the demised premises or such additional space shall be available for
occupancy by Tenant, and Tenant shall not be entitled to possession of the
demised premises or such additional space until the same are available for
occupancy by Tenant; provided, however, that Tenant shall have no claim against
Landlord, and Landlord shall have no liability to Tenant by reason of any such
postponement of said specific date, and the parties hereto further agree that
any failure to have the demised premises or such additional space available for
occupancy by Tenant on said specific date or on the Commencement Date shall in
no wise affect the obligations of Tenant hereunder nor shall the same be
construed in any wise to extend the Term. This Section 43.07 shall be deemed to
be an express provision to the contrary of Section 223-a of the Real Property
Law of the State of New York and any other law of like import now or hereinafter
in force.
43.08. In the event that Tenant is in arrears in payment of fixed annual
rent or additional rent hereunder, Tenant waives Tenant's right, if any, to
designate the items against which any payments made by Tenant are to be
credited, and Tenant agrees that Landlord may apply any payments made by Tenant
to any items it sees fit, irrespective of and notwithstanding
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any designation or request by Tenant as to the items against which any such
payments shall be credited.
43.09. All Exhibits referred to in this Lease are hereby incorporated in
this Lease by reference.
43.10. The covenants, conditions and agreements contained in this Lease
shall bind and inure to the benefit of Landlord and Tenant and their respective
heirs, distributees, executors, administrators, successors, and except as
otherwise provided in this Lease, their assigns.
43.11. No remedy or election hereunder shall be deemed exclusive but shall,
whenever possible, be cumulative with all other remedies at law or in equity.
43.12. This Lease supersedes all prior agreements, whether oral or written,
between Landlord and Tenant, which prior agreements are null and void.
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
CHELSEA GREEN ASSOCIATES, L.P., Landlord
By: /s/ Israel Taub
Israel Taub, President
SILICON VALLEY INTERNET PARTNERS, Tenant
By: /s/ Signature Illegible
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[EXHIBIT OMITTED]
<PAGE>
EXHIBIT B
----------
1. Landlord shall arrange for the electric meters currently measuring
electric consumption for the entire 3rd floor to measure the electric
consumption only at the demised premises. Landlord shall also remove one or two
switch boxes from the demised premises to another location so as to provide
separate electric service to such balance of the 3rd floor.
2. Landlord shall place the HVAC system in good working order so that it
will sufficiently heat and/or cool the demised premises throughout the term of
this Lease substantially least in accordance with the following design criteria:
Summer: Inside 78/F.D.B,
50% RH
Outside 95/F.D.B.,
75/F.D.B.
Winter: Inside 65/F.D.B,
Outside 5/F.D.B.
based on total connected continuous electrical load of 6 watts per square foot
and one person per 100 square feet of rentable area.
3. Landlord shall remove the carpeting from the demised premises. Landlord
shall repair any area of the wood floors as is reasonably necessary to make such
floors carpetable, or if not intended to be carpeted, shall repair any areas of
the wood floor which have been materially damaged.
4. Tenant acknowledges that the windows are over 100 years old, have not
been used in many years, and are subject to Landmark Commission rules and
regulations. Landlord shall endeavor to render the windows as operable as
practicable, given their age and lack of use. However, Landlord will have no
obligation for windows which may break or become inoperable after Landlord
renders them operable.
5. If required by any Legal Requirement in effect at the execution of this
Lease, Landlord shall (i) install a water fountain in the demised premises; and
(ii) widen the small hallway and doors leading to the men's and women's
restrooms.
6. Landlord shall use reasonable efforts to obtain from J. Crew, the prior
tenant of the demised premises, any plumbing, electrical and mechanical plans
for the demised premises.
7. Landlord shall construct and install the demising walls as shown on the
floor plan annexed hereto as Exhibit A.
8. Landlord represents that, to the best of its knowledge, the demised
premises comply, as of the execution of this Lease, with fire, life and safety
codes as imposed by any Legal Requirements.
9. Landlord shall cause, within sixty (60) days from the date of this
Lease, for any extraneous wiring to be removed from the telephone closets,
including the wiring belonging to or utilized by J. Crew, the prior tenant of
the demised premises.
<PAGE>
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
One Financial Center
Boston, Massachusetts 02111
701 Pennsylvania Avenue, N.W. Telephone 617/542-6000
Washington, D.C. 20004 Fax: 617/542-2241
Telephone: 202/434-7300 www.mintz.com
Fax: 202/434-7400
Stuart A. Offner Direct Dial Number
617/348-1704
Internet Address
[email protected]
September 4, 1997
Silicon Valley Internet Partners
70 Lincoln Street, 6th Floor
Boston, MA 02111
ATTN: Mr. Robert Gett
Re: Silicon Valley Internet with
Chelsea Green Associates, LP
----------------------------
Dear Robert:
Enclosed please find two Subordination, Non-Disturbance and Attornment
Agreements fully executed by the Lehman Brothers Holdings, Inc. as Lender.
These should be executed by you and returned directly to:
David S. Lester, Esq.
Cooperman Levitt Winikoss Lester
& Newman, P.C.
800 Third Avenue
New York, NY 10022
Sincerely yours,
Stuart A. Offner
SAO:jc
Enclosure
cc: David S. Lester, Esq.
Mr. Dwayne Nesmith
<PAGE>
LEHMAN BROTHERS HOLDINGS INC., Lender
- and -
SILICON VALLEY INTERNET PARTNERS, Tenant
SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT
Dated: August 26, 1997
Location: 625 Avenue of the Americas
County: Manhattan
UPON RECORDATION
RETURN TO:
Lehman Brothers Holdings, Inc.
Three World Financial Center, 12th Floor
New York, New York 10285-1200
Attention: David Turner
<PAGE>
SUBORDINATION, NONDISTURBANCE ATTORNMENT AND AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the
"Agreement") is made as of the 26th day of August, 1997 by and between LEHMAN
BROTHERS HOLDINGS INC., having an address at Three World Financial Center, New
York, New York 10285("Lender") and SILICON VALLEY INTERNET PARTNERS, having an
address at 950 Tower Lane, Suite 300, Foster City, California 94406 ("Tenant").
RECITALS:
A. Tenant is the holder of a leasehold estate in a portion of the
property located at 625 Avenue of the Americas, New York, New York (the
"Property") under and pursuant to the provisions of a certain lease dated July
28, 1997 between Chelsea Green Associates, L.P., as landlord ("Landlord") and
Tenant, as tenant (the "Lease");
B. Chelsea Green Associates, L.P.'s interest as landlord in the Lease
has been or is about to be assigned to Lehman Brothers Holdings Inc., a Delaware
Corporation;
C. The Property is or is to be encumbered by one or more mortgages,
deeds of trust, deeds to secure debt or similar security agreements
(collectively, the "Security Instrument") in favor of or to be assigned to
Lender; and
D. Tenant has agreed to subordinate the Lease to the Security
Instrument and to the lien thereof and Lender has agreed to grant
non-disturbance to Tenant under the Lease on the terms and conditions
hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, the parties hereto mutually agree as follows:
1 SUBORDINATION. The Lease shall be subject and subordinate in all
respects to the lien and terms of the Security Instrument, to any and all
advances to be made thereunder and to all renewals, modifications,
consolidations, replacements and extensions thereof.
2 NONDISTURBANCE. So long as Tenant pays all rents and other charges as
specified in the Lease and is not otherwise in default (beyond applicable notice
and cure periods) of any of its obligations and covenants pursuant to the Lease,
Lender agrees for itself and its successors in interest and for any purchaser of
the Property upon a foreclosure of the Security Instrument, that Tenant's
possession of the premises as described in the Lease will not be disturbed
during the term of the Lease, as said term may be extended pursuant to the terms
of the Lease or as said premises may be expanded as specified in the Lease, by
reason of a foreclosure. For purposes of this agreement, a "foreclosure" shall
include (but not be limited to) a sheriff's or trustee's sale under the power of
sale contained in the Security Instrument, the termination of any superior lease
of the Property and any other transfer of the Landlord's interest in the
Property under peril of foreclosure, including, without limitation to the
generality of the foregoing, an assignment or sale in lieu of foreclosure.
3 ATTORNMENT. Tenant agrees to attorn to, accept and recognize any
person or entity which acquires the Property through a foreclosure (an
"Acquiring Party") as the landlord under the Lease for the then remaining
balance of the term of the Lease, and any extensions thereof as made pursuant to
the Lease. The foregoing provision shall be self-operative and shall not require
the execution of any further instrument or agreement by Tenant as a condition to
its effectiveness. Tenant agrees, however, to execute and deliver, at any time
and from time to time, upon the request of the Lender or any Acquiring Party any
reasonable instrument which may be necessary or appropriate to evidence such
attornment.
2
<PAGE>
4 NO LIABILITY. Notwithstanding anything to the contrary contained
herein or in the Lease, it is specifically understood and agreed that neither
the Lender, any receiver or any Acquiring Party shall be:
(a) liable for any act, omission, negligence or default of any prior
landlord (other than to cure defaults of a continuing nature with respect to the
maintenance or repair of the demised premises or the Property); provided,
however, that any acquiring Party shall be liable and responsible for the
performance of all covenants and obligations of landlord under the Lease
accruing from and after the date that it takes title to the Property; or
(b) except as set forth in (a), above, liable for any failure of any
prior landlord to construct any improvements;
(c) subject to any offsets, credits, claims or defenses which Tenant
might have against any prior landlord; or
(d) bound by any rent or additional rent which is payable on a
monthly basis and which Tenant might have paid for more than one (1) month in
advance to any prior landlord; or
(e) bound by any cancellation, surrender, amendment or modification
of the Lease or release of liability thereunder not expressly consented to in
writing by Lender or otherwise permitted by the Security Instrument in each
instance; or
(f) be liable to Tenant hereunder or under the terms of the Lease
beyond its interest in the Property.
Notwithstanding the foregoing, Tenant reserves its rights to any and all claims
or causes of action against such prior landlord for prior losses or damages and
against the successor landlord for all losses or damages arising from and after
the date that such successor landlord takes title to the Property.
5 RENT. Tenant has notice that the Lease and the rents and all other
sums due thereunder have been assigned to Lender as security for the loan
secured by the Security Instrument. In the event Lender notifies Tenant of the
occurrence of a default under the Security Instrument and demands that Tenant
pay its rents and all other sums due or to become due under the Lease directly
to Lender, Tenant shall honor such demand and pay its rent and all other sums
due under the Lease directly to Lender or as otherwise authorized in writing by
Lender. Landlord hereby irrevocably authorizes Tenant to make the foregoing
payments to Lender upon such notice and demand.
6 LENDER TO RECEIVE NOTICES. Tenant shall notify Lender of any
default by Landlord under the Lease which would entitle Tenant to cancel the
Lease, and agrees that, notwithstanding any provisions of the Lease to the
contrary, no notice of cancellation thereof shall be effective unless Lender
shall have received notice of default giving rise to such cancellation and shall
have failed within sixty (60) days after receipt of such notice to cure such
default, or if such default cannot be cured within sixty (60) days, shall have
failed within sixty (60) days after receipt of such notice to commence and
thereafter diligently pursue any action necessary to cure such default.
3
<PAGE>
7 NOTICES. All notices or other written communications hereunder
shall be deemed to have been properly given (i) upon delivery, if delivered in
person with receipt acknowledged by the recipient thereof, (ii) one (1) Business
Day (hereinafter defined) after having been deposited for overnight delivery
with any reputable overnight courier service, or (iii) three (3) Business Days
after having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified mail,
postage prepaid, return receipt requested, addressed to the receiving party at
its address set forth above, and:
if to Tenant, to
the attention of: Dwayne Nesmith (with a copy to: Mintz, Levin, Cohn, Ferris,
Glorsky and Popeo P.C., located at, One Financial Center, Boston, MA 02111,
Atten: Stuart A. Offner, ESQ.; and
if to Lender:
to the attention of: Mark Walsh
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Paragraph 7, the term "Business Day"
shall mean any day other than Saturday, Sunday or any other day on which banks
are required or authorized to close in New York, New York.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
8 SUCCESSORS. The obligations and rights of the parties pursuant to
this Agreement shall bind and inure to the benefit of the successors, assigns,
heirs and legal representatives of the respective parties.
9 DUPLICATE ORIGINALS; COUNTERPARTS. This Agreement may be executed
in any number of duplicate originals and each duplicate original shall be deemed
to be an original. This Agreement may be executed in several counterparts, each
of which counterparts shall be deemed an original instrument and all of which
together shall constitute a single Agreement. The failure of any party hereto to
execute this Agreement, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.
10 TRANSFER OF LOAN/SERVICING. Lender may sell, transfer and deliver
the Note and assign the Security Instrument, this Agreement and the other
documents executed in connection therewith to one or more Investors (as defined
in the Security Instrument) in the secondary mortgage market or otherwise.
Lender may also retain or assign responsibility for servicing the loan evidenced
by the Note, or may delegate some or all of such responsibility and/or
obligations to a servicer including, but not limited to, any subservicer or
master servicer, on behalf of the Investors. All references to Lender herein
shall refer to and include any such servicer to the extent applicable. Lender
may disclose the terms of this Agreement, the identity of Tenant or any
principal of Tenant, or any financial information regarding Tenant or any
principal of Tenant, to any Investor or potential Investor.
4
<PAGE>
IN WITNESS WHEREOF, Lender and Tenant have duly executed this Agreement
as of the date first above written.
LENDER: LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Mark Walsh
Name: Mark Walsh
Title: Authorized Signature
TENANT: SILICON VALLEY INTERNET PARTNERS
By:_______________________
Name:
Title:
The undersigned accepts and agrees to
the provisions of Paragraph 5 hereof:
LANDLORD: CHELSEA GREEN ASSOCIATES
By:_______________________________
Name:
Title:
5
<PAGE>
ACKNOWLEDGEMENTS
State of New York,
County of New York. ss.:
On this 26th day of August, in the year one thousand nine hundred and
ninety-seven before me personally came Mark Walsh to me known, who being by me
duly sworn, did depose and say that he resides at 5 Hunter Lane, Rye, New York;
that he is a Authorized Signature of Lehman Brothers Holdings Inc., the
corporation described in, and which executed the above instrument; that he knows
the seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation and that he signed his name thereto by like order.
/s/ Dora M. Enriquez
Notary Public
[SEAL NOT SHOWN]
State of New York,
County of New York. ss.:
On this 26th day of August, in the year one thousand nine hundred and
ninety-seven before me personally came _________________________, to me known to
be the person who executed the foregoing instrument, and who, being by me duly
sworn, did depose and say that he is a member of the firm of Silicon Valley
Internet Partners, a co-partnership, and he executed the foregoing instrument in
the firm name of ____________________; and that he had the authority to sign the
same, and he acknowledged to me that he executed the same as the act and deed of
said firm for the uses and purposes therein mentioned.
--------------------
Notary Public
6
<PAGE>
FIRST AMENDMENT OF LEASE
------------------------
Agreement made as of this day of November, 1997, between CHELSEA GREEN
ASSOCIATES, L.P., having an office at 675 Avenue of the Americas, New York, New
York 10010 ("Landlord") and SILICON VALLEY INTERNET PARTNERS, having an office
at 950 Tower Lane, Suite 300, Forster City, California 94404 ("Tenant").
WITNESSETH:
----------
WHEREAS, Landlord has leased to Tenant certain premises located at 625
Avenue of the Americas, New York, New York, pursuant to a Lease Agreement dated
July 28, 1997 ("Lease"); and
WHEREAS, Tenant has requested Landlord to give Tenant an additional
Three Hundred Thousand and 00/100 ($300,000.00) Dollars as reimbursement for the
actual costs of Tenant's Extra Work as defined in the Lease; and
WHEREAS, the Lease provides that in the event Landlord shall deliver to
Tenant said $300,000.00, the fixed annual rent for each year throughout the Term
of the Lease shall be increased by One and 00/100 ($1.00) Dollar for each Six
and 00/100 ($6.00) Dollars of increase in the reimbursement amount as provided
for in Article 6.09(b) of the Lease.
NOW, THEREFORE, the Landlord and Tenant agree as follows:
1. All defined terms used in this First Amendment of Lease shall have
the meaning set forth in the Lease, as modified by this First Amendment of
Lease.
<PAGE>
2. The fixed annual rent set forth in Article 1.1 of the Lease shall be
amended as follows:
<TABLE>
<CAPTION>
Year Fixed Annual Rent Monthly Installment
---- ----------------- -------------------
<S> <C> <C>
Rent Commencement
Date-12 $700,000.00 $58,333.33
Month 13-24 $713,000.00 $59,416.67
Months 25-36 $726,000.00 $60,500.00
Months 37-48 $739,000.00 $61,583.33
Months 49-60 $752,000.00 $62,666.67
Months 61-72 $802,000.00 $66,833.33
Months 73-84 $816,000.00 $68,000.00
Months 85-96 $830,000.00 $69,166.67
Months 97-108 $844,000.00 $70,333.33
Months 109-120 $858,000.00 $71,500.00
</TABLE>
<PAGE>
3. The Security Deposit, after applying the provisions of Articles
40.01 and 40.03 shall be in the initial amount of $837,500.00, and shall
thereafter be as follows:
<TABLE>
<CAPTION>
Anniversary of Rent Amount
- ------------------- ------
Commencement Date
- -----------------
<S> <C>
1 $675,500.00
2 $579,000.00
3 $482,500.00
4 $310,500.00
5 $223,500.00
6 and thereafter An
amount equal to two
months fixed annual
rent as in effect
from time to time.
</TABLE>
4. All other provisions of the Lease remain in full force effect and
are hereby ratified and confirmed.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
as of the day and year first written above.
CHELSEA GREEN ASSOCIATES, L.P.
By:__________________________
SILICON VALLEY INTERNET PARTNERS
By: /s/ Signature Illegible
COOPERMAN LEVITT WINIKOFF LESTER & NEWMAN, P.C.
ATTORNEYS-AT-LAW
800 THIRD AVENUE NEW YORK, N.Y. 10022
(212) 688-7000
FAX: (212) 755-2839
LONG ISLAND OFFICE
1129 NORTHERN BOULEVARD
MANHASSET, N Y 11030
SUSAN DENBURG YELLIN PLEASE RESPOND TO (516) 365-1400
Direct Dial 516-365-1400, Ext. 108 FAX (516) 365-1404
November 18, 1997
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
- ------------------------
Silicon Valley Internet Partners
950 Tower Lane, Suite 330
Foster City, California 94404
Enclosed are two (2) duplicate originals of an instruction letter with respect
to your rental payments at the above noted property.
Please acknowledge your receipt of this instruction on one of the letters and
return the same to the undersigned in the envelope we have provided. The
duplicate letter is for your files.
Very truly yours,
Susan Denburg Yellin
<PAGE>
Chelsea Green Associates, L.P.
675 Avenue of the Americas
New York, New York 10010
November 13, 1997
Silicon Valley Internet Partners
950 Tower Lane, Suite 330
Foster City, California 94404
RE: Your lease (the "Lease") of space in 625 Sixth Avenue located in
New York, NewYork (the "Property")
Gentlemen:
On May 30, 1997, the Property was refinanced by the undersigned
("Landlord") with LEHMAN BROTHERS HOLDINGS INC. D/B/A LEHMAN CAPITAL, A DIVISION
OF LEHMAN BROTHERS HOLDINGS INC. (together with its successors and assigns,
being hereinafter referred to as "Lender") and as a condition to the refinancing
by Lender, Landlord has pledged, assigned and transferred the Lease and all
rentals owing thereunder to Lender.
In order to facilitate the efficient collection of rents by Lender,
Lender has established a special deposit account for the collection of rentals
and other charges under all leases of the Property. We hereby request payment of
the rent to be made in accordance with the directions of this letter.
You are hereby authorized and directed that each payment of rent,
additional rent, common area expenses or any other charge by you under the Lease
is to be made in the form of a check made payable to the order of FIRST UNION
NATIONAL BANK - Agent for Lender Account No. FUNB#18-0000040 and delivered to
such Bank at the following address:
If by regular mail: Attention Capital Markets Group
Structured Products Servicing
First Union National Bank
P.O. Box 60697
Charlotte, North Carolina 28260-0697
Ref: FUNB#18-0000040
If by overnight delivery: First Union, Wholesale Lockbox/Structured Products
Servicing
1525 West W.T. Harris Blvd., Building 2C2
Reference #60697
Charlotte, North Carolina 28262
Ref: FUNB#18-0000040
<PAGE>
In order to induce Lender to accept such system, we have agreed that
this notification of the payment of rent may not be modified or revoked, without
Lender's written authorization. Lender shall have no control over the management
or operation of the Property and no liability under your lease. Rent (and such
other sums) paid to any party other than as set forth above will not be credited
as being paid under your lease. Please contact the undersigned at the above
address if you have any questions or comments on this matter.
Kindly sign below to indicate your acceptance of the above terms and
conditions.
Thank you for your cooperation.
Very truly yours,
Chelsea Green Associates, L.P.,
a New Jersey limited liability partnership
By: 625 General Partner LLC
By: 625 Managing Member Corp.
By: Israel Taub
Name: Israel Taub
Title: Pres
ACCEPTED AND AGREED TO BY TENANT
AS OF THIS ____ DAY OF _______, 1997:
SILICON VALLEY INTERNET PARTNERS
By:_________________________________
Name:_______________________________
Title:______________________________
2
<PAGE>
STANDARD FORM COMMERCIAL LEASE
THIS INSTRUMENT IS A LEASE, dated as of 5/2, 1997, in which the LESSOR and
LESSEE are the parties hereinafter named, and which relates to space in the
property (the "Property") known as Lincoln Plaza and located at 89 South
Street and 70-80 Lincoln Street, Massachusetts. The parties to this
instrument hereby agree with each other as follow:
1. BASIC LEASE
PROVISIONS: The following set forth basic data and, where appropriate,
constitute definitions of the terms hereinafter listed.
A. BASIC DATA.
LESSOR: Lincoln Plaza Limited Partnership, a Massachusetts
limited partnership.
LESSOR'S Original Address: c/o Capital Properties, Inc., 80
Lincoln Street, Boston, MA 02111
LESSEE: Silicon Valley Internet Partners, a California
corporation.
LESSEE'S Original Address: 950 Tower Lane, Suite 300, Foster
City, California, 94404
PERMANENT PREMISES
Permanent Premises Basic Rent:
31/98 - 3/15/99 For year one, the sum of $480,000 ($24 per
square foot of Premises Rentable Area) per
annum as the same may be adjusted and/or
abated.
3/15/00 For year two, the sum of $500,000 ($25 per
square foot of Premises Rentable Area) per
annum as the same may be adjusted and/or
abated.
3/15/01 For year three, the sum of $520,000 ($26 per
square foot of Premises Rentable Area) per
annum as the same may be adjusted and/or
abated.
5/19/02 For year four, the sum of $540,000 ($27 per
square foot of Premises Rentable Area) per
annum as the same may be adjusted and/or
abated.
3/15/03 For year five, the sum of $560,000 ($28 per
square foot of Premises Rentable Area) per
annum as the same may be adjusted and/or
abated.
Permanent Premises Rentable Area: Agreed to be 20,000 square
feel located on the second floor of the Building.
<PAGE>
Permanent Premises Escalation Factor: 12.53%, as computed in
accordance with the Escalation Factor Computation for the
building located at 89 South Street.
Permanent Premises Construction Completion Date: Ninety (90)
days after the current tenant(s) vacate the premises,
estimated to be between January 1, 1998 and March 1, 1998,
but not later than March 30, 1998.
INITIAL PREMISES
Initial Premises Basic Rent: At the rate of $107,993 ($12.75
per square foot of Premises Rentable Area) per annum as the
same may be adjusted and/or abated.
Initial Premises Rentable Area: Agreed to be 8,470 square
feet located on the sixth floor of 70-80 Lincoln Street,
Boston, MA.
INITIAL TERM Approximately five years and ten months commencing
on the Initial Premises Commencement Date and expiring at the close of
the day immediately preceding the fifth anniversary of the Permanent
Premises Commencement Date, except that if the Permanent Premises
Commencement Date shall be other than the first day of a calendar
month, the expiration of the Initial Term shall be at the close of the
day on the last day of the calendar month on which such anniversary
shall fall.
Permitted Uses: General office use.
LEASE SECURITY:
At lease Execution - LESSEE shall provide LESSOR
with a Letter of Credit in the
amount of $150,000.
Thirty (30) days prior The Letter of Credit shall be
to the Commencement increased to $614,500 (base
of construction for the portion) plus the cost of the tenant
Permanent Premises. improvements paid by LESSOR at
the request of LESSEE in excess
of $25/psf.
At six (6) months after The base portion of the Letter of
the Permanent Premises Credit may be reduced to
Commencement Date $574,000 *
2
<PAGE>
At thirteen (13) months The base portion of the Letter of
after the Permanent Credit may be reduced to
Premises Commencement $460,000 *
Date
At twenty-five (25) The base portion of the Letter of
months after the Credit may be reduced to
Permanent Premises $155,000 *
Commencement Date
At thirty-seven (37) The base portion of the Letter of
months after the Credit may be reduced to
Permanent Premises $93,333 *
Commencement Date
* Contingent upon no monetary default from the Initial
Premises Commencement Date through this reduction date. The
portion in excess of the base portion of the Letter of
Credit shall be reduced one third at thirteen months after
the Permanent Premises Commencement Date one third at twenty
five months after the Permanent Premises Commencement Date
and one third at thirty seven months after the Permanent
Premises Commencement Date.
Prepaid Rent: On the Permanent Premises Commencement Date, LESSEE
shall prepay the first three months rent.
Base Operating Expenses: The actual Operating Expenses for the
calendar year commencing January 1, 1998 and ending December 31, 1998,
as adjusted for 95% building occupancy.
Base Taxes: The actual Taxes for the Tax Year commencing July 1,
1997 and ending June 30, 1998.
Broker: Whittier Partners, Inc. & Meredith & Grew
B. ADDITIONAL DEFINITIONS.
Agent: Capital Properties, Inc., 80 Lincoln Street, Boston,
Massachusetts 02111.
Business Days: All days except Saturday, Sunday, New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas
Day (and the following Monday when any such day occurs on Sunday).
Unless specifically referred to herein as Business Days, all
references in this Lease to "days" shall mean calendar days. There
shall be no cleaning services provided on President's Day, Patriot's
Day, Columbus Day or Veterans' day.
Initial Premises: As described in Exhibit A1 attached hereto.
3
<PAGE>
Permanent Premises: As described in Exhibit A2 attached hereto.
Building Access: LESSEE shall have access to the building
together with the necessary utilities three hundred and sixty five
days per year, twenty four hours a day.
Initial Premises Commencement Date: Not later than June 1, 1997
or upon substantial completion of LESSOR'S Work.
Permanent Premises Commencement Date: The Permanent Premises
Substantial Completion Date, as defined in Section 26B of this Lease,
approximately first quarter, 1998, not later than May 1, 1998.
Escalation Factor Computation: Premises Rentable Area divided by
95% of building rentable area.
Extended Term: As defined in Section 34.
First Offered Space: As defined in Section 35.
Guarantor: None.
Initial Public Liability Insurance: $1,000,000.00 per occurrence
(combined single limit) for property damage, personal injury or death.
LESSOR'S Architectural Allowance: $1.25 per square foot of the
Permanent Premises Rentable Area, as defined in Section 26A.
LESSOR'S Tenant Improvement Allowance: $25 per square foot of the
Permanent Premises Rentable Area, as defined in Section 37.
LESSOR'S Work for Initial Premises: As defined in Section 26.
LESSOR'S Work for Permanent Premises: As defined in Section 26.
Initial Premises: A portion of the Property as shown on Exhibit A
attached hereto.
Permanent Premises: A portion of the Property as shown on Exhibit
A.
Parking: As defined in Section 36.
LESSOR'S Notice Address: LESSOR'S Original Address.
LESSEE'S Notice Address: Initial Premises, then Permanent
Premises.
4
<PAGE>
2. PREMISES A) PERMANENT PREMISES (From the Permanent Premises Commencement
Date to the end of the Term):
A portion of the Building owned by LESSOR consisting of
approximately 20,000 SQUARE FEET OF RENTABLE AREA ON THE SECOND
FLOOR OF THE BUILDING LOCATED AT 89 SOUTH STREET, BOSTON, MA AND
SUBSTANTIALLY KNOWN AS SUITE 201 on the plan attached hereto as
"Exhibit A" (the "Premises") together with the right to use in
common, with others entitled thereto, the hallways, stairways,
and elevators, necessary for access to said Premises, and
lavatories nearest thereto.
B) INITIAL PREMISES (From the Initial Premises Commencement Date
to the day before the Permanent Premises Commencement Date):
A portion of the Building owned by LESSOR consisting of
approximately 8,470 SQUARE FEET OF RENTABLE AREA ON THE SIXTH
FLOOR OF THE BUILDING LOCATED AT 70-80 LINCOLN STREET, BOSTON, MA
AND SUBSTANTIALLY KNOWN AS SUITE 601 on the plan attached hereto
as "Exhibit A" (the "Premises") together with the right to use in
common, with others entitled thereto, the hallways, stairways,
and elevators, necessary for access to said Premises, and
lavatories nearest thereto.
3. TERM The term of this lease shall be for approximately five years and
ten months commencing on the Initial Premises Commencement Date
and ending sixty months after the Permanent Premises Commencement
Date.
4. BASIC A) PERMANENT PREMISES
RENT
The LESSEE shall pay to the LESSOR rent at the rate specified in
Section 1 of this Lease, payable in advance on the first day of
each month, commencing upon occupancy of the Permanent Premises
without deduction or set off. LESSEE shall pay the first three
months rent on the Permanent Premises Commencement Date.
B) INITIAL PREMISES
The LESSEE shall pay to the LESSOR rent at the rate of $107,993
per year, payable in advance on the first day of each month
commencing approximately June 1, 1997 without deduction or set
off in monthly installments of $8,999.38.
5. SECURITY Upon the execution of this lease, the LESSEE shall provide LESSOR
DEPOSIT a Letter of Credit in accordance with Section I of this lease.
The Letter of Credit shall be held as a security for the LESSEE'S
performance as herein provided and may be drawn in the event that
LESSEE is in default beyond any applicable cure period, in
accordance with Section 19 of this Lease.
6. ADDITIONAL A. TAX. If, in any tax year, the real estate taxes on the land
RENT and buildings, of which the Premises are a part, are in excess of
the amount of the Base Taxes, as finally abated (hereinafter
called the "Base Year"), LESSEE will pay to LESSOR, as additional
rent hereunder, when and as designated within thirty
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(30) days after notice in writing by LESSOR, the amount of the
excess multiplied by the Escalation Factor. If the LESSOR obtains
an abatement of any such excess real estate tax, a proportionate
share of such abatement, less the reasonable fees and costs
incurred in obtaining the same, if any, shall be refunded to the
LESSEE.
B. OPERATING. If, in any calendar year, the Operating Expenses
for the Property of which the Premises are a part, are in excess
of the amount of the Base Operating Expenses, LESSEE will pay to
LESSOR, as additional rent hereunder, when and as designated
within thirty (30) days after notice in writing by LESSOR, the
amount of the excess multiplied by the Escalation Factor.
Operating expenses are defined for the purposes of this agreement
as: The aggregate costs or expenses reasonably incurred by LESSOR
with respect to the operation, administration, cleaning, repair,
maintenance and management of the premises including, without
limitation, those items designated as "included" in Exhibit C and
also excluding those items designated as "Excluded" on Exhibit C
attached hereto. Any such accounting by LESSOR shall be binding
and conclusive upon LESSEE unless within sixty (60) days after
the giving by LESSOR of such accounting, LESSEE shall notify
LESSOR that LESSEE disputes the correctness of such accounting,
specifying the particular respects in which the accounting is
claimed to be incorrect.
C. There shall be no Additional Rent due for the period LESSEE
occupies the Initial Premises prior to the Permanent Premises
Commencement Date.
7. UTILITIES The LESSEE shall pay, as they become due, all bills for
electricity. The LESSOR agrees to provide all other utility
service and to furnish reasonably hot and cold water and
reasonable heat and air conditioning to the Premises, the
hallways, stairways, elevators, and lavatories during normal
building business hours on regular business days of the heating
and air conditioning seasons of each year, to furnish elevator
service and to light passageways and stairways at all times, and
to furnish such cleaning service as is customary in similar
buildings in said city or town as set forth in Exhibit E attached
hereto, all subject to interruption due to any accident, to the
making of repairs, alterations, or improvements, to labor
difficulties, to trouble in obtaining fuel, electricity, service,
or supplies from the sources from which they are usually obtained
for said building, or to any cause beyond the LESSOR's control,
excluding financial incapability.
At LESSEE'S request and at LESSEE'S expense (if it is the
Building's policy at the time of such request) LESSOR shall
provide HVAC services to the Premises for whatever times LESSEE
so requests.
LESSOR shall have no obligation to provide utilities or equipment
other than the utilities and equipment within the premises as of
the commencement date of this lease. In the event LESSEE requires
additional utilities or equipment, the installation and
maintenance thereof shall be the LESSEE'S sole obligation,
provided that such installation shall be subject to the written
consent of the LESSOR.
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There shall be no charge for electricity or other utilities in
the Initial Premises while LESSEE occupies said Premises prior to
the Permanent Premises Commencement Date.
8. USE OF The LESSEE agrees to use the Premises in a manner consistent with
LEASED the nature of the building and consistent with the other LESSEES
PREMISES in the building. The LESSEE shall use the Premises only for the
purpose of listed in Section 1 of this Lease.
9. COMPLIANCE The LESSEE acknowledges that no trade or occupation shall be
WITH LAWS conducted in the Premises or use made thereof which will be
unlawful, improper, noisy or offensive, or contrary to any law or
any municipal by-law or ordinance in force in the city or town in
which the premises are situated. LESSEE agrees to comply with all
such laws. LESSEE makes no representation that uses contemplated
by the LESSEE are permitted by law. LESSOR shall comply with all
other laws affecting the Premises or the building at which they
are a part and assumes the obligation of any modifications so
required.
10. FIRE The LESSEE shall not permit any use of the Premises which will
INSURANCE make voidable any insurance on the property of which the Premises
are a part, or on the contents of said property or which shall be
contrary to any law or regulation from time to time established
by the New England Fire Insurance Rating Association, or any
similar body, succeeding to its powers. The LESSEE shall not use
the Premises for any hazardous use which will cause an extra
insurance premium. However, in the event that LESSEE does so, the
LESSEE shall, on demand, reimburse the LESSOR, and all other
tenants, all extra insurance premiums caused by the LESSEE'S use
of the Premises.
11. MAINTEN- The LESSEE agrees to maintain the Premises, in good condition,
ANCE OBLI- reasonable wear and tear and damage by fire and other casualty
GATIONS only excepted, and whenever necessary, to replace plate glass and
other glass therein.
A. LESSEE'S OBLIGATIONS. At the Permanent Premises Commencement
Date the Permanent Premises shall be in good order and the glass
whole. The LESSEE shall not permit the Premises to be overloaded,
damaged, stripped, or defaced, nor suffer any waste. LESSEE shall
obtain written consent of LESSOR before erecting any sign on the
premises. LESSOR shall provide signage on the lobby directory and
building standard signage on LESSEE'S floor. And, if any other
same size LESSEE on the second or higher floor in the Building
has the right to affix a sign on the outside of the Building,
LESSEE shall have the same right. This does not include banners
or any type of non-permanent signage. The LESSEE shall keep and
maintain the Premises in good order and repair at its own
expense. The LESSOR shall at LESSEE'S expense and upon LESSEE'S
request, furnish and install all replacement lamps, lighting
tubes, bulbs and ballasts which may be required in the Premises
during the terms hereof.
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B. LESSOR'S OBLIGATIONS. The LESSOR agrees to maintain the
structure of the building and the portion of the mechanical and
other base building systems which are a part of the building
system and do not serve the LESSEE exclusively, of which the
Premises are a part in the same condition as it is at the
commencement of the Term or as it may be put in during the Term
of this Lease, reasonable wear and tear, damage by fire and other
casualty only excepted, unless such maintenance is required
because of the LESSEE or those for whose conduct the LESSEE is
legally responsible. LESSOR shall maintain the heat pump units.
LESSOR shall never be liable for any failure to make repairs
unless LESSEE has given notice to LESSOR of the need to make such
repairs, and LESSOR has failed to commence to make such repairs
within a reasonable time after receipt of such notice, or fails
to proceed with reasonable diligence to complete such repairs.
12.ADDITIONS & The LESSEE shall not make structural alterations or additions to
ALTERATIONS the Premises or that will materially adversely affect the
building's systems, but may make non-structural alterations
provided the LESSOR consents thereto in writing, which consent
shall not be unreasonably withheld or delayed. All such allowed
alterations shall be at LESSEE'S expense and shall be in quality
at least equal to the present construction. LESSEE shall not
permit any mechanics' liens, or similar liens, to remain upon the
Premises for labor and material furnished to LESSEE or claimed to
have been furnished to LESSEE in connection with work of any
character performed or claimed to have been performed at the
direction of LESSEE and shall cause any such lien to be released
of record or bonded over forthwith without cost to LESSOR. Any
alterations or improvements made by the LESSEE shall become the
property of he LESSOR at the termination of occupancy as provided
herein.
13. ASSIGNMENT The LESSEE shall not assign or sublet the whole or any part of
& SUBLEAS- the Premises without LESSOR'S prior written consent, which
ING consent shall not be unreasonably withheld, delayed or denied.
Notwithstanding such consent, LESSEE shall remain liable to
LESSOR for the payment of all rent and for the full performance
of the covenants and conditions of this lease. If SUBLESSEE is
paying rent at an amount greater than outlined in Section 4 of
this agreement, the amount less any expenses incurred in
subleasing with the remises, over shall be due to LESSOR. LESSEE
may not sublease to other tenants in the building, active
prospects or tenants who have toured the building within sixty
(60) days prior to being introduced to the proposed sublease
space. LESSEE may not lease Premises at rates below their current
rent or the current asking rent for the building, whichever is
higher with out prior written permission from LESSOR. Any
sublessee must conform to the building's current office uses.
No LESSOR consent shall be required for an assignment or sublease
to any business organization directly or indirectly controlling
or controlled by LESSEE or under common control with LESSEE, or
to any successor by merger, consolidation or purchase of all or
substantially all of LESSEE'S assets, or in the event of the sale
of LESSEE'S capital stock, through any public exchange.
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14. SUBORDINA- This Lease shall be subject and subordinate to any and all
TION mortgages, deeds of trust and other instruments in the nature of
a mortgage, now or at any time hereafter, a lien or liens on the
property of which the Premises are a part (and the LESSEE shall,
when requested, promptly execute and deliver such written
instruments as shall be necessary to show the subordination of
this lease to said mortgages, deeds of trust or other such
instruments in the nature of a mortgage). LESSOR shall secure a
non-disturbance agreement from LESSOR'S Mortgagee within thirty
(30) days after the Lease is executed by both parties. LESSOR
shall use best efforts to secure a non-disturbance agreement from
all future Mortgagees, at LESSEE'S request and at LESSEE'S
expense, which shall only include the Mortgagees attorney's fees.
In the event that LESSEE fails or refuses to execute same, LESSOR
may do so as LESSEE'S Attorney-in-Fact.
15. LESSOR'S The LESSOR or agents of the LESSOR may, at reasonable times and
ACCESS except for in an emergency, consistently with LESSEE'S
established security procedures, enter to view the Premises and
may remove placards and signs not approved and affixed as herein
provided, and make repairs and alterations as LESSOR should elect
or needs to do and may show the Premises to others.
16. INDEMNIFI- LESSEE shall save LESSOR harmless, and shall exonerate and
CATION AND indemnify LESSOR, from and against any and all claims,
LIABILITY liabilities or penalties asserted by or on behalf of any person,
firm, corporation or public authority:
(i) on account of or based upon any injury to person, or loss
of or damage to property sustained or occurring or
emanating from the Premises on account of or based upon
the act, omission, fault, negligence or misconduct of
LESSEE, its contractors, agents, employees, invitees or
visitors;
(ii) on account of or based upon any injury to person, or loss
of or damage to property, sustained on or occurring
elsewhere (other than on the Premises) in or about the
Property (and, in particular, without limitation, the
elevators, stairways, public corridors, sidewalks,
parking areas, concourses, arcades, approaches, areaways,
roof, or other appurtenances and facilities used in
connection with the Property or the Premises) arising out
of the use or occupancy of the Property or Premises by
the LESSEE or by any person claiming by, through or under
LESSEE, except to the extent such injury, loss or damage
was caused by the negligence, fault or misconduct of
LESSOR, or its contractors, agents or employees;
and in addition to and not in limitation of either of the
foregoing subdivisions (i) and (ii):
(iii) on account of or based upon (including moneys due on
account of) any work or thing whatsoever done (other than
by LESSOR or its contractors, or agents or employees or
either) on the Leased Premises; and, in respect of any of
the foregoing, from and against all costs, expenses
(including reasonable attorneys' fees), and liabilities
incurred in or in connection with any such claim, or any
action or proceeding brought thereon; and in case any
action or proceeding be
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brought against LESSOR by reason of any such claim.
LESSEE upon notice from LESSOR shall at LESSEE'S expense
resist or defend such action or proceeding and employ
counsel therefore reasonably satisfactory to LESSOR, it
being agreed that such counsel as may act for insurance
underwriters of LESSEE engaged in such defense shall be
deemed satisfactory.
17. LIABILITY The LESSEE shall maintain with respect to the Premises and the
INSURANCE property of which the Premises are a part comprehensive
publicliability insurance in the amount of $1,000,000 with
property damage insurance in limits of $500,000 in responsible
companies qualified to do business in Massachusetts and in good
standing therein insuring the LESSOR as well as LESSEE against
injury to persons or damage to property as provided. LESSEE
agrees to increase limits as LESSOR'S mortgagee reasonably
requires. The LESSEE shall deposit with the LESSOR certificates
for such insurance at or prior to the commencement of the Term,
and thereafter within thirty (30) days prior to the expiration of
any such policies. All such insurance certificates shall provide
that such policies shall not be cancelled without at least ten
(10) days prior written notice to each assured named therein.
(a) LESSOR shall maintain all-risk, extended coverage,
casualty and comprehensive public liability
insurance with respect to the building, with such
deductibles as are now retained by prudent owners
of similar property in Boston.
(b) Each party hereby waives all liability of and all
rights of recovery and subrogation against the
other party or any of the officers, agents or
employees of the other party for any loss of or
damage to property arising out of fire or
casualty, and each party hereby agrees that
neither such party nor any of its officers,
agents, employees, or its or their insurers will
sue the other party or any of the officers, agents
or employees of the other party, for any loss of
or damage to property arising out of fire or
casualty. Each party further agrees that all
casualty insurance policies carried by such party
will contain waivers by the insurer of such
liability, recovery, subrogation and suit. In the
event of a fire or casualty emanating from
LESSEE'S premises due to the fault or negligence
of LESSEE, LESSEE shall pay LESSOR'S deductible.
18. FIRE, CASUAL- (a) Should a substantial portion of the Premises, or of the
TY, EMINENT property of which they are a part, be substantially damaged
DOMAIN by fire or other casualty, or be taken by eminent domain,
the LESSOR may elect to terminate this lease. When such
fire, casualty, or taking renders all or part of the
Premises substantially unsuitable for their intended use, a
just and proportionate abatement of rent shall be made, and
the LESSEE may elect to terminate this lease if:
(i) The LESSOR fails to give written notice within
thirty (30) days of the event of its intention
to restore Premises, or
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(ii) The LESSOR fails to restore the Premises to a
condition substantially suitable for their
intended use within ninety (90) days of said
fire, casualty or taking. LESSOR reserves, and
the LESSEE grants the LESSOR, all rights which
the LESSEE may have for damages or injury to the
Premises for any taking by eminent domain,
except for damage to the LESSEE'S fixtures,
property, or equipment, and LESSEE'S moving
expenses.
(b) Should the Premises be damaged by fire or other
casualty or taken by eminent domain and this Lease not be
terminated pursuant to Section 18(a), LESSOR shall promptly
restore the Premises to the fullest extent possible, rent
shall be abated equitably for the time and to the extent the
Premises are not fully useable for their intended use, and
the Lease otherwise shall remain in full force and effect.
19. DEFAULT AND In the event that:
BANKRUPTCY
(a) The LESSEE shall default in the payment of any
installment of rent or other sum herein specified and
such default shall continue for five (5) days after
written notice thereof; or
(b) The LESSEE shall default in the observance or
performance of any other of the LESSEE'S covenants,
agreements, or obligations hereunder and such default
shall not be corrected within thirty (30) days after
written notice thereof unless the same cannot be cured
within such time and LESSEE is diligently pursuing such
cure; or
(c) The LESSEE shall file or be filed against and the same
shall not be dismissed within ninety (90) days in any
bankruptcy, insolvency or reorganization petition; or
(d) The LESSEE shall be declared bankrupt or insolvent
according to law, or, if any assignment shall be made
of LESSEE's property for the benefit of creditors, or
(e) Any attachment is made of the leasehold interest
created by this lease and the same shall not be
dismissed within ninety (90) days; or
(f) A receiver is appointed to conduct LESSEE'S business
(whether or not LESSOR has re-entered the premises) and
the same shall not be dismissed within ninety (90)
days.
Then the LESSOR shall have the right thereafter, while such
default continues, to re-enter and take complete possession
of the Premises, to terminate this lease, and remove the
LESSEE'S effects without prejudice to any remedies which
might be otherwise used for arrears of rent or other
default. The LESSEE shall indemnify the LESSOR against all
loss of rent and additional rent and other payments which
the LESSOR may incur by reason of such termination during
the residue of the term, LESSOR agrees to use reasonable
efforts to mitigate LESSEE'S damages hereunder. If the
LESSEE shall default,
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after reasonable notice thereof in the observance or
performance of any conditions or covenants on LESSEE'S part
to be observed or performed under or by virtue of any of the
provisions in any article of this lease, the LESSOR, without
being under any obligation to do so and without thereby
waiving such default, may remedy such default for the
account and at the expense of the LESSEE. If the LESSOR
makes any expenditures or incurs any obligations for the
payment of money in connection therewith, including but not
limited to, reasonable attorney's fees in instituting,
prosecuting or defending any action or proceeding, such sums
paid or obligations insured, with interest at the rate of
prime plus 3% and costs, shall be paid to the LESSOR by the
LESSEE as additional rent. Any sums not paid when due shall
bear interest at 18 percent per annum until paid. LESSEE
shall pay an administrative fee of twenty-five dollars if a
check does not clear.
20. NOTICE Any Notice from the LESSOR to the LESSEE relating to the
Premises or to the occupancy thereof, shall be in writing
and be deemed duly served, if mailed to LESSOR'S Notice
Address as specified in Section 1 of this Lease, registered
or certified mail, return receipt requested, postage
prepaid, or by a recognized national overnight carrier
addressed to the LESSEE. Any Notice from the LESSEE to the
LESSOR relating to the Premises or to the occupancy thereof,
shall be deemed duly served, if mailed to the LESSOR'S
Notice Address as specified in Section 1 of this Lease, by
registered or certified mail, return receipt requested,
postage prepaid or by a recognized national overnight
carrier, addressed to the LESSOR at such other address as
the LESSOR may from time to time advise in writing. All rent
notices shall be paid and sent to the LESSOR at its notice
address or such other address as may be designated by
LESSOR.
21. SURRENDER The LESSEE shall at the expiration or other termination of
this Lease remove all LESSEE'S goods and effects from the
Premises, (including, without hereby limiting the generality
of the foregoing, all signs and lettering affixed or painted
by the LESSEE, either inside or outside the Premises).
LESSEE shall deliver to the LESSOR the Premises and all
keys, locks thereto, and other fixtures connected therewith
and all alterations and additions made to or upon the
Premises, in good condition reasonable wear and tear and
damage by fire or other casualty only excepted. In the event
of the LESSEE'S failure to remove any of LESSEE'S property
from the Premises, LESSOR is hereby authorized, without
liability to LESSEE for loss or damage thereto, and at the
sole risk of LESSEE, to remove and store any of the property
at LESSEE'S expense, or to retain same under LESSOR'S
control or to sell at public or private sale, without notice
any or all of the property not so removed and to apply the
net proceeds of such sale to the payment of any sum due
hereunder, or to destroy such property. The LESSEE shall
restore all damage to the Premises which may have occurred
during the use of Premises or while vacating the Premises.
Any items which the LESSEE installs, which replace items on
the Premises when LESSEE took occupancy are deemed to be
LESSOR'S property.
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22. BROKERAGE A) LESSEE warrants and represents that LESSEE has dealt with
no broker other than the broker listed in Section 1 of this
lease in connection with the consummation of this Lease and,
in the event of any breach of such warranty and
representation, LESSEE agrees to defend the same and
indemnify LESSOR against any such claim.
B) LESSOR warrants and represents that LESSOR has dealt with
no broker other than the broker listed in Section 1 of this
lease in connection with the consummation of this Lease and,
in the event of any breach of such warranty and
representation, LESSOR agrees to defend the same and
indemnify LESSEE against any such claim.
23. LESSOR'S The LESSOR is not personally liable under this Lease. (a)
LIABILITY LESSEE specifically agrees to look solely to the equity in
the property of which the Premises are a part for recovery
of any judgment from LESSOR it being specifically agreed
that LESSOR (original or successor) shall never be
personally liable for any such judgment or for the payment
of any monetary obligation to LESSEE. The provisions
contained in the foregoing sentence are not intended to, and
shall not, limit any right the LESSEE might otherwise have
to obtain injunctive relief against LESSOR or to take any
action not involving the liability of LESSOR to respond in
monetary damages from LESSOR's assets other than from such
property.
24. WAIVER Failure on the part of the LESSOR or LESSEE to complain of
any action or non-action on the part of the other, no
matter how long the same may continue, shall never be a
waiver by LESSOR or LESSEE, respectively, of its rights
hereunder. Further, no waiver at any time of the provisions
hereof, by LESSOR or LESSEE shall be construed as a waiver
of any of the other provisions hereof, and a waiver at any
time of any of the provisions hereof shall not be construed
as a waiver at any subsequent time of the same provisions.
The consent or approval of LESSOR or LESSEE to or of any
action by the other requiring such consent or approval shall
not be construed to waive or render unnecessary LESSOR'S or
LESSEE'S consent or approval to or of any subsequent similar
act by the other.
25. STATUS Recognizing that both parties may find it necessary to
REPORT establish to third parties, from time to time, the then
current status of performance hereunder, either party will,
within 10 days after receipt of a request therefore, furnish
a statement of the status of any matter pertaining to this
Lease, including without imitation, acknowledgments that (or
the extent to which) each party is in compliance with its
obligations under the terms of the Lease.
26. CONDITION PERMANENT PREMISES:
AND AREA
Except as otherwise provided in this Section, the Permanent
Premises are being delivered strictly in their condition "as
is" and LESSEE acknowledges that it has inspected the same
and found them satisfactory. LESSOR will build space in
accordance with LESSEE'S plans and specifications in an
amount not to exceed $25 per square foot, as this amount may
be increased pursuant to Section 37 of this Lease.
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A. PREPARATION OF
THE PREMISES: Promptly upon execution of the Lease, LESSEE will have
prepared, at its sole cost and expense, certain plans
("LESSEE'S Plans") for improvements to be made in the
Permanent premises to prepare the Permanent Premises for
LESSEE's occupancy. Upon completion of LESSEE'S Plans,
LESSEE shall submit the same to LESSOR for LESSOR'S
approval, which approval shall not be unreasonable delayed
or withheld. To the extent that LESSOR does not disapprove
LESSEE'S Plans in writing, and provide specific remedies
that will make LESSEE'S Plans acceptable, within ten (10)
Business Days after submission of the same by LESSEE, LESSOR
shall be conclusively deemed to have approved LESSEE'S
Plans. LESSOR shall contribute an allowance of $25,000
($1.25 per rentable square foot) for the preparation of the
LESSEE'S Plans and Specifications, payment to be made after
services are rendered and within thirty (30) days after
LESSEE forwards LESSOR bills or the same.
Promptly after approval of LESSEE'S Plans, LESSOR shall
exercise all reasonable efforts to complete in a cost
effective manner, with reasonable mark-ups only, using first
class materials and in a good and workman like manner, at
its sole cost and expense, the work specified in LESSEE'S
Plans. The work shall collectively be referred to as the
"Permanent Premises Tenant Improvement Work." LESSEE shall
have no claim against LESSOR for failure so to complete such
Work, other than the right of termination provided in
Section 26B.
B. SUBSTANTIAL
COMPLETION: The Permanent Premises shall be deemed ready for occupancy
on the first day (the Permanent Premises Substantial
Completion Date") as of which the Permanent Premises Tenant
Improvement Work has been completed except for items of work
(and, if applicable, adjustment of equipment and fixtures)
which can be completed after occupancy has been taken
without causing undue interference with LESSEE's use of the
Permanent Premises (i.e. so-called "punch list" items) the
building permit has received final sign-offs and LESSEE has
been given notice thereof. LESSOR shall complete, as soon as
conditions permit, all "punch list" items and LESSEE shall
afford LESSOR access to the Permanent Premises for such
purposes. Within a reasonable time after substantial
completion, LESSOR shall secure a final Certificate of
Occupancy for the Premises.
If the Permanent Premises Substantial Completion Date has
not occurred by May 1, 1998 (the "Permanent Premises Outside
Construction Completion Date") as it may be extended
pursuant to section 26.D. LESSEE shall have the right to
terminate this Lease by giving notice to LESSOR not later
than thirty (30) days after the Permanent Premises Outside
Construction Completion Date (as so extended), of LESSEE'S
desire so to do; and this Lease shall cease and come to an
end without further liability or obligation on the part of
either party thirty (30) days after the giving of such
notice, unless, within such 30-day period, LESSOR
substantially completes the
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Permanent Premises Tenant Improvement Work. Such right of
termination shall be LESSEE's sole and exclusive remedy at
law or in equity for LESSOR's failure so to complete such
Work.
C. CONCLUSIVENESS
OF LESSOR'S
PERFORMANCE: Except as to latent defects, no later than sixty (60) days
after the Permanent Premises Substantial Completion Date,
LESSEE shall provide LESSEE with a list of any respects in
which LESSEE deems LESSOR has not performed LESSOR'S Work,
the so called "Punch List." LESSOR shall then complete such
items of LESSOR'S Work within a reasonable period of time.
D. LESSEES' 1) If a delay shall occur in the Permanent Premises
DELAYS: Substantial Completion Date as the result of:
i) Any request by LESSEE that LESSOR delay in the
commencement of completion of LESSOR's Work for any reason;
ii) Any change by LESSEE in any of LESSEE'S Plans after
LESSEE'S approval thereof;
iii) Any other act or omission of LESSEE or its officers,
agents, servants or contractors; or
iv) Any reasonably necessary displacement of any of the
Permanent Premises Tenant Improvement Work from its place in
LESSOR's construction schedule resulting from any of the
causes for delay referred to in clauses (i), (ii), (iii), or
this paragraph and the fitting of such Work back into such
schedule; then LESSEE shall, within ten (10) business days
of the Permanent Premises Commencement Date, pay to LESSOR
for each day of such delay the amount of Basic Rent,
Escalation Charges and other charges that would have been
payable hereunder.
The delays referred to above are herein referred to
collectively and individually as "LESSEE's Delay."
2) If, as a result of LESSEE'S Delay(s), the Substantial
Completion Date is delayed in the aggregate for more than
sixty (60) days, LESSEE shall pay rent on the Initial
Premises at the rate of $22.75 per square foot. If, then, as
a result of LESSEE's Delay(s), the Substantial Completion
Date is delayed in the aggregate for more than an additional
sixty (60) days, LESSOR may (but shall not be required to)
at any time thereafter terminate this Lease by giving
written notice of such termination to LESSEE and thereupon
this Lease shall terminate without further liability or
obligation on the part of either party, except that LESSEE
shall pay to LESSOR the cost theretofore incurred by LESSOR
in performing LESSOR's Work, plus an amount equal to
LESSOR's out-of-pocket expenses incurred in connection with
this Lease, including, without limitation, brokerage and
legal fees, together
15
<PAGE>
with any amount required to be paid pursuant to Section 26
through the effective termination date. However, if within
five (5) days of LESSEE'S receipt of LESSOR'S written notice
of termination, LESSEE shall notify LESSOR that the
Permanent Premises Commencement Date is deemed to have
occurred, LESSOR'S Termination notice shall be null and void
and this Lease shall be in full force and effect as to the
Permanent Premises.
3) The Permanent Premises Completion Date shall
automatically be extended for the period of any delays
caused by LESSEE's Delay(s) or Force Majeure.
INITIAL PREMISES:
Except as otherwise provided in this Section, the Initial
Premises are being delivered strictly in their condition "as
is" and LESSEE acknowledges that it has inspected the same
and found them satisfactory. LESSOR shall build space in
accordance with the Plans and Specifications attached hereto
as Exhibit D. LESSOR shall also provide HVAC as can be found
in similar buildings in the Greater Boston Area.
27. LESSOR'S LESSOR warrants and represents that it is the owner of
WARRANTY record of the Premises and that it has authority to grant
the leasehold interest conveyed hereby.
Quiet Enjoyment: LESSOR covenants that, upon payment of
Basic Rent and all other payments provided for herein and
observance and performance of all of the provisions of this
Lease to be observed and performed by LESSEE, LESSEE shall
quietly hold, occupy and enjoy the Demised Premises and all
of the rights relating thereto during the Term, without
hindrance or molestation by, LESSOR or any party claiming
by, under, through, or paramount to, LESSOR.
28. SEVERABIL- If any Term or provision of this Lease, or the application
ITY thereof to any person or circumstance shall, to the extent
the same shall be invalid or unenforceable, the remainder of
this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be
valid and be enforced to the fullest extent permitted by
law.
29. RECORDING LESSEE agrees not to record this Lease, but, if the Term of
this Lease (including any extended term) is seven (7) years
or longer, each party hereto agrees, on the request of the
other, to execute a so-called Notice of Lease in recordable
form and complying with applicable law and reasonably
satisfactory to LESSOR'S attorneys. Such document shall
expressly state that it is executed pursuant to the
provisions contained in this Lease, and is not intended to
vary the terms and conditions of this Lease.
30. HOLDING Any Holding Over by LESSEE after the expiration of the Term
OVER of this Lease shall be treated as a tenancy at sufferance at
a rate equal to one and one half times the Basic Rent then
in effect plus Additional Rent and other charges
16
<PAGE>
herein provided. In the event that LESSOR incurs damages,
direct and/or indirect, sustained by reason of any such
holding over, LESSEE shall pay rent for the period of such
holding over at a rate equal to two and one half times the
Basic Rent then in effect plus Additional Rent and other
charges herein provided. Such payment shall be liquidated
damages and LESSOR shall have no further rights against
LESSEE at law or in equity. Otherwise, such Holding Over
shall be on the terms and conditions set forth in this Lease
as far as applicable.
31. GOVERNING This Lease shall be governed exclusively by the provisions
LAW hereof and by the laws of the Commonwealth of Massachusetts,
as the same may from time to time exist.
32. RELOCATION Deleted.
33. ENTIRE
AGREEMENT This Lease and the Exhibits made a part hereof contain the
entire and only agreement between the parties and any and
all statements and representations, written and oral,
including previous correspondence and agreements between the
parties hereto, are merged herein. LESSEE acknowledges that
all representations and statements upon which it relied in
executing this Lease are contained herein and that the
LESSEE in no way relied upon any other statements or
representations, written or oral. Any executory agreement
hereafter made shall be ineffective to change, modify,
discharge or effect an abandonment of this Lease in whole or
in part unless such executory agreement is in writing and
signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
34. OPTION TO
EXTEND: Provided that at the time of such exercise (i) there then
exists no Default of LESSEE beyond applicable notice and
cure periods, (ii) this Lease is then in full force and
effect, and (iii) LESSEE is in actual occupancy in excess of
75% of the Premises, LESSEE shall have the right and option
to extend the term of this Lease for one (1) extended term
of five years (the "Extended Term"). The Extended Term shall
commence on the day immediately succeeding the expiration
date of the Initial Term, and shall end on the day
immediately preceding the fifth anniversary of the first day
of such Extended Term. LESSEE shall exercise such option to
extend by giving written notice to LESSOR of its desire to
do so not later than twelve (12) months prior to the
expiration date of the Initial Term. Provided the conditions
of clauses (i), (ii) and (iii) of this section shall have
been satisfied, the giving of such notice by LESSEE shall
automatically extend the Term of this Lease for the Extended
Term, and no instrument of renewal need be executed. In the
event that LESSEE fails to give such notice to LESSOR, this
Lease shall automatically terminate at the end of the
Initial Term, and LESSEE shall have no further option to
extend the Term of this Lease, it being agreed that time is
of the essence with respect to the giving of such notice.
The Extended Term shall be on all the terms and conditions
of this Lease, except that (I) option to extend that Term of
this Lease, and (II) the Basic Rent for the Extended Term
shall be at Fair Market Value. LESSOR shall designate Fair
Market Value, (the "Fair Market Value") by written notice to
LESSEE within sixty (60) days of receipt of notice from
LESSEE. If LESSEE disagrees with such designation, (the
17
<PAGE>
"Designation"), LESSEE shall by written notice, sent within
twenty (20) days of receipt of Designation, advise LESSOR of
such disagreement; otherwise LESSEE shall conclusively be
deemed to have agreed to such Designation.
In the event that the Parties are unable to agree, each
Party shall appoint an appraiser within ten (10) business
days. Each appraiser so appointed shall be instructed to
determine independently the Fair Market Value and then
confer. If the two appraisers are unable to determine a
Designation acceptable to both parties within ten (10)
business days, they shall appoint a third appraiser within
ten (10) business days. The Designation of this appraiser
shall be considered final. The final appraisers report shall
be delivered within twenty (20) days and shall be considered
binding on both parties.
35. RIGHT OF
FIRST OFFER If at any time during the Term of this Lease, LESSOR shall
desire to lease any space on the first, third and fourth
floors of the Building (the "First Offer Space"), LESSOR
shall notify LESSEE and set forth the Fair Market Value
terms and conditions on which LESSOR is willing to lease all
or any portion of the First Offer Space, including, without
limitation, rent, build-out allowance and other tenant
incentives or inducements to lease, if any. The Terms shall
be the same as offered to other LESSEE'S with similar Rights
of First Offer. Provided that the time of such exercise (i)
there then exists no Default of LESSEE beyond applicable
notice and cure periods, (ii) this Lease is then if full
force and effect, and (iii) LESSEE is in actual occupancy of
the entire Premises demised thereunder, LESSEE may, by
giving notice in writing to LESSOR within five (5) Business
Days after receipt of LESSOR'S notice, elect to lease the
First Offer Space on the terms so offered by LESSOR. If
LESSEE shall so elect to lease the First Offer Space, it
shall within ten (10) days after such election enter into an
amendment to this Lease incorporating the terms and
contained in LESSOR'S notice. If LESSEE shall not elect to
lease the First Offer Space within such five (5) Business
Day period, or shall fail to enter into such amendment to
this Lease within such ten-day period, LESSEE shall have no
further rights under this section with respect to the First
Offer Space and LESSOR shall be free to lease any or all of
such space to other parties. LESSEE'S rights under this
section of the lease shall be subordinate to the existing
tenant's rights under this section, as set forth on Exhibit
F attached hereto. If the First Offer Space remains
unleased, LESSOR shall re-offer the space to LESSEE after
two hundred forty (240) days.
36. PARKING LESSOR shall lease one triple and one tandem slot, each able
to accommodate three and two cars respectively at the rate
of $1,000 per month (two hundred dollars per car space). The
particular slots may be changed from time to time but at the
beginning of the lease term the slots shall be 5 & 6 as
detailed on Exhibit B attached hereto.
37. LESSOR'S If the cost to construct the Permanent Premises in
ADDITIONAL accordance with LESSEE'S Plans is in excess of $25/psf
TENANT ($500,000), LESSOR shall, if requested by LESSEE, provide up
IMPROVE to an additional $10/psf ("LESSOR'S Additional Tenant
MENT Improvement Allowance"). The LESSOR'S Additional Tenant
ALLOWANCE Improvement Allowance may be used only for the costs of
construction to the Permanent Premises and my not be used
for furniture or in any other way.
18
<PAGE>
LESSEE shall repay the LESSOR'S Additional Tenant
Improvement Allowance in equal monthly payments of principal
and interest calculated at a 10% per annum rate as
Additional Rent.
The total amount of the LESSOR'S Additional Tenant
Improvement Allowance shall be added to the base Letter of
Credit at described in Section 1 of this Lease and shall be
reduced each year on a schedule separate from the base
portion. The "Additional Portion of the Letter of Credit"
shall reduce at the rate of one-third per year.
38. INITIAL Prior to the Permanent Premises Commencement Date, LESSEE
PREMISES may have mail and other packages delivered to the security
MAIL desk at 89 South Street. The mail and other packages shall
DELIVERY then be delivered to LESSEE at the Initial Premises. Such
delivery shall be made by building maintenance personnel,
one time each day, at a time mutually agreeable to LESSEE
and LESSOR. ESSEE may pick up mail and other packages more
frequently. LESSOR hall exercise reasonable care with
LESSEE'S mail and other packages, however, LESSOR shall have
no responsibility for LESSEE'S mail and other packages.
39. OTHER
PROVISIONS None.
IN WITNESS WHEREOF, the said parties hereunto set their hands and seals this 2nd
day of May, 1997.
LESSEE: ________________ LESSOR: Lincoln Plaza Limited Partnership
BY: L.P. Properties, Inc. - its General Partner
BY: Richard D. Cohen - its President
By: /s/ Signature Illegible
PRESIDENT SVIP
Hereunto Duly Authorized
19
<PAGE>
EXHIBIT A - 1
INITIAL PREMISES
[EXHIBIT OMITTED]
20
<PAGE>
EXHIBIT A - 2
PERMANENT PREMISES
[EXHIBIT OMITTED]
21
<PAGE>
EXHIBIT B
Parking.
<TABLE>
<CAPTION>
SPACE # # OF SPACES
------- -----------
<S> <C>
1 2
2 3
3 3
4 3
5 3 SVIP
6 2 SVIP
7 2
8 2
9 2
10 2
11 2
12 2
13 2
</TABLE>
LESSOR may substitute or change the particular parking spaces.
22
<PAGE>
EXHIBIT C
ITEMS INCLUDED IN OPERATING EXPENSES
------------------------------------
Without limitation, Operating Expenses shall include:
1. All expenses incurred by Lessor or Lessor's agents which shall be directly
related to employment of personnel for the Property, including amounts
incurred for wages, salaries and other compensation for services, payroll,
social security, unemployment and similar taxes, workmen's compensation
insurance, disability benefits, pensions, hospitalization, retirement plans
and group insurance, uniforms and working clothes and the cleaning thereof,
and expenses imposed on Lessor or Lessor's agents pursuant to any
collective bargaining agreement for the services of employees of Lessor or
Lessor's agents in connection with the operation, repair, maintenance,
cleaning, management and protection of the Property, and its mechanical
systems including, without limitation, day and night supervisors, property
manager, accountants, bookkeepers, janitors, carpenters, engineers,
mechanics, electricians and plumbers and personnel engaged in supervision
of any of the persons mentioned above; provided that, if any such employee
is also employed for other property of Lessor, such compensation shall be
suitably prorated among the Property and such other properties.
2. The cost of services, utilities, materials and supplies furnished or used
in the operation, repair, maintenance, including without limitation fees,
if any, imposed upon Lessor, or charged to the Property, by the state or
municipality in which the Property is located on account of the need of the
Property for increased or augmented public safety services.
3. The cost of replacements for tools and other similar equipment used in the
repair, maintenance, cleaning and protection of the Property, provided
that, in the case of any such equipment used jointly on other properties,
such costs shall be suitably prorated among the Property and such other
properties.
4. Where the Property is managed by Lessor or an affiliate of Lessor, a sum
equal to the amounts customarily charged by management firms in the Boston
area for similar properties, but in no event more than six percent (6%) of
gross annual income, whether or not actually paid, or where managed by
other than Lessor or an affiliate thereof, the amounts charged for
management, together with, in either case, reasonable amounts charged for
legal and other professional fees relating to the Property, but excluding
such fees and commissions paid in connection with services rendered for
securing, terminating or renewing leases and administration and operation
of the Premises. The rate for the management fee shall be adjusted to
reflect the same rate in the base year as in each subsequent year. In
calendar year 1996, the rate charged was 4%.
5. Reasonable premiums for insurance against damage or loss to the Property
from such hazards as shall from time to time be required by mortgagees.
6. If, during the Term of this Lease, Lessor shall make a capital expenditure
for the purpose of reducing Operating Expenses or to comply with law
hereinafter imposed, the total cost of which is not properly includable in
Operating Expenses for the Operating Year in which it was made, there shall
nevertheless be included in such Operating Expenses for the Operating Year
in which it was made and in Operating Expenses for each succeeding
Operating Year the annual charge-off of such capital expenditure; and the
useful life shall be determined reasonably by Lessor in
23
<PAGE>
accordance with generally accepted accounting principles and practices in
effect at the time of making such expenditure.
7. Costs for electricity, water and sewer use charges, and other utilities
supplied to the Property and not paid for directly by Tenants in the
Building.
8. Betterment assessments provided the same are apportioned equally over the
longest period permitted by law.
9. Amounts paid to independent contractors for services, materials, and
supplies furnished for the operation, repair, maintenance, cleaning and
protection of the Property.
If, for any reason portions of the rentable area of the Building not included in
the Premises were not occupied by lessees or LESSOR was not supplying all
lessees with the services being supplied under this Lease or any lessees in the
Building were supplied with a lesser level of standard services than those
supplied to LESSEE under this Lease, LESSOR'S Operating Expenses for the
property shall include the amounts reasonably determined by LESSOR which would
have been incurred if all of the rentable area in the Building were occupied and
were supplied with the same level of standard services as supplied to LESSEE
under this Lease.
Excluded Items
Operating Expenses for the Property shall not include the following: LESSOR'S
Tax Expenses; cost of repairs or replacements (i) resulting from eminent domain
takings, (ii) resulting from fire or other casualty except for (x) the amount
deductible from LESSOR'S insurance claim, as provided above or (y) any fire or
other casualty caused by a peril not required to be insured against under
Section 17 (with any capital expenditures being amortized as contemplated above
with respect to other capital expenditures), (iii) to the extent reimbursed by
insurance, or (iv) required, above and beyond ordinary periodic maintenance, to
maintain in good order, condition and repair the roads, driveways, walkways and
lobbies of the Building, including the roof, building systems, exterior walls
and floor slabs (an example of which, without limitation, would be the costs of
constructing and consequently maintaining, repairing and operating a Garage on
the Property); replacement or contingency reserves; the cost of capital
improvements (other than as specifically provided for above) or as required by
law heretofore imposed but which LESSOR has failed to complete; ground lease
rents or payment of debt obligations; real estate taxes other than with respect
to the Property except as expressly provided above in connection with the common
areas and amenities; legal and other professional fees for matters not relating
to the normal administration and operation of the Property (expressly excluding
fees and charges incurred for the recovery of the rentals or the eviction of
tenants); advertising (except for employment advertisements pertaining to
building staff), public relations or brokerage fees and commissions paid in
connection with services rendered for securing or renewing leases; costs of
services or work provided to other lessees in excess of services or work to
which LESSEE is entitled hereunder without additional charge; interest or
penalties for late payments; depreciation and other non-cash charges (except as
otherwise expressly provided); personnel charges for employees above the grade
of property manager (and overhead associated therewith), except in those
instances where a property manager is not charged to the property and then, a
portion of an individual above the grade of property manager may be so allocated
to the property. The percentage allocation shall be made based on the
individuals allocation of time to the building. LESSOR'S Operating Expenses
shall be reduced by the amount of any proceeds, payments, credits or
reimbursements which LESSOR receives from sources other than tenants and which
are applicable to such Operating Expenses for the Property.
24
<PAGE>
EXHIBIT D
Initial Premises Plans & Specifications
* The walls marked shall be demoed and the remaining walls repaired.
* The walls and ceilings shall be painted in the color of LESSOR'S choice.
* All completed areas shall be recarpeted with LESSOR'S choice of carpet. All
other flooring shall remain as is.
* See following plan.
25
<PAGE>
EXHIBIT E
Cleaning Specifications
Provide services five nights a week, Monday through Friday between the hours of
5 p.m. & 10 p.m.
MAIN LOBBY(S):
- -------------
Daily:
-----
Sweep and wash flooring. Lobby floor to be maintained in accordance with
Capital Properties, Inc. specifications.
All ash urns to be emptied, black matter to be replaced as necessary.
All elevator doors to be wiped down and polished every night.
Lobby wall to be dusted within hand reach.
All glass including doors, both sides, windows within reach of cleaner and
floor directories to be cleaned and polished.
Smudges and fingerprints to be wiped from walls, switchplates, doors,
counters, elevator call buttons and elsewhere as needed.
All planters to be polished and arranged property on floor.
All brass surfaces to be wiped down.
Wash all rubber mats.
Monthly:
-------
All resilient tile floors in public areas to be treated equivalent to spray
buffing. (Medford)
Quarterly:
---------
Dusting of high-hats and diffusers
Maintenance of lobby floors in accordance of Capital Properties
specifications.
ELEVATORS:
- ---------
Daily:
-----
All wall surfaces to be cleaned and polished every night.
26
<PAGE>
All door tracts to be vacuumed and polished.
Weekly:
------
Stainless steel ceiling panels to be cleaned and polished.
GENERAL AND PRIVATE OFFICES, RECEPTION AREA, CONFERENCE ROMS, HALLWAYS,
STAIRWELLS, ETC.:
- -------------------------------------------------------------------------------
Nightly:
-------
Empty all wastebaskets, replace liners. Liners to be supplied by Capital
Properties
Empty all ashtrays, damp wipe and polish.
Dust all desks, chairs, tables, office furniture and equipment, window
sills, ledges, horizontal surfaces, etc.
Wash and sanitize sides and tops of all water coolers.
Hand dust all grill work within normal reach.
Remove all fingermarks from private entrance doors, light switches and
doorways.
Spot clean walls around light switches, door jambs, etc.
Wipe clean all brass and other bright work.
Spot clean all glass partitions. (both sides)
Remove and dust under all desk equipment and telephone and replace same.
Thoroughly vacuum all carpeting.
----------
Dry mop V.C.T. flooring. Damp mop spillage on V.C.T. flooring.
Weekly:
------
Damp mop and spray buff V.C.T. flooring.
Dust coat racks, and the like.
Wash both sides of all glass partitions.
Remove and dust under all desk equipment and telephone and replace same.
Quarterly:
---------
Render high dusting not reached in daily cleaning to include.
27
<PAGE>
Semi-Annually:
-------------
Dust diffusers, ceiling corners and high dusting above 72"
Annually:
--------
Machine strip and refinish V.C.T. flooring.
B. RESTROOMS:
- ------------
Nightly:
-------
Clean all bowl faces.
Clean and sanitize all toilets and urinals.
Clean all bright work.
Clean mirrors.
Wash both sides of all toilet seats.
Empty ashtrays and clean inside and outside.
Empty waste receptacles, clean outside and replace plastic liners. Liners
furnished by Capital Properties, Inc.
Empty sanitary napkin disposal units.
Replace expendable items (hand towels, toilet tissue, hand soap). Products
furnished by Capital Properties, Inc.
Spot clean partitions, walls and entry doors.
Sweep and wash (with a disinfectant cleaner) bathroom floors.
Weekly:
------
Clean showers. (If any)
Monthly:
-------
Remove cobwebs from ceilings and corners.
Clean diffusers.
Dust above 72".
Wash partitions and walls.
28
<PAGE>
Monthly:
-------
Machine scrub lavatory floors.
Semi-Annually:
-------------
Machine scrub and refinish (using a water sealer).
29
<PAGE>
CAFETERIA/KITCHEN:
- -----------------
Nightly:
-------
Empty all waste containers, clean exteriors and replace liners. Liners
supplied by Capital Properties, Inc.
Wash and sanitize table tops and counters.
Clean kitchen sink.
Damp mop and spray buff V.C.T. flooring.
Monthly:
-------
Spray buff all hard surface floor area.
Annually:
--------
Machine strip and refinish all V.C.T. flooring.
GENERAL:
- -------
Nightly:
-------
Remove all trash to designated area in accordance with any recycling
programs that may be in effect.
Clean janitor closets at end of shift, leave all equipment neat and
orderly.
Maintain daily log.
30
<PAGE>
EXHIBIT F
Existing Tenants Rights for the
First, Third and Fourth Floors
Suite 105 New England Banking Institute - Lease through 7/31/04, one five year
option.
Suite 102 New England Banking Institute - Lease through 7/31/04, one five year
option.
Suite 104 New England Banking Institute - Right of First Offer
Suite 301 GE Capital ITS - Lease through 3-31-02, one five year option.
Unicco Service Co. (Suite 305) Right of First Offer
Suite 305 Unicco Service Co. - Lease through 5-31-02, one five year option.
GE Capital ITS (Suite 301) Right of First Offer
Suite 401 HDR - Lease through 12-31-00
Suite 405 FST/HNTB - Lease through 7-31-99, two one year options
HDR (Suite 401) Right of First Offer
31
<PAGE>
[CHART OMITTED]
<PAGE>
NOTICE OF LEASE
---------------
Pursuant to the provisions of Massachusetts General Laws Chapter 183, Section 4,
notice is hereby given of the following lease (the "Lease"):
Lessor: Lincoln Plaza Limited Partnership
c/o Capital Properties, Inc.
80 Lincoln Street
Boston, MA 02111
Lessee: Silicon Valley Internet Partners
950 Tower Lane, Suite 300
Foster City, CA 94404
Date of Execution of Lease: May 2, 1997
Description of
Leased Premises: A portion of the building owned by Lessor
consisting of approximately 20,000 square
feet of rentable area on the second floor of
the building located at 89 South Street,
Boston, MA and substantially known as Suite
201 on the plan attached hereto as "Exhibit
A" (the "Premises") together with the right
to use in common, with others entitled
thereto, the hallways, stairways, and
elevators, necessary for access to said
Premises, and lavatories nearest thereto.
Initial Lease Term: Five Years
Option to Extend: Tenant has the option to extend the term of
the Lease for one additional period of five
(5) years on the terms and conditions set
forth in the Lease.
<PAGE>
Executed as a sealed instrument as of the 2nd day of May, 1997.
LESSOR: LINCOLN PLAZA LIMITED PARTNERSHIP
By: L.P. Properties, Inc., its General Partner
By: /s/ Signature Illegible
LESSEE: SILICON VALLEY INTERNET PARTNERS
By: /s/ Signature Illegible
-2-
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
______, SS. April 29, 1997
Then personally appeared the above-named Richar's Cohen the ____________
________ of L.P. Properties, Inc. General Partner of Lincoln Plaza Limited
Partnership, and acknowledged the foregoing instrument to be ______ free act and
deed and the free act and deed of said L.P. Properties, Inc. and Lincoln Plaza
Limited Partnership, before me,
/s/ Signature Illegible
(SEAL)
Notary Public
My Commission Expires: 8-31-98
COMMONWEALTH OF MASSACHUSETTS
________ SS. April 25, 1997
Then personally appeared the above-named __________, the ____________ of Silicon
Valley Internet Partners., and acknowledged the foregoing instrument to be
______ free act and deed and the free act and deed of said Silicon Valley
Internet Partners, before me,
/s/ Signature Illegible
(SEAL)
Notary Public
My Commission Expires:
-3-
<PAGE>
SUBORDINATION, NONDISTURBANCE
AND ATTORNMENT AGREEMENT
Dated: September 23, 1997
between
Silicon Valley Internet Partners
Tenant,
and
Lincoln Plaza Limited Partnership
Landlord,
and
BHF-BANK Aktiengesellschaft,
Grand Cayman Branch,
as Agent for certain Lendors,
Mortgagee.
LOCATION OF PREMISES
Street Address: 183 Essex Street & 70-80 Lincoln Street
City or Town of: Boston
County of: Suffolk
State of: Massachusetts
After recording, please return to:
Patterson, Belknap, Webb & Tyler LLP
1133 Avenue of the Americas
New York, NY 10036-6710
Attn: William W. Weisner, Esq.
<PAGE>
-2-
SUBORDINATION, NON-DISTURBANCE AND
----------------------------------
ATTORNMENT AGREEMENT
--------------------
THIS AGREEMENT, made as of this _____ day of September, 1997 among Silicon
Valley Internet Partners, a California corporation having its principal place of
business at 89 South Street, Boston, MA 02111 ("TENANT"), LINCOLN PLAZA LIMITED
PARTNERSHIP. a Massachusetts limited partnership, having an office at 527
Madison Avenue, New York, NY 10022 ("LANDLORD"), and BHF-BANK
Aktiengesellschaft, a German bank acting through its Grand
Cayman Branch, having an address in care of New York Branch, 590 Madison Avenue,
New York, New York, 10022-2540 ("MORTGAGEE").
RECITALS:
---------
Mortgagee, as agent for certain lenders, is the mortgagee under a certain
instrument entitled Mortgage and Security Agreement (the "MORTGAGE"), dated
September ___, 1997, executed and delivered by Landlord to Mortgagee and
intended to be recorded with the Suffolk County Registry of Deeds, which
Mortgage secures a certain promissory note of even date with the Mortgage made
by Landlord to Mortgagee (the "NOTE"). The Mortgage conveys and constitutes a
lien on certain real property described on EXHIBIT A attached hereto and made a
part hereof and the improvements thereon (the "REAL PROPERTY").
Tenant has entered into a certain lease dated May 2, 1997 (the "LEASE")
with Landlord or its predecessor in title to the Real Property demising space in
the Real Property known as Suite No. 201, the Permanent Premises and prior to
that, Suite 600, the Initial Premises. (the "PREMISES").
Tenant and Landlord have requested that Mortgagee enter into an agreement
on the terms and conditions herein set forth, and Mortgagee has agreed to enter
into this Agreement.
AGREEMENTS:
----------
ACCORDINGLY, in consideration of the mutual convenants hereinafter
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto mutually
covenant and agree as follows:
<PAGE>
-3-
1. The Lease and any extensions, renewals, replacements or modifications
thereof, and all of the right, title and interest of Tenant in and to the Real
Property are and shall be subject and subordinate to the lien of the Mortgage
and to all the terms, covenants and conditions contained therein, and to any
renewals, modifications, replacements, consolidations and extensions thereof.
2. In the event of foreclosure of the Mortgage, or in the event Mortgagee
comes into possession or acquires title to the Real Property as a result of the
enforcement or foreclosure of the Mortgage, or as a result of any other means,
Mortgagee agrees that Tenant shall not be disturbed in its possession of the
Premises for any reason other than one which, under the terms of the Lease,
would entitle Landlord to terminate the Lease or would, without any further
action by Landlord, cause the termination of the lease, or would entitle
Landlord to dispossess Tenant from the Premises; PROVIDED, that at the time
Mortgagee acquires possession of or title to the Real Property there is
then no default that continues beyond the expiration of grace and cure periods,
if any under the Lease.
3. Tenant agrees with Mortgagee that if the interests of Landlord in the
Real Property shall be transferred to and owned by Mortgagee by reason of
foreclosure of the Mortgage, a deed in lieu of foreclosure, any proceedings
brought by Mortgagee, or by any other manner, Tenant shall be bound to Mortgagee
under all the terms, covenants and conditions of the Lease (provided however
that the terms of the Mortgage shall govern the disposition of insurance
proceeds and condemnation awards) for the balance of the term thereof remaining
and any extensions or renewals thereof which may be effected in accordance with
any option therefor in the lease with the same force and effect as if Mortgagee
were the landlord under the Lease, and Tenant does hereby attorn to Mortgagee as
its landlord, said attornment to be effective and self-operative without the
execution of any further instrument on the part of any of the parties hereto
immediately upon Mortgagee succeeding to the interest of Landlord in the
Premises. Tenant agrees, however, upon the election of and written demand by
Mortgagee, within ten (10) days after demand of Mortgagee to execute an
instrument in confirmation of the foregoing provisions, reasonably satisfactory
to Mortgagee, in which Tenant shall acknowledge such attornment and shall set
forth the terms and conditions of its tenancy.
4. Tenant agrees with Mortgagee that if Mortgagee shall succeed to the
interest of Landlord under the Lease, Mortgagee shall not be (a) liable for any
action or omission of any prior landlord under the Lease, or (b) subject to any
offsets or defenses which Tenant might have
<PAGE>
-4-
against any prior landlord, or (c) bound by any rent or additional rent which
Tenant might have paid for more than the current month to any prior landlord,
except for the first three months rent to be prepaid at the Permanent Premises
Commencement Date, as defined in the Lease or (d) bound by any security deposits
which Tenant may have paid to any prior landlord, unless such deposit is
transferred to Mortgagee, or (e) bound by any amendment or modification of the
Lease made on or after the date hereof without Mortgagee's prior written
consent, or (f) bound to effect or pay for any construction for Tenant's
occupancy or to pay any allowances Landlord is obligated to pay under the lease,
or (g) if the Lease provides that Tenant is entitled to expansion space,
obligated, or have any liability for failure, to provide such expansion space if
a prior landlord has precluded (by execution of lease(s) entered into with other
tenants or otherwise) the availability of such expansion space. Tenant further
agrees with Mortgagee that Tenant will not voluntarily subordinate the Lease to
any lien or encumbrance without Mortgagee's prior written consent. The term
"prior landlord" includes without limitation, Landlord. Notwithstanding anything
to the contrary in subparagraph (f) of this Article 4, if Mortgagee succeeds to
the interest of Landlord under the Lease and at the time of such succession
Landlord is or will at any time be obligated under the Lease to effect or pay
for any construction of the Premises (or any space to be added thereto) for
Tenant's occupancy or to pay any allowances in connection with such construction
(any such obligation an "Unperformed Work Obligation"), Mortgagee shall have no
obligation or liability therefor, but Tenant shall have the right to perform and
fund such Unperformed Work Obligations itself and offset the costs of the same
(the "Offset Amount") against the rent payable under the Lease, subject to the
following conditions: (i) Tenant shall give Mortgagee written notice of the
existence of any Unperformed Work Obligations; (ii) Mortgagee shall have the
right (but not the obligation) to perform any Unperformed Work Obligations, and
Tenant shall not commence to perform such Unperformed Work Obligations for a
period of thirty (30) days after receipt by Mortgagee of Tenant's written notice
with respect to such Unperformed Work Obligations, (iii) if Mortgagee elects not
to perform any Unperformed work Obligations, then Tenant shall, before
commencing to perform such Unperformed Work Obligations, seek competitive bids
from at least three contractors and shall select the contractor with the lowest
bid to perform the same; (iv) Tenant shall submit to Mortgagee, for Mortgagee's
reasonable approval, receipted bills with respect to the performance of the
Unperformed Work Obligations, together with such other information as Mortgagee
may reasonably request to verify such cost; and (v) the Offset Amount shall be
offset against the rent payable under the Lease in equal monthly installments
<PAGE>
-5-
to be spread evenly over the remaining term of the Lease, as calculated by
Mortgagee.
5. If Landlord shall default in the performance or observance of any of the
terms, covenants, conditions or agreements in the Lease to be performed on the
part of Landlord, Tenant shall give written notice thereof to Mortgagee and
Mortgagee shall have the right (but not the obligation) to cure such default.
Tenant shall not take any action with respect to any default by Landlord under
the Lease, including, without limitation, any action in order to terminate,
rescind or avoid the Lease or to withhold any rental thereunder, for a period of
thirty (30) days after receipt by Mortgagee of Tenant's written notice with
respect to such default; PROVIDED, HOWEVER, that in the case of any default
which cannot with reasonable diligence be cured by Landlord or Mortgagee within
such 30-day period, if Mortgagee shall proceed promptly to commence to cure such
default and, thereafter, shall prosecute the curing of same with reasonable
diligence, then the time within which such default may be cured shall be
extended for such period as may be necessary to complete the curing of same.
