<PAGE>
As filed with the Securities and Exchange Commission on May 10, 1999
Registration No. 333-77539
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
ASK JEEVES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 7375 94-3256053
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of
incorporation or organization) Classification Code) Identification
No.)
</TABLE>
---------------------
918 PARKER STREET
BERKELEY, CALIFORNIA 94710
(510) 649-8685
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------
ROBERT W. WRUBEL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ASK JEEVES, INC.
918 PARKER STREET
BERKELEY, CALIFORNIA 94710
(510) 649-8685
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
---------------------
COPIES TO:
ANDREI M. MANOLIU, ESQ. JAMES N. STRAWBRIDGE, ESQ.
MICHAEL L. WEINER, ESQ. JON C. GONZALES, ESQ.
Cooley Godward LLP Wilson Sonsini Goodrich & Rosati
Five Palo Alto Square Professional Corporation
3000 El Camino Real 650 Page Mill Road
Palo Alto, California 94306 Palo Alto, California 94304
(650) 843-5000 (650) 493-9300
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
---------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number 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,
please check the following box: / /
---------------------
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 OF 1933 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.
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- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 to the Form S-1 Registration Statement is being filed
for the sole purpose of filing additional exhibits.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
sale of common stock being registered. All amounts are estimates.
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<S> <C>
SEC registration fee............................................................ $ 11,510
NASD Filing fee................................................................. 4,640
Nasdaq National Market listing fee.............................................. 1,000
Printing and engraving expenses................................................. 200,000
Legal fees and expenses......................................................... 400,000
Accounting fees and expenses.................................................... 350,000
Blue sky fees and expenses...................................................... 10,000
Transfer agent fees............................................................. 10,000
Miscellaneous fees and expenses................................................. 112,850
---------
Total......................................................................... $1,100,000
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") authorizes
a court to award, or a corporation's board of directors to grant indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities, including
reimbursement for expenses incurred, arising under the Securities Act.
As permitted by the DGCL, our Amended and Restated Certificate of
Incorporation, which will become effective upon the closing of this offering,
includes a provision that eliminates the personal liability of its directors for
monetary damages for breach of fiduciary duty as a director, except for
liability (1) for any breach of the director's duty of loyalty to us or our
stockholders; (2) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (3) under Section 174 of
the DGCL regarding unlawful dividends and stock purchases; or (4) for any
transaction from which the director derived an improper personal benefit.
As permitted by the DGCL, our Amended and Restated Certificate of
Incorporation and/or our Bylaws, which will become effective upon the closing of
this offering, provide that (1) we are required to indemnify our directors and
officers to the fullest extent permitted by the DGCL, subject to certain very
limited exceptions; (2) we are permitted to indemnify our other employees to the
extent that we indemnify our officers and directors, unless otherwise required
by law, our Amended and Restated Certificate of Incorporation, our Bylaws or
agreements; (3) we are required to advance expenses, as incurred, to our
directors and officers in connection with a legal proceeding to the fullest
extent permitted by the DGCL, subject to certain very limited exceptions; and
(4) the rights conferred in our Bylaws are not exclusive.
Prior to the closing of this offering, we intend to enter into Indemnity
Agreements with each of our current directors and officers to give such
directors and officers additional contractual assurances regarding the scope of
the indemnification set forth in our Amended and Restated Certificate of
Incorporation and our Bylaws and to provide additional procedural protections.
At present, there is no pending litigation or proceeding involving a director,
officer or employee of the Company regarding which
II-1
<PAGE>
indemnification is sought, nor are we aware of any threatened litigation that
may result in claims for indemnification.
With approval by the Board, we expect to obtain directors' and officers'
liability insurance. Reference is made to the Underwriting Agreement contained
in Exhibit 1.1 hereto, which contains provisions indemnifying our officers and
directors against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since the Company's inception on June 13, 1996, the Company has issued and
sold the following unregistered securities:
1. Prior to the completion of this offering, the Company intends to effect a
one-for-two reverse stock split of its outstanding common stock in which
each two outstanding shares of common stock will be split into one share of
common stock.
2. On June 17, 1996, the Company issued 1,500,000 shares of its common stock to
Garrett Gruener in consideration of the assets of Cameo Technology, Inc. a
company owned by Garrett Gruener, and $20,000 pursuant to the Asset Purchase
Agreement and Plan on Reorganization by and between the Company and Cameo
Technology, Inc.
3. On June 17, 1996, the Company issued 900,000 shares of its common stock to
David Warthen in consideration of $20,000.
4. From inception through April 30, 1999, the Company granted options to
purchase 6,403,354 shares of common stock at a weighted average exercise
price of $2.00 per share to employees, consultants, directors and other
service providers pursuant to its 1996 Option Plan and issued an aggregate
of 1,036,939 shares of its common stock to employees, consultants, directors
and other service providers for aggregate consideration of approximately
$86,348 pursuant to exercises of options granted under the 1996 Option Plan.
5. From inception through April 30, 1999, the Company granted options to
purchase 579,998 shares of common stock at a weighted average exercise price
of $0.41 per share to employees and consultants pursuant to option
agreements outside of the 1996 stock Option Plan and issued an aggregated
390,540 shares of its common stock to employees, consultants, directors and
other service providers for aggregate consideration of approximately $1,406
pursuant to exercise of such options outside of the 1996 Option Plan.
6. In August 1997, the Company issued 1,083,498 shares of common stock at a
purchase price of $0.23 and warrants to purchase 541,749 shares of common
stock to two investors. The warrants have a per share exercise price of
$0.23 per share.
7. In April 1998, the Company issued 32,600 shares of common stock to an
independent contractor for services performed. The Company imputed a value
for the services of $13,221, of which $5,700 was paid in cash, and the
remainder was allocated to the shares issued.
8. In November 1997, the Company issued 12,000 shares of common stock in
exchange for assets valued at $.23 per share.
9. In December 1997, the Company issued 541,829 shares of common stock for an
aggregate purchase price of $249,241 or $.46 per share to one investor.
11. In May, June and July 1998, the Company issued warrants exercisable into
21,500 shares of common stock to a consultant for services performed. The
warrants are exercisable into shares of common stock at a per share exercise
prices of $.53.
12. In June 1998, the Company issued and sold an aggregate of 2,148,807 shares
of its common stock for an aggregate purchase price of approximately
$1,138,868 or $.53 per share to 16 investors.
II-2
<PAGE>
13. In September 1998, the Company issued and sold 1,855,415 shares of its
common stock for an aggregate purchase price of approximately $983,370 or
$.73 per share to 11 investors.
14. In November 1998 and January 1999, the Company issued and sold 3,709,884
shares of its Series A preferred stock for an aggregate purchase price of
approximately $7,642,361 or $2.06 per share to 25 investors.
15. In December 1998, the Company issued warrants to purchase 17,500 shares of
common stock to our landlord in partial consideration for lease obligations.
The warrants were exercised in April 1999.
16. In February and March 1999, the Company issued and sold 5,775,806 shares of
its Series B Preferred
Stock for an aggregate purchase price of approximately $25,009,239, or $4.33
per share to 44 investors.
17. In March 1999, the Company issued a warrant exercisable into 2,500 shares of
common stock to a consultant for services performed. The warrant is
exercisable into shares of common stock at a per share exercise price of
$4.32.
18. On April 16, 1999, the Company issued 450,000 shares of common stock in
consideration of, among other things, certain assets relating to Lumina
Decision Systems, Inc., pursuant to the Asset Purchase Agreement by and
between the Company and Lumina Decision Systems.
The sale of the above securities was deemed to be exempt from registration
under the Securities Act in reliance upon Section 4(2) of the Securities Act or
Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b)
of the Securities Act as transactions by an issuer not involving any public
offering or transactions pursuant to compensation benefit plans and contracts
relating to compensation as provided under Rule 701. The recipients of
securities in each such transaction represented their intentions 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 issued in such transactions. All recipients had adequate access,
through their relationships with us, to information about Ask Jeeves.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Form of Certificate of Incorporation of the Registrant.
3.2** Certificate of Merger to be filed with the Secretary of State of the State of Delaware on ,
1999.
3.3** Form of Certificate of Incorporation of the registrant to be filed on the closing of the offering made
hereby.
3.4** Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1, 3.2 and 3.3 hereof.
4.2* Specimen Certificate for Registrant's Common Stock.
4.3 Warrant to purchase 15,000 shares of Common Stock granted by the Registrant to Antenna Group PR dated
as of June 30, 1998.
4.4 Warrant to purchase 20,000 shares of Common Stock granted by the Registrant to Antenna Group PR dated
as of July 31, 1998.
4.5 Warrant to purchase 8,000 shares of Common Stock granted by the Registrant to Antenna Group PR dated
as of May 31, 1998.
4.6 Warrant to purchase 5,000 shares of Common Stock granted by the Registrant to Soren Jacobsen dated as
of March 10, 1999.
5.1* Opinion of Cooley Godward LLP.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<C> <S>
10.1** Amended and Restated 1996 Equity Incentive Plan.
10.2** Form of Option Agreement for the Amended and Restated 1996 Equity Incentive Plan.
10.3** 1999 Equity Incentive Plan.
10.4** Form of Option Agreement for the 1999 Equity Incentive Plan.
10.5** 1999 Employee Stock Purchase Plan.
10.6 Commercial Office Lease by and between Eat/Work Development, L.P. and the Roda Group Venture
Development Company dated as of August 20, 1997.
10.7 Commercial Office Lease by and between Eat/Work Development, L.P. and the Roda Development Company
dated as of August 14, 1998.
10.8 Commercial Office Lease by and between Eat/Work Development, L.P. and the Roda Development Company
dated as of November 15, 1998.
10.9 Commercial Office Lease by and between Eat/Work Development, L.P. and the Registrant dated as of May
15, 1998.
10.10 Lease Agreement by and between Parker Associates and the Registrant dated as of January 26, 1999.
10.11 Assignment and Assumption of Standard Commercial Office Lease for Eat/Work Development by and between
The Roda Group Venture Development Company, L.L.C. and the Registrant dated as of January 1, 1999
(relating to 918 Parker Street, Suite A-14, Berkeley, California).
10.12 Assignment and Assumption of Standard Commercial Office Lease for Eat/Work Development by and between
The Roda Group Venture Development Company, L.L.C. and the Registrant dated as of January 1, 1999
(relating to 918 Parker Street, Suite A-1-1 and A-1-2, Berkeley, California).
10.13+ License Agreement between the Registrant and Compaq Computer Corporation dated as of October 2, 1998.
10.14+** License and Development Agreement between the Registrant and Compaq Computer Corporation dated as of
March 31, 1999.
10.15** Consulting Services Agreement by and between the Registrant and The Roda Development Group dated as of
December 14, 1998.
10.16** Offer letter by and between the Company and M. Bruce Nakao dated as of April 16, 1999.
10.17** Offer letter by and between the Registrant and Laurence Fishkin dated as of January 11, 1999.
10.18** Offer letter by and between the Registrant and Edward Briscoe III dated as of January 18, 1999.
10.19** Offer letter by and between the Registrant and Frank Vaculin dated as of January 5, 1999.
10.20 Offer letter by and between the Registrant and Robert W. Wrubel dated as of May 22, 1998.
10.21 Common Stock and Warrant Purchase Agreement by and between the Registrant, and each of Daniel H.
Miller, Roger A. Strauch and the Roda Group Venture Development Company, LLC. dated as of August 20,
1997.
10.22** Common Stock Subscription Agreement, by and between the Registrant and certain investors of the
Registrant dated as of June 26, 1998.
10.23** Common Stock Subscription Agreement, by and between the Registrant and certain investors of the
Registrant dated as of August 31, 1998.
10.24** Series A Preferred Stock Purchase Agreement by and between the Registrant and certain investors of the
Registrant dated as of November 13, 1998.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.25** Series B Preferred Stock Purchase Agreement by and between the Registrant and certain investors of the
Registrant dated as of February 24, 1999.
10.26+** Asset Purchase Agreement by and between the Registrant and Lumina Decision Systems, Inc. dated as of
April 16, 1999.
10.27 Form of Indemnity Agreement by and between the Registrant and each of its directors and executive
officers.
23.1 Consent of Ernst & Young LLP.
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1** Power of attorney. Reference is made to Page II-6.
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
+ Certain portions of this document have been omitted pursuant to a
confidential treatment request.
* To be filed by amendment.
** Previously filed.
(b) FINANCIAL STATEMENT SCHEDULES.
All schedules have been omitted because the information required to be set
forth therein is not applicable or is shown in the combined 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 for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange 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, 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) of (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.
(2) For the purposes 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 that 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, as amended, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Berkeley, State of California, on May 10, 1999.
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ASK JEEVES, INC.
By: /s/ ROBERT W. WRUBEL
-----------------------------------------
Robert W. Wrubel
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER:
/s/ ROBERT W. WRUBEL
- ------------------------------ President, Chief Executive May 10, 1999
Robert W. Wrubel Officer and Director
PRINCIPAL ACCOUNTING OFFICER:
*/s/ CHRISTINE M. DAVIS
- ------------------------------ Controller May 10, 1999
Christine M. Davis
ADDITIONAL DIRECTORS:
*/s/ ROGER A. STRAUCH
- ------------------------------ Chairman of the Board of May 10, 1999
Roger A. Strauch Directors
*/S/ A. GEORGE ("SKIP") BATTLE
- ------------------------------ Director May 10, 1999
A. George ("Skip") Battle
*/s/ BENJAMIN M. ROSEN
- ------------------------------ Director May 10, 1999
Benjamin M. Rosen
*/s/ DANIEL J. NOVA
- ------------------------------ Director May 10, 1999
Daniel J. Nova
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*/s/ GEOFFREY Y. YANG
- ------------------------------ Director May 10, 1999
Geoffrey Y. Yang
*/s/ GARRETT GRUENER
- ------------------------------ Director May 10, 1999
Garrett Gruener
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ ROBERT W. WRUBEL
-------------------------
Robert W. Wrubel
ATTORNEY-IN-FACT
</TABLE>
II-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
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<C> <S>
1.1* Form of Underwriting Agreement.
3.1** Form of Certificate of Incorporation of the Registrant.
3.2** Certificate of Merger to be filed with the Secretary of State of the State of Delaware on ,
1999.
3.3** Form of Certificate of Incorporation of the registrant to be filed on the closing of the offering made
hereby.
3.4** Bylaws of the Registrant.
4.1 Reference is made to Exhibits 3.1, 3.2 and 3.3 hereof.
4.2* Specimen Certificate for Registrant's Common Stock.
4.3 Warrant to purchase 15,000 shares of Common Stock granted by the Registrant to Antenna Group PR dated
as of June 30, 1998.
4.4 Warrant to purchase 20,000 shares of Common Stock granted by the Registrant to Antenna Group PR dated
as of July 31, 1998.
4.5 Warrant to purchase 8,000 shares of Common Stock granted by the Registrant to Antenna Group PR dated
as of May 31, 1998.
4.6 Warrant to purchase 5,000 shares of Common Stock granted by the Registrant to Soren Jacobsen dated as
of March 10, 1999.
5.1* Opinion of Cooley Godward LLP.
10.1** Amended and Restated 1996 Equity Incentive Plan.
10.2** Form of Option Agreement for the Amended and Restated 1996 Equity Incentive Plan.
10.3** 1999 Equity Incentive Plan.
10.4** Form of Option Agreement for the 1999 Equity Incentive Plan.
10.5** 1999 Employee Stock Purchase Plan.
10.6 Commercial Office Lease by and between Eat/Work Development, L.P. and the Roda Group Venture
Development Company dated as of August 20, 1997.
10.7 Commercial Office Lease by and between Eat/Work Development, L.P. and the Roda Development Company
dated as of August 14, 1998.
10.8 Commercial Office Lease by and between Eat/Work Development, L.P. and the Roda Development Company
dated as of November 15, 1998.
10.9 Commercial Office Lease by and between Eat/Work Development, L.P. and the Registrant dated as of May
15, 1998.
10.10 Lease Agreement by and between Parker Associates and the Registrant dated as of January 26, 1999.
10.11 Assignment and Assumption of Standard Commercial Office Lease for Eat/Work Development by and between
The Roda Group Venture Development Company, L.L.C. and the Registrant dated as of January 1, 1999
(relating to 918 Parker Street, Suite A-14, Berkeley, California).
10.12 Assignment and Assumption of Standard Commercial Office Lease for Eat/Work Development by and between
The Roda Group Venture Development Company, L.L.C. and the Registrant dated as of January 1, 1999
(relating to 918 Parker Street, Suite A-1-1 and A-1-2, Berkeley, California).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- ------------------------------------------------------------------------------------------------------
<C> <S>
10.13+ License Agreement between the Registrant and Compaq Computer Corporation dated as of October 2, 1998.
10.14+** License and Development Agreement between the Registrant and Compaq Computer Corporation dated as of
March 31, 1999.
10.15** Consulting Services Agreement by and between the Registrant and The Roda Development Group dated as of
December 14, 1998.
10.16** Offer letter by and between the Company and M. Bruce Nakao dated as of April 16, 1999.
10.17** Offer letter by and between the Registrant and Laurence Fishkin dated as of January 11, 1999.
10.18** Offer letter by and between the Registrant and Edward Briscoe III dated as of January 18, 1999.
10.19** Offer letter by and between the Registrant and Frank Vaculin dated as of January 5, 1999.
10.20 Offer letter by and between the Registrant and Robert W. Wrubel dated as of May 22, 1998.
10.21 Common Stock and Warrant Purchase Agreement by and between the Registrant, and each of Daniel H.
Miller, Roger A. Strauch and the Roda Group Venture Development Company, LLC. dated as of August 20,
1997.
10.22** Common Stock Subscription Agreement, by and between the Registrant and certain investors of the
Registrant dated as of June 26, 1998.
10.23** Common Stock Subscription Agreement, by and between the Registrant and certain investors of the
Registrant dated as of August 31, 1998.
10.24** Series A Preferred Stock Purchase Agreement by and between the Registrant and certain investors of the
Registrant dated as of November 13, 1998.
10.25** Series B Preferred Stock Purchase Agreement by and between the Registrant and certain investors of the
Registrant dated as of February 24, 1999.
10.26+** Asset Purchase Agreement by and between the Registrant and Lumina Decision Systems, Inc. dated as of
April 16, 1999.
10.27 Form of Indemnity Agreement by and between the Registrant and each of its directors and executive
officers.
23.1 Consent of Ernst & Young LLP.
23.2* Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1** Power of attorney. Reference is made to Page II-6.
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
+ Certain portions of this document have been omitted pursuant to a
confidential treatment request.
* To be filed by amendment.
** Previously filed.
<PAGE>
WARRANT
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE CORPORATION
THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AND PURCHASED PURSUANT TO THE
TERMS AND CONDITIONS SET FORTH IN THAT CERTAIN AUGUST 20, 1997 COMMON STOCK AND
WARRANT TO PURCHASE COMMON STOCK PURCHASE AGREEMENT BETWEEN THE ORIGINAL HOLDER
HEREOF AND THE COMPANY.
No. Series 98-2 15,000
WARRANT TO PURCHASE COMMON STOCK
ASK JEEVES, INC. a California corporation (the "Corporation"), hereby
grants to Antenna Group PR (the "Holder"), the right to purchase from the
Corporation fifteen thousand (15,000) shares of the common stock of the
Corporation (the "Warrant Shares"), subject to the terms and conditions set
forth below. This Warrant is issued in exchange for Public Relations efforts
undertaken on behalf of the Company during the month of June, 1998.
1. TERM. This Warrant may be exercised, as set forth in Section 3, at any
time through June 30, 2003 (the "Exercise Period").
2. PURCHASE PRICE. The purchase price for each share of the Corporations'
common stock purchasable hereunder shall be $0.2641 per share (subject to
adjustments for stock splits, combinations and the like).
3. EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part,
but not for less than Ten Thousand (10,000) Warrant Shares (or such lesser
number of Warrant Shares as may at the end of the time of exercise constitute
the maximum number exercisable) and in excess of 10,000 Warrant Shares in
increments of 1,000 Warrant Shares. It is exercisable, subject to the
satisfaction of applicable securities laws, at any time during the Exercise
Period by the surrender of the Warrant to the Corporation at its principal
office together with the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, accompanied by payment in full of the amount
of the aggregate Exercise Price of the Warrant Shares in immediately available
funds.
4. FRACTIONAL INTEREST. The Corporation shall not be required to issue an
fractional shares on the exercise of this Warrant.
5. WARRANT CONFERS NO RIGHTS OF SHAREHOLDER. The Holder shall not have any
rights as a shareholder of the Corporation with regard the Warrant Shares prior
to actual exercise resulting in the purchase of the Warrant Shares.
6. INVESTMENT REPRESENTATION. Neither this Warrant nor the Warrant Shares
issuable upon the exercise of this Warrant have been registered under the
Securities Act of 1933, or any state securities laws. The Holder acknowledges by
acceptance of the Warrant that as of the date of this Warrant and at
1.
<PAGE>
the time of exercise (a) he has acquired this Warrant or the Warrant Shares,
as the case may be, for investment and not with a view to distribution; and
either (b) he has a pre-existing personal or business relationship with the
Corporation, or its executive officers, or by reason of his business or
financial experience he has the capacity to protect his own interests in
connection with the transaction; and (c) he is an accredited investor as that
term is defined in Regulation D promulgated under the Securities Act. The
Holder agrees that any Warrant Shares issuable upon exercise of this Warrant
will be acquired for investment and not with a view to distribution and such
Warrant Shares will not be registered under the Securities Act and applicable
state securities laws or, based on an opinion of counsel reasonably
satisfactory to the Corporation, an exemption from such registration and
qualification is available. The Holder, by acceptance hereof consents to the
placement of the following restrictive legends, or substantially similar
legends, on each certificate to be issued to the Holder by the Corporation in
connection with the issuance of such Warrant Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES
LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) THERE
IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OF LAWS COVERING SUCH
SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OF HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS
UNDER APPLICABLE STATE LAW.
7. RESERVATION OF SHARES. The Corporation agrees at all times during the
Exercise Period to have authorized and reserved, for the exclusive purpose of
issuance and delivery upon exercise of this Warrant, a sufficient number of
shares of its common stock to provide for the exercise of the rights represented
hereby.
8. ADJUSTMENT FOR RE-CLASSIFICATION OF CAPITAL STOCK. If the Corporation at
any time during the Exercise Period shall, by subdivision, combination or
re-classification of securities, change any of the securities to which purchase
rights under this Warrant exist under the same or different number of securities
of any class or classes, this Warrant shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares immediately prior to
such subdivision, combination, or re-classification. If shares of the
Corporation's common stock are subdivided into a greater number of shares of
common stock, the purchase price for the Warrant Shares upon exercise of this
Warrant shall be proportionately reduced and the Warrant Shares shall be
proportionately increased; and conversely, if shares of the Corporation's common
stock are combined into a smaller number of common stock shares, the price shall
be proportionately increased, and the Warrant Shares shall be proportionately
decreased.
9. PUBLIC OFFERING LOCK-UP. In connection with the first underwritten
registration of the Corporation's securities, the Holder agrees, upon the
request of the Corporation and the underwriters managing such underwritten
offering of the Corporation's securities, not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any Warrant
Shares (other than those included in the registration) without the prior written
consent of the Corporation and such underwriters, as the case may be, for such
period of time, not to exceed one hundred eighty (180) days, from the effective
date of such registration as the underwriters may specify. The Corporation and
underwriters may request such additional written agreements in furtherance of
such standoff in the form reasonably satisfactory to the Corporation and such
underwriter. The Corporation may also impose stop-transfer instructions with
respect to the shares subject to the foregoing restrictions until the end of
said one hundred eighty (180) day period.
2.
<PAGE>
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the
Corporation of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and upon reimbursement to the Corporation of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Corporation will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate.
11. ASSIGNMENT. With respect to any offer, sale or other disposition of
this Warrant or any underlying securities, the Holder will give written notice
to the Corporation prior thereto, describing briefly the manner thereof,
together with a written opinion of such Holder's counsel, to the effect that
such offer, sale or other distribution may be effected without registration or
qualification (under any applicable federal or state law then in effect).
Furthermore, no such transfer shall be made unless the transferee meets the same
investor suitability standards set forth in Section 6 of this Warrant. Promptly
upon receiving such written notice and reasonably satisfactory opinion, if so
requested, the Corporation, as promptly as practicable, shall notify such Holder
that such Holder may sell or otherwise dispose of this Warrant or the underlying
securities, as the case may be, all in accordance with the terms of the written
notice delivered to the Corporation. If a determination has been made pursuant
to this Section 11 that the opinion of counsel for the Holder is not reasonably
satisfactory to the Corporation, the Corporation shall so notify the Holder
promptly after such determination has been made. Each Warrant thus transferred
shall bear the legends required by Section 6. The Corporation may issue stop
transfer instructions to its transfer agent in connection with such
restrictions. Warrants and underlying securities issued upon transfers after the
expiration date of the Lock-Up Period shall be issued without the Lock-Up
Legend.
12. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
between California residents entered into and to be performed entirely within
the State of California.
13. AMENDMENTS. Any term of this Warrant may be amended with the written
consent of the Company and the holders of warrants representing not less than a
majority in interest (50%+) of the shares of Common Stock issuable upon exercise
of the outstanding Series 97 Warrants.
14. NOTICES. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified by hand or professional
courier service or five (5) days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid and addressed to the
party to be notified at the address indicated for such party in the
Corporation's records, or as such other address as such party may designate by
ten (10) days advance written notice to the other parties.
15. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
Dated: June 30, 1998 ASK JEEVES, INC.
By: /s/ Curtis Vredenburg
-----------------------
Curtis Vredenburg, CFO
3.
<PAGE>
WARRANT
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE CORPORATION
THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AND PURCHASED PURSUANT TO THE
TERMS AND CONDITIONS SET FORTH IN THAT CERTAIN AUGUST 20, 1997 COMMON STOCK AND
WARRANT TO PURCHASE COMMON STOCK PURCHASE AGREEMENT BETWEEN THE ORIGINAL HOLDER
HEREOF AND THE COMPANY.
No. Series 98-3 20,000
WARRANT TO PURCHASE COMMON STOCK
ASK JEEVES, INC., a California corporation (the "Corporation"), hereby
grants to Antenna Group PR (the "Holder"), the right to purchase from the
corporation fifteen thousand (15,000) shares of the common stock of the
Corporation (the "Warrant Shares"), subject to the terms and conditions set
forth below. This Warrant is issued in exchange for Public Relations efforts
undertaken on behalf of the Company during the month of July, 1998.
1. TERM. This Warrant may be exercised, as set forth in Section 3, at any
time through July 31, 2003 (the "Exercise Period").
2. PURCHASE PRICE. The purchase price for each share of the Corporation's
common stock purchasable hereunder shall be $0.2641 per share (subject to
adjustments for stock splits, combinations and the like).
3. EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part,
but not for less than Ten Thousand (10,000) Warrant Shares (or such lesser
number of Warrant Shares as may at the time of exercise constitute the maximum
number exercisable) and in excess of 10,000 Warrant Shares in increments of
1,000 Warrant Shares. It is exercisable, subject to the satisfaction of
applicable securities laws, at any time during the Exercise Period by the
surrender of the Warrant to the Corporation at its principal office together
with the Notice of Exercise annexed hereto duly completed and executed on behalf
of the Holder, accompanied by payment in full of the amount of the aggregate
Exercise Price of the Warrant Shares in immediately available funds.
1
<PAGE>
4. FRACTIONAL INTEREST. The Corporation shall not be required to issue any
fractional shares on the exercise of this Warrant.
5. WARRANT CONFERS NO RIGHTS OF SHAREHOLDER. The Holder shall not have any
rights as a shareholder of the Corporation with regard to the Warrant Shares
prior to actual exercise resulting in the purchase of the Warrant Shares.
6. INVESTMENT REPRESENTATION. Neither this Warrant nor the Warrant Shares
issuable upon the exercise of this Warrant have been registered under the
Securities Act of 1933, or any state securities laws. The Holder acknowledges by
acceptance of the Warrant that as of the date of this Warrant and at the time of
exercise (a) he has acquired this Warrant or the Warrant Shares, as the case may
be, for investment and not with a view to distribution; and either (b) he has a
pre-existing personal or business relationship with the Corporation, or its
executive officers, or by reason of his business or financial experience he has
the capacity to protect his own interests in connection with the transaction;
and (c) he is an accredited investor as that term is defined in Regulation D
promulgated under the Securities Act. The Holder agrees that any Warrant shares
issuable upon exercise of this Warrant will be acquired for investment and not
with a view to distribution and such Warrant Shares will not be registered under
the Securities Act and applicable state securities laws and that such Warrant
Shares may have to be held indefinitely unless they are subsequently registered
or qualified under the Securities Act and applicable state securities laws or,
based on an opinion of counsel reasonably satisfactory to the Corporation, an
exemption from such registration and qualification is available. The Holder, by
acceptance hereof, consents to the placement of the following restrictive
legends, or substantially similar legends, on each certificate to be issued to
the Holder by the Corporation in connection with the issuance of such Warrant
Shares.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS
COVERING SUCH SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS
UNDER APPLICABLE STATE LAW.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME, NOT TO EXCEED ONE HUNDRED EIGHTY
(180) DAYS FROM THE EFFECTIVE DATE OF THE CORPORATION'S FIRST UNDERWRITTEN
PUBLIC OFFERING.
7. RESERVATION OF SHARES. The Corporation agrees at all times during the
Exercise Period to have authorized and reserved, for the exclusive purpose of
issuance and delivery upon exercise of this Warrant, a sufficient number of
shares of its common stock to provide for the exercise of the rights represented
hereby.
2
<PAGE>
8. ADJUSTMENT FOR RE-CLASSIFICATION OF CAPITAL STOCK. If the Corporation at
any time during the Exercise Period shall, by subdivision, combination or
re-classification of securities, change any of the securities to which purchase
rights under this Warrant exist under the same or different number of securities
of any class or classes, this Warrant shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares immediately prior to
such subdivision, combination, or re-classification. If shares of the
Corporation's common stock are subdivided into a greater number of shares of
common stock, the purchase price for the Warrant Shares upon exercise of this
Warrant shall be proportionately reduced and the Warrant Shares shall be
proportionately increased; and conversely, if shares of the Corporation's common
stock are combined into a smaller number of common stock shares, the price shall
be proportionately increased, and the Warrant Shares shall be proportionately
decreased.
9. PUBLIC OFFERING LOCK-UP. In connection with the first underwritten
registration of the Corporation's securities, the Holder agrees, upon the
request of the corporation and the underwriters managing such underwritten
offering of the Corporation's securities, not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any Warrant
Shares (other than those included in the registration) without the prior written
consent of the Corporation and such underwriters, as the case may be, for such
period of time, not to exceed one hundred eighty (180) days, from the effective
date of such registration as the underwriters may specify. The Corporation and
underwriters may request such additional written agreements in furtherance of
such standoff in the form reasonably satisfactory to the Corporation and such
underwriter. The Corporation may also impose stop-transfer instructions with
respect to the shares subject to the foregoing restrictions until the end of
said one hundred eighty (180) day period.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the
Corporation of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and upon reimbursement to the Corporation of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Corporation will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate.
11. ASSIGNMENT. With respect to any offer, sale or other disposition of
this Warrant or any underlying securities, the Holder will give written notice
to the Corporation prior thereto, describing briefly the manner thereof,
together with a written opinion of such Holder's counsel, to the effect that
such offer, sale or distribution may be effected without registration or
qualification (under any applicable federal or state law then in effect).
Furthermore, no such transfer shall be made unless the transferee meets the same
investor suitability standards set forth in Section 6 of this Warrant. Promptly
upon receiving such written notice and reasonably satisfactory opinion, if so
requested, the Corporation, as promptly as practicable, shall notify such Holder
that such Holder may sell or otherwise dispose of this Warrant or the underlying
securities, as the case may be, all in accordance with the terms of the written
notice delivered to the Corporation. If a determination has been made pursuant
to this Section 11 that the opinion of counsel for the Holder is not reasonably
satisfactory to the Corporation, the Corporation shall so
3
<PAGE>
notify the Holder promptly after such determination has been made. Each
Warrant thus transferred shall bear the same legends appearing on this
Warrant, and underlying securities thus transferred shall bear the legends
required by Section 6. The Corporation may issue stop transfer instructions
to its transfer agent in connection with such restrictions. Warrants and
underlying securities issued upon transfers after the expiration date of the
Lock-Up Period shall be issued without the Lock-Up Legend.
12. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
between California residents entered into and to be performed entirely within
the State of California.
13. AMENDMENTS. Any term of this Warrant may be amended with the written
consent of the Company and the holders of warrants representing not less than a
majority in interest (50% +) of the shares of Common Stock issuable upon
exercise of the outstanding Series 97 Warrants.
14. NOTICE. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified by hand or professional
courier service or five (5) days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid and addressed to the
party to be notified at the address indicated for such party in the
Corporation's records, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
15. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
Dated: July 31, 1998 ASK JEEVES, INC.
By: /s/ Curtis Vrendenburg
-----------------------------------
Curtis Vredenburg, CFO
4
<PAGE>
Exhibit 4.5
WARRANT
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE CORPORATION
THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AND PURCHASED PURSUANT TO THE
TERMS AND CONDITIONS SET FORTH IN THAT CERTAIN AUGUST 20, 1997 COMMON STOCK AND
WARRANT TO PURCHASE COMMON STOCK PURCHASE AGREEMENT BETWEEN THE ORIGINAL HOLDER
HEREOF AND THE COMPANY.
No. Series 98-1 8,000
WARRANT TO PURCHASE COMMON STOCK
ASK JEEVES, INC., a California corporation (the "Corporation"), hereby
grants to Antenna Group PR (the "Holder"), the right to purchase from the
Corporation eight thousand (8,000) shares of the common stock of the Corporation
(the "Warrant Shares"), subject to the terms and conditions set forth below.
This Warrant is issued in exchange for Public Relations efforts undertaken on
behalf of the Company during the month of May, 1998.
1. TERM. This Warrant may be exercised, as set forth in Section 3, at any
time through May 31, 2003 (the "Exercise Period").
2. PURCHASE PRICE. The purchase price for each share of the Corporation's
common stock purchasable hereunder shall be $0.2641 per share (subject to
adjustments for stock splits, combinations and the like).
3. EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part,
but not for less than Ten Thousand (10,000) Warrant Shares (or such lesser
number of Warrant Shares as may at the time of exercise constitute the maximum
number exercisable) and in excess of 10,000 Warrant Shares in increments of
1,000 Warrant Shares. It is exercisable, subject to the satisfaction of
applicable securities laws, at any time during the Exercise Period by the
surrender of the Warrant to the Corporation at its principal office together
with the Notice of Exercise annexed hereto duly completed and executed on behalf
of the Holder, accompanied by payment in full of the amount of the aggregate
Exercise Price of the Warrant Shares in immediately available funds.
1.
<PAGE>
4. FRACTIONAL INTEREST. The Corporation shall not be required to issue any
fractional shares on the exercise of this Warrant.
5. WARRANT CONFERS NO RIGHTS OF SHAREHOLDER. The Holder shall not have any
rights as a shareholder of the Corporation with regard to the Warrant Shares
prior to actual exercise resulting in the purchase of the Warrant Shares.
6. INVESTMENT REPRESENTATION. Neither this Warrant nor the Warrant Shares
issuable upon the exercise of this Warrant have been registered under the
Securities Act of 1933, or any state securities laws. The Holder acknowledges by
acceptance of the Warrant that as of the date of this Warrant and at the time of
exercise (a) he has acquired this Warrant or the Warrant Shares, as the case may
be, for investment and not with a view to distribution; and either (b) he has a
pre-existing personal or business relationship with the Corporation, or its
executive officers, or by reason of his business or financial experience he has
the capacity to protect his own interests in connection with the transaction;
and (c) he is an accredited investor as that term is defined in Regulation D
promulgated under the Securities Act. The Holder agrees that any Warrant shares
Isabel upon exercise of this Warrant will be acquired for investment and not
with a view to distribution and such Warrant Shares will not be registered under
the Securities Act and applicable state securities laws and that such Warrant
Shares may have to be held indefinitely unless they are subsequently registered
or qualified under the Securities Act and applicable state securities laws or,
based on an opinion of counsel reasonably satisfactory to the Corporation, an
exemption from such registration and qualification is available. The Holder, by
acceptance hereof, consents to the placement of the following restrictive
legends, or substantially similar legends, on each certificate to be issued to
the Holder by the Corporation in connection with the issuance of such Warrant
Shares.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS
COVERING SUCH SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS
UNDER APPLICABLE STATE LAW.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME, NOT TO EXCEED ONE HUNDRED EIGHTY
(180) DAYS FROM THE EFFECTIVE DATE OF THE CORPORATION'S FIRST UNDERWRITTEN
PUBLIC OFFERING.
7. RESERVATION OF SHARES. The Corporation agrees at all times during the
Exercise Period to have authorized and reserved, for the exclusive purpose of
issuance and delivery upon exercise of this Warrant, a sufficient number of
shares of its common stock to provide for the exercise of the rights represented
hereby.
2.
<PAGE>
8. ADJUSTMENT FOR RE-CLASSIFICATION OF CAPITAL STOCK. If the Corporation at
any time during the Exercise Period shall, by subdivision, combination or
re-classification of securities, change any of the securities to which purchase
rights under this Warrant exist under the same or different number of securities
of any class or classes, this Warrant shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares immediately prior to
such subdivision, combination, or re-classification. If shares of the
Corporation's common stock are subdivided into a greater number of shares of
common stock, the purchase price for the Warrant Shares upon exercise of this
Warrant shall be proportionately reduced and the Warrant Shares shall be
proportionately increased; and conversely, if shares of the Corporation's common
stock are combined into a smaller number of common stock shares, the price shall
be proportionately increased, and the Warrant Shares shall be proportionately
decreased.
9. PUBLIC OFFERING LOCK-UP. In connection with the first underwritten
registration of the Corporation's securities, the Holder agrees, upon the
request of the corporation and the underwriters managing such underwritten
offering of the Corporation's securities, not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any Warrant
Shares (other than those included in the registration) without the prior written
consent of the Corporation and such underwriters, as the case may be, for such
period of time, not to exceed one hundred eighty (180) days, from the effective
date of such registration as the underwriters may specify. The Corporation and
underwriters may request such additional written agreements in furtherance of
such standoff in the form reasonably satisfactory to the Corporation and such
underwriter. The Corporation may also impose stop-transfer instructions with
respect to the shares subject to the foregoing restrictions until the end of
said one hundred eighty (180) day period.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the
Corporation of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and upon reimbursement to the Corporation of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Corporation will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate.
11. ASSIGNMENT. With respect to any offer, sale or other disposition of
this Warrant or any underlying securities, the Holder will give written notice
to the Corporation prior thereto, describing briefly the manner thereof,
together with a written opinion of such Holder's counsel, to the effect that
such offer, sale or distribution may be effected without registration or
qualification (under any applicable federal or state law then in effect).
Furthermore, no such transfer shall be made unless the transferee meets the same
investor suitability standards set forth in Section 6 of this Warrant. Promptly
upon receiving such written notice and reasonably satisfactory opinion, if so
requested, the Corporation, as promptly as practicable, shall notify such Holder
that such Holder may sell or otherwise dispose of this Warrant or the underlying
securities, as the case may be, all in accordance with the terms of the written
notice delivered to the Corporation. If a determination has been made pursuant
to this Section 11 that the opinion of counsel for the Holder is not reasonably
satisfactory to the Corporation, the Corporation shall so
3.
<PAGE>
notify the Holder promptly after such determination has been made. Each
Warrant thus transferred shall bear the same legends appearing on this
Warrant, and underlying securities thus transferred shall bear the legends
required by Section 6. The Corporation may issue stop transfer instructions
to its transfer agent in connection with such restrictions. Warrants and
underlying securities issued upon transfers after the expiration date of the
Lock-Up Period shall be issued without the Lock-Up Legend.
12. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
between California residents entered into and to be performed entirely within
the State of California.
13. AMENDMENTS. Any term of this Warrant may be amended with the written
consent of the Company and the holders of warrants representing not less than a
majority in interest (50% +) of the shares of Common Stock issuable upon
exercise of the outstanding Series 97 Warrants.
14. NOTICE. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified by hand or professional
courier service or five (5) days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid and addressed to the
party to be notified at the address indicated for such party in the
Corporation's records, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
15. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
Dated: May 31, 1998 ASK JEEVES, INC.
By: /s/ Curtis Vredenburg
-------------------------------
Curtis Vredenburg, CFO
4.
<PAGE>
WARRANT
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION THEREOF. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION WITHOUT AN
OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR THE CORPORATION
THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AND PURCHASED PURSUANT TO THE
TERMS AND CONDTIIONS SET FORTH IN THAT CERTAIN AUGUST 20, 1997 COMMON STOCK AND
WARRANT TO PURCHASE COMMON STOCK PURCHASE AGREEMENT BETWEEN THE ORIGINAL HOLDER
HEREOF AND THE COMPANY.
No. Series 99-11 5,000
WARRANT TO PURCHASE COMMON STOCK
ASK JEEVES, INC., a California corporation (the "Corporation"), hereby
grants to Soren Jacobsen (the "Holder"), the right to purchase from the
Corporation five thousand (5,000) shares of the common stock of the Corporation
(the "Warrant Shares"), subject to the terms and conditions set forth below.
This Warrant is issued in exchange for transfer of the rights and titles to the
following domain names: justask.com and justask.org.
1. TERM. This Warrant may be exercised, as set forth in Section 3, at any
time through March 10, 2004 (the "Exercise Period").
2. PURCHASE PRICE. The purchase price for each share of the Corporation's
common stock purchasable hereunder shall be $2.16 per share (subject to
adjustments for stock splits, combinations and the like).
3. EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part,
but not for less than One Thousand (1,000) Warrant Shares (or such lesser number
of Warrant Shares as may at the time of exercise constitute the maximum number
exercisable) and in excess of 1,000 Warrant Shares in increments of 1,000
Warrant Shares. It is exercisable, subject to the satisfaction of applicable
securities laws, at any time during the Exercise Period by the surrender of the
Warrant to the Corporation at its principal office together with the Notice of
Exercise annexed hereto duly completed and executed on behalf of the Holder,
accompanied by payment in full of the amount of the aggregate Exercise Price of
the Warrant Shares in immediately available funds.
1.
<PAGE>
4. FRACTIONAL INTEREST. The Corporation shall not be required to issue any
fractional shares on the exercise of this Warrant.
5. WARRANT CONFERS NO RIGHTS OF SHAREHOLDER. The Holder shall not have any
rights as a shareholder of the Corporation with regard to the Warrant Shares
prior to actual exercise resulting in the purchase of the Warrant Shares.
6. INVESTMENT REPRESENTATION. Neither this Warrant nor the Warrant Shares
issuable upon the exercise of this Warrant have been registered under the
Securities Act of 1933, or any state securities laws. The Holder acknowledges by
acceptance of the Warrant that as of the date of this Warrant and at the time of
exercise (a) he has acquired this Warrant or the Warrant Shares, as the case may
be, for investment and not with a view to distribution; and either (b) he has a
pre-existing personal or business relationship with the Corporation, or its
executive officers, or by reason of his business or financial experience he has
the capacity to protect his own interests in connection with the transaction;
and (c) he is an accredited investor as that term is defined in Regulation D
promulgated under the Securities Act. The Holder agrees that any Warrant Shares
issuable upon exercise of this Warrant will not be registered under the
Securities Act and applicable state securities laws and that such Warrant Shares
may have to be held indefinitely unless they are subsequently registered or
qualified under the Securities Act and applicable state securities laws or,
based on an opinion of counsel reasonably satisfactory to the Corporation, an
exemption from such registration and qualification is available. The Holder, by
acceptance hereof, consents to the placement of the following restrictive
legends, or substantially similar legends, on each certificate to be issued to
the Holder by the Corporation in connection with the issuance of such Warrant
Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UDNER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS
COVERING SUCH SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS
UNDER APPLICABLE STATE LAW.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME, NOT TO EXCEED ONE HUNDRED
EIGHTY (180) DAYS FROM THE EFFECTIVE DATE OF THE CORPORATION'S FIRST
UNDERWRITTEN PUBLIC OFFERING.
7. RESERVATION OF SHARES. The Corporation agrees at all times during the
Exercise Period to have authorized and reserved, for the exclusive purpose of
issuance and delivery upon exercise of this Warrant, a sufficient number of
shares of its common stock to provide fore the exercise of the rights
represented hereby.
2.
<PAGE>
8. ADJUSTMENT FOR RE-CLASSIFICATION OF CAPITAL STOCK. If the Corporation at
any time during the Exercise Period shall, by subdivision, combination or
re-classification of securities, change any of the securities to which purchase
rights under this Warrant exist under the same or different number of securities
of any class or classes, this Warrant shall thereafter entitle the Holder to
acquire such number and kind of securities as would have been issuable as a
result of such change with respect to the Warrant Shares immediately prior to
such subdivision, combination, or reclassification. If shares of the
Corporation's common stock are subdivided into a greater number of shares of
common stock, the purchase price for the Warrant Shares upon exercise of this
Warrant shall be proportionately reduced and the Warrant Shares shall be
proportionately increased; and conversely, if shares of the Corporation's common
stock are combined into a smaller number of common stock shares, the price shall
be proportionately increased, and the Warrant Shares shall be proportionately
decreased.
9. PUBLIC OFFERING LOCK-UP. In connection with the first underwritten
registration of the Corporation's securities, the Holder agrees, upon the
request of the Corporation and the underwriters managing such underwritten
offering of the Corporation's securities, not to sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any Warrant
Shares (other than those included in the registration) without the prior written
consent of the Corporation and such underwriters, as the case may be, for such
period of time, not to exceed one hundred eighty (180) days, from the effective
date of such registration as the underwriters may specify. The Corporation and
underwriters may request such additional written agreements in furtherance of
such standoff in the form reasonably satisfactory to the Corporation and such
underwriter. The Corporation may also impose stop-transfer instructions with
respect to the shares subject to the foregoing restrictions until the end of
said one hundred eighty (180) day period.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by the
Corporation of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of any Warrant or stock certificate, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and upon reimbursement to the Corporation of all reasonable expenses
incidental thereto, and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Corporation will make and deliver a new Warrant
or stock certificate of like tenor and dated as of such cancellation, in lieu of
this Warrant or stock certificate.
11. ASSIGNMENT. With respect to any offer, sale or other disposition of
this Warrant or any underling securities, the Holder will give written notice to
the Corporation prior thereto, describing briefly the manner thereof, together
with a written opinion of such Holder's counsel, to the effect that such offer,
sale or other distribution may be effected without registration or qualification
(under any applicable federal or state law then in effect). Furthermore, no such
transfer shall be made unless the transferee meets the same investor suitability
standards set forth in Section 6 of this Warrant. Promptly upon receiving such
written notice and reasonably satisfactory opinion, if so requested, the
Corporation, as promptly as practicable, shall notify such Holder that such
Holder may sell or otherwise dispose of this Warrant or the underlying
securities, as the case may be, all in accordance with the terms of the written
notice delivered to the Corporation. It a determination has been made pursuant
to this Section 11 that the opinion of counsel for the Holder is not reasonably
satisfactory to the Corporation, the Corporation shall so
3.
<PAGE>
notify the Holder promptly after such determination has been made. Each
Warrant thus transferred shall bear the same legends appearing on this
Warrant, and underlying securities thus transferred shall bear the legends
required by Section 6. The Corporation may issue stop transfer instructions
to its transfer agent in connection with such restrictions. Warrants and
underling securities issued upon transfers after the expiration date of the
Lock-Up Period shall be issued without the Lock-Up Legend.
12. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
between California residents entered into and to be performed entirely within
the State of California.
13. AMENDMENTS. Any term of this Warrant may be amended with the written
consent of the Company and the holders of warrants representing not less than a
majority in interest (50%+) of the shares of Common Stock issuable upon exercise
of the outstanding Series 97 Warrants.
14. NOTICES. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified by hand or professional
courier service or five (5) days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid and addressed to the
party to be notified at the address indicated for such party in the
Corporation's records, or at such other address as such party may designate by
ten (10) days' advance written notice to the other parties.
15. ATTORNEYS' FEES. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
Dated: March 10, 1999 ASK JEEVES, INC.
By: /s/ Christine M. Davis
------------------------------------
Christine M. Davis, Chief Financial
Officer
4.
<PAGE>
STANDARD COMMERCIAL OFFICE LEASE FOR EAT/WORK DEVELOPMENT
THIS COMMERCIAL OFFICE LEASE (the "Lease") is entered into as of 8/20/97 by
and between EAT/WORK DEVELOPMENT, LP, a California limited partnership
("Landlord") and THE RODA GROUP VENTURE DEVELOPMENT COMPANY, L.L.C., a
Delaware limited liability company ("Tenant").
1. BASIC LEASE TERMS. Landlord leases to Tenant, and Tenant rents and hires
from Landlord, the Premises described in Section 1.1 below, for the rents
hereinafter reserved, for the term stated in Section 1.4 below, and upon and
subject to the terms, conditions (including limitations, restrictions, and
reservations), and covenants hereinafter provided. Each party hereby
expressly covenants and agrees to observe and perform all of the conditions
and covenants herein contained on its part to be observed and performed. The
parties agree that the following table (the "Table") sets forth in summary
form the basic terms of this Lease, as all of such terms as defined below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Period Suite # Square Footage Monthly Base Pro Rata Share Base Year
Rent (incl. CAM)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
October 15, 1997- A-1-1 4800 s.f. $8,400.00 14% 1998
October 14, 2000 A-1-2
- -----------------------------------------------------------------------------------------------------------
</TABLE>
In the event of any conflict between the terms contained in the Table and the
terms contained in subsequent sections of the Lease, the terms of the Table
shall control, subject to any adjustments specifically provided for in any
other provisions of the Lease.
1.1 PREMISES. The Premises leased to Tenant (the "Premises") is that portion
of the first floor of the Building described in Section 1.2 below and commonly
known as Suites A-1-1 and A-1-2, as shown on the floor plan annexed hereto as
EXHIBIT B. The Premises also include all fixtures and equipment which are
attached thereto, except items not deemed to be included therein and which are
removable by Tenant as provided in Section 18. Landlord and Tenant agree that
the square footage of the Premises, for all purposes under this Lease, are as
specified in the Table. Tenant acknowledges that it has had an opportunity to
verify the numbers stated in the Table relating to the measurements of the
Premises prior to the Commencement Date of this Lease.
1.2 BUILDING. The Premises are located in the building known by the street
address 918 Parker Street (the "Building") in the City of Berkeley, County of
Alameda, State of California. The Building is more particularly described and
depicted in EXHIBIT A which is attached hereto. Landlord and Tenant agree that
the square footage of the Building, for all purposes under this Lease, is
twenty thousand seven hundred (20,700). Tenant acknowledges that it has had an
opportunity to verify the measurement of the Building prior to the Commencement
Date of this Lease.
1.3 DEVELOPMENT. The Building is located in and forms part of the real
property commonly known as the Eat/Work Development, with a street address of
918 Parker Street, Berkeley, California (the "Development"), which comprises
three different buildings and constitutes a single parcel on the assessment
roll of the Alameda County Tax Assessor. For the purposes of this Lease, the
Development shall mean the Building and any common or public areas or
facilities, easements, corridors, lobbies, sidewalks, loading areas,
driveways, landscaped areas, skywalk, parking garages and lots, and any and
all other structures or facilities operated or maintained in connection with
or for the benefit of the Building, and all parcels or tracts of land on
which all or any portion of the Building or any of the other foregoing items
are located, and any fixtures, machinery, equipment, apparatus, Systems and
Equipment (as defined in Section 5.5 below), furniture, and other personal
property located thereon or therein and used in connection therewith, whether
title is held by Landlord or its affiliates. Landlord and Tenant agree that
the square footage of the Development, for all purposes under this Lease, is
thirty four thousand (34,000). Tenant acknowledges that it has had an
opportunity to verify the measurement of the Development prior to the
Commencement Date of this Lease.
1.4 TERM. The term (the "Term") for which the Premises are hereby leased
shall commence on the "Commencement Date," which shall be October 15, 1997, or,
if earlier, the day on which the Premises are ready for occupancy (as defined
in Section 5) and shall end on October 14, 2000 (the "Expiration Date") or any
earlier date upon which the Term may expire or be canceled or terminated
pursuant to any of the conditions or covenants of this Lease or pursuant to
law. Promptly following the Commencement Date the parties hereto shall, if
required by Landlord, enter into a supplementary agreement fixing the dates of
the Commencement Date and the Expiration Date in the form which is attached
hereto as EXHIBIT C and incorporated herein by reference.
1.4.1 DELAY IN POSSESSION. If Landlord is unable to deliver possession of
the Premises to Tenant at the commencement hereof, Landlord shall not be
liable for any damage caused thereby, nor shall this Lease be void or
voidable, but Tenant shall not be liable for any rent until possession is
delivered with all Work
<PAGE>
having been substantially completed pursuant to Section 5.2 and Exhibit D
hereof. Tenant may at its option terminate this Lease if possession of the
Premises with all work substantially completed pursuant to Section 5.2 and
Exhibit D hereof, is not delivered within forty five (45) days of the
Commencement Date.
1.5 TENANT PARKING. Tenant is entitled to nine (9) unreserved parking spaces
in the parking lot of Eat/Work Development. If it is necessary at any time to
reserve parking spaces or hire a guard to monitor parking, Landlord may, at
its option, do so and pass both reasonable administrative and direct labor
expenses for the guard or monitor to tenant based on tenant's Pro Rata Share
as defined in Section 1.
2. RENT. The "Rent" reserved under this Lease, for the Term thereof, shall
consist of the following:
a) "Base Rent" of eight thousand four hundred dollars ($8400.00) per
month, which shall be payable in advance on the first day of each and every
calendar month during the Term of this Lease, except that Tenant shall pay the
first month's Base Rent due under the Lease upon the execution and delivery
of this Lease by Tenant; and
b) "Additional Rent" consisting of any and all other sums of money as
shall become payable by Tenant to Landlord hereunder; and Landlord shall have
the same remedies for default in the payment of Additional Rent as for a
default in payment of Base Rent.
2.1 BASE RENT ADJUSTMENT. On each anniversary of the Commencement Date the
monthly Base Rent shall increase by two hundred and forty dollars ($240.00).
2.2 ADDITIONAL RENT. In addition to the Base Rent and all other payments due
under this Lease, Tenant shall pay to Landlord, in the manner set forth
herein, as Additional Rent, the following amounts (collectively the "Rental
Adjustment"):
a) INCREASED INSURANCE. Tenant agrees to pay its Pro Rata Share of that
portion of all Casualty Insurance under Section 2.3e incurred or paid by
Landlord in connection with the ownership and operation of the Building
("insurance") during each Adjustment Period which exceeds the amount of Base
Operating Insurance subject to proration under Section 2.3.2 below. In the
event that Landlord obtains additional coverages or increases the rate of
coverage as of the commencement date of this Lease, Landlord agrees to adjust
Base Year coverage as if such coverage had been included in the Base Year.
Notwithstanding anything to the contrary herein, Landlord agrees that
"Increased Insurance" shall not include any surcharge or unusual rate increase
attributable to any non-office Tenant in the Building.
b) INCREASED TAXES. An amount equal to Tenant's Pro Rata Share of that
portion of Real Estate Taxes paid by Landlord during each Adjustment Period
which exceeds the amount of Base Real Estate Taxes, subject to proration under
Section 2.3.2 below. Notwithstanding anything to the contrary herein, Tenant's
obligation to pay its Pro Rata Share of any increase in Real Estate Taxes
which is attributable to a transfer or change in the ownership of the Building
(the "Increase") shall be limited as follows: if the transfer or change in
ownership occurs during the first year after the Commencement Date, Tenant
shall have no obligation to pay any portion of the Increase; if the transfer
or change in ownership occurs during the second year after the Commencement
Date, Tenant shall pay twenty percent (20%) of the Increase; if the transfer
or change in ownership occurs during the third year after the Commencement
Date, Tenant shall pay forty percent (40%) of the Increase; if the transfer or
change in ownership occurs during the fourth year after the Commencement Date,
and assuming Tenant has exercised its Extension Option, Tenant shall pay sixty
percent (60%) of the Increase; if the transfer or change in ownership occurs
during the fifth year after the Commencement Date, and assuming Tenant has
exercised its Extension Option, Tenant shall pay eighty percent (80%) of the
Increase; and if the transfer or change in ownership occurs during the sixth
year after the Commencement Date, and assuming Tenant has exercised its
Extension Option, Tenant shall pay one hundred percent (100%) of the Increase.
2.3 DEFINITIONS. For the purposes of this Lease, the following definitions
shall apply:
a) BASE INSURANCE. "Base Insurance" means the total of insurance paid
by Landlord during calendar year 1997 for the Leased Premises (the "Base
Insurance Year").
b) BASE REAL ESTATE TAXES. "Base Real Estate Taxes" means the total of
Real Estate Taxes paid by Landlord during tax year 1998-1999 for the Leased
Premises (the "Base Tax Year").
c) TENANT'S PRO RATA SHARE. "Tenant's Pro Rata Share" shall mean the
percentage labeled as such in the Table in Section 1, derived as follows:
Tenant's Pro Rata Share is calculated by dividing the agreed area of the
Premises (numerator) by the agreed area of the Development (denominator) and
expressing the resulting quotient as a percentage. Tenant's Pro Rata Share
shall be adjusted during the Term in proportion to any adjustment in the area
of the Premises or Development in accordance with the formula stated herein.
d) ADJUSTMENT PERIOD. "Adjustment Period" means each calendar year of
which any portion occurs during the Term, excluding the Base Year and
beginning with the first calendar year immediately following the Base Year.
e) INSURANCE. "Insurance" means premiums for any insurance policies as
determined by Landlord in accordance with the reasonable practice of prudent
landlords in the vicinity of the Development (including public liability,
property damage, earthquake if commercially reasonable, and fire and extended
<PAGE>
coverage insurance for the full replacement cost of the Building as required
by Landlord or its lenders for the Building).
f) REAL ESTATE TAXES. "Real Estate Taxes" means any and all ad
valorem real property taxes and any form of assessment, levy, charge, fee,
tax, or other imposition imposed by any authority, including any city,
county, state, or federal governmental agency, or any school, library,
lighting, transportation, housing, drainage, or other improvement or special
assessment district thereof, whether or not now customary or in the
contemplation of the parties hereto, and whether or not general, special,
ordinary, or extraordinary, which Landlord shall pay during any Adjustment
Period because of or in connection with the ownership, leasing, or operation
of the Building.
2.3.1 RECONCILIATION. On or before the first day of April of each year after
the first Adjustment Period (or as soon thereafter as is practical), Landlord
shall deliver to Tenant a statement (the "Statement") setting forth the
Rental Adjustment for the preceding year. Tenant shall pay Landlord the
amount of any rental adjustment within ten (10) days of the receipt of the
Statement. The obligation of Tenant to make payments required under this
Section 2.3.1 shall survive the expiration or earlier termination of the Term
of this Lease.
2.3.2 PRORATION OF RENTAL ADJUSTMENT. If the Term does not commence on
January 1 or does not end on December 31, Tenant's obligations to pay
estimated and actual amounts towards increased Insurance and/or Real Estate
Taxes for such first or final calendar year shall be prorated to reflect the
portion of such year(s) included in the Term. Such proration shall be made by
multiplying the total estimated or actual (as the case may be) increased
insurance and/or Real Estate Taxes, (as the case may be) for such calendar
year(s), as well as the base insurance amount and/or Base Real Estate Taxes,
(as the case may be), by a fraction, the numerator of which shall be the
number of days of the Term during such calendar year, and the denominator of
which shall be three hundred sixty-five (365).
2.4 PAYMENT OF RENT. Tenant shall pay the Base Rent and Additional Rent
promptly when due, without demand therefor and without any abatement,
deduction, or setoff whatsoever, except as may be expressly provided in this
Lease. Tenant shall pay the Rent to Landlord, in lawful money of the United
States of America, at Landlord's office at the Building or at such other
place, or to such agent and at such place, as Landlord may designate by
notice to Tenant. If the Commencement Date occurs on a day other than the
first day of a calendar month, the Base Rent for such calendar month shall
be prorated, and the balance of the first month's Base Rent theretofore paid
shall be credited against the next monthly installment of Base Rent. The Base
Rent for the last month of the lease term shall also be prorated.
