SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE (the "Amendment") is made and entered
into as of the 18th day of February, 1999 by and between FIFTH STREET
PROPERTIES, LLC, a Delaware limited liability company ("Landlord"), and IMGIS,
Inc. (dba AdForce, Inc.), a California corporation ("Tenant"), with respect
to the following:
RECITALS
A. Landlord's predecessor in interest and Tenant entered into a
certain written lease dated December 20, 1996 (the "Original Lease"), as
amended by that certain First Amendment to Lease dated February 18, 1998 (the
"First Amendment"). The Original Lease and the First Amendment are
collectively referred to as the "Lease". The Lease covers certain premises
commonly known as Suites 400 and 475 (the "Premises"), 611 Anton Boulevard
(the "Building"), Costa Mesa, California.
B. Pursuant to the terms hereof, Landlord and Tenant desire to extend
the term of the Original Lease and to expand the Premises to include Suites
450 and 550 (hereinafter individually referred to by suite number and
collectively referred to as the "Additional Premises"), which Additional
Premises consists of 5,505 square feet of Rentable Area in the aggregate.
Suite 450 consists of 1,212 square feet of Rentable Area and Suite 550
consists of 4,293 square feet of Rentable Area. The Additional Premises shall
be approximately as depicted on Exhibit "A" attached to this Amendment.
D. Landlord and Tenant desire to enter into this Amendment to set
forth the terms upon which the Additional Premises shall be added to the
Premises. In addition, Landlord and Tenant desire to set forth certain
changes in the terms of the Lease upon which Tenant shall hold and occupy the
Premises and the Additional Premises.
AGREEMENT
IN CONSIDERATION OF the foregoing recitals and the mutual promises and
covenants contained herein, Landlord and Tenant agree as follows:
1. EXPANSION OF PREMISES/TERM.
(a) Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the Additional Premises, subject to all of the terms and conditions
of this Amendment and of the Original Lease. The term of the Lease with
respect to Suite 450 shall commence on March 1, 1999 (the "Suite 450
Effective Date"). The term of the Lease with respect to Suite 550 shall have
a target commencement date of April 15, 1999 but shall have an actual
commencement date, subject to the provisions of Exhibit "B", on the earlier of
(i) Substantial Completion of Landlord's work pursuant to Exhibit "B", (ii)
the date upon which Landlord would have completed Landlord's work but for
delays in construction caused by Tenant or (iii) upon such date as Tenant
takes possession of and commences use of Suite 550 for the conduct of its
normal business operations, (the "Suite 550 Effective Date"). Within thirty
(30) days following the date of commencement of the term for Suite 550,
Landlord and Tenant shall execute a supplemental agreement, in letter form,
setting forth the Suite 550 Effective Date. Notwithstanding the foregoing,
failure of Tenant to execute such supplemental agreement shall
-1-
not affect Landlord's determination of the Suite 550 Effective Date in
accordance with this Amendment.
(b) If Tenant delays Landlord in the construction of Suite 550
pursuant to Exhibit "B", Landlord shall tender Suite 550 to Tenant upon
written notice stating that, except for such delays caused by Tenant, Suite
550 will be or would have been ready for occupancy on the date specified in
such notice. The date set forth in such notice shall be the Suite 550
Effective Date, regardless of whether Tenant takes possession of Suite 550 on
such date.
(c) The target commencement date stated in Paragraph 1(a) above,
is an estimated date by which Landlord's work will be completed as provided
in Exhibit "B". If Landlord is unable to tender possession of Suite 550 on
that date, this Amendment shall not be void or voidable, nor shall Landlord
be liable for any loss or damage resulting therefrom, except to the extent
caused by Landlord's gross negligence or willful misconduct. In the event
that Landlord delivers Suite 550 after April 15, 1999, the term of the Lease
as to all space shall be extended one (1) day for each day of such delay in
delivery such that the term for all space is a full five (5) years following
the Suite 550 Effective Date.
(d) Landlord's sole construction obligation under this Amendment
is set forth in Exhibit "B" and Landlord shall have no other obligation to
otherwise modify or prepare any of the Additional Premises for occupancy by
Tenant. Landlord and Tenant acknowledge that Landlord shall use diligent
efforts to commence and complete such construction of Suite 550 as promptly
as practicable.