6. This Agreement constitutes full compliance with any provisions of the
Lease that provide for subordination of the Lease only upon delivery of a
non-disturbance agreement to Tenant.
7. (a) From and after Tenant's receipt of written notice from Mortgagee (a
"RENT PAYMENT NOTICE"), Tenant shall pay all rent and additional rent under the
Lease to Mortgagee or as Mortgagee shall direct in writing. Tenant shall comply
with any Rent Payment Notice notwithstanding any contrary instruction, direction
or assertion from Landlord. Mortgagee's delivery to Tenant of a Rent Payment
Notice, or Tenant's compliance therewith, shall not be deemed to: (i) cause
Mortgagee to succeed to or to assume any obligations or responsibilities of
Landlord under the Lease, all of which shall continue to be performed and
discharged solely by Landlord unless and until any non-disturbance and
attornment has occurred pursuant to this Agreement or (ii) relieve Landlord of
any obligations under the Lease.
(b) Landlord irrevocably directs Tenant to comply with any Rent Payment
Notice, notwithstanding any contrary direction, instruction, or assertion by
Landlord. Tenant shall be entitled to rely on any Rent Payment Notice. Landlord
hereby releases Tenant from, and shall indemnify and hold Tenant harmless from
and against any and all loss, claim, damage, liability, cost or expense
(including payment of reasonable attorney's fees and disbursements) arising from
any claim based upon
<PAGE>
-6-
Tenant's compliance with any Rent Payment Notice. Landlord shall look solely to
Mortgagee with respect to any claims Landlord may have on account of an
incorrect or wrongful Rent Payment Notice.
8. This Agreement shall bind and inure to the benefit of the parties
hereto, their successors and assigns. As used herein: (a) the term "Tenant"
shall include any subtenant, successors and/or assigns of Tenant named herein;
(b) the words "foreclosure" and "foreclosure sale" shall be deemed to include
the acquisition of Landlord's estate in the Premises by voluntary deed (or
assignment) in lieu of foreclosure; and (c) the word "Mortgagee" shall include
the Mortgagee herein specifically named and any of its successors and assigns,
including anyone who shall have succeeded to Landlord's interest in the Real
Property by, through or under foreclosure of the Mortgage.
9. Wherever used herein, the singular shall include both the singular and
the plural of the use of any gender shall apply to all genders.
10. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts applicable to similar agreements
made and to be performed entirely within said Commonwealth. This Agreement shall
be construed without regard to any presumption or rule requiring construction
against the party causing this Agreement to be drafted.
11. This Agreement shall not be modified or amended except in writing
signed by all parties hereto.
12. This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which shall be one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal the day and year first above written.
TENANT:
------
Silicon Valley Internet Partners
By: /s/ Robert L. Gett
Name: ROBERT L. GOTT
Title: PRESIDENT/CEO
<PAGE>
-7-
MORTGAGEE:
---------
BIIF-BANK Aktienggsellachaft
Grand Cayman Branch
/s/ Signature Illegible
By: ______________________________
Name: Sylvia Gross
Title: Vice President
/s/ Signature Illegible
By: _______________________
Name: Catherine Hickey
Title: Vice President
LANDLORD:
--------
LINCOLN PLAZA LIMITED
PARTNERSHIP
By: L.P. PROPERTIES, INC.,
ITS GENERAL PARTNER
/s/ Signature Illegible
By: ______________________
Name: Richard D. Cohen
Title: President
<PAGE>
-8-
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss Sept. 22, 1997
Then personally appeared the above-named Robert Gett, as Silicon Valley
Internet Partners of 89 South Street, Boston, MA 02111, a California
corporation, and acknowledged the foregoing instrument was signed and sealed on
behalf of said corporation by authority of its Board of Directors, and he
acknowledged said instrument to be his free act and deed and the free act and
deed of said corporation.
Before me,
/s/ Signature Illegible
Notary Public
My Commission Expires: 2/5/2004
STATE OF NEW YORK
New York, ss September 23, 1997
Then personally appeared the above-named Sylvia Gross & Catherine Hickey,
each as a Vice President of BHF-BANK Aktiengesellschaft, Grand Cayman Branch, a
Herman Dark, and acknowledged the foregoing instrument was signed and sealed on
behalf of said corporation by authority of its Board of Directors, and he
acknowledged said instrument to be their free act and deed and the free act and
deed of said corporation.
Before me,
/s/ Signature Illegible
Notary Public
My Commission Expires: 4/4/98
<PAGE>
STATE OF NEW YORK
New York, ss September 23, 1997
Then personally appeared the above-named Richard D. Cohen, President of
L.P. Properties, Inc., as the duly authorized general partner of Lincoln Plaza
Limited Partnership, a Massachusetts limited partnership, and acknowledged the
foregoing instrument to be his free act and deed as President of L.P.
Properties, Inc., and the free act and deed of L.P. Properties, Inc., as general
partner of Lincoln Plaza Limited Partnership before me.
/s/ Signature Illegible
Notary Public
My Commission Expires: 4/4/98
<PAGE>
EXHIBIT A
PARCEL 1
A certain parcel of land, with the building thereon, as shown on a plan
entitled "Plan of Land in Boston, Mass. (Suffolk County)" dated March 29, 1979
by Boston Survey Consultants, recorded with the Suffolk County Registry of Deeds
in Book 9205, Page 75, and bounded and described according to said plan as
follows:
NORTHERLY by Essex Street, one hundred thirty-one and 35/100 (131.35)
feet;
EASTERLY by South Street, one hundred fifty-three and 86/100 (153.86)
feet;
SOUTHERLY by Tufts Street, one hundred forty-three and 37/100 (143.37)
feet;
WESTERLY by land now or formerly of Trustees of G.K. Hall & Company,
one hundred seventy-seven and 11/100 (177.11) feet by a line
in part through the middle of a brick partition wall.
The aforesaid parcel contains approximately 22,580 square feet of land,
according to said plan.
PARCEL 2
A certain parcel of land, with the building thereon, situated on Essex,
Lincoln and Tufts Streets, in Boston, Suffolk County, Massachusetts, bounded:
NORTHEASTERLY by Essex Street, sixty and 59/100 (60.59) feet;
SOUTHEASTERLY by land now or late of Philip H. Theopold one
hundred and seventy-seven and 6/100 (177.06) feet;
SOUTHWESTERLY by Tufts Street, sixty-one and 52/100 (61.52)
feet; and
NORTHWESTERLY by Lincoln Street one hundred eighty-seven and
96/100 (187.96) feet.
Containing ten thousand nine hundred sixty-five and 7/10 (10965 7/10) square
feet of land, and being shown on a plan of William S. Crocker, C.E. dated June
25, 1947, recorded with Suffolk Deeds in Book 6342, Page 282.
<PAGE>
Exhibit 10.19
FIRST AMENDMENT TO LEASE
This FIRST AMENDMENT TO LEASE (this "Amendment") is dated as of
October 1, 1999 by and between Lincoln Plaza Limited Partnership, a
Massachusetts limited partnership as lessor (the "LESSOR") and Silicon Valley
Internet Partners, as lessee (the "LESSEE").
WHEREAS, by a lease (the "Lease") dated as of May 2, 1997 LESSOR
leased to LESSEE 20,000 square feet of space (the "Permanent Premises")
located on the second (2nd) floor of the building located at 89 South Street,
Boston, Massachusetts, (the "Building") and 8,470 square feet of space (the
"Initial Premises") located on the sixth (6th) floor of the building located
at 70-80 Lincoln Street, Boston, Massachusetts; and
WHEREAS, LESSOR and LESSEE desire to amend the Lease (i) to reflect
the fact that different Premises shall be substituted for the Initial
Premises and shall be called the Substitute Initial Premises, and (ii) to
make other changes to the Lease consequent thereto.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
mutually acknowledged, Landlord and Tenant hereby agree as follows:
1. BASIC DATA. Effective as of the Substitute Initial Premises
Commencement Date (described in Paragraph 4 of this First Amendment to
Lease), the below-listed definitions set forth in Section 1 of the Lease
shall be deleted in their entirety, and the following definitions shall be
substituted therefor:
"Initial Premises Rentable Area: The Substitute Initial
Premises is agreed to be approximately 11,772 square
feet located on the seventh (7th) floor of the
Building.
Initial Premises Basic Rent: The Substitute Initial Premises
Basic Rent shall be at the rate of $150,093 ($12.75
per square foot of Premises Rentable Area) per annum
as the same may be adjusted or abated.
Initial Premises Commencement Date: The Substitute Initial
Premises Commencement Date shall be approximately
October 18, 1997, upon substantial completion of
LESSOR'S Work for the Substitute Initial Premises, not
later than October 25, 1997.
LESSOR'S Work for Initial Premises: LESSOR'S Work for
Substitute Initial Premises - as defined in Section 5
below.
Initial Premises: Substitute Initial Premises: A portion of
the Property shown as Exhibit A1 attached hereto."
2. ADDITIONAL DEFINITIONS; BASIC RENT; ADDITIONAL RENT; UTILITIES
Effective as of the Substitute Initial Premises Commencement Date,: a)
Section 2B of the Lease shall be deleted in its entirety and the following
shall be substituted therefor:
<PAGE>
"B) SUBSTITUTE INITIAL PREMISES (from the Substitute Initial
Premises Commencement Date to the day before the
Permanent Premises Commencement Date.) A portion of
the building owned by LESSOR consisting of
approximately 11,772 square feet of rentable area on
the seventh floor of the Building and substantially
known as Suite 701 on the plan attached hereto as
Exhibit A1 (the "Substitute Initial Premises")
together with the right to use in common, with other
entitled thereto, the hallways, stairways, restrooms
and elevators necessary for access to said Premises.
If LESSOR subdivides the Substitute Initial Premises while
LESSEE occupies the Substitute Initial Premises, LESSOR shall
build a common corridor in accordance with Exhibit D2 and
shall build two comparably sized conference rooms to these
designated A and B on Exhibit D2, all such work to be
performed on weekends or after 5:00 pm on weekdays.
LESSOR shall not subdivide the Substitute Initial Premises
prior to January 1, 1998."
b) Section 4B) of the Lease shall be deleted in its entirety and the
following shall be substituted therefor:
The LESSEE shall pay to the LESSOR Rent at the rate of
$150,093 per year, payable in advance on the first day of
each month after the Substitute Initial Premises Commencement
Date without deduction or set off in monthly installments of
$12,507.75. If said date occurs other than on the first day
of the month rent shall be equitably adjusted.
c) Section 6.c and 7 of the Lease shall both be modified by adding
after the words "Initial Premises" in each the phrase "or the
Substitute Initial Premises".
3. EXHIBITS. Effective as of the Substitute Initial Premises
Commencement Date, Exhibit A (part A-1) and D shall be deleted from the Lease
in their entirety and a new Exhibit A1 and D1 attached hereto shall be
substituted therefore.
4. SUBSTITUTE INITIAL PREMISES COMMENCEMENT DATE
The Substitute Initial Premises Commencement Date will be approximately
October 18, 1997, upon substantial completion of LESSOR'S Work (which
shall be paid for by LESSOR) for the Substitute Initial Premises as
defined in Paragraph 5 below.
5. CONDITION OF SUBSTITUTE INITIAL PREMISES Effective as of the date
of this First Amendment to Lease, the final paragraph of Section 26 of the
lease with the heading "Initial Premises" is hereby deleted and the following
shall be substituted therefor.
"Substitute Initial Premises:
<PAGE>
Except as Otherwise provided in this Section, the Substitute
Initial Premises are being delivered strictly in their condition
"as is" and LESSEE acknowledges that it has inspected the same
and found them satisfactory. LESSOR shall build space in
accordance with the Plans and Specifications attached hereto as
Exhibit D1."
6. EFFECT OF THIS AMENDMENT. Except as specifically amended hereby,
all provisions of the lease are hereby ratified and confirmed and remain in
full force and effect.
IN WITNESS WHEREOF, LESSOR and LESSEE have caused this Amendment to
be duly executed, under seal, by persons hereunto duly authorized, in
multiple copies, each to be considered an original hereof, as of the date set
forth above.
LESSOR:
Lincoln Plaza Limited Partnership
By: L.P. Properties, Inc. - Its General Partner
By: Richard D. Cohen - Its President
By: /s/ Richard D. Cohen
--------------------------------------------
LESSEE:
Silicon Valley Internet Partners
By: /s/ Signature Illegible
---------------------------------------------
<PAGE>
EXHIBIT A
[CHART OMITTED]
<PAGE>
Exhibit D1
- - Demo wall by main entry and mail counter in training room.
- - Relocate refrigerator, dishwasher, coffee filter
- - Provide 10 circuits in the open area in the Southeast area of the space
with outlets as per the attached diagram.
- - Provide 3 circuits in the equipment room with outlets as per the attached
diagram.
- - Provide dedicated outlet for copier.
- - Install door and frame in room next to training room.
- - Provide reception desk at entry and cabinets by kitchen area.
- - Move data T1 line
- - Move voice T1 line
- - Move UUNet service
- - Move telephone lines (up to 8)
- - Wiring and ports as per the attached diagram (including Lucent phone
system).
- - Clean carpets
- - Move pool table
- - Move furniture and equipment
- - Provide shelving for copier room
- - Install 11 white boards
- - All perimeter doors to lock on same tenants key
<PAGE>
Exhibit D1, p2
[CHART OMITTED]
<PAGE>
Exhibit D2
[CHART OMITTED]
<PAGE>
PROPERTY NAME/#______________________________ 6-07
?? IT []YES
[]NO
??cribe split -----------
----------- 710040
----------- LANDSCAPING CONTRACT
-----------
----------- Includes all Interior and Exterior landscaping
-----------
-----------
ASSUMPTIONS:
A. Flowering plant program cost/month --------------
B. Weekly Maintenance --------------
C. B x 52/12 --------------
D. Exterior Landscaping (describe below) --------------
E. Holiday (describe below) --------------
F. A + C + D + E --------------
Enter monthly amount below
Exterior Landscaping --------------
-------------------------------------------------------
Holiday ----------------------------------------
??3 Actual ----------------- ----------------------------------------------
??4 Actual ----------------- ----------------------------------------------
1998 BUDGET
??5 Actual -----------------
??6 Actual -----------------
??7 Actual -----------------
JAN $ ------------- JUL $ --------------
FEB $ ------------- AUG $ --------------
MAR $ ------------- SEP $ --------------
APR $ ------------- OCT $ --------------
MAY $ ------------- NOV $ --------------
JUN $ ------------- DEC $ --------------
TOTAL --------------
Information By [] NY [] BOSTON
<PAGE>
PROPERTY NAME/#______________________________
?? IT []YES
[]NO
??be split -----------
----------- 710050
square ----------- BUILDING CLEANING
----------- Cost by cleaning contractor to clean the
buildings. Cost per foot should be based on
cleanable square feet - not rentable.
-----------
-----------
ASSUMPTIONS:
Cleanable sq. ft. --------------
Cost per square foot --------------
Annual Cost (Jan) --------------
Monthly Cost --------------
*Remember to adjust for occupancy.
1998 BUDGET
?? Actual -----------------
?? Actual -----------------
?? Actual -----------------
?? Actual -----------------
?? Forecast ---------------
JAN $ ------------- JUL $ --------------
FEB $ ------------- AUG $ --------------
MAR $ ------------- SEP $ --------------
APR $ ------------- OCT $ --------------
MAY $ ------------- NOV $ --------------
JUN $ ------------- DEC $ --------------
TOTAL --------------
Information By [] NY [] BOSTON
<PAGE>
PROPERTY NAME/#______________________________ 7-02
SPLIT []YES
[]NO
??cribe split ----------- 710020
----------- SECURITY CONTRACT
-----------
-----------
-----------
-----------
ASSUMPTIONS:
A. #hours per week --------------------------------
B. hourly rate --------------------------------
C. A x B --------------------------------
D. x 52 weeks --------------------------------
E. # holidays --------------------------------
F. # hours/holidays --------------------------------
G. holiday rate (1 1/2) --------------------------------
H. E x F x G --------------------------------
I. # vacation days --------------------------------
J. # hours/vacation days --------------------------------
K. I x J x B --------------------------------
L. # Emergency days --------------------------------
M. # hours/emer. days --------------------------------
N. L x M x B --------------------------------
O. Add D + H + K + N --------------------------------
P. divide 0 / 12 --------------------------------
Q. Enter monthly amount below
Notes: I is for guard whom we employ. Include vacation, sick, personnel days
and holidays we recognize which the guard service does not.
?? 93 Actual -----------------
?? 94 Actual -----------------
?? 95 Actual -----------------
?? 96 Actual -----------------
?? 97 Actual -----------------
?? 97 Forecast ---------------
1998 BUDGET
JAN $ ------------- JUL $ --------------
<PAGE>
FEB $ ------------- AUG $ --------------
MAR $ ------------- SEP $ --------------
APR $ ------------- OCT $ --------------
MAY $ ------------- NOV $ --------------
JUN $ ------------- DEC $ --------------
TOTAL --------------
Information By [] NY [] BOSTON
<PAGE>
Exhibit 10.20
OMNIOFFICES, INC.
December 3, 1998
Mr. Dwayne Nesmith
Viant
650 Townsend
Suite 375
San Francisco, CA 94103
RE: AGREEMENT BETWEEN OMNIOFFICES, INC. (BRENTWOOD) AND VLANT DATED
SEPTEMBER 29, 1998 (THE "AGREEMENT")
Dear Mr. Nesmith:
Enclosed is a fully executed copy of the Agreement with OmniOffices,
Inc. Thank you for the opportunity of letting OmniOffices, Inc.
service Viant.
Sincerely,
/s/ Jean A. Waguespack
Jean A. Waguespack
National Sales Department
<PAGE>
THE OMNIOFFICES GROUP
September 29, 1998
Mr. Dwayne Nesmith
Viant
650 Townsend
Suite 375
San Francisco, CA 94103
RE: REVOCABLE LICENSE BETWEEN OMNIOFFICES, INC., SUCCESSOR IN INTEREST
TO OMNIOFFICES/BRENTWOOD, INC. AND VIANT DATED SEPTEMBER 3, 1998
(THE "AGREEMENT")
Dear Dwayne:
BE IT KNOWN, that for good consideration the parties make the following
additions or stipulations a part of said Revocable License as if
contained therein. In the event any of the following additions or
stipulations conflict with the Revocable License, the following shall
control:
1. As of OCTOBER 15, 1998, VIANT will occupy office numbers 560 & 561
in addition to office numbers 521 & 522.
2. In consideration for the execution of this Revocable License and the
addition in offices, the Basic Fee rent under the Revocable License
will be increased to THIRTY NINE THOUSAND ONE HUNDRED FIFTY DOLLARS AND
00/100------DOLLARS ($39,150.00), payable in equal monthly installments
of $6,525.00 with an additional security deposit of $2,750.00 and an
additional expense deposit of $2,750.00 for office numbers 560 & 561.
Escalation as provided for in the above referenced Revocable License
will remain in effect.
3. Omni agrees to waive $6,525.00 of the Client Services Retainer;
however, at any time during the term or any renewal of the Revocable
License, that any payment due under this Revocable License is not
received by Omni in its office within five (5) days of the due date as
outlined in section 3 and 6 of the Revocable License, $6,525.00 will
become immediately due without any additional notice or demand.
4. Provided that client is not in Default hereunder or under any other
agreement with Omni, or any parent, subsidiary or affiliate corporation
of Omni, Omni will rebate a total of $1,631.25 to Client otherwise due
hereunder in monthly installments as detailed in the schedule below on
office number(s) 560,561, 520 & 521 for the first term of this
Revocable License OCTOBER 15, 1998 to MARCH 1, 1999. If Client should
breach this Revocable License then the rebated amount shall be repaid
to Omni without any additional notice or demand.
<PAGE>
<TABLE>
<CAPTION>
MONTH AMOUNT
----- ------
<S> <C>
October 15, 1998 $163.13
November 1, 1998 $326.25
December 1, 1998 $326.25
January 1, 1999 $326.25
February 1, 1999 $326.25
March 1, 1999 $163.12
</TABLE>
4. Effective OCTOBER 15, 1998 any prior rebate schedule will become null and
void.
All other terms and conditions of the above-referenced Revocable License will
remain in effect.
IN WITNESS WHEREOF, Omni and Client have caused these presents to be duly
executed as of the date first written above.
Thank you for the acceptance of our proposal.
Sincerely,
/s/Signature Illegible
Juliette Proenza Colon
National Accounts Manager
ACCEPTED BY OMNI: ACCEPTED BY CLIENT:
OmniOffices, Inc., successor in
interest to OmniOffices/Brentwood, Inc. Viant
/s/ Signature Illegible /s/ Signature Illegible
By: Corporate Counsel By: _______________
Date: 12/3/98 Date: 10/27/98
This letter constitutes an offering and is not binding on either party until
such time both parties have executed this document.
<PAGE>
Exhibit 10.21
BASIC LEASE INFORMATION
1. LANDLORD: CENTRUM G.S. LTD
2. BUILDING: The Centrum, 3102 Oak Lawn Dallas, Texas 75219
3. ADDRESS (for notices): 3102 Oak Lawn, Suite 470
Dallas, Texas 75219
Attention: General Manager
TELEPHONE: (214) 521-3342
4. TENANT: Viant Corporation
5. LEASED PREMISES: The space known as Suite Nos. 202 (11,834 sq. ft.)
and 430 (5,622 sq. ft.) as identified on Exhibit "A"
hereto located on floor 2 and 4 of the Building as
described in the Lease.
6. ADDRESS (for notices):
Before occupancy: 89 South Street
Boston, MA 01604
Attention: Mike Tubridy
Telephone: (617) 531-3700
After occupancy: 3102 Oak Lawn
Suite 430 and Suite 202
Dallas, Texas 75219
Attention: Ed Mellows
7. BASE RENT (ALL NET OF ELECTRICITY):
<TABLE>
<CAPTION>
Suite 202
Months Annual Base Rent Rent/Sq.Ft. Monthly Base Rent
------ ---------------- ----------- -----------------
<S> <C> <C> <C>
1-60 $248,514.00 $21.00 $ 20,709.50
</TABLE>
(plus electricity)
<TABLE>
<CAPTION>
Suite 430
Months Annual Base Rent Rent/Sq.Ft. Monthly Base Rent
------ ---------------- ----------- -----------------
<S> <C> <C> <C>
1-16 $134,928.00 $24.00 $11,244.00
</TABLE>
(plus electricity)
8. ADVANCE PAYMENT: $85,512.00 due and payable upon execution of the
Lease.
9. SECURITY DEPOSIT: $11,244.00 due and payable upon execution of the
Lease; subject to Tenant electing to occupy Suite 202
of the Premises, an additional amount (which shall be
a minimum of $20,709.50) shall be payable on or
before the date that notifies Landlord that Tenant is
electing to occupy Suite 202 of the Premises.
10. BASE OPERATING EXPENSES: Actual Operating Expenses incurred in
calendar year 1998, subject to adjustment
as provided in the Lease
11. TENANT'S PRO RATA SHARE: 1.74% - Suite 430
3.66% - Suite 202
BASIC INFORMATION - PAGE 1 OF 2
<PAGE>
12. COMMENCEMENT DATE: August 1, 1998 with respect to Suite 430 and
December 1, 1999 with respect to Suite 202. Prior
to August 1, 1998, Suite 430 is subject to the
terms of an Interim Lease between Landlord and
Tenant related to such space. By execution of the
Lease, Tenant is relieved of any obligation under
the Interim Lease to pay rental with respect to
Suite 430 for the period prior to August 1, 1998.
13. LEASE TERM A period commencing on the Commencement Date and
terminating on November 30, 2004, unless sooner terminated
pursuant to the terms of the Lease.
14. RENTABLE AREA IN THE PREMISES: Approximately 17,456 square feet of
Rentable Area (Suite 430 - 5,622;
Suite 202 - 11,834).
15. BUILDING AREA: Approximately 323,636 square feet of Rentable Area.
16. PERMITTED USE: General office and internet consulting.
The foregoing Basic Lease Information shall be used in conjunction with
and limited by the references thereto in the provisions of the Lease.
In the event of any conflict between any Basic Lease Information and
the Lease, the terms of the Lease shall control.
BASIC INFORMATION - PAGE 2 OF 2
<PAGE>
OFFICE BUILDING LEASE TABLE OF CONTENTS
<TABLE>
<CAPTION>
PARAGRAPH PARAGRAPH PAGE
NUMBER TITLE NO
- ------ ----- --
<S> <C> <C>
1. PREMISES 1
2. TERM 2
3. RENT 2
4. PAYMENT OF EXCESS OPERATING EXPENSES AND ELECTRICAL COSTS 2
5. CHARACTER OF OCCUPANCY 6
6. SERVICE AND UTILITIES 7
7. OUIET ENJOYMENT 9
8. MAINTENANCE, REPAIRS, ALTERATIONS AND ADDITIONS 10
9. ENTRY BY LANDLORD 11
10. MECHANICS' LIENS 12
11. DAMAGE TO PROPERTY, INJURY TO PERSONS 12
12. INSURANCE, CASUALTY, AND RESTORATION OF PREMISES 14
13. CONDEMNATION 15
14. ASSIGNMENT AND SUBLETTING 15
15. ESTOPPEL CERTIFICATE 17
16. DEFAULT 17
17. REMEDIES FOR DEFAULT 18
18. REMOVAL OF TENANT'S PROPERTY 21
19. COMPLETION OF PREMISES AND POSTPONEMENT OF COMMENCEMENT DATE 21
20. HOLDING OVER 22
21. CONTROL OF COMMON AREAS 22
22. SURRENDER AND NOTICE 23
23. ACCEPTANCE OF PREMISES BY TENANT 23
24. SUBORDINATION AND ATTORNMENT 23
25. PAYMENTS AFTER TERMINATION 24
26. AUTHORITIES FOR ACTION AND NOTICE 24
27. SECURITY DEPOSIT 24
28. MISCELLANEOUS 25
29. LANDLORD'S LIEN 30
</TABLE>
EXHIBITS:
---------
Exhibit "A" - Premises
Exhibit "B" - Legal Description
Exhibit "C" - Rules and Regulations
<PAGE>
Exhibit "D" - Work Letter Agreement
Exhibit "E" - Parking
Exhibit "F" - Financial Statement
Exhibit "G" - Guaranty of Lease (Not Applicable)
Exhibit "H" - Renewal Option
Exhibit "H-I" - Termination Option
Exhibit "I" - Right of First Refusal
<PAGE>
OFFICE BUILDING LEASE
THIS LEASE (the "Lease") is made this _____ day of July, 1998, between
CENTRUM G.S. LTD. ("Landlord") and Viant Corporation, a corporation ("Tenant")
Tenant's address prior to commencement of the lease term, or its headquarters in
the event this Lease covers a branch office, is as set forth in the Basic Lease
Information.
1. PREMISES:
In consideration of the payment of rent and the keeping and performance
by Tenant of the covenants and agreements hereinafter set forth, and subject to
and upon the terms and conditions contained herein, Landlord hereby leases to
Tenant and Tenant hereby rents from Landlord those certain premises located on
the second and fourth floors designated on the Plan attached hereto as Exhibit
"A" (the "Premises"), and by this reference made a part hereof, said premises
consisting of approximately 17,456 square feet of Rentable Area comprising Suite
Nos. 202 (consisting of 11,834 square feet of Rentable Area) and 430 (consisting
of 5,622 square feet of Rentable Areas) of the building located at 3102 Oak Lawn
Avenue, being the southeast comer of Oak Lawn and Cedar Springs, Dallas, Texas
75219 (hereinafter called the "BUILDING"), together with anon-exclusive license,
subject to the provisions hereof to use all appurtenances thereto, including,
but not limited to, any plazas, common areas and other areas designated by
Landlord for use by tenants of the Building. The Building, plazas, common areas,
other areas and appurtenances, plus the real property on which the same is
situated, being more particularly described on Exhibit "B" attached hereto and
by this reference made a part hereof, are hereinafter collectively sometimes
called the "Building Complex" The term "BUILDING COMPLEX" includes the Office
Project and the other parts of a larger development forming a portion
of The Centrum project at the southeast comer of Oak Lawn and Cedar Springs,
Dallas. Texas which are intended to be integrated into a single condominium
regime and subject therefore to reciprocal easement arrangements for common use
of certain areas as an integrated mixed-use development.
"OFFICE PROJECT" shall mean that portion of the Building Complex used
for the benefit of tenants of office space, or dedicated to, or benefitting such
office use, including an appropriate allocation of Common Areas and Service
Areas used by all portions of the Building Complex.
"COMMON AREAS" shalt mean those areas devoted to corridors, elevator
foyers, mail room, restrooms, mechanical rooms, elevator mechanical rooms,
janitorial closets, electrical and telephone closets, vending areas and lobby
areas (whether at ground level or otherwise), and other similar facilities
provided for the common use or benefit of tenants generally and/or the public,
including all automobile parking spaces, driveways, entrances and exits thereto,
loading areas, plazas, pedestrian walkways and ramps, landscaped areas,
stairways and other areas, facilities and improvements provided by Landlord both
inside and outside the Building Complex.
"SERVICE AREAS" shall mean those areas within the outside walls used
for building stairs, elevator shafts flues vents stacks pipe shafts and other
vertical penetrations -ut shall not include any such areas for the exclusive use
of a particular tenant).
"RENTABLE AREA" shall mean the area contained within the demising walls
of the Premises and any other area designated for the exclusive use of Tenant
plus an allocation of the Tenant's Pro Rata Share of the square footage of the
Office Project.
"BUILDING AREA" shall mean all rentable space available for office
lease in the Building which is currently deemed to be approximately Three
Hundred Twenty Three Thousand Six Hundred Thirty Six (323,626) square feet,
regardless of minor variations in actual square footage. Landlord shall be
entitled to make such adjustments to the Building Area from time to time as
shall be necessary for the Landlord to accurately reflect same based on
circumstances causing a reduction or increase thereto.
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<PAGE>
"TENANT'S PRO RATA SHARE" shall mean that fraction, the numerator of
which is the Rentable Area and the denominator of which is the Building Area At
such time, if ever, as any space is added to or subtracted from the Premises.
Tenant's Pro Rata Share shall be increased or decreased accordingly.
"CALENDAR YEAR" shall mean each twelve (12) month period beginning on
January 1, and ending at midnight December 31 during the term of this Lease
The estimates of Rentable Area within the Premises and the Building
Area as set forth herein may be revised at Landlord's election if Landlord's
architect determines such estimate to be inaccurate in any material degree after
examination of the final drawings of the Premises and the Building
The Rentable Area in the Premises is hereby stipulated for all purposes
hereof to be 17,456 square feet, whether the same should be more or less as a
result of minor variations resulting from actual construction and completion of
the Premises for occupancy so long as such work is substantially in accordance
with the terms and provisions hereof If any of the Building is ever at
Landlord's election demolished, altered, remodeled, renovated, expanded or
otherwise changed in such a manner as to alter the amount of space contained
therein, then the above calculation for the Building Area shall be adjusted and
recalculated by using the foregoing method for determining same
2. TERM:
The term of this Lease shall commence on the Commencement Date stated
in the Basic Lease Information (August 1, 1998 with respect to Suite 430, and,
with respect to Suite 202, the date shall be December 1, 1999, or on such
earlier date on which Tenant shall take occupancy of Suite 202 of the Premises),
and continue for sixty (60) calendar months from the earlier of December 1, 1999
or the Commencement Date with respect to Suite 202 (the "LEASE TERM"). See
EXHIBIT "H-1" for Tenant's right to terminate this Lease on or before November
30, 1999 Landlord represents to Tenant that Suite 202 of the Premises is
available to Tenant, and during the term of this Lease shall continue to be
available to Tenant, for the purpose of construction of improvements and
occupancy by Tenant pursuant to the terms of this Lease, during the period of
construction of improvements prior to December 1, 1999, Tenant shall not be
deemed to be in occupancy of Suite 202. Subsequent to Tenant notifying Landlord
that Tenant intends to occupy Suite 202, at or prior to the Commencement Date
for Suite 202, Tenant shall diligently complete the improvements to Suite 202
pursuant to Exhibit "D" to this Lease
3. RENT:
A. BASE RENT. Tenant shall pay to Landlord, as an annual base
rent (the "BASE RENT") for each Calendar Year of the Lease Term the
sums set forth in the Basic Lease Information, in U S Dollars, which
sums shall be payable in monthly installments as set forth in the Basic
Lease Information from the Commencement Date, and continuing thereafter
in advance on the first day of each succeeding calendar month. All Base
Rent and other rentals or sums due hereunder ("ADDITIONAL RENT")
(collectively, "RENTAL") shall be paid in advance without notice,
abatement, deduction or offset at the office of Landlord or to such
other person or at such other place as Landlord may designate in
writing. The installments of the Base Rent for the first and last
months of the Lease Term shall be prorated based upon the number of
days during each of said months that the Lease Term is in effect.
Payment of rent for the first full calendar month for which rental is
payable shall be made upon execution of this Lease, and the prorated
rent for the month in which Tenant moves into the Premises shall be
paid prior to move-in
B. Minimum Rent In no event shall the total rent paid by
Tenant during any Calendar Year ever be less than the Base Rent for the
immediately preceding Calendar Year plus an estimate of Tenant's Pro
Rata Share of increases in Operating Expenses, as described in
Paragraph 4 below
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<PAGE>
4. PAYMENT OF EXCESS OPERATING EXPENSES AND ELECTRICAL COSTS:
---------------------------------------------------------
A. DEFINITIONS. In addition to the terms elsewhere defined in this
Lease, the following terms shall have the following meanings
(1) "BASE OPERATING EXPENSES" shall mean an amount equal to
those Operating Expenses for the Calendar Year 1998
attributable to the total number of square feet of Building
Area adjusted to reflect 100% occupancy. It is understood and
agreed by Tenant that Landlord has not made any representation
that the Base Operating Expenses will equal or approximate the
actual Operating Expenses for any Calendar Year. Tenant's Base
Rent includes a component applicable to Base Operating
Expenses.
(2) "OPERATING EXPENSES" shall mean all direct or indirect
costs and expenses incurred in each Calendar Year, computed on
an accrual basis, of any kind or nature which are necessary,
ordinary, or customarily incurred in connection with the
operation and maintenance of the Office Project. Operating
Expenses shall include all expenditures by and costs to
Landlord to maintain and operate all facilities of the Office
Project now or hereafter existing Operating Expenses of the
Office Project shall include all charges allocable to the
Office Project for any services for or accruing to the benefit
of the Office Project which are provided either from a central
plant or stations or substations also serving other parts of
the Building Complex
Operating Expenses shall include, but not be limited to the
following:
(a) Labor costs for Landlord's employees
performing services required or utilized in
connection with the operation, repair and maintenance
of and control of access to the Building Complex,
including but not limited to amounts incurred for
wages, salaries and other compensation for services,
payroll, social security, unemployment and other
similar taxes, worker's compensation insurance,
disability benefits, pensions, hospitalization, and
retirement plans and group insurance.
(b) Management fees, the cost of maintaining
a management office at the Building Complex, and all
fees for legal and accounting services relating to
the Building Complex
(c) Rental and/or purchase costs of
materials, supplies, hand tools and equipment used in
the operation, repair, replacement and maintenance
and the control of access to the Building and the
Building Complex.
(d) Amounts charged to Landlord by
contractors and/or suppliers for services, materials,
equipment and supplies furnished in connection with
the operation, repair, maintenance, replacement of
and control of access to any part of the Building,
the plazas, the garage, and sidewalks adjoining the
Building, or the Building Complex generally, and the
heating, air conditioning, ventilating, plumbing,
electrical, elevator and other systems of the
Building and the garage.
(e) Costs incurred by Landlord for fire and
extended coverage insurance, earthquake and extended
coverage insurance, liability and extended coverage
insurance and other insurance customarily carried
from time to time by lessors of comparable office
buildings or required to be carried by Landlord.
(f) Charges for all utilities, including but
not limited to electricity, water and sewer, but
excluding those charges for which tenants are
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<PAGE>
individually responsible
(g) Taxes, including (i) all real estate
taxes and assessments on the Building Complex, the
Building or the Premises, and taxes and assessments
levied in substitution or supplementation in whole or
in part of such taxes, (ii) all personal property
taxes for the Building's personal property, including
license expenses, (iii) all franchise fees, (iv) all
taxes imposed on services of Landlord's agents and
employees, and (v) all other taxes, fees or
assessments now or hereafter levied by any
governmental authority on the Building Complex, the
Building or its contents or on the operation and use
thereof (except as related to specific tenants),
including attorneys' fees, court costs and fees and
costs of tax consultants and tax appraisers, but
excluding income taxes. Tenant agrees that, as
between Tenant and Landlord, Landlord has the sole
and absolute right to contest taxes levied against
the Building or the Building Complex (other than
taxes levied directly against Tenant's personal
property). Therefore, to the full extent permitted by
law, Tenant waives any right to initiate, prosecute
or appeal any proceeding for the purpose of reducing
the assessed valuation of the Premises or the
Building Complex for tax purposes. Landlord shall
file notice of protest in any year in which its
evaluation leads it to reasonably conclude that such
protest is necessary or desirable.
(h) Landscape expenses and costs of
repairing, resurfacing and striping of the parking
areas of the Building Complex.
(i) Cost of all maintenance service
agreements for equipment, alarm service, window
cleaning, drapery or Venetian blind cleaning,
janitorial services, pest control, uniform supply,
landscaping, and parking equipment.
(j) Cost of all other repairs, replacements
and general maintenance of the Building Complex and
Building neither specified above nor directly billed
to tenants, including all repairs, alterations,
additions, replacements or changes that are the
result of normal wear and tear or part of normal
property and building maintenance
(k) Amortization of capital improvements or
repairs made to the Building or parking garage
subsequent to the Commencement Date which are
primarily for the purpose of reducing operating
expense costs or otherwise improving the operating
efficiency of the Building or which are required to
comply with any change in the laws, rules or
regulations of any governmental authority or which
will extend the life of the Building, the cost of
such items to be amortized over a period which shall
be the greater of five (5) years or the useful life
of the capital improvements or repairs involved.
(l) Operating costs of the Exterior Common
Areas. "EXTERIOR COMMON AREAS" shall mean those areas
of the Building Complex which are not located within
the Building and its immediate proximity and which
are provided and maintained for the common use and
benefit of Landlord and tenants of the Building
generally and the employees, invitees and licensees
of Landlord and such tenants, including, without
limitation, sidewalks and landscapes
Operating Expenses shall not include the following: (a) the cost of
capital improvements (except as above set forth in subsection (k) above, and
except for issues which, though they may be considered capital for accounting
purposes, are properly considered to be maintenance and repair items, such as
painting of Common Areas, replacement of carpet in elevator lobbies, replacement
of worn components, and the like), depreciation, interest, lease commissions,
tenant finish-out, legal costs attributable directly to tenant leases, and
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<PAGE>
principal payments on mortgage and other nonoperating debts of Landlord, (b)
costs occasioned by casualty or by the exercise of eminent domain, (c) costs to
correct any structural defect in the Building or the Premises, (d) costs of
insurance coverage not customarily paid by tenants of other commercial office
facilities in the vicinity of the Building, or (e) costs incurred in connection
with the presence of any hazardous substance in, on, under or about the Building
except to the extent the hazardous substance in question exists due to actions
or inactions of the Tenant.
Notwithstanding any language in the Lease seemingly to the contrary, if
the Building is not fully occupied during any Calendar Year of the Lease Term,
actual Operating Expenses and the Excess for purposes of this provision shall be
determined as if the Building had been 100% occupied during such Calendar Year
Operating Expenses shall be adjusted to reflect 100% occupancy for the first and
subsequent Lease Years
Notwithstanding anything contained herein to the contrary, if any lease
entered into by Landlord with any tenant in the Office Project is on a so-called
"net" basis, or provides for a separate basis of computation for any Operating
Expenses with respect to its leased premises, then, to the extent that Landlord
determines that an adjustment should be made in making the computations herein
provided for, Landlord shall be permitted to modify the computation of Base
Operating Expenses, Building Area, and Operating Expenses for a particular
Calendar Year in order to eliminate or otherwise modify any such expenses which
are paid for in whole or in part by such tenant. Furthermore, in making any
computations contemplated hereby, Landlord shall also be permitted to make such
adjustments and modifications to the provisions of this PARAGRAPH 4 as shall be
reasonably necessary to achieve the intention of the parties hereto
B. ADJUSTMENT MECHANISM. The Base Rent payable hereunder shall be
adjusted upward from time to time in accordance with the following
provisions:
(1) Tenant shall, during the Lease Term, pay as an adjustment
to Base Rent hereunder Tenant's Pro Rata Share of an amount equal to
the excess ("EXCESS"), if any, from time to time of actual Operating
Expenses per square foot per Calendar Year for the Building Area in the
Building over the Base Operating Expenses Prior to January 1 of each
Calendar Year during Tenant's occupancy or as soon thereafter as
practical, Landlord shall make a good faith estimate of the Excess for
each upcoming Calendar Year and, upon prior written notice to Tenant,
may require the monthly payment of Base Rent to be adjusted in
accordance with such estimate Landlord shall have the right from time
to time during any such Calendar Year to revise the estimate of the
Excess for such year and provide Tenant with a revised statement
therefor, and thereafter the amount Tenant shall pay each month shall
be based upon such revised estimate. Any amounts paid based on any
estimate shall be subject to adjustment pursuant to SUBPARAGRAPH (2)
below when actual Operating Expenses are available for such Calendar
Year
(2) As soon as is practical following the end of each Calendar
Year during Tenant's occupancy, landlord shall furnish to Tenant a
statement of Landlord's actual Operating Expenses for the previous
Calendar Year. If for any Calendar Year additional Base Rent collected
for the prior Calendar Year, as a result of Landlord's estimate of
Operating Expenses, is in excess of the additional Base Rent actually
due during such prior Calendar Year, then Landlord shall refund to
Tenant any overpayment (or at Landlord's option, apply such amount
against the next rentals due hereunder). Likewise, Tenant shall pay to
Landlord, on demand, any under payment with respect to the prior
Calendar Year whether or not the Lease has terminated prior to receipt
by Tenant of a statement for such underpayment.
(3) Tenant's obligation with respect to Tenant's Pro Rata
Share of accrued Operating Expenses shall survive the expiration or
early termination of this Lease, and subsequent to such expiration or
termination Tenant shall pay Tenant's
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<PAGE>
Pro Rata Share of the actual Operating Expenses for the
portion of the final Calendar Year of the Lease during which
Tenant was obligated to pay such expenses. If Tenant occupies
the Premises for less than a full Calendar Year during the
first or last Calendar Years of the Lease Term hereof,
Tenant's Pro Rata Share for such partial year shall be
prorated based upon the number of calendar months and days
during which Tenant occupied the Premises. Tenant shall pay
Tenant's Pro Rata Share of any such increases within thirty
(30) days following receipt of notice thereof.
(4) Provided Tenant is not in default hereunder, Tenant shall
have the right, at any time within ninety (90) days after a statement
of actual Operating Expenses for a particular Calendar Year has been
rendered by Landlord as provided herein, but no more frequently than
once per Calendar Year and only for the immediately prior Calendar
Year, at its sole cost and expense, to examine, upon ten (10) business
days' written notice, and during Landlord's business hours, Landlord's
books and records relating to Landlord's determination of Operating
Expenses. The exercise of this right by Tenant shall not affect the
timing of the payments required by this paragraph. If by agreement of
the parties or by final adjudication by a court of competent
jurisdiction, it is determined that Landlord's calculations were
incorrect, then any payment in Tenant's favor required as a result of
such examination shall be credited towards amounts of payments owed by
Tenant for Operating Expenses for the current Calendar Year. Tenant
agrees to maintain all audit information confidential, and to obtain
from any outside auditor which Tenant uses such auditor's written
agreement to keep the audit results and any information regarding a
compromise, settlement or operating expense adjustment confidential,
provided that Tenant may provide such information pursuant to subpoena
or as required by law. The obligations set forth herein shall survive
expiration or termination of the Lease.
C. ELECTRICAL COSTS. Notwithstanding anything in this Lease to
the contrary, Operating Expenses shall not include the cost of
electricity, but the Base Rent hereunder shall be increased by an
amount equal to Tenant's Prorata Share of the actual cost of
electricity to the Office Project (excluding electrical charges billed
directly to other tenants for extraordinary electrical use), which
Prorata Share shall be equal to the product of (i) the cost of
electricity to the Office Project and (ii) the fraction having a
numerator equal to the Rentable Area of the Premises and a denominator
equal to the Building Area ("Electric Costs"). Landlord may from time
to time invoice Tenant for Tenant's Prorata Share of electricity costs
and Tenant shall pay such amount to Landlord within five (5) days of
delivery of the invoice. Landlord from time to time may also make a
reasonable, good faith estimate of Tenant's Prorata Share of Electric
Costs for each upcoming calendar year and, upon thirty (30) days'
written notice to Tenant, may require the monthly payment of Base Rent
to be adjusted in accordance with such estimate. In addition, the
Premises may be separately submetered by Landlord, and in such event
Tenant shall be billed monthly from such submeter for all electricity
used by Tenant in operating the Premises
5. CHARACTER OF OCCUPANCY:
The Premises are to be used and occupied by Tenant solely for general
or executive offices, or both, and for no other purpose without the prior
written consent of landlord. TENANT, BY OCCUPYING THE PREMISES, ACKNOWLEDGES AND
WARRANTS AND REPRESENTS TO LANDLORD THAT IT HAS CONDUCTED ITS OWN INDEPENDENT
INVESTIGATION OF THE PREMISES AND THAT THE PREMISES ARE ACCEPTABLE FOR OCCUPANCY
AND ARE SUITABLE FOR THE PURPOSES AND USES CONTEMPLATED BY TENANT.
Further, Tenant shall not occupy or use the Premises or permit any
portion of the Premises to be used or occupied for any purpose which is
unlawful, disreputable or deemed to be hazardous on account of fire or other
hazards and shall not use or permit the Premises to be used for any act which
will increase the existing rate of insurance upon the Building or the Building
Complex, or cause a cancellation of any insurance policy covering the Building,
the Building Complex or any part thereof nor shall Tenant sell, or permit to be
kept, used, or sold in or about the Premises any article which
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may be prohibited by Landlord's insurance policies. Tenant shall not use any
apparatus, machinery or device in or about the Premises which shall make any
noise or set up any vibration which will unreasonably disturb other tenants.
Tenant agrees not to connect any apparatus, machinery or device to any
mechanical, electrical or other Building system without the prior consent of
Landlord Landlord agrees not to unreasonably withhold permission for such
connections to the mechanical, electrical or other building systems. Tenant
shall not use the Premises for any purpose which would tend to lower the
first-class character of the Building or create unreasonable elevator loads or
otherwise interfere with standard Building operations, nor shall Tenant engage
in any activity which is not in keeping with the standards of the Building.
Tenant shall not commit waste or suffer or permit waste to be committed, nor
shall Tenant permit any nuisance in or about the Premises or interfere with,
annoy or disturb any other tenant or Landlord in the operation of the Building.
Tenant shall not use the Premises or permit anything to be done in or
about the Premises which will in any way conflict with or violate any law,
statute, ordinance or governmental rule or regulation now in force or hereafter
enacted or promulgated
Tenant shall not cause or permit to occur (i) any violation of any
federal, state or local law, ordinance or regulation now or hereafter enacted,
related to environmental conditions or, under or about the Premises, or arising
from Tenant's use or occupancy of the Premises, including, but not limited to
soil and ground water conditions, or (ii) the use, generation, release,
manufacture, refining, production, processing, storage or disposal of any
Hazardous Substance The term "Hazardous Substance", as used herein, shall
include, without limitation, flammables, explosives, radioactive materials,
asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause cancer or
reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances or related materials, petroleum and petroleum products, and
substances declared to be hazardous or toxic under any law or regulations, now
or hereafter enacted or promulgated by any governmental authority. TENANT SHALL
INDEMNIFY, DEFEND, AND HOLD HARMLESS LANDLORD, THE MANAGER OF THE BUILDING
COMPLEX, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, BENEFICIARIES, AGENTS AND
EMPLOYEES FROM ALL FINES, SUITS, PROCEDURES, CLAIMS AND ACTIONS OF EVERY KIND,
AND ALL COSTS ASSOCIATED THEREWITH (INCLUDING ATTORNEYS' AND CONSULTANTS' FEES)
ARISING OUT OF OR IN ANY WAY CONNECTED WITH ANY DEPOSIT, SPILL, DISCHARGE OR
OTHER RELEASE OF A HAZARDOUS SUBSTANCE THAT OCCURS DURING THE LEASE TERM AT OR
FROM THE PREMISES, WHICH ARISES AT ANY TIME FROM TENANT'S USE OR OCCUPANCY OF
THE PREMISES. Under no circumstances shall Tenant be liable for any losses,
costs, claims, liabilities and damages (including attorneys' and consultants'
fees) of every type and nature, directly or indirectly arising out of or in
connection with any Hazardous Substance present at any time on or about the
Building, or the soil, air, improvements, groundwater, or surface water thereof,
or the violation of any laws, orders or regulations, relating to any such
Hazardous Substance, except to the extent that any of the foregoing actually
results from the use, release or emission of Hazardous Substance by Tenant or
its agents or employees in violation of applicable environmental laws. Tenant's
obligations and liabilities hereunder shall survive the expiration of this
Lease.
6. SERVICE AND UTILITIES:
A. SERVICES PROVIDED BY LANDLORD. Landlord, at the charges
provided for herein, and in accordance with standards from time to time
prevailing for comparable office buildings in the greater Dallas. Texas
area, agrees to (1) furnish water to the Building for use in lavatories
and drinking fountains (and to the Premises if the plans for the
Premises so provide). (2) furnish during Ordinary Business Hours such
heated or cooled air in season to the Premises as may, in the judgment
of Landlord, be reasonably required for the comfortable use and
occupancy of the Premises, subject to containment as required by
governmental laws, rules and regulations. (3) provide janitorial
services for the Premises (including such window washing as may, in the
judgment of Landlord, be reasonably required), such janitorial services
to be provided only on Monday through Friday, provided that if Tenant's
floor coverings or other improvements are other than Building Standard
("BUILDING STANDARD") as used herein shall mean the type, brand,
quality and/or quantity of materials Landlord designates from time to
time to be the minimum quality and/or quantity to be used in the
Building or the exclusive
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type, grade, quality and/or quantity of material to be used in the
Building), Tenant shall pay the additional cleaning cost attributable
thereto as Additional Rent upon presentation of a statement there for
by Landlord, the failure to pay constituting a default hereunder
(subject to applicable notice and cure provisions of this Lease), (4)
provide, during Ordinary Business Hours, passenger elevators for
ingress to and egress from the Premises, (5) provide all Building
Standard fluorescent bulb replacement in all areas and all incandescent
bulb replacement in public areas, toilet and restroom areas and
stairwells, and (6) cause, for twenty-four (24) hours per day each day,
electric current to be supplied to the Premises for all of Tenant's
Standard Electrical Usage, as hereinafter defined. "TENANT'S STANDARD
ELECTRICAL USAGE", as used herein, shall mean and refer to electrical
consumption in an amount sufficient to power typewriters, voice
writers, calculating machines, refrigerator, microwave oven, computers,
printers, copying machine and other machines of similar low electrical
consumption Tenant's Standard Electrical Usage shall not include
electricity required for special lighting in excess of Building
Standard, and any other item of electrical equipment which (singly)
consumes more than 0.5 kilowatts at rated capacity or requires a
voltage other than 120 volts single phase, except for that equipment
named in Paragraph 6.A herein. If the installation of said electrical
equipment requires additional air conditioning capacity above that
provided by the Building Standard system, then the additional air
conditioning installation and operating costs shall be the obligation
of Tenant. "ORDINARY BUSINESS HOURS", as used herein, shall mean from
7:30 a.m. to 6:00 p.m. on Monday through Friday and from 7:30 a.m. to
12:00 p.m. on Saturdays, Legal Holidays excepted "LEGAL HOLIDAYS", as
used herein, shall mean New Year's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, Christmas Day, and such other national
holidays as may hereafter be established by the United States
Government.
B. EXCESS USAGE "EXCESS USAGE" shall be defined as any usage
by Tenant of electricity (1) during other than Ordinary Business Hours;
(2) in an amount in excess of Tenant's Standard Electrical Usage; (3)
for "Special Equipment", or (4) for any requirement for standard HVAC
services during other than Ordinary Business Hours. "SPECIAL
EQUIPMENT", as used herein, shall mean (a) any equipment consuming more
than 50 kilowatts at rated capacity, (b) any equipment requiring a
voltage other than 120 volts, single phase, except for that equipment
named in PARAGRAPH 6.A herein, or (c) equipment that requires the use
of self-contained HVAC units. Tenant shall reimburse Landlord for
reasonable costs incurred by Landlord in providing services for Excess
Usage Such reasonable costs will include Landlord's costs for
materials, utilities, and labor (including fringe and overhead costs).
Computation of Landlord's cost for providing such services will be made
by Landlord's engineer, based on his engineering survey of Tenant's
Excess Usage. Tenant shall also reimburse Landlord for all costs of
supplementing the Building HVAC. System or extending or supplementing
any electrical service, as Landlord may determine is necessary, as a
result of Tenant's Excess Usage Prior to installation or use by Tenant
of any equipment which will result in Excess Usage, or to the operation
of the Premises for extended hours on an ongoing basis, Tenant shall
notify Landlord of such intended installation or use and shall obtain
Landlord's consent therefor. In addition to the foregoing, Tenant, at
Tenant's option, at the time of such notice or at any time thereafter,
may request Landlord, at Tenant's sole cost and expense, to install a
check meter or flow meter to assist in determining the cost to Landlord
of Tenant's Excess Usage. If Tenant desires electric current or heated
or cooled air to the Premises during periods other than Ordinary
Business Hours, upon at least six (6) hours advance notice to Landlord
by Tenant, Landlord will use reasonable efforts to supply the same, but
at the expense of Tenant, at Landlord's standard rate as established by
it from time to time for such services. All such usage shall be subject
to such reasonable regulations as Landlord shall provide, and shall
require two-hour minimum usage increments. The initial hourly rate
shall be $50.00.
C. JANITORIAL SERVICES. If Tenant requires janitorial services
other than those required to be provided to other tenants of the
Building Complex generally, Tenant shall separately pay for such
services monthly upon billings by Landlord as provided in PARAGRAPH 6A
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D. FAILURE OF SERVICES. Tenant agrees that Landlord shall not
be liable for failure to supply any heating, air conditioning,
elevator, electrical, janitorial, lighting or other services during any
period when Landlord uses reasonable diligence to supply such services,
or during any period when Landlord is required to reduce or curtail
such services pursuant to any applicable laws, rules or regulations now
or hereafter in force and effect, it being understood that Landlord may
discontinue, reduce or curtail such services, or any of them (either
temporarily or permanently), at such times as may be necessary by
reason of accident, unavailability of employees or materials at
reasonable cost, repairs, alterations, improvements, strikes, lockouts,
riots, acts of God, application of applicable laws, statutes, rules and
regulations, or due to any other happening beyond the control of
Landlord. In the event of any such interruption, reduction or
discontinuance of Landlord's services (either temporarily or
permanently), Landlord shall not be liable for damages to persons or
property as a result thereof, nor shall the occurrence of any such
event in any way be construed as an eviction of Tenant, or cause or
permit an abatement, reduction or set off of rent, or operate to
release Tenant from any of Tenant's obligations hereunder.
E. SUPPLEMENTARY AIR-CONDITIONING. whenever machines or
equipment which generate heat either as a prime purpose or as an
incidental effect are used by Tenant in the premises which affect the
temperature otherwise maintained by the air conditioning system,
Landlord reserves the right to install supplementary air conditioning
units in the Premises, and costs thereof, including the costs of
installation, operation and maintenance thereof, shall be paid by
Tenant to Landlord upon demand by Landlord.
F. TELECOMMUNICATIONS PROVIDERS. If Tenant wishes at any time
to use the services of a telephone or telecommunications provider whose
equipment is not then servicing the Building, no such provider may
install its lines or other equipment within the Building without the
prior written approval of Landlord. Landlord's approval shall not be
deemed a warranty or representation by Landlord as to suitability,
competence or financial strength of the provider. Landlord shall not be
required to approve any telecommunications provider unless (i) Landlord
shall incur no expense with respect to provision of services, including
without limitation the costs of installation, materials and services,
(ii) the provider shall have entered into a license agreement with
Landlord in form acceptable to Landlord containing such reasonable
requirements, including indemnities, insurance and other items as
Landlord determines to be necessary to protect its financial interests
and the interests of the Building, (iii) the provider agrees to abide
by Landlord's rules and regulations, building and other codes and such
other requirements as are reasonably determined by Landlord to be
necessary to protect the interest and the safety of the Building, the
tenants in the Building, and Landlord; (iv) Landlord reasonably
determines that there is sufficient space in the Building for the
placement of all of the providers' equipment and materials, (v) the
provider uses existing building conduits and pipes, (vi) Landlord
receives from the provider such compensation as Landlord reasonably
determines to compensate it for space used in the Building by the
provider, costs which Landlord may reasonably expect to incur, and the
fair market value of the access to the Building. Landlord's refusal to
grant its approval to any prospective telecommunications provider shall
not be deemed a default by Landlord under this Lease, unless and until
a court of final judgment determines that Landlord acted recklessly or
maliciously, and in that event. Tenant's sole and exclusive remedy
shall be to seek specific performance. The provisions of this paragraph
are solely for the benefit of Tenant and Landlord, and not for the
benefit of any third party.
G. TELECOMMUNICATIONS SERVICES. Tenant acknowledges and agrees
that all telephone and telecommunication services desired by Tenant
shall be ordered and used at Tenant's sole expense. Unless Landlord
otherwise requests or consents in writing, all of Tenant's
telecommunications equipment shall be located solely in the Premises
and the telephone closets on the floor on which the Premises is
located, in accordance with rules and regulations adopted by Landlord
from time to time. Landlord shall have no responsibility for the
maintenance of Tenant's telecommunications equipment, including wiring,
nor for any wiring or other infrastructure to which Tenants
telecommunications equipment may be connected Landlord shall have no
obligation or liability with respect to any interruption,
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curtailment or discontinuance of telecommunications or telephone
services, and it shall be the sole obligation of Tenant at its expense
to obtain substitute service.
7. QUIET ENJOYMENT:
Subject to liens, covenants, easements and restrictions of record,
Landlord agrees to warrant and defend Tenant in the quiet enjoyment and
possession of the Premises during the term of this Lease so long as Tenant
complies with the provisions hereof and is not in default hereunder.
8. MAINTENANCE, REPAIRS, ALTERATIONS AND ADDITIONS:
A. MAINTENANCE AND REPAIRS.
Landlord shall maintain the Building, and all other portions
of the Building Complex not the obligation of Tenant or any other
tenant in the Building, in good order, condition and repair
Notwithstanding the foregoing, should any of Landlord's equipment or
machinery break down, or for any reason whatsoever ceased to function
properly, Tenant shall have no claim for rebate of rent or damages on
account of an interruption in services occasioned thereby or resulting
therefrom; provided, however, Landlord agrees to use diligent efforts
to promptly repair said equipment or machinery and to restore said
services during normal business hours Unless otherwise expressly
stipulated herein, Landlord shall not be required to make any
improvements to or repairs of any kind or character to the Premises
during the term of this Lease, except such repairs to Building Standard
improvements as may be deemed necessary by Landlord for normal
maintenance operations.
Except for services furnished by Landlord pursuant to
Paragraph 6 hereof Tenant shall, at Tenant's sole cost and expense,
maintain the Premises in good order, condition and repair, ordinary
wear and tear excepted, including, without limitation the interior
surfaces of the ceilings, walls and floors; all doors and interior
windows; all plumbing pipes, all electrical fixtures and special items
in excess of Building Standard, furnishings installed within the
Premises; and all equipment installed by or at the expense of Tenant.
If Tenant fails to maintain the Premises as required by this
Lease, after written notice from Landlord, then Landlord shall have the
right, but shall not be required, to do such acts and expend such funds
at the expense of Tenant as are reasonably required to perform such
work, and Tenant shall, upon demand, reimburse Landlord for any amounts
so expended, and such amounts shall be deemed Additional Rent hereunder
Landlord shall have no liability to Tenant for any damage,
inconvenience or interference with Tenant's use of the Premises as a
result of performing any such work.
Landlord and Tenant shall each do all acts required to comply
with all applicable laws, ordinances, regulations and rules of any
public authority relating to their respective maintenance obligations
as set forth herein.
B. DISABILITY ACTS.
Landlord shall use reasonable efforts not to violate the
access provisions of the Americans With Disabilities Act of 1990 and
the Texas Architectural Barriers Act, as they may be amended
(collectively, the "DISABILITY ACTS") in its operation and control of
the Common Areas of the Building Complex, provided, however, that
Tenant acknowledges that, due to the nature of the Disability Acts,
Landlord shall have reasonable discretion to determine whether any
actions must be taken to avoid violation.
Landlord and Tenant each agree to indemnity, defend and hold
the other harmless from and against all costs, expenses, losses,
liabilities, actions, demands or claims, including reasonable
attorneys' fees and costs arising from or in connection with any claim
or action alleging a violation of the Disability Acts regarding the
portion of the Premises and the Building Complex for which such party
has the obligation under this Lease to cause
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compliance with such laws
C. ALTERATIONS AND ADDITIONS.
Tenant shall make no alterations, additions or improvements to
the Premises or any part thereof without obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld
or delayed In the event Landlord does give its consent, Landlord may
condition its consent to any alterations, additions or improvements
upon such requirements as Landlord may deem necessary in its reasonable
discretion, including, without limitation, the manner in which the work
is done, the right to approve the contractor by whom the work is to be
performed, and the times during which the work is to be accomplished.
All alterations and additions to the Premises including, by
way of illustration but not by limitation, all partitions, paneling,
air conditioning units, carpeting, drapes, other window coverings,
light fixtures (but not including movable office furniture not attached
to the Building), and all improvements or trade fixtures provided for
in the plans or specifications pursuant to EXHIBIT "D" hereof shall be
deemed to be a part of the real estate and the property of Landlord and
shall remain upon and be surrendered with the Premises as apart thereof
without molestation, disturbance or injury at the end of the Lease
Term, whether by lapse of time or otherwise. Notwithstanding the
foregoing, Landlord, by notice given to Tenant no later than thirty
(30) days after the date Landlord is notified in writing by Tenant of
alterations or additions to the Premises, may elect to have Tenant
remove any or all of such alterations or additions (exclusive, however,
of the improvements provided for in Exhibit "D" to this Lease which
shall remain part of the Premises following termination of this Lease),
and, in such event, Tenant shall promptly remove, at its sole cost and
expense, such alterations and additions and shall restore the Premises
to their condition prior to the making of the same, reasonable wear and
tear excepted. Tenant shall indemnify Landlord against any loss or
liability resulting from delay by Tenant in so surrendering the
Premises, including, without limitation, any claims made by any
succeeding tenant founded on such delay.
If Landlord authorizes persons requested by Tenant to perform
any alterations, repairs, modifications or additions to the Premises,
then prior to the commencement of any such work, Tenant shall, upon
request, deliver to Landlord such payment and performance bonds or
other security as Landlord may reasonably require, and certificates
issued by insurance companies qualified to do business in the State of
Texas, evidencing that Worker's Compensation, public liability
insurance and property damage insurance, all in amounts, with companies
and on forms satisfactory to Landlord, are in force and effect and
maintained by all contractors and subcontractors engaged by Tenant to
perform such work. All such policies shall name Landlord and any other
parties designated by Landlord as an additional insured. Each such
certificate shall provide that the insurance policy may not be canceled
or modified without ten (10) days' prior written notice to Landlord.
Further, Tenant shall permit Landlord to post notices in the Premises
in locations which will be visible by persons performing any work on
the Premises stating that Landlord is not responsible for the payment
for such work and setting forth such other information as Landlord may
deem necessary. All Tenant alterations, repair and maintenance work
shall be performed in such a manner as not to interfere with, delay, or
impose any additional expense upon Landlord in the maintenance or
operation of the Building or upon other tenants' use of their premises.
Notwithstanding anything herein to the contrary, Landlord
hereby expressly reserves the right at its sole discretion to
temporarily or permanently change the location of, close, block or
otherwise alter any entrances, corridors, skywalks, tunnels, doorways
or walkways leading to or providing access to the Building of any part
thereof or otherwise restrict the use of same provided such activities
do not unreasonably impair Tenant's access to the Premises, and it is
agreed that Landlord shall not incur any liability whatsoever to Tenant
as a consequence thereof and such activity shall not be deemed to be a
breach of any of Landlord's obligations hereunder.
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9. ENTRY BY LANDLORD:
Landlord and its agents shall have the right to enter the Premises with
reasonable notice, at all reasonable times for the purpose of (1) examining or
inspecting the same, (2) supplying janitorial services and any other services to
be provided by Landlord to Tenant hereunder, (3) showing the same to prospective
purchasers, lenders, or tenants of the Building, and (4) making such
alterations, repairs, improvements or additions to the Building as Landlord may
deem necessary or desirable. If Tenant shall not be personally present to open
and permit an entry into the Premises at any time when such entry by Landlord is
necessary or permitted hereunder. Landlord may enter by means of a master key
without liability to Tenant and without affecting this Lease. If during the last
month of the Lease Term, Tenant shall have removed substantially all of its
property therefrom, and if Tenant shall consent thereto in writing, Landlord may
immediately enter and alter, renovate and redecorate the Premises without
elimination or abatement of rent and without incurring liability to Tenant for
any compensation. Such entry shall not be construed an election by Landlord to
terminate this Lease Landlord, during the entire Lease Term, shall have the
right to change the number, designation or name of the Building without
liability to Tenant. Tenant shall not, without the prior consent of Landlord,
change the locks or install additional locks on any entry door or doors to the
Premises. If Landlord gives its consent to the foregoing.
Tenant shall provide Landlord with a copy of all keys for such locks.
10. MECHANICS' LIENS:
Tenant shall pay or cause to be paid all costs for work done by Tenant
or caused to be done by Tenant on the Premises of a character which will or may
result in liens on Landlord's interest therein. Tenant will keep the Premises
and Building Complex free and clear of all mechanic's liens and other liens on
account of work done or claimed to have been done for Tenant or persons claiming
under it. Landlord shall be entitled to require Tenant to obtain payment and/or
performance bonds satisfactory to Landlord in connection with any work done or
caused to be done by Tenant on the Premises. Tenant hereby agrees to indemnify
Landlord for, save Landlord harmless from, and defend Landlord against all
liability, loss, damage, costs or expenses, including attorneys' fees and
interest incurred on account of any claims of any nature whatsoever, including
lien claims of laborers, material men, or others for work actually or allegedly
performed for, or for materials or supplies actually or allegedly furnished to
Tenant or persons claiming under Tenant. Should any liens be filed or recorded
against the Premises or any portion of the Building Complex, or should any
action affecting the title thereto be commenced, relating to work claimed to
have been done for or supplies or materials furnished to Tenant. Tenant shall
cause such liens to be removed or bonded around (in an amount determined by
Landlord to be equal to at least 150% of the amount of the claim, plus estimated
costs and interest) If Tenant bonds and contests any lien. Tenant shall pay and
satisfy any final judgment establishing the validity of existence of any lien.
If Tenant shall be in default in paying any charge for which a mechanic's lien
or suit to foreclose the lien has been recorded or filed, and shall not have
caused the same to be released of record or shall not have given Landlord
security as aforesaid, Landlord may (but without being required to do so) pay
such lien or claim and any costs, and the amount so paid, together with
reasonable attorneys' fees incurred in connection therewith, shall be
immediately due from Tenant to Landlord.
11. DAMAGE TO PROPERTY, INJURY TO PERSONS:
A. INDEMNIFICATION. TENANT HEREBY INDEMNIFIES AND AGREES TO
HOLD HARMLESS AND TO DEFEND LANDLORD AND ITS AFFILIATED COMPANIES AND
THEIR RESPECTIVE AGENTS, SERVANTS, DIRECTORS, OFFICERS, AND EMPLOYEES
(COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST ANY AND ALL LIABILITIES,
CLAIMS, SUITS, DAMAGES, COSTS (INCLUDING COURT COSTS, ATTORNEY'S FEES,
AND COSTS OF INVESTIGATION) AND CLAIMS OF LIABILITY, AND ACTIONS OF ANY
KIND ARISING OR ALLEGED TO ARISE BY REASON OF ANY INJURY (INCLUDING
DEATH) TO ANY PERSON OR DAMAGE TO OR LOSS OF ANY PROPERTY WHATSOEVER
(1) OCCURRING IN, ON, OR ABOUT THE PREMISES OR ANY PART THEREOF, OR (2)
OCCURRING IN, ON, OR ABOUT THE BUILDING COMPLEX,
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<PAGE>
WHEN SUCH INJURY OR DAMAGE IS CAUSED IN WHOLE OR IN PART BY THE ACT,
NEGLECT, FAULT OR OMISSION TO ACT ON THE PART OF TENANT, ITS AGENTS,
CONTRACTORS, EMPLOYEES, OR INVITEES, EVEN IF SUCH LIABILITY, CLAIMS,
SUITS, COSTS, INJURIES, DEATHS, OR DAMAGES ARISE FROM OR ARE ATTRIBUTED
TO THE CONCURRENT NEGLIGENCE OF ANY INDEMNITEE THE ONLY CIRCUMSTANCE
UNDER WHICH TENANT'S OBLIGATION TO INDEMNIFY THE INDEMNITEES DOES NOT
APPLY IS TO THE EXTENT AN OCCURRENCE RESULTS FROM THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF AN INDEMNITEE OR THEIR CONTRACTORS TENANT
FURTHER INDEMNIFIES AND AGREES TO HOLD INDEMNITEES HARMLESS FROM AND TO
DEFEND INDEMNITEES AGAINST ANY AND ALL CLAIMS ARISING FROM ANY BREACH
OR DEFAULT IN THE PERFORMANCE OF ANY OBLIGATION ON TENANT'S PART TO BE
PERFORMED UNDER THE TERMS OF THIS LEASE, OR ARISING FROM ANY ACT OR
NEGLIGENCE OF TENANT, OR ANY OF ITS AGENTS, CONTRACTORS, EMPLOYEES OR
INVITEES, SUCH OBLIGATION TO INDEMNIFY DOES NOT APPLY TO IS TO THE
EXTENT AN OCCURRENCE RESULTS FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF LANDLORD, ITS AGENTS, CONTRACTORS, EMPLOYEES, OR
INVITEES. INDEMNITEES SHALL NOT BE LIABLE TO TENANT FOR ANY DAMAGE BY
OR FROM ANY ACT OR NEGLIGENCE OF ANY CO-TENANT OR OTHER OCCUPANT OF THE
BUILDING, OR ANY VISITOR IN THE BUILDING OR ANY OWNER OR OCCUPANT OF
ADJOINING OR CONTIGUOUS PROPERTY Tenant agrees to pay for all damage to
the Building Complex, and to tenants or occupants thereof, caused by
Tenant's misuse or neglect of the Premises or any portion for the
Building Complex. If any action or proceeding shall be brought by or
against any Indemnitee in connection with any such liability or claim,
Tenant, on notice from Landlord, shall defend such action or
proceeding, at Tenant's expense, by or through attorneys reasonably
satisfactory to Landlord. The provisions of this paragraph shall apply
to all activities of Tenant with respect to the Premises or Building
Complex, whether occurring before or after the Commencement Date and
before or after the expiration or termination of this Lease Tenant's
obligations under this paragraph shall not be limited to the limits of
coverage of insurance maintained or required to be maintained by Tenant
under this Lease.
Indemnitees shall not be liable for any damage to property
entrusted to them or to the building manager, if any, nor for the loss
or damage to any property by theft or otherwise, by any means
whatsoever, nor for any injury (including death) to persons or damage
to or loss of property resulting from fire, act of God, public enemy,
riot, strike, insurrection, explosion, falling plaster, repairs, steam,
gas, electricity, water, or rain which may leak from any part of the
Building or from the pipes, appliances or plumbing works therein or
from the roof, street or subsurface, or from any other place, or
resulting from other cause whatsoever, provided, however, that nothing
contained herein shall be construed to relieve Indemnitees from
liability for any personal injury resulting from the gross negligence
or willful misconduct of themselves or their agents, contractors or
invitees. All personal property upon the Premises shall be at the risk
of the Tenant only and no Indemnitees shall be liable for any damage
thereto or theft thereof, whether or not due in whole or in part to the
negligence of any Indemnitee Indemnitees shall not be liable for
interference with the light, view or other incorporeal hereditaments.
Tenant shall give prompt notice to Landlord in case of fire or
accidents in the Premises or in the Building, or of defects therein or
in the fixtures or equipment.
B. LIABILITY INSURANCE. Tenant agrees to carry and maintain,
for the mutual benefit of Landlord and Tenant, during the Lease Term
and any extension hereof, (i) commercial general public liability
insurance against claims for personal injury, sickness or disease,
including death and property damage in or about the Premises, such
insurance to afford protection to the limit of not less than $5,000,000
(BIPD Form) Combined Single Limit Coverage, (ii) Worker's Compensation
Employer's Liability insurance in the minimum statutory amounts, and
(iii) Automobile Liability Combined Single Limit Coverage (BIPD Form)
of not less than $500,000. All such insurance shall be procured from a
responsible insurance company or companies authorized to do business in
the State of Texas, and shall
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be otherwise satisfactory to Landlord Each policy shall include a
waiver of subrogation in favor of the Landlord, and shall state that
such insurance is primary insurance as regards to any other insurance
carried by Landlord. Evidence of these coverages represented by
Certificates of Insurance issued by the insurance carrier must be
furnished to the Landlord prior to Tenant moving in Certificates of
Insurance shall specify the additional insured status and primary
insurance nature mentioned above as well as the waivers of subrogation
provided for herein. Such Certificates of Insurance shall state that
Landlord and any other parties required by Landlord will be notified in
writing thirty (30) days prior to cancellation, material change or
renewal of insurance. The limits of said insurance shall not, under any
circumstances, limit the liability of Tenant hereunder.
C. WAIVER OF SUBROGATION. Notwithstanding anything herein to
the contrary, Landlord and Tenant each hereby waives any cause of
action against the other, its agents, servants, officers, or employees,
for any loss or damage that may occur to the improvements thereto, or
the Building by reason of fire, the elements, or any other cause which
is (i) insured against hereunder regardless of cause or origin,
including negligence of the other party hereto, its agents, officers or
employees, or (ii) which would normally be covered, by comparable
buildings in the greater Dallas, Texas area, by full replacement value
"all risk" property insurance and covenants that no insurer shall hold
any right of subrogation against such other party. Landlord and Tenant
each covenant and agree to notify its insurer of the waiver set forth
herein and to secure from such insurer an appropriate endorsement to
its respective insurance policy with respect to such waiver.
12. INSURANCE, CASUALTY, AND RESTORATION OF PREMISES:
A. LANDLORD'S CASUALTY INSURANCE. Landlord shall maintain
casualty insurance on the shell and core of the Building, on the
Premises to the extent of the Building Standard Materials therein, and
on the Building Complex, in such amounts, from such companies, and on
such terms and conditions, including loss of rental insurance, as
Landlord from time to time deems appropriate (but with the same to be
included in the Operating Expenses of the Building Complex as
hereinabove described), and payment for losses thereunder shall be made
solely to Landlord. If the annual premiums to be paid by Landlord shall
exceed the standard rates because of Tenant's operations within or
contents of the Premises or because the improvements to the Premises
are beyond Building Standard Materials, Tenant shall promptly pay the
excess amount of the premium upon request by Landlord (and if
necessary, Landlord may allocate the insurance costs of the Building to
give effect to this sentence).
B. TENANT'S INSURANCE ON PERSONAL PROPERTY. Tenant shall
maintain at its expense standard casualty insurance on all of its
personal property, including removable trade fixtures, located in the
Premises and on its leasehold improvements which are not Building
Standard, and all other additions and improvements (including fixtures)
made by Tenant and not required to be insured by Landlord above. All
such insurance shall provide that it shall not be cancelable and or the
coverage thereunder shall not be reduced without at least ten (10)
days' advance written notice to Landlord. Tenant shall deliver copies
of such policies or certificates of insurance in a form satisfactory to
Landlord not less than twenty (20) days prior to (a) the Commencement
Date and (b) the expiration of old policies. Tenant understands that
Landlord will not carry insurance of any kind on Tenant's furniture and
furnishings or on any fixtures or equipment removable by Tenant under
the provisions of this Lease, and that Landlord shall not be obligated
to repair any damage thereto or to replace the same. Landlord shall not
be required to repair any injury or damage by fire or to make any
repairs or replacements of improvements installed in the Premises by or
for Tenant.
C. CASUALTY. In the event of a fire or other casualty in the
Premise. Tenant shall immediately give notice thereof to Landlord. In
the event that the Premises or the Building is damaged by fire or other
insured casualty and insurance proceeds in an amount sufficient to
repair the damages have been made available there for by the holder or
holders of any mortgages or deeds of trust encumbering the Building
Complex, the damage shall be repaired by and at the expense of Landlord
provided, that such repairs and restoration can, in
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Landlord's reasonable opinion, be made within one hundred eighty (180)
days after the occurrence of such damage without the payment of
overtime and other premiums Notwithstanding anything contained in this
paragraph, Landlord shall only be obligated to restore or rebuild the
Premises to the Building Standard condition. Until such repairs and
restoration are completed, the Base Rent (plus any applicable
Additional Rent) shall be abated in proportion to the part of the
Premises which is unusable by Tenant in the conduct of its business
(there shall, however, be no abatement of Base Rent (or Additional
Rent) by reason of any portion of the Premises being unusable for a
period equal to two (2) days or less). If the damage is due to the
willful misconduct of Tenant or its employees, agents or invitees,
there shall be no abatement of Base Rent (or Additional Rent). Landlord
agrees to notify Tenant within sixty (60) days after such casualty if
it estimates that it will be unable to repair and restore the Premises
or Building within said one hundred eighty (180) day period. Such
notice wilt set forth the approximate length of time Landlord estimates
will be required to complete such repairs and restoration. If Landlord
estimates it cannot make such repairs and restoration within said one
hundred eighty (180) day period, or if such repairs are not completed
within such time period, then either party, by written notice to the
other, may cancel this Lease as of the date of occurrence of such
damage, provided that such notice is given to the other party within
fifteen (15) days after Landlord notifies Tenant of the estimated time
for completion of such repairs and restoration. If no notice is given
by Tenant evidencing its intent to terminate this Lease, and Landlord
has not otherwise terminated, this Lease shall continue in effect and
the Base Rent (Plus any applicable Additional Rent) shall be
apportioned in the manner provided above.
D. EFFECT ON RENT. Except as provided in this Paragraph 12,
there shall be no abatement of Base Rent (or Additional Rent) and no
liability of Landlord by reason of any injury to or interference with
Tenant's business or property arising from the making of any repairs,
alterations or improvements in or to the fixtures, appurtenances and
equipment in the Building Complex.
E. INSUFFICIENT INSURANCE PROCEEDS. In case sufficient
insurance proceeds are unavailable, or the Building throughout shall be
so injured or damaged, whether by fire or otherwise (though said
Premises may not be affected, or if affected, can be repaired within
said one hundred eighty (180) days), that Landlord, within sixty (60)
days after the happening of such injury, shall decide not to
reconstruct or rebuild said Building, then, notwithstanding anything
contained herein to the contrary, upon notice in writing to that effect
given by Landlord to Tenant within said sixty (60) days. Tenant shall
pay the Base Rent (plus applicable Additional Rent), properly
apportioned and abated (if applicable) up to said date, this Lease
shall terminate from the date of delivery of said written notice, and
both parties hereto shall be freed and discharged from alt obligations
hereunder arising from the date of termination. A total destruction of
the Building shall automatically terminate this Lease.
13. CONDEMNATION:
If any portion of the Premises which materially affects Tenant's
ability to continue to use the remainder thereof for the purposes set forth
herein, or if any portion of the Building, the loss of which renders the
Premises untenantable, is taken by right of eminent domain or by condemnation,
or is conveyed in lieu of any such taking, then this Lease may be terminated at
the option of either Landlord or Tenant. Such option shall be exercised by
either patty giving notice to the other of such termination within thirty (30)
days after such taking or conveyance, whereupon this Lease shall forthwith
terminate, the Base Rent plus applicable Additional Rent) shall be duly
apportioned as of the date of such taking or conveyance and both parties hereto
shall be freed and discharged from all obligations hereunder arising from the
date of termination. Upon such termination, Tenant shall surrender to Landlord
the Premises and all of Tenant's interest therein under this Lease, and Landlord
may re-enter and take possession of the Premises or remove Tenant therefrom. If
any portion of the Premises or of any area appurtenant thereto is taken which
does not materially affect. Tenant's right to use the remainder of the Premises
for the purposes set forth herein, this Lease shall continue in full force and
effect and Landlord shall promptly perform any repair or restoration work
required to restore the Premises, insofar as possible, to its former condition,
and the rental owing hereunder shall
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be adjusted, if necessary, in such just manner and proportion as the part so
taken (and its effect on Tenant's ability to use the remainder of the Premises)
bears to the whole. In the event of taking or conveyance as described herein.
Landlord shall receive the entire award or consideration for the lands,
improvements and the leasehold so taken. Tenant shall have no rights to any such
condemnation award.
14 ASSIGNMENT AND SUBLETTING:
A. RESTRICTIONS ON ASSIGNMENT AND SUBLETTING. Tenant shall not
permit any part of the Premises to be used or occupied by any persons
other than Tenant and the employees of Tenant, nor shall Tenant permit
any part of the Premises to be used or occupied by any licensee or
concessionaire, or permit any persons to be upon the Premises other
than Tenant, its employees, customers and others having lawful business
with Tenant. Tenant shall not assign or sublet this Lease or otherwise
part with the possession of the Premises or any portion thereof without
the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed.
In the event Landlord does provide its consent to any
assignment or subletting, such consent shall be conditioned on the
following (1) such consent shall not relieve the Tenant from its
obligations as primary obligor (and not as surety or guarantor) for the
payment of all rental due hereunder, and for the full and faithful
observance and performance of the covenants, terms and conditions
herein contained, (2) the proposed assignee or sublessee shall be
engaged in a business and the Premises will be used in a manner which
is in keeping with the then current standards of the Building (as
determined solely by Landlord), and Tenant shall provide Landlord with
reasonable proof thereof, (3) the proposed assignee or sublessee shall
be a reputable party whose net financial worth and liquidity is equal
to or greater than the net financial worth of Tenant as of the date
hereof (as determined solely by Landlord), and Tenant shall have
provided Landlord with reasonable proof thereof; (4) Tenant shall not
be in default hereunder at the time it makes its request for such
consent, (5) neither the proposed assignee or sublessee (nor any party
which, directly or indirectly, controls or is controlled by or is under
common control with the proposed assignee or sublessee) is then an
occupant of any part of the Building or a party with whom Landlord is
then negotiating to lease space in the Building, (6) the form and
substance of the proposed sublease or instrument of assignment is
acceptable to Landlord and is expressly subject to all of the terms and
provisions of this Lease and to any matters to which this Lease is
subject, (7) the proposed occupancy would not increase the office
cleaning requirements or impose an extra burden upon the services to be
supplied by Landlord to Tenant hereunder, and (8) Tenant enters into a
written agreement with Landlord whereby it is agreed that fifty percent
(50%) of any profit realized by Tenant as a result of said sublease or
assignment and any and all sums and other considerations of whatsoever
nature paid to Tenant by the assignee or sublessee for or by reason of
such assignment or sublease, after deducting and giving Tenant credit
for Tenant's reasonable costs directly associated therewith, including
reasonable brokerage fees and the reasonable costs of remodeling or
otherwise improving the Premises for said assignee or sublessee, but
excluding any free rentals or the like offered to any such sublessee or
assignee, shall be payable to Landlord as it accrues as Additional Rent
hereunder Tenant shall not, without the prior written consent of
Landlord, publicly advertise the Premises for assignment or sublease.
Consent of the Landlord to an assignment or subletting shall
not in any way be construed to relieve the Tenant or the assignee or
sublessee from obtaining the consent of the Landlord to any further
assignment or subletting. Any attempted assignment or sublease by
Tenant in violation of the terms and conditions of this paragraph shall
be void and shall constitute an event of default under this Lease. The
prohibition against an assignment or sublease described in this
paragraph shall be deemed to include a prohibition against Tenant's
mortgaging or otherwise encumbering its leasehold estate, as well as
against an assignment or sublease which may occur by operation of law,
each of which shall be ineffective and void and shall constitute an
event of default under this Lease unless consented to by Landlord in
writing in advance.
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Notwithstanding the foregoing, Tenant may, without Landlord's
prior written consent, assign the Lease to (a) any subsidiary,
affiliate, division or corporation controlling, controlled by, or under
common control with Tenant, or (b) a successor corporation related to
Tenant by merger or consolidation. Any such assignment shall not
release Tenant from Tenant's obligations set forth under the terms of
this Lease.
B. REQUEST FOR CONSENT TO ASSIGNMENT OR SUBLETTING. If Tenant
requests Landlord's consent to an assignment of this Lease or to a
subletting of the whole or any part of the Premises. Tenant shall
submit to Landlord the information required in SUBPARAGRAPHS 14A(2) AND
(3) above and shall submit information specifying the duration of the
desired sublease or assignment, the date same is to occur, the exact
location of the space affected thereby and the proposed rentals on a
square foot basis chargeable thereunder.
C. APPROVAL OF DOCUMENTS. All documents utilized by Tenant to
evidence any subletting or assignment to which Landlord has consented
shall be subject to the prior written approval by Landlord or its
counsel. Tenant shall pay on demand all of Landlord's costs and
expenses, including reasonable attorney's fees (not to exceed
$1,200.00), incurred in determining whether or not to consent to any
requested sublease or assignment and in preparing, reviewing and
approving such documentation.
D. ASSIGNMENT UPON BANKRUPTCY. Notwithstanding anything to the
contrary contained in this Lease, if a trustee in bankruptcy is
entitled to assume control over Tenant's rights under this Lease and
assigns such rights to any third-party, the Base Rent to be paid
hereunder by such party shall be increased to the then current Base
Rent (if greater than then being paid for the Premises) which Landlord
would charge for comparable space in the Building as of the date of
such third-party's occupancy of the Premises. In addition, in the event
of such assignment pursuant to the Federal Bankruptcy Code, any and all
consideration payable or otherwise due by virtue of such assignment
shall be paid or delivered or Landlord as Landlord's sole and exclusive
property.
E. LANDLORD'S RIGHT TO ASSIGN. Landlord shall have the right
to transfer and assign, in whole or in part, all of its rights and
obligations hereunder and in the Building Complex, and in such event
and upon such transfer, no further liability or obligation shall
thereafter accrue against Landlord hereunder.
15. ESTOPPEL CERTIFICATE:
Tenant agrees, at any time and from time to time, upon not less than
ten (10) business days prior written request by Landlord, to execute,
acknowledge and deliver to Landlord an estoppel certificate certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications, that it is in full force and effect as modified, and stating the
modifications), that there have been no defaults thereunder by Landlord or
Tenant (or if there have been defaults, setting forth the specific nature
thereof), the date to which the rent and other charges have been paid in
advance, if any, and such other matters as are reasonably requested by Landlord,
it being intended that any such statement delivered pursuant to this paragraph
may be relied upon by any prospective purchaser of all or any portion of
Landlord's interest herein, or a holder or prospective holder of any mortgage or
deed of trust encumbering (or to encumber) the Building Complex. Tenant's
failure to deliver such certificate within such time shall constitute an event
of default (as that term is defined elsewhere in this Lease).