2.5 LATE CHARGES. Tenant acknowledges that the late payment of any monthly
Rent will cause Landlord to lose the use of that money and incur costs and
expenses not contemplated under this Lease, including administrative and
collection costs and processing and account expenses, the exact amount of
which it is difficult to ascertain. Therefore, if more than one such
installment within any 12-month period is not received by Landlord within
five (5) days from the date it is due, Tenant shall pay Landlord a late
charge equal to five percent (5%) of such installment. Landlord and Tenant
agree that this late charge represents a reasonable estimate of such costs
and expenses and is fair compensation to Landlord for the loss suffered from
such nonpayment by Tenant. In addition, any check returned by the bank for
any reason will be considered late and will be subject to all late charges
plus a Twenty Dollar ($20.00) fee. After two such occasions in any twelve
(12) month period, Landlord will have the right to require payment by a
cashier's check or money order. Acceptance of any late charge shall not
constitute a waiver of Tenant's default with respect to such nonpayment by
Tenant nor prevent Landlord from exercising any other rights or remedies
available to Landlord under this Lease or at law.
3 SECURITY DEPOSIT. Tenant shall deposit with Landlord the amount of
eight thousand four hundred dollars ($8,400.00) (the "Security Deposit") upon
Tenant's execution and submission of this Lease to be held, applied and
disposed of pursuant to the provisions of Section 1950.7 of the California
Civil Code. The Security Deposit shall serve as security for the prompt,
full, and faithful performance by Tenant of the terms and provisions of this
Lease. Landlord shall not be required to keep the Security Deposit separate
from Landlord's general funds or pay interest on the Security Deposit.
3.1 APPLICATION OF DEPOSIT. In the event that Tenant is in Default
hereunder and fails to cure within any applicable time permitted under this
Lease, or in the event that Tenant owes any amounts to Landlord upon the
expiration of this Lease, Landlord may use or apply the whole or any part of
the Security Deposit for the payment of Tenant's obligations hereunder. The
use or application of the Security Deposit or any portion thereof shall not
prevent Landlord from exercising any other right or remedy provided hereunder
or under any Law and shall not be construed as liquidated damages.
3.2 RESTORATION OF FULL DEPOSIT. In the event the Security Deposit is
reduced by such use or application, Tenant shall deposit with Landlord,
within ten (10) days after written notice, an amount sufficient to restore
the full amount of the Security Deposit.
<PAGE>
3.3 DISPOSITION OF SECURITY DEPOSIT. After the Expiration Date or any
earlier termination of the Lease, any remaining portion of the Security
Deposit shall be returned to Tenant in accordance with the provisions of
Section 1950.7 of the California Civil Code.
4 USE. The Premises are to be used as offices and related uses and for
no other purpose without prior written consent of Landlord.
4.1 PROHIBITED USES. Tenant shall not use any portion of the Premises for
purposes other than those specified hereinabove, and no use shall be made or
permitted to be made upon the Premises, nor acts done, which will increase
the existing rate of insurance upon the property, or cause cancellation of
insurance policies covering said property. Tenant shall not conduct or permit
any sale by auction on the Premises. Tenant shall not use, release or store
or permit the usage, release, or storage of restricted materials or
substances by Department of Health Services, California Water Quality Control
Board, Environmental Protection Agency, or any other governmental agency or
entity, and Tenant shall comply with all environmental laws, regulations,
rules and requirements applicable to Tenant's activities in the Premises.
Tenant shall indemnify, defend and hold Landlord harmless from and against
any claims, judgments, demands, liabilities, costs and expenses (including
reasonable attorney's fees) arising from Tenant's breach of the above
covenants. Tenant shall not commit any waste upon the Premises or any
nuisance or act which may disturb the quiet enjoyment of any tenant in the
Building.
5 CONDITION OF PREMISES. Tenant shall accept the Premises (and the
Systems and Equipment serving the same) in an "as is" condition, except as
provided in paragraph 5.4, on the date the Term commences, and Landlord shall
have no obligation to improve, alter, remodel, or otherwise modify the
Premises prior to Tenant's occupancy, except as provided in the mutually
approved "Work Letter Agreement" attached hereto and made a part hereof as
Exhibit D.
5.1 LANDLORD'S PREPARATION. If the parties have entered into a separate
Work Letter Agreement concurrently with their execution of this Lease,
Landlord shall use reasonable diligence in completing and preparing the
Premises for Tenant's occupancy in the manner and subject to the terms,
conditions, and covenants set forth in the Work Letter Agreement. The
facilities, materials, furnishings and work to be furnished, installed, and
performed in the Premises by Landlord pursuant to the Work Letter Agreement
are referred to as the "Work." Such other installations, materials, and work
which may be undertaken by or for the account of Tenant to prepare, equip,
decorate, and furnish the Premises for Tenant's occupancy are referred to as
the "Tenant's Work."
5.1.1 POSSESSION DURING WORK. It is the intention of the parties that Tenant
shall be in possession and occupancy of the Premises during the period that
Landlord is performing work in the Development. Landlord shall have no
liability to Tenant nor shall Tenant's obligations under this Lease be
reduced or abated in any manner whatsoever by reason of any inconvenience,
annoyance, interruption, or injury to Tenant's business arising from
Landlord's performance of the improvements in the Development or making any
repairs or changes which Landlord is required or permitted by this Lease or by
any other tenant's lease or required by law to make in or to any portion of
the Building or the Development. Landlord shall nevertheless use reasonable
efforts to minimize any interference with Tenant's business in the Premises.
5.2 READINESS FOR OCCUPANCY. The Premises shall be deemed ready for
occupancy on the earliest date on which all of the following conditions (the
"Occupancy Conditions") have first been met:
a) SUBSTANTIAL COMPLETION OF WORK. Substantially Completed shall
mean that the Premises and the Work and furnishings required to be installed
under Exhibit D hereof are sufficiently completed to allow Tenant to occupy
the Premises for their intended purposes, and it shall be so deemed
notwithstanding the fact that minor or insubstantial details of
construction, mechanical adjustment, or decoration (as further defined in
Exhibit D) remain to be performed, the noncompletion of which does not
materially interfere with Tenant's beneficial use of the Premises for their
intended purposes;
b) ACCESS AND SERVICES. Reasonable means of access and facilities
necessary to Tenant's use and occupancy of the Premises, including corridors,
elevators, stairways, heating, ventilating, air-conditioning, sanitary,
water, and electrical facilities (but exclusive of parking facilities) have
been installed and are in reasonably good operating order and available to
Tenant; and
5.2.1 TENANT DELAYS. If the occurrence of any of the Occupancy Conditions
and Landlord's preparation of the Premises for occupancy shall be delayed
owing to either (a) any act, omission, or failure of Tenant or any of its
employees, agents, or contractors which shall continue after Landlord shall
have given Tenant reasonable notice that such act, omission, or failure would
result in delay, and such delay shall have been unavoidable by Landlord in
the exercise of reasonable diligence and prudence; or (b) the nature of any
items of additional work or change orders that Landlord undertakes to perform
for the account of Tenant (including any delays incurred by Landlord, after
making reasonable efforts, in procuring any materials, equipment, or fixtures
of a kind or nature not used by Landlord as part of its standard construction)
<PAGE>
(collectively "Tenant Delays"), then the Premises shall be deemed ready for
occupancy on the date when they would have been ready but for such Tenant
Delays.
5.3 EARLY ENTRY. During any period that Tenant shall be permitted to enter
the Premises prior to the Commencement Date other than to occupy the same
(e.g.,to perform alterations or improvements), Tenant shall comply with all
terms and provisions of this Lease, except those provisions requiring the
payment of Rent. Landlord shall permit early entry, provided the Premises are
legally available and Landlord has completed any Work required under this
Lease.
5.4 NOTICE OF DEFECTS. It shall be conclusively presumed upon Tenant's
taking actual possession of the Premises that the same were in satisfactory
condition (except for latent defects) as of the date of such taking of
possession, unless within thirty (30) days after the Commencement Date Tenant
shall give Landlord notice in writing specifying the respects in which the
Premises were not in satisfactory condition. Landlord agrees to exercise for
Tenant's benefit all of the standard contractor remedies and warranties of at
least one year and any manufacturors warranties for all new Work and as further
provided in Section 5.3 of the Work Letter Agreement.
5.5 SYSTEMS AND EQUIPMENT. As used in this Lease, "Systems and Equipment"
means collectively any existing duct work, intrabuilding network cables and
wires that transmit voice, data, and other telecommunications signals
("INC"), and other equipment, facilities, and systems designed to supply
water, heat, ventilation, air conditioning and humidity or any other services
or utilities, or comprising or serving as any component or portion of the
electrical, gas, steam, plumbing, sprinkler, communications, alarm, security,
or fire/life/safety systems or equipment, or any other mechanical,
electrical, electronic, computer, or other systems or equipment for the
Building. Nothing in this Lease shall be construed to impose upon the Tenant
a general obligation to maintain the Building Systems and Equipment, except
as specifically provided for in this Lease.
6 ASSIGNMENT AND SUBLETTING. Tenant agrees that it shall not assign,
sublet, mortgage, hypothecate, or encumber this Lease, nor permit or allow
the Premises or any part thereof to be used or occupied by others, without
the prior written consent of Landlord in each instance which shall not
unreasonably be withheld or delayed. The actions described in the foregoing
sentence are referred to collectively herein as "Transfers." If the Premises
or any part thereof be sublet or occupied by anybody other than Tenant,
Landlord may, after default by Tenant, collect rent from the subtenant or
occupant and apply the net amount collected to the Rent herein reserved; but
no Transfer, occupancy, or collection shall be deemed a waiver of the
provisions hereof, the acceptance of the subtenant or occupant as tenant, or
a release of Tenant from the further performance hereunder by Tenant. The
consent by Landlord to a Transfer shall not relieve Tenant from obtaining the
Landlord's express written consent to any further Transfer. In no event shall
any permitted sublessee assign or encumber its sublease or further sublet all
or any portion of its sublet space, or otherwise suffer or permit the sublet
space or any part thereof to be used or occupied by others, without
Landlord's prior written consent in each instance which shall not be
unreasonably withheld or delayed. Notwithstanding anything to the contrary
herein, Tenant shall have a one-time right to assign the entire Premises to a
company in which Tenant is a significant (i.e. more than 20%) shareholder
without Landlord's prior consent, provided that (a) Tenant agrees that such
assignment will not void the personal guarantee which is attached to this
Lease as EXHIBIT E and (b) Tenant shall provide to Landlord concurrently with
such assignment reasonably satisfactory evidence of (i) Tenant's majority
ownership of assignee and (ii) a financial strength on the part of such
assignee which is at least equal to that of Tenant as of the Commencement
Date of this Lease.
7 COMPLIANCE WITH LAWS. Tenant shall use the Premises in compliance with all
applicable federal, state, county, and local governmental and municipal laws,
statutes, ordinances, rules, regulations, codes, decrees, orders, and other
such requirements, and decisions by courts in cases where such decisions are
considered binding precedents in the State of California (the "State"), and
decisions of federal courts applying the laws of the State (collectively
"Laws"). Tenant shall, at its sole cost and expense, promptly comply with
each and all of such Laws, and also with the requirements of any board of
fire underwriters or other similar body now or hereafter constituted to deal
with the condition, use, or occupancy of the Premises, except in the case of
required compliance (including, without limitation structural changes) not
triggered by Tenant's change in use of the Premises or Tenant's alterations,
additions, or improvements therein. Tenant shall comply with all applicable
Laws regarding the physical condition of the Premises, but only to the extent
that the applicable Laws pertain to the particular manner in which Tenant
uses the Premises or the particular use to which Tenant puts the Premises, if
different from that permitted under Section 4 of this Lease.
7.1 CODE COSTS. Notwithstanding anything to the contrary in this Section 7,
if the requirement of any public authority obligates either Landlord or
Tenant to expend money in order to bring the Premises and/or any area of the
Building into compliance with Laws as a result of Tenant's particular use or
alteration of the Premises; Tenant's change in the use of the Premises; the
manner of conduct of Tenant's business or operation of its installations,
equipment, or other property therein; any cause or condition created by or at
5
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the instance of Tenant, other than by Landlord's performance of any work for
or on behalf of Tenant; or breach of any of Tenant's obligations hereunder,
then Tenant shall bear all costs ("Code Costs") of bringing the Premises
and/or Building into compliance with Laws, whether such Code Costs are
related to structural or nonstructural elements of the Premises or Building.
8 HAZARDOUS MATERIALS. Tenant shall not cause or permit to occur (i) any
violation of applicable Laws now or hereafter enacted or issued, related to
environmental conditions on, under, or about the Premises arising from
Tenant's leasehold interest in or use or occupancy of the Premises including,
soil and groundwater conditions and (ii) the use, generation, release,
manufacture, refining, production, processing, storage, or disposal of any
Hazardous Materials on, under, or about the Premises or the Building or the
transportation to or from the Premises or the Building of any Hazardous
Materials, except de minimis amounts of Hazardous Materials that are commonly
used in office products or are present in ordinary cleaning supplies. All
such office products and cleaning supplies will be used and stored in a
manner that complies with all Laws. Tenant shall at its own expense make all
submissions to, provide all information required by, and comply with all
requirements of all governmental authorities under Laws relating to Hazardous
Materials. Should any governmental entity having jurisdiction over the
Premises demand that a remediation plan be prepared or that remediation be
undertaken because of any deposit, spill, discharge, or other release of
Hazardous Materials that occurs during the Term of this Lease at or from the
Premises which arises at any time from Tenant's use or occupancy of the
Premises or from acts or omissions of Tenant, its agents, employees,
representatives, or invitees, then Tenant shall, at its own expense, prepare
and submit the required plans. Tenant shall indemnify, defend, protect, and
hold Landlord, its partners, officers, directors, beneficiaries,
shareholders, agents, employees, and lenders harmless from all fines, suits,
procedures, claims, liabilities, and actions of every kind, and all costs
associated therewith (including investigation costs and attorneys' and
consultants' fees) arising out of or in any way connected with any deposit,
spill, discharge, or other release of Hazardous Materials that occurs during
the Term of this Lease, at or from the Premises which arises at any time from
Tenant's use or occupancy of the Premises or from Tenant's failure to provide
all information, make all submissions, and take all steps requires by any
governmental authorities having jurisdiction over the Premises. Tenant's
obligations and the indemnity hereunder shall survive the expiration or
earlier termination of this Lease. The term Hazardous Materials as used
herein shall include any chemical, substance, or material which has been or
is hereafter determined by any federal, state, or local governmental agency
to be capable of posing a risk of injury to health or safety including
petroleum, asbestos, polychlorinated biphenyls, radioactive materials, and
radon gas.
9 MAINTENANCE, REPAIRS, ALTERATIONS. Subject to Tenant's rights under
Section 5.4 above and Section 5.3 of the Work Letter Agreement, after
completion of Landlord's Work, pursuant to Section 5 Tenant shall, at his own
expense and at all times, maintain the Premises in good and safe condition,
including plate glass and any existing or future intrabuilding alarm,
computer, or network cables and wires that transmit voice, data, and other
telecommunications signals ("INC"), and any other existing or future exposed
equipment or system comprising or supplying water, gas, electricity, HVAC,
communications, alarms, fire/safety, sprinkler, plumbing or appliances for
the Premises and shall surrender the same at termination hereof in as good
condition as received, normal wear and tear excepted. Tenant shall be
responsible for all repairs for such exposed equipment for systems required,
excepting the roof, skylights, exterior walls, and structural foundations,
which shall be maintained by Landlord. Notwithstanding Tenant's foregoing
maintenance and repair responsibility, Tenant shall not be responsible to
replace any systems or equipment where such replacement would be deemed a
capital replacement as opposed to a repair under generally-accepted
accounting principles, unless such replacement has been caused solely by
Tenant's negligence, wilfull misconduct, or failure to maintain as required
hereunder. Landlord shall maintain in good condition the common areas of the
property, such as sidewalks, driveways, lawns, and shrubbery. No improvement
or alteration of the Premises shall be made without the prior written consent
of the Landlord, which shall not be unreasonably withheld or delayed. Prior
to the commencement of any substantial repair (except in an emergency
provided that Tenant shall notify Landlord as soon as reasonably possible),
improvement, or alteration, Tenant shall give Landlord at least five (5)
days' written notice in order that Landlord may post appropriate notices of
nonresponsibility to avoid any liability for liens for any such work of
improvement on the Premises.
10 ENTRY AND INSPECTION. Tenant shall permit Landlord or Landlord's agents
to enter upon the Premises at reasonable times and upon reasonable notice for
the purpose of inspecting the same, will permit Landlord at any time within
one hundred twenty (120) days prior to the expiration of this Lease to place
upon the Premises any usual and reasonable "To Lease" or "Available" signs,
and will permit persons desiring to lease the same to inspect the Premises
thereafter.
11 INDEMNIFICATION OF LANDLORD. Tenant agrees to assume the defense of and
indemnify and save harmless Landlord from all claims, liability, loss,
damage, injury, including physical injury of Tenant's employees directly or
indirectly arising from the performance of this Lease, from tenant's
occupation or use of the Premises, or arising out of the failure of Tenant to
provide a "safe place to work" and from any and all claims, liability, loss,
damage, injury, including physical injury or death and liability therefor
caused or incurred, including injury or death of Tenant's business invitees
and social guests, resulting directly or indirectly from Tenant's occupancy
of the Leased Premises covered by this Lease. Tenant's duties to defend,
indemnify and save harmless shall apply to liability incurred or claimed as a
result of negligence or willful
6
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misconduct, regardless of responsibility for such negligence or willful
misconduct unless Landlord, its employees or agents were solely negligent in
the matters complained of.
12. LANDLORD'S INSURANCE. Landlord shall, as part of Insurance expenses,
maintain "all risk" property damage insurance containing an agreed amount
endorsement covering not less than one hundred percent (100%) of the full
insurable replacement cost valuation of the Building and the tenant
improvements, betterments, and the alterations thereto; and Landlord's
personal property, business papers, furniture, fixtures, and equipment
(collectively "Landlord's Property"), exclusive of the costs of excavation,
foundations, footings, and risks required to be covered by Tenant's
insurance, and subject to commercially reasonable deductibles. Landlord
shall also, as part of insurance expenses, obtain and keep in full force the
following policies of insurance: commercial general liability insurance;
workers' compensation insurance, if required by applicable Law; and such
other insurance as Landlord deems appropriate or as may be required by any
Holder or ground lessor. Landlord's insurance shall be issued by insurance
companies authorized to do business in the State of California with a
financial rating of at least B+ for any property insurance and at least B+
for any liability insurance, as rated in the most recent edition of Best's
Insurance Reports;
13. TENANT'S INSURANCE. Tenant shall obtain and maintain in effect at all
times during Tenant's possession of the Premises the following insurance
coverages and policies:
(a) LIABILITY INSURANCE. Tenant shall maintain a policy of
commercial general liability insurance, which shall include coverages for (i)
bodily injury; (ii) property damage; and (iii) personal property. The
minimum limits of liability shall be a combined single limit with respect to
each occurrence of not less than One Million Dollars ($1,000,000) and an
aggregate limit of not less than Two Million Dollars ($2,000,000). The
policy shall contain a cross-liability endorsement and a severability of
interest clause.
(b) TENANT'S BUSINESS PERSONAL PROPERTY INSURANCE. Tenant shall
maintain on all of its business personal property, including valuable
business papers and accounts receivable; operating supplies; inventory; and
furniture, fixtures, and equipment (whether owned, leased, or rented)
(collectively "Business Personal Property") an "all risk" property damage
insurance policy including coverages for sprinkler leakage and containing an
agreed amount endorsement (or, if applicable, a business owner's policy with
a no-coinsurance provision) in an amount not less than one hundred percent
(100%) of the full replacement cost valuation of such Business Personal
Property, if available. The proceeds from any such policy shall be used by
Tenant for the replacement of such Business Personal property.
(c) BUSINESS INTERRUPTION/EXTRA EXPENSE INSURANCE. Tenant shall
maintain business interruption or (if applicable) contingent business
interruption and extra expense insurance in such amounts as will adequately
reimburse Landlord for any item or expense enumerated in this agreement. If
Tenant's business interruption or (if applicable) contingent business
interruption and extra expense insurance proceeds are insufficient to cover
all of Tenant's obligations, Landlord shall be paid before any other creditor.
Such insurance will be carried with the same insurer that issues the
insurance for Tenant's Business Personal Property pursuant to Section 13(b).
(d) WORKER'S COMPENSATION INSURANCE. Tenant shall maintain worker's
compensation insurance as required by the State of California.
(e) TENANT'S LIABILITY LIMITATION. Except with respect to any
intentional tort, under no circumstance shall Tenant ever be liable for
consequential damages, including damages for lost profits or business
interuption.
13.1 TENANT'S INSURANCE CRITERIA. All insurance required to be maintained by
Tenant under this Lease shall conform to the following criteria:
(a) Tenant's insurance shall be issued by insurance companies
authorized to do business in the State of California with a financial rating
of at least B+ for any property insurance and at least B+ for any liability
insurance, as rated in the most recent edition of Best's Insurance Reports;
(b) Tenant's insurance shall be issued as primary and
noncontributory;
(c) Tenant's liability and property insurance policies shall name
Landlord as the additional named insured and Landlord, Landlord's agents, and
any ground lessors and Holders (as such terms are defined in Section 27)
whose names shall have been furnished to Tenant as additional named insureds;
(d) Tenant's insurance shall contain an endorsement requiring at
least thirty (30) days written notice from the insurance company to each
insured and additional insured before cancellation or any material change in
the coverage, scope, or amount of any policy; and
<PAGE>
(e) with respect to damage to or loss of Tenant's Business Personal
Property, a waiver of subrogation must be obtained, as required under Section
14 below.
13.2 BLANKET COVERAGE. All of the insurance requirements set forth herein on
the part of Tenant to be observed shall be deemed satisfied if the Premises
are covered by a blanket insurance policy complying with the limits,
requirements, and criteria contained in this Article insuring all or most of
Tenant's facilities in California.
13.3 EVIDENCE OF COVERAGE. A duplicate original policy or a certificate of
insurance shall be deposited with Landlord at the commencement of the Term
or, if earlier, upon Tenant's taking possession of the Premises; and on
renewal of the policy a certificate of insurance listing the insurance
coverages required hereunder and naming the appropriate additional insureds
shall be deposited with Landlord not less than seven (7) days before
expiration of the policy.
14 WAIVER OF SUBROGATION. To the maximum extent permitted by insurance
policies which Landlord and Tenant are required to maintain under Sections 12
and 13 above, Tenant and Landlord, for the benefit of each other, waive any
and all rights of subrogation which might otherwise exist. Landlord and
Tenant intend that their respective property loss risks shall be borne by
responsible insurance carriers to the extent above provided, and Landlord and
Tenant hereby agree to look solely to, and seek recovery only from, their
respective insurance carriers in the event of a property loss to the extent
that such coverage is agreed to be provided hereunder. The parties each
hereby waive all rights and claims against each other for such losses and
waive all rights of subrogation of their respective insurers, provided such
waiver of subrogation shall not affect the right of the insured to recover
thereunder. The parties agree that their respective insurance policies are
now, or shall be, endorsed such that said waiver of subrogation shall not
affect the right of the insured to recover thereunder, so long as no material
additional premium is charged therefor.
15. UTILITIES. Tenant shall be responsible for payment directly to their
suppliers of the charges for all utilities (except water, which shall be
supplied by Landlord as part of Operating Expenses), including, gas,
electricity, heat, and other services delivered to or consumed in the
Premises. If any such services are not separately metered to Tenant, Tenant
shall pay to Landlord pursuant to Section 2.2 a reasonable proportion, as
determined by Landlord, of all charges jointly metered with other premises.
15.1 INTERRUPTION OF SERVICES. Landlord does not warrant that any services
or utilities provided hereunder for Tenant's use in the Premises will be free
from shortages, failures, variations, or interruptions caused by repairs,
maintenance, replacements, improvements, alterations, changes of service,
strikes, lockouts, labor controversies, accidents, inability to obtain
services, fuel, steam, water or supplies, governmental requirements or
requests, or other causes beyond Landlord's reasonable control, including
interference with light or other incorporeal hereditaments and any
interruption in services or any failure to provide services to Landlord by a
designated utility company at the demarcation point at which Landlord accepts
responsibility for such service or at any point prior thereto, which
interference impedes Landlord in furnishing plumbing, HVAC, electrical,
sanitary, life safety, elevator, telecommunications, or other Building
services, utilities, or the Systems and Equipment. None of the same shall be
deemed an eviction or disturbance of Tenant's use and possession of the
Premises or any part thereof, shall render Landlord liable to Tenant for
abatement of Rent, or shall relieve Tenant from performance of Tenant's
obligations under this Lease. Landlord in no event shall be liable for
damages by reason of loss of profits, business interruption, or other
compensatory or consequential damages.
16. SIGNS. Landlord reserves the exclusive right to the roof, side and rear
walls of the Premises. Tenant shall not construct any projecting sign or
awning without the prior written consent of Landlord, which shall not be
unreasonably withheld or delayed.
17. CONDEMNATION. If any part of the Premises shall be taken or condemned
for public use, and a part thereof remains which is susceptible of occupation
hereunder, this Lease shall, as to the part taken, terminate as of the date
the condemnor acquires possession, and thereafter Tenant shall be required to
pay such proportion of the rent for the remaining term as remaining square
footage of the Premises bears to the total original square footage of the
Premises at the date of condemnation; provided, however, that Landlord at its
option may terminate this Lease as of the date the condemnor acquires
possession. In the event that the demised Premises are condemned in whole,
or that a portion is condemned of such size that the remainder is not
suitable for Tenant's beneficial enjoyment of the Premises for their intended
purposes, this Lease shall terminate upon the date upon which the condemner
acquires possession. All sums which may be payable on account of any
condemnation shall belong to the Landlord, and Tenant shall not be entitled
to any part thereof; provided however, that Tenant shall be entitled to
retain any amount awarded to him for his trade fixtures or moving expenses.
18. SURRENDER AND RESTORATION. At or before the Expiration Date or the date
of any earlier termination of this Lease, or as promptly as practicable using
Tenant's best efforts after such an earlier termination date, Tenant, at its
expense, shall do all of the following:
<PAGE>
(a) surrender possession of the Premises in the condition required
under Section 9, ordinary wear and tear excepted;
(b) surrender all keys, any key cards, and any parking stickers or
cards to Landlord and give Landlord in writing the combinations of any locks
or vaults then remaining in the Premises;
(c) remove from the Premises all of Tenant's Property, except such
items thereof as Tenant shall have expressly agreed in writing with Landlord
were to remain and to become the property of Landlord; and
(d) fully repair any damage to the Premises or the Property
resulting from such removal.
Tenant's obligations herein shall survive the termination of the Lease. All
improvements and other items in or upon the Premises (except Tenant's
Property), whether installed by Tenant or Landlord, shall be Landlord's
property and shall remain upon the Premises, all without compensation,
allowance, or credit to Tenant; provided, however, that if prior to such
termination Landlord so directs by notice. Tenant shall promptly remove such
of the Improvements in the Premises as are designated in such notice and
shall restore the Premises to their condition prior to the installation of
such Improvements. Notwithstanding the foregoing, Landlord shall not require
removal of customary office improvements installed pursuant to the Work
Letter Agreement, if any (except as expressly provided to the contrary
therein), or installed by Tenant with Landlord's written approval (except as
expressly required by Landlord in connection with granting such approval).
18.1 TENANT'S FAILURE TO REMOVE OR RESTORE. If Tenant shall fail to perform
any repairs or restoration or fail to remove any items from the Premises as
required under this Section 18, Landlord may do so, and Tenant shall pay
Landlord the cost thereof upon demand. All property removed from the
Premises by Landlord pursuant to any provisions of this Lease or any Law may
be handled or stored by Landlord at Tenant's expense, and Landlord shall in
no event be responsible for the value, preservation, or safekeeping thereof.
All property not removed from the Premises or retaken from storage by Tenant
within thirty (30) days after expiration or earlier termination of this Lease
or Tenant's right to possession shall at Landlord's option be conclusively
deemed to have been conveyed by Tenant to Landlord as if by bill of sale
without payment by Landlord. Unless prohibited by applicable Laws, Landlord
shall have a lien against such property for the costs incurred in removing
and storing the same.
19 DESTRUCTION OF PREMISES. Landlord and Tenant agree that their
respective rights and obligations in the event of any damage or destruction
of the Premises or Building shall be governed exclusively by this Lease.
Tenant, as a material inducement to Landlord entering into this Lease,
irrevocably waives and releases Tenant's rights under California Civil Code
Sections 1932(2), 1933(4), and 1942, as the same may be modified or replaced
hereafter. No damages, compensation, or claim shall be payable by Landlord
for any inconvenience, interruption, or cessation of Tenant's business or any
annoyance arising from any damage to or destruction of all or any portion of
the Premises or Building.
19.1 PARTIAL DESTRUCTION OF PREMISES. In the event of a partial destruction
of the Premises during the term hereof from any cause, Landlord shall
forthwith repair the same at Landlord's expense, provided that such repairs
can be made within sixty (60) days under existing Laws; but such partial
destruction shall not terminate this Lease, except that Tenant shall be
entitled to a proportionate reduction of Rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with Tenant's beneficial enjoyment of the Premises for their
intended purposes. If such repairs cannot be made within sixty (60) days,
Landlord, at his option may make the same within a reasonable time, this
Lease continuing in effect with the rent proportionately abated as aforesaid;
and in the event that Landlord shall not elect to make such repairs which
cannot be made within sixty (60) days, this Lease may be terminated by either
party upon written notice, effective as of the date of such notice.
Notwithstanding the foregoing, if all repairs cannot be completed or are not
actually completed within one hundred eighty (180) days of the date of damage
Tenant may terminate this Lease at its option.
19.2 DESTRUCTION OF BUILDING. In the event that the Building is destroyed to
an extent of not less than one-third of the replacement costs thereof, either
party may elect to terminate this Lease, whether the Premises be injured or
not. A total destruction of the Building shall terminate this Lease.
19.3 DISPUTES. In the event of any dispute between Landlord and Tenant with
respect to the provisions hereof, the matter shall be settled by arbitration
in accordance with the provisions of Section 26 below.
20 TENANT'S DEFAULT. The occurrence of any one or more of the following
events shall constitute a material breach and default ("Event of Default") of
this Lease by Tenant:
(a) Tenant's failure to pay any Rent or any other charges required
to be paid by Tenant under this Lease, where such failure continues for five
(5) days after written notice from Landlord that such payment is due and
payable provided, however, that such written notice will no longer be
required if Landlord has issued two or more during any 12-month period;
(b) Tenant's failure promptly and fully to perform any other
covenant, condition, or agreement contained in this Lease, where such failure
continues for thirty (30) days after written notice thereof from Landlord to
Tenant;
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(c) Tenant's failure to comply with the Rules, unless such failure
is cured within five (5) days after notice; provided, that if the nature of
Tenant's failure is such that more than five (5) days are reasonably required
in order to cure, Tenant shall not be in Default if Tenant commences to cure
within such period and thereafter diligently and continuously prosecutes such
cure to completion;
(d) Tenant's abandonment or vacation of the Premises;
(e) any material misrepresentation or omission herein or in any
financial statements or other materials provided by Tenant or any Guarantor
in connection with negotiating or entering this Lease or in connection with
any Transfer under Section 6;
(f) cancellation of any guaranty of this Lease by any Guarantor;
(g) failure by Tenant to cure within any applicable times permitted
thereunder any default under any other lease for space in any other building
owned or managed by Landlord or its affiliates now or hereafter entered by
Tenant; and any Default hereunder not cured within the times permitted for
cure herein shall, at Landlord's election, constitute a default under any
other such lease or leases;
(h) The levy of a writ of attachment or execution on the Lease or on
any of Tenant's property;
(i) Tenant's or any Guarantor's general assignment for the benefit
of creditors or arrangement, composition, extension, or adjustment with its
creditors; or
(j) In any proceeding or action in which Tenant is a party, the
appointment of a trustee, receiver, agent, or custodian to take charge of the
Premises or Tenant's Property for the purpose of enforcing a lien against the
Premises or Tenant's Property.
The parties expressly agree that any notice which Landlord may give to Tenant
that an Event of Default has occurred under this Section 20 shall satisfy the
requirements of Section 1161 of the California Code of Civil Procedure, and
it shall not be necessary to give another notice to Tenant under Section 1161.
20.1 LANDLORD's REMEDIES. Upon the occurrence of an Event of Default
hereunder, Landlord shall have the right, in addition to any other rights or
remedies Landlord may have, at Landlord's option, without further notice or
demand of any kind, to elect to do one of the following alternatives:
(i) Terminate this Lease and Tenant's right to possession of the Premises,
re-enter the Premises, and take possessions thereof; and Tenant shall have
no further claim to the Premises or under this Lease; or
(ii) Continue this Lease in effect and collect any unpaid Rent or other
charges which have theretofore accrued or which thereafter become due and
payable. It is intended hereunder that Landlord have the remedy described in
California Civil Code Section 1951.4, which provides that a landlord may
continue a lease in effect after a tenant's breach and abandonment and
recover rent as it becomes due, if tenant has the right to sublease or
assign, subject only to reasonable limitations.
In the event of any re-entry or retaking of possession by Landlord, Landlord
shall have the right, but not the obligation, to remove all or any part of
Tenant's Property from the Premises and to place such property in storage at
a public warehouse at the expense and risk of Tenant.
20.2 NO WAIVER OF DEFAULT. The waiver by Landlord of any Event of Default or
of any other breach of any term, covenant, or condition of this Lease shall
not be deemed a waiver of such term, covenant, or condition or of any
subsequent breach of the same or any other term, covenant, or condition.
Acceptance of Rent by Landlord subsequent to any Event of Default or breach
hereof shall not be deemed a waiver of any preceding Event of Default or
breach other than the failure to pay the particular Rent so accepted,
regardless of Landlord's knowledge of any breach at the time of such
acceptance of Rent. Neither Landlord nor Tenant shall be deemed to have
waived any term, covenant, or condition of this Lease, unless the waiving
party gives the other party written notice of such waiver. Neither Landlord
nor Tenant should rely upon the other party's failure or delay in enforcing
any right or remedy hereunder.
20.3 LANDLORD'S RIGHT TO CURE. If Tenant defaults in the performance of any
of its obligations under this Lease, Landlord may (but shall not be obligated
to), without waiving such default, perform the same for the account and at
the expense of Tenant. Tenant shall pay Landlord all costs of such
performance promptly upon receipt of a bill therefor.
20.4 DAMAGES. Should Landlord elect to terminate this Lease under the
provisions of Section 20.1(i) above, Landlord may recover as damages from
Tenant the following:
(a) PAST RENT: The worth at the time of the award of any unpaid
Rent which had been earned at the time of termination; plus
(b) RENT PRIOR TO AWARD: The worth at the time of the 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 Tenant proves could have been reasonably avoided; plus
(c) RENT AFTER AWARD: The worth at the time of the award of the
amount by which the unpaid Rent for the balance of the Term after the time of
award exceeds the amount of the rental loss that Tenant proves could have
been reasonably avoided; plus
(d) SUBSTANTIALLY CAUSED DAMAGES: Any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant's failure
to perform its obligations under this
<PAGE>
Lease, including, but not limited to, any costs or expenses (including
attorneys' fees), incurred by Landlord in (i) retaking possession of the
Premises; (ii) maintaining the Premises after Tenant's default; (iii)
preparing the Premises for reletting to a new tenant, including any repairs
or alterations; and (iv) reletting the Premises, including brokers'
commissions.
"The worth at the time of the award" as used in subsections (a) and (b) above
is to be computed by allowing interest at the rate of ten percent (10%) per
annum. "The worth at the time of the award" as used in subsection (c) above
is to be computed by discounting the amount at the discount rate of the
Federal Reserve Bank situated nearest to the Premises at the time of the
award plus one percent (1%).
21 RULES. Tenant agrees that it will abide by, keep and observe all
reasonable rules and regulations which Landlord may make from time to time
for the management, safety, care, and cleanliness of the Building and
grounds, the parking of vehicles and the preservation of good order herein as
well as for the convenience of other occupants and tenants of the Building.
The violations of any such rules and regulations shall be deemed a material
breach of this Lease by Tenant.
22 NOTICES. Any notice required or permitted under this Lease shall be in
writing and shall be delivered in at least one of the following ways:
personally or by private hand-delivery messenger service; by depositing the
same in the United States mail, postage prepaid, registered or certified,
return receipt requested; or by depositing such notice, postage prepaid, with
Federal Express, DHL, UPS, or another nationally-recognized private overnight
delivery service. Each such notice shall be addressed to the intended
recipient at such party's address set forth as follows, or at such other
address as such party has theretofore specified by written notice delivered
in accordance with this Section 22:
if to Landlord:
Attn: Michael Goldin
720 Channing Way
Berkeley, CA 94710
if to Tenant:
The Roda group Venture
Development Company
918 Parker Street
Berkeley, CA 94710
Attn: Daniel H. Miller
Every notice given to a party shall state the section of the Lease pursuant
to which the notice is given and the period of time within which the recipient
of the notice must respond.
23 HOLDING OVER. Any holding over after the expiration of this Lease, with
the consent of Landlord, shall be construed as a month-to-month tenancy at a
base monthly rental of one hundred and fifty percent (150%) of the monthly
rental which was in effect under the Lease on the Expiration Date, and
otherwise in accordance with the terms hereof, as applicable, except that
Tenant shall have no extension or renewal option.
24 OPTION TO RENEW. Tenant is hereby granted one (1) option to extend (the
"Extension Option") the Term of the Lease for a period of three (3) Lease
Years (the "Extension Period"). The Extension Period term shall begin the
first day following the Expiration Date and shall take effect on the same
terms and conditions in effect under the Lease immediately prior to the first
Extension Period, except that monthly Base Rent shall be nine thousand one
hundred and twenty dollars ($9,120.00).
24.1 EXERCISE OF OPTION. The Extension Option may be exercised only by
giving Landlord written notice of Tenant's irrevocable election to exercise no
earlier than ten (10) months and no later than six (6) months prior to the
commencement of the Extension Period.
24.2 FAILURE TO EXERCISE. If Tenant shall fail validly and timely to
exercise the option herein granted, said option shall terminate and shall be
null and void and of no further force and effect.
24.3 DEFAULT. Tenant's exercise of the Option shall, at Landlord's election,
be null and void if an Event of Default exists on the date of Tenant's notice
of exercise and such Default is not cured within the applicable cure
period, or at any time thereafter and prior to commencement of the relevant
Extension Period and such Default is not cured within the applicable cure
period. Tenant's exercise of the Extension Option shall not operate to cure
a Default by Tenant nor to extinguish or impair any rights or remedies of
Landlord arising by virtue of such Default. If the Lease or Tenant's right
to possession of the Premises shall terminate before Tenant shall have
exercised the Extension Option, then immediately upon such termination the
Extension Option shall simultaneously terminate and become null and void.
<PAGE>
24.4 TIME. Time is of the essence of the Extension Options granted hereunder.
25 ESTOPPEL CERTIFICATE. Tenant shall at any time upon not less than ten
(10) days' prior written notice from Landlord execute, acknowledge, and
deliver to Landlord a statement in writing certifying (a) that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in
full force and effect), the amount of any security deposit, and the date to
which the rent and other charges are paid in advance, if any; and (b)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults
on the part of the Landlord hereunder, or specifying such defaults if any are
claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer to the Premises. At Landlord's option,
Tenant's failure to deliver such statement within such time shall be
a material breach of this Lease or shall be conclusive upon Tenant that (i)
this Lease is in full force and effect, without modification except as may be
represented by Landlord, (ii) there are no uncured defaults in Landlord's
performance, and (iii) not more than one month's rent has been paid in
advance or such failure may be considered by Landlord as a default by Tenant
under this Lease. If Landlord desires to finance, refinance, or sell the
Premises, or any part thereof, Tenant hereby agrees to deliver to any lender or
purchaser designated by Landlord summary financial statements of Tenant as
may be reasonably required by such lender or purchaser. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
25.1 SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT. With respect to
Security Devices entered into by Landlord after execution of this Lease,
Tenant's subordination of this Lease shall be subject to receiving assurance
(a "non-disturbance agreement") from the Lender that Tenant's possession and
this Lease, including any options to extend the term hereof, will not be
disturbed so long as Tenant is not in Breach hereof and attorns to the record
owner of the Premises. Landlord agrees to use reasonable commercial efforts
to obtain from the current lender on the Building a nondisturbance agreement
for Tenant within a reasonable period before or after the Commencement Date.
26 ARBITRATION. In the event of any dispute between Landlord and Tenant
arising under this Lease that is not resolved by the parties within ten (10)
days after the date either party gives notice to the other of its desire to
arbitrate the dispute (the "Outside Agreement Date"), the dispute shall be
settled by binding arbitration as provided in this Section 26; provided,
however, that nothing in this Section 26 shall limit Landlord's right to
bring an unlawful detainer action against Tenant if appropriate. All
arbitration proceedings shall be conducted at Berkeley, California. Judgment
upon the arbitration award may be entered in any court having jurisdiction.
The arbitrators shall have no power to change the Lease provisions. Both
parties shall continue performing their Lease obligations pending the award
in the arbitration proceeding. The arbitrators shall award the prevailing
party reasonable expenses and costs, including reasonable attorneys' fees
pursuant to Section 26.2 below, plus interest on the amount due at ten
percent (10%) per annum or the maximum then allowed by Law, whichever is less.
26.1 PROCEDURE. Not later than fifteen (15) days following the Outside
Agreement Date, the party demanding arbitration shall submit the matter to
arbitration under the current rules of the American Arbitration Association
including their rules relating to discovery, but subject to any definitions
or sections of the Lease which may be applicable to the dispute under
submission, and shall request a list of potential arbitrators from whom an
arbitrator shall be selected in accordance with the rules of the American
Arbitration Association.
26.2 PAYMENT. The losing party shall pay to the prevailing party the amount
of the final arbitration award. If payment is not made within ten (10)
business days after the date the arbitration award is no longer appealable,
then in addition to any remedies under the law, if Landlord is the prevailing
party, it shall have the same remedies for failure to pay the arbitration
award as it has for Tenant's failure to pay Rent; and if Tenant is the
prevailing party, it may deduct any remaining award from its monthly payment
of Rent or other charges.
27 SUBORDINATION. Tenant agrees that this Lease shall be automatically
subordinate to any mortgage or trust deeds that are now or may hereafter be
placed upon said Premises. Notwithstanding the foregoing, Tenant agrees that
any mortgagee of the Building, the holder of any note, or beneficiary of any
deed of trust (collectively "Holders") encumbering the Building shall have
the right upon written notice to Tenant to subordinate the lien of any such
note or deed of trust to this Lease.
28 LANDLORD'S LIABILITY. The liability of Landlord to Tenant for any
default by Landlord under this Lease or arising in connection herewith or
with Landlord's operation, management, leasing, repair, renovation,
alteration, or any other matter relating to the Building or the Premises
shall be limited to Landlord's insurance in a minimum amount of three million
dollars ($3,000,000) combined plus the interest of Landlord in the
Development (and the rental proceeds thereof) except with respect to any
intentional tort. Under no circumstances shall Landlord ever be liable for
consequential or punitive damages, including damages for lost profits or for
business interruption. Tenant agrees to look solely to Landlord's interest
in the Development (and the rental proceeds thereof) for the recovery of any
judgment
<PAGE>
against Landlord, and Landlord shall not be personally liable for any such
judgment or deficiency after execution thereon. The limitations of liability
contained in this Section 28 shall apply equally and inure to the benefit of
Landlord's present and future partners, beneficiaries, officers, directors,
trustees, shareholders, agents, and employees, and their respective partners,
heirs, successors, and assigns. Under no circumstances shall any present or
future general or limited partner of Landlord (if Landlord is a partnership),
or trustee or beneficiary (if Landlord or any partner of Landlord is a trust)
have any liability for the performance of Landlord's obligations under this
Lease.
28.1 LIABILITY UPON TRANSFER. The term Landlord as used herein shall mean
only the owner or owners, at the time in question, of the fee title of leased
Premises and in the event of any transfer of such title or interest, Landlord
herein named shall be relieved from and after the date of such transfer of
all liability as respects Landlord's obligations thereafter to be performed,
provided that any funds in the hands of Landlord at the time of such
transfer, in which Tenant has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Landlord shall,
subject as aforesaid, be binding on Landlord's successors and assigns, only
during their respective periods of ownership.
29 FIRST SOURCE AGREEMENT. (For five or more employees) Tenant represents
that it has fewer than five (5) employees as of the Commencement Date of the
Lease and as such is not subject to the requirement to enter into a First
Source Agreement with the City of Berkeley.
30 MISCELLANEOUS. The following provisions shall apply generally to terms,
provisions, and covenants of this Lease:
30.1 NO OFFER. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of, or
option for, the Premises. This document becomes effective and binding only
upon execution and delivery hereof by Tenant and by Landlord. No act or
omission of any employee or agent of Landlord or of Landlord's broker shall
alter, change, or modify any of the provisions hereof.
30.2 NO PARTNERSHIP. It is expressly understood that Landlord does not, in
any way or for any purpose, become a partner of Tenant in the conduct of its
business, or otherwise, or joint adventurer or a member of a joint enterprise
with Tenant, and that the provisions of this Lease relating to the percentage
rental payable hereunder, if any, are included solely for the purpose of
providing a method whereby the rental is to be measured and ascertained.
30.3 HEIRS, ASSIGNS, SUCCESSORS. This Lease is binding upon and inures to
the benefit of the heirs, assigns and successors in interest to the parties.
30.4 TIME. Time is of the essence of this Lease.
30.5 WAIVER. No failure of Landlord or Tenant to enforce any term hereof
shall be deemed to be a waiver.
30.6 ATTORNEY'S FEES. In case arbitration or suit should be brought for
recovery of the Premises, or for any sum due hereunder, or for any breach
hereunder by either Tenant or Landlord, or because of any act or omission
which may arise out of the possession of the Premises, by either party, the
prevailing party shall be entitled to all costs incurred in litigation,
arbitration, or otherwise in connection with such action, including a
reasonable attorneys' fee.
31 ENTIRE AGREEMENT. This Lease, together with its exhibits, contains all
the agreements of the parties hereto and supersedes any previous
negotiations. There have been no representations made by the Landlord or
Tenant or understandings made between the parties other than those set forth
in this Lease and its exhibits. This Lease may not be modified except by a
written instrument duly executed by the parties hereto.
IN WITNESS WHEREOF Landlord and Tenant have executed this Lease as of
the date first-above written.
Landlord: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
---------------------------------
Michael Goldin, General Partner
Tenant: THE RODA GROUP VENTURE DEVELOPMENT COMPANY, L.L.C., a
Delaware limited liability company
By: /s/ Daniel Miller
---------------------------------
Daniel Miller
Its: Managing Director
--------------------------------
<PAGE>
[DIAGRAM OF FLOOR PLAN]
<PAGE>
EXHIBIT B-FIRST FLOOR
[DIAGRAM]
<PAGE>
EXHIBIT B-MEZZANINE
[DIAGRAM]
<PAGE>
EXHIBIT C
This Commencement Date agreement is attached to that certain lease dated
8/20/97 between Eat/Work Development, LP, a California limited
partnership and The Roda Group Venture Development Company, L.L.C., a
Delaware limited liability company ("Tenant") for the Premises as described
in the Lease. Landlord and Tenant agree that the Commencement Date pursuant
to Section 1.4 of the Lease shall be 10/15/97 for all purposes thereunder.
Landlord: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
----------------------------------
Michael Goldin, General Partner
Tenant: THE RODA GROUP VENTURE DEVELOPMENT COMPANY
L.L.C., a Delaware limited liability company
By: /s/ Daniel Miller
----------------------------------
Daniel Miller
Its: Managing Director
----------------------------------
<PAGE>
EXHIBIT D - WORK LETTER AGREEMENT
THIS WORK LETTER AGREEMENT (the "Agreement") is made as of 8/20/97,
between EAT/WORK DEVELOPMENT, LP, a California limited partnership
("Landlord"). THE RODA GROUP VENTURE DEVELOPMENT COMPANY L.L.C., a Delaware
limited liability company ("Tenant").
Reference is made to the lease dated as, of 8/20/97 between Landlord and
Tenant (the "Lease") for premises known as Suites A-1-1 and A-1-2, (the
"Premises"), located in the building (the "Building") known as 918 Parker
Street, Berkeley, California.
1. BASIC TERMS.
A. Date to substantially complete work: Commencement Date under the
Lease.
B. Description of The Work:
(a) Demising walls and furnishings as shown in Plans attached
hereto as Schedule 1. These walls to be standard steel stud frame with sound
batte and 5/8" sheet rock unless otherwise noted. Walls to be spray finished
and painted white. Molding and trim to be painted wood or base rubber mold.
(c) Standard office lighting.
(d) Pre-wired for burglar alarm.
(e) ten thousand dollars ($10,000) allowance towards network
cabling.
2. BASIC AGREEMENT.
A. COMPLETION OF WORK. On or before the Commencement Date under the
Lease, Landlord shall substantially complete the Work shown on the final
approved Plans. However, Landlord shall not be responsible for delays caused
by Tenant or Tenant's contractor's, agents, or employees. Landlord shall
deliver the Premises broom clean with all plumbing, lighting, electrical, and
all Systems and Equipment in a good state of repair.
B. COST OF THE WORK. Landlord shall bear the cost of the Work
(including the cost of building permits and sales tax) as shown on the final
approved Plans; and Tenant shall bear any costs incurred in connection with
any work it may desire in addition to that shown on the final approved Plans.
3. CHANGES AFTER PLANS ARE APPROVED. If Tenant shall desire any changes,
alterations, or additions to the final Plans after they have been approved by
Landlord, Tenant shall submit a detailed written request or revised Plans
(the "Change Order") to the Landlord for approval. If reasonable and
practicable and generally consistent with the Plans theretofore approved,
Landlord shall not unreasonably withhold approval; but all costs in
connection therewith shall be paid for by Tenant as a Tenant's Cost under
Paragraph 4 to the extent that such costs exceed the amount expected to be
incurred by Landlord under the previous plans. Landlord's approval of any
Change Order shall be contingent upon Tenant's acknowledgement and agreement
to any delay in the date of substantial completion which may be caused by
such Change Order.
4. TENANT'S COSTS; ESTIMATES (IF APPLICABLE). Any amounts that Tenant is
required to pay under this Agreement shall be referred to as "Tenant's Cost"
herein. Tenant's cost shall be deemed "additional Rent" under the Lease.
Landlord may at any time reasonably estimate Tenant's Cost in advance, in
which case, after mutual written agreement to proceed, Tenant shall deposit
such estimated amount with Landlord within 10 days after requested by
Landlord. If such estimated amount exceeds the actual amount of Tenant's
Cost, Tenant shall receive a refund of the difference; and if the actual
amount shall exceed the estimated amount, Tenant shall pay the difference to
Landlord within ten (10) days after requested by Landlord. Any cost estimates
based on a Space Plan or so-called "pricing plan" will be preliminary in
nature and may not be relied on by Tenant. However, Landlord agrees that any
written estimate of Tenant's Cost based on the approved Working Drawings will
not be exceeded by more than twenty percent (20%), except to the extent that:
(a) Tenant thereafter makes changes in the Working Drawings or the Work,
(b) overtime labor is required in order to substantially complete the Work by
the Work Completion Date, (c) concealed conditions are encountered on the job
site, (d) new legal requirements become effective following preparation of
the estimate, or (e) there are strikes, acts of God, shortages of materials,
or other causes beyond Landlord's reasonable control.
5. SUBSTANTIAL COMPLETION. The term substantial completion and its various
inflections as used herein shall mean that Landlord has caused all of the
Work to be completed substantially, except for so-called "punch-list items";
e.g., minor details of construction or decoration or mechanical adjustments
which do not substantially interfere with Tenant's occupancy or beneficial
enjoyment of the Premises for their intended purposes or Tenant's ability to
complete any improvements to the Premises to be made by Tenant. If there is
any dispute as to whether Landlord has substantially completed the Work, the
good faith decision of a mutually agreed upon Space Planner shall be final
and binding on the parties.
5.1 NOTICE OF SUBSTANTIAL COMPLETION. If Landlord notifies Tenant in writing
that the Work is substantially completed, and Tenant fails to object thereto
in writing within seven (7) days thereafter specifying in reasonable detail
the items of work needed to be performed in order to achieve substantial
completion, Tenant shall be deemed conclusively to have agreed that the Work
is substantially completed, for purposes of commencing the Commencement Date
and Rent under the Lease.
5.2 FINAL COMPLETION. Substantial completion shall not prejudice Tenant's
rights to require full completion of any remaining items of Work. However,
if Landlord notifies Tenant in writing that the Work is fully completed, and
Tenant fails to object thereto in writing within fifteen (15) days
thereafter specifying in reasonable detail the items of work needed to be
completed and the nature of work needed to complete said items. Tenant shall
be deemed conclusively to have accepted the Work as fully completed (or such
portions thereof as to which Tenant has not so objected).
<PAGE>
5.3 LATENT AND PATENT DEFECTS. Landlord shall repair patent defects in the
Premises (except for defects in Tenant Improvements which are constructed by
Tenant under this Lease), provided Landlord is notified of the same within
three (3) months following the Commencement Date of the Term. Landlord shall
also repair latent defects in the Premises (except for defects in Tenant
Improvements which are constructed by Tenant under this Lease), provided
Landlord is notified of the same within twelve (12) months following the Term
Commencement Date. Landlord shall also repair all mechanical, heating,
ventilation, air conditioning, electrical, life safety, lighting, and
plumbing apparatus and equipment within the Premises whether or not the same
are a part of Tenant Improvements. If such maintenance and repair is
required because of the negligence or willful misconduct of Tenant, Tenant
shall reimburse Landlord the cost of such maintenance and repair, except to
the extent that Landlord is entitled to reimbursement from insurance
purchased by Landlord as part of Operating Expenses.
THE PARTIES AGREE THAT THE PROVISIONS OF THIS WORK LETTER AGREEMENT ARE
HEREBY INCORPORATED BY THIS REFERENCE INTO THE LEASE FULLY AS THOUGH SET
FORTH THEREIN. In the event of any express inconsistencies between the Lease
and this Work Letter Agreement, the latter shall govern and control. Any
default by a party hereunder shall constitute a default by that party under
the Lease, and said party shall be subject to the remedies and other
provisions applicable thereto under the Lease.
IN WITNESS WHEREOF Landlord and Tenant have executed this Agreement as
of the date first-above written.
Landlord: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
---------------------------------
Michael Goldin, General Partner
Tenant: THE RODA GROUP VENTURE DEVELOPMENT COMPANY L.L.C., a
Delaware limited liability company
By: /s/ Dan Miller
------------------------------
Daniel Miller
Its: Managing Director
------------------------------
<PAGE>
SCHEDULE 1
[DIAGRAM]
FIRST LEVEL PLAN
<PAGE>
SCHEDULE 1
[DIAGRAM]
MEZZANINE PLAN
<PAGE>
[DIAGRAM]
FIRST LEVEL PLAN--POWER &
ELECTRICAL
<PAGE>
[EXHIBIT E]
E A T / W O R K D E V E L O P M E N T
LEASE GUARANTY
THIS GUARANTY ("Guaranty") is executed and delivered as of August 15, 1997,
by DANIEL MILLER, an individual, and ROGER STRAUCH, an individual (jointly and
severally "Guarantor") for the benefit of EAT/WORK DEVELOPMENT, a California
limited partnership ("Landlord"), with reference to the following facts:
RECITALS
A. Landlord and The Roda Group, L.L.C., a California limited liability
company ("Tenant") are parties to that certain Commercial Office lease (the
"Lease") dated as of August 15, 1997, for approximately 4,800 rentable square
feet (the "Premises") in the building commonly known as the Eat/Work
Development, located at 918 Parker Street, Berkeley, California (the
"Property").
B. As a condition to executing the Lease, Landlord has required that
Guarantor execute and deliver this Guaranty.
AGREEMENT
1 GUARANTEE OF LEASE. In order to induce Landlord to execute the foregoing
Lease, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned parties
(collectively, jointly, and severally referred to as the "undersigned") do
hereby absolutely and unconditionally (subject to the limitations provided
herein), jointly and severally, guarantee to Landlord, its successors, and
assigns, the full performance and observance of all the covenants,
conditions, and agreements provided to be performed and observed by Tenant in
the Lease, including the prompt payment of the Rent and all other amounts
provided in the Lease to be paid by Tenant, and all obligations of Tenant
under any parking agreement, storage agreement, work agreement, or other
agreement between the parties now or hereafter entered into in connection
with said Lease or the Premises or Property thereunder; provided, however,
that Guarantor's exposure and liability hereunder shall be limited to a
maximum of ONE HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($125,000).
2 WAIVER OF NOTICES. The undersigned hereby waives acceptance and notice
of acceptance of this Guaranty and notice of non-payment, non-performance, or
non-observance, and all other notices and all proof or demands.
EAT/WORK DEVELOPMENT CONTINUING GUARANTY
PAGE E-1 OF 3
<PAGE>
3 WAIVER OF SURETYSHIP DEFENSES. The undersigned expressly agrees that its
obligations hereunder shall in no way be terminated, affected, or impaired by
reason of the granting by Landlord of any indulgences to Tenant or by reason
of the assertion against Tenant of any of the rights or remedies reserved to
Landlord pursuant to the provisions of said Lease or by the relief of the
Tenant from any of the Tenant's obligations under said Lease by operation of
law or otherwise, including the rejection of the Lease in a bankruptcy
proceeding, the undersigned hereby waiving all suretyship defenses.
4 MODIFICATION OF LEASE. The undersigned covenants and agrees that this
Guaranty shall remain and continue in full force and effect as to any
renewal, modification, or extension of the Lease made by the original Tenant,
whether or not the undersigned shall have received any notice of or consented
to such renewal, modification, or extension; provided, however, that the
obligations of this Guaranty shall terminate as of the tenth (10th) day of
the Extension Term defined in the Lease if Tenant, its successors, or assigns
exercises its Extension Option thereunder and if Landlord shall have approved
Tenant's then-current financial statement. Landlords's approval of such
financial statement shall not be unreasonably withheld, conditioned, or
delayed.
5 JOINT AND SEVERAL LIABILITY. The undersigned agree that their liability
hereunder as to each shall be primary and that in any right of action which
shall accrue to the Landlord under the Lease the Landlord may, at its option,
proceed against the undersigned and the Tenant, jointly or severally, and may
proceed against the undersigned without having commenced any action against
or having obtained any judgement against the Tenant. Landlord may proceed
against any one or more Guarantors without proceeding against the others and
may release any Guarantor(s) or any security deposit, security interest, or
letter of credit without releasing the other Guarantors.
6 WAIVER OF STRICT PERFORMANCE. It is agreed that the failure of the
Landlord to insist in any one or more instances upon strict performance or
observance of any of the terms, provisions, or covenants of the Lease or this
Guaranty or to exercise any right therein or herein contained shall not be
construed or deemed to be a waiver or relinquishment for the future of such
term, provision, covenant, or right, but the same shall continue and remain
in full force and effect. Receipt by the Landlord of rent or other payments
with knowledge of the breach of any provision of the Lease shall not be
deemed a waiver of such breach or of this Guaranty.
7 TRANSFER OF LEASE. No assignment or other transfer of the Lease or any
interest therein shall operate to extinguish or diminish the liability of the
undersigned hereunder, except as set forth in PARA 4 above. The parties
expressly intend that this Guaranty shall apply to any transfer permitted
under the Lease without Landlord's prior written consent equally as to the
Lease. Notwithstanding the foregoing, this Guaranty shall not apply to any
renewal, modification, or extension of the Lease made by any party other than
the original Tenant, except only for the exercise of the option set forth in
Section 24 of the Lease.