(e) The term of the Lease shall be extended for forty-five (45)
days so as to expire on April 14, 2004. The term as to the Additional
Premises shall be co-terminus with the Premises and shall expire on April 14,
2004. There shall be no option to further extend the term of the Lease.
(f) Tenant's security deposit shall be increased by $17,051.28
payable concurrently with Tenant's execution and delivery of this Amendment
to Landlord.
2. RENT. Rent shall be as follows:
(a) From the Suite 450 Effective Date until termination, Basic
Annual Rent for Suite 450 shall be at the rate of $25.00 per square foot of
Rentable Area (approximately $2.08 per square foot per month). Therefore,
Basic Annual Rent for Suite 450 during such period shall be $30,300.00
($2,525.00 per month).
(b) From the Suite 550 Effective Date until termination, Basic
Annual Rent for Suite 550 shall be at the rate of $25.00 per square foot of
Rentable Area (approximately $2.08 per square foot per month). Therefore,
Basic Annual Rent for Suite 550 during such period shall be $107,325.00
($8,943.75 per month).
(c) In addition, Tenant shall continue to pay all Additional Rent
provided for in the Original Lease. Pursuant to the provision of Exhibit
"A-4" of the Original Lease, Landlord has caused the Building and the Project
to be remeasured utilizing Stevenson's Systems, Inc., an independent
contractor ("Stevenson"). Stevenson has determined the building to be 299,263
square feet of Rentable Area and the Project to be 720,633 square feet of
Rentable Area. Therefore, commencing on January 1, 1999, to and until the
Effective Date, Additional Rent shall be based upon the Rentable Area of
Premises, or 12,857 square feet and utilizing the Building Expense
Percentage of 4.5223% and Project Expense Percentage of 1.8780%. From the
Suite 450 Effective Date until the
-2-
Suite 550 Effective Date, Additional Rent shall be based upon the Rentable
Area of the Premises and Suite 450, or 14,069 square feet and utilizing the
Building Expense Percentage of 4.9486% and the Project Expense Percentage of
2.0551%. From the Suite 550 Effective Date until expiration of the term,
Additional Rent shall be based upon the Rentable Area of the Premises and the
Additional Premises or 18,362 square feet and utilizing the Building Expense
Percentage of 6.4587% and the Project Expense Percentage of 2.6821%.
(d) For the period following the original expiration date of the
Original Lease (February 28, 2004), Basic Annual Rent for the original
Premises shall be increased to the same rate as then applicable for the
Additional Premises.
3. IMPROVEMENTS TO ADDITIONAL PREMISES.
(a) Landlord shall deliver Suite 450 in its then existing "AS-IS"
condition on or about February 1, 1999. Landlord shall have no obligation
with respect to any improvement or modification of such space and Tenant
shall be responsible for any such modifications which shall be undertaken in
full compliance with the terms and conditions of the Original Lease.
(b) Prior to delivery of Suite 550 to Tenant, Landlord shall
improve the space pursuant to the provisions of Exhibit "B" attached hereto
and made a part hereof.
4. TERMS AND CONDITIONS FOR THE ADDITIONAL PREMISES. From and after
the Suite 450 Effective Date and the Suite 550 Effective Date, respectively,
Tenant shall hold and occupy Suite 450 and Suite 550 upon all of the terms
and conditions of the Original Lease as amended by this Amendment and, in the
event of any inconsistency between the Original Lease, the First Amendment
and this Amendment, the provisions of this Amendment shall control.
5. MODIFICATIONS TO ORIGINAL LEASE.
(a) Notwithstanding the provisions of Paragraph 6(c) of the
Original Lease to the contrary, Tenant may make cosmetic alterations to the
Premises, as expanded, without securing Landlord's prior written consent
provided: (i) such modifications shall cost not more than $10,000 during any
calendar year of the term; (ii) such modifications are in the nature of
normal and usual office improvements; and (iii) such modifications do not
affect any of the mechanical electrical or plumbing systems of the Building and
are not visible from the exterior of the Building. Further, in cases where
Landlord's consent is required, Landlord shall advise Tenant at the time of
such consent whether or not Landlord will require removal of such improvement
at expiration of the term.
