EXHIBIT 10.7
FIRST AMENDMENT TO OFFICE LEASE
THIS FIRST AMENDMENT TO OFFICE LEASE ("First Amendment") is made and
entered into this 14th day of January, 2000 by and between PINE STREET INVESTORS
I, L.L.C., a Delaware limited liability company ("Landlord"), and PEOPLEPC INC.,
a Delaware corporation ("Tenant").
RECITALS
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A. On June 3, 1999, Landlord and Tenant entered into that certain
Office Lease under which Landlord leased to Tenant, and Tenant leased from
Landlord, certain premises comprising the 11th floor of the building (the
"existing Premises") located at 000 Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (the
"Building"). The Office Lease is referred to herein as the "Lease."
B. Tenant desires to lease additional office space on the 10th floor
of the Building to increase its existing Premises and Landlord desires to lease
such space to Tenant on the terms and conditions set forth herein.
C. Any terms set forth in this Agreement which are not expressly
defined shall have the meanings ascribed to them in the Lease.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Landlord and Tenant hereby agree as follows:
AGREEMENT
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1. ADDITIONAL LEASED SPACE. Landlord hereby leases to Tenant and Tenant hereby
hires from Landlord, in addition to the existing Premises, 13,285 rentable
square feet of space comprising the tenth (10th) floor of the Building (Suite
1000), as identified on Exhibit A attached hereto and made a part hereof (the
"Additional Leased Space"). The parties acknowledge and agree that as of the
Commencement Date (defined in Paragraph 2 below): (i) the existing Premises and
the Additional Leased Space shall be collectively referred to herein and for
purposes of the Lease, as amended hereby, as the "Premises," and (ii) the total
rentable area comprising the Premises shall be equal to 26,570 square feet.
2. Term.
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(a) The lease Term for the Additional Leased Space shall commence on
February 15, 2000 (the "Commencement Date"), and, unless sooner terminated as
provided herein or in the Lease, shall expire on February 14, 2005. Said
Commencement Date may be postponed as set forth in Paragraph 2(d) of this First
Amendment. The Term may be extended upon the terms and conditions set forth in
Rider Two to the Lease.
(b) The "Expiration Date" applicable to the existing Premises is hereby
amended to be February 14, 2005.
(c) If Landlord fails to deliver possession of the Additional Leased
Space within five (5) business days following the execution and delivery of this
First Amendment by Landlord and Tenant, the Commencement Date shall be delayed
for each day beyond said five (5) day period until Landlord delivers possession
of the Additional Leased Space. If Landlord, for any reason whatsoever, cannot
deliver possession of the Additional Leased Space to Tenant by the Commencement
Date, this Amendment and the Lease shall not be void or voidable, the term of
the Lease shall not be extended by such delay, the terms and conditions of the
Lease applicable to the existing Premises shall in no way be affected thereby,
and the Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom; provided, however, if Landlord is unable, for any reason except to
the extent caused by Tenant, its contractors, agents or employees, to deliver
possession of the Additional Leased Space to Tenant within one hundred twenty
(120) days following execution and delivery of this First Amendment by both
Landlord and Tenant, Tenant shall, as its sole remedy, have the right to
terminate the Lease as to the Additional Leased Space only by delivering written
notice to Landlord any time thereafter until Landlord delivers possession of the
Premises to Tenant. Upon such termination, Landlord and Tenant shall be relieved
of their obligations hereunder and under the Lease as it applies to the
Additional Leased Space, and any Security Deposit and prepaid Base Rent paid
hereunder attributable to the Additional Leased Space shall be returned to
Tenant.
(d) Article 2(D) of the Lease is hereby deleted in its entirety and
replaced with the following:
"Subject to the terms set forth in this Paragraph, Tenant shall have the right
to terminate and cancel the Lease and the First Amendment as to either the
existing Premises or the Additional Leased Space (the "Terminated Space")
effective as of the expiration of thirty (30) full calendar months following the
Commencement Date applicable to the Additional Leased Space (the "Termination
Date") by delivering to Landlord written notice thereof at least six (6) months
prior to the Termination Date (the "Termination Option"). As a condition to the
effectiveness of Tenant's exercise of its Termination Option, and in addition to
Tenant's obligation to satisfy all other monetary and nonmonetary obligations as
to the Terminated Space under the Lease and the First Amendment through the
Termination Date, Tenant shall, thirty (30) days prior to the Termination Date,
pay Landlord a sum equal to: (i) four months Base Rent applicable to
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the Terminated Space (which, if the Terminated Space is the existing Premises,
shall be equal to the average Base Rent payable by Tenant over the Lease Term),
plus (ii) fifty percent (50.0%) of any other direct out of pocket costs of
Landlord incurred in connection with the leasing of the Terminated Space to
Tenant hereunder and under the Lease, including, without limitation, leasing
commissions paid by Landlord in connection with the execution of the First
Amendment and the Lease and any improvement allowance provided to Tenant by
Landlord for the Terminated Space, the exact sum of which Landlord agrees to
identify to Tenant prior to Tenant's payment thereof; said sum, as applicable,
shall be referred to herein collectively as the "Termination Consideration".