EAT/WORK DEVELOPMENT CONTINUING GUARANTY
PAGE E-2 OF 3
<PAGE>
STANDARD COMMERCIAL OFFICE LEASE FOR EAT/WORK DEVELOPMENT
THIS COMMERCIAL OFFICE LEASE (the "Lease") is entered into as of 8/14/98 by
and between EAT/WORK DEVELOPMENT, LP, a California limited partnership
("Landlord") and The Roda Group Venture Development Co., L.L.C., a Delaware
limited liability company ("Tenant").
1. BASIC LEASE TERMS. Landlord leases to Tenant, and Tenant rents and hires
from Landlord, the Premises described in Section 1.1 below, for the rents
hereinafter reserved, for the term stated in Section 1.4 below, and upon and
subject to the terms, conditions (including limitations, restrictions, and
reservations), and covenants hereinafter provided. Each party hereby
expressly covenants and agrees to observe and perform all of the conditions
and covenants herein contained on its part to be observed and performed. The
parties agree that the following table (the "Table") sets forth in summary
form the basic terms of this Lease, as all of such terms as defined below:
<TABLE>
<CAPTION>
Period Suite # Square Footage Monthly Base Pro Rata Share Base Year
Rent (incl. CAM)
<S> <C> <C> <C> <C> <C>
October 15, 1998- A-14 4800 sq. ft. $7920 14.12% 1998
October 14, 2001
</TABLE>
In the event of any conflict between the terms contained in the Table and the
terms contained in subsequent sections of the Lease, the terms of the Table
shall control, subject to any adjustments specifically provided for in any
other provisions of the Lease.
1.1 PREMISES. The Premises leased to Tenant (the "Premises") is that portion
of the Building described in Section 1.2 below and commonly known as Suites
A-14, as shown on the floor plan annexed hereto as EXHIBIT B. The Premises
also include all fixtures and equipment which are attached thereto, except
items not deemed to be included therein and which are removable by Tenant as
provided in Section 18. Landlord and Tenant agree that the square footage of
the Premises, for all purposes under this Lease, are as specified in the
Table. Tenant acknowledges that it has had an opportunity to verify the
numbers stated in the Table relating to the measurements of the Premises
prior to the Commencement Date of this Lease.
1.2 BUILDING. The Premises are located in the building known by the street
address 918 Parker Street (the "Building") in the City of Berkeley, County of
Alameda, State of California. The Building is more particularly described
and depicted in EXHIBIT A which is attached hereto. Landlord and Tenant
agree that the square footage of the Building, for all purposes under this
Lease, is twenty thousand seven hundred (20,700). Tenant acknowledges that
it has had an opportunity to verify the measurement of the Building prior to
the Commencement Date of this Lease.
1.3 DEVELOPMENT. The Building is located in and forms part of the real
property commonly known as the Eat/Work Development, with a street address of
918 Parker Street, Berkeley, California (the "Development"), which comprises
three different buildings and constitutes a single parcel on the assessment
roll of the Alameda County Tax Assessor. For the purposes of this Lease, the
Development shall mean the Building and any common or public areas or
facilities, easements, corridors, lobbies, sidewalks, loading areas,
driveways, landscaped areas, skywalk, parking garages and lots, and any and
all other structures or facilities operated or maintained in connection with
or for the benefit of the Building, and all parcels or tracts of land on
which all or any portion of the Building or any of the other foregoing items
are located, and any fixtures, machinery, equipment, apparatus, Systems and
Equipment (as defined in Section 5.5 below), furniture, and other personal
property located, thereon or therein and used in connection therewith, whether
title is held by Landlord or its affiliates. Landlord and Tenant agree that
the square footage of the Development, for all purposes under this Lease, is
thirty four thousand (34,000). Tenant acknowledges that it has had an
opportunity to verify the measurement of the Development prior to the
Commencement Date of this Lease.
1.4 TERM. The term (the "Term") for which the Premises are hereby leased
shall commence on the "Commencement Date," which shall be October 15, 1998
or, if earlier, the day on which the Premises are ready for occupancy (as
defined in Section 5) and shall end on October 14, 2001 (the "Expiration
Date") or any earlier date upon which the Term may expire or be canceled or
terminated pursuant to any of the conditions or covenants of this Lease or
pursuant to law. Promptly following the Commencement Date the parties hereto
shall, if required by Landlord, enter into a supplementary agreement fixing
the dates of the Commencement Date and the Expiration Date in the form which
is attached hereto as EXHIBIT C and incorporated herein by reference.
1.4.1 DELAY IN POSSESSION. If Landlord is unable to deliver possession of
the Premises to Tenant at the commencement hereof, Landlord shall not be
liable for any damage caused thereby, nor shall this Lease be void or
voidable, but Tenant shall not be liable for any rent until possession is
delivered with all Work having been substantially completed pursuant to
Section 5.2 and EXHIBIT D hereof. Tenant may at its option terminate this
Lease if possession of the Premises with all work substantially completed
pursuant to
<PAGE>
Section 5.2 and Exhibit D hereof, is not delivered within one hundred twenty
(120) days of the Commencement Date.
1.5 TENANT PARKING. Tenant is entitled to nine (9) unreserved parking spaces
in the parking lot of Eat/Work Development. If it is necessary at any time
to reserve parking spaces or hire a guard to monitor parking, Landlord may,
at its option, do so and pass both reasonable administrative and direct labor
expenses for the guard or monitor to Tenant based on Tenant's Pro Rata Share
as defined in Section 1.
2 RENT. The "Rent" reserved under this Lease, for the Term thereof, shall
consist of the following:
a) "Base Rent" of seven thousand nine hundred twenty dollars
($7,920.00) per month, which shall be payable in advance on the first day of
each and every calendar month during the Term of this Lease, except that
Tenant shall pay the first month's Base Rent due under the Lease upon the
execution and delivery of this Lease by Tenant; and
b) "Additional Rent" consisting of any and all other sums of money
as shall become payable by Tenant to Landlord hereunder; and Landlord shall
have the same remedies for default in the payment of Additional Rent as for a
default in payment of Base Rent.
2.1 BASE RENT ADJUSTMENT. On each anniversary of the Commencement Date the
monthly Base Rent shall increase by two hundred eighty dollars ($280.00).
2.2 ADDITIONAL RENT. In addition to the Base Rent and all other payments
due under this Lease and the Work Letter Agreement, Tenant shall pay to
Landlord, in the manner set forth herein, as Additional Rent, the following
amounts (collectively the "Rental Adjustment"):
a) INCREASED INSURANCE. Tenant agrees to pay its Pro Rata Share of
that portion of all Casualty Insurance under Section 2.3e incurred or paid by
Landlord in connection with the ownership and operation of the Building
("insurance") during each Adjustment Period which exceeds the amount of Base
Operating Insurance subject to proration under Section 2.3.2 below. In the
event that Landlord obtains additional coverages or increases the rate of
coverage as of the commencement date of this Lease, Landlord agrees to adjust
Base Year coverage as if such coverage had been included in the Base Year.
Notwithstanding anything to the contrary herein, Landlord agrees that
"Increased Insurance" shall not include any surcharge or unusual rate
increase attributable to any non-office Tenant in the Building.
b) INCREASED TAXES. An amount equal to Tenant's Pro Rata Share of
that portion of Real Estate Taxes paid by Landlord during each Adjustment
Period which exceeds the amount of Base Real Estate Taxes, subject to proration
under Section 2.3.2 below. Notwithstanding anything to the contrary herein,
Tenant's obligation to pay its Pro Rata Share of any increase in Real Estate
Taxes which is attributable to a transfer or change in the ownership of the
Building (the "Increase") shall be limited as follows: if the transfer or
change in ownership occurs during the first year after the Commencement Date,
Tenant shall have no obligation to pay any portion of the Increase; if the
transfer or change in ownership occurs during the second year after the
Commencement Date, Tenant shall pay twenty percent (20%) of the Increase; if
the transfer or change in ownership occurs during the third year after the
Commencement Date, Tenant shall pay forty percent (40%) of the Increase; if
the transfer or change in ownership occurs during the fourth year after the
Commencement Date, and assuming Tenant has exercised its Extension Option,
Tenant shall pay sixty percent (60%) of the Increase; if the transfer or
change in ownership occurs during the fifth year after the Commencement Date,
and assuming Tenant has exercised its Extension Option, Tenant shall pay
eighty percent (80%) of the Increase; and if the transfer or change in
ownership occurs during the sixth year after the Commencement Date, and
assuming Tenant has exercised its Extension Option, Tenant shall pay one
hundred percent (100%) of the Increase.
2.3 DEFINITIONS. For the purposes of this Lease, the following definitions
shall apply:
a) BASE INSURANCE. "Base Insurance" means the total of insurance
paid by Landlord during calendar year 1998 for the Development (the "Base
Insurance Year").
b) BASE REAL ESTATE TAXES. "Base Real Estate Taxes" means the
total of Real Estate Taxes paid by Landlord during tax year 1998-1999 for the
Development (the "Base Tax Year").
c) TENANT'S PRO RATA SHARE. "Tenant's Pro Rata Share" shall mean
the percentage labeled as such in the Table in Section 1, derived as follows:
Tenant's Pro Rata Share is calculated by dividing the agreed area of the
Premises (numerator) by the agreed area of the Development (denominator) and
expressing the resulting quotient as a percentage. Tenant's Pro Rata Share
shall be adjusted during the Term in proportion to any adjustment in the area
of the Premises or Development in accordance with the formula stated herein.
d) ADJUSTMENT PERIOD. "Adjustment Period" means each calendar year
of which any portion occurs during the Term, excluding the Base Year and
beginning with the first calendar year immediately following the Base Year.
e) INSURANCE. "Insurance" means premiums for any insurance
policies as determined by Landlord in accordance with the reasonable practice
of prudent landlords in the vicinity of the Development (including public
liability, property damage, earthquake if commercially reasonable, and fire
and extended
2
<PAGE>
coverage insurance for the full replacement cost of the Building as required
by Landlord or its lenders for the Building).
f) REAL ESTATE TAXES. "Real Estate Taxes" means any and all ad
valorem real property taxes and any form of assessment, levy, charge, fee,
tax, or other imposition imposed by any authority, including any city,
county, state, or federal governmental agency, or any school, library,
lighting, transportation, housing, drainage, or other improvement or special
assessment district thereof, whether or not now customary or in the
contemplation of the parties hereto, and whether or not general, special,
ordinary, or extraordinary, which Landlord shall pay during any Adjustment
Period because of or in connection with the ownership, leasing, or operation
of the Building.
2.3.1 RECONCILIATION. On or before the first day of April of each year
after the first Adjustment Period (or as soon thereafter as is practical),
Landlord shall deliver to Tenant a statement (the "Statement") setting forth
the Rental Adjustment for the preceding year. Tenant shall pay Landlord the
amount of any rental adjustment within ten (10) days of the receipt of the
Statement. The obligation of Tenant to make payments required under this
Section 2.3.1 shall survive the expiration or earlier termination of the Term
of this Lease.
2.3.2 PRORATION OF RENTAL ADJUSTMENT. If the Term does not commence on
January 1 or does not end on December 31, Tenant's obligations to pay
estimated and actual amounts towards increased Insurance and/or Real Estate
Taxes for such first or final calendar year shall be prorated to reflect the
portion of such year(s) included in the Term. Such proration shall be made
by multiplying the total estimated or actual (as the case may be) increased
insurance and/or Real Estate Taxes, (as the case may be) for such calendar
year(s), as well as the base insurance amount and/or Base Real Estate Taxes,
(as the case may be), by a fraction, the numerator of which shall be the
number of days of the Term during such calendar year, and the denominator of
which shall be three hundred sixty-five (365).
2.4 PAYMENT OF RENT. Tenant shall pay the Base Rent and Additional Rent
promptly when due, without demand therefor and without any abatement,
deduction, or setoff whatsoever, except as may be expressly provided in this
Lease. Tenant shall pay the Rent to Landlord, in lawful money of the United
States of America, at Landlord's office at the Building or at such other
place, or to such agent and at such place, as Landlord may designate by
notice to Tenant. If the Commencement Date occurs on a day other than the
first day of a calendar month, the Base Rent for such calendar month shall be
prorated, and the balance of the first month's Base Rent theretofore paid
shall be credited against the next monthly installment of Base Rent. The
Base Rent for the last month of the lease term shall also be prorated.
2.5 LATE CHARGES. Tenant acknowledges that the late payment of any
monthly Rent will cause Landlord to lose the use of that money and incur costs
and expenses not contemplated under this Lease, including administrative and
collection costs and processing account expenses, the exact amount of which
it is difficult to ascertain. Therefore, if more than one such installment
within any 12-month period is not received by Landlord within five (5) days
from the date it is due, Tenant shall pay Landlord a late charge equal to
five percent (5%) of such installment. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for the loss suffered from such nonpayment by
Tenant. In addition, any check returned by the bank for any reason will be
considered late and will be subject to all late charges plus a Twenty Dollar
($20.00) fee. After two such occasions in any twelve (12) month period,
Landlord will have the right to require payment by a cashier's check or money
order. Acceptance of any late charge shall not constitute a waiver of
Tenant's default with respect to such nonpayment by Tenant nor prevent
Landlord from exercising any other rights or remedies available to Landlord
under this Lease or at law.
3 SECURITY DEPOSIT. Tenant shall deposit with Landlord the amount of
fifteen thousand eight hundred forty dollars ($15,840.00)(the "Security
Deposit") upon Tenant's execution and submission of this Lease to be held,
applied and disposed of pursuant to the provisions of Section 1950.7 of the
California Civil Code. The Security Deposit shall serve as security for the
prompt, full, and faithful performance by Tenant of the terms and provisions
of this Lease. Landlord shall not be required to keep the Security Deposit
separate from Landlord's general funds or pay interest on the Security
Deposit. Notwithstanding the foregoing, Landlord shall return seven thousand
nine hundred twenty dollars ($7,920.00) to Tenant upon Tenant's payment of
second months Rent provided Tenant is not default of the Lease.
3.1 APPLICATION OF DEPOSIT. In the event that Tenant is in Default
hereunder and fails to cure within any applicable time permitted under this
Lease, or in the event that Tenant owes any amounts to Landlord upon the
expiration of this Lease, Landlord may use or apply the whole or any part of
the Security Deposit for the amount of Tenant's obligations hereunder. The
use or application of the Security Deposit or any portion thereof shall not
prevent Landlord from exercising any other right or remedy provided hereunder
or under any Law and shall not be construed as liquidated damages.
3.2 RESTORATION OF FULL DEPOSIT. In the event the Security Deposit is
reduced by such use or application, Tenant shall deposit with Landlord,
within ten (10) days after written notice, an amount sufficient to restore
the full amount of the Security Deposit.
3
<PAGE>
3.3 DISPOSITION OF SECURITY DEPOSIT. After the Expiration Date or any
earlier termination of the Lease, any remaining portion of the Security
Deposit shall be returned to Tenant in accordance with he provisions of
Section 1950.7 of the California Civil Code.
4 USE. The Premises are to be used for offices and related uses and
for no other purpose without prior written consent of Landlord.
4.1 PROHIBITED USES. Tenant shall not use any portion of the Premises
for purposes other than those specified herein, and no use shall be made or
permitted to be made upon the Premises, nor acts done, which will increase
the existing rate of insurance upon the property, or cause cancellation of
insurance polices covering said property. Tenant shall not conduct or permit
any sale by auction on the Premises. Tenant shall not use, release or store
or permit the usage, release, or storage of restricted materials or
substances by Department of Health Services, California Water Quality Control
Board, Environmental Protection Agency, or any other governmental agency or
entity, and Tenant shall comply with all environmental laws, regulations,
rules and requirements applicable to Tenant's activities in the Premises.
Tenant shall indemnify, defend and hold Landlord harmless from and against any
claims, judgments, demands, liabilities, costs and expenses (including
reasonable attorney's fees) arising from Tenant's breach of the above
covenants. Tenant shall not commit any waste upon the Premises or any
nuisance or act which may disturb the quiet enjoyment of any tenant in the
Building.
5 CONDITION OF PREMISES. Tenant shall accept the Premises (and the
Systems and Equipment serving the same) in an "as is" condition, except as
provided in paragraph 5.4, on the date the Term commences, and Landlord shall
have no obligation to improve, alter, remodel, or otherwise modify the
Premises prior to Tenant's occupancy, except as provided in the mutually
approved "Work Letter Agreement" attached hereto and made a part hereof as
EXHIBIT D.
5.1 LANDLORD'S PREPARATION. If the parties have entered into a separate
Work Letter Agreement concurrently with their execution of this Lease,
Landlord shall use reasonable diligence in completing and preparing the
Premises for Tenant's occupancy in the manner and subject to the terms,
conditions, and covenants set forth in the Work Letter Agreement. The
facilities, materials, furnishings and work to be furnished, installed, and
performed in the Premises by Landlord pursuant to the Work Letter Agreement
are referred to as the "Work." Such other installations, materials, and work
which may be undertaken by or for the account of Tenant to prepare, equip,
decorate, and furnish the Premises for Tenant's occupancy are referred to as
the "Tenant's Work."
5.1.1 POSSESSION DURING WORK. It is the intention of the parties that
Tenant shall be in possession and occupancy of the Premises during the period
that Landlord is performing work in the Development. Landlord shall have no
liability to Tenant nor shall Tenant's obligations under this Lease be
reduced or abated in any manner whatsoever by reason of any inconvenience,
annoyance, interruption, or injury to Tenant's business arising from
Landlord's performance of the improvements in the Development or making any
repairs or changes which Landlord is required or permitted by this Lease or
by any other tenant's lease or required by law to make in or to any portion
of the Building or the Development. Landlord shall nevertheless use
reasonable efforts to minimize any interference with Tenant's business in the
Premises.
5.2 READINESS FOR OCCUPANCY. The Premises shall be deemed ready for
occupancy on the earliest date on which all of the following conditions (the
"Occupancy Conditions") have first been met:
a) SUBSTANTIAL COMPLETION OF WORK. Substantially Completed shall
mean that the Premises and the Work and furnishings required to be installed
under Exhibit D hereof are sufficiently completed to allow Tenant to occupy
the Premises for their intended purposes, and it shall be so deemed
notwithstanding the fact that minor or insubstantial details of construction,
mechanical adjustment, or decoration (as further defined in Exhibit D) remain
to be performed, the noncompletion of which does not materially interfere
with Tenant's beneficial use of the Premises for their intended purposes;
b) ACCESS AND SERVICES. Reasonable means of access and facilities
necessary to Tenant's use and occupancy of the Premises, including corridors,
elevators, stairways, heating, ventilating, air-conditioning, sanitary,
water, and electrical facilities (but exclusive of parking facilities) have
been installed and are in reasonably good operating order and available to
Tenant; and
5.2.1 TENANT DELAYS. If the occurrence of any of the Occupancy Conditions
and Landlord's preparation of the Premises for occupancy shall be delayed
owing to either (a) any act, omission, or failure of Tenant or any of its
employees, agents, or contractors which shall continue after Landlord shall
have given Tenant reasonable notice that such act, omission, or failure would
result in delay, and such delay shall have been unavoidable by Landlord in
the exercise of reasonable diligence and prudence; or (b) the nature of any
items of additional work or change orders that Landlord undertakes to perform
for the account of Tenant (including any delays incurred by Landlord, after
making reasonable efforts, in procuring any materials, equipment, or fixtures
of a kind or nature not used by Landlord as part of its standard construction)
4
<PAGE>
(collectively "Tenant Delays"), then the Premises shall be deemed ready for
occupancy on the date when they would have been ready but for such Tenant
Delays.
5.3 EARLY ENTRY. During any period that Tenant shall be permitted to enter
the Premises prior to the Commencement Date other than to occupy the same
(e.g., to perform alterations or improvements), Tenant shall comply with
all terms and provisions of this Lease, except those provisions requiring the
payment of Rent. Landlord shall permit early entry, provided the Premises
are legally available and Landlord has completed any Work required under this
Lease.
5.4 NOTICE OF DEFECTS. It shall be conclusively presumed upon Tenant's
taking actual possession of the Premises that the same were in satisfactory
condition (except for latent defects) as of the date of such taking of
possession, unless within thirty (30) days after the Commencement Date Tenant
shall give Landlord notice in writing specifying the respects in which the
Premises were not in satisfactory condition. Landlord agrees to exercise for
Tenant's benefit all of the standard contractor remedies and warranties of at
least one year and any manufacturer's warranties for all new Work and as
further provided in Section 5.3 of the Work Letter Agreement.
5.5 SYSTEMS AND EQUIPMENT. As used in this Lease, "Systems and Equipment"
means collectively any existing duct work, intrabuilding network cables and
wires that transmit voice, data, and other telecommunications signals
("INC"), and other equipment, facilities, and systems designed to supply
water, heat, ventilation, air conditioning and humidity or any other services
or utilities, or comprising or serving as any component or portion of the
electrical, gas, steam, plumbing, sprinkler, communications, alarm, security,
or fire/life/safety systems or equipment, or any other mechanical,
electrical, electronic, computer, or other systems or equipment for the
Building. Nothing in this Lease shall be construed to impose upon the Tenant
a general obligation to maintain the Building Systems and Equipment, except
as specifically provided for in this Lease.
6 ASSIGNMENT AND SUBLETTING. Tenant agrees that it shall not assign,
sublet, mortgage, hypothecate, or encumber this Lease, nor permit or allow
the Premises or any part thereof to be used or occupied by others, without
the prior written consent of Landlord in each instance which shall not
unreasonably be withheld or delayed. The actions described in the foregoing
sentence are referred to collectively herein as "Transfers." If the Premises
or any part thereof be sublet or occupied by anybody other than Tenant,
Landlord may, after default by Tenant, collect rent from the subtenant or
occupant and apply the net amount collected to the Rent herein reserved; but
no Transfer, occupancy, or collection shall be deemed a waiver of the
provisions hereof, the acceptance of the subtenant or occupant as tenant, or
a release of Tenant from the further performance hereunder by Tenant. The
consent by Landlord to a Transfer shall not relieve Tenant from obtaining the
Landlord's express written consent to any further Transfer. In no event
shall any permitted sublessee assign or encumber its sublease or further
sublet all or any portion of its sublet space, or otherwise suffer or permit
the sublet space or any part thereof to be used or occupied by others,
without Landlord's prior written consent in each instance which shall not be
unreasonably withheld or delayed. Notwithstanding anything to the contrary
herein, Tenant shall have a one-time right to assign the entire Premises to a
company in which Tenant is a significant (i.e. more than 20%) shareholder
without Landlord's prior consent, provided that (a) Tenant agrees that such
assignment will not void the personal guarantee which is attached to this
Lease as EXHIBIT E and (b) Tenant shall provide to Landlord concurrently with
such assignment reasonably satisfactory evidence of (i) Tenant's majority
ownership of assignee and (ii) a financial strength on the part of such
assignee which is at least equal to that of Tenant as of the Commencement
Date of this Lease.
7 COMPLIANCE WITH LAWS. Tenant shall use the Premises in compliance with
all applicable federal, state, county, and local governmental and municipal
laws, statutes, ordinances, rules, regulations, codes, decrees, orders, and
other such requirements, and decisions by courts in cases where such
decisions are considered binding precedents in the State of California (the
"State"), and decisions of federal courts applying the laws of the State
(collectively "Laws"). Tenant shall, at its sole cost and expense, promptly
comply with each and all of such Laws, and also with the requirements of any
board of fire underwriters or other similar body now or hereafter constituted
to deal with the condition, use, or occupancy of the Premises, except in the
case of required compliance (including, without limitation, structural
changes) not triggered by Tenant's change in use of the Premises of Tenant's
alterations, additions, or improvements therein. Tenant shall comply with
all applicable Laws regarding the physical condition of the Premises, but
only to the extent that the applicable Laws pertain to the particular manner
in which Tenant uses the Premises or the particular use to which Tenant puts
the Premises, if different from that permitted under Section 4 of this Lease.
7.1 CODE COSTS. Notwithstanding anything to the contrary in this Section 7,
if the requirement of any public authority obligates either Landlord or
Tenant to expend money in order to bring the Premises and/or any area of the
Building into compliance with Laws as a result of Tenant's particular use or
alteration of the Premises; Tenant's change in the use of the Premises; the
manner of conduct of Tenant's business or operation of its installations,
equipment, or other property therein; any cause or condition created by or at
the instance of Tenant, other than by Landlord's performance of any work for
or on behalf of Tenant; or breach of any of Tenant's obligations hereunder,
then Tenant shall bear all costs ("Code Costs") of bringing
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the Premises and/or Building into compliance with Laws, whether such Code
Costs are related to structural or nonstructural elements of the Premises or
Building.
8 HAZARDOUS MATERIALS. Tenant shall not cause or permit to occur (i) any
violation of applicable Laws now or hereafter enacted or issued, related to
environmental conditions on, under, or about the Premises arising from
Tenant's leasehold interest in or use or occupancy of the Premises including,
soil and groundwater conditions and (ii) the use, generation, release,
manufacture, refining, production, processing, storage, or disposal of any
Hazardous Materials on, under, or about the Premises or the Building or the
transportation to or from the Premises or the Building of any Hazardous
Materials, except de minimis amounts of Hazardous Materials that are commonly
used in office products or are present in ordinary cleaning supplies. All
such office products and cleaning supplies will be used and stored in a
manner that complies with all Laws. Tenant shall at its own expense make all
submissions to, provide all information required by, and comply with all
requirements of all governmental authorities under Laws relating to Hazardous
Materials. Should any governmental entity having jurisdiction over the
Premises demand that a remediation plan be prepared or that remediation be
undertaken because of any deposit, spill, discharge, or other release of
Hazardous Materials that occurs during the Term of this Lease at or from the
Premises which arises at any time from Tenant's use or occupancy of the
Premises or from acts or omissions of Tenant, its agents, employees,
representatives, or invitees, then Tenant shall, at its own expense, prepare
and submit the required plans. Tenant shall indemnify, defend, protect, and
hold Landlord, its partners, officers, directors, beneficiaries,
shareholders, agents, employees, and lenders harmless from all fines, suits,
procedures, claims, liabilities, and actions of every kind, and all costs
associated therewith (including investigation costs and attorneys' and
consultants' fees) arising out of or in any way connected with any deposit,
spill, discharge, or other release of Hazardous Materials that occurs during
the Term of this Lease, at or from the Premises which arises at any time from
Tenant's use or occupancy of the Premises or from Tenant's failure to provide
all information, make all submissions, and take all steps requires by any
governmental authorities having jurisdiction over the Premises. Tenant's
obligations and the indemnity hereunder shall survive the expiration or
earlier termination of this Lease. The term Hazardous Materials as used
herein shall include any chemical, substance, or material which has been or
is hereafter determined by any federal, state, or local governmental agency
to be capable of posing a risk of injury to health or safety including
petroleum, asbestos, polychlorinated biphenyls, radioactive materials, and
radon gas.
9 MAINTENANCE, REPAIRS, ALTERATIONS. Subject to Tenant's rights under
Section 5.4 above and Section 5.3 of the Work Letter Agreement, after
completion of Landlord's Work, pursuant to Section 5 Tenant shall, at his own
expense and at all times, maintain the Premises in good and safe condition,
including plate glass and any existing or future intrabuilding alarm,
computer, or network cables and wires that transmit voice, data, and other
telecommunications signals ("INC"), and any other existing or future exposed
equipment or system comprising or supplying water, gas, electricity, HVAC,
communications, alarms, fire/safety, sprinkler, plumbing or appliances for
the Premises and shall surrender the same at termination hereof in as good
condition as received, normal wear and tear excepted. Tenant shall be
responsible for all repairs for such exposed equipment or systems required,
excepting the roof, skylights, exterior walls, and structural foundations,
which shall be maintained by Landlord. Notwithstanding Tenant's foregoing
maintenance and repair responsibility, Tenant shall not be responsible to
replace any systems or equipment where such replacement would be deemed a
capital replacement as opposed to a repair under generally-accepted
accounting principles, unless such replacement has been caused solely by
Tenant's negligence, wilfull misconduct, or failure to maintain as required
hereunder. Landlord shall maintain in good condition the common areas of the
property, such as sidewalks, driveways, lawns, and shrubbery. No improvement
or alteration of the Premises shall be made without the prior written consent
of the Landlord, which shall not be unreasonably withheld or delayed. Prior
to the commencement of any substantial repair (except in an emergency
provided that Tenant shall notify Landlord as soon as reasonably possible),
improvement, or alteration, Tenant shall give Landlord at least five (5)
days' written notice in order that Landlord may post appropriate notices of
nonresponsibility to avoid any liability for liens for any such work of
improvement on the Premises.
10 ENTRY AND INSPECTION. Tenant shall permit Landlord or Landlord's agents
to enter upon the Premises at reasonable times and upon reasonable notice for
the purpose of inspecting the same, will permit Landlord at any time within
one hundred twenty (120) days prior to the expiration of this Lease to place
upon the Premises any usual and reasonable "To Lease" or "Available" signs,
and will permit persons desiring to lease the same to inspect the Premises
thereafter.
11 INDEMNIFICATION OF LANDLORD. Tenant agrees to assume the defense of and
indemnify and save harmless Landlord from all claims, liability, loss,
damage, injury, including physical injury of Tenant's employees directly or
indirectly arising from the performance of this Lease, from tenant's
occupation or use of the Premises, or arising out of the failure of Tenant to
provide a "safe place to work" and from any and all claims, liability, loss,
damage, injury, including physical injury or death and liability therefor
caused or incurred, including injury or death of Tenant's business invitees
and social guests, resulting directly or indirectly from Tenant's occupancy
of the Leased Premises covered by this Lease. Tenant's duties to defend,
indemnify and save harmless shall apply to liability incurred or claimed as a
result of negligence or willful misconduct, regardless of responsibility for
such negligence or willful misconduct except to the extent Landlord, its
employees or agents were substantially negligent in the matters complained of.
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12 LANDLORD'S INSURANCE. Landlord shall, as part of Insurance expenses,
maintain "all risk" property damage insurance containing an agreed amount
endorsement covering not less than one hundred percent (100%) of the full
insurable replacement cost valuation of the Building and the tenant
improvements, betterments, and the alterations thereto; and Landlord's
personal property, business papers, furniture, fixtures, and equipment
(collectively "Landlord's Property"), exclusive of the costs of excavation,
foundations, footings, and risks required to be covered by Tenant's
insurance, and subject to commercially reasonable deductibles. Landlord shall
also, as part of insurance expenses, obtain and keep in full force the
following policies of insurance: commercial general liability insurance;
workers' compensation insurance, if required by applicable Law; and such
other insurance as Landlord deems appropriate or as may be required by any
Holder or ground lessor. Landlord's insurance shall be issued by insurance
companies authorized to do business in the State of California with a
financial rating of at least B+ for any property insurance and at least B+
for any liability insurance, as rated in the most recent edition of Best's
Insurance Reports;
13 TENANT'S INSURANCE. Tenant shall obtain and maintain in effect at all
times during Tenant's possession of the Premises the following insurance
coverages and policies:
(a) LIABILITY INSURANCE. Tenant shall maintain a policy of commercial
general liability insurance, which shall include coverages for (i) bodily
injury; (ii) property damage; and (iii) personal property. The minimum limits
of liability shall be a combined single limit with respect to each occurrence
of not less than One Million Dollars ($1,000,000) and an aggregate limit of
not less than Two Million Dollars ($2,000,000). The policy shall contain a
cross-liability endorsement and a severability of interest clause.
(b) TENANT'S BUSINESS PERSONAL PROPERTY INSURANCE. Tenant shall maintain
on all of its business personal property, including valuable business papers
and accounts receivable; operating supplies; inventory; and furniture,
fixtures, and equipment (whether owned, leased, or rented) (collectively
"Business Personal Property") an "all risk" property damage insurance policy
including coverages for sprinkler leakage and containing an agreed amount
endorsement (or, if applicable, a business owner's policy with a no-
coinsurance provision) in an amount not less than one hundred percent (100%)
of the full replacement cost valuation of such Business Personal Property, if
available. The proceeds from any such policy shall be used by Tenant for the
replacement of such Business Personal property.
(c) BUSINESS INTERRUPTION/EXTRA EXPENSE INSURANCE. Tenant shall maintain
business interruption or (if applicable) contingent business interruption and
extra expense insurance in such amounts as will adequately reimburse Landlord
for any item or expense enumerated in this agreement. If Tenant's business
interruption or (if applicable) contingent business interruption and extra
expense insurance proceeds are insufficient to cover all of Tenant's
obligations, Landlord shall be paid before any other creditor. Such insurance
will be carried with the same insurer that issues the insurance for Tenant's
Business Personal Property pursuant to Section 13(b).
(d) WORKER'S COMPENSATION INSURANCE. Tenant shall maintain worker's
compensation insurance as required by the State of California.
(e) TENANT'S LIABILITY LIMITATION. Except with respect to any intentional
tort, under no circumstance shall Tenant ever be liable for consequential
damages, including damages for lost profits or business interruption.
13.1 TENANT'S INSURANCE CRITERIA. All insurance required to be maintained by
Tenant under this Lease shall conform to the following criteria:
(a) Tenant's insurance shall be issued by insurance companies authorized
to do business in the State of California with a financial rating of at least
B+ for any property insurance and at least B+ for any liability insurance, as
rated in the most recent edition of Best's Insurance Reports;
(b) Tenant's insurance shall be issued as primary and noncontributory;
(c) Tenant's liability and property insurance policies shall name
Landlord as the additional named insured and Landlord, Landlord's agents, and
any ground lessors and Holders (as such terms are defined in Section 27)
whose names shall have been furnished to Tenant as additional named insureds;
(d) Tenant's insurance shall contain an endorsement requiring at least
thirty (30) days written notice from the insurance company to each insured
and additional insured before cancellation or any material change in the
coverage, scope, or amount of any policy; and
(e) with respect to damage to or loss of Tenant's Business Personal
Property, a waiver of subrogation must be obtained, as required under Section
14 below.
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13.2 BLANKET COVERAGE. All of the insurance requirements set forth herein
on the part of Tenant to be observed shall be deemed satisfied if the
Premises are covered by a blanket insurance policy complying with the limits,
requirements, and criteria contained in this Article insuring all or most of
Tenant's facilities in California.
13.3 EVIDENCE OF COVERAGE. A duplicate original policy or a certificate of
insurance shall be deposited with Landlord at the commencement of the Term
or, if earlier, upon Tenant's taking possession of the Premises; and on
renewal of the policy a certificate of insurance listing the insurance
coverages required hereunder and naming the appropriate additional insureds
shall be deposited with Landlord not less than seven (7) days before
expiration of the policy.
14 WAIVER OF SUBROGATION. To the maximum extent permitted by insurance
policies which Landlord and Tenant are required to maintain under Sections 12
and 13 above, Tenant and Landlord, for the benefit of each other, waive any
and all rights of subrogation which might otherwise exist. Landlord and
Tenant intend that their respective property loss risks shall be borne by
responsible insurance carriers to the extent above provided, and Landlord and
Tenant hereby agree to look solely to, and seek recovery only from, their
respective insurance carriers in the event of a property loss to the extent
that such coverage is agreed to be provided hereunder. The parties each
hereby waive all rights and claims against each other for such losses and
waive all rights of subrogation of their respective insurers, provided such
waiver of subrogation shall not affect the right of the insured to recover
thereunder. The parties agree that their respective insurance policies are now,
or shall be, endorsed such that said waiver of subrogation shall not affect
the right of the insured to recover thereunder, so long as no material
additional premium is charged therefor.
15 UTILITIES. Tenant shall be responsible for the payment directly to their
suppliers of the charges for all utilities (except water, which shall be
supplied by Landlord as part of Operating Expenses), including, gas,
electricity, heat, and other services delivered to or consumed in the
Premises. If any such services are not separately metered to Tenant, Tenant
shall pay to Landlord pursuant to Section 2.2 a reasonable proportion, as
determined by Landlord, of all charges jointly metered with other premises.
15.1 INTERRUPTION OF SERVICES. Landlord does not warrant that any services or
utilities provided hereunder for Tenant's use in the Premises will be free
from shortages, failures, variations, or interruptions caused by repairs,
maintenance, replacements, improvements, alterations, changes of service,
strikes, lockouts, labor controversies, accidents, inability to obtain
services, fuel, steam, water or supplies, governmental requirements or
requests, or other causes beyond Landlord's reasonable control, including
interference with light or other incorporeal hereditaments and any
interruption in services or any failure to provide services to Landlord by a
designated utility company at the demarcation point at which Landlord
accepts responsibility for such service or at any point prior thereto, which
interference impedes Landlord in furnishing plumbing, HVAC, electrical,
sanitary, life safety, elevator, telecommunications, or other Building
services, utilities, or the Systems and Equipment. None of the same shall be
deemed an eviction or disturbance of Tenant's use and possession of the
Premises or any part thereof, shall render Landlord liable to Tenant for
abatement of Rent, or shall relieve Tenant from performance of Tenant's
obligations under this Lease. Landlord in no event shall be liable for damages
by reason of loss of profits, business interruption, or other compensatory or
consequential damages.
16 SIGNS. Landlord reserves the exclusive right to the roof, side and rear
walls of the Premises. Tenant shall not construct any projecting sign or
awning without the prior written consent of Landlord, which shall not be
unreasonably withheld or delayed.
17 CONDEMNATION. If any part of the Premises shall be taken or condemned
for public use, and a part thereof remains which is susceptible of occupation
hereunder, this Lease shall, as to the part taken, terminate as of the date
the condemnor acquires possession, and thereafter Tenant shall be required to
pay such proportion of the rent for the remaining term as remaining square
footage of the Premises bears to the total original square footage of the
Premises at the date of condemnation; provided, however, that Landlord at its
option may terminate this Lease as of the date the condemnor acquires
possession. In the event that the demised Premises are condemned in whole, or
that a portion is condemned of such size that the remainder is not suitable
for Tenant's beneficial enjoyment of the Premises for their intended
purposes, this Lease shall terminate upon the date upon which the condemnor
acquires possession. All sums which may be payable on account of any
condemnation shall belong to the Landlord, and Tenant shall not be entitled
to any part thereof; provided however, that Tenant shall be entitled to
retain any amount awarded to him for his trade fixtures, moving expenses,
loss of goodwill or increased market value of rent, provided that such award
does not reduce the amount of Landlord's claim and award.
18 SURRENDER AND RESTORATION. At or before the Expiration Date or the date
of any earlier termination of this Lease, or as promptly as practicable using
Tenant's best efforts after such an earlier termination date, Tenant, at its
expense, shall do all of the following:
(a) surrender possession of the Premises in the condition required under
Section 9, ordinary wear and tear excepted;
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(b) surrender all keys, any key cards, and any parking stickers or
cards to Landlord and give Landlord in writing the combinations of any locks
or vaults then remaining in the Premises;
(c) remove from the Premises all of Tenant's Property, except such
items thereof as Tenant shall have expressly agreed in writing with Landlord
were to remain and to become the property of Landlord; and
(d) fully repair any damage to the Premises or the Property resulting
from such removal.
Tenant's obligations herein shall survive the termination of the Lease. All
improvements and other items in or upon the Premises (except Tenant's
Property), whether installed by Tenant or Landlord, shall be Landlord's
property and shall remain upon the Premises, all without compensation,
allowance, or credit to Tenant; provided, however, that if prior to such
termination Landlord so directs by notice, Tenant shall promptly remove such
of the Improvements in the Premises as are designated in such notice and
shall restore the Premises to their condition prior to the installation of
such Improvements. Notwithstanding the foregoing, Landlord shall not require
removal of customary office improvements installed pursuant to the Work
Letter Agreement, if any (except as expressly provided to the contrary
therein), or installed by Tenant with Landlord's written approval (except as
expressly required by Landlord in connection with granting such approval).
18.1 TENANT'S FAILURE TO REMOVE OR RESTORE. If Tenant shall fail to perform
any repairs or restoration or fail to remove any items from the Premises as
required under this Section 18, Landlord may do so, and Tenant shall pay
Landlord the cost thereof upon demand. All property removed from the Premises
by Landlord pursuant to any provisions of this Lease or any Law may be
handled or stored by Landlord at Tenant's expense, and Landlord shall in no
event be responsible for the value, preservation, or safekeeping thereof. All
property not removed from the Premises or retaken from storage by Tenant
within thirty (30) days after expiration or earlier termination of this Lease
or Tenant's right to possession shall at Landlord's option by conclusively
deemed to have been conveyed by Tenant to Landlord as if by bill of sale
without payment by Landlord. Unless prohibited by applicable Laws, Landlord
shall have a lien against such property for the costs incurred in removing and
storing the same.
19 DESTRUCTION OF PREMISES. Landlord and Tenant agree that their respective
rights and obligations in the event of any damage or destruction of the
Premises or Building shall be governed exclusively by this Lease. Tenant, as
a material inducement to Landlord entering into this Lease, irrevocably
waives and releases Tenant's rights under California Civil Code Sections
1932(2), 1933(4), and 1942, as the same may be modified or replaced
hereafter. No damages, compensation, or claim shall be payable by Landlord for
any inconvenience, interruption, or cessation of Tenant's business or any
annoyance arising from any damage to or destruction of all or any portion of
the Premises or Building.
19.1 PARTIAL DESTRUCTION OF PREMISES. In the event of a partial destruction
of the Premises during the term hereof from any cause, Landlord shall
forthwith repair the same at Landlord's expense, provided that such repairs
can be made within sixty (60) days under existing Laws; but such partial
destruction shall not terminate this Lease, except that Tenant shall be
entitled to a proportionate reduction of Rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with Tenant's beneficial enjoyment of the Premises for their
intended purposes. If such repairs cannot be made within sixty (60) days,
Landlord, at his option may make the same within a reasonable time, this
Lease continuing in effect with the rent proportionately abated as aforesaid;
and in the event that Landlord shall not elect to make such repairs which
cannot be made within sixty (60) days, this Lease may be terminated by either
party upon written notice, effective as of the date of such notice.
Notwithstanding the foregoing, if all repairs cannot be completed or are not
actually completed within one hundred eighty (180) days of the date of damage
Tenant may terminate this Lease at its option upon written notice to Landlord.
19.2 DESTRUCTION OF BUILDING. In the event that the Building is destroyed to
an extent of not less than one-third of the replacement costs thereof, either
party may elect to terminate this Lease, whether the Premises be injured or
not. A total destruction of the Building shall terminate this Lease.
19.3 DISPUTES. In the event of any dispute between Landlord and Tenant with
respect to the provisions hereof, the matter shall be settled by arbitration
in accordance with the provisions of Section 26 below.
20 TENANT'S DEFAULT. The occurrence of any one or more of the following
events shall constitute a material breach and default ("Event of Default") of
this Lease by Tenant:
(a) Tenant's failure to pay any Rent or any other charges required to
be paid by Tenant under this Lease, where such failure continues for ten (10)
days after written notice from Landlord that such payment is due and payable
provided, however, that such written notice will no longer be required if
Landlord has issued two or more during any 12-month period;
(b) Tenant's failure promptly and fully to perform any other covenant,
condition, or agreement contained in this Lease, where such failure continues
for thirty (30) days after written notice thereof from Landlord to Tenant;
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(c) Tenant's failure to comply with the Rules, unless such failure is
cured within five (5) days after notice; provided, that if the nature of
Tenant's failure is such that more than five (5) days are reasonably required
in order to cure, Tenant shall not be in Default if Tenant commences to cure
within such period and thereafter diligently and continuously prosecutes such
cure to completion;
(d) Tenant's abandonment or vacation of the Premises;
(e) any material misrepresentation or omission herein or in any
financial statements or other materials provided by Tenant or any Guarantor
in connection with negotiating or entering this Lease or in connection with
any Transfer under Section 6;
(f) cancellation of any guaranty of this Lease by any Guarantor;
(g) failure by Tenant to cure within any applicable times permitted
thereunder any default under any other lease for space in any other building
owned or managed by Landlord or its affiliates now or hereafter entered by
Tenant; and any Default hereunder not cured within the times permitted for
cure herein shall, at Landlord's election, constitute a default under any
other such lease or leases;
(h) The levy of a writ of attachment or execution on this Lease or on
any of Tenant's property;
(i) Tenant's or any Guarantor's general assignment for the benefit of
creditors or arrangement, composition, extension, or adjustment with its
creditors; or
(j) In any proceeding or action in which Tenant is a party, the
appointment of a trustee, receiver, agent, or custodian to take charge of the
Premises or Tenant's Property for the purpose of enforcing a lien against the
Premises or Tenant's Property.
The parties expressly agree that any notice which Landlord may give to Tenant
that an Event of Default has occurred under this Section 20 shall satisfy the
requirements of Section 1161 of the California Code of Civil Procedure, and
it shall not be necessary to give another notice to Tenant under Section 1161.
20.1 LANDLORD'S REMEDIES. Upon the occurrence of an Event of Default
hereunder, Landlord shall have the right, in addition to any other rights or
remedies Landlord may have, at Landlord's option, without further notice or
demand of any kind, to elect to do one of the following alternatives:
(i) Terminate this Lease and Tenant's right to possession of the Premises,
re-enter the Premises, and take possession thereof; and Tenant shall have no
further claim to the Premises or under this Lease; or
(ii) Continue this Lease in effect and collect any unpaid Rent or other
charges which have theretofore accrued or which thereafter become due and
payable. It is intended hereunder that Landlord have the remedy described in
California Civil Code Section 1951.4, which provides that a landlord may
continue a lease in effect after a tenant's breach and abandonment and
recover rent as it becomes due, if tenant has the right to sublease or
assign, subject only to reasonable limitations.
In the event of any re-entry or retaking of possession by Landlord, Landlord
shall have the right, but not the obligation, to remove all or any part of
Tenant's Property from the Premises and to place such property in storage at
a public warehouse at the expense and risk of Tenant. In addition, upon an
event of default, Tenant, or Tenant's Guarantors shall immediately pay to
Landlord the unamortized portion of the Supplementary Allowance as specified
in Section 2b of Exhibit D.
20.2 NO WAIVER OF DEFAULT. The waiver by Landlord of any Event of Default or
of any other breach of any term, covenant, or condition of this Lease shall
not be deemed a waiver of such term, covenant, or condition or of any
subsequent breach of the same or any other term, covenant, or condition.
Acceptance of Rent by Landlord subsequent to any Event of Default or breach
hereof shall not be deemed a waiver of any preceding Event of Default or
breach other than the failure to pay the particular Rent so accepted,
regardless of Landlord's knowledge of any breach at the time of such
acceptance of Rent. Neither Landlord nor Tenant shall be deemed to have
waived any term, covenant, or condition of this Lease, unless the waiving
party gives the other party written notice of such waiver. Neither Landlord
nor Tenant should rely upon the other party's failure or delay in enforcing
any right or remedy hereunder.
20.3 LANDLORD'S RIGHT TO CURE. If Tenant defaults in the performance of any
of its obligations under this Lease, Landlord may (but shall not be obligated
to), without waiving such default, perform the same for the account and at
the expense of Tenant. Tenant shall pay Landlord all costs of such
performance promptly upon receipt of a bill therefor.
20.4 DAMAGES. Should Landlord elect to terminate this Lease under the
provisions of Section 20.1(i) above, Landlord may recover as damages from
Tenant the following:
(a) PAST RENT: The worth at the time of the award of any unpaid Rent
which had been earned at the time of termination; plus
(b) RENT PRIOR TO AWARD: The worth at the time of the 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 Tenant proves could have been reasonably avoided; plus
(c) RENT AFTER AWARD: The worth at the time of the award of the amount
by which the unpaid Rent for the balance of the term after the time of award
exceeds the amount of the rental loss that Tenant proves could have been
reasonably avoided; plus
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(d) SUBSTANTIALLY CAUSED DAMAGES: Any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant's failure
to perform its obligations under this Lease, including, but not limited to,
any costs or expenses (including attorneys' fees), incurred by Landlord in
(i) retaking possession of the Premises; (ii) maintaining the Premises after
Tenant's default; (iii) preparing the Premises for reletting to a new tenant,
including any repairs or alterations; and (iv) reletting the Premises,
including broker's commissions.
"The worth at the time of the award" as used in subsections (a) and (b) above
is to be computed by allowing interest at the rate of ten percent (10%) per
annum. "The worth at the time of the award" as used in subsection (c) above
is to be computed by discounting the amount at the discount rate of the
Federal Reserve Bank situated nearest to the Premises at the time of the
award plus one percent (1%).
21 RULES. Tenant agrees that it will abide by, keep and observe all
reasonable rules and regulations which Landlord may make from time to time
for the management, safety, care, and cleanliness of the Building and
grounds, the parking of vehicles and the preservation of good order herein as
well as for the convenience of other occupants and tenants of the Building.
The violations of any such rules and regulations shall be deemed a material
breach of this Lease by Tenant.
22 NOTICES. Any notice required or permitted under this Lease shall be in
writing and shall be delivered in at least one of the following ways:
personally or by private hand-delivery messenger service; by depositing the
same in the United States mail, postage prepaid, registered or certified,
return receipt requested; or by depositing such notice, postage prepaid, with
Federal Express, DHL, UPS, or another nationally-recognized private
overnight delivery service. Each such notice shall be addressed to the
intended recipient at such party's address set forth as follows, or at such
other address as such party has theretofore specified by written notice
delivered in accordance with this Section 22:
if to Landlord:
Attn: Michael Goldin
2332 5th Street
Berkeley, CA 94710
if to Tenant:
The Roda Group Venture
Development Company
918 Parker Street
Berkeley, CA 94710
Attn: Daniel H. Miller
Every notice given to a party shall state the section of the Lease pursuant
to which the notice is given and the period of time within which the
recipient of the notice must respond.
23 HOLDING OVER. Any holding over after the expiration of this Lease, with
the consent of Landlord, shall be construed as a month-to-month tenancy at a
base monthly rental of one hundred and fifty percent (150%) of the monthly
rental which was in effect under the Lease on the Expiration Date, and
otherwise in accordance with the terms hereof, as applicable, except that
Tenant shall have no extension or renewal option.
24 OPTION TO RENEW. Tenant is hereby granted one (1) option to extend (the
"Extension Option") the Term of the Lease for a period of three (3) Lease
Years (the "Extension Period"). The Extension Period term shall begin the
first day following the Expiration date and shall take effect on the same
terms and conditions in effect under the Lease immediately prior to the first
Extension Period, except that monthly Base Rent shall be eight thousand eight
hundred twenty dollars ($8,820.00) plus any Additional Rent as specified in
Section 2 herein and PARA. 2b of Exhibit D. Should Tenant elect not to
renew this Lease, then Landlord shall exercise reasonable good-faith efforts
to secure another tenant for the Leased Premises who shall agree to leave
intact all, or as much as possible, of the Work specified in Exhibit D of the
Work Letter Agreement. Tenant shall pay back to Landlord the unamortized
amount of the Supplementary Allowance as follows:
1) If the new Tenant assumes Premises as is, and the new Rent is higher
than that of The Roda Group, then Landlord shall pay to The Roda Group on a
monthly basis 20% of the difference between The Roda Group lease and new
lease for the period of the three year extension term.
2) If the new Tenant assumes Premises as is, and the new Rent is less
than that of The Roda Group, The Roda Group shall pay to Landlord the
difference between The Roda Group Lease and that of new Tenant on a monthly
basis for the period of the three year extension term.
3) If New Tenant Lease requires complete removal of The Roda Group's
Work as specified in Exhibit D of the Work Letter Agreement, Tenant shall pay
to Landlord on a monthly basis a sum equal to eighteen dollars and fifty
three cents ($18.53) per one thousand dollars ($1000) of the Supplementary
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Allowance which Tenant has elected to draw pursuant to the terms of the Work
Letter Agreement for the period of the three year Extension term.
4) If new Tenant requires that some of The Roda Group's Work, as
specified in Exhibit D of the Work Letter Agreement, be removed, then
Landlord will determine at its reasonable discretion, that amount of the
remaining unamortized portion of the Supplementary Allowance which will be
due. Landlord will notify Tenant of this amount and such amount will become
due within thirty days of written notice.
5) In addition to the foregoing provisions, during any period between
the expiration of the initial Term and the commencement date for payment of
rent under any new lease which Landlord is able to obtain for the Premises,
Tenant shall pay to Landlord on a monthly basis a sum equal to eighteen
dollars and fifty three cents ($18.53) per one thousand dollars ($1000) of the
Supplementary Allowance which Tenant has elected to draw pursuant to the
terms of the Work Letter Agreement until one of the above conditions has been
met. This provision will survive the Termination of this Lease.
24.1 EXERCISE OF OPTION. The Extension Option may be exercised only by
giving Landlord written notice of Tenant's irrevocable election to exercise
no earlier than ten (10) months and no later than six (6) months prior to the
commencement of the Extension Period. Tenant agrees to give Landlord notice
within such period of its exercise of the Extension Option or of its decline
to exercise the Extension Option. If Tenant fails to give the notice
required hereunder within the time specified, Tenant shall be deemed
conclusively to have exercised the Extension Option automatically for the
Extension Period as provided herein.
24.2 DEFAULT. Tenant's exercise of the Option shall, at Landlord's election,
be null and void if an Event of Default exists on the date of Tenant's
notice of exercise and such Default is not cured within the applicable cure
period, or at any time thereafter and prior to commencement of the relevant
Extension Period and such Default is not cured within the applicable cure
period. Tenant's exercise of the Extension Option shall not operate to cure
any Default by Tenant nor to extinguish or impair any rights or remedies of
Landlord arising by virtue of such Default. If the Lease or Tenant's right
to possession of the Premises shall terminate before Tenant shall have
exercised the Extension Option, then immediately upon such termination the
Extension Option shall simultaneously terminate and become null and void.
24.3 TIME. Time is of the essence of the Extension Options granted hereunder.
25 ESTOPPEL CERTIFICATE. Tenant shall at any time upon not less than ten
(10) days' prior written notice from Landlord execute, acknowledge, and
deliver to Landlord a statement in writing certifying (a) that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in
full force and effect), the amount of any security deposit, and the date to
which the rent and other charges are paid in advance, if any; and (b)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults
on the part of Landlord hereunder, or specifying such defaults if any are
claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer to the Premises. At Landlord's option,
Tenant's failure to deliver such statement within such time shall be
a material breach of this Lease or shall be conclusive upon Tenant that (i)
this Lease is in full force and effect, without modification except as may be
represented by Landlord, (ii) there are no uncured defaults in Landlord's
performance, and (iii) not more than one month's rent has been paid in
advance or such failure may be considered by Landlord as a default by Tenant
under this Lease. If Landlord desires to finance, refinance, or sell the
Premises, or any part thereof, Tenant hereby agrees to deliver to any lender
or purchaser designated by Landlord summary financial statements of Tenant as
may be reasonably required by such lender or purchaser. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
25.1 SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT. With respect to
Security Devices entered into by Landlord after execution of this Lease,
Tenant's subordination of this Lease shall be subject to receiving assurance
(a "non-disturbance agreement") from the Lender, which is otherwise
reasonably acceptable to Tenant, that Tenant's possession and this Lease,
including any options to extend the term hereof, will not be disturbed so
long as Tenant is not in Breach hereof and attorns to the record owner of the
Premises. Landlord agrees to use reasonable commercial efforts to obtain
from the current lender on the Building a nondisturbance agreement for Tenant
within a reasonable period before or after the Commencement Date.
26. ARBITRATION. In the event of any dispute between Landlord and Tenant
arising under this Lease that is not resolved by the parties within ten (10)
days after the date either party gives notice to the other of its desire to
arbitrate the dispute (the "Outside Agreement Date"), the dispute shall be
settled by binding arbitration as provided in this Section 26; provided,
however, that nothing in this Section 26 shall limit Landlord's right to
bring an unlawful detainer action against Tenant if appropriate. All
arbitration proceedings shall be conducted at Berkeley, California. Judgment
upon the arbitration award may be entered in any court having jurisdiction.
The arbitrators shall have no power to change the Lease provisions. Both
parties shall continue performing their Lease obligations pending the award
in the arbitration proceeding. The arbitrators shall award the prevailing
party reasonable expenses and costs, including reasonable attorney's fees
pursuant
12
<PAGE>
to Section 26.2 below, plus interest on the amount due at ten percent (10%)
per annum or the maximum then allowed by Law, whichever is less.
26.1 PROCEDURE. Not later than fifteen (15) days following the Outside
Agreement Date, the party demanding arbitration shall submit the matter to
arbitration under the current rules of the American Arbitration Association
including their rules relating to discovery, but subject to any definitions
or sections of the Lease which may be applicable to the dispute under
submission, and shall request a list of potential arbitrators from whom an
arbitrator shall be selected in accordance with the rules of the American
Arbitration Association.
26.2 PAYMENT. The losing party shall pay to the prevailing party the amount
of the final arbitration award. If payment is not made within ten (10)
business days after the date the arbitration award is no longer appealable,
then in addition to any remedies under the law, if Landlord is the prevailing
party, it shall have the same remedies for failure to pay the arbitration
award as it has for Tenant's failure to pay Rent; and if Tenant is the
prevailing party, it may deduct any remaining award from its monthly payment
of Rent or other charges.
27 SUBORDINATION. Tenant agrees that this Lease shall be automatically
subordinate to any mortgage or trust deeds that are now or may hereafter be
placed upon said Premises. Notwithstanding the foregoing, Tenant agrees that
any mortgagee of the Building, the holder of any note, or beneficiary of any
deed of trust (collectively "Holders") encumbering the Building shall have
the right upon written notice to Tenant to subordinate the lien of any such
note or deed of trust to this Lease.
28 LANDLORD'S LIABILITY. The liability of Landlord to Tenant for any default
by Landlord under this Lease or arising in connection herewith or with
Landlord's operation, management, leasing, repair, renovation, alteration, or
any other matter relating to the Building or the Premises shall be limited to
Landlord's insurance in a minimum amount of three million dollars ($3,000,000)
combined plus the interest of Landlord in the Development (and the rental
proceeds thereof) except with respect to any intentional tort. Under no
circumstances shall Landlord ever be liable for consequential or punitive
damages, including damages for lost profits or for business interruption.
Tenant agrees to look solely to Landlord's interest in the Development (and
the rental proceeds thereof) for the recovery of any judgment against
Landlord, and Landlord shall not be personally liable for any such judgment
or deficiency after execution thereon. The limitations of liability contained
in this Section 28 shall apply equally and inure to the benefit of Landlord's
present and future partners, beneficiaries, officers, directors, trustees,
shareholders, agents, and employees, and their respective partners, heirs,
successors, and assigns. Under no circumstances shall any present or future
general or limited partner of Landlord (if Landlord is a partnership), or
trustee or beneficiary (if Landlord or any partner of Landlord is a trust)
have any liability for the performance of Landlord's obligations under this
Lease.
28.1 LIABILITY UPON TRANSFER. The term Landlord as used herein shall mean only
the owner or owners, at the time in question, of the fee title of leased
Premises and in the event of any transfer of such title or interest, Landlord
herein named shall be relieved from and after the date of such transfer of
all liability as respects Landlord's obligations thereafter to be performed,
provided that any funds in the hands of Landlord at the time of such
transfer, in which Tenant has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Landlord shall,
subject as aforesaid, be binding on Landlord's successors and assigns, only
during their respective periods of ownership.
29 FIRST SOURCE AGREEMENT. (For five or more employees) Tenant represents
that it has fewer than five (5) employees as of the Commencement Date of the
Lease and as such is not subject to the requirement to enter into a First
Source Agreement with the City of Berkeley.
30 MISCELLANEOUS. The following provisions shall apply generally to terms,
provisions, and covenants of this Lease:
30.1 NO OFFER. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of, or
option for, the Premises. This document becomes effective and binding only
upon execution and delivery hereof by Tenant and by Landlord. No act or
omission of any employee or agent of Landlord or of Landlord's broker shall
alter, change, or modify any of the provisions hereof.
30.2 NO PARTNERSHIP. It is expressly understood that Landlord does not, in any
way or for any purpose, become a partner of Tenant in the conduct of its
business, or otherwise, or joint adventurer or a member of a joint enterprise
with Tenant, and that the provisions of this Lease relating to the percentage
rental payable hereunder, if any, are included solely for the purpose of
providing a method whereby the rental is to be measured and ascertained.