(b) Notwithstanding anything in Paragraph 14 of the Original Lease
to the contrary, in the event that Tenant is notified by Landlord of the fact
that within twelve (12) months of any damage or destruction of the Premises,
as expanded, and/or the Building or any part thereof so as to preclude
Tenant's use of the Premises, Tenant cannot be given reasonable use of, and
access to, a fully repaired and restored Premises and Building (except for
minor "punch-list" items which will be repaired promptly thereafter), and the
utilities and services pertaining to the Building and the Premises, as
expanded, all suitable for the efficient conduct of Tenant's business
therefrom, then Tenant may elect to exercise a right to terminate the Lease
upon ten (10) days written notice sent to Landlord at any time within a
period of thirty (30) days following Tenant's receipt of Landlord's notice as
specified above. If Tenant gives timely notice of termination as provided
above, this Lease shall terminate thirty (30) days after Landlord's receipt of
Tenant's notice of termination.
-3-
(c) Notwithstanding the provisions of Paragraph 16(d) of the
Original Lease, any profits realized by Tenant in connection with such
transaction shall be handled in accordance with the provisions hereof. As a
condition to Landlord's consent to any assignment or sublease, Landlord and
Tenant shall equally share any quote "profits" which may result from such
assignment or sublease. For purposes herein, "profits" shall mean the "rent"
or "consideration" (as such terms are defined in Paragraph 16(d) of the
Original Lease) received from the assignee or subleasee during the sublease
term or on account of the assignment, less: (i) the gross revenue paid to
Landlord by Tenant during the period of the sublease term or during the
assignment; (ii) any brokers commissions paid in connection with such
transaction.
(d) Notwithstanding the provisions of Paragraph 26(a)(ii) of the
Original Lease to the contrary, the Premises, as expanded, shall be
considered "abandoned" only if Tenant is absent from such Premises, as
expanded, for five (5) days or longer and Tenant is otherwise in default
under the Lease.
(e) Notwithstanding the provisions of Paragraph 27 of the Original
Lease to the contrary, as to the Additional Premises only, and only for the
first sixty (60) days of any such holdover of all or any portion of the
Additional Premises, the holdover rental rate shall be one hundred fifty
percent (150%) of the Basic Annual Rent and Additional Rent than in effect.
Thereafter, the holdover rates shall be as provided in Paragraph 27 of the
Original Lease.
(f) With respect to Paragraph 44 of the Original Lease, it is
understood and agreed that Tenant may disclose the Lease to the United States
Securities and Exchange Commission and as may thereafter be required in
connection with Tenant offering its stock for sale to the public.
6. BROKERS. Except for Landlord's agent South Coast Plaza, each of
Landlord and Tenant represents and warrants to the other that it has employed
no broker, finder or real estate agent in connection with this Amendment and
the transactions provided for herein, and that there is no broker, finder or
real estate agent who is entitled to a fee or commission from or through such
indemnifying party in connection with this Amendment or the transactions
provided for herein. Each of Landlord and Tenant agrees to indemnify, defend
and hold the other harmless from and against all claims for a fee or
commission by any broker, finder or agent claiming through such indemnifying
party with respect to this Amendment or the transactions provided for herein.
Payment shall not be a condition precedent to recovery upon the foregoing
indemnification provision. The foregoing indemnification provision shall be
deemed to include a covenant by each indemnifying party to defend the
indemnified party against claims covered by such indemnification with legal
counsel reasonably satisfactory to the indemnified party.
7. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8. DEFINED TERMS. All terms used in this Amendment with initial
capital letters and not defined herein shall have the meanings given to such
terms in the Original Lease or First Amendment, as applicable.
9. LEASE IN EFFECT. Landlord and Tenant acknowledge and agree that
the Original Lease, as amended by the First Amendment and this Amendment, is
in full force and effect in accordance with its terms.
-4-
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this
Second Amendment to Lease as of the day of actual receipt by Landlord.