16. DEFAULT:
The happening of anyone or more of the following events shall
constitute an "EVENT OF DEFAULT"
A. FAILURE TO PAY RENT. Tenant shall fail to pay when due any
installment of Base Rent. Additional Rent or other charge, including
Tenant's Pro Rata Share of the Operating Expenses set forth in
PARAGRAPH 4 of this Lease, and such default shall continue
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for five (5) days after written notice from Landlord, provided,
however, that Tenant shall not be entitled to more than two (2) notices
of delinquency in a monetary obligation during any Calendar Year, and
if thereafter any rent or other amounts owing hereunder are not paid
when due, a default shall be considered to have occurred even though no
notice thereof is given,
B. ABANDONMENT. Tenant shall abandon the Premises or any
portion thereof;
C. TRANSFER OR DISSOLUTION. This Lease or the estate of Tenant
hereunder shall be transferred to or shall pass to or devolve upon any
other person or party except in a manner permitted herein or if Tenant
shall be dissolved or otherwise liquidated;
D. ATTACHMENT. This Lease or the Premises or any part thereof
shall be taken upon execution or by other process of law directed
against Tenant, or shall be taken upon or subject to any attachment at
the instance of any creditor or claimant against Tenant, and said
attachment shall not be discharged or disposed of within fifteen (15)
days after the levy thereof.
E. VOLUNTARY BANKRUPTCY. Tenant or any guarantor of the Lease
shall file a petition in bankruptcy or insolvency or for reorganization
or arrangement under the bankruptcy laws of the United States or under
any insolvency act of any state, or shall voluntarily take advantage of
any such law or act by answer or otherwise or shall be dissolved, or
shall make an assignment for the benefit of creditors, or shall admit
in writing its inability to pay its debts as they mature.
F. INVOLUNTARY BANKRUPTCY. Involuntary proceedings under any
such bankruptcy law or insolvency act or for the dissolution of Tenant
or any guarantor of the Lease shall be instituted against Tenant or
such guarantor, as the case may be, or a receiver or trustee of all or
substantially all of the property of Tenant or any guarantor shall be
appointed, and such proceeding shall not be dismissed or such
receivership or trusteeship vacated within sixty (60) days after such
institution or appointment.
G. FAILURE TO PERFORM OTHER COVENANTS. Tenant shall fail to
perform any of the other agreements, terms, covenants or conditions
hereof on Tenant's part to be performed, and such nonperformance shall
continue for a period of fifteen (15) days after notice thereof by
Landlord to Tenant, or for such other reasonable period of time as
Landlord shall reasonably determine if such are for non-performance has
been initiated by Tenant but cannot reasonably be completed within
fifteen (15) days.
17. REMEDIES FOR DEFAULT:
A. TERMINATION OR NON-TERMINATION. Upon the happening of any
event of default as herein above or hereinbelow described, Landlord
shall have the right, at its election, then or at any time thereafter
and while any such event of default shall continue, either:
(1) to give Tenant written notice of Landlord's
intention to terminate this Lease on the date of giving notice
or on any later date specified therein, whereupon Tenant's
right to possession of the Premises shall cease and this Lease
shall be terminated, except as to Tenant's liability, as if
the expiration of the term fixed in such notice were the end
of the Lease Term herein originally demised; or
(2) to re-enter and take possession of the Premises
or any part thereof, and repossess the same as Landlord's
former estate, and expel Tenant and those claiming through or
under Tenant, and remove the effects of both or either,
without being liable for prosecution therefor, without being
deemed guilty of any manner of trespass, and without prejudice
to any remedies for arrears of rent or preceding breach of
covenants or conditions Should Landlord elect to re-enter as
provided in this SUBPARAGRAPH 17A(2), or should Landlord take
possession pursuant to legal
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proceedings or pursuant to any notice provided for by law,
Landlord may, from time to time, without terminating this
Lease, relet the Premises or any part thereof in Landlord's or
Tenant's name, but for the account of Tenant, for such term or
terms (which may be greater or less than the period which
would otherwise have constituted the balance of the term of
this Lease) and on such conditions and upon such other terms
(which may include concessions of free rent and alteration and
repair of the Premises) as Landlord, in its reasonable
discretion, may determine, and Landlord may collect and
receive the rents therefor. Landlord shall in no way be
responsible or liable for any failure to relet the Premises,
or any part thereof, or for any failure to collect any rent
due upon such reletting. No such re-entry or taking possession
of the Premises by Landlord shall be construed as an election
on Landlord's part to terminate this Lease unless a written
notice of such intention is given to Tenant. No notice from
Landlord hereunder or under a forcible entry and detainer
statute or similar law shall constitute an election by
Landlord to terminate this Lease unless such notice
specifically so states. Landlord reserves the right following
any such re-entry or reletting to exercises its right to
terminate this Lease by giving Tenant written notice to that
effect, in which event the Lease will terminate as specified
in said notice.
B. REPOSSESSION AND ALTERATION OF LOCKS. Landlord shall be
entitled to alter all locks and other security devices at the Premises
without terminating this Lease. In the event Landlord does alter the
locks and other security devices at the Premises, (i) Landlord shall
not be obligated to allow Tenant re-entry to the Premises or provide
Tenant with a new key unless and until Tenant cures any and all such
defaults under this Lease, (ii) Landlord shall have the right to refuse
to give Tenant a new key unless Tenant increases its security deposit
by an amount determined by Landlord; (iii) in the event Landlord does
provide Tenant with a key, a new key will only be provided during the
Landlord's regular business hours, and (iv) Tenant shall be obligated
to pay Landlord all costs and expenses incurred by Landlord in
connection with altering all such locks and other security devices at
the Premises. Exercise by Landlord of any one or more remedies
hereunder granted or otherwise available shall not be deemed to be an
acceptance of surrender of the Premises by Tenant, whether by agreement
or by operation of law, it being understood that such surrender can be
effected only by written agreement of Landlord and Tenant. Tenant
expressly authorizes Landlord to alter locks and other security
devices. Tenant waives all claims arising out of any of Landlord's
actions under this subparagraph Tenant agrees that Landlord may
re-enter with or without legal proceedings, as Landlord may elect, and
Landlord shall not be liable in trespass or otherwise.
C. LIABILITY OF TENANT IF NO TERMINATION. In the event that
Landlord does not elect to terminate this Lease as permitted in
SUBPARAGRAPH 17A(1), but on the contrary, elects to take possession as
provided in SUBPARAGRAPH 17A(2) hereof, Tenant shall pay to Landlord
upon demand (a) the unpaid rent due hereunder earned but unpaid at the
time of reletting, (b) the cost of recovering possession (including
reasonable attorney's fees and costs of suit), and (c)(i) the rent and
other sums as herein provided, which would be payable hereunder if such
repossession had not occurred, less (ii) the net proceeds, if any, of
reletting of the Premises after deducting Landlord's reasonable
expenses in connection with such reletting, including but without
limitation, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees, expenses of employees, alteration,
redecorating and repair costs and expenses of preparation for such
reletting. If, in connection with any reletting, the new lease term
extends beyond the existing Lease Term, or the premises covered thereby
include in addition to the Premises other premises not part of the
Premises, a fair apportionment of the rent received from such reletting
and the expenses incurred in connection therewith will be made in
determining the net proceeds from such reletting. Any rent concessions
will be apportioned over the term of the new lease. Tenant shall pay
such rent and other sums to Landlord monthly on the days on which the
rent would have been payable hereunder if possession had not been
retaken, and Landlord shall be entitled to receive the same from Tenant
on each such day No deliver to or recovery by Landlord of any portion
due Landlord hereunder shall be any defense in any action to recover
any amount not theretofore reduced to judgment in favor of Landlord,
nor shall any reletting be construed as an election on the part of
Landlord to terminate this lease unless a written notice of such
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intention is given to Tenant by Landlord. Notwithstanding any such
reletting without termination, Landlord may at any time thereafter
elect to terminate this Lease for such previous breach.
D. MINIMUM DAMAGES. Nothing herein shall preclude Landlord at
its election from recovering, at a minimum, the fair rental value of
the Premises as damages for the failure of Tenant to pay the agreed
upon rentals. Landlord shall be obligated, as governed by applicable
state and federal law, to mitigate said damages by making a reasonable
and good faith effort to release the Premises.
E. LIABILITY OF TENANT IF TERMINATION. In the event that this
Lease is terminated (except as provided in the paragraphs on casualty
or condemnation), Tenant shall remain liable to Landlord for (i) the
cost of recovering the Premises (including reasonable attorney's fees
and costs of suit), (ii) the unpaid rent owed to Landlord at the time
of termination, (iii) damages in an amount equal to the rent and other
sums which would have been owed by Tenant hereunder for the balance of
the term had this Lease not been terminated, less the net proceeds, if
any, of any reletting of the Premises by Landlord subsequent to such
termination, after deducting all of Landlord's expenses in connection
with such reletting, including, but without limitation, the expenses
enumerated in PARAGRAPH 17C above, and (iv) any other sum of money and
damages owed by Tenant to Landlord. Landlord shall be entitled to
collect such damages from Tenant monthly on the days on which the rent
and other amounts would have been payable hereunder if this Lease had
not been terminated, or Landlord shall be entitled to recover forthwith
against Tenant, as damages for the loss of the bargain and not as a
penalty, an aggregate sum which, at the time of such termination of
this Lease, represents the amount, if any, by which the aggregate of
the rent and all other sums payable by Tenant hereunder which would
have accrued for the balance of the Lease Term exceeds the aggregate
rental value of the Premises (such rental value to be computed on the
basis of a tenant paying not only Base Rent, but also such other
charges as are required to be paid by Tenant under the terms of this
Lease) for the balance of such term, both discounted to present worth
at the rate of eight percent.(8%) per annum.
F. CUMULATIVE REMEDIES. Suit or suits for the recovery of the
amounts and damages set forth herein may be brought by Landlord, from
time to time, at Landlord's election, and nothing herein shall be
deemed to require Landlord to await the date that this Lease or the
Lease Term would have expired had there been no such default by Tenant,
or no such termination, as the case may be. Each right and remedy
provided for in this Lease shall be cumulative and shall be in addition
to every other right to remedy provided for in this Lease or not or
hereafter existing at law or in equity or by statute or otherwise,
including, but not limited to, suits for injunctive relief and specific
performance. The exercise or beginning of the exercise by Landlord of
any one or more of the rights or remedies provided for in this Lease or
now or hereafter existing at law or in equity or by statute or
otherwise. All costs incurred by Landlord in connection with collecting
any amounts and damages owed by Tenant pursuant to the provisions of
this Lease or to enforce any provision of this Lease, including
reasonable attorneys' fees from the date any such matter is turned over
to an attorney, shall also be recoverable by Landlord from Tenant.
G. NO WAIVER OF PERFORMANCE. No failure by Landlord to insist
upon the strict performance of any agreement, term, covenant or
condition hereof or to exercise any right or remedy consequent upon a
breach thereof, and no acceptance of full or partial rent during the
continuance of any such breach, shall constitute a waiver of any such
breach or any such agreement, term, covenant or condition. No
agreement, term, covenant or condition hereof to be performed or
complied with by Tenant, and no breach thereof shall be waiver, altered
or modified except by written instrument executed by Landlord. No
waiver of any breach shall affect or alter this Lease; but each and
every agreement, term, covenant and condition hereof shall continue in
full force and effect with respect to any other then existing or
subsequent breach. Notwithstanding any termination of this lease, the
same shall continue in force and effect as to any provisions hereof
which require observance or performance by Landlord or Tenant
subsequent to termination.
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H. REMEDIES UPON BANKRUPTCY. Nothing contained in this
Paragraph 17 shall limit or prejudice the right of Landlord to prove
and obtain as liquidated damages in any bankruptcy, insolvency,
receivership, reorganization or dissolution proceeding an amount equal
to the maximum allowed by any statute or rule of law governing such
proceeding and in effect at the time when such damages are to be
proved.
I. DELINQUENT RENTS AND OTHER SUMS. Any rents or other amounts
owing hereunder which are not paid within five (5) days after they are
due shall bear interest at the lesser of (i) the maximum nonusurious
rate of interest applicable to such payment under the laws of the State
of Texas, or (ii) the rate of eighteen percent (18%) per annum, with
such interest to accrue from the due date of such payment until
received by Landlord. Similarly, any amounts paid by Landlord shall
have the right, but not the obligation to do, shall, if not repaid by
Tenant within five (5) days of demand by Landlord, thereafter bear
interest at the above applicable rate until received by Landlord. In
addition to the interest due on delinquent rents and other sums
hereunder, if Tenant fails to make any payment when due, and such
failure to pay continues for a period of five (5) days (without any
notice), then Tenant shall pay, in addition to the amount due and
owing, a late charge of 10% of such amount due and owing, it being
understood that said late payment charge shall constitute liquidated
damages but shall not void the occurrence of an event of default or
eliminate any of Landlord's remedies therefor) and shall be for the
purposes of reimbursing Landlord for the additional costs and expenses
which Landlord presently expects to incur in connection with the
handling and processing of late installment payments of rent, and
Tenant and Landlord agree that the damages suffered by Landlord in the
event of any such late payment(s) are not capable of being ascertained
precisely, and that the foregoing charge constitutes a reasonable and
good faith estimate by the parties of the extent of such damage.
18. REMOVAL OF TENANT'S PROPERTY:
All movable furniture and personal effects of Tenant and other
occupants of the Premises not removed from the Premises upon the vacating (at a
time when Tenant is in default with respect to its obligation to pay rent under
the terms of this Lease) or abandonment thereof or upon the termination of this
Lease for any cause whatsoever shall conclusively be deemed to have been
abandoned and may be appropriated, sold, stored, destroyed or otherwise disposed
of by Landlord without notice to Tenant or any other person and without
obligation to account therefor; and Tenant shall pay Landlord for all expenses
incurred by Landlord in connection with the disposition of such property. In
addition, Tenant expressly authorizes Landlord to remove all of such property
from the Premises if Landlord re-enters and re-possesses the Premises without
terminating this Lease, pursuant to a right granted it in this Lease, and to
store such property at Tenant's expense, release to any holder of a security
interest superior to Landlord's, if any, or dispose of in accordance with
Landlord's lien rights hereunder, all without or conversion or other damages,
and Tenant waives all claims arising out of Landlord's actions under this
subparagraph.
19. COMPLETION OF PREMISES AND POSTPONEMENT OF COMMENCEMENT DATE:
A COMPLETION OF PREMISES Landlord has agreed to complete
the Premises as more fully set forth in the work letter (the "WORK
LETTER") to be executed between Landlord and Tenant and attached hereto
as Exhibit "D" and incorporated herein. Other than as set forth in the
Work Letter. Landlord shall have no obligation for the completion of
the Premises, and Tenant shall accept the Premises in their "As Is"
condition on the Commencement Date, except for those items set forth in
a written communication received by Landlord within fourteen (14)
business days after Tenant's occupancy of the Premises. In any event.
Landlord shall not have any obligation for the repair or replacement of
any portions of the interior of the Premises which are damaged or wear
out during the Lease Term, regardless of the cause therefor, except if
the cause is attributable to the gross negligence or fault of Landlord.
If the Premises are not ready for occupancy on the Commencement Date,
the rent under this Lease shall not commence until the Premises are
ready for occupancy, whereupon this Lease, and all of the covenants,
conditions and agreements herein contained,
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shall be in full force and effect, and the expiration of the Lease Term
shall be postponed for an equivalent period of time. Such postponement
of rent for the period prior to the delivery to Tenant of the Premises
ready for occupancy shall be in full settlement of all claims which
Tenant might otherwise have by reason of said Premises not being ready
for occupancy on the date specified in PARAGRAPH 2
B. EARLY OCCUPANCY. Tenant may occupy the Premises prior to
the Commencement Date, provided that (a) it has obtained Landlord's
prior written consent thereto; (b) it will not in any way hinder the
Tenant improvement work, if any, to be performed by Landlord, and the
Tenant will cooperate with all reasonable requests of workers and
Landlords in conjunction therewith, and (c) the rent for such period
shall be at the monthly rate prorated accordingly) set forth in
Paragraph 3 hereof. Upon Tenant's occupancy of the Premises all of the
provisions of this Lease shall be in fill force and effect. "READY FOR
OCCUPANCY," as that term is used herein, shall mean the date that
Landlord shall have substantially completed the Premises or any
remodeling work to be performed by Landlord to the extent agreed to in
the Work Letter. The certificate of the architect (or other
representative of Landlord) in charge of supervising the completion or
remodeling of the Premises shall control conclusively the date upon
which the Premises are ready for occupancy and the obligation to pay
rent shall begin as aforesaid. In addition to the above, if Landlord is
delayed in delivering the Premises to Tenant due to the failure of a
prior occupant to vacate the same, then the rent and term shall also be
postponed as hereinabove set forth, and such postponement shall be in
fill settlement of all claims which Tenant may otherwise have by reason
of the delay of delivery.
C. POSTPONEMENT OF COMMENCEMENT DATE. If, as a result of the
postponement of the commencement of the Lease Term, the Lease Term
would begin other than on the date set forth in Paragraph 2 hereof, the
Commencement Date shall be postponed and Tenant shall pay proportionate
rent, where applicable, at the same monthly rate set forth herein (also
in advance) for such partial month, and all other terms and conditions
of this Lease shall be in force and effect during such partial month.
20. HOLDING OVER:
Should Tenant hold over after the termination of this Lease with the
consent of Landlord, Tenant shall become a tenant from month-to-month only upon
each and all of the terms herein provided as may be applicable to such
month-to-month tenancy, and any such holding over shall not constitute an
extension of this Lease. During such holding over. Tenant shall pay rental equal
to one hundred fifty percent (150%) of the last monthly rental rate and the
other monetary charges as provided herein. Such tenancy shall continue until
terminated by Landlord as provided by law or until Tenant shall have given to
Landlord a written notice at least thirty (30) days prior to the intended date
of termination of such monthly tenancy of Tenant's intention to terminate such
tenancy. In the event of any unauthorized holding over. Tenant shall also
indemnify Landlord against all claims for damages by any other tenant to whom
Landlord may have leased all or any part of the Premises effective upon the
termination of this Lease. Any holding over without the consent of Landlord
shall create a tenancy at sufferance relationship with Tenant.
21. CONTROL OF COMMON AREAS:
All Common Areas for the general use in common of Building Complex
tenants, their officers, employees, agents, invitees, licensees, visitors and
customers (all of the foregoing are hereinafter collectively referred, to as
"Permitted Users"), shall be at all times subject to the exclusive control and
management of Landlord, and Landlord shall have the right at any time and from
time to time to establish, modify and enforce reasonable rules and regulations
with respect to all such Common Areas. Landlord shall have the right to
construct, maintain and operate lighting facilities within the Common Areas, to
employ personnel to operate and monitor the Common Areas; to change at any time
and from time to time the area, level, location and arrangement of parking areas
and other Common Areas, to restrict parking by and enforce parking charges (by
operation of meters or otherwise) against Permitted Users of exposed spaces, to
require the use of cards providing access
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to the parking areas, to require identification of tenants by placement of auto
stickers, to close all or any portion of the Common Areas to such extent as may,
in the opinion of Landlord or Landlord's counsel, be legally sufficient to
prevent a public dedication thereof or the accrual of any rights therein to any
person or the public, to discourage parking by other than Permitted Users, to
charge a fee for visitor and customer parking; and to do and perform such other
acts in and to the Common Areas as, in the use of good business judgment,
Landlord shall determine to be advisable with a view to the improvement of the
convenience and use thereof by the Permitted Users. Reference in this PARAGRAPH
21 to parking areas shall in no way be construed as giving Tenant any rights or
privileges in connection with such parking areas; any such rights or privileges
shall be set forth exclusively in EXHIBIT "E". All reasonable expenses incurred
by Landlord in the maintenance and operation of the Common Areas shall be
included in the definition of Operating Expenses.
22. SURRENDER AND NOTICE:
Upon expiration or other termination of the Lease Term. Tenant shall
promptly quit the Premises and surrender the Premises to Landlord broom clean,
in good order and condition, except for ordinary wear and tear and loss by fire
or other casualty, and Tenant shall remove all of its movable furniture and
other effects and such alterations, additions and improvements as Landlord shall
require Tenant to remove pursuant to PARAGRAPH 8 hereof. In the event that
Tenant fails to vacate the Premises in a timely manner as required. Tenant shall
be responsible to Landlord for all costs incurred by Landlord as a result of
such failure, including, but not limited, any amounts required to be paid to
third-parties who were to have occupied the Premises.
23. ACCEPTANCE OF PREMISES BY TENANT:
Taking possession of the Premises by Tenant shall be conclusive
evidence as against Tenant that (i) the Premises were in the condition agreed
upon between Landlord and Tenant, (ii) Tenant has acknowledged satisfactory
completion of fix-up work which Landlord has agreed in writing to perform and of
the obligations of Landlord set forth in the Work Letter, except as to such
"punchlist" items provided for in PARAGRAPH 19 hereof, which Tenant acknowledges
by taking possession do not impair occupancy and use of the Premises, (iii) the
Premises are suitable for the purpose for which the same are leased, (iv) the
Building and each and every part and appurtenance thereof are in good and
satisfactory condition, except for any defect which is not discoverable upon a
reasonable inspection, and (v) Tenant waives any defects in the Premises and its
appurtenances and in all other parts of the Building and the appurtenances
thereto, except for any defect which is not discoverable upon a reasonable
inspection.
24. SUBORDINATION AND ATTORNMENT:
A. CONDOMINIUM REGIME. This Lease, at Landlord's option, shall
be subordinate to any ground lease, declaration of covenants, or
condominium declaration (now or hereafter placed upon the Building
Complex) regarding maintenance and use of any areas contained in any
portion of the Building Complex and to all renewals, modifications,
consolidations, replacements and extensions thereof Tenant agrees, with
respect to any of the foregoing documents, that no documentation other
than this Lease shall be required to evidence such subordination.
Tenant acknowledges that the Building Complex may be dedicated by
Landlord as a condominium regime, to provide for the separate operation
and ownership of residential condominium apartments, the retail areas,
and the Office Complex,. and that Landlord shall have absolute and
complete discretion to provide for such condominium regime on such
terms and conditions as it shall determine, provided only that nothing
therein contained shall materially alter Tenant's rights or materially
increase Tenant's obligations hereunder.
B. SUBORDINATION AND NONDISTURBANCE. This Lease and all of
Tenant's rights, title and interest in and under the Lease, at the
option of any holder or a mortgage or deed of trust on the Building
Complex or the Premises, shall be subject, subordinate and inferior to
such mortgage or deed of trust, and to any and all advances made under
such mortgage or deed of trust and to all renewals, modifications,
increases, consolidations, replacements and
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extensions thereof Tenant hereby attorns to all successor owners of the
Building, whether or not such ownership is acquired as a result of a
sale through foreclosure of a deed of trust or mortgage, or otherwise.
The subordination of this Lease to any mortgage or deed of trust and
the attornment by Tenant to all successor owners of the Building shall
be automatic and self-operative, and no special instrument or
subordination or attornment shall be necessary Without limiting such
automatic and self-operative subordination and attornment, however,
Tenant agrees to execute such documents as may be required to further
evidence such subordination and the attornment by Tenant to any
successor owners of the Building, or to make this Lease prior to the
lien of any mortgage or deed of trust, as the case may be, and by
failing to do so within ten (10) business days after written demand,
Tenant hereby makes, constitutes and irrevocably appoints Landlord as
Tenants attorney-in-fact and in Tenants name, place and stead, to do
so. This power of attorney is coupled with an interest (and shall not
terminate upon death or disability of the Tenant, if Tenant is an
individual). Notwithstanding the foregoing, in the event the holder of
any mortgage or deed of trust or the landlord under any ground lease
elects that the leasehold interest of the Tenant shall be subordinate
to the interest of such holder of any mortgage or deed of trust or such
ground lessee under any ground lease hereafter placed upon the Building
Complex, the leasehold interest of the Tenant under this Lease shall be
subordinate only on the condition that the Tenant's right of possession
of the Premises shall not be disturbed notwithstanding any default of
Landlord hereunder, and Tenant shall have the right to remain in
possession of the Premises described herein in accordance with the
terms and provisions of this Lease for so long as Tenant shall not be
in default under the terms and provisions of the Lease. If any holder
of the mortgage or deed of trust shall elect for this Lease to be
superior to the lien of its mortgage or deed of trust, and shall give
written notice thereof to Tenant, then this Lease shall automatically
be deemed prior to such mortgage or deed of trust, whether this Lease
is dated earlier or later than the date of said mortgage or deed of
trust or the date of recording thereof.
25. PAYMENTS AFTER TERMINATION:
No payments of money by Tenant to Landlord after the termination of
this Lease, in any manner, or after giving of any notice of default (other than
a demand for payment of money) by Landlord to Tenant, shall reinstate, continue
or extend the term of this Lease or affect any notice given to Tenant prior to
the payment of such money, it being agreed that after the service of notice of
commencement of a suit or after any final judgment granting Landlord possession
of the Premises, Landlord may receive and collect any sums of rent due, or any
other sums of money due under the terms of this Lease, or may otherwise exercise
any of its rights and remedies hereunder. The payment of such sums of money,
whether as rent or otherwise, shall not waive said notice, or in any manner
affect any suit theretofore commenced or judgment therefore obtained.
26. AUTHORITIES FOR ACTION AND NOTICE:
A. AUTHORITY FOR ACTION. Except as herein otherwise provided,
Landlord may act in any matter provided for herein by and through its
Building Manager or any other person who shall from time to time be
designated by Landlord in writing.
B. NOTICES. All notices or demands required or permitted to be
given to Landlord or Tenant hereunder shall be in writing, and shall be
deemed duly served when personally delivered or three (3) days
following deposit in the United States Mail, with proper postage
prepaid, certified or registered, return receipt requested, or on
receipt by facsimile service, receipt confirmed, followed by delivery
by U.S. mail, as provided herein, or one (1) day following deposit with
an expedited overnight delivery service by a commercial air carrier
such as Federal Express. Airborne or Purolator, addressed to the other
party at its principal office in the Building (and, with respect to a
notice regarding an alleged default on the part of Landlord, also at
the address specified in PARAGRAPH 28K below), or at the most recent
address of which such party giving notice has notified the other party
in writing. Notices to Tenant shall be addressed to the address set
forth in the Basic Lease Information until occupancy of the Premises.
If Tenant fails to so designate any other address, such notice may
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after occupancy be mailed to Tenant's Premises in the Building. Either
party shall have the right to designate in writing served as above
provided, a different address to which notice is to be mailed. The
foregoing shall in no event prohibit notice from being given as
provided in any applicable rule of the Texas Rules of Civil Procedure,
as the same may be amended from time to time.
27. SECURITY DEPOSIT:
It is agreed that Tenant, concurrently with the execution of this
Lease, has deposited with Landlord, and will keep on deposit at all times during
the term hereof the sum of $11,244.00 (the "SECURITY DEPOSIT"), the receipt of
which is hereby acknowledged, as security for the payment by Tenant of the rent
herein agreed to be paid and for the faithful performance of all the terms,
conditions and covenants of this Lease, it being expressly understood that the
Security Deposit shall not be considered a measure of Landlord's damages in case
of default by Tenant. If Tenant elects to occupy Suite 202 of the Premises,
pursuant to the terms of this Lease, the amount of the Security Deposit will be
increased to $31,953.50 (or an additional amount as herein provided) and Tenant
will be required to deposit with Landlord, on or before October 1, 1999, the
amount of $20,709.50 (or an additional amount as herein provided). If at any
time during the Lease Term, Tenant shall be in default in the performance of any
provision of this Lease, Landlord shall have the right, without prejudice to any
other remedy, to use the Security Deposit, or so much thereof as is necessary,
in payment of any rent in default as aforesaid, reimbursement of any expense
incurred by Landlord, and in payment of any damages incurred by Landlord by
reason of Tenant's default. In such event, Tenant shall, on written demand of
Landlord, forthwith remit to Landlord a sufficient amount in cash to restore the
Security Deposit to its original amount. In the event the Security Deposit has
not been used as aforesaid, the Security Deposit, or as much thereof as has not
been used for such purposes, shall be refunded to Tenant, without interest, upon
full performance of this Lease by Tenant, Landlord shall have the right to
commingle the Security Deposit with other funds of Landlord. Landlord may
deliver the funds deposited herein by Tenant to any purchaser of Landlord's
interest in the Premises in the event such interest is sold, and thereupon
Landlord shall be discharged from further liability with respect to the Security
Deposit. If claims of Landlord exceed the Security Deposit, Tenant shall remain
liable for the balance of such claims. See EXHIBIT "H-1" for terms related to a
payment of $85,512.00 required to be made by Tenant.
At the time of Tenant giving Landlord notice of its intent to occupy
Suite 202 of the Premises, Tenant shall also deliver to the Landlord a copy of
its financial statements, including schedules thereto, as of a recent date. If
such financial statements are not timely delivered to the Landlord, or if the
Landlord reasonably determines that the financial condition of the Tenant is
such that a Security Deposit in excess of $31,953.50 is appropriate, the amount
of the Security deposit required to be made with respect to the Premises shall
be increased to the amount which Landlord shall determine and notify Tenant in
writing within thirty (30) days from the date of receipt of Tenant's financial
statements. In no event shall the security deposit required to be made by
Tenant, with respect to Suite 202, shall exceed the amount of the Allowance (as
defined in Exhibit "D" of this Lease) actually expended with respect to Suite
202. If the amount of the Security Deposit does exceed $31,953.50, Tenant shall
be entitled to fund the excess amount by delivering to the Landlord, and
maintaining throughout the term of this Lease, an irrevocable letter of credit
which must be reasonably acceptable to Landlord. If Tenant uses a letter of
credit as aforesaid, the amount of such letter of credit may be reduced each
month, during the remaining term of this Lease, by a pro rata amount equal to
the number of months remaining during the term of this Lease divided by the
initial amount of the letter of credit provided by Tenant to Landlord pursuant
hereto.
28. MISCELLANEOUS:
A. RULES AND REGULATIONS. The rules and regulations attached
hereto and marked Exhibit "C", as well as such rules and regulations as
may hereafter be adopted by Landlord for the operation, care and
cleanliness of the Premises and the Building Complex and the
preservation of good order therein, are hereby expressly made a part
hereof, and Tenant agrees to obey all such rules and regulations. The
violation of any such rules and regulations by Tenant shall be deemed
an event of default of this Lease by Tenant, affording
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Landlord all those remedies set out herein Landlord shall not be
responsible to Tenant for the failure of any other tenant or occupant
of the Building to comply with any of said rules and regulations.
B. REPRESENTATIONS OF TENANT. Tenant hereby warrants and
represents that the certified financial statement of Tenant and any
other writings furnished to Landlord in connection with this Lease,
copies of which are attached hereto as EXHIBIT "F", are true and
correct and omit no material fact. No material adverse changes have
occurred in the financial condition reflected therein since the
respective dates thereof.
Tenant additionally warrants and represents that, (i) if
Tenant is a corporation or a partnership, Tenant is duly organized,
validly existing, and in good standing under the laws of the State of
Texas; (ii) has all requisite power and authority to execute, deliver
and perform the Lease; (iii) the execution, delivery and performance by
Tenant of the Lease has been duly authorized by all necessary corporate
or partnership action, as the case may be; does not contravene Tenant's
Articles of Incorporation or Bylaws or Partnership Agreement, as the
case may be; does not cause Tenant to be in conflict with, in default
under, or in breach of the terms of any agreement or other instrument,
(iv) there are no actions, suits or proceedings pending or threatened
against Tenant by any person that might materially adversely affect the
business operations, prospects or financial condition of Tenant; and
(v) the Lease constitutes the legal, valid and binding obligations of
Tenant enforceable against it under Texas law in accordance with its
terms.
C. DEFINITION OF LANDLORD. The term "LANDLORD" as used in this
Lease, so far as covenants or obligations on the part of Landlord are
concerned, shall be limited to mean and include only the owner or
owners of the Building (and the authorized agents of Landlord) at the
time in question. In the event of any transfer or transfers of the
title to the Building, the Landlord herein named (and in the case of
any subsequent transfers or conveyances, the then-grantor) shall be
automatically released from and after the date of such transfer or
conveyance of all liability with respect to the performance of any
covenants or obligations on the part of Landlord contained in this
Lease thereafter to be performed, provided that the grantee assumes the
duty to perform Landlord's covenants and obligations hereunder, and
provided that any funds in which Tenant has an interest in the hands of
Landlord or the then-grantor at the time of such transfer shall be
turned over to the grantee. Any amount then due and payable to Tenant
by Landlord or the then-grantor under any provisions of this Lease
shall be paid to Tenant at the time of any transfer or conveyance.
D. NO MERGER UPON TERMINATION. The termination or mutual
cancellation of this Lease shall not work a merger, and such
termination or mutual cancellation shall, at the option of Landlord,
either terminate all subleases and subtenancies or operate as an
assignment to Landlord of any or all of such subleases or subtenancies.
E. LANDLORD'S USE OF ENTRYWAYS. Tenant agrees that for the
purposes of completing or making repairs or alterations in any portion
of the Building, Landlord may use one or more of the street entrances,
halls, passageways and elevators of the Building.
F. INDEPENDENT COVENANTS. This Lease shall be construed as
though the covenants herein between Landlord and Tenant are
independent, and not dependent Tenant shall not be entitled to any
setoff of the rent or other amounts owing hereunder against Landlord if
Landlord fails to perform its obligations set forth herein, provided,
however, that the foregoing shall in no way impair the right of Tenant
to commence a separate action against Landlord for any violation by
Landlord of the provisions hereof so long as notice is first given to
Landlord and any holder of a mortgage or deed of trust covering the
Building Complex or any portion thereof, and an opportunity is granted
to Landlord and such holder to correct such violation as provided in
SUBPARAGRAPH K of this PARAGRAPH 28.
G. PARTIAL INVALIDITY. If any clause or provision of this
Lease is illegal, invalid or unenforceable under present or future laws
effective during the Lease Term, then and in
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that event, it is the intention of the parties hereto that the
remainder of this Lease shall not be affected thereby, and it is also
the intention of the parties to this Lease that in lieu of each clause
or provision of this Lease that is illegal, invalid or unenforceable,
there shall be added as a part of this Lease a legal, valid and
enforceable clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible.
H. CAPTIONS. The captions of each paragraph are added as a
matter of convenience only and shall be considered of no effect in the
construction of any provision or provisions of this Lease.
I. BINDING EFFECT. Except as herein specifically set forth,
all terms, conditions and covenants to be observed and performed by the
parties hereto shall be applicable to and binding upon their respective
heirs, administrators, executors, successors and permitted assigns.
J. DEFAULT BY LANDLORD. In the event of any alleged default on
the part of Landlord hereunder. Tenant shall give written notice to
Landlord in the manner herein set forth and shall afford Landlord a
reasonable opportunity to cure any such default. Notice to Landlord of
any such alleged default shall be ineffective unless Tenant shall send
notice of such default in the manner prescribed in PARAGRAPH 26B of
this Lease to the holder of any mortgages or deeds of trust covering
the Building Complex or any portion thereof whose address Tenant has
been notified of in writing, and unless Tenant shall afford such holder
a reasonable opportunity to cure any alleged default on Landlord's
behalf. In no event will Landlord or any mortgagee be responsible for
any consequential damages incurred by Tenant, including, but not
limited to, lost profits or interruption of business, as a result of
any alleged default by Landlord.
K. JOINT AND SEVERAL LIABILITY. If the Tenant under this Lease
is more than one entity or person, the obligations imposed upon Tenant
under this Lease shall be joint and several.
L. EFFECT OF CERTAIN ACTIONS. No act or thing done by Landlord
or Landlord's agent during the term hereof, including but not limited
to, any agreement to accept surrender of the Premises or to amend or
modify this Lease, shall be deemed to be binding upon Landlord unless
such act or things shall be by Landlord or a party designated in
writing by Landlord as so authorized to act. The delivery of keys to
Landlord or Landlord's agents, employees or officers shall not operate
as a termination of this Lease or a surrender of the Premises No
payment by Tenant, or receipt by Landlord, of a lesser amount than the
monthly rent herein stipulated, shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or
statement on any check or any letter accompanying any check, or payment
as rent, be deemed an accord and satisfaction; and Landlord may accept
such check or payment without prejudice to Landlord's right to recover
the balance of such rent or to pursue any other remedy available to
Landlord.
M. NAME CHANGE. Landlord shall have the right to change the
name of the Building, to construct other buildings or improvements in
any plaza or other area designated by Landlord for use by tenants, or
to change the location or character of, or make alterations of or
additions to, any of said places or other areas, and Landlord shall not
incur any liability whatsoever to Tenant as a consequence thereof.
N. ENTIRE AGREEMENT AND AMENDMENTS. Tenant acknowledges and
agrees that it has not relied upon any statements, representations,
agreements or warranties except such as are expressed in this Lease,
that this Lease and the Exhibits attached hereto reflect the entire
agreement and understandings of the parties hereto, and that no other
agreement, amendment or modification of the Lease shall be valid or
binding unless expressed in writing and executed by Landlord and Tenant
in the same manner as the execution of this Lease.
O. LEASE CONSTRUCTION. Both parties acknowledge and agree that
they have
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had the benefit of legal counsel in interpreting the terms and
provision of this Lease, and the terms and provisions of this Lease
shall not be construed against or in favor of a patty hereto merely
because such party is the "Landlord" or the "Tenant" hereunder or such
party or its counsel is the draftsman of this Lease.
P. LIABILITY OF LANDLORD. Notwithstanding anything to the
contrary contained herein, Landlord's liability under this Lease shall
be limited to its interest in the Building, and neither Landlord nor
any of its officers, directors or employees shall have personal
liability for any deficiency judgment obtained in connection with this
Lease.
Q. TIME OF ESSENCE. Time is of the essence hereof.
R. AUTHORITY. Tenant and the parties executing this Lease on
behalf of Tenant represent to Landlord that such parties are authorized
to do so by requisite action of Tenant's board of directors, or
partners, as the case may be, and agree, upon request, to deliver to
Landlord a resolution or similar document to that effect.
S. ASSIGNMENT AND ADEQUATE ASSURANCE UPON BANKRUPTCY. Landlord
and Tenant understand that notwithstanding certain provisions to the
contrary contained herein, a trustee or debtor in possession under the
Bankruptcy Code of the United States may have certain rights to assume
or assign this Lease. Landlord and Tenant further understand that, in
any event. Landlord is entitled under the Bankruptcy Code to Adequate
Assurance of future performance of the terms and provisions of this
Lease. For purposes of any such assumption or assignment. "ADEQUATE
ASSURANCE" shall include at least the following:
(1) In order to assure Landlord that the proposed
assignee will have the resources with which to pay the rent
called for herein, any proposed assignee must have, as
demonstrated to Landlord's satisfaction, a net worth at least
as great as the net worth of Tenant on the date this Lease
became effective, increased by seven percent (7%), compounded
annually, for each year from the Commencement Date through the
date of the proposed assignment. The financial condition and
resources of Tenant were a material inducement to Landlord in
entering into this Lease.
(2) Any proposed assignee of this Lease must assume
and agree to be personally bound by the terms, provisions and
covenants of this Lease.
In addition to the foregoing provisions
regarding "Adequate Assurance," no assumption ("ASSUMPTION")
of this Lease pursuant to 11 U.S.C. Section 365(b)(1) by the
Tenant as debtor-in-possession or by the trustee for such
Tenant shall be effective unless.
(a) All monetary defaults under the Lease
have been cured by payment to Landlord within five
(5) days of the date of Assumption,
(b) All non-monetary defaults under the
Lease shall be cured by performance within fifteen
(15) days of the date of Assumption;
(c) All actual monetary losses incurred by
Landlord occasioned by any default by Tenant under
the terms of this Lease have been paid to Landlord
within fifteen (15) days of the date of the
Assumption;
(d) Landlord shall have received within five
(5) days of the date of the Assumption a security
deposit equal to two (2) months' Base Rent and an
advance prepayment of rental equal to one (1) month's
Base Rent, each sum to be held by Landlord as
assurance of future performance by the Tenant under
the Lease and which shall be subject to the terms and
conditions set forth in this Lease and shall be
deemed to be rental under this Lease for the purposes
of 11 U.S.C. Section 101, et seq., as amended and
from time to time
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in effect.
T. FORCE MAJEURE. Any obligation of the Landlord hereunder
which is delayed or not performed due to acts of God, strike, riot,
war, weather, failure to obtain labor and materials at a reasonable
cost, or any other reason beyond the control of the Landlord, shall not
constitute a default hereunder and shall be performed within a
reasonable time after the end of such cause for delay or
nonperformance.
U. NO RECORDATION. Tenant shall not record this Lease or a
memorandum hereof without the prior written consent of Landlord. In the
event that Tenant violates this provision, this Lease shall, at the
option of Landlord, be null, void, and of no further force and effect,
except that Tenant shall be liable to Landlord, as liquidated damages,
in the amount of the remaining rental to be paid hereunder.
V. DUPLICATE EXECUTION. This Lease may be executed in two or
more duplicate originals. Each duplicate original shall be deemed to be
an original hereof, and it shall not be necessary for a party hereto to
produce more than one such original as evidence hereof.
W. TAXES ON PERSONAL PROPERTY. Tenant shall pay, or cause to
be paid, before delinquency, any and all taxes levied or assessed and
which become payable during the term hereof upon all of Tenant's
leasehold improvements, equipment, furniture, fixtures and personal
property located in the Premises; excepting only items paid for by
Landlord and standard throughout the Building. In the event that any or
all of Tenant's leasehold improvements, equipment, furniture, fixtures
and personal property shall be assessed and taxed with the Building,
Tenant shall pay to Landlord as additional rent hereunder its share of
such taxes within ten (10) days after delivery to Tenant by Landlord of
a statement in writing setting forth the amount of such taxes
applicable to Tenant's property.
X. ACCESS CONTROL. Access control shall be provided during
other than Ordinary Business Hours as Landlord deems appropriate.
Landlord shall have no liability to Tenant, its employees, agents,
invitees or licensees for losses due to theft or burglary, or for
damages done by unauthorized persons on the Premises, and neither shall
Landlord be required to insure against any such losses. Tenant agrees
to surrender all keys and entry cards then in its possession upon the
expiration or earlier termination of this Lease.
Y. KEYS AND LOCKS. All keys to the Premises shall be the
property of Landlord and, upon termination of the Lease, Tenant shall
surrender to Landlord all keys to any locks on doors entering or within
the Premises, and give to Landlord the explanation of the combination
of all locks for safes, safe cabinets and vault doors, if any, in the
Premises.
Z. NO BROKERS. Tenant represents and warrants that it has had
no dealings with any broker or agent (other than Terren Commercial and
Landlord's broker, both of whom Landlord shall pay pursuant to separate
agreements) in connection with the negotiation or execution of this
Lease, and Tenant shall indemnify and hold Landlord harmless from any
costs, expenses, or liability for commissions or other compensation or
charges claimed by any broker or agent (other than Terren Commercial
and Landlord's broker), with respect to this Lease.
AA. GRAPHICS. No signs, numerals, letters or other graphics
shall be used or permitted in the exterior of, or which may be visible
from outside, the Premises, unless approved in advance and in writing
by Landlord.
BB. ATTORNEYS' FEES. In the event either party defaults in the
performance of any of the terms, agreements or conditions contained in
this Lease and the other party places the enforcement of this Lease, or
any part thereof, or the collection of any rent due or to become due
hereunder, or recovery of the possession of the Premises, in the hands
of an attorney who files suit upon the same, and should such
non-defaulting party prevail in such suit, the defaulting party agrees
to pay the other party's reasonable attorneys' fees.
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CC. GENDER. The pronouns of any gender shall include the other
genders, and either the singular or the plural shall include the other.
DD. CHOICE OF LAW. This Lease and the rights and remedies
granted hereunder shall be construed in accordance with the laws of the
State of Texas, and this Lease shall be performable in Dallas County,
Texas Venue of any action arising out of this Lease shall be in state
courts in the State of Texas, in Dallas County.
EE. DISCLAIMER OF WARRANTIES. TENANT HEREBY WAIVES ANY AND ALL
WARRANTIES, EXPRESS AND IMPLIED, INCLUDING WARRANTIES OF HABITABILITY,
TENANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE AND SUITABILITY FOR
AN INTENDED COMMERCIAL PURPOSE. Landlord's duties and warranties are
limited to those expressly stated in this Lease and shall not include
any implied duties or implied warranties, now or in the future. No
representations or warranties have been made by Landlord other than
those contained in this Lease Landlord has made no representations or
warranty to Tenant regarding the composition, makeup, characteristics,
quality, occupance or business of any other tenants in the Building
Complex, the availability or continued availability of any facilities
or amenities provided in the Building Complex or the prospects for any
of the foregoing.
FF. HAZARDOUS SUBSTANCE. To the knowledge of Landlord, (a) no
hazardous substance is present on the Building or the soil, surface
water or groundwater thereof, (b) no underground storage tanks are
present on the Building, and (c) no action, proceeding or claim is
pending or threatened regarding the Building concerning any hazardous
substance or pursuant to any environmental law.
GG. EXPENDITURES. Any expenditure by a party permitted or
required under the Lease, for which such party is entitled to demand
and does demand reimbursement from the other party, shall be reasonably
incurred, and shall be substantiated by documentary evidence available
for inspection and review by the other party or its representative
during normal business hours.
29. LANDLORD'S LIEN: Subject to the terms hereof, Landlord hereby
waives the statutory lien available to the Landlord under the laws of the State
of Texas. Such waiver shall cease to be in effect if Tenant is in default as to
payment of rental under the terms of this Lease and such default is not cured
within ten (10) days after Landlord has given to Tenant written notice of such
default. Not Applicable.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease on the
dates indicated below, to be effective as of the day and year first above
written (the "LEASE DATE").
(THE ATTACHED ADDENDUM, IF ANY, AND EXHIBITS "A" THROUGH "I" ARE MADE A
PART OF THIS LEASE FOR ALL PURPOSES.)
LANDLORD: CENTRUM G.S. LTD.
Address: By Goodyork Corporation,
a Texas corporation,
3102 Oak Lawn its general partner
Suite 470, Lock Box 100
Dallas, Texas 75219
By: /s/ Signature Illegible
William K. Sudo
Date: Aug. 25, 1998 Vice President
-30-
<PAGE>
TENANT: VIANT CORPORATION
Address:
3102 Oak Lawn By: /s/ Signature Illegible
Suite 430 Name Signature Illegible
Dallas, Texas 75219 Title: Vice President & CFO
Date: _______________, 1998
-31-
<PAGE>
EXHIBIT "A"
PREMISES
<PAGE>
EXHIBIT "B"
LEGAL DESCRIPTION
Being a tract of land situated in the City of Dallas, Dallas County, Texas, out
of the WILLIAM GRIOSBY SURVEY-ABSTRACT 501; and being part of BLOCK T11026 of
the BOWSER AND LEMMON'S OAK LAWN AND NORTH DALLAS ADDITION as recorded in Volume
3, Page 537, of the Map Records of Dallas County, Texas; and being more
particularly described as follows.
BEGINNING at an iron rod for corner at the intersection of the southerly line of
Hall Street (60 feet wide) and the westerly line of Welborn Street (variable
width);
THENCE South 45(Degree)19'00" West along said westerly line of Welborn Street a
distance of 400.00 feet to an iron rod for corner at the intersection of the
northerly line of Cedar Springs Road (60 feet wide) and said westerly line of
Welborn Street;
THENCE North 47(Degree)30'00" West along said northerly line of Cedar Springs
Road a distance of 288.19 feet to a nail at the beginning of a curve to the
right;
THENCE in a northerly direction along said curve to the right having a radius of
25.00 feet, a central angle of 58(Degree)10'30" and an arc length of 25.38 feet
to a chisel mark at the end of said curve to the right;
THENCE North 10(Degree)40'30" East along the easterly line of Oak Lawn Avenue
(variable width at this point) a distance of 123.77 feet to a chisel mark at an
angle point;
THENCE North 20(Degree)39'40" East continuing along said easterly line of Oak
Lawn Avenue a distance of 47.96 feet to a chisel mark at an angle point;
THENCE North 45(Degree)19'00" East continuing along said easterly line of Oak
Lawn Avenue a distance of 157.99 feet to a chisel mark for corner;
THENCE South 44(Degree)41'00" East along the southwesterly line of a tract of
land conveyed to the Argyle Apartments Corp. by deed filed for record on March
15, 1935, a distance of 200.00 feet to a chisel mark for comer;
THENCE North 45(Degree)19'00" East along the southeasterly line of said Argyle
tract a distance of 100.00 feet to an iron rod for corner in the southerly line
of Hall Street;
THENCE South 44(Degree)41'00" East along said southerly line of Hall Street a
distance of 200.00 feet to the POINT OF BEGINNING and CONTAINING 136,534 square
feet, more or less, or 3.1344 acres.
<PAGE>
EXHIBIT "C"
RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways and similar areas
shall not be obstructed by tenants or used for any purpose other than ingress to
and from the Premises and for going from one part of the Building to another
part of the Building. Landlord may remove, at tenant's expense, any unauthorized
obstruction caused by such tenant without notice or obligations to such tenant.
2. Plumbing fixtures and appliances shall be used only for the purpose
for which designed, and no sweeping, rubbish, rags or other unsuitable materials
shall be thrown or placed therein. Any stoppage or damage resulting to any such
fixture or appliance from misuse on the part of a tenant shall be paid by such
tenant.
3. Landlord retains absolute control over the exterior appearance of
the Building and the exterior appearance of the Premises as viewed from public
halls and areas, and no tenant shall, without Landlord's prior written consent,
install signs, posters, advertisements, lighting, decorations, or window
coverings which can be viewed from the exterior of the Building of Premises.
4. Directories will be placed by Landlord, at Landlord's own expense,
in the main lobby of the Building. No other directories shall be permitted
unless consented to by Landlord in writing.
5. Tenants shall not place in or move about the Building, without
Landlord's prior written consent, any safe or other heavy article which in
Landlord's reasonable opinion may damage the Building. Landlord may designate
the location of any heavy article to be placed in the Building. All damage done
to the Building by the improper placing of heavy items which overstress the
floor will be repaired at the sole expense of the tenant responsible therefor.
6. Corridor doors, when not in use, shall be kept closed.
7. Each tenant shall ensure that delivers of materials and supplies to
the Building are made through such entrances, elevators and corridors and at
such times as may be designated by landlord, and shall pay to Landlord the cost
of repairing any damage in the Building caused by any person making such
deliveries. Prior approval must be obtained from Landlord for any deliveries
that must be received after normal working hours.
8. Each tenant shall ensure that furniture and equipment being moved
into or out of the Building is moved through such entrances, elevators and
corridors ad at such times as may be designed by Landlord, by a moving company
approved by Landlord, and only after providing any damage to the Building
thereby.
9. Each tenant shall cooperate with Building employees in keeping the
Premises neat and clean.
10. Nothing shall be swept or thrown into corridors, halls, elevator
shafts or stairways.
11. Should a tenant require telegraphic, telephonic, annunciator or any
other communication service, Landlord will direct the electricians and
installers where and how the wires are to be introduced and placed, and none
shall be introduced or placed except as Landlord shall direct.
12. No tenant shall make or permit any unseemly, disturbing or improper
noises in the Building, or otherwise interfere with, annoy or disturb in any way
other tenants or persons having business with them.
Exhibit "C" Page 1 of 3
<PAGE>
13. No equipment of any kind shall be operated on the Premises that
could in any way annoy other tenants in the Building without prior written
consent of Landlord.
14. Landlord has the right to evacuate the Building in the event of
emergency or catastrophe.
15. All electrical fixtures hung in the Premises must be of a quality,
type, design, bulb color, size and general appearance approved by Landlord.
16. No water cooler, space heater, air conditioning unit or system or
other apparatus shall be installed or used by any tenant without the prior
written consent of Landlord. No tenant shall tamper with or attempt to adjust
temperature control thermostats in such tenant's Premises. Landlord shall adjust
thermostats as required to maintain the Building standard temperature.
17. Landlord shall provide all locks for doors in each tenant's
Premises, at the cost of such tenant, and no tenant shall place any additional
lock on any door in its Premises. A reasonable number of keys to the locks on
the doors in each tenant's Premises shall be furnished by Landlord to each
tenant, at the cost of such tenant ad the tenant shall not have any duplicate
keys made. At the end of the tenant's lease term, each tenant shall promptly
return to the Landlord all keys for the Building which are in possession of such
tenant.
18. Landlord will not be responsible for lost or stolen personal
property, money or jewelry from each tenant's Premises, public or common areas
regardless of whether such loss occurs when the area is locked against entry or
not.
19. The Building shall not be used or permitted to be used for
residential lodging or sleeping purposes or for the storage of personal effects
or property not required for business purposes.
20. Only persons approved by Landlord may prepare, solicit orders for,
sell, serve or distribute foods or beverages in the Building, or use the
elevators, corridors or common areas for any such purposes. Except with
Landlord's prior written consent, no tenant shall permit on such tenant's
Premises the use of equipment for dispensing food or beverages or for the
preparation, solicitation of orders for, sale, serving or distribution of food
or beverages.
21. All tenants will refer all contractors, contractors'
representatives and installation technicians to Landlord for Landlord's
supervision, approval and control before the performance of any contractual
services. This provision shall apply to all work performed in the Building
Complex including, but not limited to, installations of telephones, telegraph
equipment, electrical devices ad attachments, doors, entranceways, and any and
all installations of every nature affecting floors, walls, woodwork, trim,
windows, ceilings, equipment and any other physical portion of the Building.
22 To ensure orderly operation of the Building, no ice, mineral or
other water, towels, newspapers, etc., shall be delivered to any leased area
except by persons appointed or approved by Landlord in writing.
23. No birds or animals shall be brought into or kept in, on or about
any tenant's Premises, except animals trained to aid the visually and hearing
impaired.
24. No tenant shall operate a full service travel agency within the
Building without the prior written consent of Landlord.
25. Each tenant shall provide Landlord a list of the automobile license
numbers of their employees. Tenants shall be responsible for continually
updating this list of license numbers as there are additions or changes.
26. No tenant shall park in the parking areas designated for visitors
or handicapped persons, or in any other restricted areas designated by Landlord.
Exhibit "C" Page 2 of 3
<PAGE>
27. Automobiles parked in unauthorized restricted areas may be removed
by Landlord at tenant's cost.
28. Each tenant shall report any accident occurring in the parking
garage or parking lots to Landlord.
29. No flammable or explosive fluids or materials shall be kept or used
within the Building except in areas approved by Landlord, and tenants shall
comply with all applicable building and fire codes relating thereto.
30. In these Rules and Regulations, the term "tenant" includes the
employees, agents, invitees and licensees of each tenant and other persons
permitted to use or occupy the Building.
31. Landlord reserves the right to rescind any of these rules and
regulations and make such other and further rules and regulations as in the
judgment of Landlord shall from time to time be needed for the safety,
protection, care and cleanliness of the Building, the operation thereof, the
preservation of good order therein, and the protection ad comfort of its
tenants, their agents, employees and invitees, which rules when made and notice
thereof given to a tenant shall be binding upon such tenant in like manner as if
originally herein prescribed.
Exhibit "C" Page 3 of 3
<PAGE>
EXHIBIT "D"
WORK LETTER AGREEMENT
This Work Letter Agreement (the "AGREEMENT") supplements that certain
lease (the "Lease") dated and executed concurrently herewith by and between
CENTRUM G S LTD ("Landlord") and VIANT CORPORATION ("Tenant") Terms defined in
the Lease have the same definitions where used herein.
1. Space planning drawings and construction and engineering drawings shall be
prepared by Tenant's architect, at Tenant's cost and expense. The final approved
Space Plans, Construction Plans, and MP&E Plans are collectively called the
"Plans" The Plans are comprised of.
(a) Complete Building Standard Space Plans (the "Space Plans")
for the layout of the Premises;
(b) Complete, finished and detailed 1/8 inch scale
architectural drawings and specifications for Tenant's partition layout,
reflected ceiling, telephone and electrical outlets, and finish schedule for the
work to be done by Landlord under PARAGRAPH 5 hereof (the "CONSTRUCTION PLANS");
and
(c) Complete Building Standard mechanical plans and
specifications where necessary for installation of normal air conditioning
system and duct work and heating and electrical facilities (the "MP&E PLANS").
Tenant shall provide all information necessary to permit the Plans to
comply with the Disability Acts if Tenant is a "public accommodation" as defined
therein Tenant shall be solely responsible for determining whether or not it is
a public accommodation and for compliance with the Disability Acts within the
Premises Tenant's approval of the Plans shall constitute an acknowledgment that
they comply with the Disability Acts.
2. Tenant shall use Building Standard Materials, unless other materials
are expressly approved in writing by Landlord. Where the term "Building
Standard" is used in this Agreement, it shall mean the exclusive type, brand,
quality and/or quantity of materials Landlord designates from time to time to be
the quality or quantity to be used in the Building Tenant may obtain a list of
current Building Standard Materials from Landlord upon request. Tenant
acknowledges that it leases the Premises in a "as is" condition, and that Tenant
has inspected the Premises and accepts the Premises in such condition.
Tenant must use as its contractor, in connection with any and all
construction or improvements related to the Premises, a firm which is reasonably
approved by Landlord to perform construction work in connection with the
Premises. In connection with the construction of any improvements to the
Premises. Tenant must have weekly meetings, at times and places reasonably
acceptable to Landlord, with Landlord and its agents for the purpose to review
the status of the construction project and for such other related purposes as
Landlord shall reasonably request.
3. Landlord agrees to provide Tenant an allowance (the "ALLOWANCE") of not
to exceed $35.00 per square foot for the 11,834 square feet of Rentable Area of
Suite 202 of the Premises (no amount of Allowance is payable with respect to
Suite 430), being the sum of $414,190.00, toward the actual cost of (i)
preparation of the Plans, (ii) the Finish Work, (iii) construction permits, (iv)
contractor's fees or profit (as specified in the general contract for
construction), (v) sales taxes, and (vi) construction management fees in the
amount of five percent (5%) of the total cost of the Finish Work, payable to
Landlord's construction manager. Tenant shall not be entitled to any credit
towards the Base Rent under this Lease for any portion of the Allowance not
applied to the cost of the Finish Work, any amounts unused being the sole
property of Landlord.
In the event the Allowance shall not be sufficient to complete the
Finish Work contemplated by the Plans, as approved by Landlord. Tenant shall pay
all amounts, when billed by Tenant's contractor, required in order to cause the
completion of the Premises in accordance with the Plans.
Exhibit "D" Page 1 of 2
<PAGE>
Landlord shall not be required to pay to Tenant or any third party all
or any portion of the Allowance until (a) the Finish Work has been completed.
(b) Landlord is reasonably satisfied that such Finish Work will not result in
any type of mechanics or materialmans' lien being placed upon the Building by
Tenant's contractor or any other agent or representative of Tenant in connection
with, or related to, the Finish Work, and (c) Landlord has reviewed and approved
the invoice(s) submitted by Tenant, or one of its agents, to Landlord in
connection with, or related to, the Finish Work Subject to the foregoing,
Landlord shall make progress payments to the Tenant's contractor, as the Finish
Work is completed and copies of invoices related thereto are delivered to
Landlord, of amounts not to exceed ninety percent (90%) of the Allowance.
4. The Premises shall be deemed "substantially complete" and ready for occupancy
by Tenant when incomplete Finish Work consists only of minor "punch list" type
items that do not materially adversely interfere with access to the Premises or
with the conduct of Tenant's business in and from the Premises.
It is hereby acknowledged by both Tenant and Landlord that this exhibit
has been executed as of, and shall become part of the Lease Agreement dated
the__day of July, 1998.
LANDLORD:
CENTRUM G.S. LTD
By Goodyork Corporation, a Texas corporation,
its general partner.
By: /s/ Signature Illegible
Name: Signature Illegible
Title: V.P.
TENANT:
VIANT CORPORATION
By: /s/ Signature Illegible
Name: Signature Illegible
Title: Vice President & CFO
Exhibit "D" Page 2 of 2
<PAGE>
EXHIBIT "E"
PARKING
1. SPACES Landlord shall make available to Tenant throughout the term
of this Lease the use of 59 of the Building's unreserved parking spaces (the
"Spaces") in the Building parking facilities (the "PARKING FACILITIES"),
provided, however, that Tenant shall notify Landlord in writing in advance of
any change in the number of the Spaces which Tenant elects to use Landlord shall
have no obligation to make any parking spaces available to Tenant other than the
number of the Spaces which Tenant has so elected to use, and no obligation to
make Spaces available at any particular place or places in the Parking
Facilities. In the event, Landlord contracts with a manager to operate the
Parking Facilities. Tenant shall contract directly with the manager of the
Parking Facilities for the use of the Spaces, and in such instance, Landlord
shall have no obligation to Tenant for any matters arising in connection with
such contractual relationship between Tenant and the manager of the Parking
Facilities. The number of Spaces to be made available will relate to the
occupancy of the Pemises as follows: (a) until Suite 202 is actually occupied by
Tenant, up to 17 Spaces will be available to Tenant, and (b) thereafter, up to
59 Spaces will be available to Tenant.
2. CHARGES. The unreserved Spaces shall be made available to Tenant at
the rate of $35.00 per month plus sales tax.
3. USE. It is hereby agreed and understood that Landlord's sole
obligation hereunder is to make the Spaces available to Tenant as provided
herein. Tenant's right to the use of such Spaces shall be subject to compliance
with the rules and regulations promulgated from time to time by Landlord or the
manager of the Parking Facilities, and
<PAGE>
shall be subject to termination for violation of any such rules or regulations
upon written notice from Landlord or such manager. Landlord shall have no
liability whatsoever for any property damage, loss or theft, assault or other
criminal actions and/or personal injury which might occur as a result of or in
connection with the use of the Spaces by Tenant, its employees, agents, invitees
and licensees, and Tenant hereby indemnifies and holds Landlord harmless from
and against any and all costs, claims, expenses, and/or causes of action which
landlord may incur in connection with or arising out of Tenant's use of the
Spaces. The failure, for any reason, of Landlord to provide or make available
the Spaces to Tenant or the inability of Tenant to utilize the Spaces shall
under no circumstances be deemed a default by Landlord pursuant to the terms of
the Lease or give rise to any claim or cause of action by Tenant against
Landlord, the same being hereby expressly waived by Tenant.
4. LANDLORD'S RIGHTS Landlord shall have the right to make a reasonable
charge for public parking, control access to the Parking Facilities, restrict
access and parking rights to particular levels of the Parking Facilities,
restrict use by tenants, including Tenant, and visitors to specific portions of
the Parking Facilities, control access to any elevators in the Parking
Facilities, add parking decks, change curb cuts, change traffic patterns,
re-stripe the Parking Facilities and parking surfaces as to size and location of
Spaces, and temporarily displace vehicles (for the purpose of maintaining,
improving and expanding the parking Facilities and with appropriate rebate of
any rental fee paid).
5. PARKING CARDS. Landlord shall issue cards providing access to the
Parking Facilities at a charge of $10.00 per card Lost or damaged cards will be
replaced on request, but a charge of $50.00 per card will be required to
reimburse Landlord for administrative costs of card replacement and
reprogramming of the card entry processing unit.
6. COOPERATION Tenant shall cooperate fully in Landlord's efforts to
maintain the designated use of the various Parking Facilities and parking areas,
and shall follow all regulations issued by Landlord with respect thereto.
<PAGE>
EXHIBIT "F"
FINANCIAL STATEMENT
Exhibit "G" Page 1 of 2
<PAGE>
EXHIBIT "H"
RENEWAL OPTION
Provided that no event of default has ever occurred beyond applicable
notice and cure periods under any term or provision contained in this Lease and
provided that Tenant has continuously occupied the Premises for the permitted
use during the Lease Term, Tenant (but not any assignee or subtenant) shall have
the right and option (the "RENEWAL OPTION") to renew this Lease with respect to
Suite 202 only (no renewal rights exist with respect to Suite 430), by written
notice delivered to Landlord no later than six (6) months prior to the
expiration of the initial Lease Term, for an additional term (the "RENEWAL
TERM") of sixty (60) months under the same terms, conditions, and covenants
contained in this Lease, except that.
(a) no abatements or other concessions, if any, applicable to the
initial Lease Term shall apply to the Renewal Term.
(b) the Base Rent shall be 100% of the market rate for comparable
office space located in the Building as of the end of the initial Lease Term as
determined by Landlord, but no less than the initial base rent;
(c) Tenant shall have no option to renew this Lease beyond the
expiration of the Renewal Term; and
(d) all leasehold improvements within the Premises shall be provided in
their then existing condition (on an "AS IS" basis) at the time the Renewal Term
commences, without any finish allowance or other contribution by Landlord.
Failure by Tenant to notify Landlord of Tenant's election to exercise
the Renewal Option herein granted within the time limits set forth for such
exercise shall constitute a waiver of such Renewal Option. Once Tenant exercises
the Renewal Option. Tenant shall not be entitled to thereafter revoke the
Renewal Option. In the event Tenant elects to exercise the Renewal Option as set
forth above, Landlord shall, within fifteen (15) days thereafter, notify Tenant
in writing of the proposed rental for the Renewal Term (the "PROPOSED RENEWAL
RENTAL") Tenant shall within fifteen (15) days following delivery of the
Proposed Renewal Rental by Landlord notify Landlord in writing of the acceptance
or rejection of the Proposed Renewal Rental. If Tenant accepts Landlord's
proposal, then the Proposed Renewal Rental shall be the rental rate in effect
during the Renewal Term. Failure of Tenant to respond in writing during the
aforementioned fifteen (15) day period shall be deemed an acceptance by Tenant
of the Proposed Renewal Rental. Should Tenant reject Landlord's Proposed Renewal
Rental during such fifteen (15) day period, then Landlord and Tenant shall
negotiate during the thirty (30) day period commencing upon Tenant's rejection
of Landlord's Proposed Renewal Rental to determine the rental for the Renewal
Term. In the event Landlord and Tenant are unable to agree to a rental for the
Renewal Term during said thirty (30) day period, then the Renewal Option shall
terminate and be null and void and the Lease shall, pursuant to its terms and
provisions, terminate at the end of the original Lease Term.
Upon exercise of the Renewal Option by Tenant and subject to the
conditions set forth hereinabove, the Lease shall be extended for the period of
such Renewal Term without the necessity of the execution of any further
instrument or document, although if requested by either party, Landlord and
Tenant shall enter into a written agreement modifying and supplementing the
Lease in accordance with the provisions hereof.
Any termination of the Lease during the initial Lease Term shall
terminate all renewal rights hereunder. The renewal rights of Tenant hereunder
shall not be severable from the Lease, nor may such rights be assigned or
otherwise conveyed in connection with any permitted assignment or subletting of
the Lease Landlord's consent to any assignment or subletting of the Lease shall
not be construed as allowing an assignment or conveyance of such rights to any
assignee or subtenant.
Exhibit "H"
<PAGE>
EXHIBIT "H-1"
TERMINATION OPTION
At any time prior to June 1, 1999, Tenant shall have the right and
option (the "Termination Option") to terminate this Lease, by written notice
subject to the following conditions.
(a) At the time of execution of this Lease. Tenant shall pay to
Landlord the amount of Eighty-Five Thousand Five Hundred Twelve and 00/100
Dollars ($85.512 00), such amount is herein referred to as the "Termination
Funds" Such payment shall not be deemed a security deposit
(b) The Termination Funds are to compensate Landlord for early
termination of this Lease if Tenant exercises the Termination Option.
(c) By delivering the notice of election to exercise the Termination
Option, Tenant shall forfeit any claim it has to the Termination Funds.
(d) The notice of election to exercise the Termination Option must
acknowledge that Tenant forfeits its rights to the Termination Funds.
(e) The written notice to exercise the Termination Option must be
delivered to Landlord (in the same manner as required by this Lease) on or
before June 1, 1999.
(f) If Tenant does not exercise the Termination Option on or before
June, 1999, (i) Tenant shall pay to Landlord, as an additional Security Deposit
(pursuant to the terms of this Lease), the amount of $20,709.50 (or an
additional amount if so required pursuant to the terms of the Lease); such
amount must be paid to Landlord on or before the thirtieth day prior to the
Commencement Date with respect to Suite 202, and (ii) the Termination Funds will
be refunded by Landlord to Tenant prior to the date that Tenant undertakes to
occupy Suite 202 of the Premises.
(g) Landlord has the right to deposit the Termination Funds into its
operating account for use by Landlord as it deems appropriate.
Exhibit "H-1"
<PAGE>
EXHIBIT "1"
RIGHT OF FIRST REFUSAL
Provided that no event of default exists and no condition exists which with the
passage of time or the giving of notice or both would constitute an event of
default pursuant to this Lease and provided that Tenant has continuously
occupied the premises for the permitted use during the Lease Term, in the event
that a third party expresses interest in leasing all or any portion of the space
adjacent to the Premises and identified as Suite 201 on the plat attached to the
Lease, being approximately 6,126 square feet of rentable area (the "EXPANSION
SPACE"). Tenant (but not any assignee or subtenant) shall have the one time
right (the "RIGHT OF FIRST REFUSAL") to lease the Expansion Space upon the terms
and conditions hereinafter set forth.
That certain 6,126 rentable square feet as more particularly shown as
Expansion Space on EXHIBIT "A" to this Lease.
Tenant's Right of First Refusal shall be exercised, if at all, by
delivery of written notice by Tenant to Landlord within five (5) days after
Landlord's delivery to Tenant of such offer. If Tenant accepts the offer and
exercises its Right of First Refusal, Landlord and Tenant shall enter into a
written agreement modifying and supplementing this Lease and specifying that
such Expansion Space is a part of the Premises for the remainder of the Lease
Term, and any renewal thereof if applicable. In the event that Tenant does not
notify Landlord of its acceptance within such five (5) day period, then Tenant's
rights under this paragraph shall terminate and Landlord shall be able to lease
the Expansion Space to the third party who expressed an interest therein on such
terms and conditions as Landlord deems satisfactory to it.
The Lease (and Tenant's obligation to pay rent) with respect to the
Expansion Space shall commence on the date specified in Landlord's offer to
Tenant and shall terminate upon the expiration of the initial Lease Term,
subject to any renewal options provided for in the Lease, and shall be upon the
same terms, covenants and conditions as provided in the Lease for the original
Premises, except that the rent for the Expansion Space shall be $20.00 per
square feet of rental space, plus electricity. Any termination of the Lease
during the initial Lease Term shall terminate all rights of first refusal
hereunder. This Right of First Refusal shall not be severable from the Lease,
nor may such Right be assigned or otherwise conveyed in connection with any
permitted assignment or subletting of the Lease. Landlord's consent to any
assignment or subletting of the Lease shall not be construed as allowing an
assignment or conveyance of this Right of First Refusal to any assignee or
subtenant. Nothing herein contained should be construed so as to limit or
abridge Landlord's ability to deal with the Expansion Space or to lease the
Expansion Space to other tenants, Landlord's sole obligation being to deliver
the Expansion Space to Tenant in accordance with this provision.
The Lease shall not be void or voidable, nor shall Landlord be liable
to Tenant for any loss or damage resulting from any delay in delivering
possession of the Expansion Space to Tenant, but abatement of the Base Rent from
the date of exercise of the Right of First Refusal to the date of actual
delivery of the Expansion Space shall constitute full settlement of all claims
that Tenant might have against Landlord by reason of the Expansion Space not
being delivered upon the date specified in Landlord's offer.
Exhibit "I"
<PAGE>
Exhibit 10.22
POLATNICK PROPERTIES
--------------------
April 8, 1997
Mr. Robert McComb
Vice President
Starboard Commercial Brokerage
400 S. El Camino Real
Suite 320
San Mateo, CA 94404
Dear Bob:
Thank you for your offer dated April 2, 1997. Please review the following
revised Letter of Intent which will outline the basic business points which
Zoro, LLC, as Landlord, would consider for incorporation into an acceptable
lease agreement with Silicon Valley Internet Partners, as Tenant, for the
leasing of office space at 699 Eighth Street, San Francisco.
PREMISES:
A portion of the 3rd floor on the south westerly quadrant of the floor
consisting of approximately 23,077 rentable square feet, actual square footage
to be calculated by the building architect in compliance with BOMA usable
standards with a 1.20 load factor.
TERM:
Five years, commencing August 1, 1997 or upon substantial completion of tenant
improvement, whichever is sooner, and expiring 60 months thereafter. Tenant
shall have the right to extend the term for one successive period of five years
at the then fair market value as more particularly set forth in the lease.
RENTAL RATE:
The rental rate for the term of the lease shall be in accordance with the
following schedule based upon the rentable square footage, payable monthly, on a
fully serviced gross rate, net of utilities.
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<CAPTION>
<S> <C>
Year 1: $19.16
Year 2: $19.66
Year 3: $20.16
Year 4: $20.66
Year 5: $21.16
</TABLE>
<PAGE>
Tenant shall pay increases in taxes and operating expenses over base year
1997/1998, based upon a projected occupancy of 95%. First month's rent shall be
tendered upon lease execution.
SECURITY:
A. SECURITY DEPOSIT. An amount equal to the three (3) month's rent in accordance
with the rent schedule for the fifth year of the lease term, shall be tendered
as a security deposit upon execution of the lease. The Landlord shall credit
against the next ensuing rent due, two (2) months of the security deposit, after
the expiration of the 36th month of the term providing the Tenant has not been
in default.
B. The principals shall execute LETTER OF CREDIT TO guaranty the Lease, in an
amount not to exceed an aggregate of $250,000, during the initial term only.
TENANT IMPROVEMENTS:
Landlord will provide Tenant with a "Turnkey" build out for tenant improvements,
as per plans dated March 25, 1997 and annotated price plan dated 4/1/97. Please
see attached outline from Bevilacqua & Son dated April 8, 1997 (estimate
#97-038) for further detail. Should Tenant elect to construct above tenant
improvements, the Tenant shall pay for the additional improvement. Any costs in
excess of Turnkey, shall be borne by the Tenant in one lump sum or
alternatively, the rental rate shall increase by $.018 per square foot per month
for each $1.00 per square foot increase over the Turnkey. Additional
improvements ("Upgrades") shall be capped at $2.00 per square foot.
All bids shall include Landlord's ten percent (10%) mark up for project overhead
and supervision. Landlord shall reserve the right to build the improvement.
Space plans shall be mutually agreed upon and become an attachment to the lease
before commencement.
EXPANSION OPTION:
Omitted.
<PAGE>
PARKING:
One parking space per 1,000 rentable square feet shall be included in the lease.
The rate for subject parking shall be the prevailing rate for parking, for other
tenant's in the building and is subject to adjustment on a month to month basis.
COMMISSION:
Starboard Commercial Brokerage shall be paid a commission, based upon the gross
rental amount payable under the lease, in accordance with the following
schedule: 5% of the gross rental amount for each of the years 1, 2 & 3, 2.5% of
the gross rental amount for each of the years 4 & 5.
Payable 50% upon lease execution and 50% upon rent commencement by Tenant. 50%
of the herein above described commission shall made payable to Cornish and Carey
Commercial Real Estate Services.
USE OF PREMISES:
General offices and showroom space.
MONTH TO MONTH TENANCY:
Tenant shall lease approximately 8,000 rentable square feet at $1.30 per month,
per rentable square feet. The rentable area shall be calculated with a 1.25 load
factor. The Landlord shall give an improvement allowance of $1.00 per square
foot for the premises. Such funds shall be taken out of the first months rent.
Rent commencement is projected to be May 15, 1997. The location of the temporary
premises shall be a mutually agreed upon location on the 5th floor in the NE or
SE quadrant.
INTENT NOT TO CREATE LEGAL RELATIONS:
The foregoing proposed terms are subject to the approval of the Landlord. Unless
and until a fully negotiated and binding lease, encompassing terms and
provisions as either Landlord or Tenant may deem appropriate or necessary in
either party's absolute discretion, has been signed and delivered by both
parties, neither party shall have any obligation to the other in connection with
the subject matter of this letter. This letter does not confer upon either party
an exclusive right to negotiate or lease the premises. Tenant is free to
negotiate with other potential landlords for space in other buildings and
landlord is free to negotiate with other potential tenants for the premises.
<PAGE>
Should the terms and conditions set forth above meet with your approval, please
so indicate by signing in the space provided below and return to the
undersigned. Upon receipt of Tenant's acceptance, Landlord shall immediately
revise the lease agreement for the Tenant's review. This offer is valid until
5:00 p.m., April 9, 1997.
On behalf of Zero, LLC we look forward to having Silicon Valley Internet
Partners as our newest tenant at 699 Eighth Street. If you have any questions,
please do not hesitate to call.
Sincerely,
/s/ David A. Polatnick
David A. Polatnick
AGREED AND ACCEPTED: Date: 4/8/97
Silicon Valley Internet Partners
BY: /s/ Signature Illegible
ITS: Chairman
AGREED AND ACCEPTED: Date:
Zoro, LLC. ------------------
BY:
------------------------
ITS:
-----------------------
<PAGE>
Lease Comments
Item M. Please state why the building size is 600,000 SF rather than 720,000 SF.
Item N. Liability insurance may be a bit high 2,000,000 is more typical for
office uses.
P 1.1 calls for floor plan to be attached. As Exhibit A.
P 1.2 Temp space starts two days after lease execution. Should be May 15 or
after electrical and phone conduit is installed. Temp space is to be improved by
Landlord to 1.00 per rentable square foot. All existing lights and plugs to
working. Calls for exhibit A-2
P 1.3 Rentable square footage shall reflect a load factor of 1.20 x the usable
square footage.
P 2.2 Calls for interim rent to be stated in the basic lease information.
P 2.3 Delete the word "additional" in line 8. Also refers to interim rent
P 3.4 Try for 12% on unpaid amounts
P 4.2 Page Tenant shall be exempt from any increase in operating expenses
occasioned by the first upgrade to any of the common areas of the building
including and increase in operating expenses occasioned by the installation of a
new lobby entry on the Townsend Street side of the building.
P 9.2 Exclude original improvements from Landlords right to require removal
improvement.
P 10.1 Remove Gross from negligence
P 10.2-3-4 Send these Paragraphs to your insurance vendor.
P 12.4(a) iv & v, vi What are these?
P 12.5(vi) A what? Certified by whom?
P 12.6 a.20 days is too long to wait to see if they want the space back.
b. add "except tenant's actual costs of procuring subject tenant
including but not limited to brokerage commissions, improvements advertising and
legal fees, shall be reimbursed by Landlord from any such profits, if any.
P12.8 (b) 50% each is more customary
<PAGE>
25.1 The Rights to parking spaces shall not expire for lack or use by tenant,
except that Landlord may rent unused spaces out on a month to month basis, and
tenant agrees to wait up to 30 days to reinstate its right to rent subject
parking spaces.
26.7 No relocation
Exhibit B
P 2. The plan is not adequate nor is the pricing notation for a lease.
P2 b Tenant is not retaining architect or engineers, or paying for plans or
engineering
<PAGE>
Exhibit 10.23
FIRST ADDENDUM TO LEASE
THIS FIRST ADDENDUM TO LEASE ("Addendum") is dated for reference
purposes as of April _____, 1997, and is made between Zoro, LLC ("Landlord") and
Silicon Valley Internet Partners ("Tenant") to be a part of that certain Lease,
of even date herewith, between Landlord and Tenant (herein the "Lease Form")
concerning approximately 23,077 square feet of space, located at 699 8th Street
(the "Building"), San Francisco, State of California (the "Premises"). Landlord
and Tenant agree that the Lease Form is modified and supplemented by this
Addendum.
1. COMMENCEMENT DATE: Notwithstanding anything to the contrary in the
Lease Form:
A. The Commencement Date shall occur on the later of the times
set forth in paragraph 2 of the Lease Form or the date upon which Landlord has
obtained all approvals and permits from the appropriate governmental authorities
required for the legal occupancy of the Premises for Tenant's intended use.
B. If the Commencement Date has not occurred for any reason
whatsoever on or before December 1, 1997, then in addition to Tenant's other
rights or remedies, Tenant may terminate this Lease by written notice to
Landlord.
2. RENTABLE SQUARE FOOTAGE: Notwithstanding anything to the contrary in
the Lease Form, the actual square footage of the Premises is to be determined by
the building architect in compliance with the BOMA usable standards with a 1.20
load factor.
3. ACCEPTANCE OF PREMISES: Notwithstanding anything to the contrary in
the Lease Form:
A. Tenant's acceptance of the Premises shall not be deemed a
waiver of Tenant's right to have defects in the Tenant Improvements or the
Premises repaired at Landlord's sole expense. Tenant shall give notice to
Landlord whenever any such defect becomes reasonably apparent, and Landlord
shall repair such defect as soon as practicable.
B. Landlord warrants and represents that as of the
Commencement Date the Premises will be in good condition and repair and the
electrical, mechanical, HVAC, plumbing, elevator and other systems serving the
Premises and the Building will be in good condition and repair.
4. COMPLIANCE WITH LAWS: Notwithstanding anything to the contrary in
the Lease Form, at the Commencement Date, the Premises and the Building shall
conform to all requirements of covenants, conditions, restrictions and
encumbrances ("CC&R's"), all underwriter's requirements, and all rules,
regulations, statutes, ordinances, laws and building codes, (collectively,
"Laws") applicable thereto. Tenant shall not be required to construct or pay the
cost of complying with any CC&R's, underwriter's requirements or Laws requiring
construction of improvements in the Premises which are
<PAGE>
properly capitalized under general accounting principles, unless such compliance
is necessitated solely because of Tenant's particular use of the Premises.
5. ALTERATIONS, ADDITIONS AND IMPROVEMENTS: Notwithstanding anything to
the contrary in the Lease Form:
A. REMOVAL: Tenant shall not be required to remove any of the
initial Tenant Improvements set forth in Exhibit B of the Lease Form at the end
of the Lease Term. Except as set forth in the preceding sentence, upon request,
Landlord shall advise Tenant in writing whether it reserves the right to require
Tenant to remove any alterations made by Tenant from the Premises upon
termination of the Lease.
B. LANDLORD'S CHARGES: In no event shall Tenant be required to
reimburse Landlord for any costs incurred by Landlord pursuant to Paragraph
9.1(d) of the Lease Form (relating to Tenant's alterations or additions) to the
extent such costs exceed ten (10) percent of the Tenant's cost to perform such
addition or alteration.
C. TENANT'S PROPERTY: All alterations, trade fixtures and
personal property installed in the Premises at Tenant's expense ("Tenant's
Property") shall at all times remain Tenant's property and Tenant shall be
entitled to all depreciation, amortization and other tax benefits with respect
thereto. Except for Alterations which cannot be removed without structural
injury to the Premises, at any time Tenant may remove Tenant's Property from the
Premises, provided Tenant repairs all damage caused by such removal. Tenant is
hereby permitted by Landlord to install, and shall be permitted to remove from
the Premises at any time on or before the expiration of the Lease Term, the
Computer Equipment Rack identified on Exhibit _____ attached hereto.
D. LIEN WAIVER: Landlord shall have no lien or other interest
whatsoever in any item of Tenant's Property, or any portion thereof or interest
therein located in the Premises or else-where, and Landlord hereby waives all
such liens and interests. Within ten (10) days following Tenant's request,
Landlord shall execute documents in form reasonably acceptable to Tenant to
evidence Landlord's waiver of any right, title, lien or interest in Tenant's
Property located in the Premises.
E. SALE OF TENANT'S PROPERTY: Landlord shall provide Tenant
with at least five (5) days prior written notice of any sale of Tenant's
Property.
6. DEFAULT: Notwithstanding anything to the contrary in the Lease Form,
Tenant shall not be deemed to be in default on account of Tenant's failure to
pay money to Landlord, unless Tenant's failure to pay continues for five (5)
days after Tenant's actual receipt of written notice of the delinquency from
Landlord.
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<PAGE>
7. CAPITAL IMPROVEMENTS: Notwithstanding anything to the contrary in
the Lease Form. if any of Tenant's obligations under the Lease Form (as modified
by this Addendum) would require Tenant to pay all or any portion of any charge
which could be treated as a capital improvement under generally accepted
accounting principles, the cost of such improvement shall be amortized over the
useful life of the improvement (as reasonably determined by Landlord) with
interest on the unamortized balance at the then prevailing market rate Landlord
would pay if it borrowed funds to construct such improvements from an
institutional lender, and Landlord shall inform Tenant of the monthly
amortization payment required to so amortize such costs, and shall also provide
Tenant with the information upon which such determination is made.
8. EXPENSES: Notwithstanding anything to the contrary in the Lease
Form:
In no event shall Tenant have any obligation to perform or to
pay directly, or to reimburse Landlord for, all or any portion of the following
repairs, maintenance, improvements, replacements, premiums, claims, losses,
fees, charges, costs and expenses (collectively, "Costs"), nor shall any portion
of the Tenant Improvement allowance be applied to such costs:
A. LOSSES CAUSED BY OTHERS: Costs occasioned by the act,
omission or violation of Law by Landlord, any other occupant of the Building, or
their respective agents, employees or contractors.
B. CASUALTIES AND CONDEMNATIONS: Costs occasioned by fire,
acts of God, or other casualties or by the exercise of the power of eminent
domain.
C. CAPITAL IMPROVEMENTS: Costs relating to repairs,
alterations, improvements, equipment and tools which could properly be
capitalized under generally accepted accounting principles, except to the extent
that (i) the foregoing reduces the expenses otherwise payable by Tenant under
the Lease and (ii) Tenant's share of such Cost during any twelve-month period of
the Lease is equitably determined based on Tenant's usage and amortized over the
useful life of the capital item in question.
D. REIMBURSABLE EXPENSES: Costs for which Landlord has a right
of reimbursement from others.
E. REAL ESTATE TAXES: Taxes, assessments, all other
governmental levies, and any increases in the foregoing occasioned by or
relating to (i) land and improvements not reserved for Tenant's exclusive or
nonexclusive use, (ii) a voluntary or involuntary change of ownership or other
conveyance of the real property of which the Premises is a part (a) to any
person or entity affiliated with or related to Landlord or the partners,
shareholders, officers or directors of Landlord or (b) in connection with estate
planning or (c) which is not otherwise a bona fide, arm's length sale to an
unrelated third party, (iii) assessments and other fees for improvements and
services which do not benefit the Premises, or (iv) construction of improvements
for other occupants of the Building.
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<PAGE>
F. CONSTRUCTION DEFECTS: Costs to correct any construction
defect in the Premises or the Building or to comply with any CC&R's,
underwriter's requirement or Law applicable to the Premises or the Building on
the Commencement Date.
G. UTILITIES OR SERVICES: Costs (i) arising from the
disproportionate use of any utility or service supplied by Landlord to any other
occupant of the Building, or (ii) associated with utilities and services of a
type not provided to Tenant.
H. INTERIOR IMPROVEMENTS: The cost of any renovation,
improvement, painting or redecorating of any portion of the Building not made
available for Tenant's use, or the costs to perform any initial fit-up of or
improvement to the Common Areas of the Building, including, but not limited to
the improvements to the new lobby area of or entry to the Building.
I. LEASING EXPENSES: Fees, commissions, attorneys' fees, Costs
or other disbursements incurred in connection with negotiations or disputes with
any other occupant of the Building and Costs arising from the violation by
Landlord or any occupant of the Building (other than Tenant) of the terms and
conditions of any lease or other agreement.
J. RESERVES: Depreciation, amortization or other expense
reserves.
K. MORTGAGES: Interest, charges and fees incurred on debt,
payments on mortgages and rent under ground leases.
L. CONCESSIONS AND PARKING: costs incurred in connection with
the operation of any parking or commercial concession within the Building.