30.3 HEIRS, ASSIGNS, SUCCESSORS. This Lease is binding upon and inures to the
benefit of the heirs, assigns and successors in interest to the parties.
13
<PAGE>
30.4 TIME. Time is of the essence of this Lease.
30.5 WAIVER. No failure of Landlord or Tenant to enforce any term hereof
shall be deemed to be a waiver.
30.6 ATTORNEY'S FEES. In case arbitration or suit should be brought for
recovery of the Premises, or for any sum due hereunder, or for any breach
hereunder by either Tenant or Landlord, or because of any act or omission
which may arise out of the possession of the Premises, by either party, the
prevailing party shall be entitled to all costs incurred in litigation,
arbitration, or otherwise in connection with such action, including a
reasonable attorneys' fee.
31 ENTIRE AGREEMENT. This Lease, together with its exhibits, contains all
the agreements of the parties hereto and supersedes any previous
negotiations. There have been no representations made by the Landlord or
Tenant or understandings made between the parties other than those set forth
in this Lease and its exhibits. This Lease may not be modified except by a
written instrument duly executed by the parties hereto.
IN WITNESS WHEREOF Landlord and Tenant have executed this Lease as of
the date first-above written.
Landlord: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
----------------------------------------
Michael Goldin, General Partner
Tenant: THE RODA GROUP VENTURE DEVELOPMENT COMPANY
L.L.C., a Delaware limited liability company
By: /s/ Daniel Miller
----------------------------------------
Daniel Miller
Its: Managing Director
---------------------------------------
14
<PAGE>
EXHIBIT A
BUILDING
[BLUEPRINT]
Eat/Work
Development
918 PARKER ST
<PAGE>
EXHIBIT B
[BLUEPRINT]
Eat/Work
Development
918 PARKER ST
BUILDING A
<PAGE>
EXHIBIT C
This Commencement Date agreement is attached to that certain lease dated 8/14/98
between Eat/Work Development, LP, a California limited partnership and The
Roda Group Venture Development Company, L.L.C., a Delaware limited liability
company ("Tenant") for the Premises as described in the Lease. Landlord and
Tenant agree that the Commencement Date pursuant to Section 1.4 of the Lease
shall be 10/15/98 for all purposes thereunder.
Landlord: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
----------------------------------------
Michael Goldin, General Partner
Tenant: THE RODA GROUP VENTURE DEVELOPMENT COMPANY
L.L.C., a Delaware limited liability company
By: /s/ Daniel Miller
----------------------------------------
Daniel Miller
Its: Managing Director
---------------------------------------
<PAGE>
EXHIBIT D - WORK LETTER AGREEMENT
THIS WORK LETTER AGREEMENT (the "Agreement") is made as of 8/14,
between EAT/WORK DEVELOPMENT, LP, a California limited partnership
("Landlord") and The Roda Group Venture Development Co., L.L.C., a Delaware
limited liability company ("Tenant").
Reference is made to the lease dated as of 8/14 between Landlord and
Tenant (the "Lease") for premises known as Suite A-14, (the "Premises"),
located in the building (the "Building") known as 918 Parker Street, Berkeley,
California.
1. BASIC TERMS.
A. Date to Complete Planning: July 23, 1998.
B. Date to substantially complete work: Commencement Date under the
Lease.
C. Work as shown in Plans attached hereto as SCHEDULE 1 which will
be attached hereto and incorporated herein and initialled by the parties when
the plans are completed pursuant to Section 2A below:
(a) Demising walls as shown in Plans. These walls to be
standard steel stud frame with sound batte and 5/8" sheet rock. Walls to be
spray finished and painted white. Molding and trim to be painted wood.
(b) Standard office lighting.
(c) Pre-wired for burglar alarm.
(d) Network cabling as shown on SCHEDULE 1
(e) Workstations and cubicles as shown on SCHEDULE 1
(f) air conditioning
C. NUMBER OF WORKING DRAWING REVISIONS (including revisions prior
hereto) at Landlord's Cost: ONE (1) Landlord's contribution hereunder to the
cost of the revisions to the Plans shall be chargeable to the Improvement
Allowance specified below.
2. BASIC AGREEMENT.
A. COMPLETION OF PLANS. On or before the "Date To Complete Planning"
described above, Tenant shall: (a) provide Landlord with all information
concerning Tenant's requirements in order for Landlord to prepare the Plans;
and (b) arrange for Landlord to prepare the Plans, and obtain Landlord's
written approval thereof. However, Tenant shall not be responsible for delays
caused by Landlord. Tenant recognizes and agrees that preparation of the
Plans and completion of the Work involves a coordination of activities in
accordance with a critical path analysis which is attached hereto as Schedule
2. In recognition of this critical path, Tenant agrees that it will give its
approval (or approval conditioned upon specified changes) to the Plans and any
phases of the Work as reasonably requested by Landlord within three (3)
business days after Landlord's request for such approval in each such
instance. Tenant's failure to give its approval (or approval conditioned upon
specified changes) to the Plans and any phases of the Work within such period
shall be deemed an approval of the Plans or phase of the Work for which
Landlord sought such approval. In no event shall the Commencement Date under
the Lease or Tenant's obligation to pay the Rent specified thereunder be
delayed or abated because of Tenant's failure timely to give its approval (or
approval conditioned upon specified changes) to the Plans and any phases of
the Work within the time specified in this paragraph.
B. COST OF THE PLANS. Landlord shall bear the cost of the Plans up
to an aggregate amount of 10% of the cost of the Work (including revisions,
any engineering reports, or other studies or tests in connection therewith) up
to the amounts specified above. Tenant shall bear any costs of the Plans over
such amounts. Landlord's contribution hereunder to the cost of the Plans
shall be chargeable to the Improvement Allowance specified below.
C. COMPLETION OF WORK. On or before the Commencement Date under the
Lease, Landlord shall substantially complete the Work shown on the final
approved Plans. However, Landlord shall not be responsible for delays caused
by Tenant or Tenant's contractor's, agents, or employees.
D. COST OF THE WORK. Landlord agrees to provide to Tenant an
improvement allowance to be applied to the cost of the Work in the amount of
One Hundred Thirty Thousand Dollars ($130,000) (the "Improvement Allowance").
In addition, Landlord agrees to make available to defray the cost of the Work
for Tenant a supplementary improvement allowance in an amount to be
designated by Tenant in a written notice to be delivered to Landlord within
ten (10) days after Landlord's final approval of the Plans, up to a maximum
of Ninety Thousand Dollars ($90,000), subject to the bank availability (the
"Supplementary Allowance"). Landlord shall bear the cost of the Work
(including the cost of building permits and sales tax) as shown on the final
approved Plans, up to the aggregate amount of the Improvement Allowance and
that portion of the Supplementary Allowance utilized by Tenant, as provided
above; and Tenant shall bear any costs incurred in connection with any work
it may desire in addition to that shown on the final approved Plans, as well
as any costs incurred in connection with (a) concealed conditions encountered
on the job site, (b) new legal requirements which become effective following
preparation of the estimate; or (c) strikes, acts
<PAGE>
of God, shortages of materials, or other causes beyond Landlord's reasonable
control, as well as any portion of the cost of the Work which exceeds the
aggregate sum of the Improvement Allowance and the amount of Supplementary
Improvement Allowance designated by Tenant as provided above. Tenant agrees
that the Rent for the initial Term of the Lease shall be increased by
eighteen Dollars and Fifty Three Cents ($18.53) per month for each increment
of One Thousand Dollars ($1,000) or part thereof that Tenant elects to draw
of the available Supplementary Improvement Allowance as provided herein,
which increases assumes (x) that Tenant will exercise its Extension Option
under the Lease, (y) an amortization period of six (6) years, and (z) an
interest rate of 10% per annum. Tenant agrees promptly to execute and deliver
to Landlord an amendment to the Lease to reflect the increase in the Rent
thereunder with results from the utilization of the Supplementary Improvement
Allowance described herein as soon as the amount of such increase is
liquidated and as soon as such amendment is presented to Tenant for
execution. The increase shall be deemed an item of Additional Rent under
Section 2.2 of the Lease. An estimate of the cost for the Work is attached as
SCHEDULE 2.
3. CHANGES AFTER PLANS ARE APPROVED. If Tenant shall desire any changes,
alterations, or additions to the final Plans after they have been approved by
Landlord, Tenant shall submit a detailed written request or revised Plans
(the "Change Order") to the Landlord for approval. If reasonable and
practicable and generally consistent with the Plans theretofore approved,
Landlord shall not unreasonably withhold approval; but all costs in connection
therewith shall be paid for by Tenant as a Tenant's Cost under Paragraph 4.
4. TENANT'S COST; ESTIMATES (IF APPLICABLE). Any amounts that Tenant is
required to pay under this Agreement shall be referred to as "Tenant's Cost"
herein. Tenant's cost shall be deemed "additional Rent" under the Lease.
Landlord may at any time reasonably estimate Tenant's Cost in advance, in
which case, after mutual written agreement to proceed, Tenant shall deposit
such estimated amount with Landlord within 10 days after requested by
Landlord. If such estimated amount exceeds the actual amount of Tenant's
Cost, Tenant shall receive a refund of the difference; and if the actual
amount shall exceed the estimated amount, Tenant shall pay the difference to
Landlord within ten (10) days after requested by Landlord. Any cost estimates
based on a Space Plan or so-called "pricing plan" will be preliminary in
nature and may not be relied on by Tenant. However, Landlord agrees that any
written estimate of Tenant's Cost based on the approved Working Drawings will
not be exceeded by more than twenty percent (20%), except to the extent that:
(a) Tenant thereafter makes changes in the Working Drawings or the Work, (b)
overtime labor is required in order to substantially complete the Work by the
Work Completion Date, (c) concealed conditions are encountered on the job
site, (d) new legal requirements become effective following preparation of
the estimate, or (e) there are strikes, acts of God, shortages of materials,
or other causes beyond Landlord's reasonable control.
5. SUBSTANTIAL COMPLETION. The term substantial completion and its various
inflections as used herein shall mean that Landlord has caused all of the
Work to be completed substantially, except for so-called "punchlist items";
e.g., minor details of construction or decoration or mechanical adjustments
which do not substantially interfere with Tenant's occupancy or beneficial
enjoyment of the Premises for their intended purposes or Tenant's ability to
complete any improvements to the Premises to be made by Tenant. If there is
any dispute as to whether Landlord has substantially completed the Work, the
good faith decision of Landlord's Space Planner shall be final and binding on
the parties.
5.1 NOTICE OF SUBSTANTIAL COMPLETION. If Landlord notifies Tenant in
writing that the Work is substantially completed, and Tenant fails to object
thereto in writing within seven (7) days thereafter specifying in reasonable
detail the items of work needed to be performed in order to achieve
substantial completion, Tenant shall be deemed conclusively to have agreed
that the Work is substantially completed, for purposes of commencing the
Commencement Date and Rent under the Lease.
5.2 FINAL COMPLETION. Substantial completion shall not prejudice Tenant's
rights to require full completion of any remaining items of Work. However, if
Landlord notifies Tenant in writing that the Work is fully completed, and
Tenant fails to object thereto in writing fifteen (15) days thereafter
specifying reasonable detail the items of work needed to be completed and the
nature of work needed to complete said items, Tenant shall be deemed
conclusively to have accepted the Work as fully completed (or such portions
thereof as to which Tenant has not so objected).
5.3 LATENT AND PATENT DEFECTS. Landlord shall repair patent defects in the
Premises (except for defects in Tenant Improvements which are allocated to
Tenant under this Lease), provided Landlord is notified of the same within
three (3) months following the Commencement Date of the Term. Landlord shall
also repair latent defects in the Premises (except for defects in Tenant
Improvements which are allocated to Tenant under this Lease), provided
Landlord is notified of the same within twelve (12) months following the Term
Commencement Date. If such maintenance and repair is required because of the
negligence or willful misconduct of Tenant, Tenant shall reimburse Landlord
the cost of such maintenance and repair, except to the extent that Landlord
is entitled to reimbursement from insurance purchased by Landlord as part of
Operating Expenses.
THE PARTIES AGREE THAT THE PROVISIONS OF THIS WORK LETTER AGREEMENT
ARE HEREBY INCORPORATED BY THIS REFERENCE INTO THE LEASE FULLY AS THOUGH SET
FORTH THEREIN. In the event of any express inconsistencies between the Lease
and this Work Letter Agreement, the latter shall govern and control. Any
<PAGE>
default by a party hereunder shall constitute a default by that party under
the Lease, and said party shall be subject to the remedies and other
provisions applicable thereto under the Lease.
IN WITNESS WHEREOF Landlord and Tenant have executed this Agreement
as of the date first-above written.
Landlord: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
------------------------------
Michael Goldin, General Partner
Tenant: THE RODA GROUP VENTURE DEVELOPMENT COMPANY
L.L.C., a Delaware limited liability company
By: /s/ Daniel Miller
---------------------------
Daniel Miller
Its: Managing Director
---------------------------
<PAGE>
SCHEDULE 1
(which will be attached hereto and incorporated herein and initialled by
the parties when the plans are completed pursuant to Section 2A above)
<PAGE>
Schedule 1
AUGUST
1988
[CALENDAR]
7 Drawings to City Project to bid (Expedited Permit)
21 City response
25 City resubmittal review
31 Construction Begins
<PAGE>
Schedule 2
SEPTEMBER
1988
[CALENDAR]
1 City resubmittal review (Day 8)
8 Pull Permit
<PAGE>
[EXHIBIT E]
E A T / W O R K D E V E L O P M E N T
LEASE GUARANTY
THIS GUARANTY ("Guaranty") is executed and delivered as of 8/14, 1988, by
DANIEL MILLER, an individual, and ROGER STRAUCH, an individual (jointly and
severally "Guarantor") for the benefit of EAT/WORK DEVELOPMENT, a California
limited partnership ("Landlord"), with reference to the following facts:
RECITALS
A. Landlord and The Roda Group Venture Development Co., L.L.C., a
Delaware limited liability company ("Tenant") are parties to that certain
Commercial Office lease (the "Lease") dated as of 8/14, 1998, for
approximately 4800 rentable square feet (the "Premises") in the building
commonly known as the Eat/Work Development, located at 918 Parker Street,
Suite A-14, Berkeley, California (the "Property").
B. As a condition to executing the Lease, Landlord has required that
Guarantor execute and deliver this Guaranty.
AGREEMENT
1 GUARANTEE OF LEASE. In order to induce Landlord to execute the foregoing
Lease, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned parties
(collectively, jointly, and severally referred to as the "undersigned") do
hereby absolutely and unconditionally (subject to the limitations provided
herein), jointly and severally, guarantee to Landlord, its successors, and
assigns, the full performance and observance of all the covenants,
conditions, and agreements provided to be performed and observed by Tenant in
the Lease, including the prompt payment of the Rent and all other amounts
provided in the Lease to be paid by Tenant, and all obligations of Tenant
under any parking agreement, storage agreement, work agreement, or other
agreement between the parties now or hereafter entered into in connection
with said Lease or the Premises or Property thereunder; provided, however,
that Guarantor's exposure and liability hereunder shall be limited to a
maximum of ONE HUNDRED FORTY THOUSAND DOLLARS ($140,000).
2 WAIVER OF NOTICES. The undersigned hereby waives acceptance and notice of
acceptance of this Guaranty and notice of non-payment, non-performance, or
non-observance, and all other notices and all proof or demands.
3 WAIVER OF SURETYSHIP DEFENSES. The undersigned expressly agrees that its
obligations hereunder shall in no way be terminated, affected, or impaired by
reason of the granting by Landlord of any indulgences to Tenant or by reason
of the assertion against Tenant of any of the rights or remedies reserved to
Landlord pursuant to the provisions of said Lease or by the relief of the
Tenant from any of the Tenant's obligations under said Lease by operation of
law or otherwise, including the rejection of the Lease in a bankruptcy
proceeding, the undersigned hereby waiving all suretyship defenses.
4 MODIFICATION OF LEASE. The undersigned covenants and agrees that this
Guaranty shall remain and continue in full force and effect as to any
renewal, modification, or extension of the Lease made by the original Tenant,
whether or not the undersigned shall have received any notice of or consented
to such renewal, modification, or extension, except as provided in PARA 7.
5 JOINT AND SEVERAL LIABILITY. The undersigned agree that their liability
hereunder as to each shall be primary and that in any right of action which
shall accrue to the Landlord under the Lease the Landlord may, at its option,
proceed against the
EAT/WORK DEVELOPMENT CONTINUING GUARANTY
PAGE E-1 OF 3
<PAGE>
undersigned and the Tenant, jointly or severally, and may proceed against the
undersigned without having commenced any action against or having obtained
any judgement against the Tenant. Landlord may proceed against any one or
more Guarantors without proceeding against the others and may release any
Guarantor(s) or any security deposit, security interest, or letter of credit
without releasing the other Guarantors.
6 WAIVER OF STRICT PERFORMANCE. It is agreed that the failure of the
Landlord to insist in any one or more instances upon strict performance or
observance of any of the terms, provisions, or covenants of the Lease or this
Guaranty or to exercise any right therein or herein contained shall not be
construed or deemed to be a waiver or relinquishment for the future of such
term, provision, covenant, or right, but the same shall continue and remain in
full force and effect. Receipt by the Landlord of rent or other payments with
knowledge of the breach of any provision of the Lease shall not be deemed a
waiver of such breach or of this Guaranty.
7 TRANSFER OF LEASE. No assignment or other transfer of the Lease or any
interest therein shall operate to extinguish or diminish the liability of the
undersigned hereunder, except as set forth in PARA 4 above. The parties
expressly intend that this Guaranty shall apply to any transfer permitted
under the Lease without Landlord's prior written consent equally as to the
Lease. Notwithstanding the foregoing, this Guaranty shall not apply to any
renewal, modification, or extension of the Lease made by any party other than
the original Tenant, except only for the exercise of the option set forth in
Lease. Section 24 of the Lease and except to the extent that Landlord cannot
charge a new tenant rent sufficient to cover the cost of Tenant Improvements
requested by and provided to Tenant, then Guarantor agrees to continue to
guaranty that portion of the Rent attributable to such non-covered Tenant
Improvements.
8 APPLICATION OF LAWS. If the laws applied by the jurisdiction in which this
Guaranty is sought to be enforced require that the undersigned have any
rights not set forth herein, in order for this Guaranty to be valid or
enforceable, then such rights shall be deemed a part hereof, but only to the
extent necessary to make this Guaranty valid and enforceable.
9 ATTORNEYS' FEES. If either Landlord or Guarantor obtains a judgement
against the other party by reason of a breach of this Guaranty, the losing
party shall pay all reasonable attorneys' fees and costs incurred in any
collection or attempted collection of the obligations hereby guaranteed or in
enforcing this Guaranty.
10 SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon and inure to
the benefit of the parties and their respective heirs, administrators,
executors, successors, and assigns.
11 TERMINATION. If at any time Tenant can show that it has maintained a Net
Worth in excess of $300,000 for a period of at least three (3) months, then
this Guaranty shall no longer cover the Base Rent ($1.65/square foot/month)
portion of the Lease. If at any time Tenant can show that it has maintained a
Net Worth in excess of $600,000 for a period of at least three (3) months,
then this Guaranty shall terminate and Guarantor shall no longer be liable
for any obligation of the Lease. For the purposes of this section, Net Worth
shall mean Tenant's assets minus Tenant's liabilities with assets counted as
follows:
< -- ACCOUNTS RECEIVABLE: 80% OF BOOK VALUE
< -- FIXED ASSETS: 50% OF BOOK VALUE
< -- PREPAID AND DEFERRED CHARGES: 0% OF BOOK VALUE
< -- OTHER ASSETS: 0% OF BOOK VALUE
< -- INTANGIBLE ASSETS: 0% OF BOOK VALUE
< -- WORK IN PROGREES OR EQUIVALENT: 0% OF BOOK VALUE
< -- CASH AND OTHER LIQUID ASSETS: 100%
To implement the partial or full termination set forth in this section,
Guarantor or tenant shall provide Landlord with a signed statement from a
certified public
EAT/WORK DEVELOPMENT CONTINUING GUARANTY
PAGE E-2 OF 3
<PAGE>
accountant setting forth the Net Worth of Tenant. Landlord shall then have 30
days to contest such statement and shall have the right, through a certified
public accountant of Landlord's choosing, to examine the books of Tenant. Any
dispute under this section shall be finally settled by arbitration as set
forth in the Section 26 of the Lease.
11.1 REINSTATEMENT OF LEASE GUARANTY OBLIGATION. Notwithstanding anything
to the contrary in this Guaranty, Guarantor agrees that if the original
Tenant (I.E., The Roda Group, L.L.C.) shall dissolve, wind down, disband, or
cease to function as the legal person or entity which existed on the date of
the lease or of any such assignment, as the case may be, Guarantor's
obligations hereunder shall be reinstated in full, regardless of whether,
how, in what circumstances, or for what reason Landlord may theretofore have
agreed to suspend, waive, or terminate this Guaranty or discrete obligations
hereunder. Notwithstanding the foregoing, this Reinstatement of Lease
Guaranty Obligation shall not apply if the Lease has been duly assigned to
an assignee as provided in Section 6 of the Lease and who meets the
Termination criteria as set forth in this PARA 11.
12 MARITAL STATUS. Each of the undersigned has caused his spouse to join in
this Guaranty by signing below; and if no such spouse has signed, the
undersigned hereby represents and warrants that he is unmarried.
IN WITNESS WHEREOF, this Guaranty is executed this 14th day of August,
1998, at Berkeley,
GUARANTOR: DANIEL MILLER, an individual
/s/ Daniel Miller
--------------------------------------------
SPOUSE: --------------------------------------------
--------------------------------------------
[SPOUSE'S NAME TYPED OR PRINTED]
GUARANTOR: ROGER STRAUCH, an individual
/s/ Roger Strauch
--------------------------------------------
SPOUSE: /s/ Julie A. Kuehanyan
--------------------------------------------
--------------------------------------------
[SPOUSE'S NAME TYPED OR PRINTED]
EAT/WORK DEVELOPMENT CONTINUING GUARANTY
PAGE E-3 OF 3
<PAGE>
STANDARD COMMERCIAL OFFICE LEASE FOR EAT/WORK DEVELOPMENT
THIS COMMERCIAL OFFICE LEASE (the "Lease") is entered into as of 11/15/98
by and between EAT/WORK DEVELOPMENT, LP, a California limited partnership
("Landlord") and ASK JEEVES, Inc., a California corporation ("Tenant").
1. BASIC LEASE TERMS. Landlord leases to Tenant, and Tenant rents and hires
from Landlord, the Premises described in Section 1.1 below, for the rents
hereinafter reserved, for the term stated in Section 1.4 below, and upon and
subject to the terms, conditions (including limitations, restrictions, and
reservations), and covenants hereinafter provided. Each party hereby
expressly covenants and agrees to observe and perform all of the conditions
and covenants herein contained on its part to be observed and performed. The
parties agree that the following table (the "Table") sets forth in summary
form the basic terms of this Lease, as all of such terms as defined below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Period Suite # Square Footage Monthly Base Pro Rata Share Base Year
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Decemb 1, 1998- B-C 1835 s.f. $2940.00 5.4% 1999
Novemb 30, 2001
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
In the event of any conflict between the terms contained in the Table and the
terms contained in subsequent sections of the Lease, the terms of the Table
shall control, subject to any adjustments specifically provided for in any
other provisions of the Lease.
1.1 PREMISES. The Premises leased to Tenant (the "Premises") is that
portion of the first floor of the Building described in Section 1.2. below
and commonly known as Suite B-C, as shown on the floor plan annexed hereto
as EXHIBIT B. The Premises also include all fixtures and equipment which are
attached thereto, except items not deemed to be included therein and which
are removable by Tenant as provided in Section 18. Landlord and Tenant agree
that the square footage of the Premises, for all purposes under this Lease,
are as specified in the Table. Tenant acknowledges that it has had an
opportunity to verify the numbers stated in the Table relating to the
measurements of the Premises prior to the Commencement Date of this Lease.
1.2 BUILDING. The Premises are located in the building known by the street
address 2607 7th Street (the "Building") in the City of Berkeley, County of
Alameda, State of California. The Building is more particularly described and
depicted in EXHIBIT A which is attached hereto. Landlord and Tenant agree
that the square footage of the Building, for all purposes under this Lease,
is twelve thousand (12,000). Tenant acknowledges that it has had an
opportunity to verify the measurement of the Building prior to the
Commencement Date of this Lease.
1.3 DEVELOPMENT. The Building is located in and forms part of the real
property commonly known as the Eat/Work Development, with a street address of
918 Parker Street, Berkeley, California (the "Development"), which comprises
three different buildings and constitutes a single parcel on the assessment
roll of the Alameda County Tax Assessor. For the purposes of this Lease, the
Development shall mean the Building and any common or public areas or
facilities, easements, corridors, lobbies, sidewalks, loading areas,
driveways, landscaped areas, skywalk, parking garages and lots, and any and
all other structures or facilities operated or maintained in connection with
or for the benefit of the Building, and all parcels or tracts of land on
which all or any portion of the Building or any of the other foregoing items
are located, and any fixtures, machinery, equipment, apparatus, Systems and
Equipment (as defined in Section 5.5 below), furniture, and other personal
property located thereon or therein and used in connection therewith, whether
title is held by Landlord or its affiliates. Landlord and Tenant agree that
the square footage of the Development, for all purposes under this Lease, is
thirty four thousand (34,000). Tenant acknowledges that it has had an
opportunity to verify the measurement of the Development prior to the
Commencement Date of this Lease.
1.4 TERM. The term (the "Term") for which the Premises are hereby leased
shall commence on the "Commencement Date," which shall be December 1, 1998,
or, if earlier, the day on which the Premises are ready for occupancy (as
defined in Section 5) and shall end on November 30, 2001 (the "Expiration
Date") or any earlier date upon which the Term may expire or be canceled or
terminated pursuant to any of the conditions or covenants of this Lease or
pursuant to law. Promptly following the Commencement Date the parties hereto
shall, if required by Landlord, enter into a supplementary agreement fixing
the dates of the Commencement Date and the Expiration Date in the form which
is attached hereto as EXHIBIT C and incorporated herein by reference.
1.5 TENANT PARKING. Tenant is entitled to two (2) unreserved parking
spaces in the parking lot of Eat/Work Development. If it is necessary at any
time to reserve parking spaces or hire a guard to monitor parking, Landlord
may, at its option, do so and pass both reasonable administrative and direct
labor expenses for the guard or monitor to tenant based on tenant's Pro Rata
Share as defined in Section 1.
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2. RENT. The "Rent" reserved under this Lease, for the Term thereof,
shall consist of the following:
a) "Base Rent" of Two Thousand Nine Hundred Forty Dollars
($2,940.00) per month, which shall be payable in advance on the first day of
each and every calendar month during the Term of this Lease, except that
Tenant shall pay the first month's Base Rent due under the Lease upon the
execution and delivery of this Lease by Tenant; and
b) "Additional Rent" consisting of any and all other sums of money
as shall become payable by Tenant to Landlord hereunder; and Landlord shall
have the same remedies for default in the payment of Additional Rent as for a
default in payment of Base Rent.
2.1 BASE RENT ADJUSTMENT. On each anniversary of the Commencement Date the
monthly Base Rent shall increase by One Hundred Twenty Dollars ($120.00).
2.2 ADDITIONAL RENT. In addition to the Base Rent and all other payments
due under this Lease, Tenant shall pay to Landlord, in the manner set forth
herein, as Additional Rent, the following amounts (collectively the "Rental
Adjustment"):
a) INCREASED INSURANCE. Tenant agrees to pay its Pro Rata Share of
that portion of all Casualty Insurance under Section 2.3e incurred or paid by
Landlord in connection with the ownership and operation of the Building
("insurance") during each Adjustment Period which exceeds the amount of Base
Operating Insurance subject to proration under Section 2.3.2 below. In the
event that Landlord obtains additional coverages or increases the rate of
coverage as of the commencement date of this Lease, Landlord agrees to adjust
Base Year coverage as if such coverage had been included in the Base Year.
Notwithstanding anything to the contrary herein, Landlord agrees that
"Increased Insurance" shall not include any surcharge or unusual rate
increase attributable to any non-office Tenant in the Building.
b) INCREASED TAXES. An amount equal to Tenant's Pro Rata Share of
that portion of Real Estate Taxes paid by Landlord during each Adjustment
Period which exceeds the amount of Base Real Estate Taxes, subject to
proration under Section 2.3.2 below. Notwithstanding anything to the contrary
herein, Tenant's obligation to pay its Pro Rata Share of any increase in Real
Estate Taxes which is attributable to a transfer or change in the ownership
of the Building (the "Increase") shall be limited as follows: if the transfer
or change in ownership occurs during the first year after the Commencement
Date, Tenant shall have no obligation to pay any portion of the Increase; if
the transfer or change in ownership occurs during the second year after the
Commencement Date, Tenant shall pay twenty percent (20%) of the Increase; if
the transfer or change in ownership occurs during the third year after the
Commencement Date, Tenant shall pay forty percent (40%) of the Increase; if
the transfer or change in ownership occurs during the fourth year after the
Commencement Date, and assuming Tenant has exercised its Extension Option,
Tenant shall pay sixty percent (60%) of the Increase; if the transfer or
change in ownership occurs during the fifth year after the Commencement Date,
and assuming Tenant has exercised its Extension Option, Tenant shall pay
eighty percent (80%) of the Increase; and if the transfer or change in
ownership occurs during the sixth year after the Commencement Date, and
assuming Tenant has exercised its Extension Option, Tenant shall pay one
hundred percent (100%) of the Increase.
2.3 DEFINITIONS. For the purposes of this Lease, the following definitions
shall apply:
a) BASE INSURANCE. "Base Insurance" means the total of insurance
paid by Landlord during calendar year 1999 for the Development (the "Base
Insurance Year").
b) BASE REAL ESTATE TAXES. "Base Real Estate Taxes" means the
total of Real estate Taxes paid by Landlord during tax year 1999 for the
Development (the "Base Tax Year").
c) TENANT'S PRO RATA SHARE. "Tenant's Pro Rata Share" shall mean
the percentage labeled as such in the Table in Section 1, derived as follows:
Tenant's Pro Rata Share is calculated by dividing the agreed area of the
Premises (numerator) by the agreed area of the Development (denominator) and
expressing the resulting quotient as a percentage. Tenant's Pro Rata Share
shall be adjusted during the Term in proportion to any adjustment in the area
of the Premises or Development in accordance with the formula stated herein.
d) ADJUSTMENT PERIOD. "Adjustment Period" means each calendar year
of which any portion occurs during the Term, excluding the Base Year and
beginning with the first calendar year immediately following the Base Year.
e) INSURANCE. "Insurance" means premiums for any insurance
policies as determined by Landlord in accordance with the reasonable practice
of prudent landlords in the vicinity of the Development (including public
liability, property damage, earthquake if commercially reasonable, and fire
and extended coverage insurance for the full replacement cost of the Building
as required by Landlord or its lenders for the Building).
f) REAL ESTATE TAXES. "Real Estate Taxes" means any and all ad
valorem real property taxes and any form of assessment, levy, charge, fee,
tax, or other imposition imposed by any authority, including any city,
county, state, or federal governmental agency, or any school, library,
lighting, transportation, housing, drainage, or other improvement or special
assessment district thereof, whether or not now customary or in the
contemplation of the parties hereto, and whether or not general, special,
ordinary, or extraordinary, which Landlord shall pay during any Adjustment
Period because of or in connection with the ownership, leasing, or operation
of the Building.
<PAGE>
2.3.1 RECONCILIATION. On or before the first day of April of each year after
the first Adjustment Period (or as soon thereafter as is practical), Landlord
shall deliver to Tenant a statement (the "Statement") setting forth the
Rental Adjustment for the preceding year. Tenant shall pay Landlord the
amount of any rental adjustment within ten (10) days of the receipt of the
Statement. The obligation of Tenant to make payments required under this
Section 2.3.1 shall survive the expiration or earlier termination of the Term
of this Lease.
2.3.2 PRORATION OF RENTAL ADJUSTMENT. If the Term does not commence on
January 1 or does not end on December 31, Tenant's obligations to pay
estimated and actual amounts towards increased Insurance and/or Real Estate
Taxes for such first or final calendar year shall be prorated to reflect the
portion of such year(s) included in the Term. Such proration shall be made by
multiplying the total estimated or actual (as the case may be) increased
insurance and/or Real Estate Taxes, (as the case may be) for such calendar
year(s), as well as the base insurance amount and/or Base Real Estate Taxes,
(as the case may be), by a fraction, the numerator of which shall be the
number of days of the Term during such calendar year, and the denominator of
which shall be three hundred sixty-five (365).
2.4 PAYMENT OF RENT. Tenant shall pay the Base Rent and Additional Rent
promptly when due, without demand therefor and without any abatement,
deduction, or setoff whatsoever, except as may be expressly provided in this
Lease. Tenant shall pay the Rent to Landlord, in lawful money of the United
States of America, at Landlord's office at the Building or at such other
place, or to such agent and at such place, as Landlord may designate by
notice to Tenant. If the Commencement Date occurs on a day other than the
first day of a calendar month, the Base Rent for such calendar month shall be
prorated, and the balance of the first month's Base Rent theretofore paid
shall be credited against the next monthly installment of Base Rent. The Base
Rent for the last month of the lease term shall also be prorated.
2.5 LATE CHARGES. Tenant acknowledges that the late payment of any monthly
Rent will cause Landlord to lose the use of that money and incur costs and
expenses not contemplated under this Lease, including administrative and
collection costs and processing and account expenses, the exact amount of
which it is difficult to ascertain. Therefore, if more than one such
installment within any 12-month period is not received by Landlord within
five (5) days from the date it is due, Tenant shall pay Landlord a late
charge equal to five percent (5%) of such installment. Landlord and Tenant
agree that this late charge represents a reasonable estimate of such costs
and expenses and is fair compensation to Landlord for the loss suffered from
such nonpayment by Tenant. In addition, any check returned by the bank for
any reason will be considered late and will be subject to all late charges
plus a Twenty Dollar ($20.00) fee. After two such occasions in any twelve
(12) month period, Landlord will have the right to require payment by a
cashier's check or money order. Acceptance of any late charge shall not
constitute a waiver of Tenant's default with respect to such nonpayment by
Tenant nor prevent Landlord from exercising any other rights or remedies
available to Landlord under this Lease or at law.
3 SECURITY DEPOSIT. Tenant shall deposit with Landlord the amount of
Seventeen Thousand Six Hundred Forty Dollars ($17,640.00) (the "Security
Deposit") upon Tenant's execution and submission of this Lease to be held,
applied and disposed of pursuant to the provisions of Section 1950.7 of the
California Civil Code. The Security Deposit shall serve as security for the
prompt, full, and faithful performance by Tenant of the terms and provisions
of this Lease. Landlord shall not be required to keep the Security Deposit
separate from Landlord's general funds or pay interest on the Security
Deposit. Landlord agrees that Tenant shall have the right to reduce the
amount of the Security Deposit held by Landlord by an amount representing the
cost of a new HVAC system to be installed in the Premises after the
Commencement Date of this Lease as approved and accepted by Landlord in
accordance with the provisions of Section 9 below. In order to reduce the
Security Deposit as provided herein, Tenant shall present Landlord with paid
invoices, receipts, original warranty information, evidence of an HVAC
maintenance contract, and such other documentation as Landlord may reasonably
require relating to the installation and approval of the HVAC system in the
Premises. Landlord agrees to refund to Tenant the cost of the HVAC system and
its installation in the Premises within thirty (30) days after receipt of
such documentation from Tenant.
3.1 APPLICATION OF DEPOSIT. In the event that Tenant is in Default
hereunder and fails to cure within any applicable time permitted under this
Lease, or in the event that Tenant owes any amounts to Landlord upon the
expiration of this Lease, Landlord may use or apply the whole or any part of
the Security Deposit for the payment of Tenant's obligations hereunder. The
use or application of the Security Deposit or any portion thereof shall not
prevent Landlord from exercising any other right or remedy provided hereunder
or under any Law and shall not be construed as liquidated damages.
3.2 RESTORATION OF FULL DEPOSIT. In the event the Security Deposit is
reduced by such use or application, Tenant shall deposit with Landlord,
within ten (10) days after written notice, an amount sufficient to restore
the full amount of the Security Deposit.
3.3 DISPOSITION OF SECURITY DEPOSIT. After the Expiration Date or any
earlier termination of the Lease, any remaining portion of the Security
Deposit shall be returned to Tenant in accordance with the provisions of
Section 1950.7 of the California Civil Code.
<PAGE>
4 USE. The Premises are to be for software development and related uses
and for no other purpose without prior written consent of Landlord.
4.1 PROHIBITED USES. Tenant shall not use any portion of the Premises for
purposes other than those specified hereinabove, and no use shall be made or
permitted to be made upon the Premises, nor acts done, which will increase
the existing rate of insurance upon the property, or cause cancellation of
insurance policies covering said property. Tenant shall not conduct or permit
any sale by auction on the Premises. Tenant shall not use, release or store
or permit the usage, release, or storage of restricted materials or
substances by Department of Health Services, California Water Quality Control
Board, Environmental Protection Agency, or any other governmental agency or
entity, and Tenant shall comply with all environmental laws, regulations,
rules and requirements applicable to Tenant's activities in the Premises.
Tenant shall indemnify, defend and hold Landlord harmless from and against
any claims, judgments, demands, liabilities, costs and expenses (including
reasonable attorney's fees) arising from Tenant's breach of the above
covenants. Tenant shall not commit any waste upon the Premises or any
nuisance or act which may disturb the quiet enjoyment of any tenant in the
Building.
5 CONDITION OF PREMISES. Tenant shall accept the Premises (and the
Systems and Equipment serving the same) in an "as is" condition, except as
provided in paragraph 5.1, on the date the Term commences, and Landlord shall
have no obligation to improve, alter, remodel, or otherwise modify the
Premises prior to Tenant's occupancy.
5.1 NOTICE OF DEFECTS. It shall be conclusively presumed upon Tenant's
taking actual possession of the Premises that the same were in satisfactory
condition (except for latent defects) as of the date of such taking of
possession, unless within thirty (30) days after the Commencement Date Tenant
shall give Landlord notice in writing specifying the respects in which the
Premises were not in satisfactory condition. Landlord agrees to exercise for
Tenant's benefit all of the standard contractor remedies and warranties of at
least one year and any manufacturers warranties for all new Work and as
further provided in Section 5.3 of the Work Letter Agreement.
5.2 SYSTEMS AND EQUIPMENT. As used in this Lease, "Systems and Equipment"
means collectively any existing duct work, intrabuilding network cables and
wires that transmit voice, data, and other telecommunications signals
("INC"), and other equipment, facilities, and systems designed to supply
water, heat, ventilation, air conditioning and humidity or any other services
or utilities, or comprising or serving as any component or portion of the
electrical, gas, steam, plumbing, sprinkler, communications, alarm, security,
or fire/life/safety systems or equipment, or any other mechanical,
electrical, electronic, computer, or other systems or equipment for the
Building. Nothing in this Lease shall be construed to impose upon the Tenant
a general obligation to maintain the Building Systems and Equipment, except
as specifically provided for in this Lease.
6 ASSIGNMENT AND SUBLETTING. Tenant agrees that it shall not assign,
sublet, mortgage, hypothecate, or encumber this Lease, nor permit or allow
the Premises or any part thereof to be used or occupied by others, without
the prior written consent of Landlord in each instance which shall not
unreasonably be withheld or delayed. The actions described in the foregoing
sentence are referred to collectively herein as "Transfers." If the Premises
or any part thereof be sublet or occupied by anybody other than Tenant,
Landlord may, after default by Tenant, collect rent from the subtenant or
occupant and apply the net amount collected to the Rent herein reserved; but
no Transfer, occupancy, or collection shall be deemed a waiver of the
provisions hereof, the acceptance of the subtenant or occupant as tenant, or
a release of Tenant from the further performance hereunder by Tenant. The
consent by Landlord to a Transfer shall not relieve Tenant from obtaining the
Landlord's express written consent to any further Transfer. In no event shall
any permitted subleasee assign or encumber its sublease or further sublet all
or any portion of its sublet space, or otherwise suffer or permit the sublet
space or any part thereof to be used or occupied by others, without
Landlord's prior written consent in each instance which shall not be
unreasonably withheld or delayed. Notwithstanding anything to the contrary
herein, Tenant shall have a one-time right to assign the entire Premises to a
company in which Tenant is a majority shareholder or to the Roda Group
Development Company, LLC, a Delaware limited liability company, without
Landlord's prior consent, provided that Tenant shall provide to Landlord
concurrently with such assignment reasonably satisfactory evidence of (i)
Tenant's majority ownership of assignee and (ii) a financial strength on the
part of such assignee which is at least equal to that of Tenant.
7. COMPLIANCE WITH LAWS. Tenant shall use the Premises in compliance with
all applicable federal, state, county, and local governmental and municipal
laws, statutes, ordinances, rules, regulations, codes, decrees, orders, and
other such requirements, and decisions by courts in cases where such
decisions are considered binding precedents in the State of California (the
"State"), and decisions of federal courts applying the laws of the State
(collectively "Laws"). Tenant shall, at its sole cost and expense, promptly
comply with each and all of such Laws, and also with the requirements of any
board of fire underwriters or other similar body now or hereafter constituted
to deal with the condition, use, or occupancy of the Premises, except in the
case of required compliance (including, without limitation structural
changes) not triggered by Tenant's change in use of the Premises or Tenant's
alterations, additions, or improvements
<PAGE>
therein. Tenant shall comply with all applicable Laws regarding the physical
condition of the Premises, but only to the extent that the applicable Laws
pertain to the particular manner in which Tenant uses the Premises or the
particular use to which Tenant puts the Premises, if different from that
permitted under Section 4 of this Lease.
7.1 CODE COSTS. Notwithstanding anything to the contrary in this Section 7,
if the requirement of any public authority obligates either Landlord or
Tenant to expend money in order to bring the Premises and/or any area of the
Building into compliance with Laws as a result of Tenant's particular use or
alteration of the Premises; Tenant's change in the use of the Premises; the
manner of conduct of Tenant's business or operation of its installations,
equipment, or other property therein; any cause or condition created by or at
the instance of Tenant, other than by Landlord's performance of any work for
or on behalf of Tenant; or breach of any of Tenant's obligations hereunder,
then Tenant shall bear all costs ("Code Costs") of bringing the Premises
and/or Building into compliance with Laws, whether such Code Costs are
related to structural or non-structural elements of the Premises or Building.
8 HAZARDOUS MATERIALS. Tenant shall not cause or permit to occur (i) any
violation of applicable Laws now or hereafter enacted or issued, related to
environmental conditions on, under, or about the Premises arising from
Tenant's leasehold interest in or use or occupancy of the Premises including,
soil and groundwater conditions and (ii) the use, generation, release,
manufacture, refining, production, processing, storage, or disposal of any
Hazardous Materials on, under, or about the Premises or the Building or the
transportation to or from the Premises or the Building of any Hazardous
Materials, except de minimis amounts of Hazardous Materials that are
commonly used in office products or are present in ordinary cleaning
supplies. All such office products and cleaning supplies will be used and
stored in a manner that complies with all Laws. Tenant shall at its own
expense make all submissions to, provide all information required by, and
comply with all requirements of all governmental authorities under Laws
relating to Hazardous Materials. Should any governmental entity having
jurisdiction over the Premises demand that a remediation plan be prepared or
that remediation be undertaken because of any deposit, spill, discharge, or
other release of Hazardous Materials that occurs during the Term of this
Lease at or from the Premises which arises at any time from Tenant's use or
occupancy of the Premises or from acts or omissions of Tenant, its agents,
employees, representatives, or invitees, then Tenant shall, at its own
expense, prepare and submit the required plans. Tenant shall indemnify,
defend, protect, and hold Landlord, its partners, officers, directors,
beneficiaries, shareholders, agents, employees, and lenders harmless from all
fines, suits, procedures, claims, liabilities, and actions of every kind, and
all costs associated therewith (including investigation costs and attorneys'
and consultants' fees) arising out of or in any way connected with any
deposit, spill, discharge, or other release of Hazardous Materials that
occurs during the Term of this Lease, at or from the Premises which arises at
any time from Tenant's use or occupancy of the Premises or from Tenant's
failure to provide all information, make all submissions, and take all steps
required by any governmental authorities having jurisdiction over the
Premises. Tenant's obligations and the indemnity hereunder shall survive the
expiration or earlier termination of this Lease. The term Hazardous Materials
as used herein shall include any chemical, substance, or material which has
been or is hereafter determined by any federal, state, or local governmental
agency to be capable of posing a risk of injury to health or safety including
petroleum, asbestos, polychlorinated biphenyls, radioactive materials, and
radon gas.
9 MAINTENANCE, REPAIRS, ALTERATIONS. Tenant shall, at his own expense and
at all times, maintain the Premises in good and safe condition, including
plate glass and any existing or future intrabuilding alarm, computer, or
network cables and wires that transmit voice, data, and other
telecommunications signals ("INC"), and any other existing or future exposed
equipment or system comprising or supplying water, gas, electricity, HVAC,
communications, alarms, fire/safety, sprinkler, plumbing or appliances for
the Premises and shall surrender the same at termination hereof in as good
condition received, normal wear and tear excepted. Tenant shall be
responsible for all repairs for such exposed equipment or systems required,
excepting the roof, skylights, exterior walls, and structural foundations,
which shall be maintained by Landlord. Notwithstanding Tenant's foregoing
maintenance and repair responsibility Tenant shall not be responsible to
replace any systems or equipment where such replacement would be deemed a
capital replacement as opposed to a repair under generally-accepted
accounting principles, unless such replacement has been caused solely by
Tenant's negligence, wilful misconduct, or failure to maintain as required
hereunder. Landlord shall maintain in good condition the common areas of the
property, such as sidewalks, driveways, lawns, and shrubbery. No improvement
or alteration of the Premises shall be made without the prior written consent
of the Landlord, which shall not be unreasonably withheld or delayed. Prior
to the commencement of any substantial repair (except in an emergency
provided that Tenant shall notify Landlord as soon as reasonably possible),
improvement, or alteration. Tenant shall give Landlord at least five (5)
days' written notice in order that Landlord may post appropriate notices of
nonresponsibility to avoid any liability for liens for any such work of
improvement on the Premises. Notwithstanding the foregoing, Landlord hereby
consents to Tenant's installation of an HVAC system in the Premises, subject
to Landlords prior written consent of Tenant's proposal and plans for such
installation. Such HVAC system shall be deemed a fixture and become the
property of Landlord immediately upon installation; however, Tenant agrees to
maintain in effect a maintenance contract with a contractor reasonably
acceptable to Landlord throughout the Term of the Lease. Tenant shall be
entitled to a reduction in the amount of the Security Deposit against the
cost of the purchase and installation of the HVAC system as provided in
Section 3 above.
<PAGE>
10 ENTRY AND INSPECTION. Tenant shall permit Landlord or Landlord's agents
to enter upon the Premises at reasonable times and upon reasonable notice
for the purpose of inspecting the same, will permit Landlord at any time
within one hundred twenty (120) days prior to the expiration of this Lease to
place upon the Premises any usual and reasonable "To Lease" or "Available"
signs, and will permit persons desiring to lease the same to inspect the
Premises thereafter.
11 INDEMNIFICATION OF LANDLORD. Tenant agrees to assume the defense of and
indemnify and save harmless Landlord from all claims, liability, loss, damage,
injury, including physical injury of Tenant's employees directly or
indirectly arising from the performance of this Lease, from tenant's
occupation or use of the Premises, or arising out of the failure of Tenant to
provide a "safe place to work" and from any and all claims, liability, loss,
damage, injury, including physical injury or death and liability therefor
caused or incurred, including injury or death of Tenant's business invitees
and social guests, resulting directly or indirectly from Tenant's occupancy
of the Leased Premises covered by this Lease. Tenant's duties to defend,
indemnify and save harmless shall apply to liability incurred or claimed as a
result of negligence or willful misconduct, regardless of responsibility for
such negligence or willful misconduct unless Landlord, its employees or
agents were solely negligent in the matters complained of.
12 LANDLORD'S INSURANCE. Landlord shall, as part of Insurance expenses,
maintain "all risk" property damage insurance containing an agreed amount
endorsement covering not less than one hundred percent (100%) of the full
insurable replacement cost valuation of the Building and the tenant
improvements, betterments, and the alterations thereto; and Landlord's
personal property, business papers, furniture, fixtures, and equipment
(collectively "Landlord's Property"), exclusive of the costs of excavation,
foundations, footings, and risks required to be covered by Tenant's
insurance, and subject to commercially reasonable deductibles. Landlord shall
also, as part of insurance expenses, obtain and keep in full force the
following policies of insurance: commercial general liability insurance;
workers' compensation insurance, if required by applicable Law; and such
other insurance as Landlord deems appropriate or as may be required by any
Holder or ground lessor, Landlord's insurance shall be issued by insurance
companies authorized to do business in the State of California with a
financial rating of at least B+ for any property insurance and at least B+
for any liability insurance, as rated in the most recent edition of Best's
Insurance Reports;
13 TENANT'S INSURANCE. Tenant shall obtain and maintain in effect at all
times during Tenant's possession of the Premises the following insurance
coverage and policies:
(a) LIABILITY INSURANCE. Tenant shall maintain a policy of commercial
general liability insurance, which shall include coverages for (i) bodily
injury; (ii) property damage; and (iii) personal property. The minimum
limits of liability shall be a combined single limit with respect to each
occurrence of not less than One Million Dollars ($1,000,000) and an aggregate
limit of not less than Two Million Dollars ($2,000,000). The policy shall
contain a cross-liability endorsement and a severability of interest clause.
(b) TENANT'S BUSINESS PERSONAL PROPERTY INSURANCE. Tenant shall maintain
on all of its business personal property, including valuable business papers
and accounts receivable; operating supplies; inventory; and furniture,
fixtures, and equipment (whether owned, leased, or rented) (collectively
"Business Personal Property") an "all risk" property damage insurance policy
including coverages for sprinkler leakage and containing an agreed amount
endorsement (or, if applicable, a business owner's policy with a
no-coinsurance provision) in an amount not less than one hundred percent
(100%) of the full replacement cost valuation of such Business Personal
Property, if available. The proceeds from any such policy shall be used by
Tenant for the replacement of such Business Personal property.
(c) BUSINESS INTERRUPTION/EXTRA EXPENSE INSURANCE. Tenant shall maintain
business interruption or (if applicable) contingent business interruption and
extra expense insurance in such amounts as will adequately reimburse Landlord
for any item or expense enumerated in this agreement. If Tenant's business
interruption or (if applicable) contingent business interruption and extra
expense insurance proceeds are insufficient to cover all of Tenant's
obligations, Landlord shall be paid before any other creditor. Such insurance
will be carried with the same insurer that issues the insurance for Tenant's
Business Personal Property pursuant to Section 13(b).
(d) WORKER'S COMPENSATION INSURANCE. Tenant shall maintain worker's
compensation insurance as required by the State of California.
(e) TENANT'S LIABILITY LIMITATION. Except with respect to any
intentional tort, under no circumstance shall Tenant ever be liable for
consequential damages, including damages for lost profits or business
interruption.
13.1 TENANT'S INSURANCE CRITERIA. All insurance required to be maintained by
Tenant under this Lease shall conform to the following criteria:
<PAGE>
(a) Tenant's insurance shall be issued by insurance companies
authorized to do business in the State of California with a financial rating
of at least B+ for any property insurance and at least B+ for any liability
insurance, as rated in the most recent edition of Best's Insurance Reports;
(b) Tenant's insurance shall be issued as primary and noncontributory;
(c) Tenant's liability and property insurance policies shall name
Landlord as the additional named insured and Landlord, Landlord's agents, and
any ground lessors and Holders (as such terms are defined in Section 27)
whose names shall have been furnished to Tenant as additional named insureds;
(d) Tenant's insurance shall contain an endorsement requiring at least
thirty (30) days written notice from the insurance company to each insured and
additional insured before cancellation or any material change in the
coverage, scope, or amount of any policy; and
(e) with respect to damage to or loss of Tenant's Business Personal
Property, a waiver of subrogation must be obtained, as required under
Section 14 below.
13.2 BLANKET COVERAGE. All of the insurance requirements set forth herein on
the part of Tenant to be observed shall be deemed satisfied if the Premises
are covered by a blanket insurance policy complying with the limits,
requirements, and criteria contained in this Article insuring all or most of
Tenant's facilities in California.
13.3 EVIDENCE OF COVERAGE. A duplicate original policy or a certificate of
insurance shall be deposited with Landlord at the commencement of the Term
or, if earlier, upon Tenant's taking possession of the Premises; and on
renewal of the policy a certificate of insurance listing the insurance
coverages required hereunder and naming the appropriate additional insureds
shall be deposited with Landlord not less than seven (7) days before
expiration of the policy.
14 WAIVER OF SUBROGATION. To the maximum extent permitted by insurance
policies which Landlord and Tenant are required to maintain under Sections 12
and 13 above, Tenant and Landlord, for the benefit of each other, waive any
and all rights of subrogation which might otherwise exist. Landlord and Tenant
intend that their respective property loss risks shall be borne by responsible
insurance carriers to the extent above provided, and Landlord and Tenant
hereby agree to look solely to, and seek recovery only from, their respective
insurance carriers in the event of a property loss to the extent that such
coverage is agreed to be provided hereunder. The parties each hereby waive
all rights and claims against each other for such losses and waive all rights
of subrogation of their respective insurers, provided such waiver of
subrogation shall not affect the right of the insured to recover thereunder.
The parties agree that their respective insurance policies are now, or shall
be, endorsed such that said waiver of subrogation shall not affect the right
of the insured to recover thereunder, so long as no material additional
premium is charged therefor.
15 UTILITIES. Tenant shall be responsible for the payment directly to their
suppliers of the charges for all utilities (except water, which shall be
supplied by Landlord as part of Operating Expenses), including, gas,
electricity, heat, and other services delivered to or consumed in the
Premises. If any such services are not separately metered to Tenant, Tenant
shall pay to Landlord pursuant to Section 2.2 a reasonable proportion, as
determined by Landlord, of all charges jointly metered with other premises.
15.1 INTERRUPTION OF SERVICES. Landlord does not warrant that any services
or utilities provided hereunder for Tenant's use in the Premises will be free
from shortages, failures, variations, or interruptions caused by repairs,
maintenance, replacements, improvements, alterations, changes of service,
strikes, lockouts, labor controversies, accidents, inability to obtain
services, fuel, steam, water or supplies, governmental requirements or
requests, or other causes beyond Landlord's reasonable control, including
interference with light or other incorporeal hereditaments and any
interruption in services or any failure to provide services to Landlord by a
designated utility company at the demarcation point at which Landlord accepts
responsibility for such service or at any point prior thereto, which
interference impedes Landlord in furnishing plumbing, HVAC, electrical,
sanitary, life safety, elevator, telecommunications, or other Building
services, utilities, or the Systems and Equipment. None of the same shall be
deemed an eviction or disturbance of Tenant's use and possession of the
Premises or any part thereof, shall render Landlord liable to Tenant for
abatement of Rent, or shall relieve Tenant from performance of Tenant's
obligations under this Lease. Landlord in no event shall be liable for
damages by reason of loss of profits, business interruption, or other
compensatory or consequential damages.
16 SIGNS. Landlord reserves the exclusive right to the roof, side and rear
walls of the Premises. Tenant shall not construct any projecting sign or
awning without the prior written consent of Landlord, which shall not be
unreasonably withheld or delayed.
17 CONDEMNATION. If any part of the Premises shall be taken or condemned
for public use, and a part thereof remains which is susceptible of occupation
hereunder, this Lease shall, as to the part taken, terminate as of the date
the condemnor acquires possession, and thereafter Tenant shall be required to
pay such proportion of the rent for the remaining term as remaining square
footage of the Premises bears to the
<PAGE>
total original square footage of the Premises at the date of condemnation;
provided, however, that Landlord at its option may terminate this Lease as of
the date the condemnor acquires possession. In the event that the demised
Premises are condemned in whole, or that a portion is condemned of such size
that the remainder is not suitable for Tenant's beneficial enjoyment of the
Premises for their intended purposes, this Lease shall terminate upon the
date upon which the condemnor acquires possession. All sums which may be
payable on account of any condemnation shall belong to the Landlord, and
Tenant shall not be entitled to any part thereof; provided, however, that
Tenant shall be entitled to retain any amount awarded to him for his trade
fixtures or moving expenses.
18 SURRENDER AND RESTORATION. At or before the Expiration Date or the date
of any earlier termination of this Lease, or as promptly as practicable using
Tenant's best efforts after such an earlier termination date, Tenant, at its
expense, shall do all of the following:
(a) surrender possession of the Premises in the condition required
under Section 9, ordinary wear and tear excepted;
(b) surrender all keys, any key cards, and any parking stickers or
cards to Landlord and give Landlord in writing the combinations of any locks
or vaults then remaining in the Premises;
(c) remove from the Premises all of Tenant's Property, except such
items thereof as Tenant shall have expressly agreed in writing with Landlord
were to remain and to become the property of Landlord; and
(d) fully repair any damage to the Premises or the Property resulting
from such removal.
Tenant's obligations herein shall survive the termination of the Lease. All
improvements and other items in or upon the Premises (except Tenant's
Property), whether installed by Tenant or Landlord, shall be Landlord's
property and shall remain upon the Premises, all without compensation,
allowance, or credit to Tenant; provided, however, that if prior to such
termination Landlord so directs by notice, Tenant shall promptly remove such
of the Improvements in the Premises as are designated in such notice and
shall restore the Premises to their condition prior to the installation of
such Improvements. Notwithstanding the foregoing, Landlord shall not require
removal of customary office improvements installed pursuant to the Work
Letter Agreement, if any (except as expressly provided to the contrary
therein), or installed by Tenant with Landlord's written approval (except as
expressly required by Landlord in connection with granting such approval).
18.1 TENANT'S FAILURE TO REMOVE OR RESTORE. If Tenant shall fail to perform
any repairs or restoration or fail to remove any items from the Premises as
required under this Section 18, Landlord may do so, and Tenant shall pay
Landlord the cost thereof upon demand. All property removed from the Premises
by Landlord pursuant to any provisions of this Lease or any Law may be
handled or stored by Landlord at Tenant's expense, and Landlord shall in no
event be responsible for the value, preservation, or safekeeping thereof. All
property not removed from the Premises or retaken from storage by Tenant
within thirty (30) days after expiration or earlier termination of this Lease
or Tenant's right to possession shall at Landlord's option be conclusively
deemed to have been conveyed by Tenant to Landlord as if by bill of sale
without payment by Landlord. Unless prohibited by applicable Laws, Landlord
shall have a lien against such property for the costs incurred in removing
and storing the same.
19 DESTRUCTION OF PREMISES. Landlord and Tenant agree that their
respective rights and obligations in the event of any damage or destruction
of the Premises or Building shall be governed exclusively by this Lease.
Tenant, as a material inducement to Landlord entering into this Lease,
irrevocably waives and releases Tenant's rights under California Civil Code
Sections 1932(2), 1933(4), and 1942, as the same may be modified or replaced
hereafter. No damages, compensation, or claim shall be payable by Landlord
for any inconvenience, interruption, or cessation of Tenant's business or any
annoyance arising from any damage to or destruction of all or any portion of
the Premises or Building.
19.1 PARTIAL DESTRUCTION OF PREMISES. In the event of a partial destruction
of the Premises during the term hereof from any cause, Landlord shall
forthwith repair the same at Landlord's expense, provided that such repairs
can be made within sixty (60) days under existing Laws; but such partial
destruction shall not terminate this Lease, except that Tenant shall be
entitled to a proportionate reduction of Rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with Tenant's beneficial enjoyment of the Premises for their
intended purposes. If such repairs cannot be made within sixty (60) days,
Landlord, at his option may make the same within a reasonable time, this
Lease continuing in effect with the rent proportionately abated as aforesaid;
and in the event that Landlord shall not elect to make such repairs which
cannot be made within sixty (60) days, this Lease may be terminated by either
party upon written notice, effective as of the date of such notice.
Notwithstanding the foregoing, if all repairs cannot be completed or are not
actually completed within one hundred eighty (180) days of the date of damage
Tenant may terminate this Lease at its option.
