EXHIBIT 10.16
AGREEMENT
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THIS AGREEMENT (this "Agreement") is dated as of June 29, 1999, and is made
by and between Xxxx Xxxxx' idealab!, a California corporation ("idealab!") and
FreePC, Inc., a Delaware corporation ("FreePC"). idealab! and FreePC hereby
agree as follows:
1. Recitals: This Agreement is made with reference to the fact that
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Xxxxxxx Information & Technology, Group, Inc., as landlord ("Xxxxxxx"), and
idealab!, as tenant, entered into that certain lease, dated as of June 17, 1999
(the "Lease"), with respect to the entire eighth floor and a proportionate share
of the main lobby of such building measuring approximately 29,064 rentable
square feet of premises (the "Premises") located at 00 X. Xxxxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxxxx. A copy of the Lease is attached hereto as Exhibit A and
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incorporated by reference herein.
2. Premises: idealab! hereby agrees to rent to FreePC, and FreePC hereby
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agrees to rent from idealab!, approximately 12,406 rentable square feet of the
Premises, marked as "A" on Exhibit B hereto, as may be increased from time to
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time pursuant to Sections 25 and 26 hereof (hereinafter, the "Rented Premises").
This Agreement shall be at all times subject and subordinate to the Lease.
3. Term: The term of this Agreement (the "Term") shall commence on June
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26, 1999 (the "Commencement Date") and terminate on June 26, 2000, as may be
extended pursuant to Section 24 (the "Expiration Date"), unless this Agreement
is sooner terminated pursuant to its terms.
4. Security Deposit. FreePC shall pay to idealab! the sum of $57,528.44
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as a deposit (the "Security Deposit"), receipt of which is hereby acknowledged.
Additionally, FreePC shall pay to idealab! the additional amounts as follows:
(a) on the date that idealab! delivers to FreePC possession of the North Space
pursuant to Section 25, FreePC shall pay to idealab! an additional sum of
$25,252.48, (b) if FreePC rents additional space from idealab! pursuant to
Section 26, FreePC shall pay to idealab! an additional sum equal to two times
the Base Rent (as defined below) allocated to that portion of additional space
rented by FreePC.
5. Rent:
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A. Base Rent. FreePC shall pay to idealab! as rent for the Rented
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Premises ("Base Rent") for each month during the Term, the following amounts:
(i) $1.50 per rentable square foot through December 31, 1999, and (ii) $1.87 per
rentable square foot for the balance of the Term. Base Rent for any period
during the Term hereof which is for less than one (1) month of the Term shall be
a pro rata portion of the monthly installment. Base Rent shall be payable on
the first day of each month without notice or demand and without any deduction,
offset, or abatement, in lawful money of the United States of America. Base
Rent and Additional Rent (as defined below) shall be paid directly to idealab!
at 000 X. Xxxxx Xxxxxx, Xxxxxxxx, XX 00000, Attn.: Accounting, or such other
address as may be designated in writing by idealab!.
B. Monthly Costs. FreePC shall be responsible for its proportionate
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share of any payment of any operating expenses, costs of maintenance, repair and
improvements, taxes, assessments, insurance costs, utility charges or any other
amounts in connection with the use or occupancy of the Rented
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Premises payable by idealab! under the Lease. Additionally, FreePC shall pay its
proportionate share of Excess Expenses paid by idealab! under Article 5.2 of the
Lease.
C. Parking Rent. FreePC shall pay in twelve (12) equal installments
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during the Term, the Parking Rent specified in Section 18. Parking Rent shall
be prorated and adjusted in the same manner as Base Rent under Section 5(A).
Notwithstanding the Parking Rent set forth herein, FreePC by written notice
delivered to idealab! at least fifteen (15) days in advance may, during the
first four (4) months of this Agreement, reduce the number of parking spaces
hired with a proportionate reduction in Parking Rent. Any such reduction shall
be effective only on the first day of the month following such notice.
D. Taxes. FreePC shall pay to idealab! its proportionate share of
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Taxes (as defined in the Lease) imposed on idealab! pursuant to Section 6.1 of
the Lease.