M. PROMOTION: Advertising or promotional Costs relating to
events in the Common Areas of the Building or the Exposition Hall.
N. CAPITAL LEASES: Lease payments and Costs for capital
machinery and equipment, such as air conditioners, elevators, and the like.
O. ART: Costs of sculptures, fountains, paintings and other
art objects.
P. INSURANCE: Insurance Costs for coverage not customarily
paid by tenants of similar Buildings in the vicinity of the Premises, increases
in insurance Costs caused by the activities of another occupant of the Building,
insurance deductibles, and co-insurance payments.
Q. HAZARDOUS MATERIALS: Costs incurred to investigate the
presence of any Hazardous Material, Costs to respond to any claim of Hazardous
Material contamination or damage, Costs to remove any Hazardous Material from
the Building and any judgments or other Costs
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<PAGE>
incurred in connection with any Hazardous Material exposure or releases, except
to the extent caused by the storage, use or disposal of the Hazardous Material
in question by Tenant.
R. MANAGEMENT: Wages, salaries, compensation, and labor burden
for any employee not stationed on the Building on a full-time basis or any fee,
profit or compensation retained by Landlord or its affiliates for management and
administration of the Building in excess of the management fee which would be
charged by a professional management services for operation of comparable
Buildings in the vicinity.
S. DUPLICATION: Costs and expenses for which Tenant reimburses
Landlord directly or which Tenant pays directly to a third person.
T. NON-OFFICE BUILDING RELATED EXPENSES: Costs not directly
attributable to the operation of the Building as an office building.
9. INDEMNITY: Notwithstanding anything to the contrary in the Lease
Form, Landlord shall indemnify, defend, protect and hold harmless Tenant from
all damages, liabilities, claims, judgments, actions, attorneys' fees,
consultants' fees, costs and expenses arising from the negligence or willful
misconduct of Landlord or its agents, contractors, employees or invitees, or the
breach of Landlord's obligations or representations under this Lease.
10. ASSIGNMENT AND SUBLETTING: Notwithstanding anything to the contrary
in the Lease Form, Tenant may, without Landlord's prior written consent and
without any participation by Landlord in assignment and subletting proceeds,
sublet the Premises or assign the Lease to: (i) a subsidiary, affiliate,
division or corporation controlling, controlled by or under common control with
Tenant; (ii) a successor corporation related to Tenant by merger, consolidation,
nonbankruptcy reorganization, or government action; or (iii) a purchaser of
substantially all of Tenant's assets located in the Premises. For the purpose of
this Lease, sale of Tenant's capital stock through any public exchange shall not
be deemed an assignment, subletting, or any other transfer of the Lease or the
Premises. Landlord's consent to any proposed assignment or subletting shall not
be unreasonably withheld or delayed and, if not given or withheld within
fourteen (14) days following Tenant's request for consent, shall be deemed
given. Notwithstanding anything to the contrary in the Lease Form, Tenant shall
be permitted to assign its Option to Renew the Lease set forth in Paragraph 24
of the Lease Form to any of the parties set forth in subparagraphs (i) through
(iii) of this paragraph.
11. SUBORDINATION: Notwithstanding anything to the contrary in the
Lease Form, this Lease shall not be subject to or subordinate to any ground or
underlying lease or to any lien, mortgage, deed of trust, or security interest
now or hereafter affecting the Premises, nor shall Tenant be required to execute
any documents subordinating this Lease, unless the ground lessor, lender, or
other holder of the interest to which this Lease shall be subordinated
contemporaneously executes a recognition and nondisturbance agreement which (i)
provides that this Lease shall not be terminated so long as Tenant is not in
default under this Lease and (ii) recognizes all of Tenant's rights
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<PAGE>
hereunder. Further, Tenant shall have no obligation to attorn to any
successor-in-interest or ground lessor, nor to execute any documents evidencing
attornment, unless the successor-in-interest or ground lessor in question
assumes, in writing, all obligations of the Landlord under this Lease. If
Landlord sells or otherwise conveys its interest in the Premises, Landlord shall
not be relieved of its obligations under the Lease, unless and until Landlord
transfers any security deposit of Tenant to its successor and the successor
assumes in writing the obligations to be performed by Landlord on and after the
effective date of the transfer.
12. PARKING: Notwithstanding anything to the contrary in the Lease
Form, in the event that, at any time during the Lease Term, Tenant determines
not to lease all of the 23 spaces to which it is entitled under paragraph 25 of
the Lease, such spaces shall revert to the Landlord on a month to month basis.
In the event Tenant desires to lease or re-lease such spaces, Landlord agrees to
lease or re-lease such spaces to Tenant within thirty (30) days of Tenant's
request.
13. FINANCIAL STATEMENTS: Notwithstanding anything to the contrary in
the Lease Form, Tenant shall be required to provide financial statements only in
connection with Landlord's sale or refinancing of the Buildings and all such
statements shall be held in strictest confidence.
14. RULES AND REGULATIONS: Notwithstanding anything to the contrary in
the Lease Form, Tenant shall not be required to comply with any new rule or
regulation, unless the same applies non-discriminatorily to all occupants of the
Building and does not unreasonably interfere with Tenant's use of the Premises
or Tenant's parking rights.
15. APPROVALS: Notwithstanding anything to the contrary in the Lease
Form, whenever the Lease requires an approval, consent, designation,
determination or judgment by either Landlord or Tenant, such approval, consent,
designation, determination or judgment (including, without limiting the
generality of the foregoing, those required in connection with assignment and
subletting) shall not be unreasonably withheld or delayed and in exercising any
right or remedy hereunder, each party shall at all times act reasonably and in
good faith. Notwithstanding the foregoing, or anything to the contrary in the
Lease Form, all approvals or consents required by either party with regard to
alterations or additions made pursuant to Paragraph 9.1 of the Lease Form shall
be given within fourteen (14) days of request therefor, and in the event no
response is received within such fourteen (14) day period, the requested consent
or approval shall be deemed granted.
16. REASONABLE EXPENDITURES: Notwithstanding anything to the contrary
in the Lease Form, any expenditure by a party permitted or required under the
Lease, for which such party is entitled to demand and does demand reimbursement
from the other party, shall be limited to the fair market value of the goods and
services involved, shall be reasonably incurred, and shall be substantiated by
documentary evidence available for inspection and review by the other party or
its representative during normal business hours.
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<PAGE>
17. DAMAGE OR DESTRUCTION: Notwithstanding anything to the contrary in
the Lease Form, Landlord shall notify Tenant within thirty (30) days following
any damage to or destruction of the Premises (or the Building if such damage or
destruction interferes with Tenant's use of the Premises) the length of time
Landlord reasonably estimates to be necessary for repair or restoration. Tenant
shall have the right to terminate the Lease within fifteen (15) days following
receipt of such notice if restoration or repair of the Premises will take more
than one hundred eighty (180) days.
18. NOTICES: Notwithstanding anything to the contrary in the Lease
Form, any notice or report required or desired to be given regarding this Lease
shall be in writing may be given by personal delivery, by facsimile, by courier
service or by mail. Any notice or report addressed to Tenant at the Premises or
to Landlord at the address specified in the Basic Lease Information, as
appropriate, shall be deemed to have been given (i) on the third business day
after mailing if such notice or report was deposited it the United States mail,
certified or registered, postage prepaid, (ii) when delivered if given by
personal delivery, (iii) one day following deposit, cost prepaid, with Federal
Express or similar private carrier, (iv) instantaneously upon confirmation of
receipt of facsimile, and (v) in all other cases when actually received. Either
party may change its address by giving notice of the same in accordance with
this Paragraph.
19. LANDLORD'S ENTRY OF PREMISES: Notwithstanding anything to the
contrary in the Lease Form, Landlord and Landlord's agents, except in the case
of emergency, shall provide Tenant with twenty-four (24) hours' notice prior to
entry of the Premises. Any such entry by Landlord and Landlord's agents shall
comply with all reasonable security measures of Tenant and shall not impair
Tenant's operations more than reasonably necessary. During any such entry,
Landlord and Landlord's agents shall at all times be accompanied by Tenant.
20. SALE OF PROPERTY: Notwithstanding anything to the contrary in the
Lease Form, Landlord shall not be relieved of its obligations under the Lease
upon a sale of the Building, unless the purchasing owner assumes the obligations
of Landlord in writing.
21. QUIET POSSESSION: Notwithstanding anything to the contrary in the
Lease Form, Tenant shall peacefully have, hold and enjoy the Premises, subject
to the other terms of this Lease, provided that Tenant pays the Rent and
performs all of Tenant's covenants and agreement contained in this Lease. This
covenant and the other covenants of Landlord contained in this Lease shall be
binding upon Landlord and its successors only with respect to breaches occurring
during its and their respective ownerships of Landlord's interest hereunder.
22. LANDLORD'S AUTHORITY TO EXECUTE: Notwithstanding anything to the
contrary in the Lease Form, Landlord warrants and represents to Tenant that
Landlord has the full right, power and authority to enter into this Lease and
has obtained all necessary consents and approvals from its partners, officers,
board of directors or other members required under the documents governing its
affairs in order to consummate the Lease contemplated hereby. The persons
executing this Lease on
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<PAGE>
behalf of Landlord have the full right, power and authority so to do and affirm
the foregoing warranty on behalf of Landlord and on their own behalf.
23. SECURITY DEPOSIT: Within thirty (30) days after the expiration or
earlier termination of the Lease term and after Tenant has vacated the Premises,
Landlord shall return to Tenant the entire security deposit except for amounts
that Landlord has deducted therefrom that are needed by Landlord to cure
defaults of Tenant under the Lease or compensate Landlord for damages for which
Tenant is liable pursuant to this Lease.
24. EFFECT OF ADDENDUM: Each term used herein with initial capital
letters shall have the meaning ascribed to such term in the Lease Form unless
specifically otherwise defined herein. In the event of any inconsistency between
this First Addendum and the Lease Form, the terms of this First Addendum shall
prevail. As used herein, the term "Lease" shall mean the Lease Form, this
Addendum and all riders, exhibits, rules, regulations, covenants, conditions and
restrictions referred to in the Lease Form or this Addendum.
LANDLORD: TENANT:
ZORO, LLC, SILICON VALLEY INTERNET
a California Limited Liability corporation PARTNERS
a _________ corporation
By: _______________ By:__________________
Printed Printed
Name:_________________ Name:___________________
Title:_________________ Title:_________________
Date:___________________ Date:_________________
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<PAGE>
Exhibit 10.24
MONTH-TO-MONTH LEASE
----------------------
LANDLORD: ZORO LLC, a California limited liability company
TENANT: Silicon Valley Internet Partners, a California corporation
PREMISES: Suite(s) 5226A-5232B shown on Exhibit A attached hereto.
1. PARTIES.
This Lease is entered into the 5 June, 1997, by and between Landlord
and Tenant.
2. DESCRIPTION OF PREMISES.
Landlord agrees to rent to Tenant and Tenant hereby hires from Landlord
the Premises located in the building owned by Landlord at 699 Eighth Street, San
Francisco, California (the "Building"). Notwithstanding anything in the
foregoing to the contrary, Landlord shall have the right at any time, upon
thirty (30) days prior notice, to physically relocate Tenant to other vacant
space in the Building of comparable size, and upon such relocation the
substitute premises shall be deemed the Premises under this Lease. Landlord
shall pay for Tenant's reasonable relocation expenses in connection with any
such relocation.
3. RENT
Tenant will pay to Landlord $6,600.00 in rent, per month, in advance,
on the first day of each month, without prior demand and without any deduction
or offset. Rent is payable by check, by personal delivery or mail, at the office
of the Building Upon execution hereof by Tenant, and notwithstanding the
foregoing. Tenant shall prepay rent in the amount of $13,200.00 for two (2) full
calendar months of the term of this Lease. The parties agree that any other
amount due from Tenant to Landlord hereunder shall be deemed to be additional
rent. Tenant agrees to pay a late charge of six percent (6%) of the unpaid
amount if the rent is not received by the tenth (10th) day of the month. This
late charge does not establish a grace period. The Landlord shall credit Tenant
$5,100.00 in the form of free rent, during the first month following the
commencement of lease.
In the event the Tenant defaults under this Lease, Landlord may
exercise any remedy available under California Law.
4. TERM.
The term of this Lease will commence on 6/16/97, and continue on a
calendar month-to-month basis. Either party may terminate this Lease on thirty
(30) days' prior written notice. Rent shall be prorated for the month of August
1997.
1
<PAGE>
5. SECURITY DEPOSIT.
Tenant has deposited with Landlord the sum of $6,600.00 as a security
deposit (the "Deposit") for the full and faithful performance of every provision
of this Lease to be performed by Tenant. If Tenant breaches any provision of
this Lease, Landlord may use all or any part of the Deposit for the payment of
any rent or any other sums in default, or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant's default. Upon
demand by Landlord, Tenant shall replenish any sums used by landlord from the
Deposit so that at all times the full amount of the Deposit shall be held by
Landlord. At the expiration of the term of the Lease, and provided there exists
no default by Tenant hereunder, the Deposit or any balance thereof shall be
returned to tenant. No interest is payable on the Deposit.
6. CONDITION OF PREMISES.
Tenant accepts the Premises in its "AS-IS" condition and will maintain
the Premises in a proper and safe condition, and will comply with all state and
local laws, ordinances, and regulations concerning the condition and use of the
Premises. Landlord has no obligation, and has made no commitment or
representation, to improve, repair, alter or build-out any part of the Premises.
7. TENANT AGREEMENT TO MAINTAIN PREMISES AS CONSIDERATION FOR RENTAL.
Tenant agrees that, as part of the consideration paid for the use and
occupancy of the Premises, Tenant will, at Tenant's cost, perform all work
necessary to maintain the interior of the Premises; Tenant waives all rights to
make repairs at the expense of Landlord as may be provided by any law, statute
or ordinance now or hereafter in effect, including, without limitation, the
provisions of California Civil Code Sections 1941 and 1942, and any similar,
successor or related provision of law.
8. ASSIGNMENT AND SUBLETTING.
Tenant shall not assign its interest under the Lease or sublet all or
any portion of the Premises without the prior written consent of Landlord, which
consent Landlord may grant or withhold in its sole and absolute discretion. Any
assignment or subletting without the prior consent of Landlord shall be void and
of no binding effect on Landlord.
9. INDEMNITY AND INSURANCE.
9.1 INDEMNITY. Except for the gross negligence or willful misconduct of
Landlord, its agents, contractors, and employees, Tenant shall indemnify and
hold Landlord harmless from and against any and all claims arising out of or
caused by Tenant's use or occupancy of the Premises, or arising out of or caused
by the conduct of Tenant's business or arising out of or caused by any activity,
work or things done, permitted or suffered by Tenant in or about the Premises or
elsewhere. Tenant shall defend Landlord (and shall indemnify and hold Landlord
harmless from and against all reasonable costs
2
<PAGE>
such as attorney's fees and related expenses incurred in such defense) against
any claim, action or proceeding which alleges the sole negligence or sole
willful misconduct of the Tenant, or the negligence or willful misconduct of
Landlord and Tenant. Landlord shall retain the right to reject defense counsel
appointed by Tenant or its agents, and to appoint other counsel at Landlord's
sole cost and expense, if Landlord believes that such counsel as appointed by
Tenant or its agents will not adequately represent Landlord's interest in the
case.
9.2 EXEMPTION OF LANDLORD FROM LIABILITY. Except for the gross
negligence or willful misconduct of Landlord, its agents, contractors, and
employees, Tenant, as a material part of the consideration to Landlord, hereby
assumes all risk of damage to property of Tenant or injury to persons, in, upon
or about the Premises arising from any cause and Tenant hereby waives all claims
in respect thereof against Landlord. Tenant, as a material part of the
consideration to Landlord, hereby acknowledges that there is a risk of harm to
Tenant's property and injury to persons in, upon or about the Premises arising
from any cause or event and Tenant agrees to assume all such risks of harm and
Tenant hereby waives all claims in respect thereof against Landlord. Tenant
hereby agrees that Landlord shall not be liable for injury to Tenant's business
or any loss of income therefrom or for damage to the goods, wares, merchandise
or other property of Tenant, Tenant's employees, invitees, customers, or any
other person in or about the Premises, nor shall Landlord be liable to injury to
the person of Tenant, Tenant's employees, agents or contractors, whether such
damage or injury is caused by or results from fire, steam, electricity, gas
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, or whether said damages or injury results
from conditions arising upon the Premises, or from other sources or places and
regardless of whether the cause of such damages or injury or the means of
repairing the same is inaccessible to the Tenant. Landlord shall not be liable
for any damages arising from any act or negligence of any other tenant, occupant
or user of the Building, nor from the failure of Landlord to enforce the
provisions of any other lease of the Building.
9.3 INSURANCE. Tenant shall carry and maintain in force throughout the
term of this Lease the insurance referred to in Exhibit B attached hereto, the
terms of which are incorporated in this Lease as if fully set forth herein.
9.4 WAIVER OF SUBROGATION. Each of Landlord and Tenant hereby releases
one another, and waives its entire respective rights of recovery against the
other for any direct or consequential loss or damage arising out of or incident
to the perils covered by the property insurance policy or policies carried by
the waiving party, whether or not such damage or loss may be attributable to the
negligence of either party or its agents, invitees, contractors or employees.
Each insurance policy carried by either Landlord or Tenant in accordance with
this Lease shall include a waiver of the insurer's right of subrogation to the
extent necessary.
3
<PAGE>
10. UTILITIES.
Landlord agrees to provide (i) electricity for lighting and the
operation of normal office machines, (ii) lighting replacements for Building
standard lighting, (iii) conditioned air to the extent reasonably required for
the comfortable occupancy thereof by Tenant at such times as Landlord in its
sole discretion deems reasonably necessary, (iv) elevator service during normal
business hours, (v) rest rooms and supplies therefor, (vi) potable water for the
rest rooms and for any approved kitchen areas located in the Premises, and (vii)
janitorial services as determined by the landlord.
11. LANDLORD MAINTENANCE AND REPAIR.
Landlord will maintain and operate the common areas of the Building in
reasonably good order and condition.
12. TAXES.
Tenant is responsible for, and shall pay prior to delinquency, any and
all taxes and assessments that are levied or assessed against Tenant's
improvements, fixtures, furnishings and other personal property installed in the
Premises.
13. TENANT ALTERATIONS.
Tenant shall not make any alterations, improvements or modifications to
the Premises without first obtaining Landlord's written consent. Tenant will
keep the Premises free and clear of all liens arising out of any work performed
or materials furnished to the Premises. If Tenant fails to discharge any lien,
Landlord may do so and the cost thereof will be owed to Landlord as additional
rent.
14. USE OF PREMISES.
The Premises shall be used and occupied by Tenant for general office,
software development and testing and showroom use only, and for no other
purpose. Tenant shall not use the Premises for any unlawful purpose, violate any
law or ordinance, or commit waste or nuisance on the Premises. Tenant may not
disturb, annoy, endanger, or interfere with neighboring tenants.
15. LANDLORD'S ENTRY OF PREMISES.
Tenant will make the Premises available during normal business hours at
times reasonably requested by Landlord for entry by Landlord or its agents.
16. RULES AND REGULATIONS.
Tenant and its employees, guests and invitees shall comply with all
rules and regulations established by Landlord from time to time for the
Building. The existing Rules and Regulations are attached to this Lease as
Exhibit C and are incorporated herein as if fully set forth herein.
4
<PAGE>
17. ATTORNEY'S FEES.
In any legal action brought by either party to enforce the terms of
this Lease, the prevailing party is entitled to all costs incurred in connection
with such an action, including reasonable attorneys' fees.
California law shall be applied in any such action.
18. TIME OF THE ESSENCE.
Time is of the essence of each provision of this Lease.
19. ENTIRE AGREEMENT: MODIFICATION.
This Lease contains all the agreements of the parties and cannot be
amended or modified except by written agreement.
20. SERVICE OF NOTICES.
Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal service on business days evidenced by a
signed receipt or sent by Federal Express or other national overnight carrier
service that provides evidence or proof of delivery, or by registered or
certified mail, return receipt requested, addressed to Tenant or to Landlord, as
the case may be, at the address hereinbelow provided, which notice shall be
effective upon proof of delivery. Either party may by notice to the other
specify a different address for notice purposes except that, upon Tenant's
taking possession of the Premises, the Premises shall constitute Tenant's
address for notice purposes. Tenant hereby appoints as its agent to receive the
service of all default notices and notice of commencement of unlawful detainer
proceedings the person in charge of or apparently in charge of or occupying the
Premises at the time, and, if there is no such person, then such service may be
made by (a) attaching the same on any business day on the main entrance of the
Premises, and (b) mailing a copy thereof to Tenant on the same day by registered
or certified mail, return receipt requested or by Federal Express or other
national overnight carrier service that provides evidence or proof of delivery,
and such service shall be effective (as of the date of posting of the same at
the Premises as hereinabove provided) for all purposes under this Lease.
5
<PAGE>
IN WITNESS WHEREOF, this Lease is executed the day and year first above
written.
LANDLORD: TENANT:
ZORO LLC, Silicon Valley Internet Partners,
a California limited liability company a California corporation
By: _____________________ By: /s/ Robert Gett
Martin Zankel Mr. Bob Gett
Its: Managing Partner Its: President
Address: 699 Eighth Street Address: 950 Tower Lane Suite 300
San Francisco, CA 94103 Foster City, CA 94404
Telephone: (415) 487-4000 Telephone: 415-524-1790
Fax: (415) 487-4056 Fax: 415-524-1767
6
<PAGE>
EXHIBIT A
PREMISES
--------
[CHART OMITTED]
A-1
<PAGE>
EXHIBIT B
---------
1. INSURANCE. Tenant, at its sole expense, shall procure and maintain
during the Term:
i. broad form commercial general liability insurance,
including contractual liability (specifically covering this Lease), fire, legal
liability and premises operations coverages, bodily injury coverage (which
includes personal injury coverage), and property damage liability coverage
insuring against any and all liability of Tenant, its agents and its employees
with respect to the Premises or arising out of the maintenance, use, or
occupancy thereof, said liability insurance to have combined limits in the
aggregate for bodily injury and property damage of not less than $1,000,000 per
occurrence;
ii. fire and extended coverage insurance on all improvements
to the Premises and all contents therein in an amount not less than one hundred
percent (100%) of the replacement cost thereof. Said insurance shall include a
loss payable clause for the benefit of Tenant.
iii. The general liability insurance shall insure the
performance by Tenant of the indemnity agreement contained in the Lease with
respect to liability for injury to death of persons and injury to or damage to
property. Landlord shall be named as an additional insured on all such policies.
The policy or policies evidencing such insurance shall provide that same may not
be canceled or amended without thirty (30) days prior written notice to
Landlord, and shall be issued by an insurance company licensed to do business in
California and having a Best's Financial Rating of at least Class X and a Best's
Policyholder Rating of at least Class A. Prior to Tenant's occupancy of the
Premises, Tenant shall furnish to Landlord a certificate of insurance evidencing
the existence of all insurance required to be maintained by Tenant pursuant to
this Lease. Tenant will not permit the Premises to be used for any purpose which
would render the insurance thereon or on the Building void or the insurance risk
more hazardous or increase the premium rate therefore.
B-1
<PAGE>
EXHIBIT C
RULES AND REGULATIONS
---------------------
1. COMMON AREAS. The sidewalks, halls, passages, exits, entrances,
elevators and stairways of the Building shall not be obstructed by Tenant or
used for any purpose other than for ingress to and egress from the Premises. The
halls, passages, exits, entrances, elevators and stairways are not for the
general public and Landlord shall in all cases have the right to control and
prevent access thereto of all persons (including, without limitation, messengers
or delivery personnel not wearing uniforms) whose presence in the judgment of
Landlord would be prejudicial to the safety, character, reputation or interests
of the Building and its tenants. Neither Tenant nor any agent, employee,
contractor, invites or licensee of Tenant shall go upon the roof of the
Building. Landlord shall have the right at any time, without the same
constituting an actual or constructive eviction and without incurring any
liability to Tenant therefor, to change the arrangement or location of entrances
or passageways, doors or doorways, corridors, elevators, stairs, toilets and
common areas of the Building.
2. SIGNS. No sign, placard, picture, name, advertisement or notice
visible from the exterior of the Premises shall be inscribed, painted, affixed
or otherwise displayed by Tenant on any part of the Building or the Premises
without the prior written consent of Landlord. Landlord will adopt and furnish
to tenants general guidelines relating to signs inside the Building. Tenant
agrees to conform to such guidelines. All approved signs or lettering shall be
printed, painted, affixed or inscribed at the expense of Tenant by a person
approved by Landlord. Material visible from outside the Building will not be
permitted.
3. PROHIBITED USES. The Premises shall not be used for the storage of
merchandise held for sale to the general public or for lodging. No cooking shall
be done or permitted on the Premises except that private use by Tenant of
microwave ovens Underwritters' Laboratory-approved equipment for brewing coffee,
tea, hot chocolate and similar beverages will be permitted, provided that such
use is in accordance with all applicable federal, state and municipal laws,
codes, ordinances, rules and regulations. Tenant shall not place any load on the
floors of the Building exceeding fifty (50) pounds per square foot, live or dead
load. Tenant shall not use electricity for lighting, machines or equipment in
excess of four (4) watts per square foot.
4. JANITORIAL SERVICE. Tenant shall not employ any person other than
the janitor of Landlord for the purpose of cleaning the Premises unless
otherwise agreed to by Landlord in writing. Except with the written consent of
Landlord, no persons other than those approved by Landlord shall be permitted to
enter the Building for the purpose of cleaning the Premises. Tenant shall not
cause any unnecessary labor by reason of Tenant's carelessness or indifference
in the preservation of good order and cleanliness. Landlord shall not be
responsible to Tenant for any loss of property in the Premises, however
occurring, or for any damage done to the effects of Tenant by the janitor or any
other employee or any other person.
C-1
<PAGE>
5. KEYS. Landlord will furnish Tenant without charge with two (2) keys
to each door lock provided in the Premises by Landlord. Landlord may make a
reasonable charge for any additional keys. Tenant shall not have any such keys
copied or any keys made. Tenant shall not alter any lock or install a new or
additional lock without prior written consent from Landlord, or any bolt on any
door of the Premises. Tenant, upon the termination of this Lease, shall deliver
to Landlord all keys to doors in the Building.
6. MOVING PROCEDURES. Landlord shall designate appropriate entrances
for deliveries or other movement to or from the Premises of equipment,
materials, supplies, furniture or other property, and Tenant shall not use any
other entrances for such purposes. All moves shall be scheduled and carried out
during nonbusiness hours of the Building. All persons employed and means or
methods used to move equipment, materials, supplies, furniture or other property
in or out of the Building must be approved by Landlord prior to any such
movement. Landlord shall have the right to prescribe the maximum weight, size
and position of all equipment, materials, furniture or other property brought
into the Building. Heavy objects shall, if considered necessary by Landlord,
stand on a platform of such thickness as is necessary properly to distribute the
weight. Landlord will not be responsible for loss of or damage to any such
property from any cause, and all damage done to the Building by moving or
maintaining such property shall be repaired at the expense of Tenant.
7. NO NUISANCES. Tenant shall not use or keep in the Premises or the
Building any kerosene, gasoline or inflammable or combustible fluid or material
other than limited quantities thereof reasonably necessary for the operation or
maintenance of office equipment. Tenant shall not use any method of heating or
air conditioning other than that supplied by Landlord. Tenant shall not use or
keep or permit to be used or kept any foul or noxious gas or substance in the
Premises, or permit or suffer the Premises to be occupied or used in a manner
offensive or objectionable to Landlord or other occupants of the Building by
reason of noise, odors or vibrations, or interfere in any way with other tenants
or those having business in the Building, nor shall any animals be brought or
kept in the Premises or the Building.
8. CHANGE OF ADDRESS. Landlord shall have the right, exercisable
without notice and without liability to Tenant, to change to change the name or
street address of the Building or the room or suite number of the Premises.
9. BUSINESS HOURS. Landlord establishes the hours of 8:00 a.m. to 6:00
p.m. Monday through Friday, except union holidays and legal holidays, as
reasonable and usual business hours for the purposes of this Lease. If Tenant
requests electricity or heat or air conditioning or any other services during
any other hours or on any other days, and if Landlord is able to provide the
same, Tenant shall pay Landlord such charge as Landlord shall establish from
time to time for providing such services during such hours. Any such charges
which Tenant is obligated to pay shall be deemed to be additional rent under
this Lease.
C-2
<PAGE>
10. ACCESS TO BUILDING. Landlord reserves the right to exclude from the
Building during the evening, night and early morning hours beginning at 6:00
p.m. and ending at 8:00 a.m. Monday through Friday, and at all hours on
Saturdays, Sundays, union holidays and legal holidays, all persons who do not
present identification acceptable to Landlord. Tenant shall provide Landlord
with a list of all persons authorized by Tenant to enter the Premises and shall
be liable to Landlord for all acts of such persons. Landlord shall in no case be
liable for damages for any error with regard to the admission to or exclusion
from the Building of any person. In the case of invasion, mob, riot, public
excitement or other circumstances rendering such action advisable in Landlord's
opinion, Landlord reserves the right to prevent access to the Building during
the continuance of the same by such action as Landlord may deem appropriate,
including closing doors.
11. BUILDING DIRECTORY. The directory of the Building will be provided
for the display of the name and location of Tenant and a reasonable number of
the principal officers and employees of Tenant at the expense of Tenant.
Landlord reserves the right to restrict the amount of directory space utilized
by Tenant.
12. WINDOW COVERINGS. No curtains, draperies, blinds, shutters, shades,
screens or other coverings, hangings or decorations shall be attached to, hung
or placed in, or used in connection with any window of the Building without the
prior written consent of Landlord. In any event, with the prior written consent
of Landlord, such items shall be installed on the office side of Landlord's
standard window covering and shall in no way be visible from the exterior of the
Building. Tenant shall keep window coverings closed when the effect of sunlight
(or the lack thereof) would impose unnecessary loads on the Building's air
conditioning systems.
13. FOOD AND BEVERAGES. Tenant shall not obtain for use in the Premises
vending machines or other similar services, except at such reasonable hours and
under such reasonable regulations as may be established by Landlord.
14. PROCEDURES WHEN LEAVING. Tenant shall ensure that the doors of the
Premises are closed and locked and that all water faucets, water apparatus and
utilities are shut off before Tenant and its employees leave the Premises so as
to prevent waste or damage. For any default or carelessness in this regard.
Tenant shall be liable and pay for all damage and injuries sustained by Landlord
or other tenants or occupants of the Building. On multiple tenancy floors,
Tenant shall keep the doors to the Building corridors closed at all times except
for ingress and egress.
15. BATHROOMS. The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they were
constructed, no foreign substance of any kind whatsoever shall be thrown
therein, and the expense of any breakage, stoppage or damage resulting from the
violation of this rule shall be paid by Tenant if caused by Tenant or its
agents, employees, contractors, invitees or licensees.
C-3
<PAGE>
16. PROHIBITED ACTIVITIES. Except with the prior written consent of
Landlord. Tenant shall not sell at retail newspapers, magazines, periodicals,
theater or travel tickets or any other goods or merchandise to the general
public in or on the Premises, nor shall Tenant carry on or permit or allow any
employee or other person to carry on the business of stenography, typewriting,
printing or photocopying or any similar business in or from the Premises for the
service or accommodation of occupants of any other portion of the Building, nor
shall the Premises be used for manufacturing of any kind, or any business or
activity other than that specifically provided for in this Lease.
17. NO ANTENNA. Tenant shall not install any radio or television
antenna, loudspeaker, or other device on the roof or exterior walls of the
Building. No television or radio or recorder shall be played in such a manner as
to cause a nuisance to any other tenant.
18. VEHICLES. There shall not be used in any space, or in the public
halls of the Building, either by Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other material handling
equipment as Landlord approves. No other vehicles of any kind shall be brought
by Tenant into the Building or kept in or about the Premises.
19. TRASH REMOVAL. Tenant shall store all its trash and garbage within
the Premises. No material shall be placed in the trash boxes or receptacles if
such material is of such nature that it may not be disposed of in the ordinary
and customary manner of removing and disposing of office building trash and
garbage in the city or county in which the Building is located without being in
violation of any law or ordinance governing such disposal. All garbage and
refuse disposal shall be made only through entryways and elevators provided for
such purposes and at such times as Landlord shall designate. Tenant shall crush
and flatten all boxes, cartons and containers. Tenant shall pay extra charges
for any unusual trash disposal.
20. NO SOLICITING. Canvassing, soliciting, distribution of handbills or
any other written material and peddling in the Building are prohibited, and
Tenant shall cooperate to prevent the same.
21. NO OVERNIGHT USE. The premises shall not be used for any lodging or
overnight occupancy.
22. USES RESERVED BY LANDLORD. By its execution of the Lease to which
these Rules and Regulations are attached, Tenant acknowledges that portions of
the Building may be used by the Landlord or its licensees for large scale
exhibitions and special events, including conventions, trade shows, social and
political gatherings and parties, and such that events may generate noise,
including music, amplified sound and revelry, during and after the regular
business hours of the Building. Tenant agrees that the use of the Building for
such purposes by Landlord and its licensees shall not constitute a constructive
eviction or breach of any covenant of quiet enjoyment or entitle Tenant to any
abatement of rent.
C-4
<PAGE>
23. SERVICES. The requirements of Tenant will be attended to only upon
application in writing at the office of the Building. Personnel of Landlord
shall not perform any work or do anything outside of their regular duties unless
under special instructions from Landlord.
24. WAIVER. Landlord may waive any one or more of these Rules and
Regulations for the benefit of any particular tenant or tenants, but no such
waiver by Landlord shall be construed as a waiver of such Rules and Regulations
in favor of any other tenant or tenants, nor prevent Landlord from thereafter
enforcing any such Rules and Regulations against any or all of the tenants of
the Building.
25. SUPPLEMENTAL TO LEASE. These Rules and Regulations are in addition
to, and shall not be construed to in any way modify or amend, in whole or in
part, the covenants of this Lease.
26. AMENDMENTS AND ADDITIONS. Landlord reserves the right to make such
other rules and regulations, and to amend or repeal these Rules and Regulations,
as in Landlord's judgment may from time to time be desirable for the safety,
care and cleanliness of the Building and for the preservation of good order
therein.
C-5
<PAGE>
Exhibit 10.25
OFFICE LEASE
(Gross)
699 Eighth Street
San Francisco, California
BASIC LEASE INFORMATION
The following is a summary of Basic Lease Information. To the extent
there is any conflict between the provisions of this summary and any more
specific provision of the Lease, such more specific provision shall control.
Date: June 26, 1997
<TABLE>
<S> <C>
A. LANDLORD: ZORO, LLC, a California limited liability
B. TENANT: SILICON VALLEY INTERNET PARTNERS, a
California Corporation
C. PREMISES (SECTION 1.1): 23,466 rentable square feet which comprises
the southwest portion of the third (3rd)
floor
D. BUILDING (SECTION 1.1): 699 Eighth Street, San Francisco,
California
E. TERM (SECTION 2.1): Five (5) Years
F. COMMENCEMENT DATE (SECTION 2.1): The later of September 1, 1997 (the
"Scheduled Completion Date") or upon
substantial completion by Landlord of
Landlord's Work as defined in Exhibit B.
G. EXPIRATION DATE (SECTION 2.1): August 30, 2002
H. INTERIM RENT (SECTION 2.2): $1,249.00
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C> <C>
I. BASE RENT (SECTION 3.1 (a)): MONTHS RENT
1 - 12 $37,467.38
12 - 24 $38,445.13
24 - 37 $39,422.88
37 - 48 $40,400.63
49 - 60 $41,378.38
J. BASE EXPENSE YEAR (SECTION 3.1(b)): Subject to section 3.1(e), 1997
K. BASE TAX YEAR (SECTION 3.1(c)): 1998
L. SECURITY DEPOSIT (SECTION 3.3): $124,135, Cash Security Deposit, and
$250,000 Letter of Credit, due upon
lease execution.
M. TENANT'S PERCENTAGE SHARE (SECTION 4.1): 0367% (23,466 sq. ft./638,923 sq. ft.)
N. LIABILITY INSURANCE (SECTION 10.2): $2,000,000
O. LANDLORD'S ADDRESS (SECTION 21.1): For Payment of Rent:
A&A Properties
8615 Eldercreek Road, Suite 200
Sacramento, CA 95825
For All Other Notices:
c/o Bartko, Zankel, Tarrant & Miller
900 Front Street, Suite 300
San Francisco, California 94111
Attention: Martin I. Zankel, Esq.
P. TENANT'S ADDRESS (SECTION 21.1): At the Premises.
Q. REAL ESTATE BROKER(S) (SECTION 26.5): Polatnick Properties (Landlord's Broker),
Starboard Commercial Brokerage and Cornish
& Carey Commercial Real Estate (Tenant's
Broker)
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. PREMISES 1
2. TERM 2
3. RENT 5
4. OPERATING EXPENSES AND PROPERTY TAXES 10
5. OTHER TAXES PAYABLE BY TENANT 13
6. USE 13
7. SERVICES 14
8. MAINTENANCE AND REPAIRS 15
9. ALTERATIONS 16
10. INSURANCE 19
11. COMPLIANCE WITH LEGAL REQUIREMENTS 21
12. ASSIGNMENT OR SUBLEASE 21
13. RULES AND REGULATIONS 27
14. ENTRY BY LANDLORD 27
15. EVENTS OF DEFAULT AND REMEDIES 28
16. DAMAGE OR DESTRUCTION 31
17. EMINENT DOMAIN 32
18. SUBORDINATION, MERGER AND SALE 34
19. ESTOPPEL CERTIFICATE 35
20. HOLDING OVER 35
21. NOTICES 35
22. HAZARDOUS MATERIALS 36
23. [INTENTIONALLY OMITTED] 38
24. OPTION TO RENEW 38
25. PARKING 40
26. MISCELLANEOUS 41
</TABLE>
<TABLE>
<S> <C>
Exhibit A-1 - Floor Plan of Premises
Exhibit B - Initial Improvement of the Premises
Exhibit C - Rules and Regulations
Exhibit D - Excluded Operating Expenses
</TABLE>
-iii-
<PAGE>
OFFICE LEASE
(Gross)
THIS LEASE is made as of the date specified in the Basic Lease
Information, by and between the Landlord specified in Item A of the Basic Lease
Information ("Landlord") and the Tenant specified in Item B of the Basic Lease
Information ("Tenant").
WITNESSETH:
1. PREMISES
1.1 DEMISE. Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, for the term and subject to the covenants hereinafter set forth,
to all of which Landlord and Tenant hereby agree, the space on the floor(s)
specified in Item C of the Basic Lease Information (the "Premises"), as outlined
on the floor plan(s) attached hereto as Exhibit A, in the building specified in
Item D of the Basic Lease Information (the "Building"), which includes the land
on which the Building is located. Tenant shall have the right to use, in common
with others, the entrances, lobbies, stairs and elevators of the Building as
such may exist from time to time in Landlord's discretion during the term for
access to the Premises. All of the windows and outside decks, balconies and
walls of the Building and any space in the Premises used for shafts, stacks,
pipes, conduits, ducts, electric or other utilities, sinks or other Building
facilities,-and the use thereof and access thereto through the Premises for the
purposes of operation, maintenance and repairs, are reserved to Landlord.
1.2 [Intentionally Omitted]
1.3 RENTABLE SQUARE FOOTAGE. Landlord and Tenant acknowledge and agree
that as of the date hereof the rentable square footage of the Premises and the
Building, calculated in accordance with standards of measurement adopted by the
Building Owners and Managers Association, American National Standard, ANSI/BOMA
Z65.1-1996, as modified by Landlord for uniform use in the Building, is as
provided in Item C of the Basic Lease Information, and such figure shall be
final and binding on Landlord and Tenant for all purposes under this Lease.
1.4 LIGHT AND AIR. No easement for light, air or view is included with
or appurtenant to the Premises. Any diminution or shutting off of light, air or
view by any structure which may hereafter be erected (whether or not constructed
by Landlord) shall in no way affect this Lease or impose any liability on
Landlord.
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1.5 ACCEPTANCE OF PREMISES. By accepting possession of the Premises,
Tenant shall be deemed to have acknowledged that the Premises are suitable for
its purposes and, subject to section 2.2, in good condition and repair. Tenant
acknowledges and agrees that, prior to the Commencement Date, it will inspect
the Premises and that Tenant is not relying on any representations or warranties
made by Landlord regarding the Premises or the Building except as may be
expressly set forth herein. Notwithstanding anything to the contrary in the
foregoing, if there is any defect (latent or patent) or malfunction in the
operation of any equipment, fixtures or improvements constructed or installed in
the Premises by Landlord in accordance with Exhibit B hereto, and Tenant gives
Landlord notice of such defect during the first 180 days of Tenant's occupancy
of the Premises, Landlord shall correct such defect or malfunction at Landlord's
sole cost and expense.
1.6 ATRIUM AND EXHIBITION HALL. Tenant acknowledge that the Building
has been designed around a ground floor atrium and a lower level exhibition
hall. Landlord intends to market the use of, and to conduct and to permit the
conduct of, professionally managed and presented events in such areas of the
Building. Tenant acknowledges that such uses generate noise, traffic and
increased uses of common area facilities and services in the Building and that
such activities shall under no circumstances result in or be deemed a
constructive eviction or impairment or interference with Tenant's use or
occupancy of the Premises, or entitle Tenant to any abatement in, or defense
from the payment of, any rent or other charges due under this Lease. Landlord
will use reasonable efforts to notify Tenant in advance of any upcoming
scheduled uses of the ground floor atrium or exhibition hall, and will act
diligently and take such commercially reasonable actions as may be reasonably
required in the judgment of Landlord (recognizing the potential impact on
tenants of the adverse effect that a unruly and loud public event might have on
a tenant's business) to cause all events held during normal business hours to be
conducted in such a manner that there is no unreasonable interference with the
conduct of Tenant's business in the Premises.
2. TERM
2.1 INITIAL TERM. The term of this Lease shall be the term specified
in Item E of the Basic Lease Information, which shall commence on the
Commencement Date specified in Item F of the Basic Lease Information (the
"Commencement Date") and, unless sooner terminated as herein after provided,
shall end on the Expiration Date specified in Item G of the Basic Lease
Information (the "Expiration Date"). Notwithstanding the foregoing, the term of
this Lease shall not commence and the Commencement Date shall not be deemed to
have occurred until Landlord has substantially completed Landlord's Work (as
defined in Exhibit B attached hereto) and delivered possession of the Premises
to Tenant in accordance with section 2.2 hereof. If Landlord, for any reason
whatsoever, does not substantially complete
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Landlord's Work and deliver possession of the Premises to Tenant on the
Commencement Date in accordance with section 2.2 hereof, this Lease shall not be
void or voidable and Landlord shall not be liable to Tenant for any loss or
damage resulting therefrom, but, in such event, the Commencement Date shall be
postponed until the date on which Landlord substantially completes Landlord's
Work and delivers possession of the Premises to Tenant in accordance with
section 2.2 hereof and the Expiration Date shall be extended for an equal period
(subject to adjustment in accordance with section 2.4 hereof). Notwithstanding
anything to the contrary in the foregoing, if, for whatever reason other than
Tenant Delay (as that term is hereinafter defined), the Commencement Date shall
not have occurred by December 1, 1997 (as such date is extended by Tenant
Delays) Tenant, as its sole and exclusive remedy, shall have the right to
terminate this Lease on ten (10) days' prior written notice to Landlord, unless
prior to the expiration of said ten (10) day period, Landlord satisfies all
conditions of Landlord, as provided in the Lease, to the occurrence of the
Commencement Date.
2.2 CONSTRUCTION OF TENANT IMPROVEMENTS. Landlord shall construct or
install in the Premises the improvements to be constructed or installed by
Landlord pursuant to Exhibit B. The date of substantial completion of Landlord's
Work shall be the date on which (i) construction is sufficiently complete,
substantially in accordance with the plans and specifications approved by
Landlord, to permit Tenant to occupy the Premises for the use permitted under
this Lease, and (ii) all necessary inspections required for issuance of a
certificate of occupancy with respect to the occupancy of the Premises have been
completed and signed off as approved by the appropriate governmental authority
and Landlord has requested issuance of same (but without actual issuance of
same, unless so required by the building inspector). Landlord shall use
reasonable efforts to give notice to Tenant of the anticipated date of
substantial completion at least thirty (30) days prior to such date but the
failure to give such notice shall not constitute a default by Landlord. Landlord
shall deliver possession of the Premises to Tenant on the date of substantial
completion of Landlord's Work, and Tenant shall accept such delivery of the
Premises, which acceptance shall constitute the agreement of Tenant that the
Premises are in the condition required by this Lease, subject to normal punch
list items specified by Tenant in a written notice to Landlord within thirty
(30) days after such acceptance. Landlord shall correct or complete the items on
such punch list promptly after such written notice from Tenant. If Landlord is
delayed in substantially completing Landlord's Work by any cause or delay for
which Tenant is responsible as described in Exhibit B, then Tenant shall pay to
Landlord, as additional rent, the monthly Interim Rent specified in Item H of
the Basic Lease Information (the "Interim Rent"), calculated on a per diem
basis, multiplied by the number of days of such delay, which shall be due and
payable on the Commencement Date specified in Item F of the Basic Lease
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Information for such delay before such date and monthly in arrears on the first
day of each month thereafter for such delay after such date.
2.3 EARLY OCCUPANCY. If any part of the Premises is substantially
complete, as provided in section 2.2 hereof, and ready for occupancy by Tenant
prior to the Schedule Commencement Date, Tenant may, with the prior written
approval of Landlord, take early occupancy of such part of the Premises prior to
the Scheduled Commencement Date, but the term of this Lease shall not commence
until the Scheduled Commencement Date. If Tenant takes early occupancy of part
of the Premises under this section 2.3, such early occupancy shall be on and
subject to all of the covenants in this Lease, all of which shall be binding on
and apply to Tenant during such early occupancy, except Tenant shall pay to
Landlord, as additional rent, the Interim Rent, calculated on a per-diem basis,
pro rata, in the proportion that the area in the Premises occupied by Tenant
bears to the total area in the Premises for the period from such early occupancy
to the Scheduled Commencement Date. Tenant shall give Landlord written notice of
Tenant's request to take early occupancy of any part of the Premises at least
ten (10) days prior to the requested date of such early occupancy, which notice
shall specify the requested date of early occupancy and the part of the Premises
to be occupied. Tenant shall pay the Interim Rent in respect of early occupancy
under this section 2.3 to Landlord on the Scheduled Commencement Date. If the
entire Premises is substantially complete and ready for occupancy by Tenant
prior to the Scheduled Commencement Date, Tenant shall have the right to take
early occupancy of the entire Premises prior to the Scheduled Commencement Date
and the term of this Lease shall commence on such date of early occupancy by
Tenant, in which event the Scheduled Commencement Date shall be advanced to such
date of early occupancy (without any change in the Expiration Date). Tenant
shall give Landlord written notice of Tenant's determination to take early
occupancy of the entire Premises at least ten (10) days prior to such early
occupancy, which notice shall specify the date of such early occupancy.
2.4 ADJUSTMENT TO EXPIRATION DATE. In the event the Expiration Date is
extended pursuant to section 2.1 above, and the term of this Lease, as so
extended, would otherwise end on a day other than the last day of a calendar
month, then, notwithstanding anything to the contrary contained herein, the
Expiration Date shall be extended to the last day of the calendar month in which
the day that the term of this Lease would otherwise end, but for this proviso,
occurs, and the term of this Lease shall be extended accordingly. Landlord and
Tenant each shall, promptly after the Commencement Date and the Expiration Date
have been determined, execute and deliver to the other an amendment to this
Lease which sets forth the Commencement Date and the Expiration Date for this
Lease, but the term of this
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Lease shall commence on the Commencement Date and end on the Expiration Date
whether or not such amendment is executed.
3. RENT
3.1 OBLIGATION TO PAY RENT. Tenant shall pay to Landlord the following
amounts as rent for the Premises:
(a) During the term of this Lease, Tenant shall pay to Landlord,
as base monthly rent, the respective amounts of monthly rent specified in Item I
of the Basic Lease Information (the "Base Rent"). If the Commencement Date
should occur on a day other than the first day of a calendar month, or if the
Expiration Date should occur on a day other than the last day of a calendar
month, then the Base Rent for such fractional month shall be prorated upon a
daily basis based upon a thirty (30) day month.
(b) During each calendar year or part thereof during the term of
this Lease subsequent to the base expense calendar year specified in Item J of
the Basic Lease Information (the "Base Expense Year"), Tenant shall pay to
Landlord, as additional monthly rent, Tenant's Percentage Share (as hereinafter
defined) of the total dollar increase, if any, in all Operating Expenses (as
hereinafter defined) paid or incurred by Landlord in such calendar year or part
thereof over the Operating Expenses paid or incurred by Landlord in the Base
Expense Year. Operating Expenses for the Base Expense Year shall be determined
in accordance with section 3.1(e) below.
(c) During each tax year (July 1 through June 30) or part thereof
during the term of this Lease subsequent to the base tax year ending June 30 of
the year specified in Item K of the Basic Lease Information (the "Base Tax
Year"), Tenant shall pay to Landlord, as additional monthly rent, Tenant's
Percentage Share of the total dollar increase, if any, in all Property Taxes (as
hereinafter defined) paid or incurred by Landlord in such tax year or part
thereof over the Property Taxes paid or incurred by Landlord in the Base Tax
Year.
(d) Throughout the term of this Lease, Tenant shall pay, as
additional rent, all other amounts of money and charges required to be paid by
Tenant under this Lease, whether or not such amounts of money or charges are
designated "additional rent." As used in this Lease, "Rent" shall mean and
include all Interim Rent, Base Rent, additional monthly rent as described in
section 3.1(b) and 3.1(c) hereof, and any other additional rent payable by
Tenant in accordance with this Lease.
(e) Operating Expenses for the Base Expense Year shall be
initially determined based on Operating Expenses for the calendar year 1998, and
then multiplying such amount by .99, with the intended result that Tenant shall
be responsible for Tenant's
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Percentage Share of a one percent (1%) increase in Operating Expenses for
Operating Expenses deemed paid or incurred by Landlord in 1998 over Operating
Expenses deemed paid or incurred by Landlord in the Base Expense Year. Any
adjustments to Base Year Operating Expenses required to be made by Exhibit D
shall be made by making any adjustment based on ninety-nine percent (99%) of
such adjustment.
3.2 ADDITIONAL MONTHLY RENT. The additional monthly rent payable
pursuant to sections 3.1(b) and 3.1(c) hereof shall be calculated and paid in
accordance with the following procedures:
(a) On or before the first day of each calendar year during the
term of this Lease, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of Landlord's estimate of the amounts payable under
sections 3.1(b) and 3.1(c) hereof for the ensuing calendar year. On or before
the first day of each month during such ensuing calendar year, Tenant shall pay
to Landlord one-twelfth of such estimated amounts. If such notice is not given
for any calendar year, Tenant shall continue to pay on the basis of the prior
year's estimate until the month after such notice is given, and subsequent
payments by Tenant shall be based on Landlord's current estimate. If at any time
it appears to Landlord that the amounts payable under sections 3.1(b) and 3.1(c)
hereof for the current calendar year will vary from Landlord's estimate,
Landlord may, by giving written notice to Tenant, revise Landlord's estimate for
such year, and subsequent payments by Tenant for such year shall be based on
such revised estimate. Notwithstanding anything to the contrary contained
herein, Tenant's payments under this paragraph during 1998 shall be based on
estimated Base Expense Year Operating Expenses of $_______ per rentable square
foot, with a resulting one percent (1%) increase during 1998, until such amounts
are finalized in accordance with section 3.1(e) above, whereupon any adjustment
required by section 3.2(b) shall be made based on actual Operating Expenses for
calendar year 1998.
(b) Within 90 days after the end of each calendar year, Landlord
shall give Tenant a written statement of the amounts payable under sections
3.1(b) and 3.1(c) hereof for such calendar year certified by Landlord. If such
statement shows an amount owing by Tenant that is less than the estimated
payments for such calendar year previously made by Tenant, Landlord shall credit
the excess to the next succeeding monthly installments payable under sections
3.1(b) and 3.1(c) hereof. If such statement shows an amount owing by Tenant that
is more than the estimated payments for such calendar year previously made by
Tenant, Tenant shall pay the deficiency to Landlord within ten (10) days after
delivery of such statement. Failure by Landlord to give any notice or statement
to Tenant under this section 3.2 shall not waive Landlord's right to receive, or
Tenant's obligation to pay, the amounts payable by Tenant under sections 3.1(b)
and 3.1(c) hereof.
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(c) If the term of this Lease ends on a day other than the last
day of a calendar year, the amounts payable by Tenant under sections 3.1(b) and
3.1(c) hereof applicable to the calendar year in which such term ends shall be
prorated according to the ratio which the number of days in such calendar year
to and including the end of the term bears to three hundred sixty (360).
Termination of this Lease shall not affect the obligations of Landlord and
Tenant pursuant to section 3.2(b) hereof to be performed after such termination.
3.3 INSPECTION RIGHTS.
Tenant shall have one hundred eight (180) days after delivery of
Landlord's statement provided under section 3.2(b) to object in writing to the
accuracy of the statement. If Tenant does not object within such one hundred
eighty (180) day period, Landlord's statement shall be conclusive and binding on
Tenant. If Tenant timely objects to Landlord's statement, Tenant shall have the
right, upon reasonable prior written notice to Landlord, to inspect (at
Landlord's office where said books and records are maintained) the books and
records of Landlord directly relevant to its operation, maintenance and repair
of the Building for the specific calendar year in question and for the Base
Expense Year (if such records are still available in accordance with Landlord's
document retention policy), and cause an audit of said books and records to be
performed by or under the direct supervision of a certified public accountant
("Certified Accountant") to determine if the foregoing final statement is
accurate and correct. The Certified Accountant shall be a certified public
accounting firm designated by Tenant and reasonably acceptable to Landlord.
Without limiting the generality of the foregoing, the Certified Accountant shall
be paid a fixed fee for its services and shall represent only Tenant in its
audit. The Certified Accountant shall certify the results of the audit in a
manner satisfactory to Landlord. Such audit shall in all cases be paid for by
Tenant unless the audit discloses an overpayment of Operating Expenses by Tenant
in excess of five percent (5%), in which case Landlord shall pay for the audit.
If the audit discloses an overpayment or underpayment of Operating Expenses by
Tenant, the amounts due, if any, by Tenant pursuant to this section 3.2 shall be
adjusted accordingly. In making any inspection or audit, Tenant agrees, and
shall cause the Certified Accountant to agree, to keep confidential (i) any and
all information contained in such books and records and (ii) the circumstances
and details pertaining to such examination and any dispute or settlement between
Landlord and Tenant arising out of such examination; and Tenant will confirm and
cause the Certified Accountant to confirm such agreement in a separate written
agreement if requested by Landlord; provided, however, the foregoing agreement
shall not be binding on Landlord, Tenant or the Certified Accountant in the
event of, and solely for purposes directly related to, the prosecution and/or
defense of any litigation between Landlord and Tenant involving the
interpretation and enforcement of this Lease. Objections by Tenant shall not
excuse or abate
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Tenant's obligation to make the payments required under section 3.2 pending the
resolution of Tenant's objection. Any credit due Tenant for overpayment of
Tenant's Share of any increases in the Operating Expenses shall be credited
against the installments of rent next coming due. Landlord's retention policy
for books and records relating to Operating Expenses shall provide for the
retention of relevant books and records for such periods that are not less than
the period maintained by Landlord for the retention of books and records for
income tax audit purposes.
3.4 FIRST MONTH RENT AND SECURITY DEPOSIT.
(a) Upon Lease execution, Tenant (i) shall pay to Landlord an
amount equal to the Base Rent for the first month of the term of this Lease,
which amount Landlord shall apply to the Base Rent for such first month, (ii)
cash or check in the amount of the Cash Security Deposit specified in Item L of
the Basic Lease Information, and shall cause to be delivered to Landlord the
Letter of Credit (as hereinafter defined) (the "Cash Security Deposit" and any
"Letter of Credit Proceeds" (as hereinafter defined) are hereinafter
collectively referred to as the "Security Deposit"). The Security Deposit shall
remain the sole and separate property of Landlord until actually repaid to
Tenant (or to the last assignee, if any, of Tenant's interest hereunder, unless
otherwise instructed in writing by Tenant), said sum not being earned by Tenant
until all conditions precedent for its payment to Tenant have been fulfilled. As
this sum both in equity and at law is Landlord's separate property, Landlord
shall not be required to (1) keep said deposit separate from its general
accounts, or (2) pay interest, or other increment, for its use. If Tenant fails
to pay rent or other charges when due hereunder, or otherwise defaults with
respect to any provision of this Lease, including and not limited to Tenant's
obligation to restore or clean the Premises following vacation thereof, Tenant,
at Landlord's election, shall be deemed not to have earned the right to
repayment of those portions of the Security Deposit used or applied by Landlord
for the payment of any rent or other charges in default, or for the payment of
any other sum to which Landlord may become obligated by reason of Tenant's
default, or to compensate Landlord for any loss or damage which Landlord may
suffer thereby. Landlord may retain such portion of the Security Deposit as it
reasonably deems necessary to restore or clean the Premises following vacation
by Tenant. The Security Deposit is not to be characterized as rent until and
unless so applied in respect of a default by Tenant.
(b) If Landlord elects to use or apply all or any portion of the
Security Deposit as provided in section 3.3(a), Tenant shall within ten (10)
days after written demand therefor pay to Landlord, in cash, an amount equal to
that portion of the Security Deposit used or applied by Landlord, and Tenant's
failure to so do shall be a material breach of this Lease. The ten (10) day
notice specified in the preceding sentence shall insofar as not
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prohibited by law, constitute full satisfaction of notice of default provisions
required by law or ordinance.
(c) Upon the execution of this Lease, Tenant shall cause to be
issued and delivered to Landlord a letter of credit in the face amount of
$250,000 (the "Letter of Credit Amount") by a bank, and in form and substance,
satisfactory to Landlord (the "Letter of Credit"). The Letter of Credit shall
provide for same day honor thereof, notwithstanding any contrary statutory
provisions governing the honoring of documentary letters of credit. Tenant shall
replace and cause to be issued in favor of Landlord at least thirty (30) days
prior to the stated expiry of said Letter of Credit (which expiry date shall in
no event be less then twelve (12) months from the date of issuance of the Letter
of Credit, and for any period in which the Expiration Date is included, the
expiry of the Letter of Credit shall not be prior to thirty (30) days after the
Expiration Date), a substitute Letter of Credit in the amount of the Letter of
Credit Amount. Landlord shall be entitled to draw upon the Letter of Credit (i)
upon the occurrence of an Event of Default under this Lease, by presentment to
the issuing bank of a certificate (to be honored by the issuing bank on the date
of presentment) signed by Landlord certifying that an Event of Default hereunder
has occurred and remains uncured as of the date thereof; or (ii) if the Letter
of Credit is not renewed or replaced by a substitute Letter of Credit before
twenty (20) days prior to the stated expiry date thereof, upon presentment of
the Letter of Credit in accordance with its terms. If Landlord draws upon the
Letter of Credit, Landlord shall apply the proceeds thereof (the "Letter of
Credit Proceeds"), or so much thereof as is necessary, towards the remedy of the
default by Tenant, and shall hold the remaining Letter of Credit Proceeds, if
any, as a portion of the Cash Security Deposit in accordance with section
3.3(a).
(d) Notwithstanding anything to the contrary in section 3.3(a)
above, provided no Event of Default shall have been declared under this Lease at
any time prior thereto, on the 37th and 38th months of the Term, Landlord will
credit from the Cash Security Deposit an amount equal to the Base Rent payable
for such month in satisfaction of Tenant's Base Rent obligation due for said
month.
(e) Notwithstanding anything to the contrary in section 3.3(c)
above, provided no Event of Default shall have been declared under this Lease at
any time prior thereto, on the first day of the month following the second
annual anniversary of the Commencement Date and on each twelve (12) month
anniversary thereafter, the Letter of Credit Amount shall be reduced by
$50,000.00, and upon request by Tenant, Landlord shall surrender the Letter of
Credit in substitution for a Letter of Credit in the reduced Letter of Credit
Amount.
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3.5 TENANT'S DEFAULT. Tenant acknowledges that the late payment by
Tenant of any monthly installment of Base Rent or additional monthly rent will
cause Landlord to incur costs and expenses, the exact amount of which is
extremely difficult and impractical to fix. Such costs and expenses will include
administration and collection costs in addition to processing and accounting
expenses. Therefore, if any monthly installment of Base Rent or additional
monthly rent is not received by Landlord within five (5) days after such
installment is due, Tenant shall immediately pay to Landlord a late charge equal
to four percent (4%) of such delinquent installment. Landlord and Tenant agree
that such late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to Landlord for the loss suffered by Tenant's
failure to make timely payment. In no event shall such late charge be deemed to
grant to Tenant a grace period or extension of time within which to pay any
monthly rent or prevent Landlord from exercising any right or enforcising any
remedy available to Landlord upon Tenant's failure to pay each installment of
monthly rent due under this Lease in a timely fashion, including the right to
terminate this Lease. All amounts of money payable by Tenant to Landlord
hereunder, if not paid when due, shall bear interest from the due date until
paid at the lesser of (i) the maximum annual interest rate allowed by law for
business loans (not primarily for personal, family or household purposes) not
exempt from the usury law at such due date or (ii) the rate of twelve percent
(12%) per annum.
3.6 PAYMENT OF RENT. Tenant shall pay all Base Rent and additional
monthly rent under section 3.1 hereof to Landlord, in advance, on or before the
first day of each and every calendar month during the term of this Lease. Tenant
shall pay all rent to Landlord without notice, demand, deduction or offset, in
lawful money of the United States of America, at the address of Landlord
specified in Item D of the Basic Lease Information, or to such other person or
at such other place as Landlord may from time to time designate in writing.
4. OPERATING EXPENSES AND PROPERTY TAXES
4.1 TENANT'S PERCENTAGE SHARE. As used in this Lease, "Tenant's
Percentage Share" shall mean the percentage specified in Item M of the Basic
Lease Information.
4.2 OPERATING EXPENSES. As used in this Lease, "Operating Expenses"
shall mean all costs and expenses paid or incurred by Landlord in connection
with the ownership, management, operation, maintenance or repair of the Building
or providing services in accordance with this Lease, including the following:
salaries, wages, other compensation, taxes and benefits (including payroll,
social security, workers' compensation, unemployment, disability and similar
taxes and payments) for all personnel engaged in the management, operation,
maintenance or repair of the Building; uniforms provided to such personnel;
premiums and other charges for all property, earthquake, rental value, liability
and other
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insurance carried by Landlord, together with the amount of any deductible under
such policy; water and sewer charges or fees; license, permit and inspection
fees; electricity, chilled water, air conditioning, gas, fuel, steam, heat,
light, power and other utilities; sales, use and excise taxes on goods and
services purchased by Landlord; telephone, delivery, postage, stationery
supplies and other expenses; management fees and expenses; equipment lease
payments; repairs to and maintenance of the Building, including Building systems
and accessories thereto and repair and replacement of worn out or broken
equipment, facilities, parts and installations, but excluding the replacement of
major Building systems; janitorial, window cleaning, security, guard,
extermination, water treatment, garbage and waste disposal, rubbish removal,
plumbing and other services; inspection or service contracts for elevator,
electrical, mechanical and other Building equipment and systems; supplies,
tools, materials and equipment; accounting, legal and other professional fees
and expenses (excluding legal fees incurred by Landlord relating to disputes
with specific tenants or the negotation, interpretation or enforcement of
specific leases); painting the exterior or the public or common areas of the
Building and the cost of maintaining the sidewalks, landscaping and other common
areas of the Building; the cost, reasonably amortized as determined by Landlord,
according to generally accepted accounting principles, of all furniture,
fixtures, draperies, carpeting and personal property (excluding paintings,
sculptures or other works of fine art) furnished by Landlord in common areas or
public corridors of the Building or in the Building office; all costs and
expenses resulting from compliance with any laws, ordinances, rules, regulations
or orders applicable to the Building; Building office rent or rental value for
office space reasonably necessary for the proper management and operation of the
Building; all costs and expenses of contesting by appropriate legal proceedings
any matter concerning managing, operating, maintaining or repairing the
Building, or the validity or applicability of any law, ordinance, rule,
regulation or order relating to the Building, or the amount or validity of any
Property Taxes; reasonable depreciation as determined by Landlord according to
generally accepted accounting principles on all machinery, fixtures and
equipment (including window washing machinery) used in the management,
operation, maintenance or repair of the Building and on window coverings
provided by Landlord; the cost, reasonably amortized as determined by Landlord,
according to generally accepted accounting principles, of all capital
improvements made to the Building or capital assets acquired by Landlord that
are designed or intended to be a labor-saving or energy-saving device, or to
improve economy or efficiency in the management, operation, maintenance or
repair of the Building, or to reduce any item of Operating Expenses, or that are
reasonably necessary to comply with any conservation program or required by any
law, ordinance, rule, regulation or order; and such other usual costs and
expenses which are paid by other landlords for the on-site operation, servicing,
maintenance and repair of first-class office buildings in the San Francisco Bay
Area. Operating Expenses shall not include Property Taxes and any items of
Excluded Operating Expenses
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identified in Exhibit D to this Lease (and deemed incorporated herein). Actual
Operating Expenses for the Base Expense Year and each subsequent calendar year
shall be adjusted, if necessary, to equal Landlord's reasonable estimate of
Operating Expenses for a full calendar year with the total area of the Building
occupied during such full calendar year. The determination of Operating Expenses
shall be in accordance with generally accepted accounting principles applied on
a consistent basis.
4.3 REAL PROPERTY TAXES. As used in this Lease, "Property Taxes" shall
mean all taxes, assessments, excises, levies, fees and charges (and any tax,
assessment, excise, levy, fee or charge levied wholly or partly in lieu thereof
or as a substitute therefor or as an addition thereto) of every kind and
description, general or special, ordinary or extraordinary, foreseen or
unforeseen, secured or unsecured, that are levied, assessed, charged, confirmed
or imposed by any public or government authority on or against, or otherwise
with respect to, the Building or any part thereof or any personal property used
in connection with the Building. If the Building is not assessed on a fully
completed basis for all or any part of the Base Tax Year, until it is so
assessed, Property Taxes for the Base Tax Year shall be established by
multiplying Landlord's reasonable estimate of such assessed valuation by the
applicable, tax rates for the Base Tax Year. Property Taxes shall not include
net income (measured by the income of Landlord from all sources or from sources
other than solely rent), franchise, documentary transfer, inheritance or capital
stock taxes of Landlord, unless levied or assessed against Landlord in whole or
in part in lieu of, as a substitute for, or as an addition to any Property
Taxes. Property Taxes shall not include any tax, assessment, excise, levy, fee
or charge paid by Tenant pursuant to section 5.1 hereof. Any tax rebate, refund
or reduction with respect to any period during the term of this Lease shall be
allocated to Tenant in proportion to Tenant's Percentage Share, and credited to
Tenant's obligations to pay rent hereunder until such credit is exhausted, or if
not exhausted the balance refunded to Tenant upon termination of this Lease.
4.4 COST POOLS. Landlord shall exercise good faith efforts to
equitably allocate those Operating Expenses that are incurred for the direct
benefit of specific types of tenants or users in the Building to and among those
specific user classifications ("Cost Pools"). Such Cost Pools may include, but
shall not be limited to, the office and showroom space, the ground floor atrium,
the lower level exhibition hall, and any retail space tenants of the Building.
Landlord's determination of such allocations in a manner consistent with the
terms and conditions of this section 4.4 shall be final and binding on Tenant.
Tenant acknowledges that the allocation of Operating Expenses among Cost Pools
does not affect all Operating Expenses, and is limited to specific items that
are incurred or provided to tenants of Cost
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Pools which Landlord determines, in good faith, it would be inequitable to share
among tenants of other Cost Pools in the Building.
5. OTHER TAXES PAYABLE BY TENANT
5.1 TAXES ON REAL PROPERTY, PERSONAL PROPERTY, AND TENANT'S EXTRA
IMPROVEMENTS. In addition to all Rent and other charges to be paid by Tenant
under this Lease, Tenant shall reimburse Landlord upon demand for all taxes,
assessments, excises, levies, fees and charges including all payments related to
the cost of providing facilities or services, whether or not now customary or
within the contemplation of Landlord and Tenant, that are payable by Landlord
and levied, assessed, charged, confirmed or imposed by any public or government
authority upon, or measured by, or reasonably attributable to (a) the Premises,
(b) the cost or value of Tenant's equipment, furniture, fixtures and other
personal property located in the Premises or the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant (other than the value
of the initial Tenant Improvements constructed by Landlord in accordance with
Exhibit B, up to the value of the Improvement Allowance, and any improvements
constructed by Landlord in any Additional Space delivered by Landlord to Tenant
in accordance with section 23.3 hereof), regardless of whether title to such
Improvements is vested in Tenant or Landlord, (c) any rent payable under this
Lease, including any gross income tax or excise tax levied by any public or
government authority with respect to the receipt of any such rent, or (d) the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises. Such taxes, assessments, excises,
levies, fees and charges shall not include net income (measured by the income of
Landlord from all sources or from sources other than solely rent), franchise,
documentary transfer, inheritance or capital stock taxes of Landlord, unless
levied or assessed against Landlord in whole or in part in lieu of, as a
substitute for, or as an addition to any such taxes, assessments, excises,
levies, fees and charges.
All taxes, assessments, excises, levies, fees and charges payable by
Tenant under this section 5.1 shall be deemed to be, and shall be paid as,
additional rent.
6. USE
6.1 PERMITTED USE. The Premises shall be used for general
professional, administrative and sales offices, showrooms and other uses
incidental thereto, and for no other purpose. As used herein, professional
offices includes the occupancy of the Premises for office use in connection with
software development. Tenant shall not do or permit to be done in, on or about
the Premises, nor bring or keep or permit to be brought or kept therein,
anything which is prohibited by or will in any way conflict with any law,
ordinance, rule, regulation or order now in force or which may hereafter be
enacted, or which is prohibited by any
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insurance policy carried by Landlord for the Building, or will in any way
increase the existing rate of, or cause a cancellation of, or affect any
insurance for the Building. No telemarketing operations shall be conducted in
the Premises; provided, that the conduct of direct telephone sales by Tenant to
business clients or customers during normal business hours shall not be
considered telemarketing. Tenant shall not do or permit anything to be done in
or about the Premises which will in any way obstruct or interfere with the
rights of Landlord or other tenants of the Building, or injure or annoy them.
Tenant shall not use or allow the Premises to be used for any improper, immoral,
unlawful or objectionable activity, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises or commit or suffer to be committed
any waste in, on or about the Premises. Tenant shall not bring or keep in the
Premises any furniture, equipment, materials or other objects which overload the
Premises or any portion thereof in excess of fifty (50) pounds per square foot
live or dead load, which is the normal load-bearing capacity of the floors of
the Building.
7. SERVICES
7.1 LANDLORD SERVICES. During reasonable and usual business hours, as
determined by Landlord and subject to the Rules and Regulations (as hereinafter
defined) established by Landlord, Landlord shall supply the Premises with
electricity for normal lighting and the operation of desk top office machines,
normal heating, ventilating and air conditioning reasonably required for the use
and occupancy of the Premises, and water for drinking purposes. Landlord shall
also furnish normal elevator service to the Premises at all times, and lighting
replacements for Building standard lights, restroom supplies and window washing
when needed, as determined by Landlord and subject to the Rules and Regulations.
Landlord shall also furnish normal security service for the Building (not Tenant
or the Premises) and normal janitor service to the Premises during the times and
in the manner that such services are customarily furnished in comparable office
buildings in the area. Landlord shall not be liable for any criminal acts of
others or for any direct, consequential or other loss or damage related to any
malfunction, circumvention or other failure of such security service. Landlord
shall not be in default under this Lease or be liable for any damage or loss
directly or indirectly resulting from, nor shall the rent be abated or a
constructive or other eviction be deemed to have occurred by reason of, any
installation, use or interruption of use of any equipment in connection with the
furnishing of any of the foregoing services, any failure to furnish or delay in
furnishing any such services when such failure or delay is caused by accident or
breakdown or any condition beyond the reasonable control of Landlord or by the
making of repairs or improvements to the Premises or to the Building, or any
limitation, curtailment, rationing or restriction on use of water, electricity,
gas or any resource or form of energy serving the Premises or the Building,
whether such results from mandatory restrictions
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or voluntary compliance with guidelines. Landlord shall use reasonable efforts
to correct any interruption in the furnishing of such services.
7.2 ELECTRIC CURRENT. It is the intention of the parties that Tenant
shall pay directly for all the electric current used in the Premises. Landlord
shall have the right to install a meter or a submeter in the Premises to
determine the exact amount of electricity used by Tenant. Landlord shall pay for
the cost of installation of the electric meter as part of Landlord's
Contribution towards Landlord's Work performed pursuant to Exhibit B. Tenant
shall pay for the cost of maintenance and repair (but not replacement) of the
electric meter. Tenant shall pay, as they become due, all charges shown by the
meter or submeter for the use of electric current. Landlord shall not charge a
rate for the use of electric current higher than the rate charged to Landlord by
the electric company for electricity consumption in the Building. If Landlord is
able to do so, Landlord reserves the right to cause all electrical power
directly used by Tenant to be charged directly to, and for the separate and sole
account of, Tenant by the public utility company. In no event shall the
electrical demand of Tenant in the Premises exceed that for which the existing
risers, feeders and panels serving the floor on which the Premises are located
are designed.
7.3 ADDITIONAL SERVICES. If Tenant uses heat generating machines,
equipment or computers or lighting other than Building standard lights in the
Premises which affect the temperature otherwise maintained by the air
conditioning system servicing the Premises, Landlord shall have the right to
install supplementary air conditioning units in the Premises and Tenant shall
pay to Landlord the cost thereof including the costs of installation, operation,
maintenance and repair thereof, as reasonably determined by Landlord, upon
billing by Landlord. Landlord represents that the air ventilation system
servicing the Premises is sufficient to supply .85 cubic feet of air per minute
per usable square foot of the Premises. All costs payable by Tenant under this
section 7.2 shall be deemed to be, and shall be paid as, additional rent.
8. MAINTENANCE AND REPAIRS
8.1 LANDLORD'S OBLIGATION TO REPAIR. Landlord shall maintain and
repair the public and common areas of the Building, such as plazas, lobbies,
stairs, corridors and restrooms, the roof and exterior elements of the Building,
and the elevator, mechanical (including heating, ventilating and air
conditioning) and electrical systems of the Building and keep such areas,
elements and systems in reasonably good order and condition. Any damage in or to
any such areas, elements or systems caused by Tenant or any agent, officer,
employee, contractor, licensee or invitee of Tenant shall be repaired by
Landlord at Tenant's expense and Tenant
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shall pay to Landlord, upon billing by Landlord, as additional rent, the cost of
such repairs incurred by Landlord.
8.2 TENANT'S OBLIGATION TO REPAIR. Tenant shall, at all times during
the term of this Lease and at Tenant's sole cost and expense, maintain and
repair the Premises and every part thereof and all equipment, fixtures and
improvements therein, other than those Building systems identified in Paragraph
8.1, hereof and keep all of the foregoing clean and in good order and operating
condition, ordinary wear and tear and damages thereto by fire or other casualty
excepted. Tenant hereby waives all rights under California Civil Code section
1941 and all rights to make repairs at the expense of Landlord or as provided by
California Civil Code section 1942 or any other law, statute or ordinance now or
hereafter in effect. Subject to section 9.2 hereof, Tenant shall, at the end of
the term of this Lease, surrender to Landlord the Premises and all alternations,
additions, fixtures and improvements therein or thereto in the same condition as
when received, ordinary wear and tear and damage thereto by fire or other
casualty excepted.
9. ALTERATIONS
9.1 LANDLORD'S CONSENT. Tenant shall not make any alternations,
additions or improvements in or to the Premises or any part thereof, or attach
any fixtures or equipment thereto, without giving Landlord prior written notice
of the proposed alternations and obtaining Landlord's prior written consent.
Notwithstanding the preceding sentence, Tenant may make such alternations,
additions or improvements without Landlord's consent only if the total cost of a
the full project or job incorporating such alternations, additions or
improvements is ten thousand dollars ($10,000) or less and such alternations,
additions or improvements will not affect in any way the structural, exterior or
roof elements of the Building, but Tenant shall give mechanical, electrical,
plumbing or life safety systems of the Building, but Tenant shall give prior
written notice of any such alterations, additions or improvements to Landlord.
The foregoing waiver shall not operate to release Tenant from its obligation to
give Landlord written notice of such work as required by section 9.1(e). All
alternations, additions and improvements (except the initial improvements to be
constructed or installed in the Premises in accordance with Exhibit B) in or to
the Premises to which Landlord consents shall be made by Tenant at Tenant's sole
cost and expense as follows:
(a) Tenant shall submit to Landlord, for Landlord's written
approval, complete plans and specifications for all work to be done by Tenant.
Such plans and specifications shall be prepared by responsible licensed
architect(s) and engineer(s) approved in writing by Landlord, shall comply with
all applicable codes, laws, ordinances, rules and regulations, shall not
adversely affect the Building shell or core or any systems, components or
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elements of the Building, shall be in a form sufficient to secure the approval
of all government authorities with jurisdiction over the Building, and shall be
otherwise satisfactory to Landlord in Landlord's reasonable discretion. Tenant
shall notify Landlord in writing of the licensed architect(s) and engineer(s)
whom Tenant proposes to engage to prepare such plans and specifications.
Landlord shall notify Tenant promptly in writing whether Landlord approves or
disapproves such architect(s) and engineer(s).
(b) Landlord shall notify Tenant promptly in writing whether
Landlord approves or disapproves such plans and specifications and, if Landlord
disapproves such plans and specifications, Landlord shall describe the reasons
for disapproval. Tenant may submit to Landlord revised plans and specifications
for Landlord's prior written approval. Tenant shall pay all costs, including the
fees and expenses of the licensed architect(s) and engineer(s), in preparing
such plans and specifications.
(c) All changes in the plans and specifications approved by
Landlord shall be subject to Landlord's prior written approval. If Tenant wishes
to make any such change in such approved plans and specifications, Tenant shall
have Tenant's architect(s) and engineer(s) prepare plans and specifications for
such change and submit them to Landlord for Landlord's written approval.
Landlord shall notify Tenant in writing promptly whether Landlord approves or
disapproves such change and, if Landlord disapproves such change, Landlord shall
describe the reasons for disapproval. Tenant may submit to Landlord revised
plans and specifications for such change for Landlord's written approval. After
Landlord's written approval of such change, such change shall become part of the
plans and specifications approved by Landlord.
(d) Tenant shall, through Tenant's licensed contractor(s), perform
all work in accordance with the plans and specifications approved by Landlord.
Tenant shall pay for all work (including the cost of all utilities, permits,
fees, taxes, and property and liability insurance premiums in connection
therewith) required to make the alterations, additions and improvements. Tenant
shall engage responsible licensed contractor(s) approved in writing by Landlord
to perform all work. Tenant shall notify Landlord in writing of the licensed
contractor(s) whom Tenant proposes to engage for the work. Landlord shall notify
Tenant promptly in writing whether Landlord approves or disapproves such
contractor(s). All contractors and other persons shall at all times be subject
to Landlord's control while in the Building. Tenant shall pay to Landlord any
additional direct costs (beyond the normal services provided to tenants in the
Building) and shall reimburse Landlord for all expenses incurred by Landlord in
connection with the review, approval, and supervision of any alterations,
additions or improvements made by Tenant. Landlord's fees shall not exceed ten
percent (10%) of the projected hard construction costs for the proposed
alteration, addition or
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improvement. Under no circumstances shall Landlord be liable to Tenant for any
damage, loss, cost or expense incurred by Tenant on account of Tenant's plans
and specifications, Tenant's contractors or subcontractors, design of any work,
construction of any work, or delay in completion of any work.
(e) At least five (5) days prior to such date, Tenant shall give
written notice to Landlord of the date on which construction of any work will be
commenced. Tenant shall cause all work to be performed by the licensed
contractor(s) approved in writing by Landlord in accordance with the plans and
specifications approved in writing by Landlord and in full compliance with all
applicable codes, laws, ordinances, rules and regulations. Tenant shall keep the
Premises and the Building free from mechanics', materialmen's and all other
liens arising out of any work performed, labor supplied, materials furnished or
other obligations incurred by Tenant. Tenant shall promptly and fully pay and
discharge all claims on which any such lien could be based. Tenant shall have
the right to contest the amount or validity of any such lien, provided Tenant
gives prior written notice of such contest to Landlord, prosecutes such contest
by appropriate proceedings in good faith and with diligence, and, upon request
by Landlord, furnishes such bond as may be required by law to protect the
Premises and the Building from such lien. Landlord shall have the right to post
and keep posted on the Premises any notices that may be provided by law or which
Landlord may deem to be proper for the protection of Landlord, the Premises and
the Building from such liens, and to take any other action Landlord deems
necessary to remove or discharge liens or encumbrances at the expense of Tenant.
(f) All alterations, additions, fixtures and improvements,
including, without limitation, the Tenant Improvements made pursuant to Exhibit
B, whether temporary or permanent in character, made in or to the Premises by
Landlord or Tenant, shall become part of the Building and, upon the termination
or earlier expiration of the term of this Lease, Landlord's property. Upon
termination of this Lease, Landlord shall have the right, at Landlord's option,
by giving written notice to Tenant at any time before or within sixty (60) days
after such termination, to retain all such alterations, additions, fixtures and
improvements in the Premises, without compensation to Tenant, or, provided
Landlord has notified Tenant in writing of such requirement at the time Landlord
gives its approval to such improvement, fixture, addition or alteration, to
remove all such alterations (including, without limitation, any improvement
comprising Landlord's Work), additions, fixtures and improvements from the
Premises, repair any damage caused by any such removal, and restore the Premises
(including restoration of all openings or holes, stairs and vertical
penetrations in the Premises) to the condition in which the Premises existed
before such alterations, additions, fixtures and improvements were made, and in
the latter case Tenant shall pay to Landlord, upon billing by Landlord, the cost
of such removal, repair and restoration (including a
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reasonable charge for Landlords overhead and profit). All movable furniture,
equipment, trade fixtures, computers, office machines and other personal
property shall remain the property of Tenant ("Tenant's Property"). Tenant shall
be entitled to all depreciation, amortization and other tax benefits with
respect to Tenant's Property, and may at any time remove Tenant's Property from
the Premises, provided Tenant repairs any and all damage caused by such removal.
Without limiting the generality of the foregoing, Landlord hereby consents to
the installation in the Premises of the computer equipment rack identified on
the space plan referenced in Exhibit B hereto, and the same shall be deemed
Tenant's Property under this Lease. Upon termination of this Lease, Tenant
shall, at Tenant's expense, remove all such movable furniture, equipment, trade
fixtures, computers, office machines and other personal property from the
Building and repair all damage caused by any such removal. Termination of this
Lease shall not affect the obligations of Tenant pursuant to this section 9.2 to
be performed after such termination.
9.2 LIEN WAIVER. Landlord shall have no lien or other security
whatsoever in any item of Tenant's Property, or any portion thereof or interest
therein located in the Premises or elsewhere, and Landlord hereby waives all
such liens and security interests. Upon Tenant's request, Landlord shall execute
documents in form reasonably acceptable to Landlord to evidence Landlord's
waiver of any right, title, lien or interest in Tenant's Property located in the
Premises.
9.3 ADDITIONAL RESTROOMS. Supplementing the provisions of section 9.1,
Landlord acknowledges that it has approved, in concept, the placement of
additional restrooms in the Premises, at a location is be approved by Landlord
in its sole discretion; provided, however, Landlord's conceptual approval is
subject to compliance by Tenant with all of the other conditions contained in
Section 9.1 for approval of alterations to the Premises.
10. INSURANCE
10.1 RELEASE AND INDEMNITY. Landlord shall not be liable to Tenant, and
Tenant hereby waives all claims against Landlord, for any damage to or loss or
theft of any property or for any bodily or personal injury, illness or death of
any person in, on or about the Premises or the Building arising at any time and
from any cause whatsoever, except to the extent caused by the gross negligence
or willful misconduct of Landlord. Tenant shall indemnify and defend Landlord
against and hold Landlord harmless from all claims, demands, liabilities,
damages, losses, costs and expenses, including reasonable attorneys' fees and
disbursements, arising from or related to any use or occupancy of the Premises,
or any condition of the Premises, or any default in the performance of Tenant's
obligations, or any
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damage to any property (including property of employees and invites of Tenant)
or any bodily or personal injury, illness or death of any person (including
employees and invitees of Tenant) occurring in, on or about the Premises or any
part thereof arising at any time and from any cause whatsoever (except to the
extent caused by the gross negligence or willful misconduct of Landlord) or
occurring in, on or about any part of the Building other than the Premises when
such damage, bodily or personal injury, illness or death is caused by any act or
omission of Tenant or its agents, officers, employees, contractors, invites or
licenses. This section 10.1 shall survive the termination of this Lease with
respect to any damage, bodily or personal injury, illness or death occurring
prior to such termination.
10.2 TENANT INSURANCE.
(a) Tenant shall, at all times during the term of this Lease and
at Tenant's sole cost and expense, obtain and keep in force workers'
compensation insurance as required by law, including an employers' liability
endorsement; business interruption insurance in an amount equal to all Rent
payable under this Lease for a period of twelve (12) months (at the then current
rent charged); and commercial general liability insurance, including contractual
liability (specifically covering this Lease), fire legal liability, and premises
operations, with a minimum combined single limit in the amount specified in Item
N of the Basic Lease Information per occurrence for bodily or personal injury
to, illness of, or death of persons and damage to property occurring in, on or
about the Premises or the Building. Tenant shall, at Tenant's sole cost and
expense, be responsible for insuring Tenant's furniture, equipment, fixtures,
computers, office machines and personal property. (Tenant is not required to
insure against any direct peril related to earthquake or flood.)
10.3 POLICY REQUIREMENTS. All insurance required under this Article 10
and all renewals thereof shall be issued by responsible companies qualified to
do and doing business in the State of California and reasonably acceptable to
Landlord. Each policy shall have a deductible or deductibles, if any, which do
not exceed one thousand dollars ($1,000) per occurrence. Each policy shall
expressly provide that the policy shall not be canceled or altered without
thirty (30) days' prior written notice to Landlord and shall remain in effect
notwithstanding any such cancellation or alteration until such notice shall have
been given to Landlord and such period of thirty (30) days shall have expired.
All liability insurance under this Article 10 shall name Landlord and any other
parties designated by Landlord as an additional insured, shall be primary and
non-contributing with any insurance which may be carried by Landlord, shall
afford coverage for all claims based on any act, omission, event or condition
that occurred or arose (or the onset of which occurred or arose) during the
policy period, and shall expressly provide that Landlord, although named as an
insured, shall nevertheless be entitled to recover under the policy for any
loss, injury or damage to
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Landlord. Upon the issuance thereof, Tenant shall deliver each such policy or a
certified copy and a certificate thereof to Landlord for retention by Landlord.
If Tenant fails to insure or fails to furnish to Landlord upon notice to do so
any such policy or certified copy and certificate thereof as required, Landlord
shall have the right from time to time to effect such insurance for the benefit
of Tenant or Landlord or both of them and all premiums paid by Landlord shall be
payable by Tenant as additional rent on demand.
