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EXHIBIT 10.9
SUBLEASE AGREEMENT
This Sublease Agreement ("Sublease") is made effective as of the ____
day of May, 1999, (the "Effective Date") by and between Legato Systems, Inc., a
California corporation ("Sublessor"), and Digital Impact, Inc., a California
corporation ("Sublessee"). Sublessor agrees to sublease to Sublessee, and
Sublessee agrees to sublease from Sublessor, those certain premises situated
in the City of San Mateo, County of San Mateo, State of California,
consisting of approximately 18,886 square feet of space known as Suite 110 and
200 in the building at 000 Xxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, more
particularly set forth on Exhibit "A" hereto (the "Subleased Premises").
ARTICLE 1
MASTER LEASE AND OTHER AGREEMENTS
1.1 Subject to Master Lease. Except as specifically set forth herein,
this Sublease is subject and subordinate to all of the terms and conditions of
the lease (the "Original Lease") dated April 24, 1997, between Casiopea Venture
Corporation ("Master Lessor") and Sublessor's assignor, Qualix Group, Inc., as
Lessee. The Original Lease and attached Addenda A and B, Exhibits, and
Acknowledgment of Lease Commencement dated October, 28, 1998, are referred to
herein as the "Master Lease". Sublessee hereby assumes and agrees to perform the
obligations of Lessee under the Master Lease as more particularly set forth
hereafter. Unless otherwise defined, all capitalized terms used herein shall
have the same meanings as given them in the Master Lease. A copy of the Master
Lease is attached hereto as Exhibit "B" and incorporated herein by this
reference. Sublessee shall not commit or permit to be committed any act or
omission which would violate any term or condition of the Master Lease.
Sublessee shall neither do nor permit anything to be done which would cause the
Master Lease to be terminated or forfeited by reason of any right of termination
or forfeiture reserved or vested in Master Lessor under the Master Lease, and
Sublessee shall indemnify and hold Sublessor harmless from and against all
liability, judgments, costs, demands, claims, and damages of any kind whatsoever
(including, without limitation, attorneys' fees and court costs) by reason of
any failure on the part of Sublessee to perform any of the obligations of Lessee
under the Master Lease which Sublessee has become obligated hereunder to
perform. In the event of the termination of Sublessor's interest as Lessee under
the Master Lease, then this Sublease shall terminate automatically upon such
termination without any liability of Master Lessor to Sublessee. In the event of
the termination of Sublessor's interest as Lessee under the Master Lease for any
reason other than for Sublessor's breach, then this Sublease shall terminate
automatically upon such termination without any liability of Sublessor to
Sublessee. Sublessee represents and warrants to Sublessor that it has read and
is familiar with the Master Lease.
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Sublessor represents to Sublessee that the Master Lease is in full force
and effect, and that no default or event that, with the passing of time or the
giving of notice or both, would constitute a default, exists on the part of
Sublessor. Sublessor agrees to maintain the Master Lease in full force and
effect throughout the term of this Sublease, except to the extent that any
failure to maintain the Master Lease is due to the failure of Sublessee to
comply with any of its obligations under this Sublease.
Sublessor shall not amend or modify the Master Lease in such a manner as
to materially adversely affect Sublessee's use of the Subleased Premises or
increase the obligations or decrease the rights of Sublessee hereunder, without
the prior written consent of Sublessee which may be granted or withheld at
Sublessee's sole discretion. In the event that Sublessee desires to take any
action that will require the consent of Master Lessor, Sublessor shall use
reasonable and diligent efforts at no cost to Sublessor to obtain such consent
on behalf of Sublessee, provided that Sublessor shall not be liable in any way
for the failure of Master Lessor to so consent.
1.2 Applicable Provisions. All of the terms and conditions contained in
the Master Lease as they may apply to the Subleased Premises, except those
directly contradicted or incorporated by the terms and conditions contained in
this document, and specifically except for Paragraphs I.1a, b, d, e, f, j, 1.2d,
1.3, 1.4, 3, 4.1, 4.2, 4.4, 5, 6, 19, 36, 39, 49, 50, Lease Rider No. 1, Lease
Rider No. 2, Exhibits B, D, and F are incorporated herein and shall be terms and
conditions of this Sublease (with each reference therein to "Landlord,"
"Tenant," and "Lease" to be deemed to refer to Sublessor, Sublessee, and
Sublease, respectively, as appropriate) and along with all of the following
terms and conditions set forth in this document, shall constitute the complete
terms and conditions of this Sublease. Paragraphs 15, 16, 23, 24, 27, 28, 29,
31, 41 and 43 when referencing Landlord shall mean Master Lessor and shall not
mean Sublessor in this Sublease.
1.3 Obligations of Sublessor. Notwithstanding anything herein contained,
the only services or rights to which Sublessee is entitled hereunder are those
to which Sublessor is entitled under the Master Lease, and for all such services
and rights Sublessee shall look solely to the Master Lessor under the Master
Lease, and the obligations of Sublessor hereunder shall be limited to using its
reasonable good faith efforts to obtain the performance by Master Lessor of its
obligations. Such reasonable good faith efforts shall include, without
limitations, upon Sublessee's request, (a) immediately notifying Master Landlord
of its non-performance under the Master Lease and requesting that Master
Landlord perform its obligations under the Master Lease and/or (b) assigning
Sublessor's rights under the Master Lease to Sublessee to the extent necessary
to permit Sublessee to institute legal proceedings against Master Landlord to
obtain the performance of Master Landlord's obligations under the Master Lease;
provided, however, that if Sublessee commences a lawsuit or other action,
Sublessee shall pay all costs and expenses incurred in connection therewith, and
Sublessee shall indemnify Sublessor against, and hold Sublessor harmless from,
all costs and expenses incurred by Sublessor in connection therewith. Sublessor
shall have no liability to Sublessee or any other person for damage of any
nature whatsoever as a result of the failure of Master
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Lessor to perform said obligations except for Master Lessor's termination of the
Sublessor's interest as Lessee under the Master Lease in the event of
Sublessor's breach of the Master Lease, and Sublessee shall indemnify and hold
Sublessor harmless from any and all claims and liability whatsoever for any such
damage including, without limitation, all costs and attorneys' fees incurred in
defending against same.