FIFTH STREET PROPERTIES, LLC, IMGIS CORPORATION (dba AdForce, Inc.),
a Delaware limited liability company a California corporation
By: CWP Capital Management, LLC By: /s/ [ILLEGIBLE]
a Delaware limited liability company ---------------------------------
Title: EVP & CFO
------------------------------
By: /s/ [ILLEGIBLE]
------------------------
Its: CFO By: /s/ [ILLEGIBLE]
-------------------- --------------------------------
Title: VP/GC
By: /s/ Alison M. Garcia -----------------------------
------------------------
"TENANT"
Its: SVP
-------------------
"LANDLORD"
APPROVED AS TO FORM
PILLSBURY MADISON & SUTRO LLP
BY: /s/ [ILLEGIBLE]
-------------------------
-5-
EXHIBIT "A"
FLOOR PLAN OF ADDITIONAL PREMISES
[Rectangular Floor Plan with elevator banks, stairs and lavoratories
in the center and space described as "STE 550" in upper right hand
side.]
FLOOR 5
Comerica Bank Tower
811 Anton Blvd.
Costa Mesa, CA
[Rectangular floor plan with elevator banks, stairs and lavoratories
in the center and shaded space described as "STE 450" in upper side.]
EXHIBIT "A" FLOOR 4
Comerica Bank Tower
EXHIBIT "B"
WORK LETTER
In connection with the Amendment to which this Work Letter is attached
(the "Amendment"), Landlord and Tenant hereby agree to the terms and
conditions set forth in this Work Letter relating to the construction of the
tenant improvements in Suite 550 (the "Tenant Improvements"). This Work
Letter is essentially organized chronologically and addresses the issues of
the construction of Suite 550, in sequence, as such issues will arise during
the actual construction of Suite 550. All capitalized terms used but not
defined herein shall have the meanings given such terms in the Lease.
SECTION 1.
CONSTRUCTION DRAWINGS FOR SUITE 550
Landlord and Tenant have mutually approved (i) a space plan for Suite 550
(the "Space Plan") and (ii) the notes and specifications set forth in such
space plan (collectively, the "Approved Space Plan"). Within three (3) days
of the date of execution of this Amendment by Tenant, Tenant shall cooperate
in good faith with Landlord's architects and engineers to supply such
information necessary to allow the Landlord's architects and engineers to
complete the architectural and engineering drawings for Suite 550, and the
final architectural working drawings in a form which is in compliance with
ADA (including any special requirements as a result of Tenant's
employer-employee obligations under ADA, and complete to allow subcontractors
to bid on the work and to obtain all applicable permits and in a manner
consistent with the Approved Space Plan (collectively, the "Approved Working
Drawings"). Landlord shall construct, at Landlord's cost, the Tenant
Improvements pursuant to the Approved Working Drawings, provided, however, in
no event shall Landlord's obligation for the payment of Tenant Improvements
exceed $90,550.00. In connection with the Tenant Improvements, it is
understood and agreed that Landlord's obligation for the payment of costs,
subject to the maximum, shall be limited to costs to design, engineer and
construct Suite 550 including all professional service fees, labor and
materials relative to the installation of permanent improvements in Suite 550
including architectural fees and contractor fees. Tenant shall make no
changes or modifications to the Approved Space Plan or to the Approved
Working Drawings without the prior written consent of Landlord, which consent
may be withheld in Landlord's reasonable discretion if such change or
modification would delay, directly or indirectly, Substantial Completion (as
such term is defined in Section 2, below) of construction of the Tenant
Improvements, would be inconsistent with the Approved Space Plan or would
increase the cost of designing or constructing the Tenant Improvements when
compared to the cost incurred by Landlord in using the quality of the "Building
Standard Items" described on Schedule "1" attached hereto to the extent
depicted on the Approved Space Plan or is otherwise inconsistent with ADA. Any
such increased cost or costs in excess of Landlord's maximum obligation,
shall be paid by Tenant to Landlord within five (5) days after Landlord's
written request for payment.
SECTION 2.
SUBSTANTIAL COMPLETION
The term "Substantial Completion" means that Landlord has completed the
Tenant Improvements and other work that it is obligated to perform pursuant
to this Work Letter, and that this work shall be deemed complete,
notwithstanding the fact that minor details of construction, mechanical
adjustments
or decorations which do not materially interfere with Tenant's use of Suite
550 remain to be performed (items normally referred to as "Punch-List
Items"). Suite 550 shall be deemed to have achieved Substantial Completion
even though Tenant's furniture, telephones, telexes, telecopiers, photocopy
machines, computers and other business machines or equipment have not been
installed, the purchase and installation of which shall be Tenant's sole
responsibility.