10.4 WAIVER OF SUBROGATION. Tenant waives on behalf of all insurers
under all policies of property, liability and other insurance (excluding
workers' compensation) now or hereafter carried by Tenant insuring or covering
the Premises, or any portion or any contents thereof, or any operations therein,
all rights of subrogation which any insurer might otherwise, if at all, have to
any claims of Tenant against Landlord. Landlord waives on behalf of all insurers
under all policies of property, liability and other insurance (excluding
workers' compensation) now or hereafter carried by Landlord insuring or covering
the Building or any portion or any contents thereof, or any operations therein,
all rights of subrogation which any insurer might otherwise, if at all, have to
any claims of Landlord against Tenant. Tenant shall, prior to or immediately
after the date of this Lease, procure from each of the insurers under all
policies of property, liability and other insurance (excluding workers'
compensation) now or hereafter carried by Tenant insuring or covering the
Premises, or any portion or any contents thereof, or any operations therein, a
waiver of all rights of subrogation which the insurer might otherwise, if at
all, have to any claims of Tenant against Landlord as required by this section
10.4.
11. COMPLIANCE WITH LEGAL REQUIREMENTS
11.1 TENANT COMPLIANCE. Tenant shall, at Tenant's sole cost and
expense, promptly comply with all laws, ordinances, rules, regulations, orders
and other requirements of any government or public authority now in force or
which may hereafter be in force, with all requirements of any board of fire
underwriters or other similar body now or hereafter constituted, and with all
directions and certificates of occupancy issued pursuant to any law by any
governmental agency or officer, insofar as any thereof relate to or are required
by the condition, use or occupancy of the Premises or the operation, use or
maintenance of any personal property, fixtures, machinery, equipment or
improvements in the Premises, but Tenant shall not be required to make
structural changes unless structural changes are related to or required by
Tenant's acts or use of the Premises or by improvements made by or for Tenant.
12. ASSIGNMENT OR SUBLEASE
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12.1 LEASE IS PERSONAL. The purpose of this Lease is to transfer
possession of the Premises to Tenant for Tenant's personal use in return for
certain benefits, including Rent, to be transferred to Landlord. Tenant's right
to assign or sublet as stated in this Article is subsidiary and incidental to
the underlying purpose of this Lease. Tenant acknowledges and agrees that it has
entered into this Lease in order to acquire the Premises for its own personal
use and not for the purpose of obtaining the right to convey the leasehold to
others.
12.2 "TRANSFER OF THE PREMISES" DEFINED. The terms "Transfer of the
Premises" or "Transfer" as used herein shall include any assignment of all or
any part of this Lease (including assignment by operation of law), subletting of
all or any part of the Premises or transfer of possession, or granting of the
right of possession or contingent right of possession of all or any portion of
the Premises including, without limitation, license, concession, mortgage,
devise, hypothecation, agency, franchise or management agreement, or suffering
any other person (the agents and servants of Tenant excepted) to occupy or use
the Premises or any portion thereof. If Tenant is a corporation, the stock of
which is not regularly traded on a national public stock exchange, or is an
unincorporated association limited liability company or partnership, or Tenant
consists of more than one party, the transfer, assignment or hypothecation any
controlling interest in the stock or other voting easily interests in such
corporation, association, limited liability company or partnership, shall be
deemed a Transfer of the Premises. A "controlling interest" shall be deemed a
transfer in the aggregate of more than forty-nine percent (49%) of the stock or
other voting equity interests in Tenant. Notwithstanding anything in the
foregoing to the contrary, the sale and transfer of the stock in Tenant in
transactions effected on a nationally recognized public stock exchange (whether
or not a change in control results) in the ordinary course of business and,
provided the stock of Tenant is regularly traded on a nationally recognized
public stock exchange, the transfer of stock pursuant to tender offers to
shareholders, whether or not solicited, shall not be deemed a Transfer under
this Section 12.2.
12.3 NO TRANSFER WITHOUT CONSENT. Tenant shall not suffer a Transfer of
the Premises or any interest therein, or any part thereof, of any right or
privilege appurtenant thereto without the prior written consent of Landlord, and
a consent to one Transfer of the Premises shall not be deemed to be a consent to
any subsequent Transfer of the Premises. Any Transfer of the Premises without
such consent shall (i) be voidable, and (ii) terminate this Lease, in either
case, at the option of Landlord.
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12.4 WHEN CONSENT GRANTED.
(a) The consent of Landlord to a Transfer may not be unreasonbly
withheld, provided that it is agreed to be reasonable for Landlord to consider
any of this following reasons, which list is not exclusive, in electing to
consent or to deny consent:
(i) Financial strength of the proposed transferee is not at
least equal to that of Tenant at the time of execution
of this Lease;
(ii) A proposed transferee whose occupation of the Premises
would cause a diminution in the reputation of the
Building or the other business located therein;
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(iii) A proposed transferee whose use would adversely impact
the other occupants of the Building, including, but not
limited to, a transferee who would have significantly
more employees in the Premises, generate significantly
more noise in the Premises or require the use of
significantly more Building services;
(iv) Tenant agrees that its business skills and philosophy
were an important inducement to Landlord for entering
into this Lease agreement and that Landlord may
reasonably object to the Transfer of the Premises to a
transferee who, while the use proposed to be made of the
Premises would otherwise be permitted by the use clause
of this Lease, conducts or operates its business in a
manner that Landlord, in good faith, finds objectionable
or incompatible with the overall quality of the
Building;
(v) That the validity of the Transfer is not conditioned on
the conformity of Tenant and transferee with all
provisions of this Lease at the time of Transfer,
including, without limitation, the requirement that
there be no uncured notices of default under the terms
of this Lease; or
(vi) A proposed transferee who is or is likely to be, or
whose business at the Premises is or is likely to be,
subject to compliance with additional laws or other
governmental requirements beyond those to which Tenant
or Tenant's business is subject.
(b) Notwithstanding the foregoing, Tenant shall have the right,
without the consent of Landlord (and without the right granted to Landlord in
section 12.6 to terminate this Lease), but upon prior written notice to
Landlord:
(i) provided that Silicon Valley Internet Partners ("SVIP")
or a Qualified Successor (as hereinafter defined) is the
Tenant under this Lease, to assign this Lease or sublet
all or a portion of the Premises to any entity which is
controlled by SVIP such Qualified Successor (each such
entity being referred to as a "Permitted Tenant
Affiliate"); provided that in the case of an assignment
of this Lease, the assignee assumes, in full, the
obligations of Tenant under this Lease, and if Tenant's
assignee does not have a net worth at least equal to the
greater of the net worth of Tenant (aa) as of the date
of this Lease or (bb) as of the
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date of the Transfer (the "Net Worth Test"), SVIP or the
Qualified Successor guarantees the obligations of
Tenant's assignee under this Lease in form and substance
satisfactory to Landlord. In the event that at any time
following such assignment, SVIP or the Qualified
Successor wishes to sell, mortgage, devise, hypothecate
or in any other manner whatsoever transfer any portion
of the ownership or beneficial control of the issued and
outstanding shares in the capital stock of such company,
such transaction, unless otherwise exempt under section
12.2 or this section 12.4(b), shall be deemed to
constitute a Transfer and shall be subject to all of the
provisions of this Article 12 with respect to a Transfer
of the Premises including, by specific reference, the
provisions of section 12.6. Upon request, Tenant shall
provide Landlord with a copy of any executed assignment
or subletting document executed by it with any Permitted
Tenant Affiliate. As used herein, the term "control"
shall mean the beneficial ownership, directly or
indirectly, of at least 51% of the voting common stock
or equity interests of the controlled entity; and
(ii) provided that the Net Worth Test shall be satisfied
immediately after the Transfer, and the Qualified
Successor assumes, in full, the obligations of Tenant
under this Lease, to a Qualified Successor (as that term
is hereinafter defined). As used herein, the term
"Qualified Successor" means an entity resulting from a
merger or consolidation of Tenant or from the sale of
all or substantially all of Tenant's assets.
12.5 PROCEDURE FOR OBTAINING CONSENT.
(a) Landlord need not commence its review of any proposed
Transfer, or respond to any request by Tenant with respect to such, unless and
until it has received from Tenant adequate descriptive information concerning
the transferee, the business to be conducted by the transferee, the transferee's
financial capacity, and such other information as may reasonably be required in
order to form a prudent judgment as to the acceptability of the proposed
Transfer, including, without limitation, the following:
(i) The past two years' Federal Income Tax returns of the
proposed transferee (or in the alternative the past two
years' audited annual
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Balance Sheets and Profit and Loss statements, certified
correct by a Certified Public Accountant);
(ii) Banking references of the proposed transferee;
(iii) A resume of the business background and experience of
the proposed transferee;
(iv) At least five (5) business and three (3) personal
references for the proposed transferee;
(v) An executed copy of the instrument by which Tenant
proposes to effectuate the Transfer;
(b) Tenant shall reimburse Landlord as additional rent for
Landlord's reasonable costs and attorneys' fees incurred in conjunction with the
processing and documentation of any proposed Transfer of the Premises, whether
or not consent is granted not to exceed fifteen hundred dollars ($1,500.00) per
proposed Transfer.
12.6 RECAPTURE.
(a) By written notice to Tenant (the "Termination Notice") within
ten (10) business days following submission to Landlord by Tenant of the
information specified in section 12.5, Landlord may, in any Transfer requiring
the prior written consent of Landlord, by written notice to Tenant, elect: (1)
if the proposed transaction is an assignment of this Lease or a subletting of
all or substantially all of the Premises, to terminate this Lease, or (2) at
such time as Tenant has subleased, in the aggregate fifty percent (50%) of the
Premises, to terminate that portion of the Premises subject to the proposed
Transfer, in either case not less than forty-five (45) nor more than ninety (90)
days after the end of said ten (10) days period as to the entire Premises or, as
hereinabove provided, as to a portion of the Premises so proposed to be assigned
or subleased, with a proportionate abatement in rent payable hereunder. Without
limiting the generality of the foregoing, the right granted to Landlord in
clause (1) above to terminate this Lease shall only apply to an assignment by
Tenant of all of its right and interest under this Lease and/or to any
subletting of more than the seventy-five percent (75%) of the Premises in a
single or related transactions, other than to a Permitted Tenant Affiliate or a
Qualified Successor.
(b) In the event that Landlord terminates this Lease or terminates
this Lease as to that portion of the Premises to be sublet in accordance with
Paragraph (a) above, Landlord may, if it elects, enter into a new lease covering
the Premises or the affected portion thereof with the intended assignee or
subtenant on such terms as Landlord and such person may agree or enter into a
new lease covering the Premises with any other person; in such
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event, Tenant shall not be entitled to any portion of the profit if any which
Landlord may realize on account of such termination and reletting. From and
after the date of such termination of this Lease, the parties shall have no
further obligations to each other under this Lease except for matters occurring
or obligations arising prior to the date of such termination.
12.7 REASONABLE RESTRICTION. The restrictions on Transfer described in
this Article 12 are acknowledged by Tenant to be reasonable for all purposes,
including, without limitation, the provisions of California Civil Code (the
"Code") section 1951.4(b)(2). Tenant expressly waives any rights which it might
otherwise be deemed to possess pursuant to applicable law, including, without
limitation, section 1997.040 of the Code, to limit any remedy of Landlord
pursuant to section 1951.2 or 1951.4 of the Code by means of proof that
enforcement of a restriction on use of the Premises would be unreasonable.
12.8 EFFECT OF TRANSFER. If Landlord consents to a Transfer, the
following conditions shall apply:
(a) Each and every covenant, condition or obligation imposed upon
Tenant by this Lease and each and every right, remedy or benefit afforded
Landlord by this Lease shall not be impaired or diminished as a result of such
Transfer.
(b) Tenant shall pay to Landlord on a monthly basis, sixty percent
(60%) of the excess of any sums of money, or other economic consideration
received by Tenant from the Transferee in such month (whether or not for a
period longer than one month), including higher rent, bonuses, key money, or the
like over the aggregate, of (i) the amortized portion of the reasonable expenses
actually paid by Tenant to unrelated third parties for brokerage commissions,
legal fees, tenant improvements to the Premises, or design fees incurred as a
direct consequence of the Transfer, and, (ii) the total sums which Tenant pays
Landlord under this Lease in such month, or the prorated portion thereof if the
Premises transferred is less than the entire Premises. The amount so derived
shall be paid with Tenant's payment of Base Rent. The term "amortized portion"
is that portion of the applicable expenses derived by dividing such expenses by
the number of months in the original term of the Transfer transaction.
(c) No Transfer, whether or not the consent of Landlord is
required hereunder, shall relieve Tenant of its primary obligation to pay the
rent and to perform all other obligations to be performed by Tenant hereunder.
The acceptance of rent by Landlord from any person shall not be deemed to be a
waiver by Landlord of any provision of this Lease or to be a consent to any
Transfer of the Premises.
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(d) If Landlord consents to a sublease, such sublease shall not
extend beyond the expiration of the Term.
(e) No Transfer shall be valid and no transferee shall take
possession of the Premises or any part thereof unless, within ten (10) days
after the execution of the documentary evidence thereof, Tenant shall deliver to
Landlord a duly executed duplicate original of the Transfer instrument in form
satisfactory to Landlord which provides that (i) the transferee assumes Tenant's
obligations for the payment of rent and for the full and faithful observance and
performance of the covenants, terms and conditions contained herein, (ii) such
transferee will, at Landlord's election, attorn directly to Landlord in the
event Tenant's Lease is terminated for any reason on the terms set forth in the
instrument of transfer and (iii) such instrument of transfer contains such other
assurances as Landlord reasonably deems necessary.
13. RULES AND REGULATIONS
13.1 COMPLIANCE WITH RULES AND REGULATIONS. Tenant shall faithfully
observe and comply with the Rules and Regulations (the "Rules and Regulations")
set forth in Exhibit C attached hereto and, after notice thereof, all
modifications thereof and additions thereto from time to time made in writing by
Landlord. If there is any conflict, this Lease shall prevail over the Rules and
Regulations and any modifications thereof or additions thereto. The Rules and
Regulations shall apply to all tenants of the Building and shall not be enforced
against Tenant in a discriminatory manner. Landlord shall not be liable to
Tenant or responsible for the noncompliance by any other tenant or occupant of
the Building with any Rules and Regulations.
14. ENTRY BY LANDLORD
14.1 LANDLORD'S RIGHT TO ENTER PREMISES. Subject to the provisions of
section 14.2, Landlord shall have the right to enter the Premises at any time to
(a) inspect the Premises, (b) exhibit the Premises to prospective purchasers,
lenders or tenants, (c) determine whether Tenant is performing all of Tenant's
obligations, (d) supply any service to be provided by Landlord, (e) post notices
of nonresponsibility, and (f) make any repairs to the Premises, or make any
repairs to any adjoining space or utility services, or make any repairs,
alterations or improvements to any other portion of the Building, provided all
such work shall be done as promptly as reasonably practicable and so as to cause
as little interference to Tenant as reasonably practicable. Tenant waives all
claims for damages for any injury or inconvenience to or interference with
Tenant's business, any loss of occupancy or quiet enjoyment of the Premises or
any other loss occasioned by such entry. All locks for all doors in, on or about
the Premises (excluding Tenant's vaults, safes and similar special security
areas designated in
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writing by Tenant) shall be keyed to the master system for the Building.
Landlord shall at all times have a key to unlock all such doors and Landlord
shall have the right to use any and all means which Landlord may deem proper to
open such doors in an emergency to obtain entry to the Premises. Any entry to
the Premises obtained by Landlord by any of such means shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into or
a detainer of the Premises or an eviction, actual or constructive, of Tenant
from the Premises or any portion thereof.
14.2 GENERAL CONDUCT OF LANDLORD. Except for entry to the Premises in
the event of an emergency, to provide janitorial or other regularly scheduled
Building services, Landlord shall give Tenant reasonable advance notice of
Landlord's intent to enter the Premises, and shall, as a general matter, limit
its entry to the Premises to normal business hours. Except in the case of an
emergency, Landlord's employees (including, without limitation, Landlord's
agents and contractors) entering the Premises shall be prepared to provide
proper identification and shall enter only in the presence of and accompanied by
a Tenant representative.
15. EVENTS OF DEFAULT AND REMEDIES
15.1 DEFAULT. The occurrence of any one or more of the following events
("Event of Default") shall constitute a breach of this Lease by Tenant:
(a) Tenant fails to pay any Interim Rent or any Base Rent or
additional rent under section 3.1 hereof as and when such rent becomes due and
payable; provided, however, with respect to the first such delinquency in
payment of rent during any twelve (12) month period, such delinquency in payment
of rent shall not, in and of itself, be deemed to be an Event of Default until
the failure of payment continues for a period of five (5) days after written
notice thereof from Landlord to Tenant; or
(b) Tenant fails to perform or breaches any other agreement or
covenant of this Lease to be performed or observed by Tenant as and when
performance or observance is due and such failure or breach continues for more
than fifteen (15) days after Landlord gives written notice thereof to Tenant;
provided, however, that if, by the nature of such agreement or covenant, such
failure or breach cannot reasonably be cured within such period of fifteen (15)
days, an Event of Default shall not exist as long as Tenant commences with due
diligence and dispatch the curing of such failure or breach within such period
of fifteen (15) days and, having so commenced, thereafter prosecutes with
diligence and dispatch and completes the curing of such failure or breach within
a reasonable time; or
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(c) Tenant (i) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or arrangement or
any other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy, insolvency or other debtors' relief law of any jurisdiction, (ii)
makes an assignment for the benefit of its creditors, (iii) consents to the
appointment of a custodian, receiver, trustee or other officer with similar
powers of Tenant or of any substantial part of Tenant's property, or (iv) takes
action for the purpose of any of the foregoing; or
(d) Without consent by Tenant, a court or government authority
enters an order, and such order is not vacated within thirty (30) days, (i)
appointing a custodian, receiver, trustee or other officer with similar powers
with respect to Tenant or with respect to any substantial part of Tenants
property, or (ii) constituting an order for relief or approving a petition for
relief or reorganization or arrangement or any other petition in bankruptcy or
for liquidation or to take advantage of any bankruptcy, insolvency or other
debtors' relief law of any jurisdiction, or (in ordering the dissolution,
winding-up or liquidation of Tenant); or
(e) This Lease or any estate of Tenant hereunder is levied upon
under any attachment or execution and such attachment or execution is not
vacated within thirty (30) days; or
(f) Tenant abandons the Premises.
15.2 REMEDIES UPON DEFAULT. If an Event of Default occurs, Landlord
shall have the right at any time to give a written termination notice to Tenant
and, on the date specified in such notice, Tenant's right to possession shall
terminate and this Lease shall terminate. Upon such termination, Landlord shall
have the right to recover from Tenant:
(a) The worth at the time of award of all unpaid rent which had
been earned at the time of termination;
(b) The worth at the time of award of the amount by which all
unpaid rent which would have been earned after termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided;
(c) The worth at the time of award of the amount by which all
unpaid rent for the balance of the term of this Lease after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonably
avoided; and
(d) All other amounts necessary to compensate Landlord for all the
detriment proximately caused by Tenant's failure to perform all of Tenant's
obligations under this Lease or which in the ordinary course of things would be
likely to result therefrom. The "worth at the time of award" of the amounts
referred to in clauses (a) and (b) above shall be
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computed by allowing interest at the maximum annual interest rate allowed by law
for business loans (not primarily for personal, family or household purposes)
not exempt from the usury law at the time of termination or, if there is no such
maximum annual interest rate, at the rate of eighteen percent (18%) per annum.
The "worth at the time of award" of the amount referred to in clause (c) above
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award plus one percent (1%). For
the purpose of determining unpaid rent under clauses (a), (b) and (c) above, the
rent reserved in this Lease shall be deemed to be the total rent payable by
Tenant under Article 3 and 5 hereof.
15.3 CONTINUATION AFTER DEFAULT. Even though Tenant has breached this
Lease, this Lease shall continue in effect for so long as Landlord does not
terminate Tenant's right to possession, and Landlord shall have the right to
enforce all its rights and remedies under this Lease, including the right to
recover all rent as it becomes due under this Lease. Acts of maintenance or
preservation or efforts to relet the Premises or the appointment of a receiver
upon initiative of Landlord to protect Landlord's interest under this Lease
shall not constitute a termination of Tenant's right to possession unless
written notice of termination is given by Landlord to Tenant. In addition to all
other rights and remedies it may have, Landlord shall have all of the rights and
remedies of a landlord under section 1951.4 of the California Civil Code.
15.4 REMEDIES CUMULATIVE. The remedies provided for in this Lease are
in addition to all other remedies available to Landlord at law or in equity by
statute or otherwise.
15.5 PERFORMANCE BY LANDLORD. All agreements and covenants to be
performed or observed by Tenant under this Lease shall be at Tenant's sole cost
and expense and without any abatement of rent. If Tenant fails to pay any sum of
money to be paid by Tenant or to perform any other act to be performed by Tenant
under this Lease, Landlord shall have the right, but shall not be obligated, and
without waiving or releasing Tenant from any obligations of Tenant, to make any
such payment or to perform any such other act on behalf of Tenant in accordance
with this Lease. All sums so paid by Landlord and all necessary incidental costs
shall be deemed additional rent hereunder and shall be payable by Tenant to
Landlord on demand, together with interest on all such sums from the date of
expenditure by Landlord to the date of repayment by Tenant at the lesser of (i)
the maximum annual interest rate allowed by law for business loans (not
primarily for personal, family or household purposes) not exempt from the usury
law at the date of expenditure, or (ii) at the rate of twelve percent (12%) per
annum. Landlord shall have, in addition to all other rights and remedies of
Landlord, the same rights and remedies in the event of the nonpayment of such
sums plus interest by Tenant as in the case of default by Tenant in the payment
of rent.
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15.6 TENANT'S ABANDONMENT OR SURRENDER. If Tenant abandons or
surrenders the Premises, or is dispossessed by process of law or otherwise, any
movable furniture, equipment, trade fixtures or personal property belonging to
Tenant and left in the Premises shall be deemed to be abandoned, at the option
of Landlord, and Landlord shall have the right to sell or otherwise dispose of
such personal property in any commercially reasonable manner.
16. DAMAGE OR DESTRUCTION
16.1 LANDLORD'S RESTORATION AND RENT ABATEMENT. If the Building or the
Premises, or any part thereof, is damaged by fire or other casualty before the
Commencement Date or during the term of this Lease, and this Lease is not
terminated pursuant to section 16.2 hereof, Landlord shall repair such damage
and restore the Building and the Premises to substantially the same condition in
which the Building and the Premises existed before the occurrence of such fire
or other casualty and this Lease shall, subject to this section 16.1, remain in
full force and effect. If such fire or other casualty damages the Premises or
common areas of the Building necessary for Tenant's use and occupancy of the
Premises and if such damage is not the result of the negligence or willful
misconduct of Tenant or Tenant's agents, officers, employees, contractors,
licensees or invitees, then, during the period the Premises are rendered
unusable by such damage, Tenant shall be entitled to a reduction in Base Rent in
the proportion that the area of the Premises rendered unusable by such damage
bears to the total area of the Premises. Landlord shall not be obligated to
repair any damage to, or to make any replacement of, any movable furniture,
equipment, trade fixtures or personal property in the Premises. Tenant shall, at
Tenant's sole cost and expense, repair and replace all such movable furniture,
equipment, trade fixtures and personal property. Such repair and replacement by
Tenant shall be done in accordance with Article 9 hereof. Tenant hereby waives
California Civil Code sections 1932(2) and 1933(4).
16.2 LANDLORD'S ELECTION TO TERMINATE. If the Building or the Premises,
or any part thereof, is damaged by fire or other casualty before the
Commencement Date or during the term of this Lease and (a) such fire or other
casualty occurs during the last eighteen (18) months of the term of this Lease
and the repair and restoration work to be performed by Landlord in accordance
with section 16.1 hereof cannot, as reasonably estimated by Landlord, be
completed within two (2) months after the occurrence of such fire or other
casualty unless Tenant, within thirty (30) days after such casualty elects to
extend the term of this Lease, or (b) the insurance proceeds received by
Landlord in respect of such damage are not adequate to pay the entire cost
(excluding any applicable deductible), as reasonably estimated by Landlord, of
the repair and restoration work to be performed by Landlord in accordance with
section 16.1 hereof, or (c) the repair and restoration work to be performed by
Landlord in accordance with section 16.1 hereof cannot, as reasonably estimated
by Landlord, be
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completed within seven (7) months after the occurrence of such fire or other
casualty, then, in any such event, Landlord shall have the right, by giving
written notice to Tenant within sixty (60) days after the occurrence of such
fire or other casualty, to terminate this Lease as of the date of such notice.
If Landlord does not exercise the right to terminate this Lease in accordance
with this section 16.2, Landlord shall repair such damage and restore the
Building and the Premises in accordance with section 16.1 hereof and this Lease
shall, subject to section 16.1 hereof, remain in full force and effect. A total
destruction of the Building shall automatically terminate this Lease effective
as of the date of such total destruction.
16.3 TENANT'S ELECTION TO TERMINATE. If the Premises, or any part of
the Building necessary for Tenant's access to or use of the Premises, is damaged
by fire or other casualty before the Commencement Date or during the term of
this Lease, and (a) such fire or other casualty occurs during the last eighteen
(18) months of the term of this Lease, and the repair and restoration work to be
performed by Landlord in accordance with section 16.1 hereof cannot, as
reasonably estimated by Landlord, be completed within two (2) months after the
occurrence of such fire or other casualty, or (b) the repair and restoration
work to be performed by Landlord in accordance with section 16.1 hereof cannot,
as reasonably estimated by Landlord within sixty (60) days following such
casualty, be completed within seven (7) months after the occurrence of such fire
or other casualty, then, in such event, Tenant shall have the right, by giving
written notice to Tenant within thirty (30) days after Landlord's estimate of
the time required to repair, to terminate this Lease as of the date of such
notice. The failure of Tenant to give Landlord the notice specified in this
section 16.3 in a timely fashion shall be deemed a waiver by Tenant of its
rights to terminate this Lease hereunder.
17. EMINENT DOMAIN
17.1 RIGHT TO TERMINATE. Landlord shall have the right to terminate
this Lease if any part (but less than all) of the Premises or any substantial
part of the Building (whether or not it includes the Premises) is taken by
exercise of the power of eminent domain before the Commencement Date or during
the term of this Lease. Tenant shall have the right to terminate this Lease if a
substantial portion of the Premises is taken by exercise of the power of eminent
domain before the Commencement Date or during the term of this Lease and the
remaining portion of the Premises is not reasonably suitable for Tenant's
purposes. In each such case, Landlord or Tenant shall exercise such termination
right by giving written notice to the other within thirty (30) days after the
date of such taking. If either Landlord or Tenant exercises such right to
terminate this Lease in accordance with this section 17.1, this Lease shall
terminate as of the date of such taking. If neither Landlord nor Tenant
exercises such right to terminate this Lease in accordance with this section
17.1, this Lease shall terminate as to the portion of the Premises so taken as
of the date of such taking and shall remain in full
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force and effect as to the portion of the Premises not so taken, and the Base
Rent and Tenant's Percentage Share shall be reduced as of the date of such
taking in the proportion that the area of the Premises so taken bears to the
total area of the Premises. If all of the Premises is taken by exercise of the
power of eminent domain before the Commencement Date or during the term of this
Lease, this Lease shall terminate as of the date of such taking.
17.2 AWARDS. If all or any part of the Premises is taken by exercise of
the power of eminent domain, all awards, compensation, damages, income, rent and
interest payable in connection with such taking shall, except as expressly set
forth in this section 17.2, be paid to and become the property of Landlord, and
Tenant hereby assigns to Landlord all of the foregoing. Without limiting the
generality of the foregoing, Tenant shall have no claim against Landlord or the
entity exercising the power of eminent domain for the value of the leasehold
estate created by this Lease or any unexpired term of this Lease. Tenant shall
have the right to claim and receive directly from the entity exercising the
power of eminent domain only the share of any award determined to be owing to
Tenant for the taking of improvements installed by Tenant at Tenant's sole cost
and expense in the portion of the Premises so taken based on the unamortized
cost actually paid by Tenant for such improvements, for the taking of Tenant's
movable furniture, equipment, trade fixtures and personal property, for loss of
goodwill, for interference with or interruption of Tenant's business, or for
removal and relocation expenses.
17.3 TEMPORARY TAKING. Notwithstanding anything in sections 17.1 and
17.2 hereof to the contrary, if the use of all or any part of the Premises is
taken by exercise of the power of eminent domain during the term of this Lease
on a temporary basis for a period less than the term of this Lease remaining
after such taking, this Lease shall continue in full force and effect, Tenant
shall continue to pay all of the rent and to perform all of the covenants of
Tenant in accordance with this Lease, to the extent reasonably practicable under
the circumstances, and the condemnation proceeds in respect of such temporary
taking shall be paid to Tenant.
17.4 DEFINITION OF "TAKING". As used in this Article 17, a "taking"
means the acquisition of all or part of the Premises for a public use by
exercise of the power of eminent domain or voluntary conveyance in lieu thereof
and the taking shall be considered to occur as of the earlier of the date on
which possession of the Premises (or part so taken) by the entity exercising the
power of eminent domain is authorized as stated in an order for possession or
the date on which title to the Premises (or part so taken) vests in the entity
exercising the power of eminent domain. Tenant hereby waives California Code of
Civil Procedure sections 1265.110 through 1265.160.
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18. SUBORDINATION, MERGER AND SALE
18.1 SUBORDINATION, NONDISTURBANCE, AND ATTORNMENT. This Lease shall be
subject and subordinate at all times to any and all ground leases and the lien
of any and all mortgages and deeds of trust securing any amount or amounts
whatsoever which may now exist or hereafter be placed on or against or
encumbering the Building or on or against or encumbering Landlord's interest or
estate therein, all without the necessity of having further instruments executed
by Tenant to effect such subordination. Notwithstanding the foregoing, in the
event of a foreclosure of any such mortgage or deed of trust or of any other
action or proceeding for the enforcement thereof, or of any sale thereunder or
in the event of a termination of any such ground lease, this Lease shall not be
terminated or extinguished, nor shall the rights and possession of Tenant
hereunder be disturbed, if no Event of Default then exists under this Lease, and
Tenant shall attorn to the person who acquires Landlord's interest hereunder
through any such mortgage or deed of trust. Tenant agrees to execute,
acknowledge and deliver upon demand such further instruments evidencing such
subordination of this Lease to any such ground lease or to the lien of all such
mortgages and deeds of trust as may reasonably be required by Landlord, but
Tenant's covenant to subordinate this Lease to ground leases, mortgages or deeds
of trust hereafter executed is conditioned upon each such senior mortgage or
deed of trust, or a separate subordination agreement, containing the commitments
specified in the preceding sentence. With respect to that certain deed of trust
encumbering the Building and the underlying land of record as of the date of
this Lease in favor of Bank of America ("Bank"), Landlord covenants to use best
efforts (without any requirement to pay any fees to said lender or to initiate
litigation) to cause Bank within two (2) months of the Commencement Date to
execute and deliver a non-disturbance agreement on the current form used by Bank
in favor of Tenant.
18.2 NO MERGER. The voluntary or other surrender of this Lease by
Tenant, or a mutual cancellation thereof, shall not work a merger and shall, at
the option of Landlord, terminate all or any existing subleases or subtenancies
or operate as an assignment to Landlord of any or all such subleases or
subtenancies.
18.3 SALE. If the original Landlord hereunder, or any successor owner
of the Building, sells or conveys the Building, all liabilities and obligations
on the part of the original Landlord, or such successor owner, under this Lease
accruing after such sale or conveyance shall terminate; provided that Transferee
assumes such obligations in writing, and, in such case, the original Landlord,
or such successor owner, shall automatically be released therefrom, and
thereupon all such liabilities and obligations shall be binding upon the new
owner. Tenant agrees to attorn to such new owner.
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19. ESTOPPEL CERTIFICATE
19.1 TENANT'S CERTIFICATION. At any time and from time to time, Tenant
shall, within ten (10) days after written request by Landlord, execute,
acknowledge and deliver to Landlord a certificate certifying: (a) that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect as modified, and
stating the date and nature of each modification); (b) the Commencement Date and
the Expiration Date determined in accordance with Article 2 hereof and the date,
if any, to which all rent and other sums payable hereunder have been paid; (c)
that no notice has been received by Tenant of any default by Tenant hereunder
which has not been cured, except as to defaults specified in such certificate;
(d) that Landlord is not in default under this Lease, except as to defaults
specified in such certificate; and (e) such other matters as may be reasonably
requested by Landlord or any actual or prospective purchaser or mortgage lender.
Any such certificate may be relied upon by Landlord and any actual or
prospective purchaser or mortgage lender of the Building or any part thereof. At
any time and from time to time, Tenant shall, within ten (10) days after written
request by Landlord, deliver to Landlord copies of all current financial
statements (including, without limitation, a balance sheet, an income statement,
and an accumulated retained earnings statement), annual reports, and other
financial and operating information and data of Tenant prepared by Tenant in the
course of Tenant's business. Unless available to the public, Landlord shall
disclose such financial statements, annual reports and other information or data
only to actual or prospective purchasers or mortgage lenders of the Building or
any part thereof, and otherwise keep them confidential unless other disclosure
is required by law.
20. HOLDING OVER
20.1 MONTH TO MONTH TENANCY. If, without objection by Landlord, Tenant
holds possession of the Premises after expiration of the term of this Lease,
Tenant shall become a tenant from month to month upon the terms herein specified
but at a Base Rent equal to one hundred fifty percent (150%) of the Base Rent in
effect at the expiration of the term of this Lease pursuant to Article 3 hereof,
payable in advance on or before the first day of each month. Such month to month
tenancy may be terminated by either Landlord or Tenant by giving thirty (30)
days' written notice of termination to the other at any time.
21. NOTICES
21.1 COMMUNICATIONS. All requests, approvals, consents, notices and
other communications given by Landlord or Tenant under this Lease shall be
properly given only if made in writing and either deposited in the United States
mail, postage prepaid, certified with
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return receipt requested, or delivered by hand (which may be through a messenger
or recognized delivery, courier or air express service) or by facsimile
transmission and addressed as follows: To Landlord at the address of Landlord
specified in Item O of the Basic Lease Information, or at such other place as
Landlord may from time to time designate in a written notice to Tenant; to
Tenant, before the Commencement Date, at the address of Tenant specified in Item
P of the Basic Lease Information, and after the Commencement Date, at the
Premises, or at such other place as Tenant may from time to time designate in a
written notice to Landlord. Such requests, approvals, consents, notices and
other communications shall be effective on the date of receipt (evidenced by the
certified mail receipt) if mailed or on the date of hand delivery if hand
delivered or instantaneously upon confirmation of receipt of the facsimile. If
any such request, approval, consent, notice or other communication is not
received or cannot be delivered due to a change in the address of the receiving
party of which notice was not previously given to the sending party or due to a
refusal to accept by the receiving party, such request, approval, consent,
notice or other communication shall be effective on the date delivery is
attempted. Any request, approval, consent, notice or other communication under
this Lease may be given on behalf of a party by the attorney for such party.
22. HAZARDOUS MATERIALS
22.1 DEFINITION OF HAZARDOUS MATERIALS. As used herein, the term
"Hazardous Material" means any hazardous or toxic substance, material or waste,
or any pollutant or contaminant, or words of similar import, which is or becomes
regulated by any local governmental authority, the state in which the Premises
are located, or the United States Government. The term "Hazardous Material"
includes, but is not limited to, any material or substance which is (i)
designated as a "hazardous substance" pursuant to section 311 of the Federal
Water Pollution Control Act (33 U.S.C. section 1317), (ii) defined as a
"hazardous waste" pursuant to section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. section 6901, et seq. (42 U.S.C. section 6903),
(iii) defined as a "hazardous substance" pursuant to section 101 of the
Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C.
section 9601, et seq.), (iv) asbestos, (v) petroleum (including crude oil or any
fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or
synthetic gas usable for fuel, or any mixture thereof), (vi) petroleum products,
(vii) polychlorinated biphenyls, (viii) urea formaldehyde, (ix) radon gas, (x)
radioactive matter, (xi) medical waste, and (xii) chemicals which may cause
cancer or reproductive toxicity.
22.2 DEFINITION OF ENVIRONMENTAL REQUIREMENTS. As used herein, the term
"Environmental Requirements" means all laws, ordinances, rules, regulations,
orders and other requirements of any government or public authority now in force
or which may
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hereafter be in force relating to protection of human health or the environment
from Hazardous Material, including all requirements pertaining to reporting,
licensing, permitting, investigation and remediation of emissions, discharges,
storage, disposal or releases of Hazardous Materials and all requirements
pertaining to the protection of the health and safety of employees or the public
with respect to Hazardous Material.
22.3 PROHIBITED ACTIVITIES. Tenant shall not permit or conduct the
handling, use, generation, treatment, storage or disposal on, in or about the
Premises of any Hazardous Material in excess of permitted levels or reportable
quantities under applicable Environmental Requirements without prior written
notice to Landlord. Any such handling, use, generation, treatment, storage or
disposal of any Hazardous Material permitted by Landlord hereunder shall be in
compliance with all Environmental Requirements.
22.4 NOTICE OF VIOLATIONS. Tenant shall, within ten (10) days after
Tenant's receipt thereof, give written notice of Landlord of any notice or other
communication regarding any (a) actual or alleged violation of Environmental
Requirements by Tenant or with respect to the Premises, (b) actual or threatened
migration of Hazardous Material from the Premises, or (c) the existence of
Hazardous Material in or on the Premises or regarding any actual or threatened
investigation, inquiry, lawsuit, claim, citation, directive, summons,
proceeding, complaint, notice, order, writ or injunction relating to any of the
foregoing.
22.5 TENANT INDEMNIFICATION. Tenant shall indemnify and defend Landlord
against and hold Landlord harmless from all claims, demands, liabilities,
damages, fines, encumbrances, liens, losses, costs and expenses, including
reasonable attorneys' fees and disbursements, and costs and expenses of
investigation, arising from or related to the existence on or after the
Commencement Date of Hazardous Material brought in or on the Premises by Tenant
or its agents, contractors, invitees or employees or the actual or threatened
migration on or after the Commencement Date of Hazardous Material from the
Premises as a result of contamination caused by Tenant or its agents,
contractors, invitees or employees, or the existence on or after the
Commencement Date of a violation of Environmental Requirements with respect to
the Premises. Notwithstanding the foregoing, Tenant shall not be required to
indemnify, defend or hold harmless Landlord with respect to Hazardous Materials
brought or migrating onto the Premises or for violations of Environmental
Requirements with respect to the Premises, unless Tenant or its agents,
contractors, invitees or employees, is responsible for bringing the Hazardous
Materials onto the Premises, for causing the migration or for the violation of
Environmental Requirements. To the extent Tenant has an indemnification
obligation under this section 22.5, Tenant shall, to the reasonable satisfaction
of Landlord, perform all remedial actions necessary to remove any Hazardous
Material in or on the Premises on or after the Commencement Date or to remedy
actual or threatened migration
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from the Premises of any Hazardous Material or to remedy any actual or
threatened violation of Environmental Requirements, provided such remedial
action is required under Environmental Requirements. This section 22.5 shall
survive termination of this Lease.
(a) Permitted Activities. Notwithstanding the foregoing, Landlord
acknowledges and agrees that Tenant shall be permitted to store and use on the
Premises from time to time certain Hazardous Material whose nature and
quantities are customary in connection with the permitted uses of the Premises
(and in connection with any permitted Alterations performed by Tenant), and that
Tenant shall not be required to provide Landlord with specific notice of any
such storage or use; provided that Tenant shall at all times comply with all
Environmental Requirements pertaining to any such Hazardous Material.
23. [INTENTIONALLY OMITTED]
24. OPTION TO RENEW
24.1 MANNER OF EXERCISE. Tenant (including any Permitted Tenant
Affiliate to whom the Lease has been assigned, or a Qualified Successor), shall
have the right and option to extend the term of this Lease (the "Option") as
provided in this Article 24 for one additional period of five (5) years (the
"Option Period"), provided that no Event of Default shall exist either at the
time Tenant exercises the Option or as of the Expiration Date, and provided
further that Tenant, at the time Tenant exercises the Option and on the
Expiration Date, has not subleased more than twenty-five percent (25%) of the
Premises or assigned its interest in this Lease to a transferee that is not a
Permitted Tenant Affiliate or Qualified Successor. Tenant may exercise the
Option, if at all, by written notice to Landlord delivered no later than
September 1, 2001 (the "Outside Exercise Date"). Unless all of the above
conditions precedent have been satisfied, Tenant's exercise of the Option shall
be of no force or effect and the Option shall lapse. If all of the above
conditions precedent are satisfied, then the term of this Lease shall
automatically be extended for the Option Period, and all of the terms,
conditions and provisions of this Lease shall continue in full force and effect
throughout the Option Period, except that the Base Rent to be paid by Tenant for
the Option Period shall be the fair market rental value of the Premises as of
the Expiration Date, but in no event shall the Base Rent for the Option Period
be less than the total aggregate of the Base Rent, the Operating Expenses and
Property Taxes pass-throughs payable in the last month of the term of this Lease
prior to the Expiration Date.
24.2 FAIR MARKET RENTAL VALUE. The fair market rental value of the
premises shall initially be determined by Landlord, and Landlord shall notify
Tenant of Landlord's determination of fair market rental value on or before
thirty (30) days after the Outside Exercise Date. If Tenant disputes or
disagrees with Landlord's determination of fair market
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rental value, Landlord and Tenant shall make themselves available to meet with
each other within ten (10) days of Tenant's notice to Landlord of such
disagreement to attempt to agree on the fair market rental value of the
Premises. In the event Landlord and Tenant cannot agree on the fair market
rental value within thirty (30) days of Landlord's determination of fair market
rental value, then the process described in subparagraphs (a) through (d) below
shall be followed:
(a) If Landlord and Tenant are unable to agree on fair market
rental value within said thirty (30) day period, then within ten (10) business
days thereafter Landlord and Tenant shall each simultaneously submit to the
other in a sealed envelope their good faith estimates of the fair market rental
value. If the higher of such estimates is not greater than five percent (5%) of
the lower of such estimates, then the fair market rental value shall be the
average of the two estimates.
(b) If the matter is not resolved by the exchange of estimates as
provided in paragraph (a), above, then either Landlord or Tenant may, by written
notice to the other, on or before five (5) days after the exchange, require that
the disagreement be resolved by arbitration. Within seven (7) days after such
notice, the parties shall attempt to select a mutually acceptable appraiser. If
the parties cannot agree on an appraiser, then within a second period of seven
(7) days, each party shall select an independent appraiser, and within a third
period of seven (7) days, the two appointed appraisers shall select a third
appraiser. All appraisers appointed by Landlord or Tenant, or both of them,
shall be members of the American Institute of Real Estate Appraisers of the
National Association of Realtors (or its successor), or real estate
professionals qualified by appropriate training or experience, and shall have at
least ten (10) years' experience dealing with commercial real estate in the San
Francisco South of Market district.
(c) The appraisers (or sole appraiser) shall select one of the two
fair market rental value estimates proposed by Landlord and Tenant, and shall
have not right to propose a middle ground or any modification of either of the
two proposed estimates; provided, however, the appraiser(s) shall have no
authority or power to select a fair market rental value less than the amount
provided in section 24.1 above. The fair market rental value the appraiser(s)
choose(s) shall constitute the decision of the appraiser(s) and shall be final
and binding upon the parties and is not subject to appeal. In the event of a
failure, refusal or inability of any appraiser to act, his successor shall be
appointed in the same manner as provided for appointment of the original third
appraiser. The appraiser(s) shall have the right to consult experts and
competent professionals pertaining to a determination of fair market rental
value, and may hold a hearing not to exceed one (1) business day at which time
and place the parties may present competent evidence. Any consultation by the
appraiser(s) of
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experts or other competent professionals shall be made in the presence of both
parties with full right of the other party to cross-examine. The appraiser(s)
shall render a decision and award in writing with counterpart copies to each
party. The appraiser(s) shall have no power to modify the provisions of this
Lease.
(d) Should the fair market rental value not be established by the
Expiration Date, then Tenant shall pay Base Rent plus additional rent at the
same rate as payable by Tenant on the first day of the last month of the initial
term of this Lease, and a lump sum payment by Tenant shall be made promptly upon
the determination of fair market rental value.
24.3 DETERMINATION OF FAIR MARKET RENTAL VALUE. The appraiser(s) shall
determine the fair market rental value of the Premises using the "market
comparison approach," with the relevant market being that for new and renewal
tenants for comparable office space in the San Francisco South of Market
district as of the Expiration Date, and assuming a base year of the calendar
year in which the extension period commences. The "market comparison approach"
shall take into consideration and make adjustments for the creditworthiness of
Tenant, the age and condition of the existing improvements in the Premises, any
concessions then being offered by landlords of comparable buildings in the South
of Market district to new and renewal tenants (but excluding Landlord's
transaction costs, such as brokerage commissions, the cost of building out
and/or improving space for a tenant's occupancy in excess of tenant improvements
allowance, and the like), and such other terms and conditions not inconsistent
herewith deemed relevant by the appraiser(s).
25. PARKING
25.1 TENANT PARKING. Tenant shall be entitled to use up to twenty-three
(23) unreserved parking spaces in the parking facility located in the Building
(the "Garage"). Tenant understands that the majority of available parking in the
Garage is located outdoors on the roof of the Building. Tenant may use the
Garage for the parking of automobiles used by Tenant, its officers and
employees, subject to payment to Landlord or the operator of the Garage of the
prevailing fee for parking charged to tenants of the Building. Unless Landlord
or the operator of the Garage elects otherwise, no parking spaces shall be
assigned or reserved for Tenant's parking. The use by Tenant, its employees or
other users of such parking spaces of the Garage shall be subject to the rules
and regulations established from time to time by the owner or operator of the
Garage. If Tenant has not rented the number of parking spaces to which it is
entitled within five (5) months after the Commencement Date, or if any time
thereafter Tenant relinquishes any parking space or spaces to which it is
entitled under this section 25.1, the maximum number of parking spaces that
Tenant is entitled to use under this
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paragraph shall be reduced to the actual number of parking spaces then being
used by Tenant, provided, that Landlord shall use reasonable efforts to make
such number of parking spaces available to Tenant in the future should Tenant
desire to rent the same. If the Garage owner or operator changes the parking
arrangements in the Garage (for instance, a change to reserved, self-park
parking), then Tenant's right under this section 25.1 shall be subject to
modification to reflect such change, so long as Tenant is not disproportionately
prejudiced by such change as compared to other tenants of the Building.
26. MISCELLANEOUS
26.1 DEFINED TERMS. The words "Landlord" and "Tenant" as used herein
shall include the plural as well as the singular. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." Tenant shall indemnify and defend Landlord against and hold
Landlord harmless from all claims, demands, liabilities, damages, losses, costs
and expenses, including reasonable attorneys' fees and disbursements, arising
out of or resulting from any failure by Tenant to perform any of its obligations
or any breach by Tenant of any of its representations or warranties in
accordance with this Lease. If there is more than one Tenant, the obligations
hereunder imposed upon Tenant shall be joint and several. Time is of the essence
of this Lease and each and all of its provisions. Submission of this instrument
for examination or signature by Tenant does not constitute a reservation of or
option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant. Subject to Article 12
hereof, this Lease shall benefit and bind Landlord and Tenant and the personal
representatives, heirs, successors and assigns of Landlord and Tenant. Tenant
shall not use the name of the Building for any purpose whatsoever other than as
the address of Tenant at the Premises. If any provision of this Lease is
determined to be illegal or unenforceable, such determination shall not affect
any other provision of this Lease and all such other provisions shall remain in
full force and effect. If Tenant requests the consent or approval of Landlord to
any assignment, sublease or other action by Tenant, Tenant shall pay to Landlord
on demand, as additional rent, all costs and expenses, including reasonable
attorneys' fees and disbursements, incurred by Landlord in connection therewith.
This Lease shall be governed by and construed in accordance with the laws of the
State of California.
26.2 WAIVER. The waiver by Landlord or Tenant of any breach of any
covenant in this Lease shall not be deemed to be a waiver of any subsequent
breach of the same or any other covenant in this Lease, nor shall any custom or
practice which may grow up between Landlord and Tenant in the administration of
this Lease be construed to waive or to lessen the right of Landlord or Tenant to
insist upon the performance by Landlord or Tenant in strict accordance with this
Lease. The subsequent acceptance of rent hereunder by Landlord or the
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payment of rent by Tenant shall not waive any preceding breach by Tenant of any
covenant in this Lease, nor cure any Event of Default, nor waive any forfeiture
of this Lease or unlawful detainer action, other than the failure of Tenant to
pay the particular rent so accepted, regardless of Landlord's or Tenant's
knowledge of such preceding breach at the time of acceptance or payment of such
rent.
26.3. ATTORNEYS' FEES. If there is any legal action or proceeding
(including arbitration) between Landlord and Tenant arising out of any default
by Tenant in the observance or performance of any obligation under this Lease or
to enforce this Lease or to protect or establish any right or remedy under this
Lease, the unsuccessful party to such action or proceeding shall pay to the
prevailing party all costs and expenses, including reasonable attorneys' fees
and disbursements, incurred by such prevailing party in such action or
proceeding and in any appeal in connection therewith. If such prevailing party
recovers a judgment in any such action or proceeding (including arbitration) or
appeal thereon, such costs, expenses and attorneys' fees and disbursements shall
be included in and as a part of such judgment.
26.4 EXHIBITS. Exhibit A (Floor Plan of Premises), Exhibit B (Initial
Improvement of the Premises) and Exhibit C (Rules and Regulations) are attached
to and made a part of this Lease.
26.5 SIGNS.
(a) Landlord shall provide Tenant first-time identifying
information in Building standard format in the Building directory, at Landlord's
sole cost and expense. Future revisions by Tenant thereto shall be at Tenant's
sole cost and expense.
(b) Landlord shall provide Tenant identifying information at the
main entrance to the Premises in accordance with Exhibit B hereto. Future
revisions by Tenant shall be at Tenant's sole cost and expense.
(c) If and to the extent Landlord develops other signage or tenant
identification programs for availability to tenants of the Building (such as use
of flag pole banners, exterior signage or interior or exterior electronic
signage), Landlord shall offer Tenant the right to participate in such signage
programs.
26.6 REAL ESTATE BROKERS. Tenant warrants and represents to Landlord
that Tenant has negotiated this Lease directly with the real estate broker(s)
specified in the Basic Lease Information and has not authorized or employed, or
acted by implication to authorize or to employ, any other real estate broker or
salesman to act for Tenant in connection with this Lease. Landlord shall pay the
commission due Landlord's Broker and Tenant's Broker
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pursuant to a separate agreement between Landlord and Landlord's Broker. Tenant
shall indemnify Landlord for, and hold Landlord harmless from and against, any
and all claims of any person, other then Landlord's Broker and Tenant's Broker,
who claims to have been engaged by Tenant to represent Tenant in connection with
this Lease and all liabilities arising out of or in connection with such claims.
26.7 AUTHORITY. Each individual executing this Lease represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf
of such party, and, if such party is a corporation or limited liability company,
that such corporation or limited liability company is duly authorized and in
good standing and is qualified to do business in California; that such
corporation or limited liability company is authorized to enter into this Lease
in accordance with a duly adopted resolution of the board of directors of such
corporation or members of such limited liability company, and in accordance with
its bylaws; and that this Lease is binding on such party in accordance with its
terms.
26.8 RELOCATION. Landlord shall have the right, one time during the
term of this Lease, by giving at least thirty (30) days' prior written notice to
Tenant, to substitute other space in the Building (the "Substitute Premises")
for the Premises and to relocate Tenant to the Substitute Premises. The
Substitute Premises shall include comparable elevator access. Landlord shall
designate the effective date for the substitution of the Substitute Premises for
the Premises and the relocation of Tenant to the Substitute Premises in such
notice. The area of the Substitute Premises shall be approximately comparable to
the area of the Premises; provided, however, Tenant's Base Rent shall not be
increased by reason of such relocation. Landlord shall, at Landlord's expense
before such effective date, construct and install in the Substitute Premises
improvements substantially similar in quality and quantity to the improvements
in the Premises. Landlord shall pay the reasonable costs of moving Tenant's
Property from the Premises to the Substitute Premises. As of the effective date
for the substitution of the Substitute Premises for the Premises and the
relocation of Tenant to the Substitution Premises, Tenant shall vacate the
Premises and move to the Substitute Premises, and the Substitute Premises shall
be substituted for the Premises under this Lease. Landlord and Tenant each
shall, promptly after such effective date, execute and deliver to the other an
amendment to this Lease which sets forth the substitution of the Substitute
Premises for the Premises, with an appropriate new Exhibit A, and the effective
date of such substitution, but the Substitute Premises shall be substituted for
the Premises on such effective date whether or not such amendment is executed.
26.9 QUIET ENJOYMENT. So long as Tenant is not in default (after the
expiration of any grace period), Tenant shall peaceably and quietly enjoy the
Premises throughout the term
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of this Lease without hindrance by Landlord or any person lawfully claiming
through or under Landlord.
26.10 ENTIRE AGREEMENT. There are no oral agreements between Landlord
and Tenant affecting this Lease, and this Lease supersedes and cancels any and
all previous negotiations, arrangements, brochures, offers, agreements and
understandings, oral or written, if any, between Landlord and Tenant or
displayed by Landlord to Tenant with respect to the subject matter of this
Lease, the Premises or the Building. There are no representations between
Landlord and Tenant or between any real estate broker and Tenant other than
those expressly set forth in this Lease and all reliance with respect to any
representations is solely upon representations expressly set forth in this
Lease. This Lease may not be amended or modified in any respect whatsoever
except by an instrument in writing signed by Landlord and Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of
the date first hereinabove written.
ZORO, LLC, SILICON VALLEY INTERNET PARTNERS
a California limited liability company a California corporation
By: By: /s/ Signature Illegible
-----------------------------------
Title: Title: PRESIDENT / CEU
--------------------------------
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EXHIBIT A-1
FLOOR PLAN OF PREMISES
[CHART OMITTED]
A-1
<PAGE>
EXHIBIT B
INITIAL IMPROVEMENTS OF THE PREMISES
1. LANDLORD'S WORK. Landlord and Tenant agree that the work to be
done to the Premises ("Landlord's Work") in order to prepare the same for
Tenant's occupancy shall be performed by Landlord's contractor in accordance
with plans, working drawings and specifications ("Tenant's Plans") prepared and
approved by Landlord. Landlord's Work shall be performed in accordance with
applicable laws. The quantities, character and manner of construction and
installation of Landlord's Work shall be subject to all limitations and
restrictions imposed by laws, regulations and guidelines relating to health,
safety, the environment, handicapped persons and conservation of energy adopted
by any public or government authority.
2. TENANT'S PLANS.
(a) Landlord and Tenant hereby approve that certain final space
plan prepared by Tenant's architect, revised May 8, 1997 ("Tenant's Space
Plan"), as modified by Landlord's Clarifications to Scope of Work dated June 20,
1997, a copy of which is attached hereto as Schedule B-1 (Tenant's Space Plan as
so revised is referred to as the "Scope Document"). By its execution of the
Lease, Tenant acknowledges its agreement that any change, addition or alteration
requested by Tenant in the quantity, utility or finishes of any of the materials
identified in the Scope Document, or in the layout or configuration of the
Tenant Improvements from that shown on the Space Plan, or in the anticipated use
of any portion of the Premises from that shown on the Space Plan, or any change,
modification or alteration in the electrical, mechanical, HVAC and life safety
systems servicing the Premises attributable to any of the foregoing changes,
made after the date hereof shall be deemed a change order for purposes of
paragraph 5 hereof.
(b) Promptly following execution of this Lease, Landlord shall
cause to be prepared by Tenant's architect, Gensler & Associates (the
"Architect"), who shall be retained for such work by, under contract to,
Landlord, Tenant's Plans, said plans to (i) incorporate the improvements, design
elements and items and materials identified in the Scope Document, and where not
identified, such other Building-standard items and materials as reasonably
determined by Landlord, (ii) comply with all applicable codes, laws, ordinances,
rules and regulations, (iii) be in a form sufficient to secure the approval of
all government authorities with jurisdiction over the Building, and (iv) be
otherwise satisfactory to Landlord in Landlord's reasonable discretion. Tenant's
Plans shall be complete plans, working drawings and specifications for the
layout, improvement and finish of the Premises consistent with the
B-1
<PAGE>
design and construction of the Building, including mechanical and electrical
drawings and decorating plans. To the extent not expressly provided in the Scope
Document, Tenant shall provide Landlord with the following information to enable
Landlord to prepare Tenant's Plans:
(i) Location and type of all partitions;
(ii) Location and type of all doors, with hardware and keying
schedule;
(iii) Ceiling plans, including light fixtures;
(iv) Location of telephone equipment room, with all special
electrical and cooling requirements;
(v) Location and type of all electrical outlets, switches,
telephone outlets, and lights;
(vi) Location of all sprinklers;
(vii) Location and type of all equipment requiring special
electrical requirements;
(viii) Location, weight per square foot and description of any
heavy equipment or filing system exceeding fifty (50)
pounds per square foot live and dead load;
(ix) Requirements for special air conditioning or
ventilation;
(x) Type and color of floor covering;
(xi) Location, type and color of wall covering;
(xii) Location, type and color of paint or finishes;
(xiii) Location and type of plumbing;
(xiv) Location and type of kitchen equipment;
(xv) Indicate critical dimensions necessary for construction;
and
(xvi) Details showing all millwork with verified dimensions
and dimensions of all equipment to be built in, corridor
entrances, bracing or support of special walls or glass
partitions, and any other items or information requested
by Landlord.
B-2
<PAGE>
(c) Tenant's Plans shall be subject to each of Landlord's and
Tenant's written approval (which shall not be unreasonably withheld). If
Landlord disapproves Tenant's Plans, or any portion thereof, Landlord shall
promptly give notice to Tenant setting forth the reasons for disapproval. As
promptly as reasonably possible thereafter, but not later than five (5) business
days after Landlord's notice, Tenant shall submit to Landlord revisions or other
information necessary to address the objections raised by Landlord. Tenant shall
provide Landlord with any objections to Tenant's Plans within five (5) business
days after completion of Tenant's Plans, or following request by Landlord for
interim approval of portions of Tenant's Plans. Any revisions shall be subject
to each of Landlord's and Tenant's written approval (which shall not be
unreasonably withheld), and to the procedures hereinabove provided for
additional revisions. Notwithstanding anything in the foregoing to the contrary,
any revisions requested by Tenant, or objections made by Tenant, to Tenant's
Plans shall, absent manifest error by Landlord or the Architect, be deemed a
Tenant Delay.
(d) Tenant shall promptly pay when due the entire cost of all
space planning, design, architectural and engineering services necessary for the
preparation of Tenant's Space Plan and Tenant's Plans. All interior decorating
services, such as the selection of wall paint colors and wall coverings,
fixtures, and all other decorator selection work, required by Tenant shall be
provided by Tenant at Tenant's expense. Landlord shall reimburse Tenant up to
fifteen cents ($.15) per rentable square foot of the Premises for the cost of
Tenant's Space Plan, and reimburse Tenant up to Two Dollars ($2.00) per rentable
square foot of the Premises for the cost of preparation of Tenant's Plans.
3. CONSTRUCTION.
(a) By its execution of the Lease, Tenant hereby approves DBD
Structures as Landlord's general contractor for the construction, furnishing and
installing of Landlord's Work. Landlord's Contractor and Landlord shall select
and retain all subcontractors. Landlord's contractor shall complete Landlord's
Work in accordance with Tenant's Plans, as approved by Landlord and Tenant.
(b) In consideration of the supervisory, logistical and oversight
and review work to be performed by Landlord under this Agreement, Tenant shall
pay to Landlord (and Landlord may charge against Landlord's Contribution [as
hereinafter defined] as herein provided) a construction management fee in the
amount of ten percent (10%) of the total cost of Landlord's Work.
(c) As soon as reasonably practicable following the approval of
Tenant's Plans and the cost estimate, Landlord's contractor shall diligently
obtain all governmental and quasi-governmental approvals and permits required
for Landlord's Work. Tenant shall
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approve any changes to Tenant's Plans required by the governmental and
quasi-governmental agencies necessary to obtain the approvals and permits for
Landlord's Work.
4. LANDLORD'S CONTRIBUTION.
(a) As an inducement to Tenant to enter into the Lease, and
subject to the terms of this Exhibit, Landlord agrees to pay for the entire cost
of Landlord's Work, as outlined in the Scope Document ("Landlord's
Contribution"), which amount shall be applied only to Tenant's Improvement
Allowance Items (as hereinafter defined). Any costs in excess of Landlord's
Contribution or for costs incurred for other than Tenant Improvement Allowance
Items shall be borne solely by Tenant. If as a result of any change orders made
by Tenant the amount of the final cost estimate for Landlord's Work exceeds
Landlord's Contribution (such excess amount hereinafter referred to as the
"Over-Allowance Amount"), then, subject to the terms hereof, Tenant shall
deposit with Landlord cash in the amount of the Over-Allowance Amount prior to
commencement of construction or within five (5) business days' of demand by
Landlord. The Over-Allowance Amount shall be disbursed by Landlord prior to any
further disbursement of any portion of Landlord's Contribution. Notwithstanding
the foregoing, at Tenant's option, the cost of any Tenant Improvement Allowance
Items over and above Landlord's Contribution not to exceed $2.00 per rentable
square foot shall be advanced by Landlord and amortized over the term of the
Lease by adding $.018 per rentable square foot of the Premises to the Basic Rent
provided in the Lease for each dollar per square foot of the Over-Allowance
Amount.
(b) Landlord's Work shall include:
(i) payment of plan check, permit and license fees relating
to construction of the Tenant Improvements; and
(ii) the cost of construction of the Landlord's Work,
including, without limitation, testing and inspection
costs, hoisting and trash removal costs, and
contractors' fees and general conditions.
5. CHANGES. If Tenant requests any change in Tenant's Plans or
Landlord's Work, Tenant shall request such change in a written notice to
Landlord. Each such request shall be accompanied by proper plans and
specifications prepared by Tenant's architects or engineers, at Tenant's
expense, necessary to show and explain such change from the previously approved
Tenant's Plans. All changes in Tenant's Plans shall be subject to the prior
written approval of Landlord (which shall not be unreasonably withheld). If
Landlord approves a change, Landlord shall have Landlord's contractor give
Tenant an estimate of the construction cost, if any, which will be incurred for
such change. Tenant shall, within two (2) business days after receipt of such
estimate, notify Landlord in writing to proceed or not to proceed with such
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change. In the absence of such written notice to proceed, Landlord shall not be
obligated to make the change requested by Tenant and Landlord shall proceed with
Landlord's Work in accordance with the previously approved Tenant's Plans.
6. DELAY. Tenant shall be responsible and liable to Landlord for, and
shall pay all costs and expenses incurred by Landlord in connection with, all
delay in the commencement or completion of Landlord's Work caused by (a)
Tenant's failure to prepare and submit information provided for Landlord to
prepare or delays in providing Tenant's Plans, (b) Tenant's failure to approve
Landlord's contractor's cost estimate within the time required in this Exhibit
B, (c) any changes in Tenant's Plans or Landlord's Work requested by Tenant, (d)
Tenant's requirement of any improvements, fixtures, equipment or other items
which cannot reasonably be fabricated, procured, constructed or installed within
the period of construction contemplated between Tenant's Plans Date and the
Scheduled Commencement Date, (e) Tenant's failure to make any payment required
under this Exhibit B within the time required therefor, (f) Tenant's failure to
take any action required of Tenant under this Lease or this Exhibit B, (g) any
interruption, interference or delay caused by any of Tenant's architects,
planners, engineers, contractors, subcontractors, laborers, suppliers or others
acting on behalf of Tenant, or (h) any other delay requested or caused by
Tenant.
7. OTHER WORK BY TENANT. All work not within the scope of the normal
construction trades employed on the Building, such as the furnishing and
installing of furniture, telephone equipment, office equipment and wiring, shall
be furnished and installed by Tenant at Tenant's expense. Tenant shall adopt a
schedule in conformance with the schedule of Landlord's contractors and conduct
Tenant's work in such a manner as to maintain harmonious labor relations and as
not to interfere with or delay the work of Landlord's contractors. Tenant's
contractors, subcontractors, laborers and suppliers shall be acceptable to and
approved in writing by Landlord (which shall not be unreasonably withheld) and
shall be subject to the administrative supervision of Landlord's general
contractor. Contractors and subcontractors engaged by Tenant shall employ
workers and means to ensure so far as may be possible the progress of Landlord's
Work without interruption on account of strikes, work stoppages or similar
causes for delay. Landlord shall provide reasonable access and entry to the
Premises to Tenant and Tenant's contractors and subcontractors and reasonable
opportunity and time and reasonable use of facilities to enable Tenant to adapt
the Premises for Tenant's use.
8. REQUIREMENTS. All work performed at the Building or in the
Premises by Tenant or Tenant's contractors shall be subject to the following
additional requirements:
(a) Such work shall not proceed until Landlord has approved in
writing: (i) Tenant's contractor, (ii) the amount and coverage of public
liability and property damage
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B-5 insurance, with Landlord named as an additional insured, carried by Tenant's
contractor, (iii) complete and detailed plans and specifications for such work,
and (iv) a schedule for the work.
(b) All work shall be done in conformity with a valid permit when
required, a copy of which shall be furnished to Landlord before such work is
commenced. In any case, all such work shall be performed in accordance with all
applicable laws. Notwithstanding any failure by Landlord to object to any such
work, Landlord shall have no responsibility for Tenant's failure to comply with
applicable laws.
(c) All work by Tenant or Tenant's contractor shall be done with
union labor in accordance with all union labor agreements applicable to the
trades being employed.
(d) All work by Tenant or Tenant's contractor shall be scheduled
through Landlord.
(e) Tenant or Tenant's contractor shall arrange for necessary
utility, hoisting and elevator service, on a non-exclusive basis, with
Landlord's contractor and shall pay such costs for such services as may be
charged by Landlord's contractor. Landlord shall have the right to require any
necessary movement of materials by the elevator to be done after regular working
hours at the expense of Tenant.
(f) Tenant's entry on the Premises for any purpose, including
inspection or performance of improvement work by Tenant, prior to the
Commencement Date shall be subject to all of the covenants of this Lease except
the payment of rent. Entry by Tenant shall include entry by Tenant's officers,
employees, agents, contractors, licensees or invitees.
(g) Tenant shall be responsible for cleaning the Premises and
removing all debris resulting from work performed by Tenant. All completed work
shall be subject to inspection and acceptance by Landlord. Tenant shall
reimburse Landlord upon demand for all extra expense incurred by Landlord by
reason of faulty work done by Tenant or Tenant's contractor, or by reason of any
delays caused by work done by Tenant or Tenant's contractor, or by reason of
inadequate cleanup by Tenant or Tenant's contractor.
9. REMOVAL. In accordance with section 9.1(f) of the Lease, Landlord
confirms that based on Tenant's Space Plan, the only improvements shown thereon
that Landlord will require Tenant to remove at the end of the term of the Lease
is the equipment rack
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EXHIBIT B-1
SCOPE DOCUMENT
Silicon Valley Internet Partners
Fashion Center San Francisco
June 20, 1997
The Scope Document consists of the following attachments which are incorporated
herein:
1. Clarifications to the Scope of Work, Attachment B.1.1
2. Sketch SVI 617.1, Attachment B.1.2
3. Space Plan, Attachment B.1.3
The Clarifications to the Scope of Work take precedence over Sketch SVI 617.1
and the Space Plan.
Sketch SVI 617.1 takes precedence over the Space Plan.
The required Tenant Contribution is detailed in the Clarifications to the Scope
of Work.
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SCOPE DOCUMENT
Attachment B.1.1
CLARIFICATIONS TO THE SCOPE OF WORK
Silicon Valley Internet Partners
Fashion Center San Francisco
June 20, 1997
01000 General Conditions
1. The Scope Document consists of these Clarifications to the Scope
of Work. Sketch SVI 617.1 and the Space Plan. The Clarifications
to the Scope of Work take precedence over the Space Plan and
Sketch SVI 617.1. The Sketch SVI 617.1 is included as Attachment
B.1.2 to the Scope Document.
2. All references to the "Space Plan" in this Scope Document refer to
the plan by Gensler and Associates, revised May 8, 1997, with pen
and ink changes dated June 20, 1997. The Space Plan is included as
Attachment B.1.3 to the Scope Document.
3. Some of the items listed below are above standard items and
require a Tenant Contribution for all or part of the cost.
Specific Tenant Contributions are listed in the corresponding line
items, below. Tenant shall pay the total Tenant Contribution to
the Landlord prior to commencement of the Work. The total required
Tenant Contribution is $71,990.60 for over standard items (which
include Landlord's construction management ?? for ??ch items
only).
4. The existing main corridor within the Tenant Space will be
removed. The exact structural and mechanical details for the
corridor removal will be dictated by the Landlord.
5. Toilets are approved within the Tenant Space, but their location
is subject to structural review of the building. Toilet rooms will
be built to a quality level equivalent to the current restrooms in
the building in conformance with the base building standard. All
costs associated with this construction including design,
permitting, and site surveys will be at the Tenant's expense. The
final design will be as directed by the Landlord.
6. The kitchen is approved within the Tenant Space, but its location
is subject to structural and mechanical review of the building.
Landlord will study alternative locations.
7. Open gates will not be provided at each end of the space for
venting to the atrium. Solid walls and doors will be provided as
shown on the Space Plan.
8. All power distribution to offices and cubicles will be from power
poles or from drops within full height walls. Landlord will not
allow core drilling through the post tensioned concrete slab for
electrical penetrations except as defined in Section 03000, Item
1.
9. Landlord will specify the exiting width to the corner stairwell
from within the Tenant Space based on building code requirements.
Currently the proposed doorway is a standard 36" doorway which may
not satisfy Life Safety Exiting Codes.
10. The computer equipment rack will be placed in the server room and
will be subject to
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Landlord approval. All costs associated with supply and
installation of the computer equipment rack are to be at the
Tenant's expense.
11. The Landlord reserves the right to have the Tenant remove all
equipment and the computer equipment rack upon their departure
from the space. The Landlord will not require removal of
electrical wiring, cabling and conduit.
12. The Landlord will provide a standard detail of how walls terminate
along mullions. Space Plan is to correctly identify exact
locations along window lines where walls terminate. The standard
detail will be shown on the final construction drawings.
13. All base building structural elements, piping, risers duct work,
conduit etc. will remain in their existing locations within the
Tenant Space. Reference attached Sketch SVI 617.1 for locations of
piping risers to remain.
14. Metal studs, doors and one side of finished drywall are included
around the "NIC" toilets area. This work is over standard work and
requires a Tenant Contribution of $4,684.90. All additional work
in the "NIC" toilets area is to be at the Tenant's additional
expense.
02000 Sitework
1. Demolition includes removal of all conduit, wire and electrical
fixtures that are not to be reused. All existing light fixtures
are to be removed and discarded.
2. All existing floor coverings and rubber base will be removed.
3. Existing corridor storefront metal, glass and doors which are not
shown to remain will be saved for reuse as required by the Space
Plan. Excess storefront material will be discarded.
4. Protection of all existing construction to remain is included.
03000 Concrete
1. Five (5) cored floor penetrations for electrical and telephone
connections are included. Final locations of cores will depend on
the Landlord's further review of structural and post-tensioned
steel drawings of the building. Upon this review cores may be
drilled at locations approved by the Landlord.
04000 Masonry and Stone
1. No work in this section.
05000 Metals
1. No work in this section.
2. Significant structural support will be required to support the
ceiling hung folding partition at the Multi-Purpose Room. This
structural support and the design of the support are included in
the folding partition allowance. See Section 10000.2 for
description of the folding partition allowance and required Tenant
Contribution for the allowance.
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06000 Wood and Plastics
1. All millwork is to be standard color plastic laminate with
Melamine interiors as noted on the Space Plan revised 5/8/97.
2. The following quantities of millwork are included:
a. 103 Linear feet of plastic laminate countertop with Melamine
supports.
b. 36 Linear feet of plastic laminate countertop on a plastic
laminate base cabinet with Melamine interior. Base cabinet
shall have a sliding drawer with hinged doors and one
adjustable shelf below.
c. 19 Linear feet of 2'-0" high upper cabinets on full height
walls at the mail room.
d. 41 Linear feet of upper cabinets with hinged doors and two
adjustable shelves.
3. Tenant will pay all costs for millwork in excess of the specified
quantities shown in item 06000.2, above.
07000 Thermal and Moisture Protection
1. No work in this section.
08000 Doors and Windows
1. All new doors in full height walls are to be 9'-0" high solid
core, plane sliced oak, with clear lacquer finish (Doors at the
exterior storefront shall all remain 6'-8" high).
2. All new doors in 7'-0" and 8'-0" high walls will be 6'-8" high
with specifications to match those in Item 1 above.
3. Existing storefront metal and glazing will be reused to the
maximum extent possible. All glazing areas shall use the existing
glass module lengths and utilize stem walls as necessary for
closures.
4. A card reader, electric lockset and hinges are included for one
pair of main entry doors only. All other card reader and
security/access control systems equipment (including hardware,
software, low voltage transformers, wiring, monitoring, etc.) is
excluded. Supply and installation of the card reader, lockset and
hinges is over standard work and requires a Tenant Contribution of
$2,805.00.
09000 Finishes
1. A curved, 5 foot wide soffit is provided as shown on the Space
Plan. Supply and installation of the curved soffit is over
standard work and requires a Tenant Contribution of $10,469.80.
2. Curved full height and 7'-0" walls are included as shown on the
Space Plan. Supply and installation of curved walls is above
standard and requires a Tenant Contribution of $1,919.50.
3. Painted drywall partitions are included as shown on the Space
Plan. All walls within the space will be adequately braced and
supported. The design for bracing of all 7'-0" and 8'-0" high
walls is subject to the Landlord's approval. Power and data for
all rooms
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will be provided overhead, except as specifically listed elsewhere
in the Clarifications to the Scope of Work.
4. All carpet is to be direct glue down Designweave Dana Point, 30oz.
cut pile or equal. Any upgrades to this carpet is to be at the
Tenant's expense.
5. The existing overhead slab and all new and existing attachments to
the slab will be painted white. All columns will be painted white,
not stripped and sealed as noted on the Space Plan.
6. All new drywall partitions will receive one coat of a tinted latex
primer and one finish coat of latex eggshell paint. Additional
coats of paint can be provided at the Tenant's expense.
7. Suspended ceilings are included at six Office/Team rooms only.
Supply and installation of suspended ceilings at the Office/Team
rooms is over standard work and requires a Tenant Contribution of
$2,598.20. All additional suspended ceilings are at the Tenant's
expense.
10000 Specialties
1. The existing surface mounted fire extinguishers are assumed to be
adequate to serve the new space. Existing fire extinguishers will
be relocated and remounted as directed by the fire inspector.
Additional surface mounted fire extinguishers to match the
existing will be provided if required to meet code.
2. All costs for the design, supply and installation of an operable
partition, including its structural support, at the Multi-Purpose
Room are included as an allowance. This allowance may or may not
be sufficient to cover the final costs of installing the
partition. All costs in excess of this allowance shall be at the
Tenant's expense. The folding partition allowance is an over
standard item and requires a Tenant Contribution of $29,700.00.
3. Three areas of 20' wide x 8' high white board and two areas of 12'
wide x 8' high white board are included. Supply and installation
of white boards is over standard work and requires a Tenant
Contribution of $13,269.30.
11000 Equipment
1. No work in this section.
12000 Furnishings
1. Supply and installation of furniture systems (including power,
data and telephone wiring, raceways, outlets and jacks), storage
cabinets, the reception desk and other moveable furniture shown on
the Space Plan are excluded. Furniture systems are assumed to be
supplied and installed by the Tenant complete with power poles and
electrical whips. Electrical connection of the systems furniture
whips to junction boxes at the ceiling will be provided by
Landlord.
2. Tenant's choice of window coverings, Meco shades, is not approved.
Building Standard vertical blinds will be used at all exterior
windows.
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3. Interior perimeter storefront window treatments will conform with
Building Standards. This window treatment is currently envisioned
to be a surface applied "sandblast look" window film with a wave
pattern. Tenant may propose alternate window treatments, but final
specification is by Landlord. Supply and installation of window
treatments at the interior perimeter storefront requires a Tenant
Contribution of $3,115.75.
4. Glass within the Tenant Space that is not along the exterior or
interior perimeter of the space can receive window coverings at
the Tenant's discretion and expense.
13000 Special Construction
1. No work in this section.
14000 Conveying Systems
1. No work in this section.
15000 Mechanical Systems
1. The existing fire sprinkler system will be modified as required to
cover the new wall layout. It is assumed that the existing fire
sprinkler risers are adequate to supply the new fire sprinkler
head layout. No modifications to the existing system, other than
noted above, are included.
2. Existing regular response fire sprinkler heads are believed to be
acceptable for a building of the Fashion Center San Francisco's
height. If specific life-safety requirements within the Tenant
Space require replacement of the existing sprinklers with rapid
response heads, the Tenant will make a required contribution to
Landlord of $2,000.00 at the time that this requirement is
defined.
3. A new kitchen sink is approved for the space. The location of the
kitchen sink will be determined by the Landlord based on further
review of structural and post-tensioned steel drawings.
4. Vent piping for the new sink will be run exposed in the Tenant
Space.
5. No isolated 24 hour cooling is included. Building standard air
conditioning is included only.
16000 Electrical
1. The following electrical work is included:
o Safe for demolition
o X-raying and coring at 5 locations
o 20 workstation connections through power poles by others
o 10 Lightolier tracks with 40 PAR 30 heads
o Lighting relays as required by California Title 24
o 20 local override switches
o 8 double 3-way switches
o 20 double switches
o 1300 feet of Wellmade 164 series indirect light fixtures
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o 5 poke through power/data outlets
o 30 feet of G 4000 wiremold with 5 quad outlets
o 5 circuits to wiremold
o 5 lunch room circuits
o 50 duplex outlets
o 4 dedicated circuits in Server Room
o 2 dedicated telephone equipment circuits
o 21 VAV box connections
o 2 new 208 volt panels
o 1 208 volt sub meter
o isolate existing panels for separate tenant metering
o electrical permit
o all electrical distribution is 120/208 V.
o 1 dedicated circuit for security system CPU
2. The quantity of general use power supplied to the workstations is
26.8 amps per every four workstations. This quantity of power is
over standard and requires a Tenant Contribution of $1,558.15.
3. The 10 Lightolier tracks and 40 PAR 30 heads shown in item
16000.1, above are over standard and require a Tenant Contribution
of $1,870.00.
4. The following telephone/data/security work is included:
o conduit runs from the Server Room to seven card reader
locations
o One card reader is included (See Section 08000.5 for
Tenant Contribution regarding this item). The
security system is specifically excluded.
5. The following life safety work is included:
o 18 surface mounted exit lights
o 10 Emergilights
o 39 Smoke detectors
o 20 horn strobes
o 6 speakers
o 10 pull stations
o 10 emergency ballasts on lighting circuit
6. Supply and installation of 24" wide x 6" high galvanized cable
tray includes four hundred linear feet of cable tray, three 90
degree turns and five "T"s.
7. No telephone data or security system cabling or equipment is
included, unless specifically noted above.
End of Exhibit B-1
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EXHIBIT C
RULES AND REGULATIONS
1. COMMON AREAS. The sidewalks, halls, passages, exits, entrances,
elevators and stairways of the Building shall not be obstructed by Tenant or
used for any purpose other than for ingress to and egress from the Premises. The
halls, passages, exits, entrances, elevators and stairways are not for the
general public and Landlord shall in all cases have the right to control and
prevent access thereto of all persons (including, without limitation, messengers
or delivery personnel not wearing uniforms) whose presence in the judgment of
Landlord would be prejudicial to the safety, character, reputation or interests
of the Building and its tenants. Neither Tenant nor any agent, employee,
contractor, invitee or licensee of Tenant shall go upon the roof of the
Building. Landlord shall have the right at any time, without the same
constituting an actual or constructive eviction and without incurring any
liability to Tenant therefor, to change the arrangement or location of entrances
or passageways, doors or doorways, corridors, elevators, stairs, toilets and
common areas of the Building.
2. SIGNS. No sign, placard, picture, name, advertisement or notice
visible from the exterior of the Premises shall be inscribed, painted, affixed
or otherwise displayed by Tenant on any part of the Building or the Premises
without the prior written consent of Landlord. Landlord will adopt and furnish
to tenants general guidelines relating to signs inside the Building. Tenant
agrees to conform to such guidelines. All approved signs or lettering shall be
printed, painted, affixed or inscribed at the expense of Tenant by a person
approved by Landlord. Material visible from outside the Building will not be
permitted.
3. PROHIBITED USES. The Premises shall not be used for the storage of
merchandise held for sale to the general public or for lodging. No cooking shall
be done or permitted on the Premises except that private use by Tenant of
microwave ovens and/or Underwriters' Laboratory-approved equipment for brewing
coffee, tea, hot chocolate and similar beverages will be permitted, provided
that such use is in accordance with all applicable federal, state and municipal
laws, codes, ordinances, rules and regulations. Tenant shall not place any load
on the floors of the Building exceeding fifty (50) pounds per square foot, live
or dead load. Tenant shall not use electricity for lighting, machines or
equipment in excess of four (4) watts per square foot.
4. JANITORIAL SERVICE. Tenant shall not employ any person other than
the janitor of Landlord for the purpose of cleaning the Premises unless
otherwise agreed to by Landlord in writing. Except with the written consent of
Landlord, no persons other than those approved by Landlord shall be permitted to
enter the Building for the purpose of cleaning the Premises.
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Tenant shall not cause any unnecessary labor by reason of Tenant's carelessness
or indifference in the preservation of good order and cleanliness. Landlord
shall not be responsible to Tenant for any loss of property in the Premises,
however occurring, or for any damage done to the effects of Tenant by the
janitor or any other employee or any other person.
5. KEYS. Landlord will furnish Tenant without charge with two (2)
keys to each door lock provided in the Premises by Landlord. Landlord may make a
reasonable charge for any additional keys. Tenant shall not have any such keys
copied or any keys made. Tenant shall not alter any lock or install a new or
additional lock or any bolt on any door of the Premises. Tenant, upon the
termination of this Lease, shall deliver to Landlord all keys to doors in the
Building.
6. MOVING PROCEDURES. Landlord shall designate appropriate entrances
for deliveries or other movement to or from the Premises of equipment,
materials, supplies, furniture or other property, and Tenant shall not use any
other entrances for such purposes. All moves shall be scheduled and carried out
during nonbusiness hours of the Building. All persons employed and means or
methods used to move equipment, materials, supplies, furniture or other property
in or out of the Building must be approved by Landlord prior to any such
movement. Landlord shall have the right to prescribe the maximum weight, size
and position of all equipment, materials, furniture or other property brought
into the Building. Heavy objects shall, if considered necessary by Landlord,
stand on a platform of such thickness as is necessary properly to distribute the
weight. Landlord will not be responsible for loss of or damage to any such
property from any cause, and all damage done to the Building by moving or
maintaining such property shall be repaired at the expense of Tenant.
7. NO NUISANCES. Tenant shall not use or keep in the Premises or the
Building any kerosene, gasoline or inflammable or combustible fluid or material
other than limited quantities thereof reasonably necessary for the operation or
maintenance of office equipment. Tenant shall not use any method of heating or
air conditioning other than that supplied by Landlord. Tenant shall not use or
keep or permit to be used or kept any foul or noxious gas or substance in the
Premises, or permit or suffer the Premises to be occupied or used in a manner
offensive or objectionable to Landlord or other occupants of the Building by
reason of noise, odors or vibrations, or interfere in any way with other tenants
or those having business in the Building, nor shall any animals be brought or
kept in the Premises or the Building.
8. CHANGE OF ADDRESS. Landlord shall have the right, exercisable
without notice and without liability to Tenant, to change the name or street
address of the Building or the room or suite number of the Premises.
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Exhibit 10.26
FIRST AMENDMENT TO OFFICE LEASE
(LONG TERM)
THIS FIRST AMENDMENT TO LEASE (this "Amendment"), dated as of the 14th day
of October, 1997, is entered into by and between ZORO, LLC, a California limited
liability company ("LANDLORD"), and SILICON VALLEY INTERNET PARTNERS, a
California corporation ("TENANT"). Capitalized terms used in this Amendment
without definition shall have the meanings ascribed to such terms in the Lease
(as hereinafter defined).
THE PARTIES ENTER into this Amendment on the basis of the following facts,
understandings and intentions:
A. Landlord and Tenant entered into that certain Office Lease (Gross)
dated June 26, 1997 (the "LEASE"), whereby Landlord leased to Tenant and
Tenant leased from Landlord certain premises more particularly described
therein (the "PREMISES"), and located on the third (3rd) floor of the
building owned by Landlord at 699 Eighth Street, San Francisco, California
(the "BUILDING").
B. Landlord and Tenant wish to provide for certain termination rights
in the event certain work required under the Lease is not timely commenced.
NOW, THEREFORE, based on the foregoing and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties agree as follows:
1. TERMINATION FOR FAILURE TO COMMENCE LANDLORD'S WORK. Notwithstanding
anything to the contrary in the Lease, if Landlord has not commenced actual
physical construction of Landlord's Work in accordance with final, Tenant
approved Tenant's Plans, by February 1, 1998, either Landlord or Tenant may
terminate the Lease by written notice to the other party, said termination to be
effective * If Landlord elects to terminate the Lease for any reason other than
(i) a material default by Tenant under the Lease
* ten (10) days after the delivery of said notice.
1
<PAGE>
(including, specifically, the terms of Exhibit B to the Lease), or (ii) the
failure or refusal of the appropriate local governmental agency to issue a
building permit for Landlord's Work based on the most recent set of plans and
specifications submitted to said agency for approval, Landlord shall be deemed
to have breached the Lease by its election to terminate the Lease, and Tenant
shall be entitled to recover any and all damages proximately resulting from such
breach, including without limitation, any costs incurred by Tenant as a result
of the relocation of Tenant's business operations from the temporary premises
occupied by Tenant in the Building over and above that which Tenant would have
incurred in relocating to the Premises demised under the Lease. If Landlord
terminates the Lease because of a material default by Tenant under the Lease,
Landlord shall be entitled to recover any and all damages provided for under the
Lease upon the occurrence of an Event of Default. If Tenant elects to terminate
the Lease for any reason other than (iii) a material default by Landlord under
the Lease (including, specifically, the terms of Exhibit B to the Lease), or
(iv) the failure or refusal of the appropriate local governmental agency to
issue a building permit for Landlord's Work based on the most recent set of
plans and specifications submitted to said agency for approval, Tenant shall be
deemed to have breached the Lease by its election to terminate the Lease, and
Landlord shall be entitled to recover any and all damages provided for under the
Lease upon the occurrence of an Event of Default. If Tenant terminates the Lease
because of a material default by Landlord under the Lease, Tenant shall be
entitled to recover any and all damages proximately resulting from such breach,
including without limitation, any costs incurred by Tenant as a result of the
relocation of Tenant's business operations from the temporary premises occupied
by Tenant in the Building over and above that which Tenant would have incurred
in relocating to the Premises demised under the Lease. If either Landlord or
Tenant terminates the Lease due to the failure or refusal of the appropriate
governmental agency to issue a building permit as hereinabove provided, the
Lease shall be deemed terminated upon the mutual agreement of the parties,
without penalty or charge to either party.
2. OUTSIDE DATE FOR COMPLETION OF TENANT IMPROVEMENTS. The last sentence of
Section 2.1 of the Lease is hereby amended to delete the reference to "December
1, 1997," and to substitute in lieu thereof the date July 31, 1998.
2
<PAGE>
3. NEW ADDRESS. Paragraph D of the Basic Lease Information of the Lease is
amended to reflect the new address of the Building: 650 Townsend Street, San
Francisco, CA.