E. Additional Rent. All monies other than Base Rent required to be
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paid by FreePC under this Agreement shall be deemed additional rent ("Additional
Rent"). Base Rent and Additional Rent are hereinafter collectively referred to
as "Rent."
6. Late Charge: If FreePC fails to pay to idealab! any amount due
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hereunder within five (5) business days after the due date, FreePC shall pay
idealab! upon demand interest on all amounts due, at a rate equal to the lesser
of the prime rate quoted by the Bank of America plus two percent (2%) or the
maximum rate allowed by law (the "Interest Rate"), from the fifth (5th) business
day after the due date to and including the date of the payment.
7. Use: FreePC may use the Rented Premises only for the uses permitted
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under the Lease. FreePC shall promptly and properly observe and comply with all
laws with respect to FreePC's use of the Rented Premises. Notwithstanding the
foregoing, FreePC shall not be required to comply, or pay the cost of complying,
with any laws requiring the construction of alterations or improvements to the
Rented Premises, unless due to FreePC's particular use of the Rented Premises.
FreePC shall comply with all restrictions set forth in the Lease and all rules
and regulations promulgated from time to time by Xxxxxxx.
8. Repairs: FreePC shall maintain in good order and condition the Rented
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Premises. This includes promptly reporting to idealab! all maintenance and
repairs needed for the Rented Premises. Should the need for repairs arise
directly or indirectly from FreePC's abuse or neglect, FreePC shall be solely
responsible for the cost of such repairs.
9. Improvements: idealab! shall make the improvements set forth on
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Exhibit C hereto. No other alterations or improvements shall be made to the
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Rented Premises, except in accordance with the Lease, and with the prior written
consent of idealab!.
10. Services: idealab! shall cause Xxxxxxx to provide the Premises (i)
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twenty-four (24) hours per day, seven (7) days per week, water, gas, electricity
and sewer service, (ii) Monday through Friday, janitorial service and waste
pick-up and (iii) heating, ventilating and air conditioning ("HVAC") (A) Monday
through Friday from 8:00 a.m. to 6:00 p.m. and on Saturdays from 8:00 a.m. to
1:00 p.m., except on holidays and (B) at all other times requested by FreePC,
whereupon FreePC shall pay its proportionate cost of such HVAC.
11. Indemnity:
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A. Except to the extent caused by the gross negligence or willful
misconduct of idealab!, its agents, employees or invitees, FreePC shall
indemnify, defend with counsel reasonably acceptable to idealab!, protect and
hold idealab! harmless from and against any and all claims, liabilities,
judgments, causes of action, damages, costs and expenses (including reasonable
attorneys' and experts' fees), caused by or due to: (i) the use, condition,
operation or occupation by FreePC of the Rented Premises; (ii) any repairs,
alterations, additions or changes made by FreePC, or idealab! on behalf of
FreePC, to the Rented Premises (the "Alterations"), (iii) the negligence or
willful misconduct by FreePC, its employees, agents, sublessees, invitees or
licensees or (iv) any failure by FreePC to comply with the terms or conditions
of this Agreement. FreePC's indemnification of idealab! shall survive
termination of this Agreement.
B. Except to the extent caused by the gross negligence or willful
misconduct of FreePC, its agents, employees or invitees, idealab! shall
indemnify, defend with counsel reasonably acceptable to FreePC, protect and hold
FreePC harmless from and against any and all reasonable claims, liabilities,
judgments, causes of action, damages, costs and expenses (including reasonable
attorneys' and experts' fees) caused by or due to: (i) the negligence or willful
misconduct of idealab!, its employees, agents, sublessees, invitees or
licensees; or (ii) any failure by idealab! to comply with the terms or
conditions of this Agreement, unless such failure relates to an act that FreePC
is obligated to indemnify idealab! under Sections 11(A)(i) or 11(A)(ii).
idealab!'s indemnification of FreePC shall survive termination of this
Agreement.