Tenant may not exercise the Termination Option if Tenant is in Default (as
defined in Article 20(A)) under the First Amendment or the Lease. The
Termination Option is personal to Tenant hereunder and may not be exercised by
or assigned, voluntarily or involuntarily, to any person or entity other than a
Related Entity (as defined in Article 17(G)) or a permitted assignee of Tenant's
interest in this Lease which assignee is a successor to Tenant either by merger
or consolidation or a purchaser of all or substantially all of Tenant's assets
(provided such purchaser shall have also assumed in writing Tenant's obligations
under this Lease). Tenant may only exercise the Termination Option with respect
to all (not a portion) of either the existing Premises or the Additional Leased
Space, and Tenant may not exercise the Termination Option as to both the
existing Premises and the Additional Leased Space. If Tenant properly and in a
timely manner exercises ,its Termination Option and properly and in a timely
manner delivers the Termination Consideration to Landlord and satisfies all
other monetary and non-monetary obligations under this Lease, including, without
limitation, the provisions related to surrender of the Premises as to the
Terminated Space, all of which shall be accomplished on or before the
Termination Date, then the Lease and, to the extent applicable, the First
Amendment shall terminate as of midnight on the Termination Date as to the
Terminated Space. Landlord agrees to notify Tenant of any attempted exercise of
the Termination Option which does not satisfy the foregoing terms and
conditions, identifying the deficiencies of such exercise; if Tenant does not
cure all of such deficiencies within five (5) days following Landlord's notice
thereof or if the deficiency is non-curable, Tenant's exercise of the
Termination Option shall be null and void, and the Lease and the First Amendment
shall continue in full force and effect in accordance with its terms.
3. Rent.
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(a) Base Rent. Tenant shall pay Landlord as Base Rent for the Additional
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Leased Space the sum of $46.00 per rentable square foot of the Additional Leased
Space per year, which shall be equal to an annual Base Rent of $611,110.00 and a
monthly Base
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Rent of $50,925.83. Said Base Rent shall be payable commencing as of the
Commencement Date applicable to the Additional Leased Space, except that Base
Rent for the first full calendar month for which said Base Rent shall be due,
shall be paid when Tenant executes this First Amendment. Said Base Rent shall be
in addition to the Base Rent payable for the existing Premises under Article 3
of the Lease. Any Base Rent shall be paid in advance, on or before the first day
of each calendar month during the Lease Term. If the Commencement Date
applicable to the Additional Leased Space is on a day other than the first day
of a calendar month, Base Rent for the Additional Leased Space shall be prorated
for such month.
(b) Operating Expenses. The parties acknowledge and agree that Tenant's
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Prorata Share of Taxes and Operating Expenses attributable to the Additional
Leased Space is 3.3003%. The Base Tax Year and Base Expense Year applicable to
the Additional Leased Space shall be the calendar year 2000. As of the
Commencement Date applicable to the Additional Leased Space, Tenant's Prorata
Share of Taxes and Operating Expenses (as defined in Article 26(0) of the Lease)
shall be increased to 6.601% to take into account the Additional Leased Space.
4. Condition of Additional Leased Space.
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(a) Tenant acknowledges and agrees that, notwithstanding anything to
the contrary in Article 6 of the Lease, it is leasing the Additional Leased
Space in its present and "as is" condition, and that Landlord is not responsible
for making any repairs or improvements thereto except that Landlord agrees to
provide the Allowance as set forth in Paragraph 4(b) of this First Amendment.
Tenant further acknowledges that neither Landlord nor any agent of Landlord has
made any representation or warranty with respect to the Additional Leased Space,
the Building, the Building Systems or Tenant's business.