Tenant shall notify Landlord and Contractor within three (3) business
days after Substantial Completion of Suite 550 and in any event prior to
Tenant's occupancy of Suite 550, of any Punch-List Items which need to be
completed or corrected, and Landlord shall cause such Punch-List Items to be
completed or corrected within a reasonable time thereafter.
SECTION 3.
CONTRACTOR'S WARRANTIES AND GUARANTIES
Landlord will upon completion of the Tenant Improvements and after
Tenant's acceptance of Suite 550 assign to Tenant all warranties and
guaranties by the contractor who constructs the Tenant Improvements (the
"Contractor") relating to the Tenant Improvements, and Tenant hereby waives
all claims against Landlord relating to, or arising out of the construction
of, the Tenant Improvements. Such warranties and guaranties of Contractor
shall guarantee that the Tenant Improvements shall be free from defects in
workmanship and materials for a period of not less than one (1) year from
date of completion thereof, and Contractor shall be responsible for the
replacement and repair, without additional charge, of the Tenant Improvements
that shall become defective within one (1) year after Substantial Completion
of Suite 550. The Contractor shall be selected by Landlord.
SECTION 4.
COMPLETION OF THE TENANT IMPROVEMENTS:
COMMENCEMENT DATE
Consistent with the provisions set forth in Paragraph 1 of the
Amendment, if there shall be a delay or there are delays in the Substantial
Completion of Suite 550 as a direct, indirect, partial, or total result of:
(a) Tenant's failure to timely approve any matter requiring Tenant's
approval;
(b) A breach by Tenant of the terms of this Work Letter, this
Amendment or the Original Lease;
(c) Tenant's request for changes in the Approved Space Plan or
Approved Working Drawings;
(d) Tenant's requirement for materials, components, finishes or
improvements which are not available in a commercially reasonable time given
the anticipated date of Substantial Completion of Suite 550, as set forth in
the Amendment, or which are different than Landlord's Building Standard Items;
(e) Any other acts or omissions of Tenant, or its agents, or employees;
2
then, notwithstanding anything to the contrary set forth in the Amendment or
this Work Letter and regardless of the actual date of the Substantial
Completion of Suite 550, the Suite 550 Effective Date shall be deemed to be
the date the Suite 550 Effective Date would have occurred if no Tenant delay
or delays, as set forth above, had occurred.
SECTION 5.
MISCELLANEOUS
5.1 TENANT'S ENTRY INTO SUITE 550 PRIOR TO SUBSTANTIAL COMPLETION.
Provided that Tenant and its agents do not interfere with Contractor's work
in the Building and Suite 550, Contractor shall allow Tenant access to Suite
550 prior to the Substantial Completion of Suite 550 (but if such access is
to be prior to the issuance of a certificate of occupancy of the Building by
the City of Costa Mesa, then such access shall be only as allowed by the City
of Costa Mesa) for the purpose of Tenant installing overstandard equipment or
fixtures (including Tenant's data and telephone equipment) in Suite 550.
Prior to Tenant's entry into Suite 550 as permitted by the terms of this
Section 5.1, Tenant shall submit a schedule to Landlord and Contractor, for
their approval, which schedule shall detail the timing and purpose of
Tenant's entry. Tenant shall hold Landlord harmless from and indemnify,
protect and defend Landlord against any loss or damage to the Building or
Suite 550 and against injury to any persons caused by Tenant's actions
pursuant to this Section 5.1.
5.2 FREIGHT ELEVATORS. Landlord shall, consistent with its
obligations to other tenants of the Building, and subject to the needs of
Landlord with respect to any construction or alteration of the Base, Shell
and Core of the Building, make the freight elevator reasonably available to
Tenant in connection with initial decorating, furnishing and moving into
Suite 550.
5.3 TENANT'S REPRESENTATIVE. Tenant has designated Nadine Franczyk as
its sole representative with respect to the matters set forth in this Work
Letter, who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Work Letter.