4. NO DEFAULT. Tenant represents that there are no defaults of Landlord
under the Lease nor any existing conditions which upon the giving of notice or
the lapse of time, or both, would constitute a default under the Lease.
5. FULL FORCE AND EFFECT. Except as amended hereby, the Lease remains
unamended, and as amended hereby the Lease is in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
"LANDLORD"
ZORO, LLC,
a California limited liability company
By: /s/ Signature Illegible
-----------------------------------
Its: Managing Member
"TENANT"
SILICON VALLEY INTERNET PARTNERS,
a California corporation
By: /s/ Signature Illegible
-----------------------------------
Its: President: CEO
3
<PAGE>
Exhibit 10.27
ZORO, LLC
900 FRONT STREET, SUITE 300
SAN FRANCISCO, CALIFORNIA 94111
TELEPHONE (415) 956-1900
TELECOPIER (415) 392-6560
January 29, 1998
6216.006
Martin I. Zankel
VIA HAND DELIVERY
- -----------------
Dwayne Nesmith
Silicon Valley Internet Partners
650 Townsend Center, Suite 6119
650 Townsend Street
San Francisco, CA 94103
Re: TOWNSEND CENTER/SILICON VALLEY
INTERNET PARTNERS LEASE AMENDMENT
---------------------------------
Dear Mr. Nesmith:
This letter is in furtherance to our conversation today in which we
agreed to the following:
(1) Section 1 of the Lease Amendment dated October 14, 1997 (the
"Amendment") to the Lease entered into between ZORO, LLC, a California limited
liability company, and Silicon Valley Internet Partners, a California
corporation, and dated June 26, 1997 (the "Lease"), is amended to provide that
the date by which either Landlord or Tenant may terminate the Lease if Landlord
has not commenced actual physical construction of Landlord's Work in accordance
with final approval Tenant's Plans, shall be February 15, 1998.
(2) Section 2 of the Amendment shall be amended to delete the reference
to the date "July 31, 1998" and the date "August 15, 1998" shall be inserted in
lieu thereof.
<PAGE>
Dwayne Nesmith
January 29, 1998
Page 2
It is agreed that except as amended hereby, the Amendment and the Lease
remain in full force and effect.
Very truly yours,
ZORO, LLC
a California limited partnership
By: /s/ Signature Illegible
Martin I. Zankel
Managing Member
MIZ/sc
Acknowledged and approved by:
SILICON VALLEY INTERNET
PARTNERS, a California corporation
By:
---------------------------------
Its:
--------------------------------
<PAGE>
Exhibit 10.28
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
WELLS FARGO BANK, NATIONAL
ASSOCIATION
Real Estate Group (AU #2962)
400 Capitol Mall, Suite 700
Sacramento, CA 95814
Attn: Denise Latta
Loan No. 50330V
SUBORDINATION AGREEMENT; ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL,
ATTORNMENT AND NON-DISTURBANCE AGREEMENT
(Lease To Deed of Trust)
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE
PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF
SOME OTHER OR LATER SECURITY INSTRUMENT.
THIS SUBORDINATION AGREEMENT; ACKNOWLEDGEMENT OF LEASE ASSIGNMENT, ESTOPPEL,
ATTORNMENT AND NON-DISTURBANCE AGREEMENT ("Agreement") is made August 21, 1998
by and between ZORO, LLC, & California limited liability company ("Owner"),
VIANT CORPORATION, a California corporation ("Lessee") and WELLS FARGO BANK,
NATIONAL ASSOCIATION ("Lender").
RECITALS
--------
A. Pursuant to the terms and provisions of a lease dated June 26, 1997,
and amended by the first amendment to office lease dated October 14,
1997 and the second amendment to office lease dated February 25, 1998
(collectively referred to as the "Lease"), Owner, as "Lessor", granted
to Lessee a leasehold estate in and to a portion of the property
described on Exhibit A attached hereto and incorporated herein by this
reference (which property, together with all improvements now or
hereafter located on the property, is defined as the "Property").
B. Owner has executed, or proposes to execute, a deed of trust with
absolute assignment of leases and rents security agreement and fixture
filing ("Dead of Trust") securing, among other things, a promissory
note ("Note" in the principal sum of FIFTY-FIVE MILLION FIVE HUNDRED
THOUSAND AND NO/100THS DOLLARS ($55,500,000.00), dated August 21, 1998,
in favor of Lender, which Note is payable with interest and upon the
terms and conditions described therein ("Loan"). The Deed of Trust is
to be recorded concurrently herewith.
C. As a condition to making the Loan secured by the Deed of Trust, Lender
requires that the Deed of Trust be unconditionally and at all times
remain a lien on the Property, prior and superior to all the rights of
Lessee under the Lease and that the Lessee specifically and
unconditionally subordinate the Lease to the lien of the Deed or Trust.
D. Owner and Lessee have agreed to the subordination, attornment and other
agreements herein in favor of Lender.
Page 1 of 8
<PAGE>
Loan No. 50330V
NOW THEREFORE, for valuable consideration and to induce Lender to make the Loan,
Owner and Lessee hereby agree for the benefit of Lender as follows:
1. SUBORDINATION. Owner and Lessee hereby agree that:
1.1 PRIOR LIEN. The Deed of Trust securing the Note in favor of
Lender, and any modifications, renewals or extensions thereof,
shall unconditionally be and at all times remain and lien on the
Property prior and superior to the Lease;
1.2 SUBORDINATION. Lender would not make the Loan without this
agreement to subordinate; and
1.3 WHOLE AGREEMENT. This Agreement shall be the whole agreement and
only agreement with regard to the subordination of the Lease to
the lien of the Deed of Trust and shall supersede and cancel, but
only insofar as would affect the priority between the Deed of
Trust and the Lease, any prior agreements as to such
subordination, including, without limitation, those provisions, if
any, contained in the Lease which provide for the subordination of
the Lease to a deed or deeds of trust or to a mortgage o??
mortgages.
AND FURTHER, Lessee individually declares, agrees and acknowledges for
the benefit of Lender, that:
1.4 USE OF PROCEEDS. Lender, in making disbursements pursuant to the
Note, the Deed of Trust or any loan agreements with respect to the
Property, is under no obligation or duty to, nor has Lender
represented that it will, see to the application of such proceeds
by the person or persons to whom Lender disburse?? such proceeds,
and any application or use of such proceeds for purposes other
than those provided for in such agreement or agreements shall not
defeat this agreement to subordinate in whole or in part;
1.5 WAIVER, RELINQUISHMENT AND SUBORDINATION. Lessee intentionally and
unconditionally waives relinquishes and subordinates all of
Lessee's right, title and interest in and to the Property to the
lien o?? the Deed of Trust and understands that in reliance upon,
and in consideration of, this waiver relinquishment and
subordination, specific loans and advances are being and will be
made by Lende?? and, as part and parcel thereof, specific monetary
and other obligations are being and will be entere?? into which
would not be made or entered into but for said reliance upon this
waiver, relinquishmen?? and subordination.
2. ASSIGNMENT. Lessee acknowledges and consents to the assignment of the
Lease by Lessor in favor o?? Lender.
3. ESTOPPEL. Lessee acknowledges and represents that:
3.1 LEASE EFFECTIVE. The Lease has been duly executed and delivered by
Lessee and, subject to the term and conditions thereof: (i) to
Lessee's current actual knowledge, the Lease is in full force and
effec?? (ii) the obligations of Lessee thereunder are valid and
binding; and (iii) there have been no modification or additions to
the Lease, written or oral;
3.2 NO DEFAULT. To Lessee's current actual knowledge, as of the date
hereof: (i) there exists no breaci?? default, or event or
condition which, with the giving of notice or the passage of time
or both, wou?? constitute a breach or default under the Lease; and
(ii) there are no existing claims, defenses or offse?? against
rental due or to become due under the Lease;
3.3 ENTIRE AGREEMENT. The Lease constitutes the entire agreement
between Lessor and Lessee wi?? respect to the Property and Lessee
claims no rights with respect to the Property other than as set
for?? in the Lease; and
Page 2 of 8
<PAGE>
Loan No. 5033C
3.4 NO PREPAID RENT. No deposits or prepayments of rent have been made
in connection with the Leas?? except as follows: (if none, state
"None") _____________________.
4. ADDITIONAL AGREEMENTS. Lessee covenants and agrees that, during all
such times as Lender is th?? Beneficiary under the Deed of Trust:
4.1 MODIFICATION, TERMINATION AND CANCELLATION. Lessee will not,
without Lender's prior written consent: (?? consent to any
modification or amendment relating to the Lease which changes a
material term of th?? Lease; (ii) terminate or cancel the Lease
(in whole or in part); or (iii) make any payment to Lessor i??
consideration of any modification, termination or cancellation of
the Lease (in whole or in part);
4.2 NOTICE OF DEFAULT. Lessee will notify Lender in writing
concurrently with any notice given to Lessor o?? any default by
Lessor under the Lease, and Lessee agrees that Lender has the
right (but not th?? obligation) to cure any breach or default
specified in such notice within the time periods set forth?? below
and Lessee will not declare a default of the Lease, as to Lender,
if Lender cures such defaul?? within fifteen (15) days from and
after the expiration of the time period provided in the Lease for
the cure thereof BY LESSOR; PROVIDED, however, that if such
default cannot with diligence be cured by Lender within such
fifteen (15) day period, the commencement of action by Lender
within such fifteen (15) day period to remedy the same shall be
deemed sufficient so long as Lender pursues such cur?? with
diligence;
4.3 NO ADVANCE RENTS. Lessee will make no payments or prepayments of
rent more than one (1) month in advance of the time when the same
become due under the Lease; and
4.4 ASSIGNMENT OF RENTS. Upon receipt by Lessee of written notice from
Lender that Lender has elected to terminate the license granted to
Lessor to collect rents, as provided in the Deed of Trust, and
directing the payment of rents by Lessee to Lender, Lessee shall
comply with such direction to pay and shall not be required to
determine whether Lessor is in default under the Loan and/or the
Deed of Trust. Owner agrees that any such payment to Lender shall
discharge the obligations of Lessee to make such payment to Owner
under the Lease.
5. ATTORNMENT. In the event Lender succeeds to the interest of Lessor
under the Lease, Lessee agrees for the benefit of Lender (including for
this purpose any transferee of Lender or any transferee of Lessor's
title in and to the Property by Lender's exercise of the remedy of sale
by foreclosure under the Deed of Trust) as follows:
5.1 PAYMENT OF RENT. Lessee shall pay to Lender all rental payments
required to be made by Lessee pursuant to the terms of the Lease
for the duration of the term of the Lease;
5.2 CONTINUATION OF PERFORMANCE. Lessee shall be bound to Lender in
accordance with all of the provisions of the Lease for the balance
of the term thereof, and Lessee hereby attorns to Lender as its
landlord, such attornment to be effective and self-operative
without the execution of any further instrument immediately upon
Lender succeeding to Lessor's interest in the Lease and giving
written notice thereof to Lessee;
5.3 NO OFFSET. Lender shall not be liable for, nor subject to, any
offsets or defenses which Lessee may have by reason of any act or
omission of Lessor under the Lease (except those acts or omissions
which constitute continuing defaults under the Lease including,
without limitation, failure to perform required maintenance and
repair, for which Lender, as successor to the interest of Lessor,
shall be liable), nor for the return of any sums which Lessee may
have paid to Lessor under the Lease as and for security deposits,
advance rentals or otherwise, except to the extent that such sums
are actually delivered by Lessor to Lender; and
Page 3 of 8
<PAGE>
Loan No. 50330??
5.4 SUBSEQUENT TRANSFER. If Lender, by succeeding to the interest of
Lessor under the Lease, should become obligated to perform the
covenants of Lessor thereunder, then, upon any further transfer
o?? Lessor's interest by Lender, Lender shall have no liability
under the Lease after said transfer, except for those liabilities
accruing during Lender's ownership.
6. NON-DISTURBANCE. In the event of a foreclosure under the Deed of Trust,
so long as there shall then exist no breach, default, or event of
default on the part of Lessee under the Lease beyond applicable notice
and cure periods, Lender agrees for itself and its successors and
assigns that the leasehold interest of Lessee under the Lease shall not
be extinguished or terminated by reason of such foreclosure, but rather
the Lease shall continue in full force and effect and Lender shall
recognize and accept Lessee as tenant under the Lease subject to the
terms and provisions of the Lease except as modified by this AGREEMENT;
PROVIDED, however that Lessee and Lender agree that the following
provisions of the Lease (if any) shall not be binding or Lender; any
option to purchase with respect to the Property; any right of first
refusal with respect to the Property; any provision regarding the use
of insurance proceeds or condemnation proceeds with respect to the
Property which is inconsistent with the terms of the Deed of Trust.
Subject to all the terms and provisions of this Agreement, in the event
Lender so succeeds to the interest of Lessor or any successor to
Lessor, Lender shall be liable for the performance of the Lessor under
the Lease and shall be bound by the terms of the Lease.
7. MISCELLANEOUS.
7.1 HEIRS, SUCCESSORS, ASSIGNS AND TRANSFEREES. The covenants herein
shall be binding upon, and inure to the benefit of, the heirs,
successors and assigns of the parties hereto; and
7.2 NOTICES. All notices or other communications required or permitted
to be given pursuant to the provisions hereof shall be deemed
served upon delivery or, if mailed, upon the first to occur of
receipor the expiration of three (3) days after deposit in United
States Postal Service, certified mail, postage prepaid and
addressed to the address of Lessee or Lender appearing below:
Page 4 of 8
<PAGE>
Loan No. 50330
<TABLE>
<CAPTION>
"OWNER" "LENDER"
<S> <C>
ZORO, LLC, WELLS FARGO BANK, NATIONAL ASSOCIATION
a California limited liability company Real Estate Group (AU #2962)
900 Front Street, Suite 300 400 Capitol Mall, Suite 700
San Francisco, CA 94111 Sacramento, CA 95814
Attn: Martin I. Zankel Attn: Denise Latte
Loan No. 50330V
</TABLE>
"LESSEE"
VIANT CORPORATION,
a California corporation
650 Townsend Street, Suite 6119
San Francisco, CA 94103
PROVIDED, HOWEVER, any party shall have the right to change its
address for notice hereunder by the giving of written notice
thereof to the other party in the manner set forth in this
Agreement; and
7.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute and be construed as one and the
same instrument; and
7.4 REMEDIES CUMULATIVE. All rights of Lender herein to collect rents
on behalf of Lessor under the Lease are cumulative and shall be in
addition to any and all other rights and remedies provided by law
and by other agreements between Lender and Lessor or others; and
7.5 PARAGRAPH HEADINGS. Paragraph headings in this Agreement are for
convenience only and are not to be construed as part of this
Agreement or in any way limiting or applying the provisions
hereof.
INCORPORATION. EXHIBIT A is attached hereto and incorporated herein by this
reference.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE
PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A
PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF
THE LAND.
IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES
CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO.
"OWNER"
ZORO, LLC,
a California limited liability company
BY:
------------------------------------
Martin I. Zankel, Manager
Page 5 of 8
<PAGE>
Loan No. 50330V
"LENDER"
WELLS FARGO BANK,
NATIONAL ASSOCIATION
By:
-----------------------------------
Blake E. Griffin
Its: Vice President
"LESSEE"
VIANT CORPORATION,
a California corporation
BY:
-----------------------------------
ITS:
----------------------------------
(ALL SIGNATURES MUST BE ACKNOWLEDGED)
Page 6 of 8
<PAGE>
EXHIBIT A
Loan No. 50330V
DESCRIPTION OF PROPERTY
EXHIBIT A to Subordination Agreement; Acknowledgment of Lease Assignment,
Estoppel, Attornment and Non-Disturbance Agreement dated as of August 21, 1998,
executed by ZORO, LLC, a California limited liability company, as "Owner", VIANT
CORPORATION, a California corporation, as "Lessee", and WELLS FARGO BANK,
NATIONAL ASSOCIATION, as "Lender".
All that certain real property located in the County of San Francisco, State of
California, described as follows:
APN Lot 9, Block 3783
PARCEL ONE
All of Lot 9, Assessor's Block 3783, as shown on that certain Map entitled,
"PARCEL MAP OF A PORTION OF 100 VARA BLOCK NO. 412, also being a portion of
Assessor's Block No. 3783 which Map was filed for record in the Office of the
Recorder of the City and County of San Francisco, State of California, on
November 29, 1988 in Book 38 of Parcel Maps, at page 36.
PARCEL TWO
Non-exclusive easements as set forth in that certain Grant of Easement with
Covenants and Restrictions affecting land dated as of December 29, 1988 by and
between Bay West Showplace Investors, a California Limited Partnership, and
Portman/Bay West Apparel partners, a California Partnership, recorded on
December 30, 1988 in Book E775 at Page 1598, Series No. E296406 in the Official
Records and as amended by that certain First Amendment to Grant of Easement with
Covenants and Restrictions affecting land dated as of June 19, 1998 by and
between Bay West Showplace Investors, a California Limited Partnership and Zoro,
LLC, a California limited liability company, recorded June 25, 1998 in Reel H162
at Image 0291, Series No. G376431 in the Official Records.
Page 7 of 8
<PAGE>
STATE OF CALIFORNIA
COUNTY OF____________________ as.
On this _____ day of ________________, 19__, before me,
_________________________________________________ a Notary Public in and for the
State of California, personally appeared ___________________________________
personally known to me (or proved on the basis of satisfactory evidence) to be
the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal
Signature
----------------------------------------
My commission expires
----------------------------
STATE OF CALIFORNIA
COUNTY OF ss.
------------------------------------
On this ____ day of ___________________, 19__, before me,
_________________________________________________ a Notary Public in and for the
State of California, personally appeared
__________________________________________________ personally known to me (or
proved on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal
Signature
----------------------------------------
My commission expires
----------------------------
STATE OF CALIFORNIA
COUNTY OF ss.
------------------------------------
On this _____ day of __________________, 19__, before me,
__________________________________________________ a Notary Public in and for
the State of California, personally appeared
_________________________________________ personally known to me (or proved on
the basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal
Signature
----------------------------------------
My commission expires
----------------------------
Page 8 of 8
<PAGE>
10 ALTERATIONS AND IMPROVEMENTS. Lessee shall not make or allow to be made
any alterations or physical additions in or to the premises without he
prior written consent of Lessor. Any and all such alterations or
improvements shall be surrendered to Lessor upon the termination of
this lease, ?? or time or otherwise: provided, however, that this
clause shall not apply to moveable equipment, trade fixtures or
furnitures or Lessee which may be removed by Lessee upon the expiration
or earlier termination of this lease if Lessee is not then in default.
11. LIENS. Lessee shall keep the land and building of which the premises
are a part free from any liens arising out of any work performed,
materials furnished or obligations incurred by Lessee. Lessor shall
have the right to post and keep posted on the premises any notices that
may be provided by law or which Lessor may deem to be proper for the
protection of Lessor from such liens.
12. RULES AND REGULATIONS. The rules and regulations attached hereto, as
well as such rules and regulations as may be hereafter adopted by
Lessor for the safety, care and cleanliness or the premises and the
preservation of good order therein, are hereby expressly made a part
hereof, and Lessee agrees to comply with them. Lessor shall not be
responsible to Lessee for the non-performance by any other tenant or
occupant of the building or any of said rules and regulations. The
violation of any such rules and regulations shall be deemed a material
breach of the lease by Lessee Moreover, Lessee shall pay any damages
Lessor or other tenants of the building may suffer as a result of any
violation of said rules and regulations by as employees, agents,
invitees, contractors, suppliers or customers.
13. ASSIGNMENT OF SUBLEASE. Lessee shall not assign, transfer, mortgage,
pledge, hypothecate or encumber this lease or any interest therein,
directly or indirectly, and shall not sublet the premises of any part
thereof, or allow any use thereof by license or otherwise, without the
prior written consent of Lessor. Any attempt to do so without such
consent shall be void and shall, at Lessor's option, terminate this
lease. No consent by Lessor to any assignment or subletting by Lessee
shall relieve Lessee of any obligation to be performed by Lessee under
this lease, whether occurring before or after such consent, assignment
or subletting. The consent by Lessor to any assignment or subletting or
other transfer shall not relieve Lessee from the obligation to obtain
Lessor's written consent to any other assignment or subletting and
consent to 1 assignment, subletting or other transfer shall not be
deemed to constitute consent to any subsequent assignment, subletting
or other transfer. The acceptance of rent by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision of
this lease or to be a consent to any assignment, subletting or other
transfer.
14. INSURANCE. Lessee shall obtain and maintain, at all times during the
term hereof, at its own cost, commercial general liability insurance of
at least $1,000,000.00 The aforementioned policies shall in no event
limit the liability of Lessee hereunder. The aforementioned insurance
shall name Lessor as an additional insured. Said insurance shall be
with companies having a rating of not less than A in "Best's Insurance
Guide" Lessee shall furnish from the insurance companies or cause the
insurance companies to furnish certificates of coverage. No policy
shall be cancellable or subject to reduction of coverage or other
modification or cancellation except after 30 days prior written notice
to Lessor by the insurer. All such policies shall be written as primary
policies, not contributing with and not in excess of the coverage which
Lessor may carry Lessee shall, at least 20 days prior to the expiration
of such policies, furnish Lessor with renewals or binders. Lessee
agrees that if Lessee does not take out and maintain such insurance.
Lessor may, at its option, procure said insurance on Lessee's behalf
and charge Lessee the premiums therefore together with a 25% handling
charge, payable upon demand. Lessee shall have the right to provide
such insurance coverage pursuant to blanket policies obtained by Lessee
provided such blanket policies expressly afford coverage to the
premises and to Lessee as required hereunder.
15. FIRE AND CASUALTY DAMAGE. If the premises shall be partially or totally
destroyed by fire or other casualty so as to render them untenantable,
the rent herein shall be prorated until the premises are made
tenantable by Lessor. If Lessor shall decide not to rebuild, then all
rent owed to the time of such destruction or termination shall be paid
by Lessee and this lease shall cease and terminate.
<PAGE>
16. CONDEMNATION. If the premises shall be taken or condemned in, whole or
in substantial part for public purposes, this lease shall, at the
option of either party, forthwith cease and terminate, and Lessee shall
have no claim against Lessor for the value of any unexpired term of
this lease or otherwise except for Lessee's loss of good will, moving
and relocation expenses, if any, designated for Lessee.
17. LOSS OR DAMAGE. Lessor shall not be liable to Lessee for any injury or
damage that may result to any person or property by or from any cause
whatsoever in or about the land and building of which the premises are
a part, unless caused by Lessor's negligence of intentional conduct.
18. BANKRUPTCY BY LESSEE. If (i) voluntary bankruptcy proceedings are
initiated by (Lessee, ii) Lessee is adjudged a bankrupt, (iii) Lessee
makes an assignment for the benefit of its creditors, (iv) the
execution is issued against Lessee or (v) the interest of Lessee
hereunder passes by operation or law to any person other than Lessee,
this lease may, at Lessor's option, be terminated.
19. DEFAULT. (a) If Lessee breaches any of the terms and conditions hereof,
Lessor may, at its option subject to applicable legal due process, (i)
enter and take possession of the premises, (ii) remove all persons and
property therefrom and (iii) declare this lease terminated. In such
event, Lessee shall peacefully and quietly surrender the premises to
Lessor and execute such instruments as Lessor may require to evidence
termination of Lessee's rights and interest hereunder; and Lessor shall
be entitled to recover from Lessee the aggregate of all amounts Lessor
is permitted to recover from Lessee pursuant to Section 1951.2 of the
California Civil Code, as amended, including without limitation, (i)
the worth at the time of award of the unpaid rent which had been earned
at the time of termination, (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental
loss that Lessee proves could have been reasonably avoided, (iii) the
worth at the time or award of the amount by which the unpaid rent for
the balance of the term after the time of award exceeds the amount of
such rental loss that Lessee proves could have been reasonably avoided
and (iv) all costs associated with relating efforts, including without
limitation, Lessor's overhead, legal fees, commissions and improvement
costs. The "worth at the time of award" of the amounts referred to in
clauses (i) and (ii) above shall be computed by allowing interest at
the maximum rate permitted by law. The "worth at the time of award" of
the amount referred to in clauses (i) and (ii) above clause (iii) above
shall be computed by discounting such amount at the discount rate of
the federal Reserve Bank of San Francisco at the time of award plus 1%.
(b) Unless and until Lessor elects to terminate Lessee's right of
possession hereunder. Lessor may enforce all of its rights and remedies
under this lease and section 1951.4 of the California Civil Code, as
amended, including without limitation, the right to recover the rent
and all other charges, if any, as they become due hereunder. Actions of
maintenance or preservation and efforts to relet the premises shall not
constitute a termination or Lessee's right to possession.
(c) The rights and remedies herein conferred upon Lessor are not
intended to be exclusive and are in addition to any other rights and
remedies if may have now or hereafter by law, equity or statute.
20. LESSOR'S RIGHT OF ENTRY. Lessor or its agents may enter the premises at
all reasonable hours to inspect, clean, repair, alter or make additions
thereto or to adjacent space, or for any other lawful purpose,
including without limitation, showing the premises to prospective
purchasers, tenants or lenders. For each of the aforesaid purposes,
Lessor shall retain a key with which to unlock all of the doors in the
premises. Lessor may use any and all means which it deems proper to
open said doors in an emergency and any entry to the premises obtained
by any of said means shall not, under any circumstances, be construed
or deemed to be a forcible or unlawful entry into, or a detainer of,
the premises, or an eviction of Lessee from the premises or any portion
thereof.
21. SUBORDINATION. This lease, at Lessor's option, shall be subject and
subordinate to the lien of any mortgages or deeds of trust in any
amount or amounts whatsoever now
<PAGE>
or hereafter placed on or against the land or building of which the
premises are a part without the necessity of the execution and delivery
of any further instruments on the part of Lessee to effectuate such
subordination. Lessee shall attorn to the purchaser upon any
foreclosure or trust deed sale and recognize such purchaser as the
Lessor under this lease.
22. ESTOPPEL CERTIFICATES. Lessee shall execute, acknowledge and deliver to
Lessor at any time within 10 days after request by Lessor, a statement
in writing certifying, if such be the case, that this lease is
unmodified and in full force and effect, or if there have been
modifications that the same is in full force and effect as modified,
the dates on which rent has been paid and such other information as
Lessor shall reasonably request. If additional documents are reasonably
required by Lessor for this or other purposes. Lessee shall cooperate
in the preparation thereof.
<PAGE>
24. WAIVER. No term or condition hereof or the breach thereof shall be
deemed waived, except by written consent of the party against whom the
waiver is claimed, and any waiver or the breach of any term or
condition shall not be deemed to be a waiver of any preceding or
succeeding breach of the same or any other term or condition.
Acceptance by Lessor of any performance by Lessee after the time the
same shall have become due shall not constitute a waiver by Lessor or
the breach or default unless otherwise expressly agreed to by Lessor in
writing.
25. LATE CHARGES. If the payment of any amount due hereunder is not
received by Lessor on or before the due date thereof, said payment
shall be in default and a late charge of 5% of the defaulted payment
shall also become due and payable as additional rent. Thereafter, said
pass due amount together with the late charge described herein shall
bear interest at the maximum rate permitted by law.
26. ATTORNEY'S FEES. If either party shall seek the aid of an attorney for
relief against the other hereunder, including any suit by Lessor for
the recovery of rent or possession of the premises, the losing party
shall pay the prevailing party all the costs and expenses thereby
incurred, including without limitation, attorney's fees, discovery
costs, witness fees and court costs. If applicable, whether or not an
action is initiated or prosecute to judgment.
27. HOLD HARMLESS. Lessee shall indemnify and hold harmless lessor, its
agents and employees from and against any and all claims, damages,
losses and expenses, including without limitation, attorney's fees and
costs of any kind whatsoever arising out of or resulting from, directly
or indirectly, any act or omission of Lessee, its agents or employees.
28. HOLDOVER. Any holding over by Lessee after the expiration of this
lease, without Lessor's consent, shall be deemed to be a tenancy from
month-to-month on all of the terms and conditions set forth herein, to
the extend not inconsistent with a month-to-month tenancy: provided
however, the rent for such holdover period shall be an amount equal to
the rent due for the last month of the lease term.
29. SURRENDER OF PREMISES. Upon the expiration or earlier termination of
this lease, Lessee shall surrender the premises and all alterations,
additions and improvements thereto in the same condition and
configuration as received, ordinary wear and test alone excepted. Any
damage of the type described in the rules and regulations attached
hereto shall be deemed excessive. If Lessee fails to so surrender the
premises. Lessee shall pay to Lessor, upon demand, the estimated cost
of repairs and the rental value of the premises for the time reasonably
estimated to make said repairs. The wall repair component of said
estimate, if any, shall reflect the charges necessary to replace
damaged panels in accordance with manufacturer's specifications and
procedures. Lessee shall further indemnify Lessor against any loss or
liability resulting, from delay by Lessee in so surrendering the
premises, including without limitation, any claims made by succeeding
tenants founded on such failure.
30. NOTICES. All notices which are required to be given by either party to
the other hereunder shall be in writing and shall be deemed to have
been given when they are (i) addressed as shown below, or to such other
addresses as either party may specify in writing, (ii) stamped and
(iii) deposited the United States mail.
31. AUTHORITY. If Lessee signs as a corporation, partnership or joint
venture, such of the persons executing this lease on behalf of lessee
does hereby covenant and warrant that (i) Lessee is a duly authorized
and existing entity, (ii) Lessee has and is qualified to do business in
California, (iii) the entity has full right and authority to enter into
this lease and (iv) each person signing on behalf of the entity is
authorized to do so.
32. CONSENT. Where required, the consent of either party hereunder shall
not be unreasonably withheld.
<PAGE>
33. JOINT AND SEVERAL LIABILITY. Each person or entity signing as Lessee
hereunder shall be jointly and severally liable for the obligations of
Lessee herein.
34. MISCELLANEOUS. This lease shall be construed in accordance with the law
of the State of California. In the event that one or more of the
provisions or paragraphs of this lease is determined to be a illegal
and unenforceable, the remainder of this lease shall not be affected
thereby and each remaining provision or portion thereof shall continue
to be valid and effective and shall be enforceable to the fullest
extent permitted by law. Lessee has reviewed this lease, and has had a
full opportunity to consult any attorney of its choice in this regard,
and accordingly, the normal rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this lease.
35. ENTIRE UNDERSTANDING. This agreement represents the entire
understanding of Lessor and Lessee and supersedes all prior written or
oral agreements relative to the subject matter hereof.
Dated
------------------------------------
Lessee Lessor
Genuine Internet Inc. Harvard Investment Company
- --------------------- --------------------------
805 Veterans Blvd., Suite 310 805 Veterans Blvd., Suite 200
- ----------------------------- -----------------------------
(address) (address)
Redwood City, CA 94063 Redwood City, CA 94063
- ---------------------- ----------------------
(city, state, zip code) (city, state, zip code)
By By
---------------------------- ---------------------------
Eric Greenberg Gary A. Martin
- ----------------------------------
(individual)
<PAGE>
Rules and Regulations
1. Lessee shall not any way deface the premises or any part thereof.
2. Lessor will direct workers as to where and how all computer,
communication and telephone equipment is to be installed. No boring or
cutting for wires or equipment will be allowed without the prior
written consent of Lessor.
3. No unusual furniture, freight, packages, suppliers, equipment or
merchandise of any kind shall be brought into the building without the
prior written consent of Lessor and all moving of the same into or out
of the building shall be done at such a time and in such manner as
Lessor shall designate.
4. Lessee shall specify that all deliveries be made at the near of the
building only. Under no circumstances are deliveries to be made or
receive at or through the front of the building. There shall not be
used in the building any hand trucks except those equipped with rubber
tires and side guards. In no event shall hand trucks be used on or
about the front stairs or lobby of the building.
5. Lessee shall not overload the floor of the premises, Lessor shall have
the right to prescribe the weight, size and position of all heavy
objects brought into the building and also the times and manner of
moving the same in and out of the building Lessor will not be
responsible for loss of or damage to any such property from any cause
and all damage done to the building by moving or maintaining such
property shall be repaired at the expense of Lessee.
6. Before leaving each day, Lessee shall see that the doors of the
premises and building are securely locked.
7. Cars are to park in property marked spaces only. Under no circumstances
are cars to (i) back in, (ii) park in spaces reserved for other
tenants, (iii) park in driveways, (iv) park in front of entrances to
the building, (v) park in unmarked areas or (vi) park in loading zones
except while loading or unloading. All motorcycles, mopeds and bicycles
are to park only in the area designated for them. Lessor shall have the
right to cause improperly parked vehicles to be lowed at the owner's
expense. In addition,
8. Lessee shall use protective pads at all desks, coffee machines and copy
machines and maintain the premises in a clean and orderly manner at all
times.
9. No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed, printed or affixed to any part of the outside or
inside of the building or the premises without the prior written
consent of Lessor and Lessor shall have the right to remove any such
item without notice to and at the expense of Lessee.
10. The sidewalks, halls, exits, entrances and stairways shall not be
obstructed or used for any purpose other than for ingress and egress.
The halls. exits, entrances, stairways and roof are not for the use of
the general public and Lessor shall in all cases retain the right to
control and prevent access thereto by all persons whose presence, in
the judgment of Lessor, shall be prejudicial to the safety, character,
reputation and interests of the building.
11. Lessor will furnish Lessee 2 keys to Lessee's entry door. Lessor shall
make a reasonable charge for any additional keys. Lessee shall not have
any such keys copied. Upon the expiration or earlier termination of
this lease. Lessee shall deliver to Lessor all keys to doors in the
building. Lessee shall not after any lock or install any new or
additional locks or any bolts on any door of the premises without the
written consent of Lessor.
12. The bathrooms, urinals and washbowls shall be used only for the purpose
for which they were constructed and no foreign substance of any kind
shall be thrown therein.
13. Lessee shall not employ any person other than Lessor's janitor for the
purpose of cleaning the premises without the prior written consent of
Lessor. Except with the written consent of Lessor, no persons other
than those approved by Lessor shall be permitted to enter the building
for the purpose of cleaning the same. Lessee shall not cause any
unnecessary labor by reason of Lessee's carelessness or indifference in
the preservation of good order and cleanliness. Lessor shall in no way
be responsible to Lessee for any loss of property on the premises,
however occurring, or for any damage done to the effects of any tenant
by the janitor or any other employee or any other person, janitor
service shall include ordinary dusting and
<PAGE>
cleaning and shall not include cleaning of carpets of rugs, except
normal vacuuming, or moving of furniture and other special services,
janitor service will not be furnished on nights when rooms are occupied
after 9:30 p.m.
14. Lessee shall not (i) permit or suffer the premises to be occupied or
used in a manner offensive or objectionable to Lessor or other
occupants of the building, (ii) use the premises for manufacturing,
maintenance, repair or for the storage of merchandise except as such
storage may be incidental so the use of the premises for general office
purposes or (iii) use the premises for commercial cooking, lodging,
sleeping or any illegal purpose.
15. Lessee shall not use or keep in the premises any hazardous waste,
toxic, flammable, explosive or noxious substance, except for standard
off supplies food, animal or bird.
16. No vending machine of any kind shall be installed, maintained or
operated in the premises without the prior written consent of Lessor.
17. On Saturdays, Sundays, legal holidays and other days between the hours
of 5:00 p.m. and 9:00 a.m. the following day, access to the building or
to the premises may be refused unless the person seeking access is
known to the person or employee of the building in charge has a pass or
is properly identified. The Lessor shall in no case be liable for
damages for any error with regard to the admission to or exclusion from
the building of any person. In case of invasion, not, public excitement
or other commotion, Lessor reserves the right to prevent access to the
building for the safety of the building and its tenants.
18. Lessee shall not disturb, solicit or canvass any other tenants of the
building and shall cooperate to prevent same.
19. If Lessee desires a music system, the system available through Lessor
shall be used and a separate charge will be assessed for same.
21. If Lessee wishes to maintain a coffee machine or like device in the
premises, a timer must be connected to the outlet into which said
machine is connected to prevent same from being left on.
22. No air conditioner, heater or similar appliance shall be used without
the prior written consent of Lessor.
<PAGE>
FIRST ADDENDUM TO STANDARD FORM OFFICE LEASE
--------------------------------------------
THIS FIRST ADDENDUM TO LEASE (this "Addendum") is made by and between
HARVARD INVESTMENT COMPANY, a ________________ ("Lessor"). and GENUINE INTERNET
INC., a California corporation ("Lessee"), to be a part of that certain Standard
Form Office Lease of even date herewith between Lessor and Lessee (the "Lease
Form) concerning approximately 6.370 rentable square feet of premises
("Premises"), within the building ("Building") known as the Peninsula Corporate
Center located at 805 Veterans Boulevard, Suite 310, Redwood City, California
(the "Project"). Lessor and Lessee agree that, notwithstanding anything to the
contrary in the Lease, the Lease is hereby modified and supplemented as set
forth below.
1. DEFINITIONS. Unless otherwise defined in this Addendum, all the
terms used in this Addendum shall have the same meaning and definition given
them in the Lease Form. As used in this Addendum, the term "Lease Form" shall
mean the printed lease form, together with all exhibits and attachments thereto,
to which this Addendum is attached. As used herein, the term "Lease" shall mean
the Lease Form, this Addendum, and all other addenda, exhibits, and attachments
to the Lease Form referred to in the Lease Form or in this Addendum.
2. COMMENCEMENT DATE. The term of the Lease shall commence (the
"Commencement Date") on the later of (i) June 1, 1996 or (ii) the date by which
all of the following have occurred: (a) Lessor has delivered possession of the
Premises to Lessee in the condition required by this Lease; and (b) Lessor has
obtained all approvals and permits from the appropriate governmental authorities
required for the legal occupancy of the Premises for Lessee's intended use. If
the Commencement Date has not occurred for any reason whatsoever on or before
June 15, 1996, then Lessee may terminate the Lease at any time thereafter until
the Commencement Date has occurred by written notice to Lessor, whereupon any
monies previously paid by Lessee to Lessor shall be reimbursed to Lessee.
3. OPERATING EXPENSES. Lessee shall have no obligation to pay any
operating or other expenses incurred by Lessor with respect to the Project,
including, without limitation, real property taxes and any property insurance
charges applicable to the Project.
4. SECURITY DEPOSIT. Within thirty (30) days after the expiration or
earlier termination of the Lease term and after Lessee has vacated the Premises.
Lessor shall return to Lessee the entire security deposit except for amounts
that Lessor has deducted therefrom that are needed by Lessor to cure defaults of
Lessee under the Lease or compensate Lessor for damages for which Lessee is
liable pursuant to this Lease.
5. COMPLIANCE WITH LAWS. At the Commencement Date, the Premises and
the Project shall conform to all requirements of covenants, conditions,
restrictions and encumbrances ("CC&R's"), all underwriter's requirements, and
all rules, regulations, statutes, ordinances, laws and building codes,
(collectively, "Laws") applicable thereto. Tenant shall not be required to
construct or pay the cost of complying with any CC&R's. underwriter's
requirements or Laws requiring construction of improvements in the Premises
which are properly capitalized under general accounting principles, unless such
compliance is necessitated solely because of Tenant's particular use of the
Premises.
6. REPAIRS AND MAINTENANCE. Lessor shall perform and construct, and
Lessee shall have no responsibility to perform or construct, any repair,
maintenance or improvements (i) necessitated by the acts or omissions of Lessor
or any other occupant of the Building, or their respective agents, employees or
contractors, (ii) occasioned by fire, acts of God or other casualty or by the
exercise of the power of eminent domain. (iii) required as a consequence of any
violation of any laws or construction defects in the Premises or the Building as
of the Commencement Date. (iv) for which Lessor has a right of reimbursement
from others. (v) which could be treated as a "capital expenditure" under
generally accepted accounting principles. (vi) to the heating, ventilating, air
conditioning, electrical, water, sewer, and plumbing systems serving the
Premises and the Building, and (vii) to any portion of the Building or Project
outside of the demising walls of the Premises.
7. ASSIGNMENT AND SUBLETTING. Lessee may, without Lessor's prior
written consent,
<PAGE>
sublet the Premises or assign the Lease to (i) a subsidiary, affiliate, division
or corporation controlling, controlled by or under common control with Lessee:
(ii) a successor corporation related to Lessee by merger, consolidation,
nonbankruptcy reorganization, or government action; or (iii) a purchaser of
substantially all of Lessee's assets located in the Premises.
8. INDEMNITY AND INSURANCE. Lessor shall not be released or
indemnified from, and shall indemnify, defend, protect and hold harmless Lessee
from, all losses, damages, liabilities, judgments, actions, claims, attorneys'
fees, consultants' fees, payments, costs and expenses arising from the
negligence or willful misconduct of Lessor or its agents, contractors, licensees
or invitees, Lessor's violation of any Law, order or regulation, or a breach of
Lessor's obligations or representations under the Lease.
9. WAIVER OF SUBROGATION. The parties hereto release each other and
their respective agents, employees, successors, assignees and sublessees from
all liability for injury to any person or damage to any property that is caused
by or results from a risk which is actually insured against, which is required
to be insured against under the Lease, or which would normally be covered by the
standard form of full replacement value "all risk-extended
<PAGE>
coverage" casualty insurance, without regard to the negligence or willful
misconduct of the entity so released. All of Lessor's and Lessee's repair and
indemnity obligations under the Lease shall be subject to the waiver contained
in this paragraph.
10. DAMAGE, CONDEMNATION. If the Premises are condemned or damaged by
any peril and Lessor does not elect to terminate the Lease or is not entitled to
terminate the Lease pursuant to its terms, then Lessee shall have the option to
terminate the Lease if the Premises cannot be, or are not in fact, fully
restored by Lessor to their prior condition within ninety (90) days after the
condemnation or damage.
11. NOTICES. Any notice required under the Lease that is sent by mail
shall be deemed received, if properly addressed, three (3) business days after
any such notice is deposited in the United States mail certified.
postage-prepaid, return-receipt requested.
12. DEFAULT AND LATE CHARGE. Lessee shall not be in breach or default,
not shall any late charge be imposed, on account of Lessee's failure to (i) pay
money to Lessor, unless Lessee's failure to pay continues for five (5) days
after Lessee's actual receipt of written notice of the delinquency, or (ii)
perform any other covenant of the Lease, unless such failure to perform
continues for a period of thirty (30) days after Lessee's actual receipt of
written notice of such failure or such longer time as may reasonably be required
to cure the default. Lessee shall not be in breach or default of the Lease
solely because it abandons or vacates the Premises. or as a consequence of the
filing of an involuntary bankruptcy petition, the appointment of a receiver, the
attachment of any interest in the Lease or of Lessee's other assets or the
exercise by any third party of any other remedy with respect to Lessee. Lessee's
interest in the Lease or Lessee's other assets, unless the petition, receiver,
attachment or other remedy is not discharged within sixty (60) days.
13. SURRENDER. Lessee's obligations with respect to the surrender of
the Premises shall be fulfilled if Lessee surrenders possession of the Premises
in the condition existing at the Commencement Date, ordinary wear and tear, acts
of God, casualties, condemnation. Hazardous Materials (other than those released
or emitted by Lessee), and alternations or other interior improvements which
Lessor states in writing may be surrendered at the termination of the Lease,
excepted.
14. BROKERAGE COMMISSIONS. Lessor shall be responsible for the payment
of all real estate brokerage commissions arising from the execution of the
Lease.
15. ENVIRONMENTAL. To the best knowledge of Lessor, (i) no Hazardous
Material is present on the Project or the soil, surface water or groundwater
thereof, (ii) no underground storage tanks are present on the Project, and (iii)
no action, proceeding or claim is pending or threatened regarding the Project
concerning any Hazardous Material or pursuant to any environmental law. Under no
circumstance shall Lessee be liable for, and Lessor shall indemnify, defend and
hold harmless Lessee, its agents, contractors, stockholders, directors,
successors, representatives, and assigns from and against, all losses, costs,
claims, liabilities and damages (including attorney's and consultants' fees) of
every type and nature, directly or indirectly arising out of or in connection
with any Hazardous Material present at any time on or about the Project, or the
soil, air, improvements, groundwater or surface water thereof, or the violation
of any laws, orders or regulations, relating to any such Hazardous Material,
except to the extent that any of the foregoing actually results from the release
or emission of Hazardous Material, by Lessee or its agents or employees in
violation of applicable environmental laws. As used in this Addendum, "Hazardous
Material" shall mean any material which is now or hereafter regulated by any
governmental authority or which poses a hazard to the environment or human life.
16. APPROVALS. Whenever the Lease requires an approval, consent,
designation, determination, selection or judgment by either Lessor or Lessee,
such approval, consent, designation, determination, selection or judgment and
any conditions imposed thereby shall be reasonable and shall not be unreasonably
withheld or delayed and, in exercising any right or remedy hereunder, each party
shall at all times act reasonably and in good faith.
17. REASONABLE EXPENDITURES. Any expenditure by a party permitted or
required
<PAGE>
under the Lease, for which such party is entitled to demand and does demand
reimbursement from the other party, shall be limited to the fair market value of
the goods and services involved, shall be reasonably incurred, and shall be
substantiated by documentary evidence available for inspection and review by the
other party or its representative during normal business hours.
18. NAME CHANGE. Lessor understands and acknowledges that Lessee has
filed for a legal name change from Genuine Internet, Inc. to Silicon Valley
Internet Partners. As soon as Lessor is notified in writing that such name
change is legally effective, the name of Lessor under this Lease shall
thereafter be deemed to be Silicon Valley Internet Partners, and such name
change shall be self-operative without the execution of any further instruments
on the part of either Lessor or Lessee.
19. LANDLORD'S ENTRY OF PREMISES. Lessor and Lessor's agents, except
in the case of emergency and regularly scheduled services, shall provide Lessee
with twenty-four (24) hours' notice prior to entry of the
-2-
<PAGE>
Premises. Any such entry by Lessor and Lessor's agents shall comply with all
reasonable security measures of Lessee and shall not impair Lessee's operations
more than reasonably necessary. During any such entry. Lessor and Lessor's
agents shall at all times be accompanied by Lessee.
20. PARKING. Without charge. Lessee shall have the non-exclusive use
of not less than __________, __, parking spaces on the Project. Lessor shall in
no event oversubscribe parking.
21. EFFECT OF ADDENDUM. All terms with initial capital letters used
herein as defined terms shall have the meanings ascribed to them in the Lease
unless specifically defined herein. In the event of any inconsistency between
this Addendum and the Lease, the terms of this Addendum shall prevail.
In witness whereof, said parties hereunto subscribe their names.
Lessor: Lessee:
HARVARD INVESTMENT COMPANY GENUINE INTERNET INC.
By By
------------------------ --------------------
Name Name
---------------------- ------------------
Its Its
----------------------- -------------------
-3-
<PAGE>
Standard Form Office Lease
Made and entered into at REDWOOD CITY, California, between HARVARD INVESTMENT
COMPANY ("Lessor") and GENUINE INTERNET INC. ("Lessee").
1. PREMISES. (a) In consideration of the rent herein provided and the
terms and conditions hereof, Lessor hereby leases to Lessee those
certain premises, more particularly described in Exhibit "A" attached
hereto, situated in Peninsula Corporate Center located at 805 Veterans
Blvd., Suite 310, Redwood City, California. (b) Rentable area on each
floor of the building is determined by measuring from the center of the
outer walls enclosing the premises to the center of the opposite outer
wall. Rentable area shall not include areas, if any, used for typical
tower building stairs, fire towers, elevator shafts, flues, vents
stacks. pipe shafts, vertical ducts, janitor closets and building
equipment rooms. Rentable area on partially occupied floors shall be
determined as above, but shall include only a proportionate share of
the common areas and shall be measured from the center of the outer
wall to the center of party walls and/ or hallway partitions.
The number of square feet of rentable area comprising the premises
shall be approximately 6370 sq. ft..
2. TERM. Subject to the terms and conditions set forth herein, the term of
this lease shall commence on June 1, 1996 and shall end on May 31, 1997
unless sooner terminated as hereinafter provided.
3. RENT. (a) Lessee agrees to pay to Lessor, as a monthly rent for the
premises, during the term hereof, the sum of $12,740.00 Such monthly
rent shall be due and payable advance each month on the first day of
the month and shall be payable to Lessor at the address shown below.
The first monthly installment shall be due and payable on the date of
execution of this lease by Lessee, 3) and a like monthly installment
shall be due on or before the first day of each subsequent month during
the term hereof. Should this lease commence on a day other than the
first of the month, the rent for such partial month shall be prorated.
(c) At the end of each calendar year, Lessee shall pay to Lessor, as
additional rent, Lessee's pro-rata share of the amount. If any, by
which operating expenses for said calendar year exceed $4.00 per square
foot of rentable area. As used herein, the term "operating expenses"
shall mean all costs of management operation and maintenance of the
land and building of which the premises are a part, including without
limitation, management office rental value, the cost of all capital
improvements required by any governmental authority or made by Lessor
to maintain operations, employee wages and overhead expenses, equipment
and tools, insurance, janitorial services, landscaping, maintenance and
repairs, materials and supplies, scavenger, security services and
utilities.
4. SECURITY DEPOSIT. Upon execution hereof, Lessee shall deposit with
Lessor the sum of $19,110.00. Said sum shall be held by Lessor as
security for the faithful performance by Lessee of all the terms and
conditions of this lease. If Lessee defaults with respect to any
provision of this lease, including without limitation, the provisions
relating to the payment of rent, Lessor may, at its option, apply or
retain as much of said deposit as is necessary to compensate Lessor for
the damages caused by Lessee's default. If any portion of said deposit
is so used or applied. Lessee shall, 1) demand therefore, deposit cash
with Lessor in an amount sufficient to restore said deposit to its
original amount and Lessee's failure to do so shall be a material
breach of this lease. Lessor shall not be required to keep this deposit
separate from its general funds and Lessee shall not be entitled to
interest on said deposit. If Lessee shall fully and faithfully perform
every provision of this lease to be performed by it, the deposit or any
balance thereof shall be returned to Lessee at the expiration of the
lease term. In the event of termination of Lessor's interest in this
lease. Lessor shall transfer said deposit to Lessor's successor in
interest.
5. USE. Lessee shall use the premises for general office 2) purposes only
and in strict compliance with the rules and regulations attached
hereto. Lessee shall conduct its business, insofar as the same relates
to Lessee's use of the premises, in a lawful
<PAGE>
manner and in strict compliance with all governmental laws, rules,
regulations and orders applicable to the use by Lessee of the premises.
Lessee shall, at its sole cost and expense. promptly comply with all
laws, statutes, ordinances and governmental rules, regulations, orders
or requirements now in force or which may hereafter be in force and
with the requirements of any board of fire underwriters of other
similar body now or hereafter constituted relating to or affecting the
condition or use of the premises. Lessee shall not do or permit
anything to be done in or about the premises not bring or keep anything
therein which will in any way increase fire or casualty insurance rates
or interfere with the rights of other tenants or occupants of the
building or injure or enemy them, nor shall Lessee cause, maintain or
permit any nuisance in or about the premises. Lessee shall not commit
or suffer to be committed any waste in or about the premises.
6. OCCUPANT LOAD. Notwithstanding anything to the contrary contained
herein, Lessee shall not permit the premises to be occupied by more
than 35 full-time, on-site employees.
7. EQUIPMENT. No equipment, other than that described in Exhibit "B"
attached hereto, shall be used in the premises without the prior
written consent of Lessor. Lessor does not guarantee that the
building's air conditioning will be adequate to service Lessee's
equipment needs. If auxiliary air conditioning is necessary, the cost
of purchase, installation, maintenance and operation thereof shall be
paid by Lessee upon demand.
8. BUILDING SERVICES. (a) Lessor shall provide Lessee water, sewer and
waste pick-up utilities and facilities, electricity and HVAC for normal
operations, 8 a.m. to 6 p.m. Monday through Friday, janitorial service
Monday through Friday, building lighting replacement, restroom
supplies, window washing with reasonable frequency Any additional usage
or service required by Lessee must be arranged with Lessor and shall be
subject to an additional charge. Lessor shall not be liable for, and
Lessee shall not be entitled to, any abatement or reduction of rent by
reason of Lessor's failure to furnish any of the foregoing when such
failure is caused by accidents, breakage, repairs, strikes, lockouts,
labor disturbances, o f any other cause, similar or dissimilar, beyond
the reasonable control of Lessor, Lessor shall not be liable under any
circumstances for loss of or injury to property, however occurring,
through or in connection with or incidental to the failure to furnish
any of the foregoing.
(b) Whenever heat generating machines, equipment or lighting are used
in the premises which affect the temperature otherwise maintained by
the air conditioning system, Lessor reserves the right to install
supplementary air conditioning for the premises and the cost of
purchase, installation, maintenance and operation thereof shall be paid
by Lessee upon, demand.
9. MAINTENANCE AND REPAIRS. By accepting occupancy, Lessee shall be deemed
to have agreed that the premises are in (i) a clean and sanitary
condition, (ii) good state or repair and (iii) a condition suitable for
Lessee's use. Lessee shall maintain the premises and every part thereof
in said condition. If Lessee fails to so maintain the premises, Lessor
may, at its option, perform such acts and expend such funds, at the
expense of Lessee, as are reasonably required to so maintain or repair
the premises. Any amount so expended by Lessor shall be paid by Lessee
upon demand. Lessor shall have no liability to Lessee for any damage,
inconvenience or interference with the use of the premises by Lessee as
a result of performing any such work. Lessor shall maintain the
building and every part thereof in a good state of repair.
(1) within ten (10) days after its receipt of a written
(2) administration, Sales, training and distribution
(3) and shall constitute rent for the first full month of the Lease
term.
<PAGE>
Exhibit 10.29
SUMMARY PLAN DESCRIPTION
Viant 401(k) Retirement/Savings Plan
[GRAPHIC OMITTED]
10/29/98
<PAGE>
Viant 401(k) Retirement/Savings Plan
I. PLAN INFORMATION ....................................................... 2
A. BASIC PLAN INFORMATION .............................................. 2
B. ACCOUNT ............................................................. 2
C. EMPLOYER ............................................................ 2
D. PARTICIPANT ......................................................... 2
E. PLAN ADMINISTRATOR .................................................. 2
F. PLAN NUMBER ......................................................... 2
G. PLAN QUALIFICATION .................................................. 2
H. PLAN YEAR ........................................................... 2
I. SERVICE OF PROCESS .................................................. 2
J. TRUST FUND .......................................................... 3
K. TRUSTEE ............................................................. 3
II. PARTICIPATION ......................................................... 4
A. ELIGIBILITY REQUIREMENTS ............................................ 4
III. CONTRIBUTIONS ........................................................ 5
A. EMPLOYEE PRETAX CONTRIBUTIONS ....................................... 5
1. Regular Contributions ............................................ 5
2. Bonus Contributions .............................................. 5
B. EMPLOYER MATCHING CONTRIBUTIONS ..................................... 5
C. LIMIT ON CONTRIBUTIONS .............................................. 6
D. ROLLOVER CONTRIBUTIONS .............................................. 6
IV. INVESTMENTS ........................................................... 7
A. INVESTMENTS ......................................................... 7
B. STATEMENT OF ACCOUNT ................................................ 8
V. VESTING ................................................................ 9
A. FORFEITURE AND RE-EMPLOYMENT ........................................ 9
VI. PARTICIPANT LOANS ..................................................... 11
A. LOANS ............................................................... 11
1. Loan Application ................................................. 11
2. Loan Amount ...................................................... 11
3. Number of Loans .................................................. 11
4. Interest Rate .................................................... 11
5. Maturity of Loan ................................................. 11
6. Source of Loan Proceeds .......................................... 11
7. Default or Termination of Employment ............................. 11
VII. HARDSHIP WITHDRAWALS ................................................. 12
VIII. IN-SERVICE WITHDRAWALS .............................................. 13
A. WITHDRAWALS AFTER AGE 59 1/2 ........................................ 13
IX. TOTAL DISTRIBUTION OF BENEFITS ........................................ 14
A. BENEFIT ON TERMINATION OF EMPLOYMENT ................................ 14
B. DEATH BENEFIT ....................................................... 14
C. DISABILITY RETIREMENT BENEFIT ....................................... 14
<PAGE>
D. RETIREMENT BENEFIT .................................................. 14
E. PAYMENT AND FORM OF BENEFITS ........................................ 14
X. MISCELLANEOUS INFORMATION .............................................. 17
A. BENEFITS NOT INSURED BY PBGC ........................................ 17
B. NONTRANSFERABLE ACCOUNT ............................................. 17
C. PLAN AMENDMENT ...................................................... 17
D. PLAN TERMINATION .................................................... 17
E. INTERPRETATION OF PLAN .............................................. 17
XI. INTERNAL REVENUE SERVICE TESTS ........................................ 18
A. NON-DISCRIMINATION TESTS ............................................ 18
B. TOP HEAVY TEST ...................................................... 18
XII. PARTICIPANT RIGHTS ................................................... 19
A. CLAIMS .............................................................. 19
B. STATEMENT OF ERISA RIGHTS ........................................... 19
09/02/98
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY PLAN DESCRIPTION
VIANT 401(K) RETIREMENT/SAVINGS PLAN
- --------------------------------------------------------------------------------
The Viant 401(k) Retirement/Savings Plan (the 'Plan') of Viant Corporation (the
'Employer') has been amended as of August 1, 1998 (the 'Effective Date'). This
Plan is intended to be a qualified retirement plan under the Internal Revenue
Code.
The purpose of the Plan is to enable eligible Employees to save for retirement.
As well as retirement benefits, the Plan provides certain benefits in the event
of death, disability, or other termination of employment. The Plan is for the
exclusive benefit of eligible Employees and their beneficiaries.
This booklet is called a Summary Plan Description (SPD) and it contains a
summary in understandable language of your rights and benefits under the Plan.
If you have difficulty understanding any part of this SPD, you should contact
the Plan Administrator identified on page two during normal business hours for
assistance.
This SPD is a brief description of the Plan and Trust Agreement (Plan Document).
It is not meant to interpret, extend or change the Plan Document in any way. A
copy of the Plan Document is on file with the Plan Administrator and may be read
by any Employee at any reasonable time. The Plan Document shall govern in the
event of any discrepancy between this SPD and the actual provisions of the Plan.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 1
<PAGE>
- --------------------------------------------------------------------------------
I. Plan Information
- --------------------------------------------------------------------------------
A. Basic Plan Information
The information in this section contains definitions to some of the terms that
may be used in this Summary Plan Description.
B. Account
This is an Account established by the Trustee for the purpose of recording
contributions made on your behalf and any income, expenses, gains or losses
thereon. It may also be referred to as 'Account' balance.
C. Employer
The name, address and business telephone number of the Employer is:
Viant Corporation
89 South St
Boston, MA 02111
(617) 531-3700
The Employer's Identification Number is 77-0427302.
D. Participant
A participant is an eligible Employee who has satisfied the eligibility and
entry date requirements and is eligible to participate in the Plan.
E. Plan Administrator
The Plan Administrator is responsible for the administration of the Plan. The
Plan Administrator's duties are specifically identified in the Plan Document.
The name, address and business telephone number of the Plan Administrator is:
Viant Corporation
89 South St
Boston, MA 02111
(617) 531-3700
F. Plan Number
The Plan number is 001.
G. Plan Qualification
The Employer intends to request an individual Determination Letter from the
Internal Revenue Service for the qualification of the Plan.
H. Plan Year
The Plan Year is the twelve-month period ending on the last day of December.
I. Service of Process
The Plan's agent for service of legal process is the Plan Administrator.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 2
<PAGE>
J. Trust Fund
The Plan is administered under a trust fund arrangement. There is a written Plan
Document and Trust Agreement entered into between the Trustee and the Employer.
K. Trustee
The trustee is responsible for holding the Plan assets. The trustee's duties are
specifically identified in the Plan Document and relate only to the assets in
its possession. The name and address of the Plan's Trustee is:
Fidelity Management Trust Company
82 Devonshire Street, L10A
Boston, MA 02109.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 3
<PAGE>
- --------------------------------------------------------------------------------
II. Participation
- --------------------------------------------------------------------------------
A. Eligibility Requirements
You are eligible to participate in the Plan if you are an Employee of the
Employer and attain the age of 18. Upon satisfying this requirement you will
become eligible to participate in the Plan on the first day of each month.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 4
<PAGE>
- --------------------------------------------------------------------------------
III. Contributions
- --------------------------------------------------------------------------------
For purposes of computing contributions under the Plan, as listed below, your
Employer must first define 'compensation'. Eligible compensation generally means
the taxable compensation for a Plan Year reportable by your Employer on your IRS
Form W-2 for a Plan Year, excluding the taxable value of a qualified or
non-qualified stock option.
Your compensation will also include any Employee pretax contributions you made
under the Plan and any salary reductions you made under your Employer's
cafeteria plan, 401(k) plan or other similar plan, if any. Compensation does not
include any taxable fringe benefits or taxable Employee moving and other expense
reimbursements reportable on your annual IRS Form W-2. Compensation for your
first year of eligible Plan participation will be measured only for that portion
of your initial Plan Year that you are eligible. Tax laws limit the amount of
compensation that may be taken into account each Plan Year and the maximum
amount for the 1998 Plan Year is $160,000 (this amount is subject to adjustment
each year).
A. Employee Pretax Contributions
1. Regular Contributions
You may elect to contribute a percentage of your eligible compensation
into the Plan after you satisfy the Plan's eligibility requirements. The
percentage of your compensation you elect will be withheld from each
payroll by the percentage you have elected on a pretax basis and
contributed to the Plan on your behalf. You may defer, in whole
percentages, up to an annual maximum of the lesser of 15% of eligible
compensation or $10,000 in a calendar year (in 1998 and thereafter as
adjusted by the Secretary of the Treasury). Your Employee pretax
contributions belong to you and cannot be forfeited for any reason.
However, there are special Internal Revenue Code rules which must be
satisfied and may require that the amount of your contributions be
reduced. If a reduction in your contribution is necessary, you will be
notified by the Plan Administrator. You may increase or decrease the
amount you contribute as of as of the beginning of each quarter. You may
completely suspend your contributions with sufficient notice to the Plan
Administrator. Thereafter, if you want to resume your Employee pretax
contributions as of as of the beginning of the next quarter, you must
complete a new election form.
2. Bonus Contributions
You may make Employee pretax contributions on any Employer-paid bonus. You
may defer a whole percentage from 1 to 100% of any bonus designated by the
Employer into the Plan on a pretax basis by completing a special election
form. The total amount of your bonus and Employee pretax contributions for
the Plan Year may not exceed 15 % of your eligible compensation or other
applicable Internal Revenue Code limits. The Employer may refuse to accept
any or all of your bonus contribution if it will have an adverse effect on
the Plan's Non-Discrimination Tests.
B. Employer Matching Contributions
Each Plan Year the Employer may make discretionary matching contributions of a
percent, if any, to be determined annually based on a percentage of your
Employee pretax contributions. The Employer will communicate the amount of any
annual discretionary matching contribution. Employer matching contributions must
be made within prescribed legal time limits. You must make employee deferral
contributions to be eligible to receive matching contributions.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 5
<PAGE>
C. Limit on Contributions
Federal law requires that amounts contributed by you and on your behalf by your
Employer for a given limitation year generally may not exceed the lesser of:
o $30,000 (or such amount as may be prescribed by the Secretary of the
Treasury); or
o 25% of your annual compensation.
Contributions under this Plan may not exceed the above limits. If this does
occur then excess contributions in your Account may be forfeited or refunded to
you. Income tax consequences may apply to you on any refund. You will be
notified by the Plan Administrator if you will be subject to reduced
contributions on your behalf.
The limitation year for purposes of applying the above limits is the twelve
month period ending December 31. Rollover contributions are not included in the
limits on Employee and/or Employer contributions.
D. Rollover Contributions
You can rollover part or all of an 'eligible rollover distribution' you received
from a prior employer's qualified plan, if allowed by the Plan Administrator.
(The Plan Administrator reserves the right to refuse to accept any rollover
contribution.) Alternatively, you may rollover a distribution you received from
a rollover Individual Retirement Account (IRA) which consisted solely of an
eligible rollover distribution and earnings thereon. If the rollover to the Plan
is not a direct rollover (i.e. you received a cash distribution from your prior
employer's plan or from your rollover IRA), then it must be received by the
Trustee within 60 days of your receipt of the distribution.
You may make a rollover contribution to the Plan before becoming a Participant.
However, you will not become a Participant entitled to make Employee pretax
contributions until you have met the Plan's eligibility and entry date
requirements. Your rollover contribution Account will be subject to the terms of
this Plan and will always be fully vested and nonforfeitable.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 6
<PAGE>
- --------------------------------------------------------------------------------
IV. Investments
- --------------------------------------------------------------------------------
A. Investments
The Employee Retirement Income Security Act of 1974 (ERISA) imposes certain
duties on the parties who are responsible for the operation of the plan. These
parties, called fiduciaries, have a duty to invest plan assets in a prudent
manner. However, an exception exists for plans which comply with ERISA Section
404(c) and permit a participant to exercise control over the assets in his/her
Account and choose from a broad range of investment alternatives. This Plan is
intended to be a Section 404(c) plan. This means that you and not the Plan
fiduciaries are responsible for the investment decisions relating to the assets
in your individual Account under the Plan.
You will have the opportunity to direct the investments of your Account among
the following Fidelity Investments Funds (the Fidelity Fund Number assigned to
each fund is identified in parentheses):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Fund Name Fund Code Fund Objective
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Managed Income Portfolio 0632 Seeks the preservation of capital and high current income
from GIC's, BIC's and money market instruments.
- ------------------------------------------------------------------------------------------------------------------------
2. Fidelity U.S. Bond Index Fund 0651 Seeks to provide investment results that correspond to the
aggregate price and interest performance of the debt
securities in the Lehman Brothers Aggregate Bond
Index** (the Aggregate Bond Index).
- ------------------------------------------------------------------------------------------------------------------------
3. Fidelity Puritan(R) Fund 0004 Seeks as much income as possible, consistent with the
preservation of capital, by investing in a broadly diversified
portfolio of high-yielding bonds, common stocks and preferred
stocks.
- ------------------------------------------------------------------------------------------------------------------------
4. Fidelity Equity-Income Fund 0023 Seeks income from a portfolio of equity securities that
exceeds the composite yield as represented by the Standard
and Poor's 500 Index. Capital appreciation is also a
consideration.
- ------------------------------------------------------------------------------------------------------------------------
5. Spartan(R) U.S. Equity Index Fund 0650 Seeks investment results that correspond to the total
return performance of the Standard and Poor's 500 Index by
duplicating the investment composition.
- ------------------------------------------------------------------------------------------------------------------------
6. Fidelity Blue Chip Growth Fund 0312 Seeks growth of capital over the long-term by investing in
common stocks of more well-known established companies.
- ------------------------------------------------------------------------------------------------------------------------
7. Fidelity Dividend Growth Fund 0330 Seeks to increase the value of your investment over the
long term through capital growth.
- ------------------------------------------------------------------------------------------------------------------------
8. Fidelity Emerging Growth Fund 0324 Seeks long-term capital appreciation by investing mainly in
equity securities of companies believed to offer the
potential for accelerated growth.
- ------------------------------------------------------------------------------------------------------------------------
9. Fidelity Asset Manager: Growth(SM) 0321 Seeks high total return over the long-term by allocation of
assets among stocks, bonds and short-term investments.
- ------------------------------------------------------------------------------------------------------------------------
10. Fidelity Europe Fund 0301 Seeks to increase the value of your investment over the
long term through capital growth.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
You may obtain a financial statement, a list of the assets comprising the
portfolio, and information concerning the value of the shares of each investment
fund option by calling Fidelity at 1-800-835-5097 and requesting a semi-annual
report. In addition, you may obtain a description of the annual operating
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 7
<PAGE>
expenses and policies and procedures of the investment fund option by calling
Fidelity and requesting a prospectus. You have the right to vote any mutual fund
proxy based on the number of shares you own.
You may redirect the investment of your future contributions or exchange your
existing Account balance among the above Fidelity mutual funds by calling
1-800-835-5097 on any business day between 8:30 AM and 8:00 PM. You may call
this same number 24 hours per day, seven days per week to check Account
balances, prices or yields. All telephone calls will be recorded.
Exchanges requested before 4:00 PM (ET) will be processed on that same business
day based on the closing price of the mutual fund. Exchanges requested after
4:00 PM (ET) will be processed based on the next business day's closing price of
the mutual fund. The minimum exchange is the lesser of $250 or 100% of your
Account balance in the mutual fund. If your exchange is less than $250 then it
may only be exchanged into one mutual fund. A written confirmation of your
exchange will be mailed to you within seven business days. Fidelity reserves the
right to change, restrict, or terminate participant exchange procedures to
protect mutual fund shareholders. Exchanges from the Fidelity Managed Income
Portfolio may not be made directly to a competing fund. Any exchange from the
Fidelity Managed Income Portfolio must first be invested in any of the balanced
or equity funds for a period of at least 90 days. After that time period lapses
then you may transfer this money from the balanced or equity fund into the
competing fund.
B. Statement of Account
Your Account will be updated each business day to reflect any investment
earnings or losses on each Fidelity Investments mutual fund. A quarterly
statement disclosing the value of your Account will be mailed to you within 20
days of the following dates: February 28, May 31, August 31, and November 30.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 8
<PAGE>
- --------------------------------------------------------------------------------
V. Vesting
- --------------------------------------------------------------------------------
The term 'vesting' refers to your nonforfeitable right to the money in your
Account. You receive vesting credit for the number of year(s) that you have
worked for the Employer and any other legally related Employer. If you terminate
your employment with the Employer, then you may be able to receive a portion or
all of your Account based on your vested percentage. You are always 100% vested
in your employee pre-tax account, rollover account, and any earnings thereon.
You are always 100% vested in your rollover account and any earnings thereon.
Employer matching contributions and earnings will be vested in accordance with
the following schedule:
Years of Service for Vesting Percentage
less than 1 0
1 25
2 50
3 75
4 100
If you were a participant in the plan before August 1, 1998 then you will
receive vesting credit for your years of service with the Employer based upon
the following:
================================================================================
Applicable Year(s) Method Measurement Period
------------------ ------ ------------------
- --------------------------------------------------------------------------------
1. Year(s) before 1998 General Jan. 1 to Dec. 31
- --------------------------------------------------------------------------------
2. 1998 General or Elapsed Time* Jan. 1 to Dec. 31
- --------------------------------------------------------------------------------
3. Year(s) after 1998 Elapsed Time Jan. 1 to Dec. 31
================================================================================
* You will receive credit for this year based upon whichever method is more
favorable to you.
If you became a participant on or after August 1, 1998 then you will receive
vesting credit for your years of service with the Employer based only on the
'elapsed time' method. In this case, your measurement period for determining
your years of service will generally be based upon your date of employment with
the Employer.
A. Forfeiture and Re-employment
If you terminate your employment with your Employer and are less than 100%
vested in your Employer Account then you may forfeit the non-vested portion of
your Employer Account. A forfeiture will occur in the Plan Year that you receive
a distribution of your entire vested Account or if you do not receive a
distribution after five consecutive one year breaks in service. Forfeitures are
retained in the Plan and used to reduce future Employer contributions.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 9
<PAGE>
Example: (This example is for illustration purposes only.) Assuming your
vesting schedule is as follows:
Years of Service Vesting Percentage
less than 2 0
2 20
3 40
4 60
5 80
6 100
You terminate your employment in 1998 with the following Account:
Source Amount Vested Percentage Vested Amount
Employee $ 2,000 100+ $ 2,000
Employer $ 1,000 80 800
------- -------
Total $ 3,000 $ 2,800
You received a $2,800 distribution in 1998 from the Plan. This represented
a complete distribution of your Account. A $200 forfeiture will occur in
1998.
+You are always 100% vested in your own employee pretax contributions and
earnings in the Plan.
A one-year break in service occurs when you work less than one hour in a twelve
consecutive month period. A break in service starts with the date you stop
working for your Employer. If you are absent from work due to maternity or
paternity reasons, then the break period will not start until after the first
anniversary year of your absence.
If you were a participant when you terminated your employment and are
re-employed by your Employer, then you will again become a participant on the
date you complete one hour of service. Your period of employment before you were
rehired is referred to as your pre-break service. Your period of employment
after you were rehired is referred to as your post-break service. If you are
re-employed after incurring five consecutive one-year breaks in service then
your post-break service will not count in determining your vesting percentage in
your pre-break Account balance. Your post-break service will count in
determining your vesting percentage in your pre-break Account balance and any
forfeited amounts will be restored to your Account if:
(1) You are re-employed by the Employer before you incur five
consecutive one-year breaks in service, and
(2) If you received distribution of your vested Account, you repay the
full amount of the distribution before the end of the five-year
period that begins on the date you are re-employed.
Example: Assume you terminate employment with your Employer in 1998 with
an Account balance of $10,000, of which $6,000 is vested. You elect to
receive a lump sum distribution of your vested Account balance. The
remainder, or $4,000, is forfeited in 1998. If you are rehired on January
1, 2000, and repay the $6,000 distribution prior to January 1, 2005, the
$4,000 previously forfeited will be restored to your Account.
Additionally, your service after January 1, 2000, is counted towards
vesting your pre-break Account balance of $10,000.
You should check with the Plan Administrator for further details.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 10
<PAGE>
- --------------------------------------------------------------------------------
VI. Participant Loans
- --------------------------------------------------------------------------------
A. Loans
Loans from the Plan may be available, if approved by the Plan Administrator, on
amounts in your Account based upon the following procedures:
1. Loan Application
You may only apply for one loan each Plan Year. The Plan Administrator is
responsible for approving or denying participant loans. Loans will be
allowed only to satisfy any of the following immediate and heavy financial
needs: (i) unreimbursed medical expenses for you, your spouse, children or
dependents; (ii) the purchase of your principal residence; (iii) to
prevent your eviction from or foreclosure on your principal residence;
(iv) or to pay for post-secondary education expenses for you or your
spouse, children or dependents for the next twelve months. You will incur
a set-up fee and annual maintenance fee for your loan.
2. Loan Amount
The minimum loan is $1,000. The maximum amount is the lesser of one-half
of your vested Account balance or $50,000 reduced by the highest
outstanding loan balance in your Account during the prior twelve month
period. Your vested Account balance will be used as collateral for any
loan.
3. Number of Loans
You may only have one loan outstanding at any given time. If you have an
existing loan you may not apply for another loan until the existing loan
is paid in full. You may not refinance an existing loan or obtain a second
loan for the purpose of paying off the existing loan.
4. Interest Rate
All loans shall bear a reasonable rate of interest as determined by the
Plan Administrator based on the prevailing interest rates charged by
persons in the business of lending money for loans which would be made
under similar circumstances.
5. Maturity of Loan
All loans must be repaid in level payments on at least a quarterly basis
over a five year period unless it is for the purchase of your principal
residence. Then the loan may be repaid over a ten year period.
6. Source of Loan Proceeds
Loan proceeds will be withdrawn from available contribution sources and
investment options in the order established by the Trustee. Consult your
Plan Administrator for more information.
7. Default or Termination of Employment
The Plan Administrator shall treat a loan in default if any scheduled
repayment remains unpaid more than 90 days or there is an outstanding
principal existing on a loan after the last scheduled repayment date. Upon
default, death, disability or termination of employment, the entire
outstanding principal and accrued interest shall be immediately due and
payable. Additionally, you will be deemed to have received a taxable
distribution from the Plan.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 11
<PAGE>
- --------------------------------------------------------------------------------
VII. Hardship Withdrawals
- --------------------------------------------------------------------------------
If approved by the Plan Administrator, you may withdraw your Employee pretax
contributions and Rollover contributions if applicable, in the form of a
hardship withdrawal to satisfy any of the following immediate and heavy
financial needs: (1) unreimbursed medical expenses for yourself, your spouse,
children or dependents; (2) the purchase of a principal residence; (3) to
prevent eviction from or foreclosure on your principal residence; or (4) to pay
for post-secondary education expenses for yourself, your spouse, children or
dependents for the next twelve months.
In accordance with Internal Revenue Service regulations you must first exhaust
all other assets available to you prior to obtaining a hardship withdrawal. This
includes obtaining a loan from this Plan and any other qualified plan maintained
by your Employer. Your Employee pretax contributions to this Plan and any other
Employer-sponsored qualified or non-qualified plan will be suspended for twelve
months after your receipt of the hardship withdrawal. The minimum hardship
withdrawal is $1,000.
The Plan Administrator will provide you with the appropriate form upon request.
Hardship withdrawals will be withdrawn from available investment options in the
order established by the Trustee. Consult your Plan Administrator for more
information.
You will be taxed on the amount of any hardship withdrawal under Internal
Revenue Code rules and a 10% IRS premature distribution penalty tax may also be
imposed on your withdrawal. Your hardship withdrawal will also be subject to the
mandatory 20% Federal income tax withholding. You should refer to the 'Total
Distribution of Benefits' section of this SPD.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 12
<PAGE>
- --------------------------------------------------------------------------------
VIII. In-Service Withdrawals
- --------------------------------------------------------------------------------
A. Withdrawals After Age 59 1/2
If you have reached age 59 1/2 then you may elect to withdraw all or a portion
of your Employee pretax contribution Account while you are still employed by
your Employer. The Plan Administrator will provide you with the appropriate form
upon request.
In-Service withdrawals will be withdrawn from available contribution sources and
investment options in the order established by the Trustee. Consult your Plan
Administrator for more information.
- --------------------------------------------------------------------------------
Viant 401(k) Retirement/Savings Plan 13
<PAGE>
- --------------------------------------------------------------------------------
IX. Total Distribution of Benefits
- --------------------------------------------------------------------------------
A. Benefit on Termination of Employment
If you terminate your employment with your Employer, then you may elect to
receive a distribution of your vested Account balance from the Plan. You should
contact the Plan Administrator to obtain the appropriate form to complete to
request a distribution.
B. Death Benefit
If you die while a Participant in the Plan or before any or all benefits are
paid to you, then your beneficiary or beneficiaries will be entitled to receive
your Account balance. You will automatically become 100% vested in your Account
balance. You may designate a beneficiary or beneficiaries on a designation form.
The completed beneficiary designation form must be filed with the Plan
Administrator. If you are married and want to designate someone other than your
spouse as your primary beneficiary, then your spouse must consent to this
designation by signing the form. His/her signature must be witnessed by a Plan
representative or a Notary Public. You should contact the Plan Administrator to
obtain a beneficiary designation form.
C. Disability Retirement Benefit
If you become totally and permanently disabled while you are employed by the
Employer, so that you are eligible for disability benefits under the Employer's
Long-Term Disability Plan, the full value of your Account balance may be
distributed to you upon request. You will automatically become 100% vested in
your Account balance.
D. Retirement Benefit
You do not have to terminate your employment with your Employer just because you
attain your early retirement age of 59 1/2 or you attain your normal retirement
age of 65. You will automatically become 100% vested in your Account balance
when you attain your early retirement age.
E. Payment and Form of Benefits
The Plan is designed to provide you with benefits at the time of your
retirement. However, if your employment with your Employer is terminated because
of death, disability, retirement, or for any other reason, then you may request
a distribution of your vested Account balance upon proper written direction
delivered to the Plan Administrator. You should contact the Plan Administrator
to obtain the appropriate form to request a distribution and a copy of the
'Special Tax Notice Regarding Plan Payments'.
You are required by law to receive a minimum required distribution from the
Employer's Plan, unless you are a five percent owner of the Employer, no later
than April 1 of the calendar year following the calendar year you turn 70 1/2 or
terminate your employment, whichever is later. If you are a five percent owner
of the Employer, you must start receiving your distribution no later than April
1 of the calendar year following the calendar year you turn 70 1/2. Once you
start receiving your minimum required distribution you should receive it at
least annually and you should complete the appropriate documentation each year
until all assets in your Account are distributed.
The Plan Administrator will direct the Trustee to make a lump sum distribution
to you if you terminate your employment and your vested Account balance is less
than $5,000 regardless of whether you request the distribution. Your written
consent will be required for any distribution before age 65 if your vested
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Viant 401(k) Retirement/Savings Plan 14
<PAGE>
Account balance is greater than $5,000. Properly authorized distribution
requests will be processed by the Trustee on a monthly basis. The following
forms of benefits are available under the Plan:
o Lump sum distributions
Your entire vested Account balance will be paid to you within one
calendar year.
o Installment distributions
Your vested Account balance will be paid to you in periodic payments
if your Account balance is greater than $5,000.
Lump sum distributions and in certain situations installment distributions will
be subject to the following rules:
(1). Cash Distribution
Any taxable distribution paid by the Trustee directly to you will be
subject to mandatory Federal income tax withholding of 20% of the
requested distribution. You will receive 80% of the taxable
distribution and the other 20% will be sent to the IRS as Federal
income tax withholding for that year. You cannot elect out of this
tax withholding. This withholding is not a penalty but rather a
prepayment of your Federal income taxes.
You may rollover the taxable distribution you receive to an IRA or
your new employer's qualified Plan, if it accepts rollover
contributions. However, you must rollover this distribution within
60 days after receipt. You will not be taxed on any amounts rolled
over directly into the IRA or your new employer's qualified Plan
until those amounts are later distributed to you.
(2). Direct Rollover Distribution
As an alternative to a cash distribution, you may request that your
entire distribution be rolled directly into a Fidelity IRA, a
non-Fidelity IRA or to your new employer's qualified plan if it
accepts rollover contributions. Federal income taxes will not be
withheld on any direct rollover distribution.
(a). Rollover to a Fidelity IRA - You must complete a Fidelity
'SEE' Rollover IRA application. Attach this application to the
completed Payout form. After authorizing your distribution,
the Plan Administrator will forward this material to the
Trustee. Your vested Account balance will be transferred to a
Fidelity Rollover IRA.
(b). Rollover to a Non-Fidelity IRA - You must complete a Payout
form and indicate the name and address of the custodian or
trustee, and Account number for your IRA. After authorizing
your distribution, the Plan Administrator will forward the
form to the Trustee. A check will be issued by the Trustee
payable to the IRA custodian or trustee for your benefit. The
check will contain the notation 'Direct Rollover' and it will
be mailed directly to you. You will be responsible for
forwarding it on to the custodian or trustee. You must provide
the Plan Administrator with complete information to facilitate
your direct rollover distribution.
(c). Rollover to your New Employer's Qualified Plan - You should
check with your new employer to determine if its plan will
accept rollover contributions. If allowed, then you must
complete a Payout form and indicate the name, address and plan
number of your new employer's qualified plan. After
authorizing your distribution, the Plan Administrator will
forward the form to the Trustee. A check will be issued by the
Trustee payable to the trustee of your new employer's
qualified plan. The check will contain the notation 'Direct
Rollover' and it will be mailed directly to you. You will be
responsible for forwarding it on to the new trustee. You must
provide the Plan Administrator with complete information to
facilitate your direct rollover distribution.
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Viant 401(k) Retirement/Savings Plan 15
<PAGE>
(3). Combination Cash Distribution and Direct Rollover Distribution
You may request that part of your distribution be paid directly to
you and the balance to be rolled into an IRA or your new employer's
qualified Plan. Any cash distribution you receive will be subject to
the Federal income tax withholding rules referred to in (1). Any
direct rollover distribution will be made in accordance with (2).
You will pay income tax on the amount of any taxable distribution
you receive from the Plan unless it is rolled into an IRA or your
new employer's qualified Plan. A 10% IRS premature distribution
penalty tax may also apply to your taxable distribution unless it is
rolled into an IRA or another qualified plan. The 20% Federal income
tax withheld under this section may not cover your entire income tax
liability. Consult with your tax advisor for further details.
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Viant 401(k) Retirement/Savings Plan 16
<PAGE>
- --------------------------------------------------------------------------------
X. Miscellaneous Information
- --------------------------------------------------------------------------------
A. Benefits Not Insured by PBGC
Benefits provided by the Plan are not insured or guaranteed by the Pension
Benefit Guaranty Corporation (PBGC) under Title IV of the Employee Retirement
Income Security Act of 1974 (ERISA) because the insurance provisions under ERISA
are not applicable to this particular Plan. You will only be entitled to the
vested benefits in your Account based upon the provisions of the Plan.
B. Nontransferable Account
Your Account may not be transferred, assigned or used as collateral for a loan
outside of this Plan except to the extent required by law. Creditors may not
attach, garnish or otherwise interfere with your Account balance except in the
case of a Qualified Domestic Relations Order (QDRO). A QDRO is a special order
issued by the court in a divorce, child support or similar proceeding. In this
situation, your spouse (or former spouse) or someone other than you or your
beneficiary, may be entitled to a portion or all of your Account balance.
C. Plan Amendment
Certain provisions of the Plan are subject to amendment by the Employer that may
directly or indirectly modify certain Plan rights and benefits. Any amendment
changing the vesting schedule cannot reduce the existing vested percentage of
your Account balance derived from Employer contributions. If you have three or
more years of service with the Employer and the vesting schedule is amended then
you will be given a choice to have the vested percentage of future Employer
contributions made to your Account computed under the new or the old vesting
schedule. The Plan Administrator will provide you with the appropriate
information to make an informed decision if the Plan's vesting schedule is
amended.
D. Plan Termination
The Employer has no legal or contractual obligation to make annual contributions
to or to continue the Plan. With the approval of the Board of Directors, the
Employer may at any time reduce or suspend its contributions, if applicable. In
the event the Plan should terminate, the Plan Administrator will facilitate the
distribution of Account balances under the provisions of the Plan and Trust
Agreement until all assets have been distributed by the Trustee. Each
participant in the Plan upon Plan termination will automatically become 100%
vested in your Account balance. While the Employer intends to continue the Plan,
it reserves the right to change or terminate the Plan at any time as
circumstances may dictate.
E. Interpretation of Plan
The Plan Administrator has the power and discretionary authority to construe the
terms of the Plan and to determine all questions that arise under it. Such power
and authority include, for example, the administrative discretion necessary to
resolve issues with respect to an Employee's eligibility for benefits, credited
services, disability, and retirement, or to interpret any other term contained
in Plan documents. The Plan Administrator's interpretations and determinations
are binding on all participants, employees, former employees, and their
beneficiaries.
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Viant 401(k) Retirement/Savings Plan 17
<PAGE>
- --------------------------------------------------------------------------------
XI. Internal Revenue Service Tests
- --------------------------------------------------------------------------------
A. Non-Discrimination Tests
Your Plan is intended to qualify under Sections 401(k) and 401(m) of the
Internal Revenue Code. The Plan must pass special non-discrimination tests as of
the last day of each Plan Year. These tests are intended to ensure that there is
a fair level of participation by all eligible participants. In order to meet the
tests, the Employer encourages participation from all eligible Employees.
Depending upon the results of the tests, the Plan Administrator may have to
refund Employee pretax contributions contributed to the Plan and vested matching
contributions to certain highly compensated employees, as determined under
Internal Revenue Service regulations. Employee pretax or Employer matching
contributions will be refunded to you from applicable investment options. You
will be notified by the Plan Administrator if any of your contributions will be
refunded to you.
B. Top Heavy Test
The Plan is subject to strict Internal Revenue Service rules. One of these rules
involves a 'Top-Heavy' test. Each Plan Year, the Plan Administrator tests this
Plan together with all other Employer-sponsored qualified plans to make sure
that no more than 60% of the benefits are for 'Key' Employees. If this Plan is
Top-Heavy, then the Employer may be required to make minimum annual
contributions to this Plan for you if you are employed as of Plan Year-end.
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Viant 401(k) Retirement/Savings Plan 18
<PAGE>
- --------------------------------------------------------------------------------
XII. Participant Rights
- --------------------------------------------------------------------------------
A. Claims
(1). Claim Procedure
You or your Beneficiary should make a request to obtain any benefits
you are entitled to under the Plan in the event of your termination
of employment. The Plan Administrator will provide you with a
request form to complete. Your request will be considered a claim
and will be subject to a full and fair review by the Plan
Administrator. If your claim is wholly or partially denied by the
Plan Administrator then you may appeal it in accordance with the
claim review procedure.