12. Insurance: FreePC shall keep in full force and effect, at FreePC's
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sole cost and expense, a commercial general liability policy of insurance,
insuring coverage of idealab! and FreePC in the amounts set forth in Section
9.3.1 of the Lease. The liability policy shall name idealab! as an additional
insured.
13. Release and Waiver of Subrogation: idealab! and FreePC hereby release
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each other, and their respective agents, employees, subtenants, and contractors,
from all liability for damage to any property that is caused by or results from
a risk which is actually insured against or which would normally be covered by
"all risk" property insurance, without regard to the negligence or willful
misconduct of the entity so released. Each party shall use its best efforts to
cause each insurance policy it obtains to provide that the insurer thereunder
waives all right of recovery by way of subrogation as required herein in
connection with any injury or damage covered by the policy. If the insurance
policy cannot be obtained with the waiver of subrogation, or if the waiver of
subrogation is available only at additional cost and the party for whose benefit
the waiver is not obtained does not pay the additional cost, then the party
obtaining the insurance immediately shall notify the other party.
14. Damage: If the Premises, or any part thereof, are damaged due to any
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peril, FreePC shall be entitled to an abatement of all Rent to the extent of the
interference with FreePC's use of the Rented Premises occasioned thereby. If
the Premises are damaged by any peril and the repair would reasonably be
expected to take more than one hundred eighty (180) days, then (i) FreePC shall
have the option to terminate this Agreement by delivery of written notice
thereof to idealab! and (ii) idealab! shall have the right to terminate this
Agreement if the Lease is terminated by Xxxxxxx
15. Assignment: Except to a subsidiary of FreePC or pursuant to a change
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of control in FreePC, FreePC may not assign this Agreement, rent a portion of
the Rented Premises or permit any use of the Rented Premises by another party,
without the prior written consent of idealab!.
16. Default: FreePC shall be in default of its obligations under this
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Agreement if any of the following events occur:
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A. FreePC fails to pay any Rent when due, when such failure continues
for ten (10) days after written notice;
B. The legal abandonment of the Rented Premises by FreePC;
C. The failure of FreePC to do, or cause to be done, any act required
by this Agreement, other than payment of Rent or other charges, which failure
continues for a period of ten (10) days after written notice or, if such breach
cannot reasonably be cured within said ten (10) day period, FreePC fails to
commence curative action within said ten (10) day period and diligently to
pursue the same to completion;
D. To the extent permitted by law, any act of bankruptcy caused,
suffered or permitted by FreePC. For purposes of this Agreement, "act of
bankruptcy" shall include any of the following:
(i) Any general assignment for the benefit of creditors;
(ii) The filing of any petition by or against FreePC to have
FreePC adjudged a bankrupt or a petition for reorganization or arrangement under
Title 11 of the United States Code relating to bankruptcy, as amended or
comparable law, unless such petition is filed against FreePC and dismissed
within ninety (90) days;
(iii) The appointment of a trustee or receiver to take possession
of substantially all of FreePC's assets located in the Rented Premises or
FreePC's interest in this Agreement; or
(iv) The attachment, execution or other judicial seizure of
substantially all of FreePC's assets located in the Rented Premises, or FreePC's
interest in this Agreement.
E. FreePC commits any other act or omission which constitutes a
default under the Lease, which has not been cured after delivery of written
notice and passage of the applicable grace period provided in the Lease.
17. Remedies: In the event of any default by FreePC, idealab! shall have
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all remedies provided under the Lease and by applicable law.
18. Parking: FreePC shall have the right to use, throughout the Term,
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parking spaces in the garage as provided in Article 18.4 of the Lease as
follows: (i) non-reserved spaces at a monthly rate of fifty-five dollars ($55)
per non-reserved parking space as follows: (a) from the date hereof until July
31, 1999, sixty (60) spaces, (b) from August 1st until August 31, 1999, seventy
(70) spaces, (c) from September 1st to September 30, 1999, eighty (80) spaces,
(d) from October 1st until October 31, 1999, ninety (90) spaces and (e)
thereafter, one hundred (100) spaces and (ii) one (1) reserved space at a
monthly rent of sixty-five dollars ($65) per reserved parking space
(collectively, the "Parking Rent"), each as such monthly rate may be adjusted
from time to time by Xxxxxx'x Garage. idealab! hereby agrees, upon FreePC's
written request, to reasonably negotiate with the owner of Xxxxxx'x Garage for
the use of additional parking spaces upon terms to be agreed upon by idealab!
and Xxxxxxx.