(b) Landlord shall provide to Tenant an improvement allowance in an amount
equal to One Hundred Thirty-Two Thousand Eight Hundred Fifty Dollars
($132,850.00) ("Allowance"), to reimburse Tenant for actual costs incurred by it
in connection with the refurbishment, repair, improvement and/or alteration of
the Premises, and/or the installation of Lines (as defined in the Lease) within
the Premises. Any repairs, refurbishment, improvements or alterations and
installation of Lines shall be completed by Tenant at its own expense, and
subject to the provisions of Articles 10 and 29 the Lease. The Allowance, or any
portion thereof, shall be payable by Landlord as the work progresses within
thirty (30) days following receipt of Tenant's disbursement requests against
such allowance as set forth herein. Such requests shall include the following
items, to the extent applicable to the items for which the Allowance
disbursement is being requested: (i) proper receipts for said repairs,
refurbishment, improvements or alterations, or any portions thereof, (ii) a
certification from the contractor performing said work that the sums billed
reflect work actually performed, (iii) executed conditional mechanic's and
materialman's lien releases, in the statutory form, from all parties being paid
from such disbursement, (iv) such other information or documentation as Landlord
may reasonably request. Five (5) months following the Commencement Date, any
unused portion of the Allowance will be used as a credit toward Base Rent
payable under the Lease as amended hereby.
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5. Security Deposit. Upon Tenant's execution and delivery of this First
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Amendment, Tenant shall deposit with Landlord $50,925.83 ("Cash Deposit"). In
addition, Tenant shall deliver and cause to be in effect upon the execution of
this First Amendment, during the Lease Term, and for a period sixty (60) days
thereafter, an unconditional, irrevocable letter of credit in the amount of
$509,258.30 in favor of Landlord ("Letter of Credit"). The Cash Deposit and the
Letter of Credit shall be referred to collectively herein as the "Additional
Security Deposit". The Additional Security Deposit and the Security Deposit
provided by Tenant under the Lease shall serve as security for the prompt, full
and faithful performance by Tenant of the terms and provisions of the Lease, as
amended hereunder. In accordance with the terms hereof, Tenant shall deliver the
Letter of Credit to Landlord upon the execution of this First Amendment. Such
Letter of Credit shall be in a form reasonably acceptable to Landlord and issued
by a bank selected by Tenant and reasonably acceptable to Landlord. Without
limiting the generality of the foregoing, any bank issuing the Letter of Credit
shall be a bank that accepts deposits, maintains accounts, has a local San
Francisco office that will negotiate a letter of credit, and the deposits of
which are insured by the Federal Deposit Insurance Corporation. The Letter of
Credit shall provide that the issuing bank shall deliver to Landlord at least
sixty (60) days prior written notice of the termination or expiration of any
such Letter of Credit. Tenant shall pay all expenses, points, or fees incurred
by Tenant in obtaining and maintaining the Letter of Credit. The Additional
Security Deposit and the initial Security Deposit shall be held by Landlord as
security for the prompt, full and faithful performance by Tenant of all of the
terms, covenants and conditions of the Lease and this First Amendment, and for
reimbursement of Landlord of certain expenses incurred by Landlord in connection
with the execution of the Lease and this First Amendment. Without limiting the
generality of the foregoing or anything in the Lease, Tenant acknowledges and
agrees that the Additional Security Deposit may be applied by Landlord, upon the
occurrence of a Default (including, without limitation, termination of the Lease
following a Default) to reimburse Landlord for the (i) unamortized cost of
leasing commissions payable by Landlord in connection with this First Amendment,
and (ii) the unamortized cost of Landlords Allowance (collectively, the
"Reimbursable Expenses"). Tenant agrees, upon termination of the Lease (except
under Article 2(D) of the Lease, as revised hereunder) or upon Tenant's Default,
that Landlord shall have the right to draw upon the Cash Deposit and/or the
Letter of Credit, and apply the proceeds thereof to reimburse Landlord for any
unperformed Lease obligations and any Reimbursable Expenses. In addition, upon
the occurrence of a Default under the Lease, Landlord, in its sole and absolute
discretion, shall have the right to draw upon the Cash Deposit and/or Letter of
Credit and apply the proceeds to satisfy Tenant's outstanding obligations under
the Lease. The use or application of the Additional 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. If Landlord uses or applies any portion of the Letter of
Credit, Tenant shall, within ten (10) business days after demand, (a) deposit
cash (which shall constitute an additional Security Deposit) with Landlord in an
amount that, when added to the amount remaining under the Letter of Credit,
equals $509,258.30, or (b) deliver written documentation executed by the bank
issuing the Letter of Credit that confirms that the Letter of Credit
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has been reinstated or a new or additional Letter of Credit issued in such full
amount, and Tenant's failure to do so shall be deemed a material breach and
"Default" under the Lease. If Landlord uses or applies any portion of the Cash
Deposit, Tenant shall, within ten (10) business days after demand, deposit cash
with Landlord in an amount that when added to the amount remaining under the
Cash Deposit equals $50,925.83. Upon sixty (60) days following expiration of the
Term of the Lease and the vacation of the Premises by Tenant, other than when a
Default has occurred, Landlord shall: (i) release the Letter of Credit and
Tenant's obligation to provide the Letter of Credit shall cease and (ii) return
the Cash Deposit (without interest) to Tenant. In addition, if and only if
Tenant has not been in Default under the Lease, and if Tenant has not been
notified by Landlord that it is in default under the Lease immediately prior to
the applicable period, upon Tenant's written request, Landlord agrees to review
Tenant's then current financial condition at the expiration of twenty-four (24)
months following the Commencement Date for the Additional Leased Space and, if
applicable, following the end of each twelve (12) month period thereafter, for
purposes of determining whether the Letter of Credit should remain in place,
which determination shall be made by Landlord in its sole and absolute
discretion; Tenant agrees to provide Landlord with such information as to
Tenant's financial condition as Landlord may request from time to time. Nothing
is this Paragraph shall affect or limit Landlord's right under Paragraph 36 of
the Lease.