(2). Claim Review Procedure
You or your Beneficiary may file a claim for benefits under the Plan
with the Plan Administrator on a form supplied by the Employer. The
Plan Administrator will provide you with written notice of the
disposition of your claim within 90 days after it has been filed
(or, in certain circumstances, within 180 days). In the event the
claim is denied then the reasons shall be disclosed and/or
provisions of the Plan shall be cited as appropriate.
You or your Beneficiary upon request to the Plan Administrator may
appeal the denial of your claim. If you wish further consideration
of your position then you must provide the Plan Administrator with a
written request for a hearing. You must also provide a detailed
written statement of your position for your claim and file it with
the Plan Administrator no later than 60 days after requesting a
hearing. The Plan Administrator shall make a decision on your claim
and it will be communicated to you in writing within 60 days (or, in
certain circumstances, within 120 days). It will advise you if you
have any right to appeal the decision.
B. Statement of ERISA Rights
As a participant in this Plan you are entitled to certain rights and protections
under ERISA that provides that all Plan Participants shall be entitled to the
following:
o Examine, without charge, at the Plan Administrator's office and at
other specified locations such as work sites and union halls, all
plan documents, including insurance contracts, collective bargaining
agreements and copies of all documents filed by the Plan with the
U.S. Department of Labor, such as detailed annual reports and Plan
descriptions.
o Obtain copies of all plan documents and other Plan information upon
written request to the Plan Administrator; the Plan Administrator
may make a reasonable charge for the copies.
o Receive a summary of the Plan's annual financial report. The Plan
Administrator is required by law to furnish you with a copy of this
summary annual report.
o Obtain a statement of your Account under the Plan. You must direct
this request in writing to the Plan Administrator. You may request a
statement only once a year and the Plan must provide the statement
free of charge.
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your Plan, called 'fiduciaries' of the Plan, have a duty
to do so prudently and in the interest of you and other Plan Participants and
beneficiaries. No one, including your Employer, your union, or any other person,
may
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Viant 401(k) Retirement/Savings Plan 19
<PAGE>
fire you or otherwise discriminate against you in any way to prevent you from
obtaining a pension benefit or exercising your rights under ERISA.
If your claim for a benefit is denied, in whole or in part, you must receive a
written explanation of the reason for the denial. You have the right to have the
Plan Administrator review and reconsider your claim. Under ERISA, there are
steps you can take to enforce the above rights. For instance, if you request
materials from the Plan and do not receive them within 30 days, you may file
suit in a federal court. In such a case, the court may require the Plan
Administrator to provide the materials and pay you up to $100 a day until you
receive the materials, unless the materials were not sent for reasons beyond the
control of the Plan Administrator.
If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court. If it should happen that
Plan fiduciaries misuse the Plan's money, or if you are discriminated against
for asserting your rights, you may seek assistance from the U.S. Department of
Labor, or you may file suit in a federal court. If you are successful, the court
may order the person you have sued to pay these costs and fees. If you lose, the
court may order you to pay these costs and fees; for example, if it finds your
claim frivolous. If you have any questions about your Plan, you should contact
the Plan Administrator. If you have any questions about your rights under ERISA,
you should contact the nearest area office of the U.S. Labor-Management Services
Administration, Department of Labor.
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Viant 401(k) Retirement/Savings Plan 20
<PAGE>
MASTER LEASE AGREEMENT
MASTER LEASE AGREEMENT(the "Master Lease") dated March 25, 1998 by and between
COMDISCO, INC. ("Lessor") and Silicon Valley Internet Partners ("Lessee")
IN CONSIDERATION of the mutual agreements described below, the parties agree as
follows (all capitalized terms are defined in Section 14.18)
1. PROPERTY LEASED.
Lessor leases to Lessee all of the Equipment described on each Summary Equipment
Schedule. In the event of a conflict, the terms of the applicable Schedule
prevail over this Master Lease
2. TERM.
On the Commencement Date. Lessee will be deemed to accept the Equipment, will be
bound to its rental obligations for each item of Equipment and the term of a
Summary Equipment Schedule will begin and continue through the Initial Term and
thereafter until terminated by either party upon prior written notice received
during the Notice Period. No termination may be effective prior to the
expiration of the Initial Term.
3. RENT AND PAYMENT.
Rent is due and payable in advance on the first day of each Rent Interval at the
address specified in Lessor's invoice Interim Rent is due and payable when
invoiced. If any payment is not made when due, Lessee will pay a Late Charge on
the overdue amount Upon Lessee's execution of each Schedule, Lessee will pay
Lessor the Advance specified on the Schedule The Advance will be credited
towards the final Rent payment if Lessee is not then in default No interest will
be paid on the Advance.
4. SELECTION; WARRANTY AND DISCLAIMER OF WARRANTIES.
4.1 SELECTION. Lessee acknowledges that it has selected the Equipment and
disclaims any reliance upon statements made by the Lessor, other than as set
forth in the Schedule
4.2 WARRANTY AND DISCLAIMER OF WARRANTIES. Lessor warrants to Lessee that, so
long as Lessee is not in default, Lessor will not disturb Lessee's quiet and
peaceful possession, and unrestricted use of the Equipment To the extent
permitted by the manufacturer, Lessor assigns to Lessee during the term of the
Summary Equipment Schedule any manufacturer's warranties for the Equipment.
LESSOR MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER,
INCLUDING, WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT OR ITS
FITNESS FOR A PARTICULAR PURPOSE. Lessor is not responsible for any liability,
claim, loss, damage or expense of any kind (including strict liability in tort)
caused by the Equipment except for any loss or damage caused by the willful
misconduct or negligent acts of Lessor. In no event is Lessor responsible for
special, incidental or consequential damages.
5. TITLE; RELOCATION OR SUBLEASE; AND ASSIGNMENT.
5.1 TITLE. Lessee holds the Equipment subject and subordinate to the rights of
the Owner, Lessor, any Assignee and any Secured Party Lessee authorizes Lessor,
as Lessee's agent, and at Lessor's expense, to prepare, execute and file in
Lessee's name precautionary Uniform Commercial Code financing statements showing
the interest of the Owner, Lessor, and any Assignee or Secured Party in the
Equipment and to insert serial numbers in Summary Equipment Schedules as
appropriate. Lessee will, at its expense, keep the Equipment free and clear from
any liens or encumbrances of any kind (except any caused by Lessor) and will
indemnify and hold the Owner, Lessor, any Assignee and Secured Party harmless
from and against any loss caused by Lessee's failure to do so, except where such
is caused by Lessor.
5.2 RELOCATION OR SUBLEASE. Upon prior written notice, Lessee may relocate
Equipment to any location within the continental United States provided (i) the
Equipment will not be used by an entity exempt from federal income tax, and (ii)
all additional costs (including
<PAGE>
any administrative fees, additional taxes and insurance coverage) are reconciled
and promptly paid by Lessee.
Lessee may sublease the Equipment upon the reasonable consent of the Lessor and
the Secured Party Such consent to sublease will be granted if: (i) Lessee meets
the relocation requirements set out above, (ii) the sublease is expressly
subject and subordinate to the terms of the Schedule, (iii) Lessee assigns its
rights in the sublease to Lessor and the Secured Party as additional collateral
and security, (iv) Lessee's obligation to maintain and insure the Equipment is
not altered, (v) all financing statements required to continue the Secured
Party's prior perfected security interest are filed, and (vi) Lessee executes
sublease documents acceptable to Lessor
No relocation or sublease will relieve Lessee from any of its obligations under
this Master Lease and the relevant Schedule.
5.3 ASSIGNMENT BY LESSOR. The terms and conditions of each Schedule have been
fixed by Lessor in order to permit Lessor to sell and/or assign or transfer its
interest or grant a security interest in each Schedule and/or the Equipment to a
Secured Party or Assignee In that event, the term Lessor will mean the Assignee
and any Secured Party. However, any assignment, sale, or other transfer by
Lessor will not relieve Lessor of its obligations to Lessee and will not
materially change Lessee's duties or materially increase the burdens or risks
imposed on Lessee The Lessee consents to and will acknowledge such assignments
in a written notice given to Lessee. Lessee also agrees that:
(a) The Secured Party will be entitled to exercise all of Lessor's rights, but
will not be obligated to perform any of the obligations of Lessor The Secured
Party will not disturb Lessee's quiet and peaceful possession and unrestricted
use of the Equipment so long as Lessee is not in default and the Secured Party
continues to receive all Rent payable under the Schedule, and
(b) Lessee will pay all Rent and all other amounts payable to the Secured Party,
despite any defense or claim which it has against Lessor Lessee reserves its
right to have recourse directly against Lessor for any defense or claim,
(c) Subject to and without impairment of Lessee's leasehold rights in the
Equipment, Lessee holds the Equipment for the Secured Party to the extent of the
Secured Party's rights in that Equipment.
6. NET LEASE; TAXES AND FEES.
6.1 NET LEASE. Each Summary Equipment Schedule constitutes a net lease Lessee's
obligation to pay Rent and all other amounts due hereunder is absolute and
unconditional and is not subject to any abatement, reduction, set-off, defense,
counterclaim, interruption, deferment or recoupment for any reason whatsoever.
6.2 TAXES AND FEES. Lessee will pay when due or reimburse Lessor for all taxes,
fees or any other charges (together with any related interest or penalties not
arising from the negligence of Lessor) accrued for or arising during the term of
each Summary Equipment Schedule against Lessor, Lessee or the Equipment by any
governmental authority (except only Federal, state, local and franchise taxes on
the capital or the net income of Lessor) Lessor will file all personal property
tax returns for the Equipment and pay all such property taxes due. Lessee will
reimburse Lessor for property taxes within thirty (30) days of receipt of an
invoice
7. CARE, USE AND MAINTENANCE; INSPECTION BY LESSOR.
7.1 CARE, USE AND MAINTENANCE. Lessee will maintain the Equipment in good
operating order and appearance, protect the Equipment from deterioration, other
than normal wear and tear, and will not use the Equipment for any purpose other
than that for which it was designed. If commercially available and considered
common business practice for each item of Equipment. Lessee will maintain in
force a standard maintenance contract with the manufacturer of the Equipment, or
another party acceptable to Lessor, and will provide Lessor with a complete copy
of that contract. If Lessee has the Equipment maintained by a party other than
the
<PAGE>
manufacturer or self maintains, Lessee agrees to pay any costs necessary for the
manufacturer to bring the Equipment to then current release, revision and
engineering change levels, and to re-certify the Equipment as eligible for
manufacturer's maintenance at the expiration of the lease term, provided
re-certification is available and is required by Lessor The lease term will
continue upon the same terms and conditions until recertification has been
obtained
7.2 INSPECTION BY LESSOR. Upon reasonable advance notice, Lessee, during
reasonable business hours and subject to Lessee's security requirements, will
make the Equipment and its related log and maintenance records available to
Lessor for inspection
8. REPRESENTATIONS AND WARRANTIES OF LESSEE. Lessee hereby represents, warrants
and covenants that with respect to the Master Lease and each Schedule executed
hereunder:
(a) The Lessee is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation, is duly
qualified to do business in each jurisdiction (including the jurisdiction where
the Equipment is, or is to be, located) where its ownership or lease of property
or the conduct of its business requires such qualification, except for where
such lack of qualification would not have a material adverse effect on the
Company's business; and has full corporate power and authority to hold property
under the Master Lease and each Schedule and to enter into and perform its
obligations under the Master Lease and each Schedule
(b) The execution and delivery by the Lessee of the Master Lease and each
Schedule and its performance thereunder have been duly authorized by all
necessary corporate action on the part of the Lessee, and the Master Lease and
each Schedule are not inconsistent with the Lessee's Articles of Incorporation
or Bylaws, do not
- 1 -
<PAGE>
contravene any law or governmental rule, regulation or order applicable to it,
do not and will not contravene any provision of, or constitute a default under,
any indenture, mortgage, contract or other instrument to which it is a party or
by which it is bound, and the Master Lease and each Schedule constitute legal,
valid and binding agreements of the Lessee, enforceable in accordance with their
terms, subject to the effect of applicable bankruptcy and other similar laws
affecting the rights of creditors generally and rules of law concerning
equitable remedies.
(c) There are no actions, suits, proceedings or patent claims pending or, to the
knowledge of the Lessee, threatened against or affecting the Lessee in any court
or before any governmental commission, board or authority which, if adversely
determined, will have a material adverse effect on the ability of the Lessee to
perform its obligations under the Master Lease and each Schedule.
(d) The Equipment is personal property and when subjected to use by the Lessee
will not be or become fixtures under applicable law.
(e) The Lessee has no material liabilities or obligations, absolute or
contingent (individually or in the aggregate), except the liabilities and
obligations of the Lessee as set forth in the Financial Statements and
liabilities and obligations which have occurred in the ordinary course of
business, and which have not been, in any case or in the aggregate, materially
adverse to Lessee's ongoing business.
(f) To the best of the Lessee's knowledge, the Lessee owns, possesses, has
access to, or can become licensed on reasonable terms under all patents, patent
applications, trademarks, trade names, inventions, franchises, licenses,
permits, computer software and copyrights necessary for the operations of its
business as now conducted, with no known infringement of, or conflict with, the
rights of others.
(g) All material contracts, agreements and instruments to which the Lessee is a
party are in full force and effect in all material respects, and are valid,
binding and enforceable by the Lessee in accordance with their respective terms,
subject to the effect of applicable bankruptcy and other similar laws affecting
the rights of creditors generally, and rules of law concerning equitable
remedies.
9. DELIVERY AND RETURN OF EQUIPMENT.
Lessee hereby assumes the full expense of transportation and in-transit
insurance to Lessee's premises and installation thereat of the Equipment. Upon
termination (by expiration or otherwise) of each Summary Equipment Schedule,
Lessee shall, pursuant to Lessor's instructions and at Lessee's full expense
(including, without limitation, expenses of transportation and in-transit
insurance), return the Equipment to Lessor in the same operating order, repair,
condition and appearance as when received, less normal depreciation and wear and
tear. Lessee shall return the Equipment to Lessor at 6111 North River Road,
Rosemont, Illinois 60018 or at such other address within the continental United
States as directed by Lessor, provided, however, that Lessee's expense shall be
limited to the cost of returning the Equipment to Lessor's address as set forth
herein During the period subsequent to receipt of a notice under Section 2.
Lessor may demonstrate the Equipment's operation in place and Lessee will supply
any of its personnel as may reasonably be required to assist in the
demonstrations
10. LABELING.
Upon request, Lessee will mark the Equipment indicating Lessor's interest with
labels provided by Lessor. Lessee will keep all Equipment free from any other
marking or labeling which might be interpreted as a claim of ownership.
11. INDEMNITY.
With regard to bodily injury and property damage liability only, Lessee will
indemnify and hold Lessor, any Assignee and any Secured Party harmless from and
against any and all claims, costs, expenses, damages and liabilities, including
reasonable attorneys' fees, arising out of the ownership (for strict liability
in tort only), selection, possession,
<PAGE>
leasing, operation, control, use, maintenance, delivery, return or other
disposition of the Equipment during the term of this Master Lease or until
Lessee's obligations under the Master Lease terminate. However, Lessee is not
responsible to a party indemnified hereunder for any claims, costs, expenses,
damages and liabilities occasioned by the negligent acts of such indemnified
party. Lessee agrees to carry bodily injury and property damage liability
insurance during the term of the Master Lease in amounts and against risks
customarily insured against by the Lessee on equipment owned by it. Any amounts
received by Lessor under that insurance will be credited against Lessee's
obligations under this Section.
12. RISK OF LOSS.
Effective upon delivery and until the Equipment is returned, Lessee relieves
Lessor of responsibility for all risks of physical damage to or loss or
destruction of the Equipment. Lessee will carry casualty insurance for each item
of Equipment in an amount not less than the Casualty Value All policies for such
insurance will name the Lessor and any Secured Party as additional insured and
as loss payee, and will provide for at least thirty (30) days prior written
notice to the Lessor of cancellation or expiration, and will insure Lessor's
interests regardless of any breach or violation by Lessee of any representation.
warranty or condition contained in such policies and will be primary without
right of contribution from any insurance effected by Lessor. Upon the execution
of any Schedule, the Lessee will furnish appropriate evidence of such insurance
acceptable to Lessor.
Lessee will promptly repair any damaged item of Equipment unless such Equipment
has suffered a Casualty Loss Within fifteen (15) days of a Casualty Loss, Lessee
will provide written notice of that loss to Lessor and Lessee will, at Lessee's
option, either (a) replace the item of Equipment with Like Equipment and
marketable title to the Like Equipment will automatically vest in Lessor or (b)
pay the Casualty Value and after that payment and the payment of all other
amounts due and owing with respect to that item of Equipment, Lessee's
obligation to pay further Rent for the item of Equipment will cease.
13. DEFAULT, REMEDIES AND MITIGATION.
13.1 DEFAULT. The occurrence of any one or more of the following Events of
Default constitutes a default under a Summary Equipment Schedule
(a) Lessee's failure to pay Rent or other amounts payable by Lessee when due if
that failure continues for five (5) business days after written notice, or
(b) Lessee's failure to perform any other term or condition of the Schedule or
the material inaccuracy of any representation or warranty made by the Lessee in
the Schedule or in any document or certificate furnished to the Lessor hereunder
if that failure or inaccuracy continues for ten (10) business days after written
notice, or
(c) An assignment by Lessee for the benefit of its creditors, the failure by
Lessee to pay its debts when due, the insolvency of Lessee, the filing by Lessee
or the filing against Lessee of any petition under any bankruptcy or insolvency
law or for the appointment of a trustee or other officer with similar powers,
the adjudication of Lessee as insolvent, the liquidation of Lessee, or the
taking of any action for the purpose of the foregoing; or
(d) The occurrence of an Event of Default under any Schedule, Summary Equipment
Schedule or other agreement between Lessee and Lessor or its Assignee or Secured
Party
13.2 REMEDIES. Upon the occurrence of any of the above Events of Default,
Lessor, at its option, may:
(a) enforce Lessee's performance of the provisions of the applicable Schedule by
appropriate court action in law or in equity;
(b) recover from Lessee any damages and or expenses, including Default Costs;
(c) with notice and demand, recover all sums due and accelerate and recover the
present value of the remaining payment stream of all Rent due under the
defaulted Schedule (discounted at the same rate of interest at which such
defaulted Schedule was discounted
<PAGE>
with a Secured Party plus any prepayment fees charged to Lessor by the Secured
Party or, if there is no Secured Party, then discounted at 6%) together with all
Rent and other amounts currently due as liquidated damages and not as a penalty;
(d) with notice and process of law and in compliance with Lessee's security
requirements, Lessor may enter on Lessee's premises to remove and repossess the
Equipment without being liable to Lessee for damages due to the repossession,
except those resulting from Lessor's, its assignees', agents' or
representatives' negligence; and
(e) pursue any other remedy permitted by law or equity.
The above remedies, in Lessor's discretion and to the extent permitted by law,
are cumulative and may be exercised successively or concurrently.
13.3 MITIGATION. Upon return of the Equipment pursuant to the terms of Section
13.2. Lessor will use its best efforts in accordance with its normal business
procedures (and without obligation to give any priority to such Equipment) to
mitigate Lessor's damages as described below. EXCEPT AS SET FORTH IN THIS
SECTION, LESSEE HEREBY WAIVES ANY RIGHTS NOW OR HEREAFTER CONFERRED BY STATUTE
OR OTHERWISE WHICH MAY REQUIRE LESSOR TO MITIGATE ITS DAMAGES OR MODIFY ANY OF
LESSOR'S RIGHTS OR REMEDIES STATED HEREIN. Lessor may sell, lease or otherwise
dispose of all or any part of the Equipment at a public or private sale for cash
or credit with the privilege of purchasing the Equipment. The proceeds from any
sale, lease or other disposition of the Equipment are defined as either:
(a) if sold or otherwise disposed of, the cash proceeds less the Fair Market
Value of the Equipment at the expiration of the Initial Term less the Default
Costs, or
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<PAGE>
(b) if leased, the present value (discounted at three percent (3%) over the U.S.
Treasury Notes of comparable maturity to the term of the re-lease) of the
rentals for a term not to exceed the Initial Term, less the Default Costs
Any proceeds will be applied against liquidated damages and any other sums due
to Lessor from Lessee. However, Lessee is liable to Lessor for, and Lessor may
recover, the amount by which the proceeds are less than the liquidated damages
and other sums due to Lessor from Lessee.
14. ADDITIONAL PROVISIONS.
14.1 BOARD ATTENDANCE. Upon invitation of Lessee, one representative of Lessor
will have the right to attend Lessee's corporate Board of Directors meetings and
Lessee will give Lessor reasonable notice in advance of any special Board of
Directors meeting, which notice will provide an agenda of the subject matter to
be discussed at such board meeting. Lessee will provide Lessor with a certified
copy of the minutes of each Board of Directors meeting within thirty (30) days
following the date of such meeting held during the term of this Master Lease.
14.2 FINANCIAL STATEMENTS. As soon as practicable at the end of each month (and
in any event within thirty (30) days), Lessee will provide to Lessor the same
information which Lessee provides to its Board of Directors, but which will
include not less than a monthly income statement, balance sheet and statement of
cash flows prepared in accordance with generally accepted accounting principles,
consistently applied (the "Financial Statements"). As soon as practicable at the
end of each fiscal year, Lessee will provide to Lessor audited Financial
Statements setting forth in comparative form the corresponding figures for the
fiscal year (and in any event within ninety (90) days), and accompanied by an
audit report and opinion of the independent certified public accountants
selected by Lessee. Lessee will promptly furnish to Lessor any additional
information (including, but not limited to, tax returns, income statements,
balance sheets and names of principal creditors) as Lessor reasonably believes
necessary to evaluate Lessee's continuing ability to meet financial obligations
After the effective date of the initial registration statement covering a public
offering of Lessee's securities, the term "Financial Statements" will be deemed
to refer to only those statements required by the Securities and Exchange
Commission.
14.3 OBLIGATION TO LEASE ADDITIONAL EQUIPMENT. Upon notice to Lessee. Lessor
will not be obligated to lease any Equipment which would have a Commencement
Date after said notice if (i) Lessee is in default under this Master Lease or
any Schedule; (ii) Lessee is in default under any loan agreement, the result of
which would allow the lender or any secured party to demand immediate payment of
any material indebtedness; (iii) there is a material adverse change in Lessee's
credit standing; or (iv) Lessor determines (in reasonable good faith) that
Lessee will be unable to perform its obligations under this Master Lease or any
Schedule.
14.4 MERGER AND SALE PROVISIONS. Lessee will notify Lessor of any proposed
Merger at least sixty (60) days prior to the closing date Lessor may, in its
discretion, either (i) consent to the assignment of the Master Lease and all
relevant Schedules to the successor entity, or (ii) terminate the Master Lease
and all relevant Schedules. If Lessor elects to consent to the assignment,
Lessee and its successor will sign the assignment documentation provided by
Lessor. If Lessor elects to terminate the Master Lease and all relevant
Schedules, then Lessee will pay Lessor all amounts then due and owing and a
termination fee equal to the present value (discounted at 6%) of the remaining
Rent for the balance of the Initial Term(s) of all Schedules, and will return
the Equipment in accordance with Section 9. Lessor hereby consents to any Merger
in which the acquiring entity has a Moody's Bond Rating of BA3 or better or a
commercially acceptable equivalent measure of creditworthiness as reasonably
determined by Lessor
14.5 ENTIRE AGREEMENT. This Master Lease and associated Schedules and Summary
Equipment Schedules supersede all other oral or written agreements or
understandings between the parties concerning the Equipment including, for
example, purchase orders ANY AMENDMENT OF THIS MASTER LEASE OR A SCHEDULE, MAY
ONLY BE ACCOMPLISHED BY A WRITING SIGNED BY THE PARTY AGAINST WHOM THE AMENDMENT
IS SOUGHT TO BE ENFORCED.
<PAGE>
14.6 NO WAIVER. No action taken by Lessor or Lessee will be deemed to constitute
a waiver of compliance with any representation, warranty or covenant contained
in this Master Lease or a Schedule. The waiver by Lessor or Lessee of a breach
of any provision of this Master Lease or a Schedule will not operate or be
construed as a waiver of any subsequent breach.
14.7 BINDING NATURE. Each Schedule is binding upon, and inures to the benefit of
Lessor and its assigns LESSEE MAY NOT ASSIGN ITS RIGHTS OR OBLIGATIONS
14.8 SURVIVAL OF OBLIGATIONS. All agreements, obligations including, but not
limited to those arising under Section 6 2, representations and warranties
contained in this Master Lease, any Schedule, Summary Equipment Schedule or in
any document delivered in connection with those agreements are for the benefit
of Lessor and any Assignee or Secured Party and survive the execution, delivery,
expiration or termination of this Master Lease.
14.9 NOTICES. Any notice, request or other communication to either party by the
other will be given in writing and deemed received upon the earlier of (1)
actual receipt or (3) three days after mailing if mailed postage prepaid by
regular or airmail to Lessor (to the attention of "the Comdisco Venture Group")
or Lessee, at the address set out in the Schedule, (3) one day after it is sent
by courier or (4) on the same day as sent via facsimile transmission, provided
that the original is sent by personal delivery or mail by the sending party.
14.10 APPLICABLE LAW. THIS MASTER LEASE HAS BEEN, AND EACH SCHEDULE WILL HAVE
BEEN MADE, EXECUTED AND DELIVERED IN THE STATE OF ILLINOIS AND WILL BE GOVERNED
AND CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING EFFECT TO CONFLICT OF LAW PROVISIONS. NO RIGHTS OR
REMEDIES REFERRED TO IN ARTICLE 2A OF THE UNIFORM COMMERCIAL CODE WILL BE
CONFERRED ON LESSEE UNLESS EXPRESSLY GRANTED IN THIS MASTER LEASE OR A SCHEDULE.
14.11 SEVERABILITY. If any one or more of the provisions of this Master Lease or
any Schedule is for any reason held invalid, illegal or unenforceable, the
remaining provisions of this Master Lease and any such Schedule will be
unimpaired, and the invalid, illegal or unenforceable provision replaced by a
mutually acceptable valid, legal and enforceable provision that is closest to
the original intention of the parties.
14.12 COUNTERPARTS. This Master Lease and any Schedule may be executed in any
number of counterparts, each of which will be deemed an original, but all such
counterparts together constitute one and the same instrument If Lessor grants a
security interest in all or any part of a Schedule, the Equipment or sums
payable thereunder, only that counterpart Schedule marked "Secured Party's
Original" can transfer Lessor's rights and all other counterparts will be marked
"Duplicate."
14.13 LICENSED PRODUCTS. Lessee will obtain no title to Licensed Products which
will at all times remain the property of the owner of the Licensed Products. A
license from the owner may be required and it is Lessee's responsibility to
obtain any required license before the use of the Licensed Products Lessee
agrees to treat the Licensed Products as confidential information of the owner,
to observe all copyright restrictions, and not to reproduce or sell the Licensed
Products.
14.14 SECRETARY'S CERTIFICATE. Lessee will, upon execution of this Master Lease,
provide Lessor with a secretary's certificate of incumbency and authority Upon
the execution of each Schedule with a purchase price in excess of $1,000,000,
Lessee will provide Lessor with an opinion from Lessee's counsel in a form
acceptable to Lessor regarding the representations and warranties in Section 8.
14.15 ELECTRONIC COMMUNICATIONS. Each of the parties may communicate with the
other by electronic means under mutually agreeable terms.
14.16 LANDLORD/MORTGAGEE WAIVER. Lessee agrees to provide Lessor with a
Landlord/Mortgagee Waiver with respect to the Equipment. Such waiver shall be in
a form satisfactory to Lessor.
14.17 EQUIPMENT PROCUREMENT CHARGES/PROGRESS PAYMENTS. Lessee hereby agrees that
Lessor shall not, by virtue of its entering into this Master Lease, be required
to remit any
<PAGE>
payments to any manufacturer or other third party until Lessee accepts the
Equipment subject to this Master Lease.
14.18 DEFINITIONS.
ADVANCE - means the amount due to Lessor by Lessee upon Lessee's execution of
each Schedule.
ASSIGNEE - means an entity to whom Lessor has sold or assigned its rights as
owner and Lessor of Equipment.
CASUALTY LOSS - means the irreparable loss or destruction of Equipment.
CASUALTY VALUE - means the greater of the aggregate Rent remaining to be paid
for the balance of the lease term or the Fair Market Value of the Equipment
immediately prior to the Casualty Loss. However, if a Casualty Value Table is
attached to the relevant Schedule its terms will control.
COMMENCEMENT DATE - is defined in each Schedule.
DEFAULT COSTS - means reasonable attorney's fees and remarketing costs resulting
from a Lessee default or Lessor's enforcement of its remedies.
DELIVERY DATE - means date of delivery of Inventory Equipment to Lessee's
address.
EQUIPMENT - means the property described on a Summary Equipment Schedule and any
replacement for that property required or permitted by this Master Lease or a
Schedule.
EVENT OF DEFAULT - means the events described in Subsection 13.1.
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<PAGE>
FAIR MARKET VALUE - means the aggregate amount which would be obtainable in an
arm's-length transaction between an informed and willing buyer/user and an
informed and willing seller under no compulsion to sell.
INITIAL TERM - means the period of time beginning on the first day of the first
full Rent Interval following the Commencement Date for all items of Equipment
and continuing for the number of Rent Intervals indicated on a Schedule.
INTERIM RENT - means the pro-rata portion of Rent due for the period from the
Commencement Date through but not including the first day of the first full Rent
Interval included in the Initial Term.
LATE CHARGE - means the lesser of five percent (5%) of the payment due or the
maximum amount permitted by the law of the state where the Equipment is located.
LICENSED PRODUCTS - means any software or other licensed products attached to
the Equipment.
LIKE EQUIPMENT - means replacement Equipment which is lien free and of the same
model, type, configuration and manufacture as Equipment.
MERGER - means any consolidation or merger of the Lessee with or into any other
corporation or entity, any sale or conveyance of all or substantially all of the
assets or stock of the Lessee by or to any other person or entity in which
Lessee is not the surviving entity.
NOTICE PERIOD - means not less than ninety (90) days nor more than twelve (12)
months prior to the expiration of the lease term.
OWNER - means the owner of Equipment.
RENT - means the rent Lessee will pay for each item of Equipment expressed in a
Summary Equipment Schedule either as a specific amount or an amount equal to the
amount which Lessor pays for an item of Equipment multiplied by a lease rate
factor plus all other amounts due to Lessor under this Master Lease or a
Schedule.
RENT INTERVAL - means a full calendar month or quarter as indicated on a
Schedule
SCHEDULE - means either an Equipment Schedule or a Licensed Products Schedule
which incorporates all of the terms and conditions of this Master Lease
SECURED PARTY - means an entity to whom Lessor has granted a security interest
for the purpose of securing a loan.
SUMMARY EQUIPMENT SCHEDULE - means a certificate provided by Lessor summarizing
all of the Equipment for which Lessor has received Lessee approved vendor
invoices, purchase documents and/or evidence of delivery during a calendar
quarter which will incorporate all of the terms and conditions of the related
Schedule and this Master Lease and will constitute a separate lease for the
equipment leased thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Master Lease on or as
of the day and year first above written.
SILICON VALLEY INTERNET PARTNERS COMDISCO, INC.,
as Lessee as Lessor
By: /s/signature Illegible By: /s/signature Illegible
Title Title: JAMES P. LABE, PRESIDENT
COMDISCO VENTURES DIVISION
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<PAGE>
ADDENDUM TO THE
MASTER LEASE AGREEMENT DATED AS OF MARCH 25, 1998
BETWEEN SILICON VALLEY INTERNET PARTNERS, AS LESSEE
AND COMDISCO, INC., AS LESSOR
The undersigned hereby agree that the terms and conditions of the
above-referenced Master Lease are hereby modified and amended as follows:
1) SECTION 4.2 "WARRANTY AND DISCLAIMER OF WARRANTIES."
First Sentence, line 2, delete the words "Lessee is not in default" and
insert "no Event of Default has occurred and is continuing, neither Lessor
nor any person or entity claiming by or through Lessor".
2) SECTION 5.1 "TITLE."
Delete the first sentence in its entirety and replace with: "Lessee shall
have no right, title or interest in the Equipment except as set forth in
this Master Lease or in any Schedule."
Third Sentence, line 3, after the words "caused by Lessor", insert "or
parties claiming by or through Lessor".
3) SECTION 5.3 "ASSIGNMENT BY LESSOR."
In Paragraph (a), second sentence, lines 3 and 4, delete the words "Lessee
is not in default and the Secured Party continues to receive all Rent
payable under the Schedule." and replace with "no Event of Default has
occurred and is continuing".
In Paragraph (b), insert the following clause at the beginning thereof:
"Upon written notice from Lessor,".
4) SECTION 6.1 "NET LEASE."
At the end of second sentence insert the following, ";provided, however,
that Lessee's ability to bring suit against Lessor for breach of this
Master Lease shall not be affected by this Section 6.1.".
5) SECTION 6.2 "TAXES AND FEES."
First Sentence, line 3 delete "accrued for or arising" and replace with
"attributable to periods".
<PAGE>
6) SECTION 7.1 "CARE, USE AND MAINTENANCE; INSPECTION BY LESSOR."
Delete the fourth sentence in its entirety and replace with: "With
Lessor's prior written consent, Lessee may have the Equipment maintained
by a party other than the manufacturer. Lessor approves Lessee as such
maintenance contractor.".
7) SECTION 8 "REPRESENTATIONS AND WARRANTIES OF LESSEE."
Paragraph (f) insert the following at the end thereof:", except where the
failure to do so would not reasonably be expected to have a material
adverse effect.".
8) SECTION 9 "DELIVERY AND RETURN OF EQUIPMENT."
Second sentence, line 3, after the words "to Lessor's" insert the word
"reasonable".
Fourth sentence, line 1, after the words "under Section 2" insert
",subject to Lessee's security requirements,".
Insert the following sentence at the end of Section 9: "All such
demonstrations will be conducted in such manner as to minimize any
interference with Lessee's operations.".
9) SECTION 11 "INDEMNITY."
Second sentence, in line 3, after the words "negligent acts" insert "or
willful conduct".
10) SECTION 13.1 "DEFAULT."
Paragraph (c), insert the following at the end thereof: "(and any such
involuntary event has not been dismissed or vacated within 30 days)".
11) SECTION 13.2 "REMEDIES."
Paragraph (c), line 5, delete "6%" and insert "U.S. Treasury Notes of
comparable maturity to the remaining term of the defaulted Schedule".
<PAGE>
12) SECTION 13.3 "MITIGATION."
Paragraph (b), lines 2 and 3, delete "3 percent (3%) over the U.S.
Treasury Notes of comparable maturity to the term of" and insert, "the
same interest rate implicit in".
13) SECTION 14.1 "BOARD ATTENDANCE"
Delete this section in its entirety.
14) SECTION 14.2 "FINANCIAL STATEMENTS"
In the first sentence, change the words "thirty (30)" to "forty-five
(45)".
In the second sentence, change the words "ninety (90)" to "one-hundred
twenty (120)".
15) SECTION 14.3 "OBLIGATION TO LEASE ADDITIONAL EQUIPMENT."
In line 3, delete "Lessee is in default" and replace with "an Event of
Default has occurred or is continuing".
In line 6 after the words "material indebtedness" insert "for borrowed
money in an amount in excess of $75,000".
16) SECTION 14.4 "MERGER AND SALE PROVISIONS."
In line 2, delete "sixty (60)" and replace with "twenty (20)".
17) SECTION 14.6 "NO WAIVER."
First sentence, insert the following at the beginning thereof: "Except for
a written waiver,".
18) SECTION 14.7 "BINDING NATURE."
Second sentence, insert the following at the end thereof: "EXCEPT IN
ACCORDANCE WITH SECTION 14.4.".
19) SECTION 14.9 "NOTICES."
Line 3, delete "three (3)" and insert "five (5)"; delete "postage prepaid
by regular or air mail" and insert "certified mail, return receipt
requested".
<PAGE>
20) SECTION 14.13 "LICENSED PRODUCTS."
After the first sentence insert: "To the extent that Lessor, by reason of
its ownership of the Equipment, holds any license to a Licensed Product,
Lessor shall obtain the right for Lessee to use any such Licensed Product
for the duration of the lease term.".
Third sentence, line 2, after the word "owner" insert" of such Licensed
Product".
21) SECTION 14.18 "DEFINITIONS."
"Delivery Date" revise the word "Inventory" to read "inventory".
"Like Equipment" delete the words "of the same model, type, configuration,
and manufacture as Equipment." and replace with "of the same manufacture
and of a type, model and feature configuration having a capability and
value equal to or greater than the Equipment being replaced".
Except as amended hereby, all other terms and conditions of the Master Lease
Agreement remain in full force and effect.
SILICON VALLEY INTERNET PARTNERS COMDISCO, INC.
AS LESSEE AS LESSOR
By: /s/ Signature Illegible By: /s/ Signature Illegible
Title: Vice President & CFO Title: JAMES P. LABE, PRESIDENT
COMDISCO VENTURES DIVISION
Date: 3/25/98 Date: MAR 27 1998
<PAGE>
EQUIPMENT SCHEDULE VL-1
DATED AS OF MARCH 25, 1998
TO MASTER LEASE AGREEMENT
DATED AS OF MARCH 25, 1998 (THE "MASTER LEASE")
LESSEE: SILICON VALLEY INTERNET PARTNERS LESSOR: COMDISCO, INC.
ADMIN. CONTACT/PHONE NO.: ADDRESS FOR ALL NOTICES:
Michael Tubridy, CFO 6111 North River Road
Phone: (617) 531-3700 Rosemont, Illinois 60018
Fax: (617) 531-3803 Attn.: Venture Group
Address for Notices:
89 South Street, 2nd Floor
Boston, MA 02111
Central Billing Location: Rent Interval: Monthly
same as above
Attn.:
Lessee Reference No.: ____________
(24 digits maximum)
Location of Equipment: Initial Term: 48 months
89 South Street, 2nd Floor
Boston, MA 02111
(Number of Rent Intervals)
650 Townsend Street
San Francisco, CA 94103 Lease Rate Factor: 2.3807%
625 Avenue of the Americas
New York, NY 10011 Advance: None
Centrum Tower Interim Rent: None
3102 Oak Lawn Av.
Dallas, TX 75219
Equipment specifically approved by Lessor, which shall be delivered to and
accepted by Lessee during the period March 24, 1998 through March 24, 1999
("Equipment Delivery Period"), for which Lessor receives vendor invoices
approved for payment, up to an aggregate purchase price of $1,950,000.00
("Commitment Amount"); excluding custom use equipment, leasehold improvements,
installation costs and delivery costs, rolling stock, special tooling,
"stand-alone" software, application software bundled into computer hardware,
hand held items, molds and fungible items.
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<PAGE>
1. EQUIPMENT PURCHASE
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in an aggregate value up to the
Commitment Amount referred to on the face of this Schedule. If the Equipment
acquired is of category (i), (ii), (iii) below, the effectiveness of this
Schedule as it relates to those items of Equipment is contingent upon Lessee's
acknowledgment at the time Lessor acquires the Equipment that Lessee has either
received or approved the relevant purchase documentation between vendor and
Lessor for that Equipment.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
obtained from a vendor by Lessee for its use subject to Lessor's
prior approval of the Equipment.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the
"Sale-Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than April 24,
1998*. Lessor will not perform a Sale-Leaseback Transaction for
anyrequest or accompanying Equipment ownership documents for
in-place Equipment as of the date hereof which arrives after the
date marked above by an asterisk (*). Additional Sale-Leaseback
financings after the date hereof will be handled on a case by case
basis. Further, any sale-leaseback Equipment will be placed on lease
subject to: (1) Lessor prior approval of the Equipment; and (2) if
approved, at Lessor's actual net appraised Equipment value pursuant
to the schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
---- ---------------------------------
Between 6/28/97 and 3/25/98 100%
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) 800 NUMBER EQUIPMENT. Upon Lessee's use of Comdisco's 1-800 Direct
Service, Lessor will purchase new or used Equipment from a third
party or Lessor will supply new or used Equipment from its inventory
for use by Lessee at rates provided by Lessor.
2. COMMENCEMENT DATE
The Commencement Date for each item of new on-order or used on-order
Equipment will be the install date as confirmed in writing by Lessee as set
forth on the vendor invoice of which a facsimile transmission will constitute an
original document. The Commencement Date for sale-leaseback Equipment shall be
the date Lessor tenders the purchase price. The Commencement Date for 800 Number
Equipment shall be fifteen (15) days from the ship date, such ship date to be
set forth on the vendor invoice or if unavailable on the vendor invoice the ship
date will be determined by Lessor upon other supporting shipping documentation.
Lessor will summarize all approved invoices, purchase documentation and evidence
of delivery, as applicable, received in the same calendar month into a Summary
Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the
Initial Term will begin the first day of the calendar month thereafter. Each
Summary Equipment Schedule will contain the Equipment location, description,
serial number(s) and cost and will incorporate the terms and conditions of the
Master Lease and this Schedule and will constitute a separate lease.
-2-
<PAGE>
3. OPTION TO EXTEND
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term of a Summary
Equipment Schedule, Lessee will have the right to extend the Initial Term of
such Summary Equipment Schedule for a period of one (1) year. In such event, the
rent to be paid during said extended period shall be mutually agreed upon and if
the parties cannot mutually agree, then the Summary Equipment Schedule shall
continue in full force and effect pursuant to the existing terms and conditions
until terminated in accordance with its terms. The Summary Equipment Schedule
will continue in effect following said extended period until terminated by
either party upon not less than ninety (90) days prior written notice, which
notice shall be effective as of the date of receipt.
4. PURCHASE OPTION
So long as no Event of Default has occurred and is continuing hereunder,
and upon written notice no earlier than twelve (12) months and no later than
ninety (90) days prior to the expiration of the Initial Term or the extended
term of the applicable Summary Equipment Schedule, Lessee will have the option
at the expiration of the Initial Term of the Summary Equipment Schedule to
purchase all, but not less than all, of the Equipment listed therein for a
purchase price not to exceed 12% of the Equipment cost and upon terms and
conditions to be mutually agreed upon by the parties following Lessee's written
notice, plus any taxes applicable at time of purchase. Said purchase price shall
be paid to Lessor at least thirty (30) days before the expiration date of the
Initial Term or extended term. Title to the Equipment shall automatically pass
to Lessee upon payment in full of the purchase price but, in no event, earlier
than the expiration of the fixed Initial Term or extended term, if applicable.
If the parties are unable to agree on the purchase price or the terms and
conditions with respect to said purchase, then the Summary Equipment Schedule
with respect to this Equipment shall remain in full force and effect.
Notwithstanding the exercise by Lessee of this option and payment of the
purchase price, until all obligations under the applicable Summary Equipment
Schedule have been fulfilled, it is agreed and understood that Lessor shall
retain a purchase money security interest in the Equipment listed therein and
the Summary Equipment Schedule shall constitute a Security Agreement under the
Uniform Commercial Code of the state in which the Equipment is located.
5. TECHNOLOGY EXCHANGE OPTION
If Lessee is not in default, and there is no material adverse change in
Lessee's credit, on or after the expiration of the 12th month of any Summary
Equipment Schedule, Lessee shall have the option to replace any of the Equipment
subject to such summary Equipment Schedule with new technology equipment ("New
Technology Equipment") utilizing the following guidelines:
A. Equipment being replaced with New Technology Equipment shall have an
aggregate original cost equal to or greater than $20,000 and be comprised of
full configurations of equipment.
B. This technology Exchange Option shall be limited to a maximum in the
aggregate of fifty percent (50%) of the original equipment cost and shall not
apply to software.
C. The cost of the New Technology Equipment must be equal to or greater than the
original equipment cost of the replaced equipment, but in no event shall exceed
150% of the original equipment cost.
D. The remaining lease payments applicable to the equipment being replaced by
the New Technology Equipment will be discounted to present value at 6%.
The wholesale market value of the equipment being replaced will be established
by Comdisco based upon then current market conditions. Upon the return of the
replaced equipment, the wholesale price will be deducted from the present value
of the remaining rentals and the differential will be added to the cost of the
New Technology Equipment in calculating the new rental. The lease for the New
Technology Equipment will contain terms and conditions
<PAGE>
substantially similar to those for the replaced equipment and will have an
Initial Term not less than the balance of the remaining Initial Term for the
replaced equipment.
6. OPTION AMOUNT
So long as no Event of Default shall have occurred and is continuing and
upon Lessee's request, subject to final review by Lessor, Lessor agrees to
provide to Lessee an additional $600,000.00 of Equipment upon rates and terms to
be negotiated.
-3-
<PAGE>
7. SPECIAL TERMS
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
Section 14.14 Secretary's Certificate
Delete the second sentence in its entirety.
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
SILICON VALLEY INTERNET PARTNERS COMDISCO, INC.
AS LESSEE AS LESSOR
By: /s/ Signature Illegible By: /s/ Signature Illegible
Title: /s/ Signature Illegible Title: JAMES P. LABE, PRESIDENT
COMDISCO VENTURES DIVISION
Date: 3/25/98 Date: MAR 27 1998
-4-
<PAGE>
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
This Summary Equipment Schedule dated XXXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
2. Initial Term Starts on: Initial Term:
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
4. Lease Rate Factor:
5. Rent:
6. Acceptance Doc Type:
-5-
<PAGE>
EQUIPMENT SCHEDULE VL-2
DATED AS OF MARCH 25, 1998
TO MASTER LEASE AGREEMENT
DATED AS OF MARCH 25, 1998 (THE "MASTER LEASE")
LESSEE: SILICON VALLEY INTERNET PARTNERS LESSOR: COMDISCO, INC.
ADMIN. CONTACT/PHONE NO.: ADDRESS FOR ALL NOTICES:
Michael Tubridy, CFO 6111 North River Road
Phone: (617) 531-3700 Rosemont, Illinois 60018
Fax: (617) 531-3803 Attn.: Venture Group
Address for Notices:
89 South Street, 2nd Floor
Boston, MA 02111
Central Billing Location: Rent Interval: Monthly
same as above
Attn.:
Lessee Reference No.:_________________
(24 digits maximum)
Location of Equipment: Initial Term: 48 months
89 South Street, 2nd Floor
Boston, MA 02111
(Number of Rent Intervals)
650 Townsend Street
San Francisco, CA 94103 Lease Rate Factor: 2.3807%
625 Avenue of the Americas
New York, NY 10011 Advance: None
Centrum Tower Interim Rent:: None
3102 Oak Lawn Av.
Dallas, TX 75219
EQUIPMENT (as defined below):
Software and tenant improvements specifically approved by Lessor, which shall be
delivered to and accepted by Lessee during the period March 25, 1998 through
March 25, 1999 ("Equipment Delivery Period") for which Lessor receives vendor
invoices approved for payment, up to an aggregate purchase price of
$1,300,000.00 ("Commitment Amount"); excluding custom use equipment,
installation costs and delivery costs, rolling stock, special tooling, hand held
items, molds and fungible items.
-1-
<PAGE>
1. EQUIPMENT PURCHASE
This Schedule contemplates Lessor's acquisition of Equipment for lease to
Lessee, either by one of the first three categories listed below or by providing
Lessee with Equipment from the fourth category, in an aggregate value up to the
Commitment Amount referred to on the face of this Schedule. If the Equipment
acquired is of category (i), (ii), (iii) below, the effectiveness of this
Schedule as it relates to those items of Equipment is contingent upon Lessee's
acknowledgment at the time Lessor acquires the Equipment that Lessee has either
received or approved the relevant purchase documentation between vendor and
Lessor for that Equipment.
(i) NEW ON-ORDER EQUIPMENT. Lessor will purchase new Equipment which is
obtained from a vendor by Lessee for its use subject to Lessor's
prior approval of the Equipment.
(ii) SALE-LEASEBACK EQUIPMENT. Any in-place Equipment installed at
Lessee's site and to which Lessee has clear title and ownership may
be considered by Lessor for inclusion under this Lease (the
"Sale-Leaseback Transaction"). Any request for a Sale-Leaseback
Transaction must be submitted to Lessor in writing (along with
accompanying evidence of Lessee's Equipment ownership satisfactory
to Lessor for all Equipment submitted) no later than April 25,
1998*. Lessor will not perform a Sale-Leaseback Transaction for any
request or accompanying Equipment ownership documents for in-place
Equipment as of the date hereof which arrives after the date marked
above by an asterisk (*). Additional Sale-Leaseback financings after
the date hereof will be handled on a case by case basis. Further,
any sale-leaseback Equipment will be placed on lease subject to: (1)
Lessor prior approval of the Equipment; and (2) if approved, at
Lessor's actual net appraised Equipment value pursuant to the
schedule below:
ORIGINAL EQUIPMENT INVOICE PERCENT OF ORIGINAL MANUFACTURER'S
DATE NET EQUIPMENT COST PAID BY LESSOR
---- ---------------------------------
Between 6/28/97 and 3/25/98 100%
(iii) USED ON-ORDER EQUIPMENT. Lessor will purchase used Equipment which
is obtained from a third party by Lessee for its use subject to
Lessor's prior approval of the Equipment and at Lessor's appraised
value for such used Equipment.
(iv) 800 NUMBER EQUIPMENT. Upon Lessee's use of Comdisco's 1-800 Direct
Service, Lessor will purchase new or used Equipment from a third
party or Lessor will supply new or used Equipment from its inventory
for use by Lessee at rates provided by Lessor.
2. COMMENCEMENT DATE
The Commencement Date for each item of new on-order or used on-order
Equipment will be the install date as confirmed in writing by Lessee as set
forth on the vendor invoice of which a facsimile transmission will constitute an
original document. The Commencement Date for sale-leaseback Equipment shall be
the date Lessor tenders the purchase price. The Commencement Date for 800 Number
Equipment shall be fifteen (15) days from the ship date, such ship date to be
set forth on the vendor invoice or if unavailable on the vendor invoice the ship
date will be determined by Lessor upon other supporting shipping documentation.
Lessor will summarize all approved invoices, purchase documentation and evidence
of delivery, as applicable, received in the same calendar month into a Summary
Equipment Schedule in the form attached to this Schedule as Exhibit 1, and the
Initial Term will begin the first day of the calendar month thereafter. Each
Summary Equipment Schedule will contain the Equipment location, description,
serial number(s) and cost and will incorporate the terms and conditions of the
Master Lease and this Schedule and will constitute a separate lease.
3. OPTION AMOUNT
<PAGE>
So long as no Event of Default shall have occurred and is continuing and
upon Lessee's request, subject to final review by Lessor, Lessor agrees to
provide to Lessee an additional $400,000.00 of Equipment upon rates and terms to
be negotiated.
-2-
<PAGE>
4. MISCELLANEOUS
In consideration of Lessor financing software and tenant improvements
hereunder, to purchase and Lessor agrees to sell all of Lessor's right, title
and interest in the software and tenant improvements financed pursuant to such
Initial Term in an amount equal to 12% of Lessor's aggregate cost of software
and tenant improvements provided hereunder. Lessor hereby agrees that it will
execute and deliver such additional instruments of transfer and will take such
other action as Lessee reasonably may require in order more effectively to
transfer any of the property herein granted conveyed, transferred, assigned and
delivered to Lessee.
4. SPECIAL TERMS
The terms and conditions of the Lease as they pertain to this Schedule are
hereby modified and amended as follows:
(a) Section 9. Delivery and Return of Equipment
Delete second, third and fourth sentences in their entirety.
(b) Section 14.14 Secretary's Certificate
Delete the second sentence in its entirely.
Master Lease: This Schedule is issued pursuant to the Lease identified on page 1
of this Schedule. All of the terms and conditions of the Lease are incorporated
in and made a part of this Schedule as if they were expressly set forth in this
Schedule. The parties hereby reaffirm all of the terms and conditions of the
Lease (including, without limitation, the representations and warranties set
forth in Section 8) except as modified herein by this Schedule. This Schedule
may not be amended or rescinded except by a writing signed by both parties.
SILICON VALLEY INTERNET PARTNERS COMDISCO, INC.
AS LESSEE AS LESSOR
By: /s/ Signature Illegible By: /s/ Signature Illegible
Title: /s/ Signature Illegible Title:
Date: 3/25/98 Date: MAR 27 1998
-3-
<PAGE>
EXHIBIT 1
SUMMARY EQUIPMENT SCHEDULE
This Summary Equipment Schedule dated XXXX is executed pursuant to
Equipment Schedule No. X to the Master Lease Agreement dated XXXX between
Comdisco, Inc. ("Lessor") and XXXX ("Lessee"). All of the terms, conditions,
representations and warranties of the Master Lease Agreement and Equipment
Schedule No. X are incorporated herein and made a part hereof, and this Summary
Equipment Schedule constitutes a Schedule for the Equipment on the attached
invoices.
1. For Period Beginning: And Ending:
2. Initial Term Starts on: Initial Term:
(Number of Rent Intervals)
3. Total Summary Equipment Cost:
4. Lease Rate Factor:
5. Rent:
6. Acceptance Doc Type:
-4-
<PAGE>
VOID AFTER MARCH 25, 2008
SERIES C PREFERRED STOCK PURCHASE WARRANT
THIS WARRANT HAS BEEN, AND THE SHARES OF SERIES C PREFERRED STOCK WHICH MAY BE
PURCHASED PURSUANT TO THE EXERCISE OF THIS WARRANT (THE "SHARES"), WILL BE
ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF, EXCEPT PURSUANT TO A REGISTRATION OR
EXEMPTION. NEITHER THIS WARRANT NOR THE SHARES OF SERIES C PREFERRED STOCK
ISSUABLE HEREUNDER OR ANY SHARES INTO WHICH SUCH SHARES ARE CONVERTIBLE,
(TOGETHER, THE "SECURITIES") HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL (WHICH MAY BE INSIDE OR OUTSIDE COUNSEL)
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH DISPOSITION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND OF ANY
APPLICABLE STATE SECURITIES LAWS.
NO. C-1 35,986 SHARES
SILICON VALLEY INTERNET PARTNERS
WARRANT TO PURCHASE SHARES OF SERIES C PREFERRED STOCK
THIS CERTIFIES that, for value received, COMDISCO, INC. (the "REGISTERED
HOLDER"), is entitled, upon the terms and subject to the conditions hereinafter
set forth, to subscribe for and purchase from Silicon Valley Internet Partners,
a California corporation with principal offices at 89 South Street, 7th Floor,
Boston, MA 02111 (the "COMPANY"), at any time until March 25, 2008 (the
"EXPIRATION DATE") shares of the Company's Series C Preferred Stock (the "SERIES
C PREFERRED") as follows: This Warrant will be exercisable for a total of
Thirty-Five Thousand Nine Hundred Eighty-Six (35,986) fully paid and
nonassessable shares of Series C Preferred at a price per share equal to $3.625
(the "EXERCISE PRICE"), subject to the provisions and upon the terms and
conditions hereinafter set forth.
If all of the Series C Preferred Stock is converted into shares of Common
Stock in connection with a registration of the Company's Common Stock under the
Act, then this Warrant shall automatically become exercisable for that number of
shares of Common Stock equal to the number of shares of Common Stock that would
have been received if this Warrant had been exercised in full and the shares of
Series C Preferred Stock received thereupon had been simultaneously converted
into shares of Common Stock immediately prior to such event, and the Exercise
Price shall be
<PAGE>
automatically adjusted to equal the amount obtained by dividing (i) the
aggregate Exercise Price of the Shares for which this Warrant was exercisable
immediately prior to such conversion, by (ii) the number of shares of Common
Stock for which this Warrant is exercisable immediately after such conversion.
1. Method of Exercise: Payment.
(a) Cash Exercise. The purchase rights represented by this Warrant
may be exercised by the Holder, in whole or in part, from time to time by: (i)
the surrender of this Warrant (with the notice of exercise form (the "NOTICE OF
EXERCISE") attached hereto as Exhibit A duly executed) at the principal office
of the Company; (ii) the execution of a Series C Preferred Stock Purchase
Agreement and all exhibits thereto, including without limitation an Amended and
Restated Shareholder Rights Agreement, Amended and Restated Voting Agreement,
and Amended and Restated Co-Sale Agreement (collectively, the "Series C
Transaction Documents"); and (iii) by the payment to the Company of an amount
equal to the Exercise Price multiplied by the number of the Shares being
purchased, which amount may be paid, at the election of the Holder, by wire
transfer or certified check payable to the order of the Company. The person or
persons in whose name(s) any certificate(s) representing Shares shall be
issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the Shares represented thereby (and such Shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant
to Section 1(a) hereof, the Holder may elect to receive a number of Shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant and the fully executed Series C
Transaction Documents at the principal office of the Company, together with the
Notice of Exercise in which alternative No. 1 is initiated by the Holder. In
such event, the Company shall issue to the Holder a number of Shares computed
using the following formula:
X=Y (A-B)/A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares subject to this warrant.
A = the fair market value of one share of the Company's Series C Preferred
Stock.
B = the Exercise Price (as adjusted to the date of such calculation).
(c) Fair Market Value. For purposes of this Section 2, the fair
market value of the Company's Series C Preferred Stock shall mean:
2
<PAGE>
(i) The average of the closing bid and asked prices of the
Company's Common Stock quoted in the Over-The-Counter Market Summary or the
closing price quoted on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western Edition of The Wall Street
Journal for the ten (10) trading days prior to the date of determination of fair
market value multiplied by the number of shares of Common Stock into which each
share of Series C Preferred Stock is convertible;
(ii) If the Company's Common Stock is not traded
Over-The-Counter or on an exchange, the fair market value of the Series C
Preferred Stock per share shall be the price per share which the Company could
obtain from a willing buyer (not a current employee or director) for shares sold
by the Company from authorized but unissued shares of Series C Preferred Stock
as such price shall be agreed by the parties hereto, or if agreement cannot be
reached within five (5) business days of delivery of the notice pursuant to
Section 1(b) hereof, as shall be determined by a panel of appraisers. One
appraiser shall be selected by the Holder, one appraiser shall be chosen by the
Company and the third appraiser shall be chosen by the first two appraisers. If
the appraisers cannot reach agreement as to the fair market value on the
foregoing basis on or before the thirtieth (30th) day following the Holder's
notice of election pursuant to Section 1(b), then each appraiser shall deliver
its appraisal and the appraisal which is neither the highest nor the lowest
shall be the fair market value of a share of Series C Preferred Stock. In the
event that the Holder fails to choose an appraiser or the three appraisers fail
to deliver an appraisal on or before the thirtieth (30th) day after such notice,
the appraisal of the appraiser selected by the Company shall control and shall
be fair market value for the purposes of this Warrant. The cost of the appraiser
selected by each party shall be borne by that party and the cost of the third
appraiser shall be borne one-half (1/2) by each party. Appraisers selected under
this Section 1(c) must be unaffiliated with the Holder and the Company and must
have reasonable professional qualifications for the appraisal.
(d) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time, and in no event later than
thirty (30) days thereafter, and, unless this Warrant has been fully exercised
or has expired, a new Warrant representing the Shares with respect to which this
Warrant shall not have been exercised shall also be issued to the Holder within
such time.
(e) Condition of Exercise Unless exercised pursuant to an effective
registration statement under the Act which includes the Shares so exercised, it
shall be a condition to any exercise of this Warrant that the Company shall have
received, at the time of such exercise, a representation in writing from the
Holder in the form attached hereto as Exhibit A-1, that the Shares being issued
upon exercise are being acquired for investment and not with a view to any sale
or distribution thereof, other than pursuant to an exemption.
2. Adjustment of Exercise Price and Number of Shares. The number and kind
of Shares purchasable upon the exercise of this Warrant and the Exercise Price
therefor shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
3
<PAGE>
(a) Stock Splits, Dividends and Combinations. In the event that the
Company shall at any time subdivide the outstanding shares of Series C Preferred
Stock, or shall issue a stock dividend on its outstanding shares of Series C
Preferred Stock, the number of Shares issuable upon exercise of this Warrant
immediately prior to such subdivision or to the issuance of such stock dividend
shall be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the Company shall at any time
combine the outstanding shares of Series C Preferred Stock, the number of Shares
issuable upon exercise of this Warrant immediately prior to such combination
shall be proportionately decreased, and the Exercise Price shall be
proportionately increased, effective at the close of business on the date of
such subdivision, stock dividend or combination, as the case may be.
(b) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Series C Preferred Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Section 3), provision shall be made so that the Holder of this
Warrant will thereafter be entitled to receive upon exercise of this Warrant the
number of shares of stock or other securities or property of the Company to
which a Holder of Series C Preferred Stock would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 3 with respect to the rights of
the Holder of this Warrant after the recapitalization to the end that the
provisions of this Section 3 (including adjustment of the Exercise Price then in
effect and the number of shares issuable upon exercise of this Warrant) shall be
applicable after that event in as nearly an equivalent manner as may be
practicable.
(c) Merger. If at any time there shall be a capital reorganization
of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation, whether or not the Company is the surviving corporation, other than
as provided for in Section 9 herein (a "Merger Event"), then as a part of such
Merger Event, lawful provision shall be made so that the Holder shall thereafter
be entitled to receive, upon exercise of the Warrant, the number of shares of
stock or other securities of the successor corporation resulting from such
Merger Event, equivalent in value to that which would have been issuable if
Holder had exercised this Warrant immediately prior to the Merger Event. In any
such case, appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interest of the Holder after the Merger
Event to the end that the provisions of this Warrant (including adjustments of
the Exercise Price and number of Shares purchasable) shall be applicable to the
greatest extent possible.
(d) Notices. Upon any adjustment of the Exercise Price and any
increase or decrease in the number of Shares purchasable upon the exercise of
this Warrant in accordance with Section 2 hereof, then, and in each such case,
the Company, within thirty (30) days thereafter, shall give written notice
thereof to the Holder at the address of such Holder as shown on the books of the
Company which notice shall state the Exercise Price as adjusted and, if
applicable, the increased or decreased number of Shares purchasable upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation of each. Any written notice by the Company required or
4
<PAGE>
permitted hereunder shall be given by hand delivery or first class mail, postage
prepaid, addressed to the Holder at the address shown on the books of the
Company for the Holder.
3. Restrictions on Transfer.
(a) Holder agrees not to make any disposition of all or any portion
of the Shares or the Warrant unless and until:
(i) There is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(ii) Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and the transferee has
agreed in writing to be bound by this Section 4. If reasonably requested by the
Company, Holder shall furnish the Company with an opinion of counsel (which may
be inside or outside counsel), reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the 1933 Act.
Notwithstanding the foregoing, the restrictions imposed upon the transferability
of any of the Shares or rights to acquire Shares do not apply to transfers from
the beneficial owner of any of the aforementioned securities to its nominee or
from such nominee to its beneficial owners, and shall terminate as to any
particular Shares when a letter shall have been issued to Holder at its request
by the staff of the Securities and Exchange Commission or a ruling shall have
been issued to the Holder at its request by such Commission stating that no
action shall be recommended by such staff or taken by such Commission, as the
case may be, if such security is transferred without registration under the 1933
Act in accordance with the conditions set forth in such letter or ruling and
such letter or ruling specifies that no subsequent restrictions on transfer are
required. It is agreed that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
(b) Notwithstanding the above, the Shares shall also be subject to
all restrictions on transfer set forth in the Series C Transaction Documents,
including without limitation a one hundred eighty (180) day market-standoff
period upon the Company's initial public offering, in accordance with Section 12
of the Amended and Restated Shareholder Rights Agreement.
4. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
5. Representations and Warranties by the Company.
(a) Due Authority. The execution and delivery by the Company of this
Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire Shares, have been duly
authorized by all necessary corporate action on the part
5
<PAGE>
of the Company. This Warrant is consistent with the Company's Amended and
Restated Articles of Incorporation, and does not contravene any law or
governmental rule, regulation or order applicable to it, and does not and will
not contravene any provision of, or constitute a default under, any indenture,
mortgage, contract or other instrument to which it is a party or by which it is
bound. This Warrant constitutes a legal, valid and binding agreement of the
Company, enforceable in accordance with its respective terms.
(b) Stock Fully Paid: Reservation of Shares. All of the Shares
issuable upon the exercise of the rights represented by this Warrant will, upon
issuance and receipt of the Exercise Price therefor, be fully paid and
nonassessable, and free from all preemptive rights, rights of first refusal or
first offer (except as set forth in the Series C transaction documents), taxes,
liens and charges with respect to the issuance thereof. During the period within
which the rights represented by this Warrant may be exercised, the Company shall
at all times have authorized and reserved for issuance sufficient shares of its
Series C Preferred Stock and Common Stock to provide for the exercise of the
rights represented by this Warrant. The Company has made available to the Holder
true, correct and complete copies of its Amended and Restated Articles of
Incorporation ("Charter") and Bylaws, as amended. The issuance of certificates
for shares of Shares upon exercise of the Warrant shall be made without charge
to the Holder for any issuance tax in respect thereof, or other cost incurred by
the Company in connection with such exercise and the related issuance of shares
of Shares.
(c) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant, except for the filing of notices pursuant to
Regulation D under the 1933 Act and any filing required by applicable state
securities law, which filings shall be made by the time required thereby.
(d) Holder's Additional Rights. The Series C Preferred Stock
issuable upon exercise of this Warrant shall have anti-dilution rights,
registration rights, and information rights substantially identical to those
rights set forth in the Series C Transaction Documents.
(e) Other Commitments to Register Securities. Except as set forth in
the Series C Transaction Documents, the Company is not, pursuant to the terms of
any other agreement currently in existence, under any obligation to register
under the Act any of its presently outstanding securities or any of its
securities which may hereafter be issued.
(f) Compliance with Rule 144. At the written request of the Holder,
who proposes to sell Shares issuable upon the exercise of the Warrant in
compliance with Rule 144 promulgated by the Securities and Exchange Commission,
the Company shall furnish to the Holder, within thirty (30) days after receipt
of such request, a written statement confirming the Company's compliance with
the filing requirements of the Securities and Exchange Commission as set forth
in such Rule, as such Rule may be amended from time to time.
6
<PAGE>
6. Representations and Warranties by the Holder. Holder represents and
warrants to the Company as follows:
(a) This Warrant is being acquired for Holder's own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Act, and the
Holder has no present intention of selling or engaging in any public
distribution thereof except pursuant to a registration or exemption.
(b) Holder understands that the Warrant and the Shares have not been
registered under the Act by reason of their issuance in a transaction exempt
from the registration and prospectus delivery requirements of the Act pursuant
to Section 4(2) thereof, and that they must be held by Holder indefinitely, and
that Holder must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Act or is exempted from such registration. The Holder further understands that
the Shares have not been qualified under the California Securities Law of 1968
(the "CALIFORNIA LAW") by reason of their issuance in a transaction exempt from
the qualification requirements of the California Law pursuant to Section
25102(f) thereof, which exemption depends upon, among other things, the bona
fide nature of the Holder's investment intent expressed above.
(c) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
purchase of this Warrant and the Shares purchasable pursuant to the terms of
this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the purchase of
the Shares pursuant to the terms of this Warrant.
7. Rights of Shareholders. Nothing contained herein shall confer upon
Holder any of the rights of a Shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to Shareholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value, consolidation, merger, conveyance, or otherwise) or
to receive notice of meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised and the Shares purchasable
upon the exercise hereof shall have become deliverable, as provided herein.
8. Expiration of Warrant.
This Warrant shall expire and shall no longer be exercisable as of
the earlier of:
(a) 5:00 p.m., California local time, on March 25, 2008;
(b) five (5) years after the Company's initial public offering
under the Securities Act of 1933, as amended;
7
<PAGE>
(c) a consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger with another corporation in
which the Company's Shareholders immediately preceding such consolidation or
merger own at least fifty percent (50%) of the voting securities of the
successor entity following such consolidation or merger and which does not
result in any reclassification of the Shares issuable upon exercise of this
Warrant); or
(d) a sale of all or substantially all of the assets of the Company.
9. Antidilution Provision. Except with respect to those antidilution
provisions contained herein, the Shares issuable upon execution of this Warrant
shall be granted the same antidilution protection as the other holders of the
Shares. The Company shall promptly provide the Holder with any restatement,
amendment, modification or waiver of the Charter that materially affects the
rights, preferences and privileges of the Shares. The Company shall provide
Holder with prior written notice of any issuance of its stock or other equity
security that will implicate such antidilution provisions to occur after the
effective date of this Warrant, which notice shall include (a) the price at
which stock or security is to be sold, (b) the number of shares to be issued,
and (c) such other information as necessary for Holder to determine if a
dilutive event has occurred.
10. Miscellaneous.
(a) This Warrant is being delivered in the State of California and
shall be construed and enforced in accordance with and governed by the laws of
such State. The parties expressly stipulate that any litigation under this
Warrant shall be brought in the State courts of the Counties of Santa Clara or
San Francisco, California and in the United States District Court for the
Northern District of California. The parties agree to submit to the jurisdiction
and venue of those courts.
(b) In the event of any default hereunder, the non-defaulting party
may proceed to protect and enforce its rights either by suit in equity and/or by
action at law, including but not limited to an action for damages as a result of
any such default, and/or an action for specific performance for any default
where Holder will not have an adequate remedy at law and where damages will not
be readily ascertainable.
(c) The representations, warranties, covenants and conditions of the
respective parties contained herein or made pursuant to this Warrant shall
survive the execution and delivery of this Warrant.
(d) In any litigation, arbitration or court proceeding between the
Company and the Holder relating hereto, the prevailing party shall be entitled
to attorney's fees and expenses and all costs of proceedings incurred in
enforcing this Warrant Agreement.
(e) The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
8
<PAGE>
(f) The terms of this Warrant shall be binding upon and shall inure
to the benefit of any successors in interest or assignees of the Company or the
Holder. This Warrant and all rights hereunder are not assignable or transferable
by Company or Holder, except for such permitted transfers to successors in
interest and in accordance with Section 4 herein, and any attempt to assign or
transfer the rights hereunder shall be void and of no further effect.
(g) This Warrant and the other documents delivered pursuant hereto,
including without limitation the Series C Transaction Documents, constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof.
(h) The Company shall not, by amendment of its Amended and Restated
Articles of Incorporation, or through any other means, directly or indirectly,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant and shall at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
impairment.
(i) Upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, upon surrender and cancellation of such Warrant, the Company at
its expense will execute and deliver to the holder of record, in lieu thereof, a
new Warrant of like date and tenor.
(j) The Company, upon execution of this Warrant, shall provide the
Holder with certified resolutions with respect to the representations,
warranties and covenants set forth in the Section labeled "Representations and
Warranties by the Company." The Company shall also supply such other documents
as the Holder may from time to time reasonably request.
(k) This Warrant and any provision hereof may be amended, waived or
terminated only by an instrument in writing signed by the Company and Holder.
9
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Issued this 25th day of March, 1998.
SILICON VALLEY INTERNET PARTNERS
By: /s/Signature Illegible
Title:
Acknowledged and Accepted:
COMDISCO, INC.
By: /s/Signature Illegible
----------------------
JAMES P. LABE, PRESIDENT
Title: COMDISCO VENTURES DIVISION
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
TO: SILICON VALLEY INTERNET PARTNERS
Attention: President
1. In lieu of exercising the attached Warrant for cash or check, the
undersigned hereby elects to effect the net issuance provision of Section 1(b)
of this Warrant and receive_____________ (leave blank if you choose Alternative
No. 2 below) shares of Series C Preferred Stock pursuant to the terms of this
Warrant. (Initial here if the undersigned elects this alternative). __________.
2. The undersigned hereby elects to purchase __________ (leave blank if
you choose alternative No. 1 above) shares of Series C Preferred Stock of
Silicon Valley Internet Partners pursuant to the terms of this Warrant, and
tenders herewith payment of the purchase price of such shares in full.
3. Please issue a certificate or certificates representing said shares of
Series C Preferred Stock in the name of the undersigned or in such other name as
is specified below:
---------------------------------------------------
(Name)
---------------------------------------------------
---------------------------------------------------
(Address)
4. The undersigned hereby represents and warrants that the aforesaid
shares of Series C Preferred Stock are being acquired for the account of the
undersigned for investment and not with a view to, or for resale, in connection
with the distribution thereof, and that the undersigned has no present intention
of distributing or reselling such shares except pursuant to a registration or
exemption, and all representations and warranties of the undersigned set forth
in Section 7 of the attached Warrant are true and correct as of the date hereof.
In support thereof, the undersigned agrees to execute an Investment
Representation Statement in a form substantially similar to the form attached to
the Warrant as Exhibit A-1.
-----------------------------------------
(Signature and Date)
Title :
---------------------------------
<PAGE>
EXHIBIT A-1
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : COMDISCO, INC.
COMPANY : SILICON VALLEY INTERNET PARTNERS
SECURITY : SERIES C PREFERRED STOCK ISSUED UPON EXERCISE OF
THE SERIES C PREFERRED STOCK PURCHASE WARRANT
ISSUED ON MARCH 25, 1998
AMOUNT : _________ SHARES
DATE : _______________, ______
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial condition,
and have acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act") except
pursuant to a registration of exemption.
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be imprinted with
a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or
<PAGE>
indirectly, from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than one year, and in some circumstances two years, after the
party has held, within the meaning of Rule 144, the securities to be sold; and,
in the case of an affiliate, or of a non-affiliate who has held the securities
less than two years, and in some circumstances three years, (3) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934) and the amount of securities being sold during
any three month period not exceeding the specified limitations stated therein,
if applicable.
(e) I agree, in connection with the Company's initial underwritten public
offering of the Company's securities, (1) not to sell, make short sale of, loan,
grant any options for the purchase of, or otherwise dispose of any shares of
Common Stock of the Company held by me (other than those shares included in the
registration) without the prior written consent of the Company or the
underwriters managing such initial underwritten public offering of the Company's
securities for one hundred eighty (180) days from the effective date of such
registration, and (2) I further agree to execute any agreement reflecting (1)
above as may be requested by the underwriters at the time of the public
offering; provided however that the officers and directors of the Company who
own the stock of the Company also agree to such restrictions.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
----------------------------------
(Signature)
By:
------------------------------
Title:
---------------------------
Date: , 19
--------------------- --
2
<PAGE>
SILICON VALLEY INTERNET PARTNERS
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
DATED AS OF MARCH 25, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND CONSTRUCTION 1
1.1 Definitions 1
1.2 Accounting Terms 9
2. LOAN AND TERMS OF PAYMENT 9
2.1 Revolving Facility Advances 9
2.2 Letters of Credit Subfacility 10
2.3 Letter of Credit Reimbursement; Reserve 10
2.4 Equipment Advances 11
2.5 Overadvances 12
2.6 Interest Rates, Payments, and Calculations 12
2.7 Crediting Payments 12
2.8 Fees 13
2.9 Additional Costs 13
2.10 Term 14
3. CONDITIONS OF LOANS 14
3.1 Conditions Precedent to Initial Advance 14
3.2 Conditions Precedent to all Advances 15
4. CREATION OF SECURITY INTEREST 15
4.1 Grant of Security Interest 15
4.2 Delivery of Additional Documentation Required 15
4.3 Right to Inspect 16
5. REPRESENTATIONS AND WARRANTIES 16
5.1 Due Organization and Qualification 16
5.2 Due Authorization; No Conflict 16
5.3 No Prior Encumbrances 16
5.4 Bona Fide Eligible Accounts 16
5.5 Merchantable Inventory 16
5.6 Name; Locations; Location of Chief Executive Office 16
5.7 Litigation 16
5.8 No Material Adverse Change in Financial Statements 17
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5.9 Solvency 17
5.10 Regulatory Compliance 17
5.11 Environmental Condition 17
5.12 Taxes 18
5.13 Subsidiaries 18
5.14 Government Consents 18
5.15 Full Disclosure 18
6. AFFIRMATIVE COVENANTS 18
6.1 Good Standing 18
6.2 Government Compliance 18
6.3 Financial Statements, Reports, Certificates 18
6.4 Inventory; Returns 19
6.5 Taxes 19
6.6 Insurance 20
6.7 Principal Depository 20
6.8 Quick Ratio; Minimum Cash 20
6.9 Debt-Net Worth Ratio 20
6.10 Maximum Quarterly Losses 20
6.11 Registration of Intellectual Property Rights 21
6.12 Use Of Proceeds 21
6.13 Further Assurances 21
7. NEGATIVE COVENANTS 21
7.1 Dispositions 21
7.2 Change in Business 21
7.3 Mergers or Acquisitions 22
7.4 Indebtedness 22
7.5 Advances to Employees or Shareholders 22
7.6 Encumbrances 22
7.7 Distributions 22
7.8 Investments 22
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7.9 Transactions with Affiliates 23
7.10 Subordinated Debt 23
7.11 Inventory and Equipment 23
7.12 Compliance 23
8. EVENTS OF DEFAULT 23
8.1 Payment Default 23
8.2 Covenant Default 23
8.3 Material Adverse Change 24
8.4 Attachment 24
8.5 Insolvency 24
8.6 Other Agreements 24
8.7 Subordinated Debt 25
8.8 Judgments 25
8.9 Misrepresentations 25
9. BANK'S RIGHTS AND REMEDIES 25
9.1 Rights and Remedies 25
9.2 Power of Attorney 26
9.3 Accounts Collection 27
9.4 Bank Expenses 27
9.5 Bank's Liability for Collateral 27
9.6 Remedies Cumulative 27
9.7 Demand; Protest 27
10. NOTICES 27
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER 28
12. GENERAL PROVISIONS 28
12.1 Successors and Assigns 28
12.2 Indemnification 29
12.3 Time of Essence 29
12.4 Severability of Provisions 29
12.5 Amendments in Writing, Integration 29
iii
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12.6 Counterparts 29
12.7 Survival 29
12.8 Confidentiality 29
iv
<PAGE>
This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the "AGREEMENT") is
entered into as of March 25, 1998, by and between VENTURE BANKING GROUP (f/k/a
Venture Lending), a division of CUPERTINO NATIONAL BANK ("BANK") and SILICON
VALLEY INTERNET PARTNERS ("BORROWER"). This Agreement amends and restates in its
entirety the Loan and Security Agreement by and between the Bank and the
Borrower dated as of September 19, 1996, as amended February 19, May 7, June 6
and July 25, 1997 (the "PREVIOUS AGREEMENT").
RECITALS
Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"ACCOUNTS" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower.
"ADVANCE" or "ADVANCES" means an Advance made pursuant to SECTION
2.1 or SECTION 2.4 hereof.
"AFFILIATE" means, with respect to any Person, any Person that owns
or controls directly or indirectly such Person, any Person that controls or is
controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors, and Partners.
"BANK EXPENSES" means all reasonable costs or expenses (including
reasonable attorneys' fees and expenses) incurred in connection with the
preparation, negotiation, administration, and enforcement of the Loan Documents;
and Bank's reasonable attorneys' fees and expenses incurred in amending,
enforcing or defending the Loan Documents, whether or not suit is brought.
"BORROWER'S BOOKS" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or
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financial condition; and all computer programs, or tape files, and the equipment
containing such information.
"BORROWING BASE" has the meaning set forth in SECTION 2.1 hereof.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the California Uniform Commercial Code.
"COLLATERAL" means the property, described on EXHIBIT A attached
hereto.
"COMMITTED EQUIPMENT LINE" means One Million Two Hundred and Fifty
Thousand Dollars ($1,250,000).
"COMMITTED LETTER OF CREDIT SUBFACILITY" means Two Million Dollars
($2,000,000).
"COMMITTED REVOLVING LINE" means Five Million Dollars ($5,000,000).
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct
or indirect liability, contingent or otherwise, of that Person with respect to
(i) any indebtedness, lease, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit issued
for the account of that Person; and (iii) all obligations arising under any
interest rate, currency or commodity swap agreement, interest rate cap
agreement, interest rate collar agreement, or other agreement or arrangement
designated to protect a Person against fluctuation in interest rates, currency
exchange rates or commodity prices; provided, however, that the term "Contingent
Obligation" shall not include endorsements for collection or deposit in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that such
amount shall not in any event exceed the maximum amount of the obligations under
the guarantee or other support arrangement.
"CURRENT ASSETS" means, as of any applicable date, all amounts that
should, in accordance with GAAP, be included as current assets on the
consolidated balance sheet of Borrower and its Subsidiaries as at such date.
"CURRENT LIABILITIES" means, as of any applicable date, all amounts
that should, in accordance with GAAP, be included as current liabilities on the
consolidated balance sheet of Borrower and its Subsidiaries, as at such date,
plus, to the extent not already included therein, all outstanding Advances made
under this Agreement, including all Indebtedness that is payable
2
<PAGE>
upon demand or within one year from the date of determination thereof unless
such Indebtedness is renewable or extendable at the option of Borrower or any
Subsidiary to a date more than one year from the date of determination, but
excluding Subordinated Debt and Eligible Deferred Revenue.
"DAILY BALANCE" means the amount of the respective Obligations owed
at the end of a given day.
"ELIGIBLE ACCOUNTS" means those Accounts that arise in the ordinary
course of Borrower's business that comply with all of Borrower's representations
and warranties to Bank set forth in SECTION 5.4; provided, that standards of
eligibility may be fixed and revised from time to time by Bank in Bank's
reasonable judgment and upon notification thereof to Borrower in accordance with
the provisions hereof. Unless otherwise agreed to by Bank, Eligible Accounts
shall not include the following:
(A) Accounts that the account debtor has failed to pay within
ninety (90) days of invoice date, or, with respect to Fortune 500 Accounts, one
hundred and twenty (120) days;
(B) Accounts with respect to an account debtor, fifty percent
(50%) of whose Accounts the account debtor has failed to pay within ninety (90)
days of invoice date, or, with respect to Fortune 500 Accounts, where the
account debtor has failed to pay within one hundred and twenty (120) days;
(C) Accounts with respect to which the account debtor is an
officer, employee, or agent of Borrower;
(D) Accounts with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, bill and hold,
or retentions or other terms by reason of which the payment by the account
debtor is conditional;
(E) Accounts with respect to which the account debtor is an
Affiliate of Borrower;
(F) Accounts with respect to which the account debtor does not
have its principal place of business in the United States;
(G) Accounts with respect to which the account debtor is the
United States or any department, agency, or instrumentality of the United
States;
(H) Accounts with respect to which Borrower is liable to the
account debtor for goods sold or services rendered by the account debtor to
Borrower, but only to the extent of any amounts owing to the account debtor
against amounts owed to Borrower;
(I) Accounts with respect to an account debtor, including
Subsidiaries and Affiliates, whose total obligations to Borrower exceed thirty
percent (30%) of all Accounts,
3
<PAGE>
to the extent such obligations exceed the aforementioned percentage, except as
approved in writing by Bank;
(J) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Bank believes, in
its sole discretion, that there may be a basis for dispute (but only to the
extent of the amount subject to such dispute or claim), or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business;
(K) Accounts with respect to which the account debtor is a
distributor, unless pre-approved by Bank in writing; and
(L) Accounts the collection of which Bank reasonably
determines to be doubtful.
"ELIGIBLE DEFERRED REVENUE" means non-refundable subscription
agreements for publication services (not including software sales or licensing).
"EQUIPMENT" means all present and future machinery, equipment,
tenant leasehold improvements, furniture, fixtures, vehicles, tools, parts,
attachments and Software in which Borrower has any interest.
"EQUIPMENT LINE" means the facility under which Borrower may request
Bank to issue cash advances, as specified in SECTION 2.4 hereof.
"EQUIPMENT LINE MATURITY DATE" means September 18, 2001.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
"FORTUNE 500 ACCOUNTS" means Accounts where the account debtor is a
"FORTUNE 500" company, as specified by Fortune Magazine, and identified as such
in writing by Borrower to Bank prior to or concurrent with Borrower's submission
of its Borrowing Base Certificate (as described in Section 6.3 hereof) for the
month in which such identification is applicable. A list of such Accounts
identified as Fortune 500 Accounts as of the Closing Date is attached hereto as
EXHIBIT G.
"GAAP" means generally accepted accounting principles as in effect
from time to time.
"INDEBTEDNESS" means (a) all indebtedness for borrowed money or the
deferred purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations and (d) all Contingent
Obligations to the extent not otherwise included under the definition of
Indebtedness.
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<PAGE>
"INSOLVENCY PROCEEDING" means any proceeding commenced by or against
any person or entity under any provision of the United States Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"INVENTORY" means all present and future inventory in which Borrower
has any interest, including merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products intended for sale
or lease or to be furnished under a contract of service, of every kind and
description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of Borrower, including such inventory as is
temporarily out of its custody or possession or in transit and including any
returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any documents
of title representing any of the above.
"INVESTMENT" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
"LETTER OF CREDIT SUBFACILITY" means the facility under which
Borrower may request Bank to issue Letters of Credit, as specified in SECTION
2.2 hereof.
"LIEN" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"LOAN DOCUMENTS" means, collectively, this Agreement, any note or
notes executed by Borrower in connection with this Agreement, and any other
agreement entered into between Borrower and Bank in connection with this
Agreement, all as amended or extended from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business operations or condition (financial or otherwise) of Borrower and its
Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"NEGOTIABLE COLLATERAL" means all of Borrower's present and future
letters of credit of which it is a beneficiary, notes, drafts, instruments,
securities, documents of title, and chattel paper.
"OBLIGATIONS" means all debt, principal, interest, Bank Expenses and
other amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any
5
<PAGE>
debt, liability, or obligation owing from Borrower to others that Bank may have
obtained by assignment or otherwise.
"PARTNERS" shall mean Persons with which Borrower organizes as
co-owners to carry on a business for profit.
"PAYMENT DATE" means the eighteenth (18th) calendar day of each
month.
"PERIODIC PAYMENTS" means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to Bank
pursuant to the terms and provisions of any instrument, or agreement now or
hereafter in existence between Borrower and Bank.
"PERMITTED INDEBTEDNESS" means:
(A) Indebtedness of Borrower in favor of Bank arising under
this Agreement or any other Loan Document;
(B) Indebtedness existing on the Closing Date and disclosed in
the Schedule;
(C) Subordinated Debt;
(D) Indebtedness to trade creditors incurred in the ordinary
course of business;
(E) Indebtedness secured by SECTIONS (A) AND (C) of Permitted
Liens, provided that the principal amount thereof is not increased and the terms
thereof are not modified to impose more burdensome terms upon Borrower;
(F) Other Indebtedness of Borrower, not exceeding One Hundred
Thousand Dollars ($100,000) in the aggregate at any one time; and
(G) Extensions, refinancing, modifications, amendments and
restatements of any Permitted Indebtedness, provided that the principal amount
thereof is not increased or the terms thereof are not modified to impose more
burdensome terms upon Borrower.
"PERMITTED INVESTMENT" means:
(A) Investments existing on the Closing Date disclosed in the
Schedule;
(B) (i) Marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., and (iii)
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<PAGE>
certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by Bank;
(C) Extensions of credit in the nature of accounts receivable,
notes receivable, prepaid royalties and other extensions of credit, arising from
the sale or lease of goods or services to customers or suppliers (not including
Affiliates or Subsidiaries) in the ordinary course of business;
(D) Investments constituting acquisitions permitted under
SECTION 7.3;
(E) Deposit accounts of Borrower otherwise permitted
hereunder;
(F) Other Investments aggregating not in excess of Two Hundred
and Fifty Thousand Dollars ($250,000) at any time;
(G) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or suppliers and
in settlement of delinquent obligations of, and other disputes with, customers
or suppliers arising in the ordinary course of business; and
(H) Investments in joint ventures consisting of licensing of
technology or the providing of technical support entered into in the ordinary
course of Borrower's business not interfering in any material respect with the
business of Borrower.