19. Signage: FreePC shall have the right to include its name and/or logo
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on the Premise directory, if such right is granted to idealab! under Article 12
of the Lease.
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20. Broker: idealab! and FreePC each represent to the other that they
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have dealt with no real estate brokers, finders, agents or salesmen in
connection with this transaction.
21. Notices: Unless at least five (5) days' prior written notice is given
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in the manner set forth in this section, the address of each party shall be that
address set forth below their signatures at the end of this Agreement. All
notices, demands or communications in connection with this Agreement shall be
personally delivered or properly addressed and deposited in the mail (certified,
return receipt requested, and postage prepaid) or by a reputable courier.
Notices shall be deemed delivered (a) upon receipt, if personally delivered, (b)
three (3) business days after mailing, if mailed as set forth above or (c) the
number of days indicated by such courier, if by a reputable courier.
Notwithstanding the foregoing, all notices given to Xxxxxxx under the Lease
shall be considered delivered only when delivered in accordance with the Lease.
22. idealab!'s Obligations with Respect to the Lease: idealab! shall
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fully perform all of its obligations under the Lease to the extent FreePC has
not expressly agreed to perform such obligations under this Agreement. idealab!
shall not terminate the Lease, amend or waive any provisions under the Lease or
make any elections, exercise any right or remedy and give any consent or
approval under the Lease that would materially adversely affect FreePC's use of
the Rented Premises or materially increase FreePC's obligations or materially
decrease FreePC's rights under this Agreement, without FreePC's prior written
consent. idealab!, with respect to the obligations of Xxxxxxx under the Lease,
shall use idealab!'s diligent good faith efforts to cause Xxxxxxx to perform
such obligations for the benefit of FreePC. Such diligent good faith efforts
shall include, without limitation, upon FreePC's written request, immediately
notifying Xxxxxxx of its nonperformance under the Lease and requesting that
Xxxxxxx perform its obligations under the Lease.
23. Quiet Enjoyment: FreePC shall peacefully have, hold and enjoy the
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Rented Premises, subject to the terms and conditions of this Agreement, provided
that there is not a default by FreePC. In the event, however, that idealab!
defaults in the performance or observance of any of idealab!'s remaining
obligations under the Lease or fails to perform idealab!'s stated obligations
under this Agreement, then FreePC shall give idealab! notice specifying in what
manner idealab! has defaulted, and if such default shall not be cured by
idealab! within thirty (30) days thereafter (except that if such default cannot
be cured within said thirty (30) day period, this period shall be extended for
an additional reasonable time, provided that idealab! commences to cure such
default within such thirty (30) day period and proceeds diligently thereafter to
effect such cure as quickly as commercially reasonable), then FreePC shall be
entitled to cure such default and promptly collect from idealab! FreePC's
reasonable expenses in so doing (including, without limitation, reasonable
attorneys' fees and court costs). FreePC shall not be required, however, to
wait the entire cure period described herein if earlier action is required to
comply with the Lease or with any applicable governmental law, regulation or
order.