6. Assignment and Subletting.
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(a) The fourth sentence of Article 17(A) of the Lease is hereby deleted in
its entirety and replaced with the following:
"In addition to the other requirements hereunder, if the Subject Space
comprises twenty percent (20%) or more of each full floor of the Premises, the
Subject Space must be separately demiseable with appropriate means of ingress
and egress suitable for normal renting purposes; provided, however, such
condition shall not apply or be the sole basis for Landlord withholding its
consent to any Transfer if Landlord does not exercise its right to recapture or
sublease the Subject Space as provided herein."
(b) The last sentence of Article 17(C) of the Lease is hereby deleted in
its entirety and replaced with the following:
"Notwithstanding the foregoing rights of Landlord, Landlord's right to recapture
or sublease the Subject Space as set forth in this Paragraph shall not apply to
a proposed sublease of the Premises where: (i) the aggregate space sublet and/or
proposed to be sublet by Tenant (including the Subject Space and any common area
square footage allocated or proposed to be allocated to any Transferees) is
equal to less than twenty percent (20%) of each floor of the Premises (or 40% of
the entire Premises as long as the Premises comprises two floors), or (ii) the
term of the proposed sublease is equal to or less than eighteen (18) months, the
aggregate space sublet and/or proposed to be sublet by Tenant (including the
Subject Space and any common area square footage allocated or proposed to be
allocated to any Transferees) is less than 6,000 rentable square feet per floor
of the Premises, the proposed Transferee is an affiliate (as such term is
defined in the California Corporations Code) of Tenant, or an affiliate of any
members of the board
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of directors or of a founder of Tenant, and such proposed Transferee engages in
a technology, media or internet related business or is an internet related
venture capital firm, or (iii) the sublease or assignment does not require
Landlord's consent as expressly set forth in Article 17(G). "
7. Terms and Conditions.
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(a) Except as expressly set forth herein, the terms and conditions of the
Lease shall apply to the Additional Leased Space and are hereby incorporated
herein. The Lease shall not otherwise be affected by the Amendment.
(b) Tenant hereby acknowledges that, as of the date of this Amendment,
there are no existing defaults by Landlord in the performance of its obligations
under the Lease, nor to the best of Tenant's knowledge are there now any facts
or conditions which, with notice or lapse of time or both, will become such a
default, and there is no offset, defense, counterclaim or credit against any
rental or other payment due under the Lease.
8. Brokers. The parties acknowledge that they have dealt only with XXXXXXX &
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WAKEFIELD OF CALIFORNIA, INC. and Landlord's Building representative broker
(whose commission, if any, shall be paid by Landlord pursuant to separate
agreement) as broker, agent or finder in connection with the Additional Leased
Space. The parties agree to indemnify and hold each other harmless from all
damages, judgments, liabilities and expenses (including reasonable attorney's
fees) arising from any claims or demands of any other broker, agent or finder
not disclosed herein with whom the indemnifying party (Landlord or Tenant, as
the case may be) has dealt or claimed to have dealt for any commission or fee
alleged to be due in connection with its participation in the procurement of
Tenant or the negotiations with Tenant concerning the Additional Leased Space or
execution of this First Amendment to Office Lease.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Office Lease as of the date first above written.
LANDLORD:
PINE STREET INVESTORS I, L.L.C.
a Delaware limited liability company
By: Xxxxxx Street Real Estate Fund I, L.P.,
a Delaware limited partnership,
Managing Partner
By: Xxxxxx Street Managers I, L.P.,
a Delaware limited partnership,
General Partner
By: WSC Managers I, Inc.,
a Delaware corporation,
General Partner
By: /s/ XXXXXX XXXXX
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Name: Xxxxxx Xxxxx
Title: Vice President
TENANT:
PEOPLEPC INC.,
a Delaware corporation
By: /s/ XXXX X. XXXXXXXX
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Name: Xxxx X. Xxxxxxxx
Title: VP HR & Administration
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