19.2 DESTRUCTION OF BUILDING. In the event that the Building is destroyed to
an extent of not less than one-third of the replacement costs thereof, either
party may elect to terminate this Lease, whether the Premises be injured or
not. A total destruction of the Building shall terminate this Lease.
<PAGE>
19.3 DISPUTES. In the event of any dispute between Landlord and Tenant with
respect to the provisions hereof, the matter shall be settled by arbitration
in accordance with the provisions of Section 26 below.
20 TENANT'S DEFAULT. The occurrence of any one or more of the following
events shall constitute a material breach and default ("Event of Default") of
this Lease by Tenant:
(a) Tenant's failure to pay any Rent or any other charges required to
be paid by Tenant under this Lease, where such failure continues for five (5)
days after written notice from Landlord that such payment is due and payable
provided, however, that such written notice will no longer be required if
Landlord has issued two or more during any 12-month period;
(b) Tenant's failure promptly and fully to perform any other covenant,
condition, or agreement contained in this Lease, where such failure continues
for thirty (30) days after written notice thereof from Landlord to Tenant;
(c) Tenant's failure to comply with the Rules, unless such failure is
cured within five (5) days after notice; provided, that if the nature of
Tenant's failure is such that more than five (5) days are reasonably required
in order to cure, Tenant shall not be in Default if Tenant commences to cure
within such period and thereafter diligently and continuously prosecutes
such cure to completion;
(d) Tenant's abandonment or vacation of the Premises;
(e) any material misrepresentation or omission herein or in any
financial statements or other materials provided by Tenant or any Guarantor
in connection with negotiating or entering this Lease or in connection with
any Transfer under Section 6;
(f) cancellation of any guaranty of this Lease by any Guarantor;
(g) failure by Tenant to cure within any applicable times permitted
thereunder any default under any other lease for space in any other building
owned or managed by Landlord or its affiliates now or hereafter entered by
Tenant; and any Default hereunder not cured within the times permitted for
cure herein shall, at Landlord's election, constitute a default under any
other such lease or leases;
(h) The levy of a writ of attachment or execution on this Lease or on
any of Tenant's property;
(i) Tenant's or any Guarantor's general assignment for the benefit of
creditors or arrangement, composition, extension, or adjustment with its
creditors; or
(j) In any proceeding or action in which Tenant is a party, the
appointment of a trustee, receiver, agent, or custodian to take charge of the
Premises or Tenant's Property for the purpose of enforcing a lien against the
Premises or Tenant's Property.
The parties expressly agree that any notice which Landlord may give to Tenant
that an Event of Default has occurred under this Section 20 shall satisfy the
requirements of Section 1161 of the California Code of Civil Procedure, and
it shall not be necessary to give another notice to Tenant under Section 1161.
20.1 LANDLORD'S REMEDIES. Upon the occurrence of an Event of Default
hereunder, Landlord shall have the right, in addition to any other rights or
remedies Landlord may have, at Landlord's option, without further notice or
demand of any kind, to elect to do one of the following alternatives:
(i) Terminate this Lease and Tenant's right to possession of the Premises,
re-enter the Premises, and take possession thereof; and Tenant shall have no
further claim to the Premises or under this Lease; or
(ii) Continue this Lease in effect and collect any unpaid Rent or other
charges which have theretofore accrued or which thereafter become due and
payable. It is intended hereunder that Landlord have the remedy described in
California Civil Code Section 1951.4, which provides that a landlord may
continue a lease in effect after a tenant's breach and abandonment and
recover rent as it becomes due, if tenant has the right to sublease or
assign, subject only to reasonable limitations.
In the event of any re-entry or retaking of possession by Landlord, Landlord
shall have the right, but not the obligation, to remove all or any part of
Tenant's Property from the Premises and to place such property in storage at
a public warehouse at the expense and risk of Tenant.
20.2 NO WAIVER OF DEFAULT. The waiver by Landlord of any Event of Default
or of any other breach of any term, covenant, or condition of this Lease
shall not be deemed a waiver of such term, covenant, or condition or of any
subsequent breach of the same or any other term, covenant, or condition.
Acceptance of Rent by Landlord subsequent to any Event of Default or breach
hereof shall not be deemed a waiver of any preceding Event of Default or
breach other than the failure to pay the particular Rent so accepted,
regardless of Landlord's knowledge of any breach at the time of such
acceptance of Rent. Neither Landlord nor Tenant shall be deemed to have
waived any term, covenant, or condition of this Lease, unless the waiving
party gives the other party written notice of such waiver. Neither Landlord
nor Tenant should rely upon the other party's failure or delay in enforcing
any right or remedy hereunder.
20.3 LANDLORD'S RIGHT TO CURE. If Tenant defaults in the performance of any
of its obligations under this Lease, Landlord may (but shall not be obligated
to), without waiving such default, perform the same for the account and at
the expense of Tenant. Tenant shall pay Landlord all costs of such
performance promptly upon receipt of a bill therefor.
<PAGE>
20.4 DAMAGES. Should Landlord elect to terminate this Lease under the
provisions of Section 20.1(i) above, Landlord may recover as damages from
Tenant the following:
(a) PAST RENT: The worth at the time of the award of any unpaid Rent
which had been earned at the time of termination; plus
(b) RENT PRIOR TO AWARD: The worth at the time of the 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 Tenant proves could have been reasonably avoided; plus
(c) RENT AFTER AWARD: The worth at the time of the award of the amount
by which the unpaid Rent for the balance of the Term after the time of award
exceeds the amount of the rental loss that Tenant proves could have been
reasonably avoided; plus
(d) SUBSTANTIALLY CAUSED DAMAGES: Any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant's failure
to perform its obligations under this Lease, including, but not limited to,
any costs or expenses (including attorneys' fees), incurred by Landlord in
(i) retaking possession of the Premises; (ii) maintaining the Premises after
Tenant's default; (iii) preparing the Premises for reletting to a new tenant,
including any repairs or alterations; and (iv) reletting the Premises,
including brokers' commissions.
"The worth at the time of the award" as used in subsections (a) and (b) above
is to be computed by allowing interest at the rate of ten percent (10%) per
annum. "The worth at the time of the award" as used in subsection (c) above
is to be computed by discounting the amount at the discount rate of the
Federal Reserve Bank situated nearest to the Premises at the time of the
award plus one percent (1%).
21 RULES. Tenant agrees that it will abide by, keep and observe all
reasonable rules and regulations which Landlord may make from time to time
for the management, safety, care, and cleanliness of the Building and
grounds, the parking of vehicles and the preservation of good order herein as
well as for the convenience of other occupants and tenants of the Building.
The violations of any such rules and regulations shall be deemed a material
breach of this Lease by Tenant.
22 NOTICES. Any notice required or permitted under this Lease shall be in
writing and shall be delivered in at least one of the following ways:
personally or by private hand-delivery messenger service; by depositing the
same in the United States mail, postage prepaid, registered or certified,
return receipt requested, or by depositing such notice, postage prepaid, with
Federal Express, DHL, UPS, or another nationally-recognized private overnight
delivery service. Each such notice shall be addressed to the intended
recipient at such party's address set forth as follows, or at such other
address as such party has theretofore specified by written notice delivered
in accordance with this Section 22:
if to Landlord:
Attn: Michael Goldin
720 Channing Way
Berkeley, CA 94710
if to Tenant:
Ask Jeeves, Inc.
2607 7th Street
Berkeley, CA 94710
Attn: Daniel Miller
Every notice given to a party shall state the section of the Lease pursuant
to which the notice is given and the period of time within which the
recipient of the notice must respond.
23 HOLDING OVER. Any holding over after the expiration of this Lease, with
the consent of Landlord, shall be construed as a month-to-month tenancy at a
base monthly rental of one hundred and fifty percent (150%) of the monthly
rental which was in effect under the Lease on the Expiration Date, and
otherwise in accordance with the terms hereof, as applicable, except that
Tenant shall have no extension or renewal option.
24 OPTION TO RENEW. Tenant is hereby granted one (1) option to extend (the
"Extension Option") the Term of the Lease for a period of three (3) Lease
Years (the "Extension Period"). The Extension Period term shall begin the
first day following the Expiration Date and shall take effect on the same
terms and conditions in effect under the Lease immediately prior to the first
Extension Period, except that monthly Base Rent shall be three thousand three
hundred dollars ($3,300.00).
24.1 EXERCISE OF OPTION. The Extension Option may be exercised only by
giving Landlord written notice of Tenant's irrevocable election to exercise
no earlier than ten (10) months and no later than six (6) months prior to the
commencement of the Extension Period.
<PAGE>
24.2 FAILURE TO EXERCISE. If Tenant shall fail validly and timely to
exercise the option herein granted, said option shall terminate and shall be
null and void and of no further force and effect.
24.3 DEFAULT. Tenant's exercise of the Option shall, at Landlord's
election, be null and void if an Event of Default exists on the date of
Tenant's notice of exercise and such Default is not cured within the
applicable cure period, or at any time thereafter and prior to commencement
of the relevant Extension Period and such Default is not cured within the
applicable cure period. Tenant's exercise of the Extension Option shall not
operate to cure any Default by Tenant nor to extinguish or impair any rights
or remedies of Landlord arising by virtue of such Default. If the Lease or
Tenant's right to possession of the Premises shall terminate before Tenant
shall have exercised the Extension Option, then immediately upon such
termination the Extension Option shall simultaneously terminate and become
null and void.
24.4 TIME. Time is of the essence of the Extension Options granted
hereunder.
25 ESTOPPEL CERTIFICATE. Tenant shall at any time upon not less than
ten (10) days' prior written notice from Landlord execute, acknowledge, and
deliver to Landlord a statement in writing certifying (a) that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in
full force and effect), the amount of any security deposit, and the date to
which the rent and other charges are paid in advance, if any; and (b)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults
on the part of Landlord hereunder, or specifying such defaults if any are
claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer to the Premises. At Landlord's option,
Tenant's failure to deliver such statement within such time shall be a
material breach of this Lease or shall be conclusive upon Tenant that (i)
this Lease is in full force and effect, without modification except as may be
represented by Landlord, (ii) there are no uncured defaults in Landlord's
performance, and (iii) not more than one month's rent has been paid in
advance or such failure may be considered by Landlord as a default by Tenant
under this Lease. If Landlord desires to finance, refinance, or sell the
Premises, or any part thereof, Tenant hereby agrees to deliver to any lender
or purchaser designated by Landlord summary financial statements of Tenant as
may be reasonably required by such lender or purchaser. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
25.1 SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT. With respect to
Security Devices entered into by Landlord after execution of this Lease,
Tenant's subordination of this Lease shall be subject to receiving assurance
(a "non-disturbance agreement") from the Lender that Tenant's possession and
this Lease, including any options to extend the term hereof, will not be
disturbed so long as Tenant is not in Breach hereof and attorns to the record
owner of the Premises. Landlord agrees to use reasonable commercial efforts
to obtain from the current lender on the Building a nondisturbance agreement
for Tenant within a reasonable period before or after the Commencement Date.
26 ARBITRATION. In the event of any dispute between Landlord and
Tenant arising under this Lease that is not resolved by the parties within
ten (10) days after the date either party gives notice to the other of its
desire to arbitrate the dispute (the "Outside Agreement Date"), the dispute
shall be settled by binding arbitration as provided in this Section 26;
provided, however, that nothing in this Section 26 shall limit Landlord's
right to bring an unlawful detainer action against Tenant if appropriate. All
arbitration proceedings shall be conducted at Berkeley, California. Judgment
upon the arbitration award may be entered in any court having jurisdiction.
The arbitrators shall have no power to change the Lease provisions. Both
parties shall continue performing their Lease obligations pending the award
in the arbitration proceeding. The arbitrators shall award the prevailing
party reasonable expenses and costs, including reasonable attorneys' fees
pursuant to Section 26.2 below, plus interest on the amount due at ten
percent (10%) per annum or the maximum then allowed by Law, whichever is less.
26.1 PROCEDURE. Not later than fifteen (15) days following the Outside
Agreement Date, the party demanding arbitration shall submit the matter to
arbitration under the current rules of the American Arbitration Association
including their rules relating to discovery, but subject to any definitions
or sections of the Lease which may be applicable to the dispute under
submission, and shall request a list of potential arbitrators from whom an
arbitrator shall be selected in accordance with the rules of the American
Arbitration Association.
26.2 PAYMENT. The losing party shall pay to the prevailing party the
amount of the final arbitration award. If payment is not made within ten (10)
business days after the date the arbitration award is no longer appealable,
then in addition to any remedies under the law, if Landlord is the prevailing
party, it shall have the same remedies for failure to pay the arbitration
award as it has for Tenant's failure to pay Rent; and if Tenant is the
prevailing party, it may deduct any remaining award from its monthly payment
of Rent or other charges.
27 SUBORDINATION. Tenant agrees that this Lease shall be automatically
subordinate to any mortgage or trust deeds that are now or may hereafter be
placed upon said Premises. Notwithstanding the
<PAGE>
foregoing, Tenant agrees that any mortgagee of the Building, the holder of
any note, or beneficiary of any deed of trust (collectively "Holders")
encumbering the Building shall have the right upon written notice to Tenant
to subordinate the lien of any such note or deed of trust to this Lease.
28 LANDLORD LIABILITY. The liability of Landlord to Tenant for any
default by Landlord under this Lease or arising in connection herewith or
with Landlord's operation, management, leasing, repair, renovation,
alteration, or any other matter relating to the Building or the Premises
shall be limited to Landlord's insurance in a minimum amount of three million
dollars ($3,000,000) combined plus the interest of Landlord in the
Development (and the rental proceeds thereof) except with respect to any
intentional tort. Under no circumstances shall Landlord ever be liable for
consequential or punitive damages, including damages for lost profits or for
business interruption. Tenant agrees to look solely to Landlord's interest in
the Development (and the rental proceeds thereof) for the recovery of any
judgment against Landlord, and Landlord shall not be personally liable for
any such judgment or deficiency after execution thereon. The limitations of
liability contained in this Section 28 shall apply equally and inure to the
benefit of Landlord's present and future partners, beneficiaries, officers,
directors, trustees, shareholders, agents, and employees, and their
respective partners, heirs, successors, and assigns. Under no circumstances
shall any present or future general or limited partner of Landlord (if
Landlord is a partnership), or trustee or beneficiary (if Landlord or any
partner of Landlord is a trust) have any liability for the performance of
Landlord's obligations under this Lease.
28.1 LIABILITY UPON TRANSFER. The term Landlord as used herein shall
mean only the owner or owners, at the time in question, of the fee title of
leased Premises and in the event of any transfer of such title or interest,
Landlord herein named shall be relieved from and after the date of such
transfer of all liability as respects Landlord's obligations thereafter to be
performed, provided that any funds in the hands of Landlord at the time of
such transfer, in which Tenant has an interest, shall be delivered to the
grantee. The obligations contained in this Lease to be performed by Landlord
shall, subject as aforesaid, be binding on Landlord's successors and assigns,
only during their respective periods of ownership.
29 FIRST SOURCE AGREEMENT. (For five or more employees) Tenant
supports the Equal Opportunity Program set forth in the First Source
Agreement between the Landlord and the City of Berkeley (City) regarding
employment of City residents and protected minority categories and will
pursue such goals in their employment practices. Tenant agrees to enter into
a First-Source Employer Agreement with the CITY and to make use of the City's
First Source Program as the first source for job applicants.
30 MISCELLANEOUS. The following provisions shall apply generally to
terms, provisions, and covenants of this Lease:
30.1 NO OFFER. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of, or
option for, the Premises. This document becomes effective and binding only
upon execution and delivery hereof by Tenant and by Landlord. No act or
omission of any employee or agent of Landlord or of Landlord's broker shall
alter, change, or modify any of the provisions hereof.
30.2 NO PARTNERSHIP. It is expressly understood that Landlord does not,
in any way or for any purpose, become a partner of Tenant in the conduct of
its business, or otherwise, or joint adventurer or a member of a joint
enterprise with Tenant, and that the provisions of this Lease relating to the
percentage rental payable hereunder, if any, are included solely for the
purpose of providing a method whereby the rental is to be measured and
ascertained.
30.3 HEIRS, ASSIGNS, SUCCESSORS. The Lease is binding upon and inures to
the benefit of the heirs, assigns and successors in interest to the parties.
30.4 TIME. Time is of the essence of this Lease.
30.5 WAIVER. No failure of Landlord or Tenant to enforce any term hereof
shall be deemed to be a waiver.
30.6 ATTORNEY'S FEES. In case arbitration or suit should be brought for
recovery of the Premises, or for any sum due hereunder, or for any breach
hereunder by either Tenant or Landlord, or because of any act or omission
which may arise out of the possession of the Premises, by either party, the
prevailing party shall be entitled to all costs incurred in litigation,
arbitration, or otherwise in connection with such action, including a
reasonable attorneys' fee.
30.7 TENANT'S FINANCIAL CONDITION. Tenant agrees to notify Landlord
immediately in writing of any fact or development which may materially
adversely affect Tenant's financial condition, and Tenant's obligation to
notify in this regard shall extend to all matters not within the public realm
which might materially affect the decision of an investor to buy or sell
securities in Tenant. Tenant agrees to notify Landlord immediately in writing
of any filing or impending filing for bankruptcy under federal law or any
other filing for protection from creditors under any applicable law. Tenant
agrees to provide Landlord
<PAGE>
from time to time with financial statements certified by Tenant's certified
public accountant upon reasonable notice of demand from Landlord.
31 ENTIRE AGREEMENT. This Lease, together with its exhibits, contains
all the agreements of the parties hereto and supersedes any previous
negotiations. There have been no representations made by the Landlord or
Tenant or understandings made between the parties other than those set forth
in this Lease and its exhibits. This Lease may not be modified except by a
written instrument duly executed by the parties hereto.
IN WITNESS WHEREOF Landlord and Tenant have executed this Lease as
of the date first-above written.
LANDLORD: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
----------------------------------------
Michael Goldin, General Partner
TENANT: ASK JEEVES, INC., a California corporation
By: /s/ Curtis Vredenburg
----------------------------------------
CURTIS VREDENBURG
Its: Vice President, Finance & Operations
----------------------------------------
<PAGE>
PROPOSED SITE PLAN
[FLOOR PLAN]
EXHIBIT
BUILDING
EAT/WORK
DEVELOPMENT
918 PARKER ST
---------------
BUILDING B
<PAGE>
UNIT DIAGRAM
[FLOOR PLAN]
EXHIBIT
[FLOOR PLAN]
EAT/WORK
DEVELOPMENT
918 PARKER ST
---------------
BUILDING B
<PAGE>
EXHIBIT C
This Commencement Date agreement is attached to that certain lease dated
11/15/98 between Eat/Work Development, LP, a California limited partnership and
ASK JEEVES, Inc., a California corporation ("Tenant") for the Premises as
described in the Lease. Landlord and Tenant agree that the Commencement Date
pursuant to Section 1.4 of the Lease shall be 12/1/98 for all purposes
thereunder.
LANDLORD: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
----------------------------------------
Michael Goldin, General Partner
TENANT: ASK JEEVES, INC., a California corporation
By: /s/ CURTIS VREDENBURG
----------------------------------------
Curtis Vredenburg
Its: VP, Finance & Operations
----------------------------------------
<PAGE>
STANDARD COMMERCIAL OFFICE LEASE FOR EAT/WORK DEVELOPMENT
THIS COMMERCIAL OFFICE LEASE (the "Lease") is entered into as of May 15, 1998
by and between EAT/WORK DEVELOPMENT, LP, a California limited partnership
("Landlord") and ASK JEEVES, Inc., a California corporation ("Tenant").
1. BASIC LEASE TERMS. Landlord leases to Tenant, and Tenant rents and hires
from Landlord, the Premises described in Section 1.1 below, for the rents
hereinafter reserved, for the term stated in Section 1.4 below, and upon and
subject to the terms, conditions (including limitations, restrictions, and
reservations), and covenants hereinafter provided. Each party hereby
expressly covenants and agrees to observe and perform all of the conditions
and covenants herein contained on its part to be observed and performed. The
parties agree that the following table (the "Table") sets forth in summary
form the basic terms of this Lease, as all of such terms as defined below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Period Suite # Square Footage Monthly Base Pro Rata Share Base Year
Rent (incl. CAM)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
May 15, 1998 - B-E 1930 s.f. $2509.00 5.68% 1998
May 14, 2001
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
In the event of any conflict between the terms contained in the Table and the
terms contained in subsequent sections of the Lease, the terms of the Table
shall control, subject to any adjustments specifically provided for in any
other provisions of the Lease.
1.1 PREMISES. The Premises leased to Tenant (the "Premises") is that portion
of the first floor of the Building described in Section 1.2 below and
commonly known as Suite B-E, as shown on the floor plan annexed hereto as
EXHIBIT B. The Premises also include all fixtures and equipment which are
attached thereto, except items not deemed to be included therein and which
are removable by Tenant as provided in Section 18. Landlord and Tenant agree
that the square footage of the Premises, for all purposes under this Lease,
are as specified in the Table. Tenant acknowledges that it has had an
opportunity to verify the numbers stated in the Table relating to the
measurements of the Premises prior to the Commencement Date of this Lease.
1.2 BUILDING. The Premises are located in the building known by the street
address 2607 7th Street (the "Building") in the City of Berkeley, County of
Alameda, State of California. The Building is more particularly described and
depicted in EXHIBIT A which is attached hereto. Landlord and Tenant agree
that the square footage of the Building, for all purposes under this Lease,
is twelve thousand (12,000). Tenant acknowledges that it has had an
opportunity to verify the measurement of the Building prior to the
Commencement Date of this Lease.
1.3 DEVELOPMENT. The Building is located in and forms part of the real
property commonly known as the Eat/Work Development, with a street address of
918 Parker Street, Berkeley, California (the "Development"), which comprises
three different buildings and constitutes a single parcel on the assessment
role of the Alameda County Tax Assessor. For the purposes of this Lease, the
Development shall mean the Building and any common or public areas or
facilities, easements, corridors, lobbies, sidewalks, loading areas,
driveways, landscaped areas, skywalk, parking garages and lots, and any and
all other structures or facilities operated or maintained in connection with
or for the benefit of the Building, and all parcels or tracts of land on
which all or any portion of the Building or any of the other foregoing items
are located, and any fixtures, machinery, equipment, apparatus, Systems and
Equipment (as defined in Section 5.5 below), furniture, and other personal
property located thereon or therein and used in connection therewith, whether
title is held by Landlord or its affiliates. Landlord and Tenant agree that
the square footage of the Development, for all purposes under this Lease, is
thirty four thousand (34,000). Tenant acknowledges that it has had an
opportunity to verify the measurement of the Development prior to the
Commencement Date of this Lease.
1.4 TERM. The term (the "Term") for which the Premises are hereby leased
shall commence on the "Commencement Date," which shall be May 15, 1998, or,
if earlier, the day on which the Premises are ready for occupancy (as defined
in Section 5) and shall end on May 14, 2001 (the "Expiration Date") or any
earlier date upon which the Term may expire or be canceled or terminated
pursuant to any of the conditions or covenants of this Lease or pursuant to
law. Promptly following the Commencement Date the parties hereto shall, if
required by Landlord, enter into a supplementary agreement fixing the dates
of the Commencement Date and the Expiration Date in the form which is
attached hereto as EXHIBIT C and incorporated herein by reference.
1.5 TENANT PARKING. Tenant is entitled to two (2) unreserved parking spaces
in the parking lot of Eat/Work Development. If it is necessary at any time to
reserve parking spaces or hire a guard to monitor parking, Landlord may, at
its option, do so and pass both reasonable administrative and direct labor
expenses for the guard or monitor to tenant based on tenant's Pro Rata Share
as defined in Section 1.
<PAGE>
2. RENT. The "Rent" reserved under this Lease, for the Term thereof, shall
consist of the following:
a) "Base Rent" of two thousand five hundred nine dollars ($2,509.00)
per month, which shall be payable in advance on the first day of each and
every calendar month during the Term of this Lease, except that Tenant shall
pay the first month's Base Rent due under the Lease upon the execution and
delivery of this Lease by Tenant; and
b) "Additional Rent" consisting of any and all other sums of money as
shall become payable by Tenant to Landlord hereunder; and Landlord shall have
the same remedies for default in the payment of Additional Rent as for a
default in payment of Base Rent.
c) Notwithstanding anything to the contrary in this Lease, tenant's
obligation to pay Base Rent shall be abated for a period of three (3) months
after the Commencement Date; provided that Tenant shall be immediately
obligated to repay such rental abatement if Tenant defaults hereunder and
fails to cure within the time permitted, and Landlord may draw upon Tenant's
Security Deposit in order to recoup such abated Base Rent in such
circumstances.
2.1 BASE RENT ADJUSTMENT. On each anniversary of the Commencement Date the
monthly Base Rent shall increase by one hundred dollars ($100.00).
2.2 ADDITIONAL RENT. In addition to the Base Rent and all other payments due
under this Lease, Tenant shall pay to Landlord, in the manner set forth
herein, as Additional Rent, the following amounts (collectively the "Rental
Adjustment"):
a) INCREASED INSURANCE. Tenant agrees to pay its Pro Rata Share of
that portion of all Casualty Insurance under Section 2.3e incurred or paid by
Landlord in connection with the ownership and operation of the Building
("insurance") during each Adjustment Period which exceeds the amount of Base
Operating Insurance subject to proration under Section 2.3.2 below. In the
event that Landlord obtains additional coverages or increases the rate of
coverage as of the commencement date of this Lease, Landlord agrees to adjust
Base Year coverage as if such coverage had been included in the Base Year.
Notwithstanding anything to the contrary herein, Landlord agrees that
"Increased Insurance" shall not include any surcharge or unusual rate
increase attributable to any non-office Tenant in the Building.
b) INCREASED TAXES. An amount equal to Tenant's Pro Rata Share of
that portion of Real Estate Taxes paid by Landlord during each Adjustment
Period which exceeds the amount of Base Real Estate Taxes, subject to
proration under Section 2.3.2 below. Notwithstanding anything to the contrary
herein, Tenant's obligation to pay its Pro Rata Share of any increase in Real
Estate Taxes which is attributable to a transfer or change in the ownership
of the Building (the "Increase") shall be limited as follows: if the transfer
or change in ownership occurs during the first year after the Commencement
Date, Tenant shall have no obligation to pay any portion of the Increase; if
the transfer or change in ownership occurs during the second year after the
Commencement Date, Tenant shall pay twenty percent (20%) of the Increase; if
the transfer or change in ownership occurs during the third year after the
Commencement Date, Tenant shall pay forty percent (40%) of the Increase; if
the transfer or change in ownership occurs during the fourth year after the
Commencement Date, and assuming Tenant has exercised its Extension Option,
Tenant shall pay sixty percent (60%) of the Increase; if the transfer or
change in ownership occurs during the fifth year after the Commencement Date,
and assuming Tenant has exercised its Extension Option, Tenant shall pay
eighty percent (80%) of the Increase; and if the transfer or change in
ownership occurs during the sixth year after the Commencement Date, and
assuming Tenant has exercised its Extension Option, Tenant shall pay one
hundred percent (100%) of the Increase.
2.3 DEFINITIONS. For the purposes of this Lease, the following definitions
shall apply:
a) BASE INSURANCE. "Base Insurance" means the total of insurance paid
by Landlord during calendar year 1997 for the Development (the "Base Insurance
Year").
b) BASE REAL ESTATE TAXES. "Base Real Estate Taxes" means the total of
Real Estate Taxes paid by Landlord during tax year 1998-1999 for the
Development (the "Base Tax Year").
c) TENANT'S PRO RATA SHARE. "Tenant's Pro Rata Share" shall mean the
percentage labeled as such in the Table in Section 1, derived as follows:
Tenant's Pro Rata Share is calculated by dividing the agreed area of the
Premises (numerator) by the agreed area of the Development (denominator) and
expressing the resulting quotient as a percentage. Tenant's Pro Rata Share
shall be adjusted during the Term in proportion to any adjustment in the
area of the Premises or Development in accordance with the formula stated
herein.
d) ADJUSTMENT PERIOD. "Adjustment Period" means each calendar year of
which any portion occurs during the Term, excluding the Base Year and
beginning with the first calendar year immediately following the Base Year.
e) INSURANCE. "Insurance" means premiums for any insurance policies
as determined by Landlord in accordance with the reasonable practice of
prudent landlords in the vicinity of the Development (including public
liability, property damage, earthquake if commercially reasonable, and fire
and extended coverage insurance for the full replacement cost of the Building
as required by Landlord or its lenders for the Building).
f) REAL ESTATE TAXES. "Real Estate Taxes" means any and all ad
valorem real property taxes and any form of assessment, levy, charge, fee,
tax, or other imposition imposed by any authority.
<PAGE>
including any city, county, state, or federal governmental agency, or any
school, library, lighting, transportation, housing, drainage, or other
improvement or special assessment district thereof, whether or not now
customary or in the contemplation of the parties hereto, and whether or not
general, special, ordinary, or extraordinary, which Landlord shall pay during
any Adjustment Period because of or in connection with the ownership,
leasing, or operation of the Building.
2.3.1 RECONCILIATION. On or before the first day of April of each year
after the first Adjustment Period (or as soon thereafter as is practical),
Landlord shall deliver to Tenant a statement (the "Statement") setting forth
the Rental Adjustment for the preceding year. Tenant shall pay Landlord the
amount of any rental adjustment within ten (10) days of the receipt of the
Statement. The obligation of Tenant to make payments required under this
Section 2.3.1 shall survive the expiration or earlier termination of the Term
of this Lease.
2.3.2 PRORATION OF RENTAL ADJUSTMENT. If the Term does not commence on
January 1 or does not end on December 31, Tenant's obligations to pay
estimated and actual amounts towards increased Insurance and/or Real Estate
Taxes for such first or final calendar year shall be prorated to reflect the
portion of such year(s) included in the Term. Such proration shall be made by
multiplying the total estimated or actual (as the case may be) increased
insurance and/or Real Estate Taxes, (as the case may be) for such calendar
year(s), as well as the base insurance amount and/or Base Real Estate Taxes,
(as the case may be), by a fraction, the numerator of which shall be the
number of days of the Term during such calendar year, and the denominator of
which shall be three hundred sixty-five (365).
2.4 PAYMENT OF RENT. Tenant shall pay the Base Rent and Additional Rent
promptly when due, without demand therefor and without any abatement,
deduction, or setoff whatsoever, except as may be expressly provided in this
Lease. Tenant shall pay the Rent to Landlord, in lawful money of the United
States of America, at Landlord's office at the Building or at such other
place, or to such agent and at such place, as Landlord may designate by
notice to Tenant. If the Commencement Date occurs on a day other than the
first day of a calendar month, the Base Rent for such calendar month shall be
prorated, and the balance of the first month's Base Rent theretofore paid
shall be credited against the next monthly installment of Base Rent. The Base
Rent for the last month of the lease term shall also be prorated.
2.5 LATE CHARGES. Tenant acknowledges that the late payment of any monthly
Rent will cause Landlord to lose the use of that money and incur costs and
expenses not contemplated under this Lease, including administrative and
collection costs and processing and account expenses, the exact amount of
which it is difficult to ascertain. Therefore, if more than one such
installment within any 12-month period is not received by Landlord within
five (5) days from the date it is due, Tenant shall pay Landlord a late
charge equal to five percent (5%) of such installment. Landlord and Tenant
agree that this late charge represents a reasonable estimate of such costs
and expenses and is fair compensation to Landlord for the loss suffered from
such nonpayment by Tenant. In addition, any check returned by the bank for
any reason will be considered late and will be subject to all late charges
plus a Twenty Dollar ($20.00) fee. After two such occasions in any twelve
(12) month period, Landlord will have the right to require payment by a
cashier's check or money order. Acceptance of any late charge shall not
constitute a waiver of Tenant's default with respect to such nonpayment by
Tenant nor prevent Landlord from exercising any other rights or remedies
available to Landlord under this Lease or at law.
3 SECURITY DEPOSIT. Tenant shall deposit with Landlord the amount of two
thousand five hundred nine dollars ($2,509.00) (the "Security Deposit") upon
Tenant's execution and submission of this Lease to be held, applied and
disposed of pursuant to the provisions of Section 1950.7 of the California
Civil Code. The Security Deposit shall serve as security for the prompt,
full, and faithful performance by Tenant of the terms and provisions of this
Lease. Landlord shall not be required to keep the Security Deposit separate
from Landlord's general funds or pay interest on the Security Deposit.
3.1 APPLICATION OF DEPOSIT. In the event that Tenant is in Default
hereunder and fails to cure within any applicable time permitted under this
Lease, or in the event that Tenant owes any amounts to Landlord upon the
expiration of this Lease, Landlord may use or apply the whole or any part of
the Security Deposit for the payment of Tenant's obligations hereunder. The
use or application of the Security Deposit or any portion thereof shall not
prevent Landlord from exercising any other right or remedy provided hereunder
or under any Law and shall not be construed as liquidated damages.
3.2 RESTORATION OF FULL DEPOSIT. In the event the Security Deposit is
reduced by such use or application, Tenant shall deposit with Landlord,
within ten (10) days after written notice, an amount sufficient to restore
the full amount of the Security Deposit.
3.3 DISPOSITION OF SECURITY DEPOSIT. After the Expiration Date or any
earlier termination of the Lease, any remaining portion of the Security
Deposit shall be returned to Tenant in accordance with the provisions of
Section 1950.7 of the California Civil Code.
4. USE. The Premises are to be for software development and related uses
and for no other purpose without prior written consent of Landlord.
3
<PAGE>
4.1 PROHIBITED USES. Tenant shall not use any portion of the Premises for
purposes other than those specified hereinabove, and no use shall be made or
permitted to be made upon the Premises, nor acts done, which will increase
the existing rate of insurance upon the property, or cause cancellation of
insurance policies covering said property. Tenant shall not conduct or permit
any sale by auction on the Premises. Tenant shall not use, release or store
or permit the usage, release, or storage of restricted materials or
substances by Department of Health Services, California Water Quality Control
Board, Environmental Protection Agency, or any other governmental agency or
entity, and Tenant shall comply with all environmental laws, regulations,
rules and requirements applicable to Tenant's activities in the Premises.
Tenant shall indemnify, defend and hold Landlord harmless from and against
any claims, judgments, demands, liabilities, costs and expenses (including
reasonable attorney's fees) arising from Tenant's breach of the above
covenants. Tenant shall not commit any waste upon the Premises or any
nuisance or act which may disturb the quiet enjoyment of any tenant in the
Building.
5 CONDITION OF PREMISES. Tenant shall accept the Premises (and the Systems
and Equipment serving the same) in an "as is" condition, except as provided
in paragraph 5.1, on the date the Term commences, and Landlord shall have no
obligation to improve, alter, remodel, or otherwise modify the Premises
prior to Tenant's occupancy.
5.1 NOTICE OF DEFECTS. It shall be conclusively presumed upon Tenant's
taking actual possession of the Premises that the same were in satisfactory
condition (except for latent defects) as of the date of such taking of
possession, unless within thirty (30) days after the Commencement Date Tenant
shall give Landlord notice in writing specifying the respects in which the
Premises were not in satisfactory condition. Landlord agrees to exercise for
Tenant's benefit all of the standard contractor remedies and warranties of at
least one year and any manufacturers warranties for all new Work and as
further provided in Section 5.3 of the Work Letter Agreement.
5.2 SYSTEMS AND EQUIPMENT. As used in this Lease, "Systems and Equipment"
means collectively any existing duct work, intrabuilding network cables and
wires that transmit voice, data, and other telecommunications signals
("INC"), and other equipment, facilities, and systems designed to supply
water, heat, ventilation, air conditioning and humidity or any other services
or utilities, or comprising or serving as any component or portion of the
electrical, gas, steam, plumbing, sprinkler, communications, alarm, security,
or fire/life/safety systems or equipment, or any other mechanical,
electrical, electronic, computer, or other systems or equipment for the
Building. Nothing in this Lease shall be construed to impose upon the Tenant
a general obligation to maintain the Building Systems and Equipment, except
as specifically provided for in this Lease.
6 ASSIGNMENT AND SUBLETTING. Tenant agrees that it shall not assign,
sublet, mortgage, hypothecate, or encumber this Lease, nor permit or allow
the Premises or any part thereof to be used or occupied by others, without
the prior written consent of Landlord in each instance which shall not
unreasonably be withheld or delayed. The actions described in the foregoing
sentence are referred to collectively herein as "Transfers." If the Premises
or any part thereof be sublet or occupied by anybody other than Tenant,
Landlord may, after default by Tenant, collect rent from the subtenant or
occupant and apply the net amount collected to the Rent herein reserved; but
no Transfer, occupancy, or collection shall be deemed a waiver of the
provisions hereof, the acceptance of the subtenant or occupant as tenant, or a
release of Tenant from the further performance hereunder by Tenant. The
consent by Landlord to a Transfer shall not relieve Tenant from obtaining the
Landlord's express written consent to any further Transfer. In no event shall
any permitted sublessee assign or encumber its sublease or further sublet all
or any portion of its sublet space, or otherwise suffer or permit the sublet
space or any part thereof to be used or occupied by others, without
Landlord's prior written consent in each instance which shall not be
unreasonably withheld or delayed. Notwithstanding anything to the contrary
herein, Tenant shall have a one-time right to assign the entire Premises to a
company in which Tenant is a majority shareholder or to the Roda Group
Development Company, LLC, a Delaware limited liability company, without
Landlord's prior consent, provided that (a) Tenant shall obtain in favor of
Landlord a new guarantee from the guarantor of the personal guarantee which
is attached to this Lease as EXHIBIT E, if such guarantee has not already
terminated as defined in Paragraph 11 of EXHIBIT E and (b) Tenant shall
provide to Landlord concurrently with such assignment reasonably satisfactory
evidence of (i) Tenant's majority ownership of assignee and (ii) a financial
strength on the part of such assignee which is at least equal to that of
Tenant.
7 COMPLIANCE WITH LAWS. Tenant shall use the Premises in compliance with
all applicable federal, state, county, and local governmental and municipal
laws, statutes, ordinances, rules, regulations, codes, decrees, orders, and
other such requirements, and decisions by courts in cases where such
decisions are considered binding precedents in the State of California (the
"State"), and decisions of federal courts applying the laws of the State
(collectively "Laws"). Tenant shall, at its sole cost and expense, promptly
comply with each and all of such Laws, and also with the requirements of any
board of fire underwriters or other similar body now or hereafter constituted
to deal with the condition, use, or occupancy of the Premises, except in the
case of required compliance (including, without limitation structural
changes) not triggered by Tenant's change in use of the Premises or Tenant's
alterations, additions, or improvements
4
<PAGE>
therein. Tenant shall comply with all applicable Laws regarding the physical
condition of the Premises, but only to the extent that the applicable Laws
pertain to the particular manner in which Tenant uses the Premises or the
particular use to which Tenant puts the Premises, if different from that
permitted under Section 4 of this Lease.
7.1 CODE COSTS. Notwithstanding anything to the contrary in this Section
7, if the requirement of any public authority obligates either Landlord or
Tenant to expend money in order to bring the Premises and/or any area of the
Building into compliance with Laws as a result of Tenant's particular use or
alteration of the Premises; Tenant's change in the use of the Premises; the
manner of conduct of Tenant's business or operation of its installations,
equipment, or other property therein; any cause or condition created by or at
the instance of Tenant, other than by Landlord's performance of any work for
or on behalf of Tenant; or breach of any of Tenant's obligations hereunder,
then Tenant shall bear all costs ("Code Costs") of bringing the Premises and/or
Building into compliance with Laws, whether such Code Costs are related to
structural or nonstructural elements of the Premises or Building.
8 HAZARDOUS MATERIALS. Tenant shall not cause or permit to occur (i)
any violation of applicable Laws now or hereafter enacted or issued, related
to environmental conditions on, under, or about the Premises arising from
Tenant's leasehold interest in or use or occupancy of the Premises including,
soil and groundwater conditions and (ii) the use, generation, release,
manufacture, refining, production, processing, storage, or disposal of any
Hazardous Materials on, under, or about the Premises or the Building or the
transportation to or from the Premises or the Building of any Hazardous
Materials, except de minimis amounts of Hazardous Materials that are commonly
used in office products or are present in ordinary cleaning supplies. All
such office products and cleaning supplies will be used and stored in a
manner that complies with all Laws. Tenant shall at its own expense make all
submissions to, provide all information required by, and comply with all
requirements of all governmental authorities under Laws relating to Hazardous
Materials. Should any governmental entity having jurisdiction over the
Premises demand that a remediation plan be prepared or that remediation be
undertaken because of any deposit, spill, discharge, or other release of
Hazardous Materials that occurs during the Term of this Lease at or from the
Premises which arises at any time from Tenant's use or occupancy of the
Premises or from acts or omissions of Tenant, its agents, employees,
representatives, or invitees, then Tenant shall, at its own expense, prepare
and submit the required plans. Tenant shall indemnify, defend, protect, and
hold Landlord, its partners, officers, directors, beneficiaries,
shareholders, agents, employees, and lenders harmless from all fines, suits,
procedures, claims, liabilities, and actions of every kind, and all costs
associated therewith (including investigation costs and attorneys' and
consultants' fees) arising out of or in any way connected with any deposit,
spill, discharge, or other release of Hazardous Materials that occurs during
the Term of this Lease, at or from the Premises which arises at any time from
Tenants's use or occupancy of the Premises or from Tenant's failure to
provide all information, make all submissions, and take all steps requires by
any governmental authorities having jurisdiction over the Premises. Tenant's
obligations and the indemnity hereunder shall survive the expiration or
earlier termination of this Lease. The term Hazardous Materials as used
herein shall include any chemical, substance, or material which has been or
is hereafter determined by any federal, state, or local governmental agency
to be capable of posing a risk of injury to health or safety including
petroleum, asbestos, polychlorinated biphenyls, radioactive materials, and
radon gas.
9 MAINTENANCE, REPAIRS, ALTERATIONS. Subject to Tenant's rights under
Section 5.4 above and Section 5.3 of the Work Letter Agreement, after
completion of Landlord's Work, pursuant to Section 5 Tenant shall, at his own
expense and at all times, maintain the Premises in good and safe condition,
including plate glass and any existing or future intrabuilding alarm,
computer, or network cables and wires that transmit voice, data, and other
telecommunications signals ("INC"), and any other existing or future exposed
equipment or system comprising or supplying water, gas, electricity, HVAC,
communications, alarms, fire/safety, sprinkler, plumbing or appliances for
the Premises and shall surrender the same at termination hereof in as good
condition as received, normal wear and tear excepted. Tenant shall be
responsible for all repairs for such exposed equipment or systems required,
excepting the roof, skylights, exterior walls, and structural foundations,
which shall be maintained by Landlord. Notwithstanding Tenant's foregoing
maintenance and repair responsibility, Tenant shall not be responsible to
replace any systems or equipment where such replacement would be deemed a
capital replacement as opposed to a repair under generally-accepted
accounting principles, unless such replacement has been caused solely by
Tenant's negligence, wilfull misconduct, or failure to maintain as required
hereunder. Landlord shall maintain in good condition the common areas of the
property, such as sidewalks, driveways, lawns, and shrubbery. No improvement
or alteration of the Premises shall be made without the prior written consent
of the Landlord, which shall not be unreasonably withheld or delayed. Prior
to the commencement of any substantial repair (except in an emergency
provided that Tenant shall notify Landlord as soon as reasonably possible),
improvement, or alteration, Tenant shall give Landlord at least five (5)
days' written notice in order that Landlord may post appropriate notices of
nonresponsibility to avoid any liability for liens for any such work of
improvement on the Premises.
10. ENTRY AND INSPECTION. Tenant shall permit Landlord or Landlord's
agents to enter upon the Premises at reasonable times and upon reasonable
notice for the purpose of inspecting the same, will permit Landlord at any
time within one hundred twenty (120) days prior to the expiration of this
Lease to place
5
<PAGE>
upon the Premises any usual and reasonable "To Lease" or "Available" signs,
and will permit persons desiring to lease the same to inspect the Premises
thereafter.
11 INDEMNIFICATION OF LANDLORD. Tenant agrees to assume the defense of
and indemnify and save harmless Landlord from all claims, liability, loss,
damage, injury, including physical injury of Tenant's employees directly or
indirectly arising from the performance of this Lease, from tenant's
occupation or use of the Premises, or arising out of the failure of Tenant to
provide a "safe place to work" and from any and all claims, liability, loss,
damage, injury, including physical injury or death and liability therefor
caused or incurred, including injury or death of Tenant's business invitees
and social guests, resulting directly or indirectly from Tenant's occupancy
of the Leased Premises covered by this Lease. Tenant's duties to defend,
indemnify and save harmless shall apply to liability incurred or claimed as a
result of negligence or willful misconduct, regardless of responsibility for
such negligence or willful misconduct unless Landlord, its employees or
agents were solely negligent in the matters complained of.
12 LANDLORD'S INSURANCE. Landlord shall, as part of Insurance expenses,
maintain "all risk" property damage insurance containing an agreed amount
endorsement covering not less than one hundred percent (100%) of the full
insurable replacement cost valuation of the Building and the tenant
improvements, betterments, and the alterations thereto; and Landlord's
personal property, business papers, furniture, fixtures, and equipment
(collectively "Landlord's Property"), exclusive of the costs of excavation,
foundations, footings, and risks required to be covered by Tenant's
insurance, and subject to commercially reasonable deductibles. Landlord shall
also, as part of insurance expenses, obtain and keep in full force the
following policies of insurance: commercial general liability insurance;
workers' compensation insurance, if required by applicable Law; and such
other insurance as Landlord deems appropriate or as may be required by any
Holder or ground lessor. Landlord's insurance shall be issued by insurance
companies authorized to do business in the State of California with a
financial rating of at least B+ for any property insurance and at least B+
for any liability insurance, as rated in the most recent edition of Best's
Insurance Reports;
13 TENANT'S INSURANCE. Tenant shall obtain and maintain in effect at all
times during Tenant's possession of the Premises the following insurance
coverages and policies:
(a) LIABILITY INSURANCE. Tenant shall maintain a policy of
commercial general liability insurance, which shall include coverages for (i)
bodily injury; (ii) property damage; and (iii) personal property. The minimum
limits of liability shall be a combined single limit with respect to each
occurrence of not less than One Million Dollars ($1,000,000) and an aggregate
limit of not less than Two Million Dollars ($2,000,000). The policy shall
contain a cross-liability endorsement and a severability of interest clause.
(b) TENANT'S BUSINESS PERSONAL PROPERTY INSURANCE. Tenant shall
maintain on all of its business personal property, including valuable
business papers and accounts receivable; operating supplies; inventory; and
furniture, fixtures, and equipment (whether owned, leased, or rented)
(collectively "Business Personal Property") and "all risk" property damage
insurance policy including coverages for sprinkler leakage and containing an
agreed amount endorsement (or, if applicable, a business owner's policy with
a no-coinsurance provision) in an amount not less than one hundred percent
(100%) of the full replacement cost valuation of such Business Personal
Property, if available. The proceeds from any such policy shall be used by
Tenant for the replacement of such Business Personal property.
(c) BUSINESS INTERRUPTION/EXTRA EXPENSE INSURANCE. Tenant shall
maintain business interruption or (if applicable) contingent business
interruption and extra expense insurance in such amounts as will adequately
reimburse Landlord for any item or expense enumerated in this agreement. If
Tenant's business interruption or (if applicable) contingent business
interruption and extra expense insurance proceeds are insufficient to cover
all of Tenant's obligations, Landlord shall be paid before any other creditor.
Such insurance will be carried with the same insurer that issues the
insurance for Tenant's Business Personal Property pursuant to Section 13(b).
(d) WORKER'S COMPENSATION INSURANCE. Tenant shall maintain worker's
compensation insurance as required by the State of California.
(e) TENANT'S LIABILITY LIMITATION. Except with respect to any
intentional tort, under no circumstance shall Tenant ever be liable for
consequential damages, including damages for lost profits or business
interruption.
13.1 TENANT'S INSURANCE CRITERIA. All insurance required to be maintained
by Tenant under this Lease shall conform to the following criteria:
(a) Tenant's insurance shall be issued by insurance companies
authorized to do business in the State of California with a financial rating
of at least B+ for any property insurance and at least B+ for any liability
insurance, as rated in the most recent edition of Best's Insurance Reports;
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(b) Tenant's insurance shall be issued as primary and
noncontributory;
(c) Tenant's liability and property insurance policies shall name
Landlord as the additional named insured and Landlord, Landlord's agents, and
any ground lessors and Holders (as such terms are defined in Section 27)
whose names shall have been furnished to Tenant as additional named insureds;
(d) Tenant's insurance shall contain an endorsement requiring at
least thirty (30) days written notice from the insurance company to each
insured and additional insured before cancellation or any material change in
the coverage, scope, or amount of any policy; and
(e) with respect to damage to or loss of Tenant's Business Personal
Property, a waiver of subrogation must be obtained, as required under Section
14 below.
13.2 BLANKET COVERAGE. All of the insurance requirements set forth herein
on the part of Tenant to be observed shall be deemed satisfied if the
Premises are covered by a blanket insurance policy complying with the limits,
requirements, and criteria contained in this Article insuring all or most of
Tenant's facilities in California.
13.3 EVIDENCE OF COVERAGE. A duplicate original policy or a certificate of
insurance shall be deposited with Landlord at the commencement of the Term
or, if earlier, upon Tenant's taking possession of the Premises; and on
renewal of the policy a certificate of insurance listing the insurance
coverages required hereunder and naming the appropriate additional insureds
shall be deposited with Landlord not less than seven (7) days before
expiration of the policy.
14 WAIVER OF SUBROGATION. To the maximum extent permitted by insurance
policies which Landlord and Tenant are required to maintain under Sections 12
and 13 above, Tenant and Landlord, for the benefit of each other, waive any
and all rights of subrogation which might otherwise exist. Landlord and
Tenant intend that their respective property loss risks shall be borne by
responsible insurance carriers to the extent above provided, and Landlord and
Tenant hereby agree to look solely to, and seek recovery only from, their
respective insurance carriers in the event of a property loss to the extent
that such coverage is agreed to be provided hereunder. The parties each
hereby waive all rights and claims against each other for such losses and
waive all rights of subrogation of their respective insurers, provided such
waiver of subrogation shall not affect the right of the insured to recover
thereunder. The parties agree that their respective insurance policies are
now, or shall be, endorsed such that said waiver of subrogation shall not
affect the right of the insured to recover thereunder, so long as no material
additional premium is charged therefor.
15 UTILITIES. Tenant shall be responsible for the payment directly to
their suppliers of the charges for all utilities (except water, which shall
be supplied by Landlord as part of Operating Expenses), including, gas,
electricity, heat, and other services delivered to or consumed in the
Premises. If any such services are not separately metered to Tenant, Tenant
shall pay to Landlord pursuant to Section 2.2 a reasonable proportion, as
determined by Landlord, of all charges jointly metered with other premises.
15.1 INTERRUPTION OF SERVICES. Landlord does not warrant that any services
or utilities provided hereunder for Tenant's use in the Premises will be free
from shortages, failures, variations, or interruptions caused by repairs,
maintenance, replacements, improvements, alterations, changes of service,
strikes, lockouts, labor controversies, accidents, inability to obtain
services, fuel, steam, water or supplies, governmental requirements or
requests, or other causes beyond Landlord's reasonable control, including
interference with light or other incorporated hereditaments and any
interruption in services or any failure to provide services to Landlord by a
designated utility company at the demarcation point at which Landlord accepts
responsibility for such service or at any point prior thereto, which
interference impedes Landlord in furnishing plumbing, HVAC, electrical,
sanitary, life safety, elevator, telecommunications, or other Building
services, utilities, or the Systems and Equipment. None of the same shall be
deemed an eviction or disturbance of Tenant's use and possession of the
Premises or any part thereof, shall render Landlord liable to Tenant for
abatement of Rent, or shall relieve Tenant from performance of Tenant's
obligations under this Lease. Landlord in no event shall be liable for
damages by reason of loss of profits, business interruption, or other
compensatory or consequential damages.
16 SIGNS. Landlord reserves the exclusive right to the roof, side and
rear walls of the Premises. Tenant shall not construct any projecting sign or
awning without the prior written consent of Landlord, which shall not be
unreasonably withheld or delayed.
17 CONDEMNATION. If any part of the Premises shall be taken or condemned
for public use, and a part thereof remains which is susceptible of occupation
hereunder, this Lease shall, as to the part taken, terminate as of the date
the condemnor acquires possession, and thereafter Tenant shall be required to
pay such proportion of the rent for the remaining term as remaining square
footage of the Premises bears to the total original square footage of the
Premises at the date of condemnation; provided, however, that Landlord at its
option may terminate this Lease as of the date the condemnor acquires
possession. In the event that the demised Premises are condemned in whole, or
that a portion is condemned of such size that the remainder is not suitable
for Tenant's beneficial enjoyment of the Premises for their intended
purposes, this
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Lease shall terminate upon the date upon which the condemner acquires
possession. All sums which may be payable on account of any condemnation shall
belong to the Landlord, and Tenant shall not be entitled to any part thereof;
provided however, that Tenant shall be entitled to retain any amount awarded to
him for his trade fixtures or moving expenses.
18 SURRENDER AND RESTORATION. At or before the Expiration Date or the
date of any earlier termination of this Lease, or as promptly as practicable
using Tenant's best efforts after such an earlier termination date, Tenant, at
its expense, shall do all of the following:
(a) surrender possession of the Premises in the condition required
under Section 9, ordinary wear and tear excepted;
(b) surrender all keys, any key cards, and any parking stickers or
cards to Landlord and give Landlord in writing the combinations of any locks
or vaults then remaining in the Premises;
(c) remove from the Premises all of Tenant's Property, except such
items thereof as Tenant shall have expressly agreed in writing with Landlord
were to remain and to become the property of Landlord; and
(d) fully repair any damage to the Premises or the Property resulting
from such removal.
Tenant's obligations herein shall survive the termination of the Lease. All
improvements and other items in or upon the Premises (except Tenant's
Property), whether installed by Tenant or Landlord, shall be Landlord's
property and shall remain upon the Premises, all without compensation,
allowance, or credit to Tenant; provided, however, that if prior to such
termination Landlord so directs by notice, Tenant shall promptly remove such
of the Improvements in the Premises as are designated in such notice and
shall restore the Premises to their condition prior to the installation of
such Improvements. Notwithstanding the foregoing, Landlord shall not require
removal of customary office improvements installed pursuant to the Work Letter
Agreement, if any (except as expressly provided to the contrary therein), or
installed by Tenant with Landlord's written approval (except as expressly
required by Landlord in connection with granting such approval).
18.1 TENANT'S FAILURE TO REMOVE OR RESTORE. If Tenant shall fail to perform
any repairs or restoration or fail to remove any items from the Premises as
required under this Section 18, Landlord may do so, and Tenant shall pay
Landlord the cost thereof upon demand. All property removed from the Premises
by Landlord pursuant to any provisions of this Lease or any Law may be
handled or stored by Landlord at Tenant's expense, and Landlord shall in no
event be responsible for the value, preservation, or safekeeping thereof. All
property not removed from the Premises or retaken from storage by Tenant
within thirty (30) days after expiration or earlier termination of this Lease
or Tenant's right to possession shall at Landlord's option be conclusively
deemed to have been conveyed by Tenant to Landlord as if by bill of sale
without payment by Landlord. Unless prohibited by applicable Laws, Landlord
shall have a lien against such property for the costs incurred in removing
and storing the same.
19 DESTRUCTION OF PREMISES. Landlord and Tenant agree that their
respective rights and obligations in the event of any damage or destruction
of the Premises or Building shall be governed exclusively by this Lease.
Tenant, as a material inducement to Landlord entering into this Lease,
irrevocably waives and releases Tenant's rights under California Civil Code
Sections 1932(2), 1933(4), and 1942, as the same may be modified or replaced
hereafter. No damages, compensation, or claim shall be payable by Landlord for
any inconvenience, interruption, or cessation of Tenant's business or any
annoyance arising from any damage to or destruction of all or any portion of
the Premises or Building.
19.1 PARTIAL DESTRUCTION OF PREMISES. In the event of a partial
destruction of the Premises during the term hereof from any cause, Landlord
shall forthwith repair the same at Landlord's expense, provided that such
repairs can be made within sixty (60) days under existing Laws; but such
partial destruction shall not terminate this Lease, except that Tenant shall
be entitled to a proportionate reduction of Rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with Tenant's beneficial enjoyment of the Premises for their
intended purposes. If such repairs cannot be made within sixty (60) days,
Landlord, at his option may make the same within a reasonable time, this
Lease continuing in effect with the rent proportionately abated as aforesaid;
and in the event that Landlord shall not elect to make such repairs which
cannot be made within sixty (60) days, this Lease may be terminated by either
party upon written notice, effective as of the date of such notice.
Notwithstanding the foregoing, if all repairs cannot be completed or are not
actually completed within one hundred eighty (180) days of the date of damage
Tenant may terminate this Lease at its option.
19.2 DESTRUCTION OF BUILDING. In the event that the Building is destroyed
to an extent of not less than one-third of the replacement costs thereof,
either party may elect to terminate this Lease, whether the Premises be
injured or not. A total destruction of the Building shall terminate this
Lease.
19.3 DISPUTES. In the event of any dispute between Landlord and Tenant with
respect to the provisions hereof, the matter shall be settled by arbitration
in accordance with the provisions of Section 26 below.
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20 TENANT'S DEFAULT. The occurrence of any one or more of the following
events shall constitute a material breach and default ("Event of Default") of
this Lease by Tenant:
(a) Tenant's failure to pay any Rent or any other charges required to
be paid by Tenant under this Lease, where such failure continues for five (5)
days after written notice from Landlord that such payment is due and payable
provided, however, that such written notice will no longer be required if
Landlord has issued two or more during any 12-month period;
(b) Tenant's failure promptly and fully to perform any other covenant,
condition, or agreement contained in this Lease, where such failure continues
for thirty (30) days after written notice thereof from Landlord to Tenant;
(c) Tenant's failure to comply with the Rules, unless such failure is
cured within five (5) days after notice; provided, that if the nature of
Tenant's failure is such that more than five (5) days are reasonably required
in order to cure, Tenant shall not be in Default if Tenant commences to cure
within such period and thereafter diligently and continuously prosecutes such
cure to completion;
(d) Tenant's abandonment or vacation of the Premises;
(e) any material misrepresentation or omission herein or in any
financial statements or other materials provided by Tenant or any Guarantor
in connection with negotiating or entering this Lease or in connection with
any Transfer under Section 6;
(f) cancellation of any guaranty of this Lease by any Guarantor;
(g) failure by Tenant to cure within any applicable times permitted
thereunder any default under any other lease for space in any other building
owned or managed by Landlord or its affiliates now or hereafter entered by
Tenant; and any Default hereunder not cured within the times permitted for
cure herein shall, at Landlord's election, constitute a default under any
other such lease or leases;
(h) The levy of a writ of attachment or execution on this Lease or on
any of Tenant's property;
(i) Tenant's or any Guarantor's general assignment for the benefit of
creditors or arrangement, composition, extension, or adjustment with its
creditors; or
(j) In any proceeding or action in which Tenant is a party, the
appointment of a trustee, receiver, agent, or custodian to take charge of the
Premises or Tenant's Property for the purpose of enforcing a lien against the
Premises or Tenant's Property.
The parties expressly agree that any notice which Landlord may give to Tenant
that an Event of Default has occurred under this Section 20 shall satisfy the
requirements of Section 1161 of the California Code of Civil Procedure, and
it shall not be necessary to give another notice to Tenant under Section
1161.
20.1 LANDLORD'S REMEDIES. Upon the occurrence of an Event of Default
hereunder, Landlord shall have the right, in addition to any other rights or
remedies Landlord may have, at Landlord's option, without further notice or
demand of any kind, to elect to do one of the following alternatives:
(i) Terminate this Lease and Tenant's right to possession of the Premises,
re-enter the Premises, and take possession thereof; and Tenant shall have no
further claim to the Premises or under this Lease; or
(ii) Continue this Lease in effect and collect any unpaid Rent or other
charges which have theretofore accrued or which thereafter become due and
payable. It is intended hereunder that Landlord have the remedy described in
California Civil Code Section 1951.4, which provides that a landlord may
continue a lease in effect after a tenant's breach and abandonment and
recover rent as it becomes due, if tenant has the right to sublease or
assign, subject only to reasonable limitations.