"PERMITTED LIENS" means the following:
(A) Any Liens existing on the Closing Date and disclosed in
the Schedule or arising under this Agreement or the other Loan Documents;
(B) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings, provided the same have no priority over any of Bank's
security interests;
(C) Liens on Equipment leased by Borrower or any Subsidiary
pursuant to an operating or capital lease in the ordinary course of business
(including proceeds thereof and accessions thereto) incurred solely for the
purpose of financing the lease of such Equipment (including Liens pursuant to
leases permitted pursuant to SECTION 7.1 hereof and Liens referred to in UCC
financing statements regarding leases permitted by the Agreement), provided that
the lien is confined solely to the property so acquired and improvements
thereon, and the proceed of such equipment;
(D) licenses and sublicenses granted to others in the ordinary
course of Borrower's business not interfering in any material respect with the
business of Borrower;
(E) Liens arising from judgments, decrees or attachments to
the extent and only so long as such judgment, decree or attachment has not
caused or resulted in an Event of Default;
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<PAGE>
(F) Easements, reservations, rights-of-way, restrictions,
minor defects or irregularities in title or other similar charges or
encumbrances affecting real property in a manner not materially or adversely
affecting the value or use of such property or resulting in a Material Adverse
Effect;
(G) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payments of customs or duties in connection with
the importation or exportation of goods;
(H) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of setoff or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution;
(I) Liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by Liens of the type described in
clauses (a), (c) and (d) and above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase;
(J) Liens arising by operation of law or regulation and
securing obligations not yet due; and
(K) Liens securing Subordinated Debt and other Liens
subordinated to the Lien of Bank on terms and conditions reasonably satisfactory
to Bank.
"PERSON" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"PRIME RATE" means the variable rate of interest, per annum, most
recently published in the Money Rate Section of the West Coast Edition of The
Wall Street Journal, as the "prime rate," whether or not such rate is the lowest
rate available from Bank. When a range of rates is published, the higher of the
rates shall apply at the time the rate is changed.
"QUICK ASSETS" means, at any date as of which the amount thereof
shall be determined, the consolidated cash, cash-equivalents, accounts
receivable and investments, with maturities not to exceed 90 days, of Borrower
determined in accordance with GAAP.
"RESPONSIBLE OFFICER" means each of the Chief Executive Officer, the
Chief Financial Officer and the Controller of Borrower.
"REVOLVING FACILITY" means the facility under which Borrower may
request Bank to issue cash advances, as specified in SECTION 2.1 hereof.
"REVOLVING FACILITY MATURITY DATE" means March 24, 1999.
"SCHEDULE" means the schedule of exceptions attached hereto, if any.
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"SOFTWARE" means the programs, routines, and symbolic languages that
control the operations of computer hardware.
"SUBORDINATED DEBT" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Bank on terms reasonably
acceptable to Bank (and identified as being such by Borrower and Bank).
"SUBSIDIARY" means any corporation or partnership in which (i) any
general partnership interest or (ii) more than 50% of the stock of which by the
terms thereof ordinary voting power to elect the Board of Directors, managers or
trustees of the entity shall, at the time as of which any determination is being
made, be owned by Borrower, either directly or through an Affiliate.
"TANGIBLE NET WORTH" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrower and its
Subsidiaries minus, without duplication, (i) the sum of any amounts attributable
to (a) goodwill, (b) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) all reserves not already
deducted from assets, and (ii) Total Liabilities; plus, deferred revenue,
including without limitation, Eligible Deferred Revenue.
"TOTAL LIABILITIES" means at any date as of which the amount thereof
shall be determined, all obligations that should, in accordance with GAAP, be
classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt and Eligible Deferred Revenue.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP and all calculations made
hereunder shall be made in accordance with GAAP. When used herein, the terms
"financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVING FACILITY ADVANCES. Subject to and upon the terms and
conditions of this Agreement, Bank agrees to make Advances to Borrower under
this Revolving Facility in an aggregate amount not to exceed the lesser of (i)
the Committed Revolving Line or (ii) the Borrowing Base, minus in each case the
amount of all outstanding Letters of Credit (including drawn but unreimbursed
Letters of Credit). For purposes of this Agreement, "BORROWING BASE" shall mean
an amount equal to (i) eighty percent (80%) of Eligible Accounts (the "ACCOUNTS
SUBLIMIT") plus (ii) One Million Dollars ($1,000,000) (the "OVERADVANCE
SUBLIMIT"). Subject to the terms and conditions of this Agreement, amounts
borrowed pursuant to this SECTION 2.1 may be repaid and reborrowed at any time
during the term of this Agreement.
Whenever Borrower desires an Advance, Borrower will notify Bank by
facsimile transmission or telephone no later than 3:00 p.m. California time, on
the Business Day that the Advance is to be made. Each such telephone
notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of EXHIBIT B hereto. Bank is authorized to
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make Advances under this Agreement, based upon instructions received from a
Responsible Officer, or without instructions if in Bank's discretion such
Advances are necessary, to meet Obligations which have become due and remain
unpaid. Bank shall be entitled to rely on any telephonic notice given by a
person who Bank reasonably believes to be a Responsible Officer, and Borrower
shall indemnify and hold Bank harmless for any damages or loss suffered by Bank
as a result of such reliance. Bank will credit the amount of Advances made under
this SECTION 2.1 to Borrower's deposit account.
The Revolving Facility shall terminate on the Revolving Facility Maturity
Date, at which time all Advances under this SECTION 2.1 and other amounts due
under this Agreement shall be immediately due and payable.
2.2 LETTERS OF CREDIT SUBFACILITY.
(A) Subject to the terms and conditions of this Agreement,
Bank agrees to issue or cause to be issued letters of credit ("LETTERS OF
CREDIT") for the account of Borrower in an aggregate face amount not to exceed
(i) the lesser of the Committed Revolving Line or the Borrowing Base minus (ii)
the then outstanding principal amount of Advances under the Revolving Facility
provided that the face amount of outstanding Letters of Credit (including drawn
but unreimbursed Letters of Credit) shall not in any case exceed the Committed
Letter of Credit Subfacility). Each such Letter of Credit shall have an
expiration date no later than sixty (60) days after the Revolving Facility
Maturity Date provided that Borrower's letter of credit reimbursement obligation
to Bank and any other Obligations shall be secured by cash or cash equivalents
on terms acceptable to Bank at any time after the Revolving Facility Maturity
Date if such Revolving Facility Maturity Date is not extended by Bank. All such
letters of credit shall be, in form and substance, acceptable to Bank in its
sole discretion and shall be subject to the terms and conditions of Bank's form
of application and letter of credit agreement
(B) All amounts actually paid by Bank in respect to a Letter
of Credit may, at the option of the Bank, when paid, constitute an Advance under
the Revolving Facility, otherwise Borrower shall immediately reimburse Bank for
such amounts.
(C) The Obligation of Borrower to reimburse Bank for drawings
made under Letters of Credit shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
and such Letters of Credit under all circumstances whatsoever. Borrower shall
indemnify, defend and hold Bank harmless from any loss, cost, expense or
liability, including, without limitation, reasonable attorneys' fees, arising
out of or in connection with any letters of credit.
2.3 LETTER OF CREDIT REIMBURSEMENT; RESERVE.
(A) Borrower may request that Bank issue a letter of credit
payable in a currency other than United States Dollars. If a demand for payment
is made under any such letter of credit, Bank shall treat such demand as an
advance to Borrower of the equivalent of the amount thereof (plus cable charges)
in United States currency at the then prevailing rate of exchange in San
Francisco, California, for sales of that other currency for cable transfer to
the country of which it is the currency.
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(B) Upon the issuance of any letter of credit payable in a
currency other than United States Dollars, Bank shall create a reserve under the
Revolving Facility for letters of credit against fluctuations in currency
exchange rates, in an amount equal to twenty percent (20%) of the face amount of
such letter of credit. The amount of such reserve may be amended by Bank from
time to time to account for fluctuations in the exchange rate. The availability
of funds under the Revolving Facility shall be reduced by the amount of such
reserve for so long as such letter of credit remains outstanding.
2.4 EQUIPMENT ADVANCES. Borrower may from time to time until
September 18, 1998 (the "EQUIPMENT AVAILABILITY END DATE") request Advances
(each an "EQUIPMENT ADVANCE" and collectively, the "EQUIPMENT ADVANCES") from
Bank in an aggregate amount not to exceed the Committed Equipment Line. To
evidence each Equipment Advance, Borrower shall deliver to Bank, at the time of
each Equipment Advance request, an invoice for the Equipment to be purchased.
Total Equipment Advances for the purchase of Software shall not exceed Two
Hundred and Fifty Thousand Dollars ($250,000). The Equipment Advances shall be
used only to purchase Equipment and shall not exceed One Hundred Percent (100%)
of the invoice amount of such Equipment approved from time to time by Bank,
excluding taxes, shipping, warranty charges, freight discounts and installation
expense.
It is understood by Bank and Borrower that, as of the Closing Date,
Equipment Advances of One Million Forty-Five Thousand eight Hundred Seventy
Eight Dollars and Sixty Cents ($1,045,878.60) have been made under the Committed
Equipment Line. Of such amount, Equipment Advances of Three Hundred Twenty-Five
Thousand Four Hundred Dollars and Eighty-Seven Cents ($325,400.87) was
outstanding on September 18, 1997 and is being paid to Bank by Borrower in
thirty-six equal monthly installments of principal plus accrued interest (at the
rate specified in Section 2.6(a)) which began on October 18, 1997. With respect
to the remainder of such Equipment Advances made prior to the Closing Date and
any additional Equipment Advances made after the Closing Date, interest shall
accrue from the date of each Equipment Advance at the rate specified in SECTION
2.6(A), and shall be payable monthly for each month through the Equipment
Availability End Date and such Equipment Advances that are outstanding on the
Equipment Availability End Date will be payable in thirty-six (36) equal monthly
installments of principal plus accrued interest, beginning on the Payment Date
of the month following such date.
When Borrower desires to obtain an Equipment Advance, Borrower shall
notify Bank (which notice shall be irrevocable) by facsimile transmission to be
received no later than 3:00 p.m. Pacific time one (1) Business Day before the
day on which the Equipment Advance is to be made. Such notice shall be
substantially in the form of EXHIBIT B. The notice shall be signed by a
Responsible Officer and include a copy of the invoice for the Equipment and/or
Software to be financed.
2.5 OVERADVANCES. If, the amount of Obligations owed by Borrower to
Bank pursuant to SECTION 2.1 of this Agreement is greater than the lesser of (i)
the Committed Revolving Line or (ii) the Borrowing Base, Borrower shall
immediately pay to Bank, in cash, the amount of such excess.
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2.6 INTEREST RATES, PAYMENTS, AND CALCULATIONS.
(A) INTEREST RATE. Except as set forth in SECTION 2.6(B), (i)
any Advances under SECTION 2.1 subject to the Accounts Sublimit shall bear
interest, on the average Daily Balance, at a rate equal to one-half (0.50)
percentage point above the Prime Rate or (ii) any Advances under SECTION 2.1
subject to the Overadvance Sublimit shall bear interest, on the average Daily
Balance, at a rate equal to one (1.0) percentage point above the Prime Rate;
whether an Advance is considered under (i) or (ii) above shall be based on the
most recent Borrowing Base Certificate provided to Bank by Borrower. Except as
set forth in SECTION 2.6(B), any Equipment Advances under SECTION 2.4 shall bear
interest, on the average Daily Balance, at a rate equal to one (1.0) percentage
point above the Prime Rate.
(B) DEFAULT RATE. All Obligations shall bear interest, from
and during the occurrence of an Event of Default (and written notice thereof,
except that no notice shall be required for an Event of Default under SECTION
8.5), at a rate equal to five (5) percentage points above the interest rate
applicable immediately prior to the occurrence of the Event of Default.
(C) PAYMENTS. Interest hereunder shall be due and payable on
the Payment Date of each month during the term hereof. Bank shall, at its
option, charge such interest, all Bank Expenses, and all Periodic Payments
against any of Borrower's deposit accounts or against the Committed Revolving
Line, in which case those amounts shall thereafter accrue interest at the rate
then applicable hereunder. Borrower hereby authorizes Bank to debit any of its
deposit accounts with Bank for payment of any amounts owing by Borrower to Bank.
Bank will notify Borrower of all debits which Bank makes against Borrower's
accounts. Any such debits shall in no way be deemed a set-off. Any interest not
paid when due shall be compounded by becoming a part of the Obligations, and
such interest shall thereafter accrue interest at the rate then applicable
hereunder.
(D) COMPUTATION. In the event the Prime Rate is changed from
time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m. on the day the Prime Rate is
changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.
2.7 CREDITING PAYMENTS. Prior to the occurrence of an Event of
Default, Bank shall credit a wire transfer of funds, check or other item of
payment to such deposit account or Obligation as Borrower specifies. Unless
otherwise agreed in writing by Bank, after the occurrence and during the
continuance of an Event of Default, the receipt by Bank of any wire transfer of
funds, check, or other item of payment shall be immediately applied to
conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment. Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 12:00 noon California time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day. Whenever any payment to Bank under the Loan
Documents would otherwise be due (except by reason of acceleration) on a date
that is not a Business Day, such
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payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension.
2.8 FEES. Borrower shall pay to Bank the following:
(A) FACILITY FEE. Loan. A Facility Fee equal to $12,500 shall
be payable, fully earned and nonrefundable at or prior to the closing Date. All
fees paid to Bank by Borrower prior to the Closing Date pursuant to the Previous
Agreement are fully earned and non-refundable.
(B) FINANCIAL EXAMINATION AND APPRAISAL FEES. Bank's customary
fees and out-of-pocket expenses for Bank's audits of Borrower's Accounts, and
for each appraisal of Collateral and financial analysis and examination of
Borrower performed from time to time by Bank or its agents; and
(C) BANK EXPENSES. Upon the date hereof, all Bank Expenses
incurred through the Closing Date, including reasonable attorneys' fees and
expenses, and, after the date hereof, all Bank Expenses, including reasonable
attorneys' fees and expenses, as and when they become due.
2.9 ADDITIONAL COSTS. In case any change in any law, regulation,
treaty or official directive or the interpretation or application thereof by any
court or any governmental authority charged with the administration thereof or
the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law), in each case
after the date of this Agreement:
(A) Subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);
(B) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Bank; or
(C) imposes upon Bank any other condition with respect to its
performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost, reduction or expense is incurred or determined, upon
presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.
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2.10 TERM. This Agreement shall become effective on the Closing Date
and, subject to SECTION 12.7, shall continue in full force and effect for a term
ending on the later of the Revolving Facility Maturity Date or the Equipment
Line Maturity Date. Notwithstanding the foregoing, Bank shall have the right to
terminate its obligation to make Advances under this Agreement immediately and
without notice upon the occurrence and during the continuance of an Event of
Default. Notwithstanding termination, Bank's Lien on the Collateral shall remain
in effect for so long as any Obligations are outstanding.
3. CONDITIONS OF LOANS.
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of Bank
to make the initial Advance is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, the following:
(A) this Agreement;
(B) a certificate of the Secretary of Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Agreement;
(C) certificate of the Secretary of the States of California
and Massachusetts as to Borrower's standing and qualification to do business;
(D) certified copies of Borrower's articles of incorporation
and bylaws;
(E) a promissory note for the Committed Revolving Line in
substantially the form of EXHIBIT E hereto;
(F) a promissory note for the Committed Equipment Line in
substantially the form of EXHIBIT F hereto;
(G) a collateral assignment, patent mortgage and security
agreement was executed and delivered under the Previous Agreement;
(H) a letter pursuant to the collateral assignment, patent
mortgage and security agreement;
(I) financing statements (Forms UCC-1, 2 or 3 for CA, MA, TX
and NY) as determined necessary or desirable by Bank;
(J) warrant to purchase stock;
(K) the insurance certificate was executed and delivered under
the Previous Agreement;
(L) payment of the fees and Bank Expenses then due specified
in SECTION 2.8 hereof; and
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(M) such other documents, and completion of such other
matters, as Bank may reasonably deem necessary or appropriate.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of Bank to
make each Advance, including the initial Advance, is further subject to the
following conditions:
(A) timely receipt by Bank of the Payment/Advance Form as
provided in SECTION 2.1 or 2.4; and
(B) the representations and warranties contained in SECTION 5
shall be true and correct in all material respects on and as of the date of such
Payment/Advance Form and on the effective date of each Advance as though made at
and as of each such date, and no Event of Default shall have occurred and be
continuing, or would result from such Advance. The making of each Advance shall
be deemed to be a representation and warranty by Borrower on the date of such
Advance as to the accuracy of the facts referred to in this SECTION 3.2(B).
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to Bank
a continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof.
Notwithstanding any other provision in this SECTION 4.1, the term "Collateral"
shall not include any rights which are now or hereafter held by Borrower as
licensee to the extent, and solely to the extent, that such rights are not
assignable or capable of being encumbered as a matter of law or under written
terms of the license or other agreement applicable thereto (but solely to the
extent that any such restriction shall be enforceable against Borrower under
applicable law) and, provided further, that upon the elimination of any such
disability, such grant of a security interest shall automatically extend to such
rights.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower shall
from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, all financing statements and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfected Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
4.3 RIGHT TO INSPECT. Bank (through any of its officers, employees,
or agents) shall have the right, upon reasonable prior notice, from time to time
during Borrower's usual business hours, to inspect Borrower's Books and to make
copies thereof and to check, test, and appraise the Collateral in order to
verify Borrower's financial condition or the amount, condition of, or any other
matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as
follows:
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5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each Subsidiary
is a corporation duly existing and in good standing under the laws of its state
of incorporation and qualified and licensed to do business in, and is in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be so qualified, except for states as to which any
failure to so qualify would not have a Material Adverse Effect.
5.2 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.
5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible title
to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 BONA FIDE ELIGIBLE ACCOUNTS. The Eligible Accounts are bona fide
existing obligations. The property giving rise to such Eligible Accounts has
been delivered to the account debtor or to the account debtor's agent for
immediate shipment to and unconditional acceptance by the account debtor.
Borrower has not received notice of actual or imminent Insolvency Proceeding of
any account debtor that is included in any Borrowing Base Certificate as an
Eligible Account.
5.5 MERCHANTABLE INVENTORY. All Inventory is in all material
respects of good and marketable quality, free from all material defects.
5.6 NAME; LOCATIONS; LOCATION OF CHIEF EXECUTIVE OFFICE. Except as
disclosed in the Schedule, Borrower has not done business under any name other
than as set forth on the signature page hereof or at any location other than
that specified in SECTION 10 hereof. The chief executive office of Borrower is
located at the address indicated in SECTION 10 hereof.
5.7 LITIGATION. Except as set forth in the Schedule, there are no
actions or proceedings pending by or against Borrower or any Subsidiary before
any court or administrative agency in which an adverse decision could have a
Material Adverse Effect or a material adverse effect on Borrower's interest or
Bank's security interest in the Collateral. Borrower does not have knowledge of
any such pending or threatened actions or proceedings.
5.8 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated financial statements related to Borrower and any Subsidiary that
have been delivered by Borrower to Bank fairly present in all material respects
Borrower's consolidated financial condition as of the date thereof and
Borrower's consolidated results of operations for the period then ended. There
has not been a material adverse change in the consolidated financial condition
of Borrower since the date of the most recent of such financial statements
submitted to Bank.
5.9 SOLVENCY. Borrower is solvent and able to pay its debts
(including trade debts) as they mature.
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5.10 REGULATORY COMPLIANCE. Borrower and each Subsidiary has met the
minimum funding requirements of ERISA with respect to any employee benefit plans
subject to ERISA. No event has occurred resulting from Borrower's failure to
comply with ERISA that is reasonably likely to result in Borrower's incurring
any liability that could have a Material Adverse Effect. Borrower is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940. Borrower is not engaged
principally, or as one of the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System). Borrower has complied with all the provisions of the Federal
Fair Labor Standards Act. Borrower has not violated any statutes, laws,
ordinances or rules applicable to it, violation of which could have a Material
Adverse Effect.
5.11 ENVIRONMENTAL CONDITION. None of Borrower's or any Subsidiary's
properties or assets has ever been used by Borrower or any Subsidiary. or, to
the best of Borrower's knowledge, by previous owners or operators, in the
disposal of, or to produce, store, handle, treat, release, or transport, any
hazardous waste or hazardous substance other than in accordance with applicable
law; to the best of Borrower's knowledge, none of Borrower's properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a hazardous waste or hazardous substance
disposal site, or a candidate for closure pursuant to any environmental
protection statute; no lien arising under any environmental protection statute
has attached to any revenues or to any real or personal property owned by
Borrower or any Subsidiary; and neither Borrower nor any Subsidiary has received
a summons, citation, notice, or directive from the Environmental Protection
Agency or any other federal, state or other governmental agency concerning any
action or omission by Borrower or any Subsidiary resulting in the releasing, or
otherwise disposing of hazardous waste or hazardous substances into the
environment.
5.12 TAXES. Borrower and each Subsidiary has filed or caused to be
filed all tax returns required to be filed, and has paid, or has made adequate
provision for the payment of, all taxes reflected therein.
5.13 SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
5.14 GOVERNMENT CONSENTS. Borrower and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrower's business as currently conducted,
except where any failure to do so would not reasonably be expected to have a
Material Adverse Effect.
5.15 FULL DISCLOSURE. No representation, warranty or other statement
made by Borrower in any certificate or written statement furnished to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading (it being recognized by Bank that the projections and
forecasts provided by Borrower are not to be viewed as facts and that actual
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results during the period or periods covered by any such projections and
forecasts may differ from the projected or forecasted results).
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
an Advance hereunder, Borrower shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect. Borrower shall
maintain, and shall cause each of its Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.
6.2 GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. Borrower shall comply, and shall
cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of Bank's Lien on the Collateral.
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower shall
deliver to Bank: (a) as soon as available, but in any event within forty-five
(45) days after the end of each month, a company prepared consolidated balance
sheet and income statement covering Borrower's consolidated operations during
such period, certified by a Responsible Officer; (b) as soon as available, but
in any event within one hundred twenty (120) days after the end of Borrower's
fiscal year, audited consolidated financial statements of Borrower prepared in
accordance with GAAP, consistently applied, together with an opinion on such
financial statements of an independent certified public accounting firm
reasonably acceptable to Bank; (c) within five (5) days upon becoming available,
copies of all statements, reports and notices sent or made available generally
by Borrower to its security holders or to any holders of Subordinated Debt and
all reports on Form 10-K and 10-Q filed with the Securities and Exchange
Commission; (d) promptly upon receipt of notice thereof, a report of any legal
actions pending or threatened against Borrower or any Subsidiary that could
result in damages or costs to Borrower or any Subsidiary of Two Hundred Thousand
Dollars ($200,000) or more; and (e) such budgets, sales projections, operating
plans or other financial information as Bank may reasonably request from time to
time.
Within forty-five (45) days after the last day of each month, Borrower
shall deliver to Bank a Borrowing Base Certificate signed by a Responsible
Officer in substantially the form of EXHIBIT C hereto and aged listings of
accounts receivable and accounts payable.
Notwithstanding any provision of this Agreement to the contrary, Borrower
shall not be required to disclose any document, information or other matter that
the disclosure of which to Bank, or their designated representative, is then
prohibited by law.
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Borrower shall deliver to Bank a Compliance Certificate signed by a
Responsible Officer in substantially the form of EXHIBIT D hereto within
forty-five (45) days after the end of each month.
Bank shall have a right from time to time hereafter to audit Borrower's
Accounts at Borrower's expense, provided that such audits will be conducted no
more often than every twelve (12) months unless an Event of Default has occurred
and is continuing.
The statements, reports and certificates required under the SECTION 6.3
include reports for the reporting periods ending prior to the Closing Date which
were required under the Previous Agreement and had not been delivered to Bank as
of the Closing Date.
6.4 INVENTORY; RETURNS. Borrower shall keep all Inventory in good
and marketable condition, free from all material defects. Returns and
allowances, if any, as between Borrower and its account debtors shall be on the
same basis and in accordance with the usual customary practices of Borrower, as
they exist at the time of the execution and delivery of this Agreement. Borrower
shall promptly notify Bank of all returns and recoveries and of all disputes and
claims, where the return, recovery, dispute or claim involves more than Fifty
Thousand Dollars ($50,000).
6.5 TAXES. Borrower shall make, and shall cause each Subsidiary to
make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Bank, on demand, appropriate certificates attesting to
the payment or deposit thereof; and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.
6.6 INSURANCE.
(A) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's.
(B) All such policies of insurance shall be in such form, with
such companies, and in such amounts as reasonably satisfactory, to Bank. All
such policies of property insurance shall contain a lender's loss payable
endorsement, in a form satisfactory to Bank, showing Bank as an additional loss
payee thereof and all liability insurance policies shall show the Bank as an
additional insured, and shall specify that the insurer must give at least twenty
(20) days notice to Bank before canceling its policy for any reason. Upon Bank's
request,
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Borrower shall deliver to Bank certified copies of such policies of insurance
and evidence of the payments of all premiums therefor. All proceeds payable
under any such policy, shall, at the option of Bank, be payable to Bank to be
applied on account of the Obligations.
6.7 PRINCIPAL DEPOSITORY. Borrower shall maintain its principal
depository, operating and investment accounts with Bank.
6.8 QUICK RATIO; MINIMUM CASH. Beginning with the report for the
period ending February 28, 1998, Borrower shall maintain, as of the last day of
each fiscal month, either (i) a ratio of Quick Assets to Current Liabilities of
at least 1.25 to 1.00 or (ii) cash and cash equivalents of not less than One
Million Five Hundred Thousand Dollars ($1,500,000).
6.9 DEBT-NET WORTH RATIO. Beginning with the report for the period
ending February 28, 1998, Borrower shall maintain, as of the last day of each
fiscal month, a ratio of Total Liabilities to Tangible Net Worth of not more
than 2.0 to 1.0. From and after September 30, 1998, Borrower shall maintain, as
of the last day of each fiscal month, a ratio of Total Liabilities to Tangible
Net Worth of not more than 5.0 to 1.0.
6.10 MAXIMUM QUARTERLY LOSSES. Borrower may suffer a loss not to
exceed Two Million Dollars ($2,000,000) for the fiscal quarter ending March 31,
1998; One Million Five Hundred Thousand Dollars ($1,500,000) for the fiscal
quarter ending June 30, 1998; One Million Two Hundred Thousand Dollars
($1,200,000) for the fiscal quarter ending September 30, 1998; and Five Hundred
Thousand Dollars ($500,000) for the fiscal quarter ending December 31, 1998.
6.11 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS. Borrower shall
register or cause to be registered (to the extent not already registered) with
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, those intellectual property rights listed on Exhibits A,
B and C to the Collateral Assignment, Patent Mortgage and Security Agreement by
Borrower in favor of Bank dated as of September 19, 1996 within fifteen (15)
days of the date of this Agreement. Borrower shall register or cause to be
registered with the United States Patent and Trademark Office or the United
States Copyright Office, as applicable, those additional intellectual property
rights developed or acquired by Borrower from time to time in connection with
any product prior to the sale or licensing of such product to any third party,
including without limitation revisions or additions to the intellectual property
rights listed on such Exhibits A, B and C. Borrower shall execute and deliver
such additional instruments and documents from time to time as Bank shall
reasonably request to perfect Bank's security interest in such additional
intellectual property rights.
6.12 USE OF PROCEEDS. Borrower shall use the Advances under the
Committed Revolving Line for working capital and for operating expenses only.
Borrower shall use the Advances under the Committed Equipment Line for the
acquisition of Equipment only.
6.13 FURTHER ASSURANCES. At any time and from time to time Borrower
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Bank to effect the purposes of this Agreement.
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7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until payment in full of the outstanding Obligations or
for so long as Bank may have any commitment to make any Advances, Borrower will
not do any of the following:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose
of (collectively, a "TRANSFER"), or permit any of its Subsidiaries to Transfer,
all or any part of its business or property, other than: (i) Transfers of
Inventory in the ordinary course of business; (ii) Transfers of non-exclusive
licenses or exclusive licenses and similar arrangements for the use of the
property of Borrower or its Subsidiaries within certain geographic regions;
(iii) Transfers of worn-out or obsolete Equipment; (iv) Transfers which
constitute liquidations of Investments permitted under SECTIONS 7.3 OR 7.8; or
(v) Transfers of software and copyrights not fundamental to the operation of
Borrower's business.
7.2 CHANGE IN BUSINESS. Engage in any business, or permit any of its
Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto), or suffer a material change in Borrower's ownership.
Borrower will not, without thirty (30) days prior written notification to Bank,
relocate its chief executive office.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any of
its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person unless the
Borrower, or its Subsidiary, is the surviving entity following such merger or
acquisition and if such merger, consolidation or acquisition does not result in
a Material Adverse Effect or the purchase price of such acquisition does not
exceed in the aggregate $500,000 plus net proceeds received by Borrower after
the date hereof from the sale of its equity securities or Subordinated Debt.
7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable with
respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 ADVANCES TO EMPLOYEES OR SHAREHOLDERS. Advance by way of
payment, credit or other manner, any unearned funds to employees or shareholders
of Borrower, except for advances consisting of (i) travel advances, employee
relocation loans and other employee loans and advances in the ordinary course of
Borrower's business, (ii) advance payments to sales personnel based on future
anticipated commissions or sales estimates, and (iii) loans to employees,
officers or directors relating to the purchase of equity securities of Borrower
or its Subsidiaries pursuant to employee stock purchase plans or agreements
approved by Borrower's Board of Directors, and the aggregate of all advances
outstanding at any one time under clauses (i), (ii), or (iii) above shall not
exceed the following amounts: for the period from the date hereof until June 30,
1998, $600,000 and thereafter, $900,000.
7.6 ENCUMBRANCES. Create, incur, assume or suffer to exist any Lien
with respect to any of its property, or assign or otherwise convey any right to
receive income,
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including the sale of any Accounts, or permit any of its Subsidiaries so to do,
except for Permitted Liens.
7.7 DISTRIBUTIONS. Pay any cash dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock; provided, for so long as no Event of Default has occurred
and is continuing, Company may redeem or repurchase its securities in an amount
in any fiscal year not exceeding $50,000 in connection with any agreement
between Company and any officer, director or employee of Company wherein Company
is obligated or entitled to repurchase from such officer, director or employee
shares of equity securities of Company upon such person's termination of
employment or services or other event.
7.8 INVESTMENTS. Directly or indirectly acquire or own, or make any
Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.9 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into
or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person.
7.10 SUBORDINATED DEBT. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.
7.11 INVENTORY AND EQUIPMENT. Store the Inventory with a bailee,
warehouseman, or similar party unless Bank has received a pledge of the
warehouse receipt covering such Inventory. Except for Inventory sold in the
ordinary course of business and except for such other locations as Bank may
approve in writing, Borrower shall keep the Inventory and Equipment and
Borrower's Books relating thereto only at the locations previously discussed on
the Schedule or set forth in SECTION 10 hereof or on the Schedule and such other
locations of which Borrower gives Bank prior written notice and as to which
Borrower signs and files a financing statement where needed to perfect Bank's
security interest.
7.12 COMPLIANCE. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance for such purpose. Fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the
Federal Fair Labor Standards Act or violate any law or regulation, which
violation could have a Material Adverse Effect or a material adverse effect on
the Collateral or the priority of Bank's Lien on the Collateral, or permit any
of its Subsidiaries to do any of the foregoing.
8. EVENTS OF DEFAULT.
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Any one or more of the following events shall constitute an Event of
Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT. If Borrower fails to pay the principal of, or
any interest on, any Advances when due and payable; or fails to pay any portion
of any other Obligations not constituting such principal or interest, including
without limitation Bank Expenses, within thirty (30) days of receipt by Borrower
of an invoice for such other Obligations;
8.2 COVENANT DEFAULT. If Borrower fails to perform any obligation
under SECTION 6.6, 6.7, 6.8, 6.9, 6.10 OR 6.11 or violates any of the covenants
contained in ARTICLE 7 of this Agreement, or fails or neglects to perform, keep,
or observe any other material term, provision, condition, covenant, or agreement
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Bank and as to any default
under such other term, provision, condition, covenant or agreement that can be
cured, has failed to cure such default within ten (10) days after Borrower
receives notice thereof or any officer of Borrower becomes aware thereof;
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty, (30) days) to attempt to cure such default,
and within such reasonable time period the failure to have cured such default
shall not be deemed an Event of Default (provided that no Advances will be
required to be made during such cure period);
8.3 MATERIAL ADVERSE CHANGE. If there occurs a material adverse
change in Borrower's business or financial condition, or if there is a material
impairment of the ability of Borrower to repay any portion of the Obligations or
a material impairment of the value or priority of Bank's security interests in
the Collateral;
8.4 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within twenty (20) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within twenty (20)
days after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advances will be required to be made during such cure period);
8.5 INSOLVENCY. If Borrower becomes insolvent, or if an Insolvency
Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced
against
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Borrower and is not dismissed or stayed within twenty (20) days (provided that
no Advances will be made prior to the dismissal of such Insolvency Proceeding);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of One Hundred Thousand
Dollars ($100,000) or that could have a Material Adverse Effect;
8.7 SUBORDINATED DEBT. If Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Bank;
8.8 JUDGMENTS. If a judgment or judgments for the payment of money
in an amount, individually or in the aggregate, of at least One Hundred Thousand
Dollars ($100,000) shall be rendered against Borrower and shall remain
unsatisfied and unseated for a period of ten (10) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment); or
8.9 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document.
9. BANK'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
(A) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
SECTION 8.5 all Obligations shall become immediately due and payable without any
action by Bank);
(B) Cease advancing money or extending credit to or for the
benefit of Borrower under this Agreement or under any other agreement between
Borrower and Bank;
(C) Settle or adjust disputes and claims directly with account
debtors for amounts, upon terms and in whatever order that Bank reasonably
considers advisable;
(D) Without notice to or demand upon Borrower, make such
payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Bank's determination appears to be prior or superior to
its security interest and to pay all
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expenses incurred in connection therewith. With respect to any of Borrower's
owned premises, Borrower hereby grants Bank a license to enter into possession
of such premises and to occupy the same, without charge, for up to one hundred
twenty (120) days in order to exercise any of Bank's rights or remedies provided
herein, at law, in equity, or otherwise;
(E) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;
(F) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a license or other right, solely
pursuant to the provisions of this SECTION 9.1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this SECTION 9.1, Borrower's
rights under all licenses and all franchise agreements shall inure to Bank's
benefit;
(G) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;
(H) Bank may credit bid and purchase at any public sale;
(I) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower; and
(J) Demand that Borrower (i) deposit cash with Bank in an
amount equal to the amount of any Letters of Credit remaining undrawn, as
collateral security for the repayment of any future drawings under such Letters
of Credit, and Borrower shall forthwith deposit and pay such amounts, and (ii)
pay in advance all Letter of Credit fees scheduled to be paid or payable over
the remaining term of the Letters of Credit.
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and during
the continuance of an Event of Default, Borrower hereby irrevocably appoints
Bank (and any of Bank's designated officers, or employees) as Borrower's true
and lawful attorney to: (a) send requests for verification of Accounts or notify
account debtors of Bank's security interest in the Accounts; (b) endorse
Borrower's name on any checks or other forms of payment or security that may
come into Bank's possession; (c) sign Borrower's name on any invoice or bill of
lading relating to any Account, drafts against account debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to account
debtors; (d) make, settle, and adjust all claims under and decisions with
respect to Borrower's policies of insurance; and (e) settle and adjust disputes
and claims respecting the accounts directly with account debtors, for amounts
and upon terms which Bank determines to be reasonable; provided Bank may
exercise such power of attorney to sign the name of Borrower on any of the
documents described in SECTION 4.2
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regardless of whether an Event of Default has occurred. The appointment of Bank
as Borrower's attorney in fact, and each and every one of Bank's rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations have been fully repaid and performed and Bank's obligation to
provide advances hereunder is terminated.
9.3 ACCOUNTS COLLECTION. At any time from the date of this
Agreement, Bank may notify, any Person owing funds to Borrower of Bank's
security interest in such funds and verify the amount of such Account. Borrower
shall collect all amounts owing to Borrower for Bank, receive in trust all
payments as Bank's trustee, and immediately deliver such payments to Bank in
their original form as received from the account debtor, with proper
endorsements for deposit.
9.4 BANK EXPENSES. If Borrower fails to pay any amounts or furnish
any required proof of payment due to third persons or entities, as required
under the terms of this Agreement, then Bank may do any or all of the following:
(a) make payment of the same or any part thereof; (b) set up such reserves under
the Revolving Facility, as Bank deems necessary to protect Bank from the
exposure created by such failure; or (c) obtain and maintain insurance policies
of the type discussed in SECTION 6.6 of this Agreement, and take any action with
respect to such policies as Bank deems prudent. Any amounts so paid or deposited
by Bank shall constitute Bank Expenses, shall be immediately due and payable,
and shall bear interest at the then applicable rate hereinabove provided, and
shall be secured by the Collateral. Any payments made by Bank shall not
constitute an agreement by Bank to make similar payments in the future or a
waiver by Bank of any Event of Default under this Agreement.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies with
reasonable banking practices, Bank shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.
9.7 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
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10. NOTICES. Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrower or to Bank, as the case may be, at
its addresses set forth below:
If to Borrower: Silicon Valley Internet Partners
89 South Street
Boston, MA 02111
Attn: Chief Financial Officer
FAX: (617) 292-0259
If to Bank: Venture Banking Group
Three Palo Alto Square, Suite 150
Palo Alto, California 94306
Attn: Jennifer Schellenberg
FAX: (650) 843-6969
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
California, without regard to principles of conflicts of law. Each of Borrower
and Bank hereby submits to the exclusive jurisdiction of the state and Federal
courts located in the County of Santa Clara, State of California. BORROWER AND
BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF
THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS.
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by Borrower without Bank's prior written consent, which consent
may be granted or withheld in Bank's sole discretion. Bank shall have the right
without the consent of or notice to Borrower to sell, transfer,
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negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits hereunder.
12.2 INDEMNIFICATION. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance of
all obligations set forth in this Agreement.
12.4 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION. This Agreement cannot be
amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.
12.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
12.7 SURVIVAL. All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in SECTION 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.
12.8 CONFIDENTIALITY. In handling any confidential information Bank
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this Agreement
except that disclosure of such information may be made (i) to the subsidiaries
or affiliates of Bank in connection with their present or prospective business
relations with Borrower, (ii) to prospective transferees or purchasers of any
interest in the Loans, provided that they have entered into a comparable
confidentiality agreement in favor of Borrower and have delivered a copy to
Borrower, (iii) as required by law, regulations, rule or order, subpoena,
judicial order or similar order, (iv) as may be required in connection with the
examination, audit or similar investigation of Bank and (v) as Bank may
determine in connection with the enforcement of any remedies hereunder.
Confidential information hereunder shall not include information that either:
(a) is in the public domain or in the knowledge or possession of
28
<PAGE>
Bank when disclosed to Bank, or becomes part of the public domain after
disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank by a
third party, provided Bank does not have actual knowledge that such third party
is prohibited from disclosing such information. For purposes of this SECTION
12.8, the Bank and Borrower agree that all information that Bank receives from
the Borrower relating to the business, operations or condition of Borrower or
its subsidiaries shall be treated as "confidential information" unless otherwise
indicated by Borrower or herein.
29
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SILICON VALLEY INTERNET PARTNERS
By: /s/ Signature Illegible
Title: Vice President & CFO
VENTURE BANKING GROUP, a division of
Cupertino National Bank
By: /s/ Signature Illegible
Title: AVP
30
<PAGE>
A
The Collateral shall consist of all right, title and interest of Borrower
in and to the following:
(A) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(B) All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(C) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(D) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Borrower, whether or not earned by performance,
and any and all credit insurance, guaranties, and other security therefor, as
well as all merchandise returned to or reclaimed by Borrower and Borrower's
Books relating to any of the foregoing;
(E) All documents, cash, deposit accounts, securities,
investment property, letters of credit, certificates of deposit, instruments and
chattel paper now owned or hereafter acquired and Borrower's Books relating to
the foregoing;
(F) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(G) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof.
1
<PAGE>
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM DEADLINE FOR
SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: VENTURE BANKING GROUP DATE:_____________________________
FAX#: (650) 843-6969 TIME:_____________________________
FROM: SILICON VALLEY INTERNET PARTNERS
CLIENT NAME (BORROWER)
REQUESTED BY:___________________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:___________________________________________________________
PHONE NUMBER:___________________________________________________________________
FROM ACCOUNT #________ TO ACCOUNT # ________________________________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
PRINCIPAL INCREASE (ADVANCE) $_______________________
PRINCIPAL PAYMENT (ONLY) $_______________________
INTEREST PAYMENT (ONLY) $_______________________
PRINCIPAL AND INTEREST (PAYMENT) $_______________________
OTHER INSTRUCTIONS:__________________________________________
All representations and warranties of Borrower stated in the Amended and
Restated Loan and Security Agreement are true, correct and complete in all
material respect as of the date of the telephone request for an Advance
confirmed by this Borrowing Certificate; provided, however, that those
representations and warranties expressly referring to another date shall be
true, correct and complete in all material respects as of such date.
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
- ------------------------------ ------------------------------
Authorized Requester Phone #
- ------------------------------ ------------------------------
Received By (Bank) Phone #
Authorized Signature (Bank)
2
<PAGE>
EXHIBIT C
BORROWING BASE CERTIFICATE
Borrower: Silicon Valley Internet Partners Lender: Venture Banking Group
Commitment Amount: $5,000,000
ACCOUNTS RECEIVABLE
1. Accounts Receivable Book Value as of____ $__________
2. Additions (please explain on reverse) $__________
3. TOTAL ACCOUNTS RECEIVABLE $__________
ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
4. Amounts over 90 days due* $__________
5. Balance of 50% over 90 day accounts* $__________
6. Concentration Limits $__________
7. Foreign Accounts $__________
8. Governmental Accounts $__________
9. Contra Accounts $__________
10. Promotion or Demo Accounts $__________
11. Intercompany/Employee Accounts $__________
12. Other (please explain on reverse) $__________
13. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $__________
14. Eligible Accounts (#3 minus #13) $__________
15. LOAN VALUE OF ACCOUNTS (80% of #14) $__________
BALANCES
16. Maximum Loan Amount ($5,000,000) $__________
17. Total Funds Available (Lesser of #15 or #16) $__________
18. a. Present Balance of Accounts Sublimit $__________
b. Present Balance of Overadvance Sublimit $__________
(Maximum $1,000,000)
c. Present Balance owing on Line of Credit $__________
(#18a plus #18b)
19. a. Present Balance on Letter of Credit Subfacility $__________
(Accounts Sublimit)
b. Present Balance on Letter of Credit Subfacility $__________
(Overadvance Sublimit up to $1,000,000)
c. Present Balance on Letter of Credit Subfacility $__________
(Maximum $2,000,000)
20. RESERVE POSITION (#17 minus #18c and #19c) $__________
*and pre-approved Fortune 500 Accounts over 120 days
The undersigned represents and warrants that the foregoing is true, complete and
correct, and that the information reflected in this Borrowing Base Certificate
complies with the representations and warranties set forth in the Amended and
Restated Loan and Security Agreement between the undersigned and Venture Banking
Group.
COMMENTS:
Silicon Valley Internet Partners
By:
-------------------------
Authorized Signer
BANK USE ONLY
Rec'd By:
----------------------
Authorized Signer
Date:
----------------
Verified:
----------------------
Authorized Signer
3
<PAGE>
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: Venture Banking Group
FROM: Silicon Valley Internet Partners
The undersigned authorized officer of Silicon Valley Internet Partners
hereby certifies that in accordance with the terms and conditions of the Amended
and Restated Loan and Security Agreement between Borrower and Bank (the
"Agreement"), (i) Borrower is in complete compliance for the period ending
____________________ with all required covenants except as noted below and (ii)
all representations and warranties of Borrower stated in the Agreement are true
and correct in all material respects as of the date hereof. Attached herewith
are the required documents supporting the above certification. The Officer
further certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) and are consistently applied from one period to the
next as explained in an accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
- ------------------ -------- --------
<S> <C> <C> <C>
Monthly financial statements Monthly within 45 days Yes No
Annual (CPA Audited) FYE within 120 days Yes No
Borrowing Base, A/R & A/P Agings Monthly within 45 days (when applicable) Yes No
A/R Audit Annual Yes No
<CAPTION>
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
- ------------------ -------- ------ --------
<S> <C> <C> <C> <C>
Maintain on a Monthly Basis:
Minimum Quick Ratio* 1.25:1.00 ______:1.0 Yes No
Maximum Debt/Tangible Net Worth** 2.0:1.0 ______:1.0 Yes No
Maintain on a Quarterly Basis
Maximum Permitted Loss
03/31/98 $2,000,000 __________ Yes No
06/30/98 $1,500,000 __________ Yes No
09/30/98 $1,200,000 __________ Yes No
12/31/98 $ 500,000 __________ Yes No
</TABLE>
*or maintain minimum cash and cash equivalents of $1,500,000
**From and after September 30, 1998: 5:00:1.00.
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
- --------------------------
SIGNATURE
- -------------------------
TITLE
- ----------------------------
DATE
BANK USE ONLY
Received by:
----------------
AUTHORIZED
SIGNER
Date:
--------------------
Verified:
--------------------
<PAGE>
AUTHORIZED
Date:
-------------------
4
<PAGE>
EXHIBIT E
REVOLVING LINE PROMISSORY NOTE
$5,000,000 Palo Alto, California
March 25, 1998
FOR VALUE RECEIVED, the undersigned, SILICON VALLEY INTERNET PARTNERS, a
California corporation (the "Borrower"), promises to pay to the order of VENTURE
BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK ("Bank"), at such place as
the holder hereof may designate, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Advances made by Bank to
Borrower under SECTION 2.1 of that certain Amended and Restated Loan and
Security Agreement between Borrower and Bank of even date herewith, as amended
from time to time (the "Loan Agreement"), up to a maximum principal amount of
Five Million Dollars ($5,000,000). Borrower shall also pay interest on the
aggregate unpaid principal amount of such Advances at the rates and in
accordance with the terms of the Loan Agreement. The entire principal amount and
all accrued but unpaid interest thereon shall be due and payable on the
Revolving Facility Maturity Date. All capitalized terms used herein but not
defined herein shall have the same meaning as given to them in the Loan
Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and records
each Advance made by Bank under this Note and the amount of each payment or
prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection or in any
suit or action to collect this Note or in any appeal thereof. Borrower waives
presentment, demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, and any and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note, as well
as any applicable statute of limitations. No delay by Bank in exercising any
power or right hereunder shall operate as a waiver of any power or right. Time
is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
This Note amends and restates in its entirety that certain Revolving Line
Promissory Note made by Borrower in favor of Bank dated July 25, 1997.
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by the laws of the State of
California, excluding conflicts of laws principles.
SILICON VALLEY INTERNET PARTNERS
By:
--------------------------
Printed Name:
----------------
Title:
-----------------------
5
<PAGE>
EXHIBIT F
EQUIPMENT LINE PROMISSORY NOTE
$1,250,000. Palo Alto, California
March 25, 1998
FOR VALUE RECEIVED, the undersigned, SILICON VALLEY INTERNET PARTNERS, a
California corporation (the "Borrower"), promises to pay to the order of VENTURE
BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK ("Bank"), at such place as
the holder hereof may designate, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Advances made by Bank to
Borrower under SECTION 2.4 of that certain Amended and Restated Loan and
Security Agreement between Borrower and Bank of even date herewith, as amended
from time to time (the "Loan Agreement"), up to a maximum principal amount of
One Million Two Hundred and Fifty Thousand Dollars ($1,250,000). Borrower shall
pay installments of principal and interest with respect to Equipment Advances in
accordance with SECTIONS 2.4 and 2.6 of the Loan Agreement. All capitalized
terms used herein but not defined herein shall have the same meaning as given to
them in the Loan Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and records
each Advance made by Bank under this Note and the amount of each payment or
prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection or in any
suit or action to collect this Note or in any appeal thereof. Borrower waives
presentment, demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, and any and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note, as well
as any applicable statute of limitations. No delay by Bank in exercising any
power or right hereunder shall operate as a waiver of any power or right. Time
is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
This Note amends and restates in its entirety that certain Equipment Line
Promissory Note made be Borrower in favor of Bank dated September 19, 1996.
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by the laws of the State of
California, excluding conflicts of laws principles.
SILICON VALLEY INTERNET PARTNERS
By:
----------------------------
Title:
-------------------------
6
<PAGE>
EXHIBIT G
FORTUNE 500 ACCOUNTS
MERRILL LYNCH & CO., INC.
BANKAMERICA CORPORATION
AMERICAN EXPRESS COMPANY
J.P. MORGAN & CO. INCORPORATED
WELLS FARGO & COMPANY
THE BANK OF NEW YORK COMPANY
Tandem
Compaq
Deutshche Bank
7
<PAGE>
SCHEDULE
I. Existing Indebtedness (Section 1.1)
II. Existing Investments (Section 1.1)
III. Existing Liens (Section 1.1)
IV. Names and Locations (Section 5.6)
Plus below -(1)
V. Litigation (Section 5.7)
(1) a. 650 Towsend St. San Francisco, CA 94104
b. 625 6th Ave New York, N.Y. 10011
c. 3102 Oak Lawn Ave. Dallas, TX 75219 (expected to move in
5/1/98)
8
<PAGE>
REVOLVING LINE PROMISSORY NOTE
$5,000,000 Palo Alto, California
March 25, 1998
FOR VALUE RECEIVED, the undersigned, SILICON VALLEY INTERNET PARTNERS, a
California corporation (the "Borrower"), promises to pay to the order of VENTURE
BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK ("Bank"), at such place as
the holder hereof may designate, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Advances made by Bank to
Borrower under SECTION 2.1 of that certain Amended and Restated Loan and
Security Agreement between Borrower and Bank of even date herewith, as amended
from time to time (the "Loan Agreement"), up to a maximum principal amount of
Five Million Dollars ($5,000,000). Borrower shall also pay interest on the
aggregate unpaid principal amount of such Advances at the rates and in
accordance with the terms of the Loan Agreement. The entire principal amount and
all accrued but unpaid interest thereon shall be due and payable on the
Revolving Facility Maturity Date. All capitalized terms used herein but not
defined herein shall have the same meaning as given to them in the Loan
Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and records
each Advance made by Bank under this Note and the amount of each payment or
prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection or in any
suit or action to collect this Note or in any appeal thereof. Borrower waives
presentment, demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, and any and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note, as well
as any applicable statute of limitations. No delay by Bank in exercising any
power or right hereunder shall operate as a waiver of any power or right. Time
is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
This Note amends and restates in its entirety that certain Revolving Line
Promissory Note made by Borrower in favor of Bank dated July 25, 1997.
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by the laws of the State of
California, excluding conflicts of laws principles.
SILICON VALLEY INTERNET PARTNERS
By: /s/ Signature Illegible
Printed Name:
Title:
5
<PAGE>
EQUIPMENT LINE PROMISSORY NOTE
$1,250,000. Palo Alto, California
March 25, 1998
FOR VALUE RECEIVED, the undersigned, SILICON VALLEY INTERNET PARTNERS, a
California corporation (the "Borrower"), promises to pay to the order of VENTURE
BANKING GROUP, A DIVISION OF CUPERTINO NATIONAL BANK ("Bank"), at such place as
the holder hereof may designate, in lawful money of the United States of
America, the aggregate unpaid principal amount of all Advances made by Bank to
Borrower under SECTION 2.4 of that certain Amended and Restated Loan and
Security Agreement between Borrower and Bank of even date herewith, as amended
from time to time (the "Loan Agreement"), up to a maximum principal amount of
One Million Two Hundred and Fifty Thousand Dollars ($1,250,000). Borrower shall
pay installments of principal and interest with respect to Equipment Advances in
accordance with SECTIONS 2.4 and 2.6 of the Loan Agreement. All capitalized
terms used herein but not defined herein shall have the same meaning as given to
them in the Loan Agreement.
Bank is hereby authorized by Borrower to endorse on Bank's books and records
each Advance made by Bank under this Note and the amount of each payment or
prepayment of principal of each such Advance received by Bank; it being
understood, however, that failure to make any such endorsement (or any errors in
notation) shall not affect the obligations of Borrower with respect to Advances
made hereunder, and payments of principal by Borrower shall be credited to
Borrower notwithstanding the failure to make a notation (or any errors in
notation) thereof on such books and records.
Borrower promises to pay Bank all costs and expenses of collection of this Note
and to pay all reasonable attorneys' fees incurred in such collection or in any
suit or action to collect this Note or in any appeal thereof. Borrower waives
presentment, demand, protest, notice of protest, notice of dishonor, notice of
nonpayment, and any and all other notices and demands in connection with the
delivery, acceptance, performance, default or enforcement of this Note, as well
as any applicable statute of limitations. No delay by Bank in exercising any
power or right hereunder shall operate as a waiver of any power or right. Time
is of the essence as to all obligations hereunder.
This Note is issued pursuant to the Loan Agreement, which shall govern the
rights and obligations of Borrower with respect to all obligations hereunder.
This Note amends and restates in its entirety that certain Equipment Line
Promissory Note made be Borrower in favor of Bank dated September 19, 1996.
BORROWER AND BANK HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS NOTE, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by the laws of the State of
California, excluding conflicts of laws principles.
SILICON VALLEY INTERNET PARTNERS
By: /s/ Signature Illegible
Title:
6
<PAGE>
DISBURSEMENT REQUEST AND AUTHORIZATION
BORROWER: Silicon Valley Internet Partners BANK: Venture Banking Group
LOAN TYPE. This is a Variable Rate, Revolving Line of Credit of a principal
amount up to $5,000,000 and an Equipment Line of a principal amount up to
$1,250,000.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is for business.
SPECIFIC PURPOSE. The specific purpose of this loan is: working capital needs.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
Revolving Line
Amount paid to Borrower directly: $____________
Undisbursed Funds $____________
Principal $____________
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
Prepaid Finance Charges Paid in Cash: $_________
$12,500 Loan Fee
$________ Accounts Receivables Audit
Other Charges Paid in Cash: $_________
$__________ UCC Search Fees
$__________ UCC Filing Fees
$__________ Patent Filing Fees
$__________ Trademark Filing Fees
$__________ Copyright Filing Fees
$__________ Outside Counsel Fees and Expenses
Total Charges Paid in Cash $___________
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
Borrower's account numbered 3/04/92 the amount of any loan payment. If the funds
in the account are insufficient to cover any payment, Bank shall not be
obligated to advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF MARCH 25, 1998.
BORROWER:
Silicon Valley Internet Partners
Authorized Officer /s/ Signature Illegible
1.
<PAGE>
CORPORATE BORROWING RESOLUTION
BORROWER: Silicon Valley Internet Partners BANK: Venture Banking Group
I, THE UNDERSIGNED, Secretary or Assistant Secretary of Silicon Valley Internet
Partners ("Borrower"), hereby certify that Borrower is a corporation duly
organized and existing under and by virtue of the laws of the State of
California.
I FURTHER CERTIFY that at a meeting of the Directors of Borrower (or by other
duly authorized corporate action in lieu of a meeting), duly called and held, at
which a quorum was present and voting, the following resolutions were adopted.
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of Borrower, whose actual signatures are shown below:
NAMES POSITIONS ACTUAL SIGNATURES
- ----- --------- -----------------
Robert L. Gett President & CEO
Michael Tubridy CFO /s/ Signature Illegible
- --------------------- --------------------- ---------------------
acting for and on behalf of Borrower and as its act and deed be, and they hereby
are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Venture Banking Group
("Bank"), on such terms as may be agreed upon between the officers of
Borrower and Bank, such sum or sums of money as in their judgment should
be borrowed.
EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the loan documents
of Borrower, on Bank's forms, at such rates of interest and on such terms
as may be agreed upon, evidencing the sums of money so borrowed or any
indebtedness of Borrower to Bank, and also to execute and deliver to Bank
one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the loan documents, or
any portion of the loan documents.
GRANT SECURITY. To grant a security interest to Bank in any of Borrower's
assets, which security interest shall secure all of Borrower's obligations
to Bank.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness
payable to or belonging to Borrower or in which Borrower may have an
interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of Borrower with Bank, or to cause
such other disposition of the proceeds derived therefrom as they may deem
advisable.
LETTERS OF CREDIT. To execute letter of credit applications and other
related documents pertaining to Bank's issuance of letters of credit.
1.
<PAGE>
ISSUE WARRANTS. To issue warrants to purchase Borrower's capital stock,
for such class, series and number, and on such terms, as an officer of
Borrower shall deem appropriate.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder,
and in all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents
and agreements, including agreements waiving the right to a trial by jury,
as they may in their discretion deem reasonably necessary or proper in
order to carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of Borrower's agreements or commitments in effect at the
time notice is given.
I FURTHER CERTIFY that the persons named above are principal officers of the
Corporation and occupy the positions set opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that they are in full force and effect and have not been modified or revoked
in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on March 25, 1998 and attest
that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED TO AND ATTESTED BY:
X /s/ Signature Illegible
Secretary or Assistant Secretary
2
<PAGE>
UNIFORM COMMERCIAL CODE -- FINANCING STATEMENT -- FORM UCC-1
REORDER FROM
REGISTRE, INC
514 PIERCE ST.
P.O. BOX 218
ANOKA, MN. 55303
(612) 421-1713
IMPORTANT -- READ INSTRUCTIONS ON BACK BEFORE FILLING OUT FORM
This FINANCING STATEMENT is presented to a Filing No. of Additional
Officer for filing pursuant to the Uniform Commercial Code Sheets Presented 3
3. |_| The Debtor is a transmitting utility
1. Debtor(s) (Last Name First) and Address(es).
SILICON VALLEY INTERNET
PARTNERS
520 MADISON AVE. 35TH FLOOR
NEW YORK, N.Y. 10021
2. Secured Party(ies) Name(s) and Address(es)
CUPERTINO NATIONAL BANK &
TRUST
20230 STEVENS CREEK BLVD.
CUPERTINO, CA 95014
4. For Filing Officer Date, Time, No. Filing Office
5. This Financing Statement covers the following types (or items) of property:
THIS FINANCING STATEMENT COVERS ALL RIGHT, TITLE AND INTEREST OF DEBTOR IN, TO
AND UNDER ALL INVESTMENT PROPERTY AND ALL PROCEEDS THEREOF, AS MORE FULLY
DESCRIBED IN EXHIBIT A ATTACHED HERETO AND INCORPORATED
HEREIN.
*SEE SCHEDULE I ATTACHED HERETO AND INCORPORATED HEREIN.
|_| Products of the Collateral are also covered.
6.Assignee(s) of Secured Party and Address(es)
|_| The described crops are growing or to be grown on.
|_| The described goods are or are to be affixed to
|_| The lumber to be cut or minerals or the like (including oil and gas) is on *
*(Described Real Estate Below)
8. Describe Real Estate Here
|_| This statement is to be indexed in the Real Estate Records:
9. Name of a Record Owner
No & Street Town or City County Section Block Lot
10. This statement is filed without the debtor's signature to perfect a security
interest in collateral (check appropriate box)
|_| under a security agreement signed by debtor authorizing secured party
to file this statement, or
|_| which is proceeds of the original collateral described above in which
a security interest was perfected, or
|_| acquired after a change of name, identity or corporate structure of
the debtor, or |_| as to which the filing has lapsed, or already subject
to a security interest in another jurisdiction:
|_| when the collateral was brought into the state, or |_| when the
debtor's location was changed to this state.
SILICON VALLEY INTERNET PARTNERS CUPERTINO NATIONAL BANK & TRUST
- -------------------------------- -------------------------------
By /s/ Signature Illegible TITLE: CFO By /s/ Signature Illegible TITLE: VP
Signature(s) of Debtor(s) Signature(s) of Secured Party(ies)
(1) FILING OFFICER COPY - NUMERICAL
(5/82) STANDARD FORM - FORM UCC - 1 -- Approved by Secretary of State of New
York
<PAGE>
EXHIBIT A
FINANCING STATEMENT BETWEEN
CUPERTINO NATIONAL BANK & TRUST, AS SECURED PARTY
AND
SILICON VALLEY INTERNET PARTNERS, AS DEBTOR
The Collateral shall consist of all right, title and interest of Debtor in
and to the following:
(A) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(B) All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Debtor's custody or possession or in transit
and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and Debtor's
Books relating to any of the foregoing;
(C) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(D) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Debtor arising out of the sale or lease of goods, the licensing of technology or
the rendering of services by Debtor, whether or not earned by performance, and
any and all credit insurance, guaranties, and other security therefor, as well
as all merchandise returned to or reclaimed by Debtor and Debtor's Books
relating to any of the foregoing;
(E) All documents, cash, deposit accounts, securities,
investment property, letters of credit, certificates of deposit, instruments and
chattel paper now owned or hereafter acquired and Debtor's Books relating to the
foregoing;
(F) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(G) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof.
<PAGE>
SCHEDULE I
FINANCING STATEMENT BETWEEN
CUPERTINO NATIONAL BANK & TRUST, AS SECURED PARTY
AND
SILICON VALLEY INTERNET PARTNERS, AS DEBTOR
This financing statement is filed pursuant to Section 8601 of the New York
Uniform Commercial Code for the purpose of continuing the perfection of the
Secured Party's security interest in the foregoing property as originally set
forth in the financing statement filed with this filing office on August 12,
1997 as Document No. 167871 (the foregoing property being deemed to be fully
included in the property described as Collateral in such prior financing
statement).
Some or all of the collateral is located on the following addresses:
1) 89 South Street, Boston, MA 02111
2) 650 Townsend Street, San Francisco, CA 94104
3) 625 6th Avenue, New York, NY 10011
4) 3102 Oak Lawn Avenue, Dallas, TX 75219 (expected to move in 05/01/98)
1.
<PAGE>
[EXHIBIT OMITTED]
<PAGE>
EXHIBIT A
FINANCING STATEMENT BETWEEN
CUPERTINO NATIONAL BANK & TRUST, AS SECURED PARTY
AND
SILICON VALLEY INTERNET PARTNERS, AS DEBTOR
The Collateral shall consist of all right, title and interest of Debtor in
and to the following:
(A) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located;
(B) All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Debtor's custody or possession or in transit
and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and Debtor's
Books relating to any of the foregoing;
(C) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, trademarks,
servicemarks, trade styles, trade names, patents, patent applications, leases,
license agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;
(D) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Debtor arising out of the sale or lease of goods, the licensing of technology or
the rendering of services by Debtor, whether or not earned by performance, and
any and all credit insurance, guaranties, and other security therefor, as well
as all merchandise returned to or reclaimed by Debtor and Debtor's Books
relating to any of the foregoing;
(E) All documents, cash, deposit accounts, securities,
investment property, letters of credit, certificates of deposit, instruments and
chattel paper now owned or hereafter acquired and Debtor's Books relating to the
foregoing;
(F) All copyright rights, copyright applications, copyright
registrations and like protections in each work of authorship and derivative
work thereof, whether published or unpublished, now owned or hereafter acquired;
all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential
information, now owned or hereafter acquired; all mask work or similar rights
available for the protection of semiconductor chips, now owned or hereafter
acquired; all claims for damages by way of any past, present and future
infringement of any of the foregoing; and
(G) Any and all claims, rights and interests in any of the
above and all substitutions for, additions and accessions to and proceeds
thereof.
<PAGE>
VOID AFTER MARCH 26, 2008
SERIES C PREFERRED STOCK PURCHASE WARRANT
THIS WARRANT HAS BEEN, AND THE SHARES OF SERIES C PREFERRED STOCK WHICH MAY BE
PURCHASED PURSUANT TO THE EXERCISE OF THIS WARRANT (THE "SHARES"), WILL BE
ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF. NEITHER THIS WARRANT NOR THE SHARES
OF SERIES C PREFERRED STOCK ISSUABLE HEREUNDER OR ANY SHARES INTO WHICH SUCH
SHARES ARE CONVERTIBLE, (TOGETHER, THE "SECURITIES") HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH DISPOSITION IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE
SECURITIES LAWS.
NO. C-2 5,517 SHARES
SILICON VALLEY INTERNET PARTNERS
WARRANT TO PURCHASE SHARES OF SERIES C PREFERRED STOCK
THIS CERTIFIES that, for value received, VENTURE BANKING GROUP (the
"REGISTERED HOLDER"), is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase from Silicon Valley
Internet Partners, a California corporation with principal offices at 89 South
Street, 7th Floor, Boston, MA 02111 (the "COMPANY"), at any time until March 26,
2008, subject to the provisions of Section 9, (the "EXPIRATION DATE") shares of
the Company's Series C Preferred Stock (the "SERIES C PREFERRED") as follows:
This Warrant will be exercisable for a total of Five Thousand Five Hundred
Seventeen (5,517) fully paid and nonassessable shares of Series C Preferred at a
price per share equal to $3.625 (the "EXERCISE PRICE"), subject to the
provisions and upon the terms and conditions hereinafter set forth.
1. Method of Exercise; Payment.
(a) Cash Exercise. The purchase rights represented by this Warrant
may be exercised by the Holder, in whole or in part, from time to time by: (i)
the surrender of this Warrant (with the notice of exercise form (the "NOTICE OF
EXERCISE") attached hereto as Exhibit A duly executed) at the principal office
of the Company; (ii) the execution of a Series C Preferred Stock Purchase
Agreement and all exhibits thereto, including without limitation an Amended and
Restated
<PAGE>
Shareholder Rights Agreement, Amended and Restated Voting Agreement, and Amended
and Restated Co-Sale Agreement in the same form as the Series C Preferred Stock
Purchase Agreement dated as of October 10, 1997 by and among the Company and the
Purchasers (defined therein), the Amended and Restated Shareholder Rights
Agreement dated as of June 6, 1997 by and among the Company, the Purchasers
(defined therein) and the Prior Rights Holders (defined therein), the Amended
and Restated Voting Agreement dated as of June 6, 1997 by and among the Company
and the Shareholders (defined therein), and the Amended and Restated Co-Sale
Agreement dated as of June 6, 1997 by and among the Company, the Common
Shareholders (defined therein) and the Preferred Shareholders (defined therein)
(collectively, the "Series C Transaction Documents"); and (iii) by the payment
to the Company of an amount equal to the Exercise Price multiplied by the number
of the Shares being purchased, which amount may be paid, at the election of the
Holder, by wire transfer or certified check payable to the order of the Company.
The person or persons in whose name(s) any certificate(s) representing Shares
shall be issuable upon exercise of this Warrant shall be deemed to have become
the holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the Shares represented thereby (and such Shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised.
(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant
to Section 1(a) hereof, the Holder may elect to receive a number of Shares equal
to the value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant and the fully executed Series C
Transaction Documents at the principal office of the Company, together with the
Notice of Exercise in which alternative No. 1 is initiated by the Holder. In
such event, the Company shall issue to the Holder a number of Shares computed
using the following formula:
X = Y (A-B)/A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares subject to this warrant.
A = the fair market value of one share of the Company's Series C Preferred
Stock.
B = the Exercise Price (as adjusted to the date of such calculation).
(c) Fair Market Value. For purposes of this Section 2, the fair
market value of the Company's Series C Preferred Stock shall mean:
(i) The average of the closing bid and asked prices of the
Company's Common Stock quoted in the Over-The-Counter Market Summary or the
closing price quoted on any exchange on which the Common Stock is listed,
whichever is applicable, as published in the Western
2
<PAGE>
Edition of The Wall Street Journal for the ten (10) trading days prior to the
date of determination of fair market value multiplied by the number of shares of
Common Stock into which each share of Series C Preferred Stock is convertible;
(ii) If the Company's Common Stock is not traded
Over-The-Counter or on an exchange, the fair market value of the Series C
Preferred Stock per share shall be the price per share which the Company could
obtain from a willing buyer for shares sold by the Company from authorized but
unissued shares of Series C Preferred Stock as such price shall be agreed by the
parties hereto, or if agreement cannot be reached within five (5) business days
of delivery of the notice pursuant to Section 1(b) hereof, as shall be
determined by a panel of appraisers. One appraiser shall be selected by the
Holder, one appraiser shall be chosen by the Company and the third appraiser
shall be chosen by the first two appraisers. If the appraisers cannot reach
agreement as to the fair market value on the foregoing basis on or before the
thirtieth (30th) day following the Holder's notice of election pursuant to
Section 1(b), then each appraiser shall deliver its appraisal and the appraisal
which is neither the highest nor the lowest shall be the fair market value of a
share of Series C Preferred Stock. In the event that the Holder fails to choose
an appraiser or the three appraisers fail to deliver an appraisal on or before
the thirtieth (30th) day after such notice, the appraisal of the appraiser
selected by the Company shall control and shall be fair market value for the
purposes of this Warrant. The cost of the appraiser selected by each party shall
be borne by that party and the cost of the third appraiser shall be borne
one-half (1/2) by each party. Appraisers selected under this Section 1(c) must
be unaffiliated with the Holder and the Company and must have reasonable
professional qualifications for the appraisal.
(d) Stock Certificates. In the event of any exercise of the rights
represented by this Warrant, certificates for the Shares so purchased shall be
delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the Shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time.
(e) Condition of Exercise Unless exercised pursuant to an effective
registration statement under the Act which includes the Shares so exercised, it
shall be a condition to any exercise of this Warrant that the Company shall have
received, at the time of such exercise, a representation in writing from the
Holder in the form attached hereto as Exhibit A-1, that the Shares being issued
upon exercise are being acquired for investment and not with a view to any sale
or distribution thereof.
2. Stock Fully Paid: Reservation of Shares. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable, and
free from all preemptive rights, rights of first refusal or first offer, taxes,
liens and charges with respect to the issuance thereof. During the period within
which the rights represented by this Warrant may be exercised, the Company shall
at all times have authorized and reserved for issuance sufficient shares of its
Series C Preferred Stock and Common Stock to provide for the exercise of the
rights represented by this Warrant.
3
<PAGE>
3. Adjustment of Exercise Price and Number of Shares. The number and kind
of Shares purchasable upon the exercise of this Warrant and the Exercise Price
therefor shall be subject to adjustment from time to time upon the occurrence of
certain events, as follows:
(a) Stock Splits, Dividends and Combinations. In the event that the
Company shall at any time subdivide the outstanding shares of Series C Preferred
Stock, or shall issue a stock dividend on its outstanding shares of Series C
Preferred Stock, the number of Shares issuable upon exercise of this Warrant
immediately prior to such subdivision or to the issuance of such stock dividend
shall be proportionately increased, and the Exercise Price shall be
proportionately decreased, and in the event that the Company shall at any time
combine the outstanding shares of Series C Preferred Stock, the number of Shares
issuable upon exercise of this Warrant immediately prior to such combination
shall be proportionately decreased, and the Exercise Price shall be
proportionately increased, effective at the close of business on the date of
such subdivision, stock dividend or combination, as the case may be.
(b) Recapitalizations. If at any time or from time to time there
shall be a recapitalization of the Series C Preferred Stock (other than a
subdivision, combination or merger or sale of assets transaction provided for
elsewhere in this Section 3), provision shall be made so that the Holder of this
Warrant will thereafter be entitled to receive upon exercise of this Warrant the
number of shares of stock or other securities or property of the Company to
which a Holder of Series C Preferred Stock would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section 3 with respect to the rights of
the Holder of this Warrant after the recapitalization to the end that the
provisions of this Section 3 (including adjustment of the Exercise Price then in
effect and the number of shares issuable upon exercise of this Warrant) shall be
applicable after that event in as nearly an equivalent manner as may be
practicable.
(c) Merger. If at any time there shall be a capital reorganization
of the shares of the Company's stock (other than a combination,
reclassification, exchange or subdivision of shares otherwise provided for
herein), or a merger or consolidation of the Company with or into another
corporation, whether or not the Company is the surviving corporation, other than
as provided for in Section 9 herein (a "Merger Event"), then as a part of such
Merger Event, lawful provision shall be made so that the Holder shall thereafter
be entitled to receive, upon exercise of the Warrant, the number of shares of
stock or other securities of the successor corporation resulting from such
Merger Event, equivalent in value to that which would have been issuable if
Holder had exercised this Warrant immediately prior to the Merger Event. In any
such case, appropriate adjustment (as determined in good faith by the Company's
Board of Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interest of the Holder after the Merger
Event to the end that the provisions of this Warrant (including adjustments of
the Exercise Price and number of Shares purchasable) shall be applicable to the
greatest extent possible.
(d) Notices. Upon any adjustment of the Exercise Price and any
increase or decrease in the number of Shares purchasable upon the exercise of
this Warrant in accordance with Section 2 hereof, then, and in each such case,
the Company, within thirty (30) days thereafter, shall
4
<PAGE>
give written notice thereof to the Holder at the address of such Holder as shown
on the books of the Company which notice shall state the Exercise Price as
adjusted and, if applicable, the increased or decreased number of Shares
purchasable upon the exercise of this Warrant, setting forth in reasonable
detail the method of calculation of each. Any written notice by the Company
required or permitted hereunder shall be given by hand delivery or first class
mail, postage prepaid, addressed to the Holder at the address shown on the books
of the Company for the Holder.
4. Restrictions on Transfer.
(a) Holder agrees not to make any disposition of all or any portion
of the Shares or the Warrant, except to an affiliate of Holder, unless and
until:
(i) There is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(ii) Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and the transferee has
agreed in writing to be bound by this Section 4. If reasonably requested by the
Company, Holder shall furnish the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such shares under the 1933 Act. Notwithstanding the foregoing, the
restrictions imposed upon the transferability of any of the Shares or rights to
acquire Shares do not apply to transfers from the beneficial owner of any of the
aforementioned securities to its nominee or from such nominee to its beneficial
owners, and shall terminate as to any particular Shares when a letter shall have
been issued to Holder at its request by the staff of the Securities and Exchange
Commission or a ruling shall have been issued to the Holder at its request by
such Commission stating that no action shall be recommended by such staff or
taken by such Commission, as the case may be, if such security is transferred
without registration under the 1933 Act in accordance with the conditions set
forth in such letter or ruling and such letter or ruling specifies that no
subsequent restrictions on transfer are required. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
(b) Notwithstanding the above, the Shares shall also be subject to
all restrictions on transfer set forth in the Series C Transaction Documents,
including without limitation a one hundred eighty (180) day market-standoff
period upon the Company's initial public offering.
5. Fractional Shares. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. Representations and Warranties by the Company.
5
<PAGE>
(a) Due Authority. The execution and delivery by the Company of this
Warrant and the performance of all obligations of the Company hereunder,
including the issuance to Holder of the right to acquire Shares, have been duly
authorized by all necessary corporate action on the part of the Company. This
Warrant is consistent with the Company's Amended and Restated Articles of
Incorporation, and does not contravene any law or governmental rule, regulation
or order applicable to it, and does not and will not contravene any provision
of, or constitute a default under, any indenture, mortgage, contract or other
instrument to which it is a party or by which it is bound. This Warrant
constitutes a legal, valid and binding agreement of the Company, enforceable in
accordance with its respective terms.
(b) Consents and Approvals. No consent or approval of, giving of
notice to, registration with, or taking of any other action in respect of any
state, Federal or other governmental authority or agency is required with
respect to the execution, delivery and performance by the Company of its
obligations under this Warrant, except for the filing of notices pursuant to
Regulation D under the 1933 Act and any filing required by applicable state
securities law, which filings shall be made by the time required thereby.
(c) Holder's Additional Rights. The Series C Preferred Stock
issuable upon exercise of this Warrant shall have the anti-dilution rights,
registration rights, and information rights set forth in the Series C
Transaction Documents.
7. Representations and Warranties by the Holder. Holder represents and
warrants to the Company as follows:
(a) This Warrant is being acquired for Holder's own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Act, and the
Holder has no present intention of selling or engaging in any public
distribution thereof pursuant to a registration or exemption.
(b) Holder understands that the Warrant and the Shares have not been
registered under the Act by reason of their issuance in a transaction exempt
from the registration and prospectus delivery requirements of the Act pursuant
to Section 4(2) thereof, and that they must be held by Holder indefinitely, and
that Holder must therefore bear the economic risk of such investment
indefinitely, unless a subsequent disposition thereof is registered under the
Act or is exempted from such registration. The Holder further understands that
the Shares have not been qualified under the California Securities Law of 1968
(the "CALIFORNIA LAW") by reason of their issuance in a transaction exempt from
the qualification requirements of the California Law pursuant to Section
25102(f) thereof, which exemption depends upon, among other things, the bona
fide nature of the Holder's investment intent expressed above.
(c) The Holder has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the
purchase of this Warrant and the Shares purchasable pursuant to the terms of
this Warrant and of protecting its interests in connection therewith.
6
<PAGE>
(d) The Holder is able to bear the economic risk of the purchase of
the Shares pursuant to the terms of this Warrant.
8. Rights of Shareholders. Nothing contained herein shall confer upon
Holder any of the rights of a Shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to Shareholders at
any meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value, consolidation, merger, conveyance, or otherwise) or
to receive notice of meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised and the Shares purchasable
upon the exercise hereof shall have become deliverable, as provided herein.
9. Expiration of Warrant.
The Expiration Date of this Warrant shall be the earlier of:
(a) 5:00 p.m., California local time, on March 26, 2008;
(b) five (5) years after the Company's initial public offering under
the Securities Act of 1933, as amended;
(c) the automatic conversion of the Series C Preferred Stock of the
Company into Common Stock of the Company, according to the terms of the Series C
Transaction Documents;
(d) a consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger with another corporation in
which the Company's Shareholders immediately preceding such consolidation or
merger own at least fifty percent (50%) of the voting securities of the
successor entity following such consolidation or merger and which does not
result in any reclassification of the Shares issuable upon exercise of this
Warrant); or
(e) a sale of all or substantially all of the assets of the Company.
The Company shall give Holder written notice of Holder's right to
exercise this Warrant in the form attached as Exhibit B not more than ninety
(90) days and not less than thirty (30) days before the Expiration Date. If the
notice is not so given, the Expiration Date shall automatically be extended
until thirty (30) days after the date the Company delivers the notice to Holder.
10. Miscellaneous.
(a) This Warrant is being delivered in the State of California and
shall be construed and enforced in accordance with and governed by the laws of
such State. The parties expressly stipulate that any litigation under this
Warrant shall be brought in the State courts of the Counties of Santa Clara or
San Francisco, California and in the United States District Court for the
7
<PAGE>
Northern District of California. The parties agree to submit to the jurisdiction
and venue of those courts.
(b) The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
(c) The terms of this Warrant shall be binding upon and shall inure
to the benefit of any successors in interest of the Company or the Holder. This
Warrant and all rights hereunder are not assignable or transferable by Company
or Holder, except for such permitted transfers to successors in interest and in
accordance with Section 4 herein, and any attempt to assign or transfer the
rights hereunder shall be void and of no further effect.
(d) This Warrant and the other documents delivered pursuant hereto,
including without limitation the Series C Transaction Documents, constitute the
full and entire understanding and agreement between the parties with regard to
the subjects hereof and thereof.
(e) The Company shall not, by amendment of its Amended and Restated
Articles of Incorporation, or through any other means, directly or indirectly,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant and shall at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
impairment.
(f) Upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, upon surrender and cancellation of such Warrant, the Company at
its expense will execute and deliver to the holder of record, in lieu thereof, a
new Warrant of like date and tenor.
(g) This Warrant and any provision hereof may be amended, waived or
terminated only by an instrument in writing signed by the Company and Holder.
8
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Issued this 26th day of March, 1998.
SILICON VALLEY INTERNET PARTNERS
By: /s/ signature illegible
Title: Vice President & CFO
Acknowledged and Accepted:
VENTURE BANKING GROUP
By: /s/ signature Illegible
Title: AVP
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
TO: SILICON VALLEY INTERNET PARTNERS
Attention: President
1. In lieu of exercising the attached Warrant for cash or check, the
undersigned hereby elects to effect the net issuance provision of Section 1(b)
of this Warrant and receive __________ (leave blank if you choose Alternative
No. 2 below) shares of Series C Preferred Stock pursuant to the terms of this
Warrant. (Initial here if the undersigned elects this alternative). ___________.
2. The undersigned hereby elects to purchase ______________ (leave blank
if you choose alternative No. 1 above) shares of Series C Preferred Stock of
Silicon Valley Internet Partners pursuant to the terms of this Warrant, and
tenders herewith payment of the purchase price of such shares in full.
3. Please issue a certificate or certificates representing said shares of
Series C Preferred Stock in the name of the undersigned or in such other name as
is specified below:
--------------------------------------------------
(Name)
--------------------------------------------------
--------------------------------------------------
(Address)
4. The undersigned hereby represents and warrants that the aforesaid
shares of Series C Preferred Stock are being acquired for the account of the
undersigned for investment and not with a view to, or for resale, in connection
with the distribution thereof, and that the undersigned has no present intention
of distributing or reselling such shares except pursuant to a registration or
exemption, and all representations and warranties of the undersigned set forth
in Section 7 of the attached Warrant are true and correct as of the date hereof.
In support thereof, the undersigned agrees to execute an Investment
Representation Statement in a form substantially similar to the form attached to
the Warrant as Exhibit A-1.
------------------------------------------
(Signature and Date)
Title:
-----------------------------------
<PAGE>
EXHIBIT B
NOTICE THAT WARRANT IS ABOUT TO EXPIRE
(Name of Holder)
(Address of Holder)
Attn: Chief Financial Officer
Dear ____________________:
This is to advise you that the Warrant issued to you described below will
expire on ________________________, 19__.
Issuer: Silicon Valley Internet Partners
Issue Date: March 26, 1998
Class of Security Issuable: Series C Preferred Stock
Exercise Price per Share:
Number of Shares Issuable:
Procedure for Exercise:
Please contact [name of contact person at (phone number)] with any
questions you may have concerning exercise of the Warrant. This is your only
notice of pending expiration.
Silicon Valley Internet Partners
By:
-----------------------------
Its:
----------------------------
<PAGE>
EXHIBIT A-I
INVESTMENT REPRESENTATION STATEMENT
PURCHASER : VENTURE BANKING GROUP
COMPANY : SILICON VALLEY INTERNET PARTNERS
SECURITY : SERIES C PREFERRED STOCK ISSUED UPON EXERCISE OF THE SERIES C
PREFERRED STOCK PURCHASE WARRANT ISSUED ON MARCH 26, 1998
AMOUNT : _______ SHARES
DATE : _________________, ____
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial condition,
and have acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933, as amended (the "Securities Act") except
pursuant to a registration of exemption.
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of my investment intent
as expressed herein. In this connection, I understand that, in the view of the
Securities and Exchange Commission (the "SEC"), the statutory basis for such
exemption may be unavailable if my representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from registration is otherwise available. Moreover, I understand that the
Company is under no obligation to register the Securities. In addition, I
understand that the certificate evidencing the Securities will be imprinted with
a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel for
the Company.
(d) I am familiar with the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or
<PAGE>
indirectly, from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions.
The Securities may be resold in certain limited circumstances subject to
the provisions of Rule 144, which requires among other things: (1) the
availability of certain public information about the Company, (2) the resale
occurring not less than one year, and in some circumstances two years, after the
party has held, within the meaning of Rule 144, the securities to be sold; and,
in the case of an affiliate, or of a non-affiliate who has held the securities
less than two years, and in some circumstances three years, (3) the sale being
made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934) and the amount of securities being sold during
any three month period not exceeding the specified limitations stated therein,
if applicable.
(e) I agree, in connection with the Company's initial underwritten public
offering of the Company's securities, (1) not to sell, make short sale of, loan,
grant any options for the purchase of, or otherwise dispose of any shares of
Common Stock of the Company held by me (other than those shares included in the
registration) without the prior written consent of the Company or the
underwriters managing such initial underwritten public offering of the Company's
securities for one hundred eighty (180) days from the effective date of such
registration, and (2) I further agree to execute any agreement reflecting (1)
above as may be requested by the underwriters at the time of the public
offering; provided however that in the case of both e(1) and e(2) the officers
and directors of the Company who own the stock of the Company also agree to such
restrictions.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
------------------------------------
(Signature)
By:
---------------------------------
Title:
------------------------------
Date: , 19
------------------------- --
2
<PAGE>
WARRANT RECEIPT
The undersigned hereby acknowledges receipt of a Warrant to Purchase 5,517
Shares of Series C Preferred Stock of Silicon Valley Internet Partners, a
California corporation, dated as of March 26, 1998.
The undersigned further acknowledges that said Warrant contains the legend
referring to the Securities Act of 1933, as amended, and sets forth certain
restrictions on sale or transfer of the securities.
VENTURE BANKING GROUP
Dated: 3/27/99 /s/ Signature Illegible
By
Jennifer Schellenberg
---------------------
Name
AVP
---
Title
Return receipt to:
- -----------------
Carol Timm, B2-9
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
<PAGE>
SILICON VALLEY INTERNET PARTNERS
89 SOUTH STREET
BOSTON, MA 02111
Jennifer Schellenberg
Venture Banking Group
Three Palo Alto Square, Suite 150
Palo Alto, CA 94306
Pursuant to the Amended and Restated Loan and Security Agreement dated as of
March 25, 1998 and the Collateral Assignment, Patent Mortgage and Security
Agreement dated as of September 19, 1996 (the "Collateral Assignment"), each by
and between Venture Banking Group and Silicon Valley Internet Partners, the
undersigned hereby agrees to and authorizes (i) the amendment of Exhibits A, B
and C to the Collateral Assignment to include the following additional
copyrights, patents, or trademarks and (ii) the filing of such amended Exhibits
A, B and C with the U.S. Copyright Office and/or the U.S. Patent and Trademark
Office, respectively:
[See Attached]
Silicon Valley Internet Partners
Signature: /s/ Signature Illegible
By:
Dated: 3/20/98
<PAGE>
Exhibit "C" attached to that certain Collateral Assignment, Patent Mortgage and
Loan Agreement dated September 19, 1996.
EXHIBIT "C"
TRADEMARKS
<TABLE>
<CAPTION>
TRADEMARK CLASS COUNTRY APPLICATION APPLICATION REG. REG. STATUS
DESCRIPTION # NO. DATE NO. DATE
<S> <C> <C> <C> <C> <C> <C> <C>
Viant USA 75-366,796 10-2-97 Pending
Design only USA 75-232,600 1-28-97 Pending
Silicon Valley Internet USA 75-108,013 5-22-96 Pending
Partners
SVIP USA 75-107,991 5-22-96 Pending
</TABLE>
8
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form S-1
of our report dated March 16, 1999, relating to the financial statements and
Financial Statement Schedule of Viant Corporation, which appears in such
Registration Statement. We also consent to the references to us under the
headings "Experts" and "Selected Financial Data" in such Registration
Statement. However, it should be noted that PricewaterhouseCoopers LLP has
not prepared or certified such "Selected Financial Data."
PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
April 9, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-1999
<PERIOD-START> JAN-01-1998
<PERIOD-END> JAN-01-1999
<CASH> 18,811
<SECURITIES> 0
<RECEIVABLES> 6,381
<ALLOWANCES> (909)
<INVENTORY> 0
<CURRENT-ASSETS> 25,473
<PP&E> 5,367
<DEPRECIATION> (1,319)
<TOTAL-ASSETS> 29,753
<CURRENT-LIABILITIES> 7,851
<BONDS> 2,237
0
32,136
<COMMON> 4
<OTHER-SE> 430
<TOTAL-LIABILITY-AND-EQUITY> 29,753
<SALES> 0
<TOTAL-REVENUES> 20,043
<CGS> 0
<TOTAL-COSTS> 13,159
<OTHER-EXPENSES> 13,209
<LOSS-PROVISION> 612
<INTEREST-EXPENSE> 371
<INCOME-PRETAX> (6,487)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,487)
<EPS-PRIMARY> (1.76)
<EPS-DILUTED> (1.76)
</TABLE>