24. Option to Extend: idealab! hereby grants to FreePC options (the
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"Options") to extend the Term of this Agreement, each for an additional term of
one (1) year, commencing upon the expiration of the initial Term or an Option
term, as the case may be, upon the terms and conditions set forth in this
Section 24 as follows: (A) in the event that idealab! does not exercise its
option to extend under Section 4.2 of the Lease, FreePC shall have one (1)
Option or (B) in the event that idealab! exercises its option to extend under
Section 4.2 of the Lease, FreePC shall have four (4) Options. FreePC may
exercise each Option by giving idealab! written notice of its intention not less
than one hundred (100) days prior to the expiration of the initial Term, or
Option term, as the case may be, of this Agreement. If the Option is exercised,
the Base Rent for the Premises shall be the Fair Value per square foot of the
Rented Premises. For purposes of this Section 24, "Fair Value" means the Fair
Market Rent for the Base Rent and Parking
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Rent (each as defined in Article 5.1.4.2 of the Lease) per square foot or per
parking space, as the case may be, paid by idealab! for the Premises. All other
terms and conditions contained in this Agreement, as the same may be amended
from time to time by the parties in accordance with the provisions hereof, shall
remain in full force and effect and shall apply during each Option term.
25. Right to Expand. FreePC shall automatically have an option to rent
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from idealab! the 6,752 square feet of rentable space marked as "B" on Exhibit B
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hereto (the "North Space"), commencing on October 1, 1999 and idealab! hereby
agrees to evict any tenant in the North Space no later than September 30, 1999.
If idealab! does not deliver possession of the North Space by November 1, 1999,
FreePC may elect to terminate this Agreement by giving written notice to
idealab! by November 10, 1999.
26. Right of First Offer. In the event that any portion of the area
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marked as "C" on Exhibit B hereto becomes available for rent (the "South
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Space"), before idealab! offers the South Space to a potential tenant, FreePC
shall have the right to rent all or any portion of the South Space on the same
terms and conditions as the Rented Premises.
27. Assignment of Tenant Improvement Allowance. In the event that Lessee
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is reimbursed for any Tenant Improvement Allowance pursuant to Exhibit B,
Section VII(A) of the Lease, idealab! agrees to assign such reimbursement to
FreePC within five (5) business days of idealab!'s receipt of such
reimbursement.
28. Miscellaneous: This Agreement shall in all respects be governed by
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and construed in accordance with the laws of the state of California. If any
term of this Agreement is held to be invalid or unenforceable by any court of
competent jurisdiction, then the remainder of this Agreement shall remain in
full force and effect to the fullest extent possible under the law, and shall
not be affected or impaired. This Agreement may not be amended except by the
written agreement of all parties hereto. Time is of the essence with respect to
the performance of every provision of this Agreement in which time of
performance is a factor. Any executed copy of this Agreement shall be deemed an
original for all purposes. This Agreement shall, subject to the provisions
regarding assignment, apply to and bind the respective heirs, successors,
executors, administrators and assigns of idealab! and FreePC. The language in
all parts of this Agreement shall in all cases be construed as a whole according
to its fair meaning, and not strictly for or against either idealab! or FreePC.
The captions used in this Agreement are for convenience only and shall not be
considered in the construction or interpretation of any provision hereof. When
a party is required to do something by this Agreement, it shall do so at its
sole cost and expense without right of reimbursement from the other party unless
specific provision is made therefor. Whenever one party's consent or approval
is required to be given as a condition to the other party's right to take any
action pursuant to this Agreement, then such consent or approval shall not be
unreasonably withheld or delayed. If either party brings any action or legal
proceeding with respect to this Agreement, the prevailing party shall be
entitled to recover reasonable attorneys' and experts' fees and court costs.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
first above written.
IDEALAB!: FREEPC:
XXXX XXXXX' IDEALAB!, FREEPC, INC.
a California corporation a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxxxx Xx Xxxxx
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Name: Xxxxxx Xxxxxxxxx Name: Xxxxxx Xx Xxxxx
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Its: Chief Operating Officer Its: Chief Executive Officer
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Address: 000 X. Xxxxx Xxxxxx Address: 00 X. Xxxxxxxx Xxx., 0xx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Attn.: Chief Operating Officer Attn.: Vice President, Finance
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EXHIBIT A
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LEASE
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EXHIBIT B
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THE PREMISES
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EXHIBIT C
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TENANT IMPROVEMENTS
idealab! shall tear down walls, pull and install cable and electrical wire and
build walls in the Rented Premises.
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