In the event of any re-entry or retaking of possession by Landlord, Landlord
shall have the right, but not the obligation, to remove all or any part of
Tenant's Property from the Premises and to place such property in storage at
a public warehouse at the expense and risk of Tenant.
20.2 NO WAIVER OF DEFAULT. The waiver by Landlord of any Event of Default
or of any other breach of any term, covenant, or condition of this Lease
shall not be deemed a waiver of such term, covenant, or condition or of any
subsequent breach of the same or any other term, covenant, or condition.
Acceptance of Rent by Landlord subsequent to any Event of Default or breach
hereof shall not be deemed a waiver of any preceding Event of Default or
breach other than the failure to pay the particular Rent so accepted,
regardless of Landlord's knowledge of any breach at the time of such
acceptance of Rent. Neither Landlord nor Tenant shall be deemed to have
waived any term, covenant, or condition of this Lease, unless the waiving
party gives the other party written notice of such waiver. Neither Landlord
nor Tenant should rely upon the other party's failure or delay in enforcing
any right or remedy hereunder.
20.3 LANDLORD'S RIGHT TO CURE. If Tenant defaults in the performance of
any of its obligations under this Lease, Landlord may (but shall not be
obligated to), without waiving such default, perform the same for the account
and at the expense of Tenant. Tenant shall pay Landlord all costs of such
performance promptly upon receipt of a bill therefor.
20.4 DAMAGES. Should Landlord elect to terminate this Lease under the
provisions of Section 20.1(i) above, Landlord may recover as damages from
Tenant the following:
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(a) PAST RENT: The worth at the time of the award of any unpaid Rent
which had been earned at the time of termination; plus
(b) RENT PRIOR TO AWARD: The worth at the time of the 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 Tenant proves could have been reasonably avoided; plus
(c) RENT AFTER AWARD: The worth at the time of the award of the
amount by which the unpaid Rent for the balance of the Term after the time of
award exceeds the amount of the rental loss that Tenant proves could have
been reasonably avoided; plus
(d) SUBSTANTIALLY CAUSED DAMAGES: Any other amount necessary to
compensate Landlord for all detriment proximately caused by Tenant's failure
to perform its obligations under this Lease, including, but not limited to,
any costs or expenses (including attorneys' fees), incurred by Landlord in
(i) retaking possession of the Premises; (ii) maintaining the Premises after
Tenant's default; (iii) preparing the Premises for reletting to a new tenant,
including any repairs or alterations; and (iv) reletting the Premises,
including brokers' commissions.
"The worth at the time of the award" as used in subsections (a) and (b) above
is to be computed by allowing interest at the rate of ten percent (10%) per
annum. "The worth at the time of the award" as used in subsection (c) above
is to be computed by discounting the amount at the discount rate of the
Federal Reserve Bank situated nearest to the Premises at the time of the
award plus one percent (1%).
21 RULES. Tenant agrees that it will abide by, keep and observe all
reasonable rules and regulations which Landlord may make from time to time
for the management, safety, care, and cleanliness of the Building and
grounds, the parking of vehicles and the preservation of good order herein as
well as for the convenience of other occupants and tenants of the Building.
The violations of any such rules and regulations shall be deemed a material
breach of this Lease by Tenant.
22 NOTICES. Any notice required or permitted under this Lease shall be
in writing and shall be delivered in at least one of the following ways:
personally or by private hand-delivery messenger service; by depositing the
same in the United States mail, postage prepaid, registered or certified,
return receipt requested; or by depositing such notice, postage prepaid, with
Federal Express, DHL, UPS, or another nationally-recognized private overnight
delivery service. Each such notice shall be addressed to the intended
recipient at such party's address set forth as follows, or at such other
address as such party has theretofore specified by written notice delivered
in accordance with this Section 22:
if to Landlord:
Attn: Michael Goldin
720 Channing Way
Berkeley, CA 94710
if to Tenant:
Ask Jeeves, Inc.
2607 7th Street
Berkeley, CA 94710
Attn: President
---------
Every notice given to a party shall state the section of the Lease pursuant
to which the notice is given and the period of time within which the
recipient of the notice must respond.
23 HOLDING OVER. Any holding over after the expiration of this Lease,
with the consent of Landlord, shall be construed as a month-to-month tenancy
at a base monthly rental of one hundred and fifty percent (150%) of the
monthly rental which was in effect under the Lease on the Expiration Date,
and otherwise in accordance with the terms hereof, as applicable, except that
Tenant shall have no extension or renewal option.
24 OPTION TO RENEW. Tenant is hereby granted one (1) option to extend
(the "Extension Option") the Term of the Lease for a period of three (3)
Lease Years (the "Extension Period"). The Extension Period term shall begin
the first day following the Expiration Date and shall take effect on the same
terms and conditions in effect under the Lease immediately prior to the first
Extension Period, except that monthly Base Rent shall be two thousand eight
hundred nine dollars ($2,809.00).
24.1 EXERCISE OF OPTION. The Extension Option may be exercised only by
giving Landlord written notice of Tenant's irrevocable election to exercise
no earlier than ten (10) months and no later than six (6) months prior to the
commencement of the Extension Period.
24.2 FAILURE TO EXERCISE. If Tenant shall fail validly and timely to
exercise the option herein granted, said option shall terminate and shall be
null and void and of no further force and effect.
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24.3 DEFAULT. Tenant's exercise of the Option shall, at Landlord's
election, be null and void if an Event of Default exists on the date of
Tenant's notice of exercise and such Default is not cured within the
applicable cure period, or at any time thereafter and prior to commencement
of the relevant Extension Period and such Default is not cured within the
applicable cure period. Tenant's exercise of the Extension Option shall not
operate to cure a xxx Default by Tenant nor to extinguish or impair any
rights or remedies of Landlord arising by virtue of such Default. If the
Lease or Tenant's right to possession of the Premises shall terminate before
Tenant shall have exercised the Extension Option, then immediately upon such
termination the Extension Option shall simultaneously terminate and become
null and void.
24.4 TIME. Time is of the essence of the Extension Options granted
hereunder.
25 ESTOPPEL CERTIFICATE. Tenant shall at any time upon not less than ten
(10) days' prior written notice from Landlord execute, acknowledge, and
deliver to Landlord a statement in writing certifying (a) that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature
of such modification and certifying that this Lease, as so modified, is in
full force and effect), the amount of any security deposit, and the date to
which the rent and other charges are paid in advance, if any; and (b)
acknowledging that there are not, to Tenant's knowledge, any uncured defaults
on the part of Landlord hereunder, or specifying such defaults if any are
claimed. Any such statement may be conclusively relied upon by any
prospective purchaser or encumbrancer to the Premises. At Landlord's option,
Tenant's failure to deliver such statement within such time shall be a
material breach of this Lease or shall be conclusive upon Tenant that (i)
this Lease is in full force and effect, without modification except as may be
represented by Landlord, (ii) there are no uncured defaults in Landlord's
performance, and (iii) not more than one month's rent has been paid in
advance or such failure may be considered by Landlord as a default by Tenant
under this Lease. If Landlord desires to finance, refinance, or sell the
Premises, or any part thereof, Tenant hereby agrees to deliver to any lender
or purchaser designated by Landlord summary financial statements of Tenant as
may be reasonably required by such lender or purchaser. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
25.1 SUBORDINATION, NON-DISTURBANCE, AND ATTORNMENT. With respect to
Security Devices entered into by Landlord after execution of this Lease,
Tenant's subordination of this Lease shall be subject to receiving assurance
(a "non-disturbance agreement") from the Lender that Tenant's possession and
this Lease, including any options to extend the term hereof, will not be
disturbed so long as Tenant is not in Breach hereof and attorns to the record
owner of the Premises. Landlord agrees to use reasonable commercial efforts
to obtain from the current lender on the Building a nondisturbance agreement
for Tenant within a reasonable period before or after the Commencement Date.
26 ARBITRATION. In the event of any dispute between Landlord and Tenant
arising under this Lease that is not resolved by the parties within ten (10)
days after the date either party gives notice to the other of its desire to
arbitrate the dispute (the "Outside Agreement Date"), the dispute shall be
settled by binding arbitration as provided in this Section 26; provided,
however, that nothing in this Section 26 shall limit Landlord's right to
bring an unlawful detainer action against Tenant if appropriate. All
arbitration proceedings shall be conducted at Berkeley, California. Judgment
upon the arbitration award may be entered in any court having jurisdiction.
The arbitrators shall have no power to change the Lease provisons. Both
parties shall continue performing their Lease obligations pending the award
in the arbitration proceeding. The arbitrators shall award the prevailing
party reasonable expenses and costs, including reasonable attorneys' fees
pursuant to Section 26.2 below, plus interest on the amount due at ten
percent (10%) per annum or the maximum then allowed by Law, whichever is less.
26.1 PROCEDURE. Not later than fifteen (15) days following the Outside
Agreement Date, the party demanding arbitration shall submit the matter to
arbitration under the current rules of the American Arbitration Association
including their rules relating to discovery, but subject to any definitions
or sections of the Lease which may be applicable to the dispute under
submission, and shall request a list of potential arbitrators from whom an
arbitrator shall be selected in accordance with the rules of the American
Arbitration Association.
26.2 PAYMENT. The losing party shall pay to the prevailing party the
amount of the final arbitration award. If payment is not made within ten
(10) business days after the date the arbitration award is no longer
appealable, then in addition to any remedies under the law, if Landlord is
the prevailing party, it shall have the same remedies for failure to pay the
arbitration award as it has for Tenant's failure to pay Rent; and if Tenant
is the prevailing party, it may deduct any remaining award from its monthly
payment of Rent or other charges.
27 SUBORDINATION. Tenant agrees that this Lease shall be automatically
subordinate to any mortgage or trust deeds that are now or may hereafter be
placed upon said Premises. Notwithstanding the foregoing, Tenant agrees that
any mortgagee of the Building, the holder of any note, or beneficiary of any
deed of trust (collectively "Holders") encumbering the Building shall have
the right upon written notice to Tenant to subordinate the lien of any such
note or deed of trust to this Lease.
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28 LANDLORD'S LIABILITY. The liability of Landlord to Tenant for any
default by Landlord under this Lease or arising in connection herewith or
with Landlord's operation, management, leasing, repair, renovation,
alteration, or any other matter relating to the Building or the Premises
shall be limited to Landlord's insurance in a minimum amount of three million
dollars ($3,000,000) combined plus the interest of Landlord in the
Development (and the rental proceeds thereof) except with respect to any
intentional tort. Under no circumstances shall Landlord ever be liable for
consequential or punitive damages, including damages for lost profits or for
business interruption. Tenant agrees to look solely to Landlord's interest
in the Development (and the rental proceeds thereof) for the recovery of any
judgment against Landlord, and Landlord shall not be personally liable for
any such judgment or deficiency after execution thereon. The limitations of
liability contained in this Section 28 shall apply equally and inure to the
benefit of Landlord's present and future partners, beneficiaries, officers,
directors, trustees, shareholders, agents, and employees, and their
respective partners, heirs, successors, and assigns. Under no circumstances
shall any present or future general or limited partner of Landlord (if
Landlord is a partnership), or trustee or beneficiary (if Landlord or any
partner of Landlord is a trust) have any liability for the performance of
Landlord's obligations under this Lease.
28.1 LIABILITY UPON TRANSFER. The term Landlord as used herein shall mean
only the owner or owners, at the time in question, of the fee title of leased
Premises and in the event of any transfer of such title or interest, Landlord
herein named shall be relieved from and after the date of such transfer of
all liability as respects Landlord's obligations thereafter to be performed,
provided that any funds in the hands of Landlord at the time of such
transfer, in which Tenant has an interest, shall be delivered to the grantee.
The obligations contained in this Lease to be performed by Landlord shall,
subject as aforesaid, be binding on Landlord's successors and assigns, only
during their respective periods of ownership.
29 FIRST SOURCE AGREEMENT. (For five or more employees) Tenant
represents that it has fewer than five (5) employees as of the Commencement
Date of the Lease and as such is not subject to the requirement to enter into
a First Source Agreement with the City of Berkeley.
30 MISCELLANEOUS. The following provisions shall apply generally to
terms, provisions, and covenants of this Lease:
30.1 NO OFFER. The submission of this document for examination and
negotiation does not constitute an offer to lease, or a reservation of, or
option for, the Premises. This document becomes effective and binding only
upon execution and delivery hereof by Tenant and by Landlord. No act or
omission of any employee or agent of Landlord or of Landlord's broker shall
alter, change, or modify any of the provisions hereof.
30.2 NO PARTNERSHIP. It is expressly understood that Landlord does not, in
any way or for any purpose, become a partner of Tenant in the conduct of its
business, or otherwise, or joint adventurer or a member of a joint enterprise
with Tenant, and that the provisions of this Lease relating to the percentage
rental payable hereunder, if any, are included solely for the purpose of
providing a method whereby the rental is to be measured and ascertained.
30.3 HEIRS, ASSIGNS, SUCCESSORS. This Lease is binding upon and inures to
the benefit of the heirs, assigns and successors in interest to the parties.
30.4 TIME. Time is of the essence of this Lease.
30.5 WAIVER. No failure of Landlord or Tenant to enforce any term hereof
shall be deemed to be a waiver.
30.6 ATTORNEY'S FEES. In case arbitration or suit should be brought for
recovery of the Premises, or for any sum due hereunder, or for any breach
hereunder by either Tenant or Landlord, or because of any act or omission
which may arise out of the possession of the Premises, by either party, the
prevailing party shall be entitled to all costs incurred in litigation,
arbitration, or otherwise in connection with such action, including a
reasonable attorneys' fee.
<PAGE>
31 ENTIRE AGREEMENT. This Lease, together with its exhibits, contains
all the agreements of the parties hereto and supersedes any previous
negotiations. There have been no representations made by the Landlord or
Tenant or understandings made between the parties other than those set forth
in this Lease and its exhibits. This Lease may not be modified except by a
written instrument duly executed by the parties hereto.
IN WITNESS WHEREOF Landlord and Tenant have executed this Lease as of
the date first-above written.
Landlord: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
-------------------------------------
Michael Goldin, General Partner
Tenant: ASK JEEVES, INC., a California corporation
By: /s/ Dan Miller
-------------------------------------
Dan Miller
Its: President
----------------
<PAGE>
EXHIBIT A
BUILDING
[BLUEPRINT] [GRAPHIC]
Eat/Work
Development
918 PARKER ST
BUILDING B
<PAGE>
EXHIBIT B
[BLUEPRINT] [GRAPHIC]
Eat/Work
Development
918 PARKER ST
BUILDING B
UNIT DIAGRAM
N.T.S.
<PAGE>
EXHIBIT C
This Commencement Date agreement is attached to that certain lease dated May
15, 1998 between Eat/Work Development, LP, a California limited partnership
and ASK JEEVES, Inc., a California corporation ("Tenant") for the Premises as
described in the Lease. Landlord and Tenant agree that the Commencement Date
pursuant to Section 1.4 of the Lease shall be 5/15/98 for all purposes
thereunder.
Landlord: EAT/WORK DEVELOPMENT, LP, a California limited partnership
By: /s/ Michael Goldin
----------------------------------------
Michael Goldin, General Partner
Tenant: ASK JEEVES, INC., a California corporation
By: /s/ Dan Miller
----------------------------------------
Dan Miller
Its: President
---------------------------------------
<PAGE>
BASIC LEASE INFORMATION
OFFICE LEASE
Lease Date: January 26, 1999
Landlord: Parker Associates
Address of Landlord: 2560 Ninth Street, Suite 117
Berkeley, California 94710
Tenant: Ask Jeeves, Inc.
Address of Tenant: 918 Parker
Contact: Vera Leo Telephone: 649-2183
Premises: Suite 219 in Parker Plaza
2560 Ninth Street
Berkeley, California
Scheduled Term Commencement Date: February 1, 1999
Scheduled Length of Term: 1 year
Scheduled Term Expiration Date: January 31, 2000
Rent:
Base Rent $ 5265.00/month
Estimated
Basic Operating Costs $ _______/month
Total Rent $ _______/month
Security Deposit and Last Month's Rent: $ 7897.50
Tenant's Proportionate Share:
Permitted Use: General Office
Occupancy Density: N/A
The foregoing Basic Lease Information is incorporated in to and made a part of
this Lease. Each reference in this Lease to any of the Basic Lease Information
shall mean the respective information above set forth and shall be construed to
incorporate all of the terms provided under the particular Lease paragraph
pertaining to such information. In the event of any conflict between the Basic
Lease Information and the Lease, the latter shall control.
LANDLORD: Parker Associates TENANT: Ask Jeeves, Inc.
- ----------------------------------- -----------------------------------
By /s/ Michael Horowitz By /s/ Robert Wrubel
-------------------------------- -------------------------------
Its General Partner Its President
------------------------------ ----------------------------
Date: Date:
2/2/99 2/1/99
- ----------------------------------- -----------------------------------
-1-
<PAGE>
LEASE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
1. Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2. Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Term and Possession . . . . . . . . . . . . . . . . . . . . . . . 3
4. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Restrictions On Use . . . . . . . . . . . . . . . . . . . . . . . 3
6. Compliance With Laws. . . . . . . . . . . . . . . . . . . . . . . 3
7. Alterations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
8. Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
9. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
10. Assignment And Subletting . . . . . . . . . . . . . . . . . . . . 4
11. Insurance And Indemnification . . . . . . . . . . . . . . . . . . 4
12. Waiver Of Subrogation . . . . . . . . . . . . . . . . . . . . . . 5
13. Service And Utilities . . . . . . . . . . . . . . . . . . . . . . 5
14. Estoppel Certificate. . . . . . . . . . . . . . . . . . . . . . . 5
15. Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . . 6
16. Substitution. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
17. Holding Over. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
18. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . 6
19. Rules And Regulations . . . . . . . . . . . . . . . . . . . . . . 6
20. Re-Entry By Landlord. . . . . . . . . . . . . . . . . . . . . . . 6
21. Default By Tenant . . . . . . . . . . . . . . . . . . . . . . . . 6
22. Damage By Fire, Etc.. . . . . . . . . . . . . . . . . . . . . . . 7
23. Eminent Domain. . . . . . . . . . . . . . . . . . . . . . . . . . 8
24. Sale By Landlord And Tenant's Remedies. . . . . . . . . . . . . . 8
25. Right Of Landlord To Perform. . . . . . . . . . . . . . . . . . . 8
26. Surrender Of Premises . . . . . . . . . . . . . . . . . . . . . . 8
27. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
28. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
29. Rental Adjustments. . . . . . . . . . . . . . . . . . . . . . . . 9
30. Taxes Payable By Tenant . . . . . . . . . . . . . . . . . . . . . 10
31. Successors And Assigns. . . . . . . . . . . . . . . . . . . . . . 10
32. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . 10
33. Light And Air . . . . . . . . . . . . . . . . . . . . . . . . . . 10
34. Public Transportation Information . . . . . . . . . . . . . . . . 10
35. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 10
36. Lease Effective Date. . . . . . . . . . . . . . . . . . . . . . . 10
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
EXHIBIT "A". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Rules and Regulations
EXHIBIT "B". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Outline of Premises
EXHIBIT "D". . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Form of Tenant Certificate
</TABLE>
-2-
<PAGE>
LEASE
THIS LEASE is made as of this 26th day of January,
1999, between Parker Associates, a California limited
Partnership (hereinafter called "Landlord") and Ask
Jeeves, Inc., a California Corporation (hereinafter
called "Tenant").
PREMISES 1. Landlord leases to Tenant and Tenant leases
from Landlord those premises (hereinafter called
"Premises") outlined in red on Exhibit B attached
hereto and made a part hereof, specified in the
Basic Lease Information attached hereto (the
"Building").
OCCUPANCY 2. Tenant shall use the Premises for the
Permitted Use and for no other use or purpose
without the prior written consent of Landlord. No
increase in occupant density of the Leased
Premises shall be made which shall add to the
burden of such use of the Building as determined
by Landlord without the prior written consent of
Landlord.
TERM AND 3. (a) The parties project that the term shall
POSSESSION commence on the Scheduled Term Commencement Date
and, except as otherwise provided herein or in any
exhibit or addendum hereto, shall continue in full
force until the Term Expiration Date. If the
Premises are not delivered by Landlord by the
Scheduled Term Commencement Date for any reason,
Landlord shall not be liable to Tenant for any
loss or damage resulting from such delay. The
Term Commencement Date shall be the first day of
the calendar month next following the earlier of
(i) the day when the Premises are substantially
complete, or (ii) the date on which Tenant takes
possession of, or commences the operation of its
business in some or all of the Premises. Landlord
shall provide Tenant as such notice as
circumstances allow of the date when Landlord
expects to achieve substantial completion, based
upon the progress of work. Should the Term
Commencement Date be a date other than the
Scheduled Term Commencement Date, either Landlord
or Tenant, at the request of the other shall
execute a declaration specifying the Term
Commencement Date and the rent commencement date
which shall be binding upon the parties as to the
matters therein stated. Tenant's obligation to
pay Rent and its other obligations for payment
under this Lease shall commence the date on which
Tenant takes possession of, or commences the
operation of its business in some or all of the
Premises, after the schedule of improvement
outlined in Exhibit C are completed by Landlord.
(b) Landlord shall perform the Tenant Improvement
Work in the Premises as provided in the separate
Office Lease Improvement Agreement attached hereto
as Exhibit C and made a part hereof, with
diligence, subject to events and delays due to
causes beyond its reasonable control.
(c) The Premises shall be substantially complete
and possession shall be delivered when (i)
installation of Building Standard Work (which
shall not include installation of telephone and
other communication facilities or equipment,
finish work and decoration to be preformed by
Tenant) has occurred, (ii) Tenant has direct
access from the street to the elevator lobby on
the floor where the Premises are located, (iii)
Landlord is in a position to furnish Building
services to the Premises, and (iv) Landlord's
Architect shall certify substantial completion
with respect to the Premises, whether or not
substantial completion of the Building itself
shall have occurred. Substantial completion shall
be deemed to have occurred notwithstanding a
requirement to complete "punchlist" or similar
corrective work.
RENT 4. Tenant shall pay to Landlord throughout the
Term Rent as specified in the Basic Lease
Information, payable in equal monthly installments
in advance on the first day of each calendar month
during every year of the Term in lawful money of
the United States, without deduction or offset
whatsoever, to Landlord at the address specified
in the Basic Lease Information or to such other
firm or to such other place as Landlord may from
time to time designate in writing by notice given
as herein provided. Rent for the first month of
the Term shall be paid by Tenant upon execution of
this Lease. If the obligation for payment of Rent
commences on other than the first day of a month
as provided in paragraph 3(a), then Rent provided
for such partial month shall be prorated and the
prorated installment shall be paid on the first
day of the calendar month next succeeding the Term
Commencement Date. If the Term terminates on
other than the last day of a calendar month, then
the Rent provided for such partial month shall be
prorated and the prorated installment shall be
paid on the first day of the calendar month next
preceding the date of termination.
RESTRICTIONS 5. Tenant shall not do or permit anything to be
ON USE done in or about the Premises which will in any
way obstruct or interfere with the rights of other
tenants or occupants of the Building or injure or
annoy them, nor use or allow the Premises to be
used for any improper, immoral, unlawful or
objectionable purpose, nor shall Tenant cause or
maintain or permit any nuisance in, on or about
the Premises. Tenant shall not commit or suffer
the commission of any waste in, on or about the
Premises.
COMPLIANCE 6. Tenant shall not use the Premises or permit
WITH LAWS anything to be done in or about the Premises which
will in any way conflict with any law, statute,
ordinance or governmental rule or regulation now
in force or which may hereafter be enacted or
promulgated. Tenant shall not do or permit
anything to be done on or about the Premises or
bring or keep anything therein which will in any
way increase the rate of any insurance upon the
Building or any of its contents or cause a
cancellation of said insurance or otherwise affect
said insurance in any manner, and Tenant shall at
its sole cost and expense promptly comply with all
laws, statutes, ordinances and governmental rules,
regulations or requirements now in force or which
may hereafter be in force and with the
requirements of any board of fire underwriters or
other similar body now or hereafter constituted
relating to or affecting the condition, use or
occupancy of the Premises, excluding structural
changes not related to or affected by alterations
or improvements made by or for Tenant or Tenant's
acts. The judgement of any court of competent
jurisdiction or the admission of Tenant in any
actions against Tenant, whether Landlord be a
party thereto or not, that Tenant has so violated
any such law, statute, ordinance, rule, regulation
or requirement, shall be conclusive of such
violation as between Landlord and Tenant.
ALTERATIONS 7. Tenant shall not make or suffer to be made
any alterations, additions or improvements in, on
or to the Premises or any part thereof without the
prior written consent of Landlord; and any such
alterations, additions or improvements in, on or
to said Premises, except for Tenant's movable
furniture and equipment, shall immediately become
Landlord's property and, at the end of the Term,
shall remain on the Premises without compensation
to Tenant. In the event Landlord consents to the
making of any such alteration, addition or
improvement by Tenant, the same shall be made by
Tenant, at Tenant's sole cost and expense, in
accordance with plans and specifications approved
by Landlord, and any contractor or person selected
by Tenant to make the same must first be approved
in writing by Landlord.
Notwithstanding the foregoing, at Landlord's
option, all or any portion of the alteration,
addition or improvement work shall be performed by
Landlord for Tenant's account and Tenant shall pay
Landlord's estimate of the cost thereof (including
a reasonable charge for Landlord's overhead and
profit) prior to commencement of the work.
Overhead and profit allowances shall total fifteen
percent (15%). Upon the expiration or sooner
termination of the Term, Tenant shall upon demand
by Landlord, at Tenant's sole cost and expense,
with all due diligence remove all those
alterations, additions or improvements and
restoring the Premises to their original condition
such cost to include a reasonable charge for
Landlord's overhead and profit as provided above,
and such amount may be deducted from the Security
Deposit or any other sums or amounts held by
Landlord under this Lease.
REPAIRS 8. By taking possession of the Premises, Tenant
accepts the Premises as being in the condition in
which Landlord is obligated to deliver them and
otherwise in good order, condition and repair. At
all times during the
-3-
<PAGE>
Term, Tenant shall, at Tenant's sole cost and
expense, keep the Premises and every part thereof
in good order, condition and repair, excepting
damage thereto by fire, earthquake, act of God or
the elements. Tenant waives all right it may have
under Section 1942 of the Civil Code of the State
of California and any similar law, statute or
ordinance now or hereafter in effect (to the full
extent that such waiver may lawfully be given)
authorizing or purporting to authorize Tenant to
make repairs to or for the account of Landlord.
Tenant shall upon the expiration or sooner
termination of the Term hereof, unless Landlord
demands otherwise pursuant to paragraph 7 hereof,
surrender to Landlord the Premises and all
repairs, changes, alterations, additions and
improvements thereto in the same condition as when
received or when first installed, damage by fire,
earthquake, act of God or the elements excepted.
Landlord has no obligation to alter, remodel,
improve, repair, decorate or paint the Premises or
any part thereof, except as specified in the
Office Lease Improvement Agreement and no
representations respecting the condition of the
Premises or the Building have been made by
Landlord to Tenant, except as specifically set
forth herein or in the Office Lease Improvement
Agreement.
LIENS 9. Tenant shall keep the Premises free from
lines arising out of or related to work performed,
materials or supplies furnished or obligations
incurred by Tenant or in connection with work
made, suffered or done by Tenant in Premises or
Building. In the event that Tenant shall not,
within ten (10) days following the imposition of
any such lien, cause the same to be released of
record by payment or posting of a proper bond,
Landlord shall have, in addition to all other
remedies provided herein and by law, the right,
but no obligation, to cause the same to be
released by such means as it shall deem proper,
including payment of the claim giving rise to such
lien. Landlord shall have the right at all times
to post and keep posted on the Premises any
notices permitted or required by law, or which
Landlord shall deem proper, for the protection of
Landlord, the Premises, the Building and any other
party having an interest therein, from mechanics'
and materialmen's liens, and Tenant shall give
Landlord not less than ten (10) business days
prior written notice of the commencement of any
work in the Building or Premises which could
lawfully give rise to a claim, for mechanics' or
materialmen's lien.
ASSIGNMENT 10. Tenant shall not sell, assign, encumber or
AND otherwise transfer this Lease or any interest
SUBLETTING therein (by operation of law or otherwise), sublet
the Premises or any part thereof or suffer any
other person to occupy or use the Premises or any
portion thereof, nor shall Tenant permit any lien
to be placed on Tenants' interest under this Lease
by operation of law except in accordance with the
provision of this paragraph 10. For purposes
hereof, sales, transfers or assignments of (i) a
controlling interest in the stock of Tenant, if
Tenant is a corporation, or of (ii) the general
partnership interests sufficient to control
management decisions if Tenant is a partnership or
of (iii) the majority or controlling underlying
beneficial interest, if Tenant is any other form
of business entity, shall constitute an assignment
subject to the terms of this paragraph 10.
(a) In the event that Tenant should desire to
sublet the Premises or any part thereof, Tenant
shall provide Landlord with written notice of such
desire at least ninety (90) days in advance of the
date on which Tenant desires to make such
sublease. Landlord shall then have a period of
thirty (30) days following receipt of such notice
within which to notify Tenant in writing that
Landlord elects either (i) to terminate this Lease
as to the space so affected as of the date so
specified by Tenant, in which event Tenant shall
be relieved of all further obligations hereunder
as to such space from and after that date, or (ii)
to permit Tenant to sublet such space, subject,
however, to the prior written approval of the
proposed sublessee by Landlord which said consent
shall not be unreasonably withheld. If Landlord
should fail to notify Tenant in writing of its
election within said thirty (30) day period,
Landlord shall be deemed to have waived option (i)
above, but written approval of the proposed
sublessee shall still be required. Refusal by
Landlord to approve a proposed sublessee shall not
constitute a termination of this Lease. In
exercising its right of consent to a sublessee it
shall be reasonable for Landlord to withhold
consent to any sublessee who (aa) does not agree
to assume the obligations of the Lease with
respect to the space to be so sublet, (bb) does
not agree to utilize the space so sublet for the
Permitted Use, (cc) is of unsound financial
condition as determined by Landlord, or (dd) will,
in Landlord's opinion increase the occupant
density in the Leased Premises. If Tenant
proposes to sublease less than all of the
Premises, election by Landlord of termination of
this Lease with respect to space to be so sublet
shall leave this Lease in full force and effect
with respect to the remainder of the space, the
Rent and Tenant's Proportionate Share of Operating
Expenses and taxes shall be adjusted on a pro rata
basis to reflect the reduction in Net Rentable
Area of the Premises as retained by Tenant. This
Lease as so amended shall continue thereafter in
full force and effect and references herein to the
Premises shall mean that portion thereof as to
which the Lease has not been terminated.
(b) Tenant shall not enter into any other
transaction subject to this paragraph 10 without
Landlord's prior written consent which said
consent shall not be unreasonably withheld. It
shall be reasonable for Landlord to withhold
consent to any proposed transaction described in
this paragraph 10 on any of the grounds specified
in paragraph 10 (a) with respect to sublessees or
any other reasonable grounds.
(d) Any subletting hereunder by Tenant shall not
result in Tenant being released or discharged from
any liability under this lease. Any purported
assignment, subletting or other transaction to
which paragraph 10 applies, which occurs contrary
to the provisions hereof, shall be void.
Landlord's consent to any assignment, subletting
or other transaction to which this paragraph 10
applies shall not release Tenant from any of
Tenant's obligations hereunder or constitute a
consent with respect to any subsequent transaction
to which this paragraph applies.
INSURANCE AND 11. (a) Landlord shall not be liable to Tenant and
INDEMNIFICATION Tenant hereby waives all claims against Landlord
for any injury or damage to any person or property
in or about the Premises by or from any cause
whatsoever, (other than Landlord's gross
negligence or willful misconduct) and, without
limiting the generality of the foregoing, whether
caused by water leakage of any character from the
roof, walls, basement or other portion of the
Premises or the Building, or caused by gas, fire,
oil or electricity in, on or about the Premises or
the Building.
(b) Tenant shall hold Landlord harmless from and
defend Landlord against any and all claims or
liability for any injury or damage to any person
or property whatsoever: (i) occurring in, on or
about the Premises or any part thereof, or (ii)
occurring in, on or about any facilities
(including, without prejudice to the generality of
the term "facilities", elevators, stairways,
lobbies, health clubs, passageways or hallways),
the use of which Tenant may have in conjunction
with other tenants of the Building, when such
injury or damage shall be caused in part or in
whole by the act, neglect, fault of or omission of
any duty with respect to the same by Tenant, its
agents, servants, employees or invitees. Tenant
shall further indemnify and save harmless Landlord
against and from any and all claims by or on
behalf of any person, firm or corporation arising
from the conduct or management of any work or
thing whatsoever done by Tenant in or about or
from transactions of Tenant concerning the
Premises, and will further indemnify and save
Landlord harmless against and from any and all
claims arising from any breach or default on the
part of Tenant in the performance of any covenant
or agreement on the part of Tenant to be performed
pursuant to the terms of this Lease or arising
from any act of negligence of Tenant, or any of
its agents, contractors, servants, employees or
licensees, and from and against all costs, counsel
fees, expenses and liabilities incurred in
connection with any such claim or action or
proceeding brought thereon. In case any action or
proceeding is brought against Landlord by reason
of any claims or liability within the limits of
the foregoing indemnity, Tenant shall defend such
action or proceeding at Tenant's sole expense by
counsel reasonably satisfactory to Landlord.
(c) Landlord shall hold Tenant harmless from and
defend Tenant against any and all claims or
liability for any injury or damage to any person
or property occurring in or about any facilities
(including, without prejudice to the generality of
the term "facilities", elevators, stairways,
passageways or hallways), the use of which Tenant
may have in conjunction with other tenants of the
building, when such injury or damage shall be
caused in whole or in part by the act, neglect,
fault of or omission of any duty with respect to
the same by Landlord, its
-4-
<PAGE>
agents, servants, employees or invitees.
Landlord shall further indemnify and save harmless
Tenant against and from any and all claims by or
on behalf of any person, firm or corporation
arising from the conduct or management of any
work or thing whatsoever done by Landlord in or
about, or from transactions of Landlord
concerning, the Premises where such work is not
being done for the account of Tenant; and
Landlord will further indemnify and save Tenant
harmless against and from any and all claims
arising from any breach or default on the part
of Landlord in the performance of any covenant
or agreement on the part of Landlord to be
performed pursuant to the terms of this Lease or
arising from any act or negligence of Landlord,
or any of its agents, contractors, servants,
employees or licensees, and from and against all
costs, counsel fees, expenses and liabilities
incurred in connection with any such claim or
action or proceeding brought thereon. In
case any action or proceeding is brought against
Tenant by reason of any claims or liability
within the limits of the foregoing indemnity,
Landlord shall defend such action or proceeding
at Landlord's sole expense by counsel reasonably
satisfactory to Tenant.
(d) The provisions of paragraph 11(b) and 11(c)
shall survive the expiration or termination of
this Lease with respect to any claims or
liability occurring prior to such expiration or
termination.
SEE property damage.
ADDENDUM
WAIVER OF 12. To the extent permitted by law and without
SUBROGATION affecting the coverage provided by insurance
required to be maintained hereunder, Landlord
and Tenant each waive any right to recover
against the other (i) damages for injury to or
death of persons, (ii) damages to property,
(iii) damage to the Premises or any part
thereof, (iv) damage to the Building or any part
thereof, or (v) claims arising by reason of the
foregoing, but only to the extent that any of
the foregoing damages and/or claims referred to
above are covered (and only to the extent of
such coverage) by insurance actually carried by
either Landlord or Tenant. This provision is
intended to waive fully, and for the benefit of
each party, any rights and/or claims which might
give rise to a right of subrogation on any
insurance carrier. The coverage obtained by each
party pursuant to this Lease shall include, but
without limitation, a waiver of subrogation by
the carrier which conforms to the provisions of
this paragraph.
SERVICES AND 13. (a) Landlord shall maintain the public and
UTILITIES common areas of the Building, including lobbies,
stairs, elevators, corridors and restrooms, the
windows in the Building, the mechanical,
plumbing and electrical equipment serving the
Building, and the structure itself, in
reasonably good order and condition except for
damage occasioned by the act of Tenant, which
damage shall be repaired by Landlord at Tenant's
expense.
(b) Provided Tenant shall not be in default
hereunder, and subject to the provisions
elsewhere herein contained and to the rules and
regulations of the Building, Landlord shall
furnish to the Premises, water and electricity
suitable for the Permitted Uses of the Premises,
heat and air conditioning required in Landlord's
judgment for the comfortable use and occupation
of the Premises for the Permitted Uses, and
elevator service which shall mean service either
by nonattended automatic elevators or elevators
with attendants, or both, at the option of
Landlord. Tenant also agrees at all times to
cooperate fully with Landlord and to abide by
all the regulations and requirements which
Landlord may prescribe for the proper
functioning and protection of heating,
ventilating and air conditioning systems.
Wherever heat-generating machines, excess
lighting or equipment are used 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 the cost thereof, including the
cost of installation and the cost of operation
and maintenance thereof, shall be paid by Tenant
to Landlord upon demand by Landlord.
(c) Tenant shall not without the written
consent of Landlord connect with electric
current, except through existing electrical
outlets in the Premises or water pipes, any
apparatus or device for the purposes of using
electrical current or water. If Tenant shall
require water or electric current or any other
resource in excess of that usually furnished or
supplied for the Permitted Uses of the Premises,
Tenant shall first procure the consent of
Landlord which Landlord may refuse, to the use
thereof, and Landlord may cause a special meter
to be installed in the Premises so as to measure
the amount of water, electric current or other
resource consumed for any such other use. Tenant
shall pay directly to Landlord as an addition to
and separate from payment of Basic Operating
Cost the cost of all such energy, utility
service and meters (and of installation,
maintenance and repair thereof). Landlord may add
to the metered charge a recovery of additional
expense incurred in keeping account of the
water, electric current or other resource so
consumed. Landlord shall not be liable for any
damages directly or indirectly resulting from,
nor shall the Rent herein reserved be abated by
reason of (i) the installation, use or
interruption of use of any equipment in
connection with the furnishing of any of the
foregoing utilities and services, (ii) failure
to furnish or delay in furnishing any such
utilities or services when such failure or delay
is caused by acts of God or the elements, labor
disturbances of any character, any other
accidents or other conditions beyond the
reasonable control of Landlord, or by the making
of repairs or improvements to the Premises or to
the Building, or (iii) the limitation,
curtailment, rationing or restriction on use of
water, electricity, gas or any other form of
energy or any other service or utility
whatsoever serving the Premises or the Building.
Landlord shall be entitled to cooperate
voluntarily and in a reasonable manner with the
efforts of national, state or local governmental
agencies or utility suppliers in reducing energy
or other resource consumption. The obligation to
make services available hereunder shall be
subject to the limitations of any such
voluntary, reasonable program.
(d) Any sums payable under this paragraph 13
shall constitute Additional Rent hereunder.
ESTOPPEL 14. Within ten (10) days following any written
CERTIFICATE request which Landlord may make from time to
time, Tenant shall execute and deliver to
Landlord a certificate substantially in the
form attached hereto as Exhibit D and made a
part hereof, indicating thereon any exceptions
thereto which may exist at that time. Failure by
Tenant to execute and deliver such certificate
shall constitute an acceptance of the Premises
and acknowledgment by Tenant that the statements
included in Exhibit D are true and correct
without exception. Landlord and Tenant intend
that any statement delivered pursuant to this
paragraph may be relied upon by any mortgagee,
beneficiary, purchaser or prospective purchaser
of the Building or any interest therein.
Landlord shall have the right to substitute for
the attached Exhibit D a certificate in form
required by Landlord's mortgagee or provider of
financing.
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SECURITY 15. Concurrently with execution hereof, Tenant
DEPOSIT has paid to Landlord the Security Deposit in the
amount stated on the Basic Lease Information
sheet as security for the full and faithful
performance of Tenant's obligations under this
Lease. Upon expiration of the Term or earlier
termination hereof, the Security Deposit shall
be returned to Tenant, reduced by such amounts
as may be required by Landlord to remedy
defaults on the part of Tenant in the payment of
Rent, to repair damages (excluding normal wear
and tear) to the Premises caused by Tenant and
to clean the Premises. Landlord shall hold the
Security Deposit for the foregoing purposes in
accordance with the provisions of all applicable
law.
SUBSTITUTION 16.
HOLDING OVER 17. If Tenant shall retain possession of the
Premises or any part thereof without Landlord's
consent following the expiration of the Term or
sooner termination of this Lease for any reason,
then Tenant shall pay to Landlord for each day
of such retention triple the amount of the daily
rental for the last period prior to the date of
such expiration or termination. Tenant shall
also indemnify and hold Landlord harmless from
any loss or liability resulting from delay by
Tenant in surrendering the Premises, including,
without limitation, any claims made by any
succeeding tenant founded on such delay.
Alternatively, if Landlord gives notice to
Tenant of Landlord's election thereof, such
holding over shall constitute renewal of this
Lease for a period from month to month or for
one year, whichever shall be specified in such
notice. Acceptance of Rent by Landlord following
expiration or termination shall not constitute a
renewal of this Lease, and nothing contained in
this paragraph shall waive Landlord's right of
reentry or any other right. Unless Landlord
exercises the option hereby given to it, Tenant
shall be only a Tenant at sufferance, whether or
not Landlord accepts any Rent from Tenant while
Tenant is holding over without Landlord's written
consent.
SUBORDINATION 18. Without the necessity of any additional
document being executed by Tenant for the
purpose of effecting a subordination, this
Lease shall be subject and subordinate at all
times to: (a) all ground leases or underlying
leases which may now exist or hereafter be
executed affecting the Building or the land upon
which the Building is situated or both, and (b)
the lien of any mortgage or deed of trust which
may now exist or hereafter be executed in any
amount for which said Building, land, ground
leases or underlying leases, or Landlord's
interest or estate in any of said items, is
specified as security. Notwithstanding the
foregoing, Landlord shall have the right to
subordinate or cause to be subordinated any such
ground leases or underlying leases or any such
liens to this Lease. In the event that any
ground lease or underlying lease terminates for
any reason or any mortgage or deed of trust is
foreclosed or a conveyance in lieu of
foreclosure is made for any reason, Tenant
shall, notwithstanding any subordination, attorn
to and become the Tenant of the successor in
interest to Landlord at the option of such
successor in interest. Tenant shall execute and
deliver, upon demand by Landlord and in the
form requested by Landlord, any additional
documents evidencing the priority or
subordination of this Lease with respect to any
such ground leases or underlying leases or the
lien of any such mortgage or deed of trust.
Tenant hereby irrevocably appoints Landlord as
attorney-in-fact of Tenant to execute, deliver
and record any such documents in the name and on
behalf of Tenant. At the request of Landlord,
Tenant shall provide to Landlord its current
financial statement or other information
disclosing financial worth which Landlord shall
use solely for purposes of this Lease and in
connection with the ownership, management and
disposition of the property subject hereto.
RULES AND 19. Tenant shall faithfully observe and comply
REGULATIONS with the rules and regulations printed on or
annexed to this Lease and all reasonable
modifications thereof and additions thereto from
time to time put into effect by Landlord. Landlord
shall not be responsible to Tenant for the
non-compliance by any other tenant or occupant
of the Building with any of the rules and
regulations.
RE-ENTRY 20. Landlord reserves and shall at all times
BY LANDLORD have the right to reenter the Premises to
inspect the same, to supply janitor service and
any other service to be provided by Landlord to
Tenant hereunder, to show the Premises to
prospective purchasers, mortgagees or tenants, to
post notices of nonresponsiblity and to alter,
improve or repair the Premises and any portion
of the Building, without abatement of Rent, and
may for that purpose erect, use and maintain
scaffolding, pipes, conduits and other necessary
structures in and through the Premises where
reasonably required by the character of the work
to be performed; provided that entrance to the
Premises shall not be blocked thereby, and
further provided that the business of Tenant
shall not be interfered with unreasonably.
Tenant waives any claim for damages for any
injury or inconveniences to or interference with
Tenant's business, any loss of occupancy or
quiet enjoyment of the Premises, and any other
loss occasioned thereby. Landlord shall at all
times have and retain a key with which to unlock
all of the doors in, upon and about the
Premises, excluding Tenant's vaults and safes or
special security areas (designated in advance),
and Landlord shall have the right to use any and
all means which Landlord may deem necessary or
proper to open said doors in an emergency, in
order to obtain entry to any portion of the
Premises, and any entry to the Premises or
portions thereof obtained by Landlord by any of
said means, or otherwise, shall not be construed
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 portions thereof. Landlord shall
also 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
and/or location of entrances or passageways,
doors and doorways, and corridors, elevators,
stairs, toilets or other public parts of the
Building and to change the name, number or
designation by which the Building is commonly
known.
DEFAULT 21. (a) EVENTS OF DEFAULT: The occurrence of any of
BY TENANT the following shall constitute an event of
default on the part of Tenant:
(1) ABANDONMENT. Vacation or abandonment of the
Premises for a continuous period in excess
of five (5) business days. Tenant waives
any right to notice Tenant may have under
Section 1951.3 of the Civil Code of the
State of California, the terms of this
subsection (a) being deemed such notice to
Tenant as required by said Section 1951.3;
(2) NONPAYMENT OF RENT. Failure to pay any
installment of Rent due and payable
hereunder (or failure to pay any other
amount required to be paid hereunder, all
such obligations to be construed as the
equivalent of obligations for payment of
Rent) upon the date when said payment is
due, such failure continuing without cure
by payment of the delinquent Rent and late
charge for a period of five (5) business
days after written notice and demand;
provided, however, that except as expressly
otherwise provided herein, Landlord shall
not be required to provide such notice more
than twice during the Term, the third such
non-payment constituting default for all
purposes hereof without requirement of
notice. For purposes of subparagraph 21(e),
such failure shall constitute a default
without requirement of notice. The due
dates for payment of installments of rent
provided for herein shall be absolute and
the existence of a cure period or notice
period shall not be deemed to extend said
date for purposes of determining Tenant's
compliance with its obligations hereunder.
(3) OTHER OBLIGATIONS. Failure to perform any
obligations, agreement or covenant under
this Lease other than those matters
specified in subparagraphs (1) and (2) of
this subparagraph (a), such failure
continuing for fifteen (15) business days
after written notice of such failure (or
such longer period as Landlord determines to
be necessary to remedy such default,
provided that Tenant shall continuously and
diligently pursue such remedy at all times
until such default is cured);
(4) GENERAL ASSIGNMENT. A general assignment
by Tenant for the Benefit of creditors.
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<PAGE>
(5) BANKRUPTCY. The filing of any voluntary
petition in bankruptcy by Tenant, or the
filing of an involuntary petition by
Tenant's creditors, which involuntary
petition remains undischarged for a period
of thirty (30) days. In the event that under
applicable law the trustee in bankruptcy or
Tenant has the right to affirm this Lease
and continue to perform the obligations of
Tenant hereunder, such trustee or Tenant
shall, in such time period as may be
permitted by the bankruptcy court having
jurisdiction, cure all defaults of Tenant
hereunder outstanding as of the date of the
affirmance of this Lease and provide to
Landlord such adequate assurances as may be
necessary to ensure Landlord of the
continued performance of Tenant's
obligations under this Lease;
(6) RECEIVERSHIP. The employment of a receiver
to take possession of substantially all of
Tenant's assets or the Premises, if such
receivership remains undissolved for a
period of ten (10) business days after
creation thereof;
(7) ATTACHMENT. The attachment, execution or
other judicial seizure of all or
substantially all of Tenant's assets or the
Premises, if such attachment or other
seizure remains undismissed or undischarged
for a period of ten (10) business days
after the levy thereof;
(8) INSOLVENCY. The admission by Tenant in
writing of its inability to pay its debts
as they become due, the filing by Tenant of
a petition seeking any reorganization,
arrangement, composition, readjustment,
liquidation, dissolution or similar relief
under any present or future statute, law or
regulation, the filing by Tenant of an
answer admitting or failing timely to
contest a material allegation of a petition
filed against Tenant in any such proceeding
or, if within thirty (30) days after the
commencement of any proceeding against
Tenant seeking any reorganization or
arrangement, composition, readjustment,
liquidation, dissolution or similar relief
under any present or future statute, law or
regulation, such proceeding shall not have
been dismissed.
(b) REMEDIES UPON DEFAULT.
(1) RENT. All failures to pay any monetary
obligation to be paid by Tenant under this
Lease shall be construed as obligations for
payment of Rent.
(2) TERMINATION. In the event of the
occurrence of any event of default, Landlord
shall have the right, with or without
notice or demand, immediately to terminate
this Lease, and at any time thereafter
recover possession of the Premises or any
part thereof and expel and remove therefrom
Tenant and any other person occupying the
same, by any lawful means, and again
repossess and enjoy the Premises without
prejudice to any of the remedies that
Landlord may have under this Lease, or at
law or equity by reason of Tenant's default
or of such termination.
(3) CONTINUATION AFTER DEFAULT. Even though
Tenant has breached this Lease and/or
abandoned the Premises, this Lease shall
continue in effect for so long as Landlord
does not terminate Tenant's right to
possession under paragraph 21(b)(2) hereof,
and Landlord may enforce all its right and
remedies under this Lease, including (but
without limitation) the right to recover
Rent as it becomes due; and Landlord,
without terminating this Lease, may
exercise all of the rights and remedies of
a landlord under Section 1951.4 of the
Civil Code of the State of California or
any successor code section. Acts of
maintenance, preservation or efforts to
lease the Premises or the appointment of
receiver upon application of Landlord to
protect Landlord's interests under this
Lease shall not constitute an election to
terminate Tenant's right to possession.
(c) DAMAGES UPON TERMINATION. Should Landlord
terminate this Lease pursuant to the provisions
of paragraph 21(b)(2) hereof, Landlord shall
have all the rights and remedies of a landlord
provided by Section 1951.2 of the Civil Code of
the State of California, or successor code
section. Upon such termination, in addition to
any other rights and remedies to which Landlord
may be entitled under applicable law, Landlord
shall be entitled to recover from Tenant: (i)
the worth at the time of award of the unpaid Rent
and other amounts 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 Rent loss that the Tenant proves could have
been reasonably avoided; (iii) the worth at the
time of 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 Rent loss
that the Tenant proves could be reasonably
avoided; and (iv) any other amount necessary to
compensate Landlord for all the detriment
proximately caused by Tenant's failure to
perform its 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 (i)
and (ii) shall be computed with interest at the
lesser of eighteen percent (18%) per annum or
the maximum rate allowed by law. The "worth at
the time of award" of the amount referred to in
(iii) shall be computed by reference to
competent appraisal evidence or the formula
prescribed by and using the lowest discount rate
permitted under applicable law.
(d) COMPUTATION OF RENT FOR PURPOSES OF DEFAULT.
For purposes of computing unpaid Rent which
would have accrued and become payable under this
Lease pursuant to the provisions of paragraph
21(c) unpaid Rent shall consist of the sum of:
(1) the total Basic Rent for the balance of the
Term then remaining (with the amount of
Basic Rent to be determined by reference to
fair rental value being the subject of
proof by competent evidence), plus
(2) a computation of the excess of Gross Rent
(the term "Gross Rent" meaning the sum of
(i) rental adjustments payable pursuant to
paragraph 29 and (ii) Basic Rent) over
Basic Rent for the balance of the Term then
remaining ("Excess Gross Rental"), the
assumed excess Gross Rental for the
calendar year of the default and each
future calendar year in the Term to be
equal to the Excess Gross Rental for the
calendar year prior to the year in which
default occurs compounded at a per annum
rate equal to the mean average rate of
inflation for the preceding five (5) calendar
years as determined by the United States
Department of Labor, Bureau of Labor
Statistics Consumer Price Index (All Urban
Consumers) for the Metropolitan Area or
Region of which San Francisco, California
is a part.
(e) LATE CHARGE. In addition to its other
remedies, Landlord shall have the right without
notice or demand to add to the amount of any
payment required to be made by Tenant hereunder,
and which is not paid on or before the date the
same is due, an amount equal to five percent
(5%) of the delinquency for each month or portion
thereof that the delinquency remains outstanding
to compensate Landlord for the loss of the use
of the amount not paid and the administrative
costs caused by the delinquency, the parties
agreeing that Landlord's damage by virtue of
such delinquencies would be difficult to compute
and the amount stated herein represents a
reasonable estimate thereof. Tenant shall have a
five day grace period between the 1st and 5th
day of each month to pay rent due without any
late charge.
(f) REMEDIES CUMULATIVE. All right, privileges
and elections of remedies of the parties are
cumulative and not alternative to the extent
permitted by law and except as otherwise
provided herein.
DAMAGE BY 22. If the Premises or the Building are damaged
FIRE, ETC. by fire or other casualty, Landlord shall forthwith
repair the same, provided such repairs can be
made within one hundred eighty (180) days from
the date of such damage under the laws and
regulations of the federal, state and local
governmental authorities having jurisdiction
thereof. In such event, this Lease shall remain
in full force and effect except that Tenant
shall be entitled to a proportionate reduction
of Rent while such repairs to be made hereunder
by Landlord are being made. Said proportionate
reduction shall be based upon the extent to
which the making of such repairs to be made
hereunder by Landlord shall interfere with the
business carried on by Tenant in the Premises.
Within twenty (20) days from the date of such
damage, Landlord shall notify Tenant whether or
not such repairs can be made within one hundred
eighty (180) days from the date of such damage
and Landlord's determination thereof shall be
binding on Tenant. If such repairs cannot be
made within one hundred eighty (180) days from
the date of such damage, Landlord shall have
the option within thirty (30) days of the date
of such damage either to: (a) notify Tenant of
Landlord's intention to repair such damage and
diligently prosecute such repairs, in which
event this Lease shall continue in full force
and effect and the Rent shall be reduced as
provided herein; or (b) notify Tenant of
Landlord's election to terminate this Lease as
of a date specified in such notice, which date
shall be not less than thirty (30) nor more than
sixty (60) days after notice is given. In the
event such notice to terminate is given by
Landlord, this Lease shall terminate on the date
specified in
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such notice. In case of termination by either
event, the Rent shall be reduced by a
proportionate amount based upon the extent to
which said damage interfered with the business
carried on by Tenant in the Premises, and Tenant
shall pay such reduced Rent up to the date of
termination. Landlord agrees to refund to Tenant
any Rent previously paid for any period of time
subsequent to such date of termination. The
repairs to be made hereunder by Landlord
shall not include, and Landlord shall not be
required to repair, any damage by fire or other
cause to the property of Tenant or any repairs
or replacements of any paneling, decorations,
railings, floor coverings or any alterations,
additions, fixtures or improvements installed on
the premises by or at the expense of Tenant. The
provisions of Section 1942, subdivision 2, and
Section 1933, subdivision 4, of the Civil Code
of California are superseded by the foregoing.
EMINENT 23. If any part of the Premises shall be taken
DOMAIN or appropriated under the power of eminent
domain or conveyed in lieu thereof, either party
shall have the right to terminate this Lease at
its option. If any part of the Building shall be
taken or appropriated under power of eminent
domain or conveyed in lieu thereof, Landlord may
terminate this Lease at its option. In either of
such events, Landlord shall receive (and Tenant
shall assign to Landlord upon demand from
Landlord) any income, rent, award or any
interest therein which may be paid in connection
with the exercise of such power of eminent
domain, and Tenant shall have no claim against
Landlord for any part of the sums paid by virtue
of such proceedings, whether or not attributable
to the value of the unexpired Term. If a part of
the Premises shall be so taken or appropriated
or conveyed and neither party hereto shall elect
to terminate this Lease and the Premises have
been damaged as a consequence of such partial
taking or appropriation or conveyance, Landlord
shall restore the Premises continuing under this
Lease at Landlord's cost and expense; provided,
however, that Landlord shall not be required to
repair or restore any injury or damage to the
property of Tenant or to make any repairs or
restoration of any alterations, additions,
fixtures or improvements installed on the
Premises by or at the expense of Tenant.
Thereafter, the Rent for the remainder of the
Term shall be proportionately reduced, such
reduction to be based upon the extent to which
the partial taking or appropriation or conveyance
shall interfere with the business carried on by
Tenant in the Premises. Notwithstanding anything
to the contrary contained in this paragraph, if
the temporary use or occupancy of any part of
the Premises shall be taken or appropriated
under power of eminent domain during the Term,
this Lease shall be and remain unaffected by
such taking or appropriation and Tenant shall
continue to pay in full all Rent payable
hereunder by Tenant during the Term; in the
event of any such temporary appropriation or
taking, Tenant shall be entitled to receive that
portion of any award which represents
compensation for the use of or occupancy of the
Premises during the Term, and Landlord shall be
entitled to receive that portion of any award
which represents the cost of restoration of the
Premises and the use and occupancy of the
Premises after the end of the Term.
SALE BY 24. In the event of a sale or conveyance by
LANDLORD Landlord of the Building, the same shall operate
AND TENANT'S to release Landlord from any future liability
REMEDIES upon any of the covenants or conditions,
express or implied, herein contained in favor of
Tenant, and in such event Tenant agrees to look
solely to the responsibility of the successor in
interest of Landlord in and to this Lease. This
Lease shall not be affected by any such sale and
Tenant agrees to attorn to the purchaser or
assignee. Tenant shall look solely to Landlord's
interest in the Building for recovery of any
judgment from Landlord. Landlord, or if Landlord
is a partnership, its partners whether general
or limited, or if Landlord is a corporation, its
directors, officers or shareholders, shall never
be personally liable for any such judgment.
RIGHT 25. All covenants and agreements to be performed
OF LANDLORD by Tenant under any of the terms of this Lease
TO PERFORM shall be performed by Tenant at Tenant's sole
cost and expense and without any abatement of
Rent. If Tenant shall fail to pay any sum of
money, other than Rent, required to be paid by
it hereunder or shall fail to perform any other
act on its part to be performed hereunder, and
such failure shall continue for ten (10) days
after notice thereof by Landlord, Landlord may,
but shall not be obligated to do so, and without
waiving or releasing Tenant from any obligations
of the Tenant, make any such payment or perform
any such act on the Tenant's part to be made or
performed. All sums so paid by Landlord and all
necessary incidental costs together with
interest thereon at the rate of eighteen percent
(18%) per annum or the maximum rate permitted by
law, whichever is less per annum from the date
of such payment by the Landlord shall be payable
as Additional Rent to Landlord on demand, and
Tenant covenants to pay such sums, and Landlord
shall have, in addition to any other right or
remedy of Landlord, the same right and remedies
in the event of the nonpayment thereof by Tenant
as in the case of default by Tenant in the
payment of the Rent.
SURRENDER 26. (a) Tenant shall, at least ninety (90) days
OF PREMISES before the last day of the Term, give to
Landlord a written notice of intention to
surrender the Premises on that date, but nothing
contained herein shall be construed as an
extension of the Term or as consent of Landlord
to any holding over by Tenant.
(b) At the end of the term or any renewal
thereof or other sooner termination of this
Lease, Tenant shall peaceably deliver up to
Landlord possession of the Premises, together
with all improvements, fixtures or additions
thereto by whomsoever made, in the same
condition as received, or first installed, damage
by fire, earthquake, act of God or the elements
alone excepted. Tenant may, upon the termination
of this Lease, remove all movable furniture and
equipment belonging to Tenant, at Tenant's sole
cost, title to which shall be in Tenant until
such termination, repairing any damage caused by
such removal. Property not so removed shall be
deemed abandoned by the Tenant, and title to the
same shall thereupon pass to Landlord.
(c) 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 may, at
the option of Landlord, operate as an assignment
to it of any or all such subleases or
subtenancies.