5.4 LANDLORD'S REPRESENTATIVE. Landlord has designated Bob Goodwin as
its sole representative with respect to the matters set forth in this Work
Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Work
Letter.
5.5 INSURANCE REQUIREMENTS. All of Tenant's agents shall carry excess
liability and Products and Completed Operation Coverage insurance, each in
amounts not less than $500,000 per incident, $1,000,000 in aggregate, and in
form and with companies as are required to be carried by Tenant as set forth
in Paragraph 20 of the Original Lease, and the policies therefor shall insure
Landlord and Tenant, as their interests may appear, as well as the Contractor,
and shall name as additional insureds Landlord and all mortgagees of the
Building. Tenant's agents shall maintain the foregoing insurance coverage in
force until the Tenant Improvements are fully completed, except for Products
and Completed Operation Coverage insurance, which is to be maintained for ten
(10) years following completion of Contractor's work and acceptance by
Landlord and Tenant. All insurance maintained by Tenant's agents shall
preclude subrogation claims by the insurer against any one insured
thereunder. Such insurance shall provide that it is primary insurance as
respects the Landlord and that any other insurance maintained by Landlord is
excess and not contributing with the insurance required hereunder.
3
5.6 TIME OF THE ESSENCE IN THIS WORK LETTER. Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer
to calendar days. In such instances where Tenant is required to approve or
deliver an item, if no written notice of approval is given or the item is not
delivered within the stated time period, at Landlord's sole option, at the
end of such period the item shall automatically be deemed approved or
delivered by Tenant and the next succeeding time period shall commence.
5.7 TENANT'S LEASE DEFAULT. Notwithstanding any provision to the
contrary contained in this Amendment, if an event of default as described in
Paragraph 26 of the Original Lease, or a default by Tenant under this Amendment
or this Work Letter, has occurred at any time on or before the Substantial
Completion of Suite 550, then (i) in addition to all other rights and remedies
granted to Landlord pursuant to the Original Lease, as amended, Landlord shall
have the right to cause Contractor to cease the construction of Suite 550 (in
which case, Tenant shall be responsible for any delay in the Substantial
Completion of Suite 550 covered by such work stoppage as set forth in Section 4
of this Work Letter), any and all other obligations of Landlord under the terms
of this Work Letter shall be forgiven until such time as such default is cured
pursuant to the terms of the Lease.
4
SCHEDULE "1"
BUILDING STANDARD ITEMS
(1) PARTITIONS. 2-1/2", .25 G.A metal studs @ 24" on center with
one layer of 5/8", type "x" gypsum wallboard each side.
(2) DOORS. Solid core oak doors.
(3) DOOR FRAMES. Painted aluminum door frames with locksets and
with hinges painted to match.
(4) PAINT. Two coats latex flat paint in colors to be selected by
Tenant from the Building Standard selection, with not more than two (2) colors
to be in any one room or office.
(5) ACOUSTICAL CEILING. Suspended 2'x2' regular acoustical ceiling
with fissured tiles throughout the Premises, except in passenger and service
elevator lobby areas, and public restrooms, where Landlord may choose to
specify other types of materials.
(6) LIGHT FIXTURES. 2'x4' four (4) tube 40-watt miser recessed
fluorescent return air lighting fixtures with acrylic prismatic lenses.
(7) EXIT SIGN/LIGHT. Per code.
(8) FIRE SPRINKLERS. Pendant type head with chrome finish per code.
(9) FIRE EXTINGUISHER CABINETS. Potter-Roemer, Inc., firehose
cabinet flush mounted (paint to match adjacent surface), #7020-1-F-VB, bronze
glass, vertical black lettering recessed 9" x 24" x 5-1/4", extinguisher
#3005, 5 lbs.
(10) LIFE SAFETY SPEAKERS. Per base building architectural
specifications.
(11) HVAC. The HVAC system is variable volume system.
(12) CARPET. Carpeting in elevator lobbies and common corridors on
all multiple-tenancy office floors in color and type as selected by Landlord;
carpeting within office space as required and selected by Tenant from
Building Standard selection.
(13) DRAPERIES. Draperies on all exterior office windows in color and
type as selected by Landlord.