WAIVER 27. If either Landlord or Tenant waives the
performance of any term, covenant or condition
contained in this Lease, such waiver shall not
be deemed to be a waiver of any subsequent
breach of the same or any other term, covenant
or condition contained herein. The acceptance of
Rent by Landlord shall not constitute a waiver
of any preceding breach by Tenant of any term,
covenant or condition of this Lease, regardless
of Landlord's knowledge of such preceding breach
at the time Landlord accepted such Rent. Failure
by Landlord to enforce any of the terms,
covenants or conditions of this Lease for any
length of time shall not be deemed to waive or
to decrease the right of Landlord to insist
thereafter upon strict performance by Tenant.
Waiver by Landlord of any term, covenant or
condition contained in this lease may only be
made by a written document signed by Landlord.
NOTICES 28. All notices and demands which may or are
required to be given by either party to the
other hereunder shall be in writing. All notices
and demands by Landlord to Tenant shall be sent
by United States certified or registered mail,
postage prepaid, addressed to Tenant at the
Premises, or to such other place as Tenant may
from time to time designate in a notice to
Landlord. All notices and demands by Tenant to
Landlord shall be sent by United States
certified or registered mail, postage prepaid,
addressed to Landlord at the address specified
in the Basic Lease information, or to such other
firm or to such other place as Landlord may from
time to time designate in a notice to Tenant.
RENTAL 29. In addition to Basic Rent provided to be paid
ADJUSTMENT hereunder, Tenant shall pay as Rent Tenant's
Proportionate Share of Basic Operating Cost in
the manner set forth below.
(a) DEFINITION: For purposes hereof, the terms
used in this paragraph 29 shall have the
following meanings:
SEE ADDENDUM
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(2) "Estimated Basic Operating Cost" for any
particular year shall mean Landlord's estimate
of the Basic Operating Cost for such calendar
year made prior to commencement of such calendar
year as hereinafter provided. Landlord shall
have the right from time to time to revise its
fiscal year and interim accounting periods so
long as the periods as so revised are reconciled
with prior periods in accordance with generally
accepted accounting principles applied in a
consistent manner.
(3) "Basic Operating Cost Adjustment" shall
mean the difference between Basic Operating Cost
and Estimated Basic Operating Cost for any
calendar year determined as hereinafter provided.
(b) PAYMENT OF ESTIMATED BASIC OPERATING COST.
During December of each calendar year
during the Term, or as soon thereafter as
practicable, Landlord shall give Tenant written
notice of the Estimated Basic Operating Cost for
the ensuing calendar year. The Estimated Basic
Operating Cost for the calendar year in which
the Scheduled Term Commencement Date falls is set
forth in the Basic Lease information sheet.
Tenant shall pay Tenant's Proportionate Share of
the Estimated Basic Operating Costs with
installments of Basic Rent required to be paid
pursuant to paragraph 3 above for the calendar
year to which the estimate applies in monthly
installments on the first day of each calendar
month during such year, in advance. Such payment
shall be construed to be Rent for all purposes
hereof. If at any time during the course of a
calendar year, Landlord determines that Basic
Operating Cost will apparently vary from the
then Estimated Basic Operating Cost by more than
five percent (5%), Landlord may, by written
notice to Tenant, revise the Estimated Basic
Operating Cost for the balance of such calendar
year and Tenant shall pay Tenant's Proportionate
Share of the Estimated Basic Operating Cost as so
revised for the balance of the then current
calendar year on the first day of each calendar
month thereafter, such revised installment
amounts to be Rent for all purposes hereof.
(c) COMPUTATION OF BASIC OPERATING COST
ADJUSTMENT.
Within one hundred twenty (120) days after
the end of each fiscal year as determined by
Landlord or as soon thereafter as practicable,
Landlord shall deliver to Tenant a statement of
Basic Operating Cost for the fiscal year just
ended, accompanied by a computation of Basic
Operating Cost Adjustment. If such statement
shows that Tenant's payment based upon Estimated
Basic Operating Cost is less than Tenant's
Proportionate Share of Basic Operating Cost,
then Tenant shall pay the difference within
twenty (20) days after receipt of such
statement, such payment to constitute additional
rent hereunder. If such statement shows that
Tenant's payments of Estimated Basic Operating
Cost exceed Tenant's Proportionate Share of Basic
Operating Costs, then (provided that Tenant is
not in default under this Lease), Tenant shall
receive a credit for the amount of such payment
against Tenant's obligation for payment of
Tenant's Proportionate Share of Estimated Basic
Operating Cost next becoming due hereunder. If
this Lease has been terminated or the Term
hereof has expired prior to the date of such
statement, then the Basic Operating Cost
Adjustment shall be paid by the appropriate
party within twenty (20) days after the date of
delivery of the statement.
(d) NET LEASE. This shall be a net lease and
Base Rent shall be paid to Landlord absolutely
net of all costs and expenses. The provisions for
payment of Basic Operating Cost by means of
periodic payments of Tenant's Proportionate
Share of Estimated Basic Operating Cost and the
Basic Operating Cost Adjustment are intended to
pass on to Tenant and reimburse Landlord for all
cost and expenses of the nature described
in paragraph 29(a)(i) above incurred in
connection with ownership and operation of the
Building and such additional facilities now and
in subsequent years as may be determined by
Landlord to be necessary to the Building.
(e) TENANT AUDIT. Tenant shall have the right,
at Tenant's expense and upon not less than
forty-eight (48) hours prior written notice to
Landlord to review at reasonable times
Landlord's books and records for any calendar
year a portion of which falls within the Term for
purposes of verifying Landlord's calculation of
Basic Operating Cost and Basic Operating Cost
Adjustment. In the event that Tenant shall dispute
the amount set
-9-
<PAGE>
forth in any statement provided by Landlord under
paragraph 29(?) above. Tenant shall have the right
not later than twenty (20) days following the
receipt of such statement, and upon condition
that Tenant shall first deposit with Landlord
the full amount in dispute, to cause Landlord's
books and records with respect to such calendar
year to be audited by certified public accountants
selected by Tenant subject to Landlord's
reasonable right of approval. The Basic
Operating Cost Adjustment shall be
appropriately adjusted on the basis of such
audit. If such audit discloses a liability for
a refund or credit by Landlord to Tenant in
excess of ten percent (10%) of Tenant's
Proportionate Share of the Basic Operating Cost
Adjustment previously reported, the cost of
such audit shall be borne by Landlord.
Otherwise the cost of such audit shall be paid
by Tenant. If Tenant shall not request an audit
in accordance with the provisions of this
paragraph 29(e) within twenty (20) days of
receipt of Landlord's statement provided
pursuant to paragraph 29(d), such statement
shall be final and binding for all purposes
hereof.
TAXES 30. (a) Tenant shall pay before delinquency any and
PAYABLE all taxes levied or assessed and which become
BY TENANT payable by Landlord (or Tenant) during the Term
of this Lease, whether or not now customary or
within the contemplation of the parties hereto,
which are based upon, measured by or otherwise
calculated with respect to: (a) the value of
Tenant's equipment, furniture, fixtures or
other personal property located in the
Premises; (b) the value of any leasehold
improvements, alterations, or additions made in
or to the Premises, regardless of whether title
to such improvements, alterations or additions
shall be in Tenant or Landlord; or (c) this
transaction or any document to which Tenant is
a party creating or transferring an interest or
an estate in the Premises.
(b) In the event that it shall not be lawful
for Tenant so to reimburse Landlord, the Rent
shall be revised to net Landlord the same net
rent after imposition of any such tax upon
Landlord as would have been payable to Landlord
prior to the imposition of any such tax. All
taxes payable by Tenant under this Paragraph 30
shall be additional rental.
SUCCESSORS
AND ASSIGNS 31. Subject to the provisions of paragraph 10
hereof, the terms, covenants and conditions
contained herein shall be binding upon and
inure to the benefit of the heirs, successors,
executors, administrators and assigns of the
parties hereto.
ATTORNEYS'
FEES 32. In the event that any action or proceeding
is brought to enforce any term, covenant or
condition of this Lease on the part of Landlord
or Tenant, the prevailing party in such
litigation shall be entitled to reasonable
attorneys' fees to be fixed by the court in
such action or proceeding.
LIGHT
AND AIR 33. No diminution of light, air or view by any
structure which may hereafter be erected
(whether or not by Landlord) shall entitle
Tenant to any reduction of Rent, result in any
liability of Landlord to Tenant, or in any
other way affect this Lease or Tenant's
obligations hereunder.
PUBLIC TRANS-
PORTATION 34. Tenant shall establish and maintain during
INFORMATION the Term hereof a program to encourage maximum
use of public transportation by personnel of
Tenant employed on the Premises, including
without limitation the distribution to such
employees of written materials explaining the
convenience and availability of public
transportation facilities adjacent or proximate
to the Building, staggering working hours of
employees, and encouraging use of such
facilities, all at Tenant's sole reasonable cost
and expense.
MISCELLANEOUS 35. (a) The term "Premises" shall be deemed to
include (except where such meaning would be
clearly repugnant to the context) the office
space demised and improvements now or at any
time hereinafter comprising or built in the
space hereby demised.
(b) The paragraph headings herein are for
convenience of reference and shall in no way
define, increase, limit or describe the scope
or intent of any provision of this Lease.
(c) The term "Landlord" in these presents shall
include the Landlord, its successors and
assigns. In any case where this Lease is signed
by more than one person, the obligations
hereunder shall be joint and several.
(d) The term "Tenant" or any pronoun used in
place thereof shall indicate and include the
masculine or feminine, the singular or plural
number, individuals, firms or corporations, and
their and each of their respective successors,
executors, administrators and permitted
assigns, according to the context hereof.
(e) Time is of the essence of this Lease and all
of its provisions.
(f) This Lease shall in all respects be
governed by the laws of the State of California.
(g) This Lease, together with its exhibits,
contains all the agreements of the parties
hereto and supersedes any previous negotiations.
(h) There have been no representations made by
the Landlord or understandings made between the
parties other than those set forth in this
Lease and its exhibits.
(i) This Lease may not be modified except by a
written instrument by the parties hereto.
(j) If for any reason whatsoever any of the
provisions hereof shall be unenforceable or
ineffective, all of the other provisions shall
be and remain in full force and effect.
(k)_____________________________________________
________________________________________________
________________________________________________
LEASE 36. Submission of this instrument for examination
EFFECTIVE or signature by Tenant does not constitute a
DATE reservation or option for lease, and it is not
effective as a lease or otherwise until execution
and delivery by both Landlord and Tenant.
IN WITNESS WHEREOF, the parties hereto
have executed this Lease the day and year first
above written.
"LANDLORD"
Parker Associates
---------------------------------
Date 2/2/99 By /s/ Michael Horowitz
------ -------------------------------
Its General Partner
--------------------------
"TENANT"
Ask Jeeves, Inc.
---------------------------------
Date 2/1/99 By /s/ Robert Wrubel
------ -------------------------------
Its President
-----------------------------
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<PAGE>
RULES AND REGULATIONS
EXHIBIT A.
1. Sidewalks, halls, passages, exits, entrances,
elevators, escalators and stairways shall not
be obstructed by Tenants or used by them for
any purpose other than for ingress to and
egress from their respective premises. The
halls, passages, exits, entrances, elevators
and stairways are not for the use of the
general public and Landlord shall in all cases
retain the right to control and prevent access
thereto by all persons whose presence, in the
judgment of Landlord, shall be prejudicial to
the safety, character, reputation and interests
of the Building and its Tenants, provided that
nothing herein contained shall be construed to
prevent such access to persons with whom any
Tenant normally deals in the ordinary course of
such Tenant's business unless such persons are
engaged in illegal activities. No Tenant, and
no employees or invitees of any Tenant, shall
go upon the roof of the Building, except as
authorized by Landlord.
2. No sign, placard, picture, name, advertisement
or notice, visible from the exterior of leased
premises shall be inscribed, painted, affixed,
installed or otherwise displayed by any Tenant
either on its premises or any part of the
Building without the prior written consent of
Landlord, and Landlord shall have the right to
remove any such sign, placard, picture, name,
advertisement, or notice without notice to and
at the expense of the Tenant.
If Landlord shall have given such consent
to any Tenant at any time, whether before or
after the execution of the lease, such consent
shall in no way operate as a waiver or release
of any of the provisions hereof or of such
lease, and shall be deemed to relate only to
the particular sign, placard, picture, name,
advertisement or notice so consented to by
Landlord and shall not be construed as
dispensing with the necessity of obtaining the
specific written consent of Landlord with
respect to any other such sign, placard,
picture, name, advertisement or notice.
All approved signs or lettering on doors
and walls shall be printed, painted, affixed or
inscribed at the expense of the Tenant by a
person approved by Landlord.
3. The bulletin board or directory of the Building
will be provided exclusively for the display of
the name and location of Tenants only and
Landlord reserves the right to exclude any
other names therefrom.
4. No curtains, draperies, blinds, shutters,
shades, screens or other coverings, awnings,
hangings or decorations shall be attached to,
hung or placed in, or used in connection with,
any window or door on any premises without the
prior written consent of Landlord. In any event
with the prior written consent of Landlord, all
such items shall be installed inboard of
Landlord's standard window covering and shall
in no way be visible from the exterior of the
Building. No articles shall be placed or kept
on the window sills so as to be visible from
the exterior of the Building. No articles shall
be placed against glass partitions or doors
which might appear unsightly from outside
Tenant's Premises.
5. Landlord reserves the right to exclude from the
Building between the hours of 6 pm and 8 am and
at all hours on Saturdays, Sundays and holidays
all persons who are not Tenants or their
accompanied guests in the Building. Each Tenant
shall be responsible for all persons for whom
it allows to enter the building and shall be
liable to Landlord for all acts of such persons.
Landlord shall in no case be liable for
damages for error with regard to the admission
to or exclusion from the Building of any person.
During the continuance of any invasion,
mob, riot, public excitement or other
circumstance rendering such action advisable in
Landlord's opinion, Landlord reserves the right
to prevent access to the Building by closing
the doors, or otherwise, for the safety of
Tenants and protection of the Building and
property in the Building.
6. Except with the written consent of Landlord no
person or persons other than those approved by
Landlord shall be permitted to enter the
Building for the purpose of cleaning the same.
No Tenant shall cause any unnecessary labor by
reason of such Tenant's carelessness or
indifference in the preservation of good order
and cleanliness of the premises. Landlord shall
in no way be responsible to any Tenant 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.
7.
8. Each Tenant shall see that all doors of its
premises are closed and securely locked and
must observe strict care and caution that all
water faucets or water apparatus are entirely
shut off before the Tenant or its employees
leave such premises, and that all utilities
shall likewise be carefully shut off, so as to
prevent waste or damage, and for any default or
carelessness the Tenant shall make good all
injuries sustained by other Tenants or
occupants of the Building or Landlord. On
multiple-tenancy floors, all Tenants shall keep
the door or doors to the Building corridors
closed at all times except for ingress or
egress.
9. As more specifically provided in the Tenant's
Lease of the Premises, Tenant shall not waste
electricity, water or air-conditioning and
agrees to cooperate fully with Landlord to
assure the most effective operation of the
Building's heating and air-conditioning, and
shall refrain from attempting to adjust any
controls other than room thermostats installed
for Tenant's use.
10. No Tenant shall alter any lock or access device
or install a new additional lock or access
device or any bolt on any door of its premises
without the prior written consent of Landlord.
If Landlord shall give its consent, the Tenant
shall in each case furnish Landlord with a key
for any such lock.
11. No Tenant shall make or have made additional
copies of any keys or access devices provided
by Landlord. Each Tenant, upon the termination
of the Tenancy, shall deliver to Landlord all
the keys or access devices for the Building,
offices, rooms and toilet rooms which shall
have been furnished the Tenant or which the
Tenant shall have had made. In the event of the
loss of any keys or access devices so furnished
by Landlord, Tenant shall pay Landlord therefor.
12. 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 and 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 borne by the Tenant who, or whose employees
or invitees, shall have caused it.
13. No Tenant shall use or keep in its premises or
the Building any kerosene, gasoline or
inflammable or combustible fluid or material
other than limited quantities necessary for the
operation or maintenance of office or office
equipment. No Tenant shall use any method of
heating or air-conditioning other than that
supplied by Landlord.
14. No Tenant shall use, keep or permit to be used
or kept in its premises any foul or noxious gas
or substance or permit or suffer such 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 and/or
vibrations or interfere in any way with other
Tenants or those having business therein, nor
shall any animals or birds be brought or kept
in or about any premises of the Building.
15. No cooking shall be done or permitted by any
Tenant on its premises (except that use by the
Tenant of Underwriters' Laboratory approved
equipment for the preparation of coffee, tea,
hot chocolate and similar beverages for Tenants
and their employees shall be permitted,
provided that such equipment and use is in
accordance with all applicable federal, state
and city laws, codes, ordinances, rules and
regulations), nor shall premises be used for
lodging.
EXHIBIT "A" Page 1
<PAGE>
16. Except with the prior written consent of Landlord, no Tenant shall sell
or permit the sale, at retail, of newspapers, magazines, periodicals,
theatre tickets or any other goods or merchandise in or on any premises,
nor shall Tenant carry on, or permit or allow any employee or other
person to carry on, the Business of stenography, typewriting or any
similar business in or from any premises for the service or accommodation
of occupants of any other portion of the Building, nor shall the premises
of any Tenant be used for the storage of merchandise or for manufacturing
of any kind, or the business of a public barber shop, beauty parlor, nor
shall the premises of any Tenant be used for any improper, immoral or
objectionable purpose, or any business or activity other than that
specifically provided for in such Tenant's lease.
17. If Tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions
in their installation.
18. Landlord will direct electricians as to where and how telephone, telegraph
and electrical wires are to be introduced or installed. No boring or
cutting for wires will be allowed without the prior written consent of
Landlord. The location of burglar alarms, telephones, call boxes and
other office equipment affixed to all premises shall be subject to the
written approval of Landlord.
19. No Tenant shall install any radio or television antenna, loudspeaker or
any other device on the exterior walls or the roof of the Building. Tenant
shall not interfere with radio or television broadcasting or reception
from or in the Building or elsewhere.
20. No Tenant shall lay linoleum, tile, carpet or any other floor covering so
that the same shall be affixed to the floor of its premises in any manner
except as approved in writing by Landlord. The expense of repairing any
damage resulting from a violation of this rule or the removal of any floor
covering shall be borne by the Tenant by whom, or by whose contractors,
employees or invitees, the damage shall have been caused.
21. No furniture, freight, equipment, materials, supplies, packages,
merchandise or other property will be received in the Building or carried
up or down the elevators except between such hours and in such elevators
as shall be designated by Landlord.
Landlord shall have the right to prescribe the weight, size and
position of all safes, furniture or other heavy equipment brought into the
Building. Safes or other heavy objects shall, if considered necessary by
Landlord, stand on wood strips of such thickness as determined by Landlord
to be necessary to properly distribute the weight thereof. Landlord will
not be responsible for loss of or damage to any such safe, equipment or
property from any cause, and all damage done to the Building by moving or
maintaining any such safe, equipment or other property shall be repaired
at the expense of Tenant.
Business machines and mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to such a degree as to be objectionable
to Landlord or to any tenants in the Building shall be placed and
maintained by Tenant, at Tenant's expense, on vibration eliminators or
other devices sufficient to eliminate noise or vibration. The persons
employed to move such equipment in or out of the Building must be
acceptable to Landlord.
22. No Tenant shall place a load upon any floor of the premises which exceeds
the load per square foot which such floor was designed to carry and which
is allowed by law. No Tenant shall mark, or drive nails, screw or drill
into, the partitions, woodwork or plaster or in any way deface such
premises or any part thereof. Nor shall any natural wood be painted
without Landlord's written consent. Normal wall covering shall be
excepted.
23. No Tenant shall install, maintain or operate upon the Premises any
vending machine without the written consent of Landlord.
24. There shall not be used in any space, or in the public areas of the
Building, either by any Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other material-handling
equipment as Landlord may approve. No other vehicles of any kind shall be
brought by any Tenant into or kept in or about the premises.
25. Each Tenant shall store all its trash and garbage within the interior of
its 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 trash
and garbage in the city without violation of any law or ordinance
governing such disposal. All trash, garbage and refuse disposal shall be
made only through entryways and elevators provided for such purposes and
at such times as Landlord shall designate.
26. Canvassing, soliciting, distribution of handbills or any other written
material, and peddling in the Building are prohibited and each Tenant
shall cooperate to prevent the same. No Tenant shall make room-to-room
solicitation of business from other tenants in the building.
27. Landlord shall have the right, exercisable without notice and without
liability to any Tenant, to change the name and address of the Building.
28. Landlord reserves the right to exclude or expel from the Building any
person who, in Landlord's judgment is intoxicated or under the influence
of liquor or drugs or who is in violation of any of the rules and
regulations of the Building.
29. Without the prior written consent of Landlord, Tenant shall not use the
name of the Building in connection with or in promoting or advertising
the business of Tenant except as Tenant's address.
30. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency.
31. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and
other means of entry to the Premises closed.
32. The requirements of Tenants will be attended to only upon application at
the office of the Building by an authorized individual. Employees of
Landlord shall not perform any work or do anything outside of their
regular duties unless under special instructions from Landlord, and no
employees will admit any person (Tenant or otherwise) to any office
without specific instructions from Landlord.
33. 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 Tenants of the
Building.
34. Landlord reserves the right to make such other and reasonable rules and
regulations as in its judgment may from time to time be needed for safety
and security, for care and cleanliness of the Building and for the
preservation of good order therein. Tenant agrees to abide by all such
Rules and Regulations hereinabove stated and any additional rules and
regulations which are adopted.
35. Tenant shall use carpet protector under all desk chairs, which may impact
on carpet seams.
36. Vehicles parked on premises overnight without prior written consent of the
Landlord shall be deemed abandoned and shall be subject to tow-away at
vehicle owner's expense. Parking spaces designated exclusively for Tenants
shall be excepted.
37. Tenant shall be responsible for the observance of all of the foregoing Rules
and Regulations by Tenant's employees, agents, clients, customers,
invitees and guests.
38. The Rules and Regulations are in addition to, and shall not be construed
to in any way modify, alter or amend, in whole or in part, the terms,
covenants, agreements and conditions of any Lease of Premises in the
Building. The word "Building" as used herein means the building of which
the premises are part.
Page 2
<PAGE>
EXHIBIT B AND FLOORPLAN FOR EXHIBIT C
[FLOOR PLAN]
<PAGE>
EXHIBIT B AND FLOORPLAN FOR EXHIBIT C
[FLOOR PLAN]
<PAGE>
FORM OF TENANT CERTIFICATE
EXHIBIT D.
___________________________
___________________________
___________________________
___________________________
RE:
Gentlemen:
The undersigned, as Tenant under that certain lease (the "Lease") dated
______________________________ 19 __, made with ____________________________
as Landlord (the "Landlord"), does hereby certify:
1. That the copy of the Lease attached hereto as Exhibit A is a true and
complete copy of the Lease, and there are no amendments, modifications or
extensions of or to the Lease and the Lease is now in full force and effect.
2. That its leased premises at the above location have been completed in
accordance with the terms of the Lease, that it has accepted possession of
said premises, and that it now occupies the same.
3. That it began paying rent on _____________ , 19 __ , and that, save only as
may be required by the terms of the Lease, no rental has been paid in
advance, nor has the undersigned deposited any sums with the Landlord as
security.
4. That there exist no defenses or offsets to enforcement of the Lease by the
Landlord and, so far as is known to the undersigned, the Landlord is not,
as of the date hereof, in default in the performance of the Lease, nor has
the Landlord committed any breach thereof, nor has any event occurred
which, with the passage of time or the giving of notice, or both, would
constitute a default or breach by the Landlord.
The undersigned acknowledges that you are relying on the above
representation of the undersigned in (advancing funds to purchase the
existing first mortgage loan covering the building in which the leased
premises are located) (in purchasing the building in which the leased
premises are located) and does hereby warrant and affirm to and for your
benefit, and that of your successors and assigns, that each of the
foregoing representations is true, correct and complete as of the date
hereof.
Dated: _________________________
By _____________________________
Its _________________________
EXHIBIT "D"
<PAGE>
ADDENDUM TO LEASE
This Lease addendum is made in respect to the Lease ("the Lease") between
Parker Associates, ("Landlord"), and Ask Jeeves, Inc. ("Tenant"), for Suite
#219, 2560 Ninth Street, Berkeley, California.
37. SERVICES AND UTILITIES.
Tenant shall provide its own janitorial service and pay utilities
directly to the utility companies for those utilities which are separately
metered to the Premises.
38. BASIC OPERATING COSTS.
The Basic Operating Cost per paragraph 29 that is proportionately
allocated to Tenant shall be limited to garbage removal, window washing, and
any security services needed for the well-being of the Tenants.
39. PARKING
Landlord shall provide Tenant with 3 parking spaces inside the garage of
the Building at a monthly rental of Free each and 1 spaces inside the garage
of the Building at a monthly rental of $30.00 each. Landlord's five year
lease on the parking lot includes a first right to purchase the land but is
subject to early termination of the Lease by the owner under certain
conditions. If such Lease is terminated, Landlord will use its best efforts
to obtain alternative parking spaces at no added cost to Tenant. In addition,
if Landlord succeeds in acquiring a parking facility directly across the
street from
1
<PAGE>
the Building, Tenant agrees to relocate its auto parking from inside the
garage and the Eighth Street lot to this new facility.
40. RENTAL ADJUSTMENTS.
The rent set forth on the Basic Lease Information Sheet shall be subject
to an adjustment based on the United States Bureau of Labor Statistics
Consumer Price Index (all items) for the San Francisco Bay Area ("CPI") in
effect as of December 1998. On each anniversary of the commencement of the
lease term, the rent shall be adjusted based on the percentage increase in
the most recently published CPI over the CPI for December 1998, provided
however, that in no lease year will the rent be increased less than 3% or
more than 8% of the then existing rent. If the actual increase in the CPI in
any year is less than 3%, the difference shall be subtracted from the change
in the CPI during the next following lease year. Similarly, if the actual
increase in the CPI in any year exceeds 8%, the excess shall be added to the
change in the CPI during the next following lease year for purposes of rent
adjustment.
41. INSURANCE
Section 11e of the Lease shall be amended by adding thereto the following:
Tenant shall take out and maintain during the term of this lease, at
Tenant's expense, comprehensive general liability insurance (Form
L6395a or its equivalent) and broad-form comprehensive general liability
extension endorsement (Form G 222 or L9001 or its equivalent). The
limits of said liability shall be $1,000,000. combined
2
<PAGE>
single limit bodily injury and property damage, and said policy shall
name Landlord as an additional insured (Form L9109 or its equivalent).
Tenant shall cause to be delivered to Landlord certificates evidencing
the foregoing insurance coverages, which certificates shall provide
that Landlord shall be given at lease 30 days written notice prior to
any change in or cancellation of Tenant's insurance policy.
In the event that a certificate evidencing the above is not available
or that equivalent forms are substituted for those named above, Tenant
shall obtain a signed confirmation from his insurance carrier, or their
authorized representative, that the coverage afforded under their
contract of insurance meet all of the above requirements. Landlord shall
have the right to determine whether said requirements have been
satisfied if the aforementioned certificate of insurance forms have not
been provided by Tenant.
42. CPI ANNIVERSARY DATE
With respect to paragraph 40, RENTAL ADJUSTMENTS the anniversary date
shall be November 1, 1999. The rental adjustment shall be on November 1, 1999.
43. SHARED UTILITIES
Tenants hereby acknowledges that electric and gas service to the Premises
will be shared with the Tenants of Suite #217. These Co-Tenants shall
allocate the cost of said services as they see fit to do, without Landlord's
involvement or responsibility. However, in the event of a disagreement over
such allocations, the parties shall submit the issue to binding arbitration
by Landlord.
44. APPROVAL OF THIRD PARTY
Landlord's obligations under this Lease shall be contingent upon
execution of a Termination Agreement satisfactory to Landlord and Pacific
Microsonics to terminate their current lease for Suite 219. Landlord's
contingency shall become satisfied and removed within 4 days after execution
of this Lease or this Lease shall become null and void and of no further
effect.
<PAGE>
ASSIGNMENT AND ASSUMPTION OF STANDARD COMMERCIAL OFFICE LEASE
FOR EAT/WORK DEVELOPMENT
THIS ASSIGNMENT AND ASSUMPTION OF STANDARD COMMERCIAL OFFICE LEASE FOR
EAT/WORK DEVELOPMENT ("Agreement") is dated and effective as of January 1,
1999 by and between THE RODA GROUP VENTURE DEVELOPMENT COMPANY, L.L.C., a
Delaware limited liability company ("Assignor") and ASK JEEVES, a California
corporation ("Assignee").
WHEREAS, Assignor is Tenant under that certain Standard Commercial
Office Lease For Eat/Work Development dated August 14, 1998, by and between
Eat/Work Development, LP, a California limited partnership ("Landlord") and
Assignor, (as modified from time to time, the "Lease"), respecting certain
premises (the "Premises") with a street address of 918 Parker Street, Suite
A-14, Berkeley, California, as more particularly described therein;
WHEREAS, Assignor desires to assign its interest in the Lease to
Assignee and Assignee desires to assume Assignor's obligations under the
Lease;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Assignor and Assignee agree as
follows:
1. ASSIGNMENT OF LEASE.
Assignor does hereby transfer, assign, convey and deliver to Assignee
its entire right, title and interest in the Lease and the Premises.
2. ASSUMPTION OF OBLIGATIONS.
Assignee does hereby accept this assignment and, for the benefit of
Assignor and Landlord, expressly assumes and agrees to hereafter perform all
of the terms, covenants, conditions and obligations of Assignor under the
Lease, which accrue from and after the date hereof.
3. INDEMNITY.
Assignor agrees to save, indemnify, defend and hold Assignee harmless
from and on account of any claims, demands, actions, losses, expenses and
liabilities (including attorneys' fees) of Assignee under the Lease on
account of or arising out of any obligations and liabilities of the Lessee
thereunder, arising prior to the date hereof.
Assignee agrees to save, indemnify, defend and hold Assignor harmless
from and on account of any claims, demands, actions, losses, expenses and
liabilities (including attorneys' fees) of Assignor under the Lease on
account of or arising out of the obligations and liabilities so assumed.
1.
<PAGE>
4. CONTINGENCY.
Notwithstanding anything to the contrary herein, this Assignment shall
be contingent upon the receipt of the consent of Landlord as evidenced by the
execution by Landlord of the Lessor consent set forth below.
5. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
6. COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original.
Executed as of the date first above written.
ASSIGNOR:
THE RODA GROUP VENTURE DEVELOPMENT COMPANY,
L.L.C., a Delaware limited liability company.
By: /s/ Daniel Miller
-------------------------------------
Its: Managing Partner
-------------------------------------
ASSIGNEE:
ASK JEEVES, a California corporation.
By: /s/ Robert W. Wrubel
-----------------------------------
Its: Chief Executive Officer
-----------------------------------
2.
<PAGE>
LESSOR CONSENT
The undersigned, as owner and holder of all right, title and interest of Lessor
under the Lease hereby consents to the foregoing assignment.
EAT/WORK DEVELOPMENT, LP, a
California limited partnership
By: Michael Goldin
----------------------------------
Its: General Partner
----------------------------------
3.
<PAGE>
ASSIGNMENT AND ASSUMPTION OF STANDARD COMMERCIAL OFFICE LEASE
FOR EAT/WORK DEVELOPMENT
THIS ASSIGNMENT AND ASSUMPTION OF STANDARD COMMERCIAL OFFICE LEASE FOR
EAT/WORK DEVELOPMENT ("Agreement") is dated and effective as of January 1,
1999 by and between THE RODA GROUP VENTURE DEVELOPMENT COMPANY, L.L.C., a
Delaware limited liability company ("Assignor") and ASK JEEVES, a California
corporation ("Assignee").
WHEREAS, Assignor is Tenant under that certain Standard Commercial
Office Lease For Eat/Work Development dated August 20, 1998, by and between
Eat/Work Development, LP, a California limited partnership ("Landlord") and
Assignor, (as modified from time to time, the "Lease"), respecting certain
premises (the "Premises") with a street address of 918 Parker Street, Suites
A-1-1, and A-1-2, Berkeley, California, as more particularly described
therein;
WHEREAS, Assignor desires to assign its interest in the Lease to
Assignee and Assignee desires to assume Assignor's obligations under the
Lease;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Assignor and Assignee agree as
follows:
1. ASSIGNMENT OF LEASE.
Assignor does hereby transfer, assign, convey and deliver to Assignee
its entire right, title and interest in the Lease and the Premises.
2. ASSUMPTION OF OBLIGATIONS.
Assignee does hereby accept this assignment and, for the benefit of
Assignor and Landlord, expressly assumes and agrees to hereafter perform all
of the terms, covenants, conditions and obligations of Assignor under the
Lease, which accrue from and after the date hereof.
3. INDEMNITY.
Assignor agrees to save, indemnify, defend and hold Assignee harmless
from and on account of any claims, demands, actions, losses, expenses and
liabilities (including attorneys' fees) of Assignee under the Lease on
account of or arising out of any obligations and liabilities of the Lessee
thereunder, arising prior to the date hereof.
Assignee agrees to save, indemnify, defend and hold Assignor harmless
from and on account of any claims, demands, actions, losses, expenses and
liabilities (including attorneys' fees) of Assignor under the Lease on
account of or arising out of the obligations and liabilities so assumed.
1.
<PAGE>
4. CONTINGENCY.
Notwithstanding anything to the contrary herein, this Assignment shall
be contingent upon the receipt of the consent of Landlord as evidenced by the
execution by Landlord of the Lessor consent set forth below.
5. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
6. COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original.
Executed as of the date first above written.
ASSIGNOR:
THE RODA GROUP VENTURE DEVELOPMENT COMPANY,
L.L.C., a Delaware limited liability company.
By: /s/ Daniel Miller
-----------------------------------
Its: Managing Partner
-----------------------------------
ASSIGNEE:
ASK JEEVES, a California corporation.
By: /s/ Robert W. Wrubel
------------------------------------
Its: Chief Executive Officer
------------------------------------
2.
<PAGE>
LESSOR CONSENT
The undersigned, as owner and holder of all right, title and interest of Lessor
under the Lease hereby consents to the foregoing assignment.
EAT/WORK DEVELOPMENT, LP, a
California limited partnership
By: Michael Goldin
----------------------------------
Its: General Partner
----------------------------------
3.
<PAGE>
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE
406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
EXHIBIT 10.13
LICENSE AGREEMENT
BETWEEN
ASK JEEVES, INC. AND COMPAQ COMPUTER CORPORATION
THIS LICENSE AGREEMENT (the "Agreement") is made as of October 2, 1998 (the
"Effective Date") by and between ASK JEEVES, INC., a California corporation
("Ask Jeeves"), with its principal place of business at 918 Parker Street,
Berkeley, CA 94710 ("Ask Jeeves"), and COMPAQ COMPUTER CORPORATION ("Compaq"),
with its principal place of business at 20555 SH 249, Houston, TX 77070.
RECITALS
A. Ask Jeeves has developed and owns Internet navigation tools and
databases that simplify the process of locating information on the World
Wide Web through the use of a question and answer format (the
"Service").
B. Compaq owns and operates an Internet search engine known as Alta Vista
located at www.altavista.com ("Alta Vista").
C. Compaq would like to facilitate its users' ability to locate information
on the World Wide Web by integrating the Service into Alta Vista, and
Ask Jeeves desires to license the Service to Compaq on the terms and
conditions set forth below.
AGREEMENT
In consideration of the mutual covenants contained in this Agreement,
the parties agree as follows:
1. DEFINITIONS.
1.1 "AJ ANSWER LINK" means the specific instances of Answer
Templates contained in the Ask Jeeves Knowledgebase, excluding
AV Answer Links.
1.2 "AV ANSWER LINK" means the specific instances of Answer
Templates that are modified at the request of Compaq under the
conditions and procedures set forth in this Agreement.
1.3 "ALTA VISTA" means the search engine owned and operated by
Compaq located at www.altavista.com.
1.4 "ANNUAL PERIOD" means the twelve (12) month period beginning on
Launch Date and each twelve (12) month period thereafter
beginning on the anniversary date of the Launch Date.
"Quarterly Period" means one-quarter of an Annual Period.
1.5 "ANSWER LINK" means an AJ Answer Link or an AV Answer Link.
1.
<PAGE>
1.6 "ANSWER LINK RELATIONSHIP" means an agreement with a third party
to provide it the privilege of being the destination of an
Answer Link (i.e., make their site the answer to an Ask Jeeves
Question) in return for compensation.
1.7 "ANSWER LINK REVENUE" means any monetary compensation paid by a
third party, as a result of being the Answer Link to an Ask
Jeeves Question. Answer Link Revenue will be calculated on a
gross basis, without deduction for sales commissions or other
sales expenses.
1.8 "ANSWER TEMPLATE" means the general form of answer scripts
stored in the Ask Jeeves Knowledgebase that when associated with
a specific Ask Jeeves Question and processed by the Question
Processing Engine forms a specific Answer Link.
1.9 "ASK JEEVES INTELLECTUAL PROPERTY" means the Software, the Ask
Jeeves Knowledgebase, the Ask Jeeves Questions, the Question
Processing Engine and all other intellectual property owned by
Ask Jeeves.
1.10 "ASK JEEVES KNOWLEDGEBASE" means the collection of Question
Templates and Answer Templates (and associated data structures)
that operates with the Question Processing Engine and is
currently used by Ask Jeeves in the service it operates at
www.askjeeves.com.
1.11 "ASK JEEVES QUESTION" means a specific instance of a Question
Template in the Ask Jeeves Knowledgebase, which the Service will
offer to its users to confirm the users' query. (For example,
if a user asks "Is it raining in Portland?" the Service will
offer the Ask Jeeves Question "What is the weather forecast for
Portland?" to confirm the user's question.)
1.12 "CLICK" means the return of an Answer Link from the Question
Processing Engine in response to the submittal of a selected Ask
Jeeves Question.
1.13 "CLICK RATE FEE" means the amount of money to be paid by Compaq
to Ask Jeeves for each Click.
1.14 "LAUNCH DATE" means the date the Service is first offered to
Compaq users on a regular, publicly available basis.
1.15 "NUMBER OF QUERIES" means the number of times users submit a new
search, resulting in a first results page that contains Ask
Jeeves questions.
1.16 "QUESTION PROCESSING ENGINE" means the proprietary, software
developed and owned by Ask Jeeves that allows users to pose
questions and be directed to appropriate web sites that answer
associated Ask Jeeves Questions.
1.17 "QUESTION TEMPLATE" means the general form of a question stored
in the Ask Jeeves Knowledgebase that when associated with a
specific user query and processed by the Question Processing
Engine forms one or more Ask Jeeves Questions.
1.18 "SERVICE" means the Ask Jeeves navigation service using the
Question Processing Engine and the Ask Jeeves Knowledgebase as
it will appear on and/or within Alta Vista.
1.19 "SOFTWARE" means the software and documentation provided to
Compaq by Ask Jeeves in connection with implementing the Service
on Alta Vista platforms meeting the technical specifications set
forth in Exhibit A.
2. DESCRIPTION OF THE SERVICE.
a. ASK JEEVES OBLIGATIONS.
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
2.
<PAGE>
(1) SERVICE AND KNOWLEDGEBASE. Ask Jeeves will provide Compaq with
the Software, the Ask Jeeves Knowledgebase (and regular updates
to the Ask Jeeves Knowledgebase) and technical support as may be
needed for Compaq to implement the Service on Alta Vista.
(2) EDITORIAL CONTROL OF ASK JEEVES KNOWLEDGEBASE. Ask Jeeves will
define the content of the Ask Jeeves Knowledgebase, including
the determination of what constitutes appropriate questions and
answers. Compaq may request that the Ask Jeeves Knowledgebase
Answer Templates [*]. Such [*] Assayer Links are referred to as
"AV Answer Links". Ask Jeeves and Compaq will cooperate to
develop a formal process to accept and process AV Answer Links
including reasonable limits on the number of AV Answer Links
processed in a given time period and the amount of labor
involved (including the labor to maintain the AV Answer Links).
b. COMPAQ OBLIGATIONS. Compaq will configure and operate the
Service on Alta Vista. Compaq's operation of the Service on
Alta Vista will be done in a manner that does not reflect
negatively on Ask Jeeves or the functionality of the Service.
3. LICENSE
a. GRANT OF LICENSE. Upon receipt of the fees set forth in Section
4, below, and subject to the terms and conditions of this
Agreement, Ask Jeeves grants Compaq a [*], worldwide,
nontransferable, license for the duration of this Agreement
(including any extensions) to use, reproduce, store, distribute
and display the information, data, content, Software or other
intellectual property provided by Ask Jeeves to Compaq, for the
sole purpose of providing the Service.
Ask Jeeves further grants to Compaq a [*], non-transferable
worldwide license to publicly perform and publicly display the
Service or other intellectual property provided by Ask Jeeves at
trade shows, exhibitions, and to prospective Customers, as long
as such performance or display is of the Service as implemented
on Alta Vista.
b. LICENSE RESTRICTIONS. Except as specifically granted in this
Agreement, Ask Jeeves owns and retains all right, title and
interest in all information, data, content, software or other
intellectual property provided by Ask Jeeves to Compaq in
connection with the Service. This Agreement does not transfer
ownership rights of any description in Ask Jeeves' intellectual
property to Compaq or to any other third party. Compaq will
install, reproduce and render the Service operational only for
the purposes of implementing it on Alta Vista. Compaq agrees
not to modify, reverse engineer or decompile any intellectual
property of Ask Jeeves, or to intentionally create derivative
works based on such intellectual property. Compaq agrees not to
distribute the Service to any person or entity other than as
contemplated by this Agreement or to make any other use of the
Service. Compaq agrees to display Ask Jeeves' copyright and
trademark notices on the Software and Service as stated in
Section 11.b. "Copyright Notice" and to take other steps
necessary to protect Ask Jeeves' intellectual property rights as
specified within Section 12.2 "Confidentiality."
c. COMPAQ RIGHTS. Except as otherwise stated in this Agreement,
Ask Jeeves shall [*].
4. PAYMENT. In consideration for providing the Service, Compaq will pay
Ask Jeeves as follows:
a. PER CLICK FEE.
(1) for the [*] per Annual Period, Compaq will pay Ask
Jeeves at a Click Rate Fee of [*]:
(2) for all Clicks in excess of [*] per Annual Period,
Compaq will pay Ask Jeeves at a Click Rate Fee of [*].
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
3.
<PAGE>
(3) In the event that the actual number of Clicks exceeds
the actual Number of Queries in any given calendar
month, then Ask Jeeves will be paid based on the [*]
that month.
b. MINIMUM FEE PAYMENT. Compaq will pay Ask Jeeves a "Minimum Fee"
of [*] per Quarterly Period, with the first payment to be made
no later than [*] after the Launch Date and the subsequent
payments to be made on the [*] thereafter. If the [*] of the
end of such Quarterly Period. If the [*] to Compaq. Provided,
however, that the Minimum Fee may be adjusted on a calendar
prorated basis as set forth in subsection 4.f., below.
c. ANSWER LINK REVENUES. In addition to the payments described in
2.a and 2.b., above. Compaq and Ask Jeeves agree that they will
share in any Answer Link Revenue which may occur as follows:
(1) for all Answer Link Revenue resulting from Answer Link
Relationships established by Compaq, Compaq will [*] of
such Answer Link Revenues and will pay Ask Jeeves [*];
(2) for all Answer Link Revenues resulting from Answer Link
Relationships established by Ask Jeeves, Ask Jeeves will
[*] of the Answer Link Revenues and will pay Compaq [*].
(3) In the case [*].
(4) Compaq shall have the right to market and establish
Answer Link Relationships associated with AV Answer
Links and Ask Jeeves shaft have the right to market and
establish Answer Link Relationships associated with AJ
Answer Links. Either party may assign the other the
right to market and establish Answer Link Relationships
associated with a specified portion of its Answer Links.
d. TAXES. All fees and payments stated herein [*].
e. AUDIT RIGHTS. Each party agrees that it will keep, for a
minimum of [*], proper records and books of account relating to
its activities under this Agreement. Once every [*], either
party may inspect the accounting records of the other party to
verify, reports and/or payment amounts. Any such inspection
will be conducted in a manner that does not unreasonably
interfere with the inspected party's business activities. Such
inspection shall be performed by an independent accounting firm
chosen and compensated by the requesting party, for purposes of
audit. Such accounting firm shall be required to sign an
agreement protecting the party's confidential information and
shall be authorized to report only the amount of royalties due
and payable for the period requested. The inspected party [*]
disclosed by the audit. Such inspection shall be at the [*];
however, if the audit reveals overdue payments [*] of the
payments owed to date, the [*], and the inspecting party, [*]
period. Each party shall upon written request, during normal
business hours, but not more frequently than once each calendar
year, provide access to such accounting records.
f. ADJUSTMENT TO PAYMENTS
In the event that the Software licensed under this Agreement
[*], and Ask Jeeves is unable to correct such problems after
written notice and the opportunity to cure as set forth in
Section 5.b (2), than Compaq may terminate this Agreement
and adjust on a prorated calendar basis the [*] payable to Ask
Jeeves.
5. TERM AND TERMINATION.
a. TERM. The term (the "Term") of the Agreement is two (2) years
from the Effective Date. The Agreement will renew automatically
for additional one (1) year terms (a "Renewal Term") unless
either party notifies the other m writing at least ninety (90)
days before the expiration of the Term or any Renewal Term of
its desire to terminate the Agreement.
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
4.
<PAGE>
b. TERMINATION. Either party, as applicable, has the right, in
addition and without prejudice to any other rights or remedies,
to terminate this Agreement as follows:
(1) By Compaq as set forth in Section 4.f. above.
(2) By either party, upon [*] written notice, in the event
that the either party fails to pay the amounts due to
the other party, pursuant to this Agreement;
(3) By either party, for any material breach of this
Agreement, other than the failure to make payments under
this Agreement, that is not cured within [*] of receipt
by the party in default of a written notice specifying
the breach and requiring its cure;
(4) By either party, immediately upon receiving written
notice, if (a) all or a substantial portion of the
assets of the other party are transferred to an assignee
for the benefit of creditors, or to a receiver or a
trustee in bankruptcy, (b) a proceeding is commenced by
or against the other party for relief under bankruptcy
or similar laws and such proceeding is not dismissed
within sixty (60) days, or (c) the other party is
adjudged bankrupt.
c. ASK JEEVES RIGHTS ON TERMINATION. On termination, (a) all
rights granted to Compaq under this Agreement cease and Compaq
agrees to use all commercially reasonable efforts, which shall
in no event extend for more than [*] from the date of
termination, to cease all use and reproduction of the Ask Jeeves
Intellectual Property, and (b) Compaq will promptly return all
copies of the Ask Jeeves Intellectual Property to Ask Jeeves, or
destroy all copies in its possession. Ask Jeeves has and
reserves all rights and remedies that it has by operation of law
or otherwise to enjoin the unlawful or unauthorized use of the
Ask Jeeves Intellectual Property.
d. COMPAQ RIGHTS ON TERMINATION
(1) Ask Jeeves shall grant Compaq a fully paid up,
irrevocable, worldwide license to the Software in the
event that Compaq terminates this Agreement pursuant to
Section 5.b (4), above, and that Ask Jeeves, or a
trustee or receiver for Ask Jeeves, does not assume this
Agreement in the bankruptcy proceeding, with no
modification to existing terms. This license grant
shall not grant any right to future maintenance,
upgrades, enhancements or fixes.
(2) Upon material breach by Ask Jeeves, Compaq shall have
the right, at no additional cost, to continue to provide
the Service on Alta Vista until the earlier to occur of
(i) [*] or (ii) [*].
e. SURVIVAL FOLLOWING TERMINATION. Sections 4, 5, 8, 9, 10 and 12
will survive termination or expiration of this Agreement. In
addition, provisions of this Agreement which, by their nature,
are intended to remain in effect beyond the termination or
expiration of this Agreement, shall survive its termination or
expiration.
6. MAINTENANCE, UPGRADES AND SUPPORT. Ask Jeeves will provide maintenance
and support for the Service as follows:
a. MAINTENANCE. Ask Jeeves will provide bug fixes for the Software
and the Ask Jeeves Knowledgebase [*]. Non-bug fix support and
changes specifically requested by Compaq for use in connection
with the Service may be charged by Ask Jeeves to Compaq at the
then current Ask Jeeves' standard rates.
b. UPGRADES. For a period of time [*] with this Agreement and
consistent with Ask Jeeves standard distribution practices, Ask
Jeeves will provide Compaq with periodic upgrades, enhancements,
modifications, versions to the Software and the Ask Jeeves
Knowledgebase (including beta versions, if appropriate [*]) to
Compaq. The periodic upgrades, enhancements, modifications,
versions shall automatically become part of the licensed
Software for purposes of this Agreement.
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
5.
<PAGE>
The rights to, said upgrades, enhancements, modifications,
versions shall remain with Ask Jeeves, and provided however,
that said rights shall not exceed the granting party's
ability to grant such rights.
c. TECHNICAL SUPPORT. Ask Jeeves will provide Compaq with standard
technical support during normal business hours. Ask Jeeves
technical support will be available through pager contact on a
24x7 basis in the event of a major software failure. Ask Jeeves
will work with Compaq as it relates to a catastrophic failure,
or to correct software failures or errors that prevent the
Software from functioning, on the following basis:
(1) Severity 1 - catastrophic failure, an emergency,
condition that causes critical impact and that makes the
performance or continued performance of any one or more
functions impossible. Ask Jeeves will use its [*] to
resolve technical issues of Severity 1 [*] and will
develop and communicate to Compaq a resolution plan
within [*].
(2) Severity 2 - is a condition which significantly affects
and makes the performance or continued performance of
any one or more functions difficult and which cannot be
circumvented or avoid on a temporary basis by the user.
Ask Jeeves will use its [*] to resolve technical issues
of Severity 2 within [*] and will develop and
communicate to Compaq a resolution plan within [*].
7. REPORTS AND REPORTING. Ask Jeeves will provide Compaq with user log
analysis tools that will allow Compaq to determine the number of
questions asked and answered in a given period as well as determine the
number of times a given Answer Template was selected (by both total
count and percentage.) Alta Vista will, on a weekly basis, provide Ask
Jeeves with copies of its Service user logs for Ask Jeeves' internal
use.
8. INFRINGEMENT INDEMNITY BY ASK JEEVES. Ask Jeeves agrees to indemnify,
defend and hold Compaq harmless from and against any claims, actions or
demands alleging that all or any part of the Ask Jeeves Intellectual
Property infringes any United States patent, copyright, trademark, or
other United States intellectual property right of a third party. If
use of the Ask Jeeves Intellectual Property is permanently enjoined for
any reason, Ask Jeeves, at Ask Jeeves' option, and in its sole
discretion, may (a) modify the Ask Jeeves Intellectual Property so as to
avoid infringement; (b) procure the right for Compaq to continue to use
and reproduce the Service; or (c) terminate this Agreement, in which
case Compaq shall be given a refund of all Minimum Fees actually paid to
the date of termination as its sole and exclusive remedy. Ask Jeeves
shall have no obligation under this Section 8 for or with respect to
claims, actions or demands alleging infringement that arise solely as a
result of (i) the combination of noninfringing items supplied by Ask
Jeeves with any items not supplied by Ask Jeeves, (ii) modification of
the Ask Jeeves Intellectual Property by Compaq or without the
authorization or consent of Ask Jeeves, or (iii) continued alleging
infringing activity by Compaq after Compaq has been notified Ask Jeeves'
decision to terminate under subsection 8 (c), above.
9. OTHER INDEMNITY. Each party (the "Indemnifying Party") shall indemnify
the other party (the "Indemnified Party") against any and all claims,
losses, costs and expenses, including reasonable attorneys' fees, which
the Indemnified Party may incur as a result of claims in any form by
third parties arising from: (a) the Indemnifying Party's acts, omissions
or misrepresentations, or (b) the violation of any third party
proprietary right by the Indemnifying Party's domain name, software or
any content provided by the Indemnifying Party for use on the
Indemnified Party's servers. The Indemnified Party shall (i) give the
Indemnifying Party notice of the relevant claim, (ii) cooperate with the
Indemnifying Party, at the Indemnifying Party's expense, in the defense
of such claim, and (iii) give the Indemnifying Party the right to
control the defense and settlement of any such claim, except that the
Indemnifying Party shall not enter into any settlement that affects the
Indemnified Party's rights or interest without the Indemnified Party's
prior written approval. The Indemnified Party shall have the right to
participate in the defense at its expense.
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
6.
<PAGE>
10. WARRANTIES, DISCLAIMER AND LIMITATIONS.
a. WARRANTY. Ask Jeeves warrants that (a) it holds the necessary
rights to provide and permit the use of the Service (b when the
Service is delivered to Compaq, it will be of substantially the
same quality as the service operated by Ask Jeeves at
askjeeves.com; (c) the media containing the Software will be
free from defects for a period of [*] from the date of delivery
to Compaq, provided that this warranty does not cover defects
due to Compaq's misuse of the media or an accident subsequent to
delivery, to Compaq; and (d) [*].
b. DISCLAIMER. THE WARRANTIES SET FORTH IN SECTION 10.a. ARE IN
LIEU OF, AND THIS AGREEMENT EXPRESSLY EXCLUDES, ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, ORAL OR WRITTEN, INCLUDING
WITHOUT LIMITATION, (a) ANY WARRANTY THAT THE SOFTWARE IS
ERROR-FREE, WILL OPERATE WITHOUT INTERRUPTION, OR IS
COMPATIBLE WITH ALL EQUIPMENT OR SOFTWARE CONFIGURATIONS;
(b) ANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY; AND
(c) ANY AND ALL WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE.
c. LIMITATION ON LIABILITY. EXCEPT IN THE EVENT OF A BREACH OF A
LICENSE GRANT BY LICENSEE, NEITHER PARTY SHALL BE LIABLE FOR
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS
(HOWEVER ARISING, INCLUDING NEGLIGENCE) ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT. EXCEPT IN THE EVENT OF A BREACH
OF A LICENSE GRANT, A FAILURE TO PAY FEES, OR AN INDEMNITY
CLAIM, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER
PARTY IN AN AMOUNT GREATER THAN THE AMOUNTS ACTUALLY PAID BY
COMPAQ TO ASK JEEVES UNDER THIS AGREEMENT.
11. PROMOTION, PUBLICITY AND COPYRIGHT NOTICE.
a. PROMOTION ON ALTA VISTA. Compaq agrees that it will place a
Question Answering Powered by Ask Jeeves," "Question Answering
Technology by Ask Jeeves," "Question Answering by Ask Jeeves" or
other reference mutually agreed upon by. the parties on the
results page of the Service. [*] over the placement, size,
font, and color of the reference. However, Compaq agrees that
the reference will be clearly readable to an average consumer
user.
b. COPYRIGHT NOTICE. Compaq also agrees to place "Question and
Answer Templates copyrighted by Ask Jeeves, Inc., 1996-98, all
rights reserved" notice on its copyright notice page in a manner
similar to the other copyright notices on that page. In no
event shall the notice "Question and Answer Templates
copyrighted by Ask Jeeves" be more prominately displayed that
that of the Compaq or Alta Vista copyright notices.
C. PRESS RELEASES. The parties may issue press releases announcing
the Service. The parties agree that any such press releases
shall acknowledge that the Service is based on technology
licensed from Ask Jeeves. Each party, agrees to obtain the
permission of the other, which shall not be unreasonably
withheld, BEFORE RELEASING PRESS RELEASES OR OTHER FORMS OF
PROMOTION THAT MENTION THE OTHER IN REGARDS TO THIS AGREEMENT,
except that each party may use specific information previously
approved for public release by the other, without further
approval. Neither party shall disclose the terms and conditions
of this Agreement to any, third party, including, but not
limited to, any information relating to the royalties or fees
paid by Compaq to Licensor pursuant to this Agreement. except
as required by law.
12. GENERAL PROVISIONS.
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
7.
<PAGE>
12.1 GOVERNING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of New York without giving
effect to conflict of laws principles. Both parties agree that
the Agreement shall be interpreted as if the actions within the
Agreement where performed within the State of New York.
12.2 CONFIDENTIALITY. All disclosures of proprietary and/or
confidential information in connection with this Agreement or
the transaction contemplated by this Agreement shall be governed
by the terms of the Corporate Disclosure Agreement previously
executed by the parties, a copy of which is attached as Exhibit
B to this Agreement.
12.3 ASSIGNMENT. Neither party may assign this Agreement, or any
part of this Agreement, without the prior written consent of the
other party., except that this Agreement may be assigned by
either party, without the other party's consent, to an entity
acquiring all or substantially all of the outstanding shares of
the assigning party's stock or all or substantially all of the
assigning party's assets.
[*].
12.4 SEVERABILITY; HEADINGS. If any provision herein is held to be
invalid or unenforceable for any reason, the remaining
provisions will continue in full force without being impaired or
invalidated in any way. Headings are for reference purposes
only and in no way define, limit, construe or describe the scope
or extent of such section.
12.5 FORCE MAJEURE. If performance hereunder is prevented,
restricted or interfered with by any act or condition whatsoever
beyond the reasonable control of a party, the party, so
affected, upon giving prompt notice to the other party, shall be
excused from such performance to the extent of such prevention,
restriction or interference.
12.6 INDEPENDENT CONTRACTORS. The parties are independent
contractors, and no agency, partnership, joint venture,
employee-employer or franchisor-franchisee relationship is
intended or created by this Agreement. Neither party shall make
any warranties or representations on behalf of the other party.
12.7 COMPLIANCE WITH LAWS. At its own expense, each party shall
comply with all applicable laws, regulations, rules, ordinances
and orders regarding its activities related to this Agreement.
12.8 NOTICE. Any notices hereunder shall be given to the appropriate
party, at the following addresses or at such other address as
the party shall specify, in writing.
For Ask Jeeves: For Compaq:
Ask Jeeves, Inc. Compaq Computer Corporation
918 Parker Street 20555 SH 249
Berkeley, CA 94710 Houston. TX 77070
Attn: Robert Wrubel, President Attn: Law Department
Notice shall be deemed given: upon personal delivery; if sent
by fax, upon confirmation of receipt; or if sent by certified or
registered mail, postage prepaid, 5 days after the date of
mailing.
12.9 ENTIRE AGREEMENT, AMENDMENT AND WAIVER. This Agreement sets
forth the entire understanding and agreement of the parties, and
supersedes any and all oral or written agreements or
understandings between the parties, as to the subject matter of
this Agreement. It may be changed only by a writing signed by
both parties. The waiver of a breach of any provision of this
Agreement will not operate or be interpreted as a waiver of any
other or subsequent breach.
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
8.
<PAGE>
12.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together constitute one and the same agreement. A
facsimile copy of this Agreement, including the signature pages,
will be deemed to be an original.
IN WITNESS WHEREOF, ASK JEEVES, INC. and COMPAQ COMPUTER CORPORATION have
executed this License Agreement as of the Effective Date.
ASK JEEVES, INC. COMPAQ COMPUTER CORPORATION
By: /s/ R. W. Wrubel By: /s/ Kurt Losart
---------------------------- ------------------------------
Name: R. W. Wrubel Name: Kurt Losart
------------------------- ----------------------------
Title: President Title: VP, Internet Services
------------------------- ----------------------------
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
9.
<PAGE>
EXHIBIT A
[*]
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
10.
<PAGE>
EXHIBIT B
[*]
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
11.
<PAGE>
[ ]= CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
12.
<PAGE>
[ASK JEEVES LOGO]
May 22, 1998
Robert Warren Wrubel
365 West California Boulevard
Pasadena, CA 91105
Dear Rob,
I am pleased to offer you the position of President of Ask Jeeves, Inc. (the
"Company"). Your first day of employment will be May 27, 1998. You agree to
spend at least 2 days per week at the Company during your first two weeks of
employment, and you will begin full time work the week of June 8. You will
report directly to me.
Your initial compensation will be $180,000, which will be paid semi-monthly in
accordance with the Company's normal payroll procedures. You will be awarded
stock options as detailed below and will also be eligible to participate in any
employee benefit programs that are, or may become, available to an employee in a
key managerial position at Ask Jeeves. In addition, should you so request
within six months of your first day of employment, the Company will arrange for
you to obtain an unsecured loan of $75,000, with a term of 90 days, at an annual
interest rate of 7.50%.
Upon your employment you will be awarded 1,350,000 options to purchase stock in
the Company pursuant to the Company incentive stock option plan (the "Plan"),
vesting over a period of four years, with 25% of the shares vesting on May 27,
1999, and the remaining shares vesting in 36 equal monthly installments
thereafter, expiring May 26, 2008, at a price of 23 cents per share. In the
event the Company is acquired before your stock options have fully vested, all
unvested options will vest immediately prior to the closing of that transaction,
as set forth in the Stock Option Agreement (the "Agreement") issued to you
pursuant to the Plan. A copy of the Agreement is enclosed for your review.
You will be given additional options and promoted to CEO when the Company
reaches certain financial and business objectives. Within 30 days of your
arrival, we will mutually agree on a set of criteria (which will likely include
factors such as revenues, site traffic and Service Agent sales) which will
trigger such promotion and issuance of additional options. The number of
additional options will be set to provide you with 7% ownership in the Company
after the first major round of institutional financing- The issuance of such
additional options shall be contingent upon the Company successfully completing
such major institutional financing.
The Company provides health insurance benefits for employees and their
dependents through PacifiCare. In the case of key managerial employees, the
Company pays the premiums for the employee and for all of the employee's
dependents. I will send additional information concerning the health insurance
plan under separate cover. I also suggest that you talk to our insurance
broker, Douglas Shimada of A/S Financial Services (510/893-5331), about any
specific coverage issues.
Finally, the Company will pay up to $15,000 in relocation expenses for yourself
and your family.
You should be aware that your employment with the Company is for no specified
period and constitutes at will employment. As a result, you are free to resign
at any time, for any reason or for no reason. Similarly, the Company is free to
conclude its employment relationship with you at any time, with or without
cause.
1.
<PAGE>
For purposes of federal immigration law, you will be required to provide to the
Company documentary evidence of your identify and eligibility for employment in
the United States. Such documentation must be provided to us within three (3)
business days of your date of hire or our employment relationship with you may
be terminated.
I have enclosed our Confidential Information and Invention Assignment Agreement.
If you accept this offer, please return to me a signed copy of this agreement.
In the event of any dispute or claim relating to or arising out of our
employment relationship, you and the Company agree that all such disputes shall
be fully and finally resolved by binding arbitration conducted by the American
Arbitration Association in Santa Clara County, California. However, we agree
that this arbitration provision shall not apply to any disputes or claims
relating to or arising out of the misuse or misappropriation of the Company's
trade secrets or proprietary information.
To indicate your acceptance of the Company's offer, please sign and date this
letter in the space provided below and return it to me. A duplicate original is
enclosed for your records. This letter, along with the Confidential Information
and Invention Assignment Agreement between you and the Company, sets for the
terms of your employment with the Company and supersedes any prior
representations or agreements, whether written or oral. This letter may not be
modified or amended except by a written agreement signed by the Company and by
you.
Rob, we are proud and excited to be working with you at Ask Jeeves, Inc. We
look forward to a long and mutually rewarding relationship.
Sincerely,
/s/ Roger A. Strauch
- --------------------------
Roger A. Strauch
Chairman and CEO
Enclosures
Accepted:
/s/ Robert W. Wrubel Date: May 22, 1998
- --------------------------- --------------------
Robert Warren Wrubel
2.
<PAGE>
ASK JEEVES, INC.
COMMON STOCK AND WARRANT TO PURCHASE COMMON STOCK
PURCHASE AGREEMENT
_________________________
AUGUST 20, 1999
<PAGE>
COMMON STOCK AND WARRANT TO PURCHASE COMMON STOCK
PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT TO PURCHASE COMMON STOCK PURCHASE
AGREEMENT (the "Agreement") is entered into effective as of August 20, 1997,
by and between ASK JEEVES, INC., a California corporation (the
"Corporation"), and those investors who may become parties to this agreement
as contemplated in Section 2.3 below and set forth in Schedule 1 attached
hereto from time to time, including, but not limited to, ROGER STRAUCH, an
individual ("Strauch"), and DANIEL MILLER ("Miller"), an individual (together
with Strauch, the "Initial Purchasers") (and each such party individually, a
"Purchaser" and collectively the "Purchasers"); THE RODA GROUP VENTURE
DEVELOPMENT COMPANY, LLC, a Delaware limited liability company ("Roda"); and
DAVID WARTHEN, an individual ("Warthen").
RECITALS:
A. The Corporation is in the business of Internet navigation
products and services.
B. The Purchasers are interested in investing capital in the
Corporation and the Corporation desires to obtain capital from the Purchasers
on the terms and conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the above recitals and the mutual
agreements, covenants, representations and warranties contained below in
this. Agreement, the parties agree as follows:
I. DEFINITIONS.
1.1 "Agreement" means, and the words "herein", "hereof",
"hereunder" and words of similar import refer to, this instrument and any
amendments hereto.
1.2 "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute which replaces said Exchange Act and
the rules and regulations of the SEC thereunder, all as the same shall be in
effect at the time.
1.3 "Securities Act" means the Securities Act of 1933, as
amended, or any similar Federal statute which replaces such Securities Act
and the rules and regulations of the SEC thereunder, all as the same shall be
in effect at the time.
1.4 "Party" or "parties" means the Corporation and/or any
Purchaser.
1.5 "Person" means any individual, corporation; trust,
partnership, association, or other entity.
1.
<PAGE>
1.6 "SEC" means the Securities and Exchange Commission.
II. SALE AND ISSUANCE OF COMMON STOCK AND COMMON STOCK WARRANTS.
2.1 PURCHASE AND SALE OF COMMON STOCK. The Corporation agrees to
sell to each Purchaser meeting the suitability standards set forth in Article
VI, and, subject to the terms and conditions set forth herein, each such
Purchaser (or it's assigns who meet such suitability standards) agrees to
purchase from the Corporation, the Common Stock set forth opposite its name
in Schedule 1 attached hereto at a per share purchase price of $0.6922 and in
the amounts and on or before the dates set forth therein.
2.2 PURCHASE AND SALE OF COMMON STOCK WARRANTS. Simultaneously
with the sale and purchase of each two shares of Common Stock, the
Corporation shall issue to each Purchaser a six month warrant in form and
substance attached hereto as Exhibit A ("Common Stock Warrant") to purchase
one share of the Corporation s Common Stock at an exercise price of $0.6922
per share.
2.3 ISSUANCE AND PAYMENT. The initial closing of the sale and
purchase of the Common Stock and Common Stock Warrants will take place at the
offices of PEZZOLA & REINKE, APC, 1999 Harrison Street, Suite 1300, Oakland,
California 94612, at 10:00 a.m. on August 20, 1997, or such other time and
place as the parties may mutually agree (the "Initial Closing"). At each
"Closing" (as defined in Section 2.4), the Corporation will deliver to each
Purchaser a duly issued and executed certificate of the Common Stock and duly
issued and executed Common Stock Warrant to be purchased by it, registered in
the Purchaser's name, against payment of the purchase price thereof as set
forth in Schedule 1, by certified check, by wire transfer of immediately
available funds, or by any combination of the foregoing.
2.4 SUBSEQUENT SALE OF COMMON STOCK AND COMMON STOCK WARRANT.
The Corporation may sell up to $100,000of additional Common Stock and
corresponding Common Stock Warrants to such additional persons as the
Corporation may also determine for up to sixty (60) days after the Initial
Closing upon substantially the same terms and conditions as those contained
herein, and each such person shall have the rights and obligations of a
Purchaser hereunder. The Corporation shall notify the Initial Purchasers of
any such sales. Initial Purchasers shall have thirty (30) days after such
notice to purchase collectively an equal amount of such additional Common
Stock and corresponding Common Stock Warrants on the same terms and
conditions. The Initial Closing and each subsequent closing, whether under
Section 2.3 or this Section 2.4 shall be referred to herein as a "Closing."
III. CONDITIONS OF THE PURCHASERS' OBLIGATIONS. The obligation of each
Purchaser to consummate the transactions contemplated herein at a Closing is
subject to the satisfaction on or before the date of such Closing of the
following conditions, all or any of which may be waived in writing by each
Purchaser as to its obligation to consummate the transaction so contemplated:
3.1 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of the Corporation contained in this Agreement, including
without limitation those in Article V, and in
2.
<PAGE>
any other documents delivered by the Corporation to the Purchasers at or
prior to the Initial Closing will be true and correct at and as of the date
of the Initial Closing as though then made, except to the extent of changes
caused by the transactions expressly contemplated herein, and the Corporation
shall have delivered a certificate executed by the President of the
Corporation to such effect.
3.2 CLOSING DOCUMENTS. The Corporation will have delivered to
each Purchaser, copies of the following documents:
(a) an Officer's Certificate from the Corporation dated the date
of the Initial Closing, stating that all the preconditions specified in this
Article III have been satisfied;
(b) correct and complete copies of the resolutions adopted by the
board of directors certified to such effect on the date of the Initial
Closing by the President of the Corporation authorizing the execution,
delivery and performance of this Agreement and any other agreements
contemplated hereby, and authorizing all other transactions contemplated by
this Agreement;
(c) correct and complete copies of the Corporation's Bylaws and
Articles of Incorporation as approved by the board of directors and
shareholders of the Corporation, all certified to such effect on the date of
the Initial Closing by the President of the Corporation and;
(d) a good standing certificate dated within thirty (30) days of
the Initial Closing issued by the California Secretary of State.
3.3 PROCEEDINGS. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby to be
consummated at or prior to the Initial Closing and all documents incident
thereto or required to be delivered prior to or at the Closing will be
satisfactory inform and substance to each Purchaser.
3.4 EXAMINATION OF BOOKS AND RECORDS. The Corporation shall have
made available to each Purchaser (who may appoint representatives to perform
such inspection) during normal business hours, for inspection and copying,
all of the Corporation's books, records, contracts and documents of or
relating to the Corporation.
3.5 AUTHORIZED NUMBER OF BOARD MEMBERS; INITIAL OFFICERS. The
authorized number of members of the board of directors of the Corporation
shall be between four (4) and seven (7), with the initial number of
authorized directors to be established at four (4) at the Initial Closing,
with Garrett Gruener, David Warthen, Roger Strauch and Dan Miller as the
directors as of the Initial Closing; provided, however, that if (i) the
Initial Purchasers have not collectively invested at least $333,334 on, or
prior to, the Second Closing (as identified in Schedule 1 ) or if (ii) the
Initial Purchasers have not collectively invested at least $500,000 on, or
prior to, the Third Closing (as identified in Schedule 1) then Roger Strauch
and Dan Miller shall, at the request of Garrett Gruener and David Warthen,
immediately resign as Directors of the Corporation. At the Closing, the
officers of the Corporation shall be as follows:
3.
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
Roger Strauch Chairman of the Board;
Dan Miller President
David Warthen Executive Vice President; Chief Technical Officer
David Warthen Secretary
</TABLE>
3.6 SUITS/PROCEEDINGS. No action, suit, proceeding or
investigation by or before any court, administrative agency or other
governmental authority shall have been instituted or threatened to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
3.7 AUTHORIZATION OF ISSUANCE. The Corporation's board of
directors will have authorized the issuance and sale by it to the Purchasers
pursuant to this Agreement of the Common Stock and Common Stock Warrants.
3.8 RESERVATION OF STOCK. The Corporation's board of directors
will have reserved sufficient shares of its authorized but unissued Common
Stock for the exclusive purpose of issuance upon exercise of the Common Stock
Warrants.
3.9 CAPITAL OUTSTANDING. As of the Initial Closing (but without
giving effect thereto), the Corporation will have a total of no more than
that number of shares of Common Stock issued and outstanding as listed and
described in Section 5.2. As of the Initial Closing, the Corporation will
have no outstanding options, convertible securities or warrants other than as
listed and described on Schedule 5.
IV. CONDITIONS OF THE CORPORATION'S OBLIGATIONS.
The obligation of the Corporation to issue the Common Stock and
Common Stock Warrants with respect to any one Purchaser is subject to the
satisfaction on or before the date of each Closing of the following
conditions with respect to such Purchaser, all or any of which may be waived
in writing by the Corporation:
4.1 PERFORMANCE. Each Purchaser shall have duly performed and
complied in all material respects with each of the terms, agreements and
conditions required by this Agreement to be performed or complied with by it
prior to or at the Closing.
4.2 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of each Purchaser contained in Article VI and in any other
documents delivered at or prior to the Closing shall be true and accurate on
and as of the Closing with the same effect as though made on and as of the
date of the Closing.
4.3 INSTRUMENTS AND DOCUMENTS. All instruments and documents
required to carry out under this Agreement or incidental thereto shall be
reasonably satisfactory to the Corporation and its counsel.
4.4 SUITS/PROCEEDINGS. No action, suit, proceeding or
investigation by or before any court, administrative agency or other
governmental authority shall have been instituted or threatened to restrain,
prohibit or invalidate the transactions contemplated by this Agreement.
4.
<PAGE>
V. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION.
Except as set forth on Schedule 5 attached hereto and incorporated
herein by reference, the Corporation hereby represents and warrants to each
Purchaser as of the date hereof and as of the Initial Closing as follows:
5.1 ORGANIZATION AND CORPORATE POWER. The Corporation is a
corporation duly organized,, validly existing and in good standing under the
laws of California and is qualified as a foreign corporation in all
jurisdictions in which the nature of its property owned or leased by it or
the conduct of its business requires such qualification, except for such
jurisdictions where the failure to so qualify would not individually or in
the aggregate materially and adversely affect the business, operations and
financial condition of the Corporation. The Corporation has all requisite
corporate power and authority necessary to own and operate its properties and
to carry on its business as now conducted and to enter into and to carry out
the provisions of this Agreement and the transactions contemplated hereby.
The Corporation has no subsidiaries or affiliated companies and does not
otherwise directly or indirectly control or own any other business entity.
5.2 CORPORATE CAPITALIZATION.
(a) AUTHORIZED CAPITAL STOCK. Immediately prior to the
Closing, the Corporation's authorized capital stock shall include only one
authorized class of capital stock, consisting solely of Three Million
(3,000,000) shares of Common Stock. Immediately prior to the Initial Closing
(without taking into consideration the Initial Closing), the Corporation will
have a total of Nine Hundred Ninety-one Thousand Six Hundred Sixty-six
(991,666) shares of Common Stock outstanding. All such issued and
outstanding shares have been duly authorized and validly issued, are fully
paid and nonassessable.
(b) OUTSTANDING OPTIONS/WARRANTS/CONVERTIBLE NOTES.
There are also issued and outstanding an aggregate of 91,834 stock options as
more fully set forth on Schedule 5. There are otherwise no outstanding
preemptive or other rights, options, warrants, conversion rights or
agreements for the purchase or acquisition from the Corporation of any shares
of its capital stock, except as set forth in Schedule 5. All such securities
have been duly authorized and validly issued.
(c) DIVIDENDS. The Corporation does not have any
declared and unpaid dividends (whether payable in cash, securities or other
consideration).
5.3 CORPORATE COMPLIANCE; AUTHORIZATION.
(a) COMPLIANCE WITH INSTRUMENTS. The Corporation is not in violation,
breach or default of any term of its Articles of Incorporation or Bylaws, or
in any respect, of any material term or provision of any mortgage, indenture,
contract, agreement, instrument, judgment, decree, order, statute, rule or
regulation applicable to or binding upon the Corporation.
(b) AUTHORIZATION. All corporate action on the part of
the Corporation, its officers, directors and shareholders, necessary for the
sale and issuance of the Common Stock and Common Stock Warrants and any
common stock issuable upon exercise of the Common
5.
<PAGE>
Stock Warrants and the performance of the Corporation's obligations hereunder
has been taken or will be taken prior to the Initial Closing. This
Agreement, and the Common Stock Warrant are each legal, valid and binding
obligations of the Corporation enforceable in accordance with their
respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, moratorium or other laws and equitable principles relating to or
affecting the enforcement of creditors' rights in general and by general
principles of equity.
5.4 TITLE TO PROPERTY. The Corporation has good and marketable
title to all of its properties and assets free and clear of restrictions or
conditions on transfer or assignment and free and clear of mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights of way,
covenants, conditions or restrictions, except for current taxes and
assessments not delinquent and for matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with
the present or intended use of any of these assets, nor materially impair the
business or proposed operation of the Corporation.
5.5 PATENTS AND OTHER INTANGIBLE RIGHTS. To the best knowledge
of the Corporation, the Corporation has good title (without any unlawful
misappropriation) to all patents, if any, copyrights, trade names and service
marks covering the Corporation's existing technology and proprietary property
rights, including but not limited to, the trademarks listed on Schedule 5,
the software listed on Schedule 5 (the "Software") and any invention, trade
secrets, or intellectual property rights (collectively the "Trade Secret
Property Rights"), or adequate licenses and rights to use the Trade Secret
Property Rights of others on terms deemed favorable by the Corporation, which
are necessary for the conduct of the business of the Corporation as now
conducted or as proposed to be conducted. To the best knowledge of the
Corporation, the Company is not infringing upon or otherwise acting adversely
to the right or claimed right of any person with respect to any of the
foregoing. To the best knowledge of the Corporation, no officer, director or
employee of the Corporation is under any restriction, whether contractual, or
by virtue of previous employment or otherwise, that would prevent him from
performing his duties for the Corporation or prevent the Corporation from
using the Trade Secret Property Rights. To the best knowledge of the
Corporation, no employee or consultant of the Corporation is in violation of
any term of any proprietary information or confidentiality agreement with the
Corporation. The development of the Software has not been performed by any
third party who has not assigned his copyright rights to the Corporation.
The Software (i) is not jointly owned with any other party; and (ii) to the
best knowledge of the Corporation, is free and clear of restrictions or
conditions on transfer or assignment and free and clear of mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights of way,
covenants, conditions or restrictions, except for current taxes and
assessments not delinquent and for matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with
the present or intended use of any of these assets, nor materially impair the
business or proposed operation of the Corporation.
5.6 LITIGATION. There are no (a) actions, proceedings or
investigations pending or any threat thereof, or verdicts or judgments
entered against the Corporation before any court or before any administrative
agency or officer which might result, individually or in the aggregate, in
any material adverse change in the business, properties and condition,
financial or otherwise, of the Corporation or (b) violations by the
Corporation of any foreign, federal, state or local laws, regulations or
orders.
6.
<PAGE>
5.7 TAX RETURNS AND PAYMENTS. The Corporation has not yet filed
its federal or state income tax returns for its first fiscal year ended May
31, 1997, but will file such returns in a timely manner.
5.8 EMPLOYEE COMPENSATION/LABOR RELATIONS. The Corporation has
no knowledge of any attempt to organize the employees of the Corporation, and
the Corporation is not a party to any collective bargaining agreement. There
are no strikes, work stoppages, grievance proceedings, or other material
controversies pending or to the knowledge of the Corporation threatened
between the Corporation and any employees engaged in the business of the
Corporation or any union or collective bargaining unit representing such
employees. The Corporation has complied in all material respects with all
laws relating to the employment of labor, including provisions relating to
wages, hours, equal opportunity, collective bargaining, and payment of Social
Security and other taxes.
5.9 MATERIAL LICENSES, AGREEMENTS, RELATED PARTY AGREEMENTS.
Except as set forth in Schedule 5, the Corporation is not a party to, nor is
its property bound by, (a) any agreement (i) requiring the performance by the
Corporation of any obligation for a period of time extending beyond one year
from the Closing, or (ii) calling for or which could result in the receipt of
consideration or payment of more than $10,000 individually or $50,000 in the
aggregate, or (b) any agreement or understanding between the Corporation and
any shareholder, officer, director, or employee of the Corporation or
relatives or spouses thereof other than employee compensation, employee stock
purchase and benefits agreements entered into in the ordinary course of
business.
5.10 FINANCIAL STATEMENTS. The Corporation has delivered to each
Purchaser the financial statements identified on Schedule 5 (collectively,
the "Financial Statements"). The Financial Statements are true, complete and
correct in all material respect and accurately set out and describe the
financial condition and operating results of the Corporation as of the dates,
and for the periods, indicated thereon.
5.11 FEES, COMMISSIONS AND EXPENSES. The Corporation has made no
agreements or arrangements for brokerage commissions, finders' fees or
similar compensation in connection with the transactions contemplated by this
Agreement.
5.12 GOVERNMENTAL CONSENT, ETC. Except for applicable state blue
sky and Regulation D Form D filings, no consent, approval, order,
authorization, registration, qualification, designation, license, declaration
or filing with any federal, state or municipal authority is required on the
part of the Corporation in connection with consummation of the transactions
contemplated herein.
5.13 VALIDITY OF ISSUANCE. The Common Stock issuable upon
exercise of the Common Stock Warrants to be purchased and sold pursuant to
this Agreement, will, when issued, sold, and delivered, be duly and validly
issued, fully paid and nonassessable, and will be free and clear of any liens
or encumbrances caused or created by the Corporation and, assuming the
accuracy and completeness of the Purchaser's representations hereunder, will
have been issued in compliance with all applicable state and federal
securities laws.
7.
<PAGE>
5.14 LIABILITIES. The Corporation does not have any debt,
liability or obligation of any nature, whether accrued, absolute or
contingent, and whether due or to become due, that is not reflected or
reserved against in the Financial Statements, except for those that may have
been incurred after the date of the Financial Statements in the ordinary
course of business.
5.15 BOOKS AND RECORDS. The financial records and books of
account of the Corporation are complete and correct, and have been maintained
in accordance with good business practices and are fairly reflected in the
Financial Statements.
5.16 POWERS OF ATTORNEYS. The Corporation has no powers of
attorney outstanding.
5.17 FOREIGN CORRUPT PRACTICES ACT. Neither the Corporation nor,
to its best knowledge, any Director, officer, agent, employee or other person
associated with or acting on behalf of the Corporation has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or government
employee from corporate funds; or (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977.
5.18 REAL PROPERTY HOLDING CORPORATION STATUS. Since its date of
incorporation (and that of its earliest predecessor, if any) the Corporation
has not been a "United States real property holding corporation", as defined
in Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the
"Code") and in Section 1.897-2(b) of the Regulations thereto, and the
Corporation has filed with the Internal Revenue Service all statements, if
any, with its United States income tax returns which are required under
Section 1.897-2(h) of the Regulations.
5.19 ENVIRONMENTAL AND SAFETY LAWS. To the Corporation's best
knowledge, the Corporation is in compliance with all environmental laws and
all applicable statutes, laws or regulations relating to occupational health
and safety, except where the failure to so comply has not had and is not
reasonably likely to have a material adverse effect on the business,
financial condition or prospects of the Corporation. The Corporation has
not, since inception, received any written communication from a governmental,
quasi-governmental or regulatory department or authority, citizens' group or
director, officer or employee of the Corporation, alleging that the
Corporation is not in compliance with or has violated any environmental law
or any applicable statute, law or regulation relating to occupational health
and safety. The Corporation is not aware of any past or present actions,
activities, circumstances, conditions, events or incidents that could
reasonably be expected to form the basis of any environmental claim against
the Corporation.
5.20 CHANGES. Since July 31, 1997, there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Corporation from that reflected in the
Financial Statements, except changes in the ordinary course of business which
have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the assets,
properties, financial condition, operating results,
8.
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prospects or business of the Corporation (as such business is presently
conducted and as it is proposed to be conducted);
(c) any material change or amendment to a material
contract or arrangement of which the Corporation or any of its assets or
properties is bound or subject;
(d) any material change in any compensation arrangement
or agreement with any employee;
(e) any resignation or termination of employment of any
key officer or employee of the Corporation; or
(f) receipt of notice that there has been a loss of, or
material order cancellation by, any major customer of the Corporation.
5.21 SURVIVAL OF REPRESENTATIONS. All representations made by the
Corporation in or under this Agreement shall be true and accurate as of the
Initial Closing and shall survive the Initial Closing for a period of three
(3) years thereafter (except for those changes contemplated in and provided
for by this Agreement).
VI. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. As of the Closing,
each Purchaser represents and warrants to the Corporation as to itself that:
6.1 INVESTMENT. The Purchaser is acquiring the Common Stock,
Common Stock Warrants and any Common Stock issuable upon exercise of the
Common Stock Warrants for investment purposes only for its own account, and
not with a view to, or for resale in connection with, any distribution
thereof, and it has no present intention of selling or distributing any such
securities. Purchaser understands that the Common Stock and Common Stock
Warrants (and any shares of Common Stock issued upon exercise of the Common
Stock Warrants) have not been registered under the Securities Act by reason
of a specific exemption from the registration provisions of the Securities
Act which depends upon, among other things, the bona fide nature of the
investment as expressed herein. All such securities are hereinafter
collectively referred to as the "Securities".
6.2 RULE 144. The Purchaser acknowledges that because the
Securities have not been registered under the Securities Act, the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or an exemption from such registration is available. It is aware of the
provisions of Rule 144 promulgated under the Securities Act which permits
limited resale of shares purchased in a private placement under certain
circumstances.
6.3 NO PUBLIC MARKET. The Purchaser understands that no public
market now exists for any of the securities issued by the Corporation and
that it is uncertain whether a public market will ever exist for any such
securities.
6.4 ACCESS TO DATA. The Purchaser has had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information necessary or appropriate
for deciding whether or not to purchase the Securities.
9.
<PAGE>
6.5 KNOWLEDGE AND EXPERIENCE. Purchaser has such knowledge and
experience in financial and business matters, including investments in other
start-up companies, that it is capable of evaluating the merits and risks of
the investment in the Securities, and it is able to bear the economic risk of
such investment. Further, the individual executing this Agreement has such
knowledge and experience in financial and business matters that he or she is
capable of utilizing the information made available to him or her in
connection with the offering of the Securities, of evaluating the merits and
risks of an investment in the Securities and of making an informed investment
decision with respect to the Securities.
6.6 REQUISITE POWER. The Purchaser has all requisite power and
authority necessary to enter into and to carry out the provisions of this
Agreement and the transactions contemplated hereby.
6.7 DULY AUTHORIZED. All action on the part of the Purchaser
necessary for the purchase of its Securities and the performance of the
Purchaser's obligations hereunder has been taken or will be taken prior to
the Closing. This Agreement is a legal, valid and binding obligation of the
Purchaser enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws and equitable principles relating to or affecting
the enforcement of creditors' rights in general and by general principles of
equity.
6.8 ACCREDITED INVESTOR. Purchaser is an "accredited investor"
as that term is defined in Regulation D promulgated by the Securities and
Exchange Commission. The term "Accredited Investor" under Regulation D
refers to:
(a) A person or entity who is a director or executive
officer of the Corporation;
(b) Any bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered pursuant to
Section 15 of the Exchange Act; insurance Corporation as defined in Section
2(13) of the Securities Act; investment Corporation registered under the
Investment Corporation Act of 1940; or a business development Corporation as
defined in Section 2(a)(48) of that Act; Small Business Investment
Corporation licensed by the U.S. Small Business Administration under Section
301 (c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions for the
benefit of its employees, if such plan has total assets in excess of
$5,000,000;employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is made by
a plan fiduciary, as defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance Corporation, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of $5,000,000or, if a self-directed plan, with investment decision
made solely by persons that are accredited investors;
(c) Any private business development Corporation as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
10.
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(d) Any organization described in Section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
Securities offered, with total assets in excess of $5,000,000;
(e) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000;
(f) Any natural person who had an individual income in
excess of $200,000 during each of the previous two years or joint income with
that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;
(g) Any trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Securities offered,
whose purchase is directed by a person who has such knowledge and experience
in financial and business matters that he is capable of evaluating the merits
and risks of the prospective investment; or
(h) Any entity in which all of the equity owners are
accredited investors.
As used in this Section 6.8, the term "net worth" means the excess of total
assets over total liabilities. For the purpose of determining a person's net
worth, the principal residence owned by an individual should be valued at
fair market value, including the cost of improvements, net of current
encumbrances. As used in this Section 6.8, "income" means actual economic
income, which may differ from adjusted gross income for income tax purposes.
Accordingly, the undersigned should consider whether it should add any or all
of the following items to its adjusted gross income for income tax purposes
in order to reflect more accurately its actual economic income: Any amounts
attributable to tax-exempt income received, losses claimed as a limited
partner in any limited partnership, deductions claimed for depletion,
contributions to an IRA or Keogh retirement plan, and alimony payments.
VII. RESTRICTIONS ON TRANSFER OF SECURITIES.
The Securities are not transferable except upon the conditions
specified in this Article VII, which conditions are intended to ensure
compliance with the provisions of the Securities Act and state securities
laws in respect of the transfer of any of such securities. Each instrument
representing the Securities shall be stamped or otherwise imprinted with
legends substantially in the following form until such time as the conditions
set forth in such legends have been met:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
QUALIFIED UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, OR
THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE
SECURITIES SATISFACTORY TO THE CORPORATION STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY
11.
<PAGE>
REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS UNDER
STATE LAW."
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME, NOT TO
EXCEED ONE HUNDRED EIGHTY (180) DAYS FROM THE EFFECTIVE DATE OF
THE CORPORATION'S FIRST UNDERWRITTEN PUBLIC OFFERING.
In connection with the first underwritten registration of the
Corporation's securities, each Purchaser agrees, upon the request of the
Corporation and the underwriters managing such underwritten offering of the
Corporation's securities, not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any Common Stock
without the prior written consent of the Corporation and such underwriters,
as the case may be, for such period of time, not to exceed one hundred eighty
(180) days, from the effective date of such registration as the underwriters
may specify. The Corporation and underwriters may request such additional
written agreements in furtherance of such standoff in the form reasonably
satisfactory to the Corporation and such underwriter.
The Corporation shall be entitled to enter stop transfer notices on
its stock books with respect to the Securities until the conditions as set
forth in the legends above with respect to the transfer of such securities
have been met.
VIII. MANAGEMENT SERVICES/OFFICE SPACE.
8.1 MANAGEMENT SERVICES. Commencing on the date of the Initial
Closing, the Initial Purchasers (in such capacity, the "Managers") hereby
agree to provide management services to the Corporation for the management of
the daily operations of the Corporation, including but not limited to those
services customarily performed by president of a start-up Internet company
with venture financing for a period of time no longer than December 31, 1998
and on the terms and conditions set forth below (the "Management Services").
The Managers together shall devote approximately one full-time "person month"
per month or more in the performance of their duties on behalf of the
Corporation. The Managers shall perform the Management Services in a first
class professional manner, and in no event with less effort or diligence than
is customary for start-up companies of this nature. The Management Services
and the Corporation's obligation to pay for such services shall automatically
terminate prior to December 31, 1998 upon the earlier to occur of (i)
termination by the Corporation's Board of Directors with no less than
fourteen (14) days' written notice or (ii) the first day of employment of a
new Chief Executive Officer to be hired and elected by the Board of Directors
(the "Termination Date").
8.2 MANAGEMENT SERVICES FEE; INCENTIVE. The Managers shall
receive no fee for providing the Management Services through December 31,
1998 (the "Expiration Date"); provided however, the Managers shall be
entitled to receive reimbursement from the Corporation for reasonable and
customary documented expenses incurred on behalf of the Corporation. As an
incentive to the Managers for the provision of the Management Services from
the Date of Closing and for a period of the earlier of (i) sixteen months
thereafter; (ii) the Termination Date; or (iii) the date the Management
Services cease, the Corporation shall issue beginning on the last
12.
<PAGE>
day of each month commencing March, 1998 (each, a "Payment Date") and ending
on the Expiration Date to each Manager a non-qualified stock option issued
pursuant to the terms and conditions of the Corporation's 1996 Equity
Incentive Plan and corresponding Stock Option Agreement (each, a "Stock
Option"). Each Stock Option shall have an exercise price per share (the
"Exercise Price") equal to 0.25 times the fair market value of the
Corporation's Common Stock on the applicable Payment Date as determined by
the per share price in the most recent arms-length sale of the Corporation's
Common Stock (the "Fair Market Value"). Each Stock Option shall entitle the
holder thereof to purchase that number of shares equal to the quotient
obtained by dividing $7,500 by the number obtained by subtracting the
Exercise Price from the Fair Market Value (the "Option Shares"). All Stock
Options shall be fully vested and have a term of five (5) years commencing on
the Closing Date. The right to receive Stock Options shall automatically
cease on the Termination Date. To reduce administrative costs, the Board of
Directors may issue to each Manager an option quarterly rather than monthly
for the aggregate Option Shares to which each Manager is entitled herein.
Subject to the foregoing, the Common Stock to be issued pursuant to the Stock
Options shall be issued pursuant to and under the Corporation's standard
Stock Option Agreement adopted by the Board of Directors.
8.3 CONFIDENTIALITY. Managers shall not at any time disclose,
publicize, disseminate or examine or copy any of the Corporation's
confidential information, including but not limited to, business plans,
results of operations, forecasts, financials or any other information related
to the Corporation not in the public domain (the "Confidential Information"),
nor utilize for its own benefit or for the benefit of any other party any
such Confidential Information. Upon request by the Corporation, each Manager
customary confidentiality agreement used from time to time by the Corporation
for its employees and independent contractors.
8.4 ASSIGNMENT OF MANAGEMENT SERVICES. The Managers may assign
their obligations under Section 8.1 and Article X as it pertains to Section
8.1 to Roda provided that (i) Roger Strauch, Dan Miller and Mary Klug perform
the Management Services on behalf of Roda in accordance with Section 8.1 and
at the Corporation's direction enter into the Corporation's customary
confidentiality agreement used from time to time by the Corporation for its
employees and independent contractors; and (ii) Roda agrees to comply with
Sections 8.1,8.2 and 8.3 of this Article VIII.
8.5 OFFICE SPACE. Beginning on the date of the Initial Closing,
Roda shall lease (the "Lease") to the Corporation for a term to expire on
December 31, 1998 unless terminated earlier by the Corporation upon at least
thirty (30) days' prior written notice (the "Term") approximately 1700 square
feet of office space at 918 Parker Street, Berkeley, California 94710 (the
"Premises"). The Corporation shall pay to Roda as rent for the Premises not
more than $200 per employee of the Corporation per month who are on the
Corporation's payroll on the first day of each month during the Term;
provided, however, that the Corporation shall pay no less than $1,200 per
month and no more than $5,000 per month as rent per month to Roda regardless
of the number of the Corporation's employees (the "Rent"). The Lease shall
be a gross lease and contain such other terms and conditions as are agreed
upon by the parties in the form of Exhibit B attached hereto and incorporated
herein by reference.
13.
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IX. WARTHEN EMPLOYMENT TERMS. Effective as of the Initial Closing, the
Corporation shall employ Warthen to act as the Corporation's full time
Executive Vice President and Chief Technical Officer on the following terms
and conditions (the "Employment Engagement"):
9.1 SALARY. The Employment Engagement shall provide for an
annual salary of $80,000 payable in cash in semimonthly installments of
$3,333.33 less applicable state and federal withholding taxes. Warthen shall
also receive a grant beginning on the last day of the month on which the
Agreement is signed and ending on December 31, 1998 to Warthen of a
non-qualified stock option issued pursuant to the terms and conditions of the
Corporation's 1996 Equity Incentive Plan and corresponding Stock Option
Agreement (each, a "Warthen Option"). Each Warthen Option shall have an
exercise price per share (the "Warthen Exercise Price") equal to 0.25 times
the fair market value of the Corporation's Common Stock on the applicable
Payment Date as determined by the per share price in the most recent
arms-length sale of the Corporation's Common Stock (the "Warthen Fair Market
Value"). Each Warthen Option shall entitle Warthen to purchase that number
of shares equal to the quotient obtained by dividing $3,333.33 by the by the
number obtained by subtracting the Warthen Exercise Price from the Warthen
Fair Market Value (the "Warthen Option Shares"). All Warthen Options shall
be fully vested and have a term of five (5) years commencing on the Closing
Date. To reduce administrative costs, the Board of Directors may issue to
Warthen an option quarterly rather than monthly for the aggregate Warthen
Option Shares to which Warthen is entitled herein. Notwithstanding the
foregoing, if the Corporation (i) shows a profit for 2 consecutive months or
(ii) hires a Chief Executive Officer, then Warthen may elect to receive
$3,333.33 in cash rather than any later issued Warthen Option. The Warthen
Option Shares shall be issued pursuant to and under the Corporation's
standard Stock Option Agreement adopted by the Board of Directors.
9.2 REPURCHASE OF STOCK. If Warthen voluntarily terminates his
employment with the Corporation prior to the sixth month anniversary of the
Initial Closing, then the Corporation shall have the right for up to thirty
(30) days following such voluntary termination to purchase up to two hundred
fifty thousand (250,000) shares of Warthen's stock in the Corporation
("Warthen's Stock") at a purchase price of $0.6922 per share (subject to
adjustment for stock splits, combinations and the like). If Warthen
voluntarily terminates his employment from the Corporation thereafter, then
the Corporation shall have the right for up to thirty (30) days following
such voluntary termination to purchase up to the number of Warthen Stock that
equals the remainder obtained by subtracting from 250,000 the product
obtained by multiplying 10,417 times the number of full months that have
elapsed since the Initial Closing (i.e. Fifteen months after the Initial
Closing, if Warthen voluntarily terminates his employment, then the
Corporation could repurchase 93,745 shares
[250 - (10,417 x 15) = 250,000 - 156,255 = 93,745]). If Warthen voluntarily
resigns from the Corporation on, or after, the 24th month following the
Initial Closing, then the Corporation shall have no right to repurchase from
Warthen any Warthen Stock.
X. MISCELLANEOUS.
10.1 REMEDIES. Any Person having any rights under any provision
of this Agreement will be entitled to enforce such rights specifically, to
recover damages by reason of any breach of
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any provision of this Agreement, and to exercise all other rights granted by
law, which rights may be exercised cumulatively and not alternatively.
10.2 CONSENT TO AMENDMENTS. Except as otherwise expressly
provided herein, the provisions of this Agreement may be amended and the
Corporation may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if it has obtained the written
consent of Purchasers holding sixty-six and two-thirds percent (66-2/3%) or
more of the outstanding shares of Common Stock. No course of dealing between
the Corporation and any Purchaser or any delay in exercising any rights
hereunder or under the Corporation's Articles of Incorporation will operate
as a waiver of any rights of any such Purchaser. Notwithstanding the
foregoing, this Section 10.2 shall not be amended without the consent of all
Purchasers holding Common Stock.
10.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein or made in writing by any
party in connection herewith will survive the execution and delivery of this
Agreement for a period of three (3) years after the Initial Closing.
10.4 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by
or on behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto whether so
expressed or not.
10.5 SEVERABILITY. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent
of such prohibition or invalidity, without invalidating the remainder of this
Agreement.
10.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts when taken together shall constitute one
and the same Agreement.
10.7 DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
10.8 NOTICES. All notices, demands, consents or other
communications required or permitted hereunder shall be in writing and shall
be deemed to have been given when personally delivered or upon receipt if
sent by first class certified mail, return receipt requested or the next
business day if sent by telefax (receipt confirmed and followed up by one of
the other delivery methods discussed herein as well), Express Mail, Federal
Express or similar service, addressed as follows:
If to Purchasers: To the Addresses set forth on Schedule 1
With a Copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Attn: Jeff Saper, Esq.
15.
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If to the Corporation: Ask Jeeves, Inc.
2131 University Ave.
Berkeley, CA 94704
With a Copy to: Pezzola & Reinke, APC
1999 Harrison Street, Suite 1300
Oakland, CA 94612
Attn: Donald C. Reinke, Esq.
10.9 GOVERNING LAW. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of California
applicable to contracts made and to be performed entirely in California.
10.10 SCHEDULES AND EXHIBITS. All schedules and exhibits are an
integral part of this Agreement.
10.11 LITIGATION COSTS. If any legal action, arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party or
parties therein shall be entitled to recover reasonable attorneys' fees and
other costs incurred in that action or proceeding, in addition to any other
relief to which it or they may be entitled.
10.12 FINAL AGREEMENT. This Agreement constitutes the only
agreement of the parties concerning the matters herein, and supersedes,
merges and renders void all prior written/oral, and/or contemporaneous
agreements and understandings related thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the respective Closing dates.
(SIGNATURES FOLLOW ON NEXT PAGE)
16.
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SIGNATURE PAGE TO COMMON STOCK AND
WARRANT TO PURCHASE COMMON STOCK PURCHASE AGREEMENT
ASK JEEVES, INC.
a California corporation
By: /s/ David Warthen
-------------------------------------
David Warthen
President and CEO
INITIAL PURCHASERS
/s/ Roger Strauch
- ----------------------------------------
ROGER STRAUCH
/s/ Dan Miller
- ----------------------------------------
DAN MILLER
WITH RESPECT TO ARTICLES VIII AND X:
THE RODA GROUP VENTURE DEVELOPMENT COMPANY, LLC,
a Delaware limited liability company
By: /s/ Roger Strauch
-------------------------------------
(Signature)
Chairman
-------------------------------------
(Print Name and Title)
WITH RESPECT TO ARTICLES IX AND X:
/s/ David Warthen
- ----------------------------------------
DAVID WARTHEN
17.
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EXHIBIT A
WARRANT
THE SECURITIES REPRESENTED BY OR UNDERLYING THIS INSTRUMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN
TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN
CONNECTION WITH ANY DISTRIBUTION THEREOF. THE SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION AND QUALIFICATION
WITHOUT AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED IN BY COUNSEL FOR
THE. CORPORATION THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO AND PURCHASED PURSUANT TO
THE TERMS AND CONDITIONS SET FORTH IN THAT CERTAIN AUGUST __, 1997 COMMON
STOCK AND WARRANT TO PURCHASE COMMON STOCK PURCHASE AGREEMENT BETWEEN THE
ORIGINAL HOLDER HEREOF AND THE COMPANY.
No. Series 97-FIELD(1) FIELD(2) Shares
WARRANT TO PURCHASE COMMON STOCK
ASK JEEVES, INC., a California corporation (the "Corporation"),
hereby grants to FIELD(3) (the "Holder"), the right to purchase from the
Corporation FIELD(4) shares of the common stock of the Corporation (the
"Warrant Shares"), subject to the terms and conditions set forth below. This
Warrant is one of a series of Warrants issued in connection with and pursuant
to the terms and conditions set forth in a August ___, 1997, Common Stock And
Warrant To Purchase Common Stock Purchase Agreement entered into between the
original Holder hereof and the Corporation.
1. TERM. This Warrant may be exercised, as set forth in Section
3, at any time through February __, 1998 (the "Exercise Period"), unless
extended as provided in the following sentence. For each $250,000 of
additional equity financing that the Holder is directly responsible for
introducing to the Company, and for which the Company in its sole discretion
accepts prior to the expiration of the Exercise Period, the term of this
Warrant shall be extended for an additional six month period, but in no event
shall such Exercise Period extend beyond August __, 1999.
2. PURCHASE PRICE. The purchase price for each share of the
Corporation's common stock purchasable hereunder shall be $_______ (subject
to adjustments for stock splits, combinations and the like).
3. EXERCISE OF WARRANT. This Warrant may be exercised in whole
or in part, but not for less than Ten Thousand (10,000) Warrant Shares (or
such lesser number of Warrant Shares as may at the time of exercise
constitute the maximum number exercisable) and in excess of 10,000 Warrant
Shares in increments of 1,000 Warrant Shares. It is exercisable, subject to
the
18.
<PAGE>
satisfaction of applicable securities laws, at any time during the Exercise
Period by the surrender of the Warrant to the Corporation at its principal
office together with the Notice of Exercise annexed hereto duly completed and
executed on behalf of the Holder, accompanied by payment in full of the
amount of the aggregate Exercise Price of the Warrant Shares in immediately
available funds.
4. FRACTIONAL INTEREST. The Corporation shall not be required
to issue any fractional shares on the exercise of this Warrant.
5. WARRANT CONFERS NO RIGHTS OF SHAREHOLDER. The Holder shall
not have any rights as a shareholder of the Corporation with regard to the
Warrant Shares prior to actual exercise resulting in the purchase of the
Warrant Shares.
6. INVESTMENT REPRESENTATION. Neither this Warrant nor the
Warrant Shares issuable upon the exercise of this Warrant have been
registered under the Securities Act of 1933, or any state securities laws.
The Holder acknowledges by acceptance of the Warrant that as of the date of
this Warrant and at the time of exercise (a) he has acquired this Warrant or
the Warrant Shares, as the case may be, for investment and not with a view to
distribution; and either (b) he has a pre-existing personal or business
relationship with the Corporation, or its executive officers, or by reason of
his business or financial experience he has the capacity to protect his own
interests in connection with the transaction; and (c) he is an accredited
investor as that term is defined in Regulation D promulgated under the
Securities Act. The Holder agrees that any Warrant Shares issuable upon
exercise of this Warrant will be acquired for investment and not with a view
to distribution and such Warrant Shares will not be registered under the
Securities Act and applicable state securities laws and that such Warrant
Shares may have to be held indefinitely unless they are subsequently
registered or qualified under the Securities Act and applicable state
securities laws or, based on an opinion of counsel reasonably satisfactory to
the Corporation, an exemption from such registration and qualification is
available. The Holder, by acceptance hereof, consents to the placement of
the following restrictive legends, or substantially similar legends, on each
certificate to be issued to the Holder by the Corporation in connection with
the issuance of such Warrant Shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE
SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED
UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR
LAWS COVERING SUCH SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THE SECURITIES SATISFACTORY TO THE CORPORATION,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE
QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE LAW.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME, NOT TO EXCEED ONE
19.
<PAGE>
HUNDRED EIGHTY (180) DAYS FROM THE EFFECTIVE DATE OF THE CORPORATION'S FIRST
UNDERWRITTEN PUBLIC OFFERING.
7. RESERVATION OF SHARES. The Corporation agrees at all times
during the Exercise Period to have authorized and reserved, for the exclusive
purpose of issuance and delivery upon exercise of this Warrant, a sufficient
number of shares of its common stock to provide for the exercise of the
rights represented hereby.
8. ADJUSTMENT FOR RE-CLASSIFICATION OF CAPITAL STOCK. If the
Corporation at any time during the Exercise Period shall, by subdivision,
combination or re-classification of securities, change any of the securities
to which purchase rights under this Warrant exist under the same or different
number of securities of any class or classes, this Warrant shall thereafter
entitle the Holder to acquire such number and kind of securities as would
have been issuable as a result of such change with respect to the Warrant
Shares immediately prior to such subdivision, combination, or
re-classification. If shares of the Corporation's common stock are
subdivided into a greater number of shares of common stock, the purchase
price for the Warrant Shares upon exercise of this Warrant shall be
proportionately reduced and the Warrant Shares shall be proportionately
increased; and conversely, if shares of the Corporation's common stock are
combined into a smaller number of common stock shares, the price shall be
proportionately increased, and the Warrant Shares shall be proportionately
decreased.
9. PUBLIC OFFERING LOCK-UP. In connection with the first
underwritten registration of the Corporation's securities, the Holder agrees,
upon the request of the Corporation and the underwriters managing such
underwritten offering of the Corporation's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any Warrant Shares (other than those included in the registration)
without the prior written consent of the Corporation and such underwriters,
as the case may be, for such period of time, not to exceed one hundred eighty
(180) days, from the effective date of such registration as the underwriters
may specify. The Corporation and underwriters may request such additional
written agreements in furtherance of such standoff in the form reasonably
satisfactory to the Corporation and such underwriter. The Corporation may
also impose stop-transfer instructions with respect to the shares subject to
the foregoing restrictions until the end of said one hundred eighty (180) day
period.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon
receipt by the Corporation of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any Warrant or stock certificate,
and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Corporation of
all reasonable expenses incidental thereto, and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the
Corporation will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of this Warrant or stock
certificate.
11. ASSIGNMENT. With respect to any offer, sale or other
disposition of this Warrant or any underlying securities, the Holder will
give written notice to the Corporation prior thereto, describing briefly the
manner thereof, together with a written opinion of such Holder's counsel, to
the effect that such offer, sale or other distribution may be effected
without registration or
20.
<PAGE>
qualification (under any applicable federal or state law then in effect).
Furthermore, no Such transfer shall be made unless the transferee meets the
same investor suitability standards set forth in Section 6 of this Warrant.
Promptly upon receiving such written notice and reasonably satisfactory
opinion, if so requested, the Corporation, as promptly as practicable, shall
notify such Holder that such Holder may sell or otherwise dispose of this
Warrant or the underlying securities, as the case may be, all in accordance
with the terms of the written notice delivered to the Corporation. If a
determination has been made pursuant to this Section I 1 that the opinion of
counsel for the Holder is not reasonably satisfactory to the Corporation, the
Corporation shall so notify the Holder promptly after such determination has
been made. Each Warrant thus transferred shall bear the same legends
appearing on this Warrant, and underlying securities thus transferred shall
bear the legends required by Section 6. The Corporation may issue stop
transfer instructions to its transfer agent in connection with such
restrictions. Warrants and underlying securities issued upon transfers after
the expiration date of the Lock-Up Period shall be issued without the Lock-Up
Legend.
12. GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of California applicable
to contracts between Colorado residents entered into and to be performed
entirely within the State of California.
13. AMENDMENTS. Any term of this Warrant may be amended with the
written consent of the Company and the holders of warrants representing not
less than a majority in interest (50% +) of the shares of Common Stock
issuable upon exercise of the outstanding Series 97 Warrants.
14. NOTICES. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified by hand
or professional courier service or five (5) days after deposit with the
United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified at the address indicated for such
party in the Corporation's records, or at such other address as such party
may designate by ten (10) days' advance written notice to the other parties.
15. ATTORNEYS' FEES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Warrant, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and
disbursements in addition to any other relief to which such party may be
entitled.
Dated: August __, 1997 ASK JEEVES, INC.
By:
-----------------------------
David Warthen, President & CEO
21.
<PAGE>
NOTICE OF EXERCISE
To: ASK JEEVES, INC.
(1) The undersigned hereby elects to purchase _______ shares of
Common Stock of Ask Jeeves, Inc., pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price for such shares
in full.
(2) In exercising this Warrant, the undersigned hereby confirms
and acknowledges that the shares of Common Stock are being acquired solely
for the account of the undersigned and not as a nominee for any other party,
or for investment, and that the undersigned will not offer, sell or otherwise
dispose of any such shares of Common Stock except under circumstances that
will not result in a violation of the Securities Act of 1933, as amended, or
any state securities laws.
(3) Please issue a certificate representing said shares of Common
Stock in the name of the undersigned:
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned:
------------------------------------
(Name)
- --------------------- ------------------------------------
(Date) (Signature)
22.
<PAGE>
SCHEDULE 1
<TABLE>
<CAPTION>
DOLLAR NUMBER OF CLOSING
PURCHASER AMOUNT SHARES DATE ADDRESS
<S> <C> <C> <C> <C>
Roger Strauch $ 83,334 120,390 8-20-97 Initial Closing
Dan Miller $ 83,333 120,388 8-20-97 Initial Closing
Roger Strauch $ 83,333 120,388 Not later than 30 days
after Initial Closing
(the "Second Closing")
Dan Miller $ 83,334 120,390 Not later than 30 days
after Initial Closing
(the "Second Closing")
Roger Strauch $ 83,333 120,388 Not later than 60 days
after Initial Closing
(the "Third Closing")
Dan Miller $ 83,333 120,388 Not later than 60 days
after Initial Closing
(the "Third Closing")
</TABLE>
23.
<PAGE>
Schedule 5 to the Ask Jeeves, Inc.
Common Stock and Warrant to Purchase Common Stock
Purchase Agreement
The disclosures and exceptions set forth on this Schedule 5 to the
Corporation's warranties and representations shall be deemed to qualify all
applicable representations and warranties under this Agreement whether or not
specifically cross-referenced as pertaining to a specific section, warranty
or representation in the Agreement or any other agreement or exhibit
referenced therein.
SECTION 5.2 CORPORATE CAPITALIZATION.
<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
<S> <C>
David Warthen 8,334
Gary Chevsky 50,000
Rachel Childs 10,000
Fred Davis 20,000
Robert Egan 3,500
</TABLE>
SECTION 5.5 PATENTS AND OTHER INTANGIBLE RIGHTS
LIST OF SOFTWARE
ASKJEEVES.EXE
QMATCH.DLL
COMPILER.EXE
VALIDATOR.EXE
PKGEDIT.EXE
CLIENT.EXE
The knowledgebase contained in Jeeves.MDB
LIST OF TRADEMARKS
Notwithstanding the representations and warranties set forth in
Section 5.5 of the Agreement, the Corporation is in the process
of registering the trademark "ASK JEEVES" and the trademark
identified on Attachment 5.5 to this Schedule 5.
SECTION 5.9 MATERIAL LICENSES, AGREEMENTS, RELATED PARTY AGREEMENTS.
1. Agreement for Ask Jeeves to Purchase Equipment from
Desktop Software, dated August 15, 1997.
2. Linguistic System Licensing agreement with Proximity
Technology, Inc., dated November 22, 1996, for a term
of two years.
24.
<PAGE>
3. Nondisclosure And Secrecy Agreement, dated as of
March 17, 1997, by and between the Corporation and
DynaNet, Inc, a California corporation.
4. Confidential Disclosure Agreement, dated as of April 9,
1997, by and between the Corporation and DynaNet, Inc,
a California corporation.
SECTION 5.10 FINANCIAL STATEMENTS.
Statement of Assets, Liabilities and Equity - Income Tax Basis
July 31, 1997; Statement of Revenue and Expenses - Income Tax
Basis July 31, 1997; Subsidiary Schedules Period Ended July 31,
1997; Compilation Report of Rose Y.C. Huie, Certified Public
Accountant, dated August 14, 1997; the General Ledger For Ask
Jeeves, Inc. Period Ended July 31, 1997 (the foregoing
collectively, the "Financial Statements").
25.
<PAGE>
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this ____ day of _________, 1999 by
and between ASK JEEVES, INC. a Delaware corporation (the "Corporation"), and
____________ ("Agent").
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in his/her
capacity as _______________ of the Corporation;
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as ______________ of
the Corporation, the Corporation has determined and agreed to enter into this
Agreement with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as
_______________ after the date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as
______________ of the Corporation or as a director, officer or other fiduciary
of an affiliate of the Corporation (including any employee benefit plan of the
Corporation) faithfully and to the best of his ability so long as he is duly
elected and qualified in accordance with the provisions of the Bylaws or other
applicable charter documents of the Corporation or such affiliate; PROVIDED,
HOWEVER, that Agent may at any time and for any reason resign from such position
(subject to any contractual obligation that Agent may have assumed apart from
this Agreement) and that the Corporation or any affiliate shall have no
obligation under this Agreement to continue Agent in any such position.
2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the Bylaws or the Code permitted
prior to adoption of such amendment).
1.
<PAGE>
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees), witness
fees, damages, judgments, fines and amounts paid in settlement and any other
amounts that Agent becomes legally obligated to pay because of any claim or
claims made against or by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative (including an action by or in the right of the
Corporation) to which Agent is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that Agent is, was or at
any time becomes a director, officer, employee or other agent of Corporation, or
is or was serving or at any time serves at the request of the Corporation as a
director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise; and
(b) otherwise to the fullest extent as may be provided to Agent by
the Corporation under the non-exclusivity provisions of the Code and Section 43
of the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to
Section 3 hereof shall be paid by the Corporation:
(a) on account of any claim against Agent for an accounting of
profits made from the purchase or sale by Agent of securities of the Corporation
pursuant to the provisions of Section 16(b) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any federal, state or local
statutory law;
(b) on account of Agent's conduct that was knowingly fraudulent or
deliberately dishonest or that constituted willful misconduct;
(c) on account of Agent's conduct that constituted a breach of
Agent's duty of loyalty to the Corporation or resulted in any personal profit or
advantage to which Agent was not legally entitled;
(d) for which payment is actually made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause,
bylaw or agreement, except in respect of any excess beyond payment under such
insurance, clause, bylaw or agreement;
(e) if indemnification is not lawful (and, in this respect, both the
Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the
federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or
(f) in connection with any proceeding (or part thereof) initiated by
Agent, or any proceeding by Agent against the Corporation or its directors,
officers, employees or other agents, unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the Corporation, (iii) such indemnification is provided by
the Corporation, in its sole discretion, pursuant to the powers
2.
<PAGE>
vested in the Corporation under the Code, or (iv) the proceeding is initiated
pursuant to Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. Agent shall be entitled under this Agreement
to indemnification by the Corporation for a portion of the expenses (including
attorneys' fees), witness fees, damages, judgments, fines and amounts paid in
settlement and any other amounts that Agent becomes legally obligated to pay in
connection with any action, suit or proceeding referred to in Section 3 hereof
even if not entitled hereunder to indemnification for the total amount thereof,
and the Corporation shall indemnify Agent for the portion thereof to which Agent
is entitled.
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission to so notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Agent notifies
the Corporation of the commencement thereof:
(a) the Corporation will be entitled to participate therein at its
own expense;
(b) except as otherwise provided below, the Corporation may, at its
option and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with counsel
reasonably satisfactory to Agent. After notice from the Corporation to Agent of
its election to assume the defense thereof, the Corporation will not be liable
to Agent under this Agreement for any legal or other expenses subsequently
incurred by Agent in connection with the defense thereof except for reasonable
costs of investigation or otherwise as provided below. Agent shall have the
right to employ separate counsel in such action, suit or proceeding but the fees
and expenses of such counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of Agent unless
(i) the employment of counsel by Agent has been authorized by the Corporation,
(ii) Agent shall have reasonably concluded that there may be a conflict of
interest between the Corporation and Agent in the conduct of the defense of such
action or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of Agent's separate counsel shall be at the expense of the Corporation. The
Corporation shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Corporation or as to which Agent shall
have made the conclusion provided for in clause (ii) above; and
3.
<PAGE>
(c) the Corporation shall not be liable to indemnify Agent under this
Agreement for any amounts paid in settlement of any action or claim effected
without its written consent, which shall not be unreasonably withheld. The
Corporation shall be permitted to settle any action except that it shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Agent without Agent's written consent, which may be given or
withheld in Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that Agent is not entitled to be indemnified under the
provisions of this Agreement, the Bylaws, the Code or otherwise.
9. ENFORCEMENT. Any right to indemnification or advances granted by this
Agreement to Agent shall be enforceable by or on behalf of Agent in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. Agent, in such enforcement action, if
successful in whole or in part, shall be entitled to be paid also the expense of
prosecuting his claim. It shall be a defense to any action for which a claim
for indemnification is made under Section 3 hereof (other than an action brought
to enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of
Directors or its stockholders) to have made a determination prior to the
commencement of such enforcement action that indemnification of Agent is proper
in the circumstances, nor an actual determination by the Corporation (including
its Board of Directors or its stockholders) that such indemnification is
improper shall be a defense to the action or create a presumption that Agent is
not entitled to indemnification under this Agreement or otherwise.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.
12. SURVIVAL OF RIGHTS.
(a) The rights conferred on Agent by this Agreement shall continue
after Agent has ceased to be a director, officer, employee or other agent of the
Corporation or to serve at the request of the Corporation as a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise and shall inure to the
benefit of Agent's heirs, executors and administrators.
4.
<PAGE>
(b) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Corporation, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such succession
had taken place.
13. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute but one and the same Agreement. Only
one such counterpart need be produced to evidence the existence of this
Agreement.
17. HEADINGS. The headings of the sections of this Agreement are inserted
for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given
(i) upon delivery if delivered by hand to the party to whom such communication
was directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
(a) If to Agent, at the address indicated on the signature page
hereof.
(b) If to the Corporation, to
Ask Jeeves, Inc.
918 Parker Street
Berkeley, CA 94708
or to such other address as may have been furnished to Agent by the Corporation.
5.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
ASK JEEVES, INC.
By:
--------------------------------------------
Title:
---------------------------------------------
AGENT
------------------------------------------------
Address:
------------------------------------------------
------------------------------------------------
6.
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated March 10, 1999,
except for Note 7, as to which the date is April , 1999, in Amendment No. 1 to
the Registration Statement (Form S-1) and related Prospectus of Ask Jeeves, Inc.
for the registration of of its common stock.
Walnut Creek, California
April 29, 1999
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the completion
of the reincorporation in Delaware and 1 for 2 reverse stock split as described
in Note 7 to the financial statements.
/s/ ERNST & YOUNG LLP
Walnut Creek, California
May 10, 1999