ARTICLE 2
TERM
2.1 Term. The term of this Sublease shall commence on June 1, 1999. This
shall be referred to as the "Commencement Date." The term of this Sublease shall
end on April 3, 2003, unless sooner terminated pursuant to any provision of the
Master Lease applicable to the Subleased Premises (the "Expiration Date").
Sublessor shall have no obligation to Sublessee to exercise any of its options
to extend under the Master Lease.
2.2 Option to Extend. Sublessee shall have no option to extend this
Sublease.
2.3 Sublessor's Inability to Deliver Premises. In the event Sublessor is
unable to deliver possession of the Subleased Premises on or before the
Commencement Date, Sublessor shall not be liable for any damage caused thereby,
nor shall this Sublease be void or voidable, but Sublessee's obligations
hereunder shall xxxxx until such time as Sublessor delivers possession of the
Subleased Premises to Sublessee, but the term hereof shall not be extended by
such delay. If Sublessee, with Sublessor's consent, takes possession prior to
commencement of the term. Sublessee shall do so subject to all the covenants and
conditions hereof and if for the purpose of conducting business therein, shall
pay pro rated Base Rent for each day at the same rate as that prescribed for the
first month of the term. In the event Sublessor has been unable to deliver
possession of the Subleased Premises within thirty (30) days after June 1, 1999,
Sublessee, at Sublessee's sole option, may terminate this Sublease, and
Sublessor shall return all sums paid by Sublessee to Sublessor.
ARTICLE 3
RENT
3.1 Rent. Subject to the provisions of Paragraph 13.7 of the Master
Lease, Sublessee shall pay to Sublessor each month during the term of this
Sublease, rent in the amounts set for in Exhibit C hereto, in advance, with the
first months rent due on Sublease execution and on or before the first of each
month thereafter ("Base Rent"). Rent for partial months at the commencement or
termination of this Sublease shall be prorated. Rent for partial paid to the
Sublessor at its business address noted herein, or at any other place Sublessor
may from time to time designate by written notice mailed or delivered to
Sublessee.
3.2 Personal Property Acquisition Sublessee shall pay to Sublessor upon
written notice of Master Lessor consent to this Sublease the sum of $110,000 for
purchase of
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Sublessor's personal property (the "Personal Property") in the Subleased
Premises comprised of the existing cubicle systems, wiring, two conference rooms
(off main lobby) tables and chairs and reception area furniture, all as more
particularly set forth in Exhibit D attached hereto.
Sublessor warrants that title to all Personal Property will pass to
Sublessee upon the receipt of payment therefore free and clear of all liens,
claims, security interests or encumbrances. In the event of any breach of the
foregoing warranty, Sublessor shall promptly rectify the same as its sole cost
and expense and shall indemnify, defend, and hold Sublessee harmless
from and against any damages, liability, suits, losses, claims, actions, costs,
or expenses (including attorneys' and consultants' fees and costs) suffered by
Sublessee in connection with any such breach.
3.3 Additional Rent. Sublessor is charged for Taxes, Assessments and
Operating Expenses pursuant to Section 5 of the Master Lease and Sublessee shall
be liable for such sums. If Sublessee shall procure any additional services from
Master Lessor, Sublessee shall make such payment to Sublessor or Master Lessor,
as Sublessor shall direct. Any rent or other sums payable by Sublessee under
this Section 3 shall constitute and be due as additional rent. Base Rent,
Operating Expenses due under the Master Lease and additional rent shall herein
be referred to as "Rent".
3.4 Pro Rata Share Sublessee's pro rata share under this Sublease shall
be as set forth in the Master Lease Paragraph 1.1h. Sublessee acknowledges all
square footage measurements noted and relied on in this Sublease and the Master
Lease are estimates, and no adjustments shall be made based upon any actual
measurements which may be made.
ARTICLE 4
SECURITY DEPOSIT
4.1 Security Deposit. Upon execution hereof, Sublessee shall deposit
with Sublessor the sum of Sixty-Six Thousand One Hundred and One Dollars
($66,101.00) as and for a Security Deposit to secure Sublessee's full and timely
performance of all of its obligations hereunder. If Sublessee fails to pay Rent
or any other sums as and when due hereunder, or otherwise defaults with respect
to any provision of this Sublease, Sublessor may (but shall not be obligated to)
use, apply, or retain all or any portion of said deposit for payment of any sum
for which Sublessee is obligated or which will compensate Sublessor for any loss
or damage which Sublessor may suffer thereby. Any such use, application, or
retention shall not constitute a waiver by Sublessor of its right to enforce its
other remedies hereunder, at law, or in equity. If any portion of said deposit
is so used, applied, or retained, Sublessee shall, within 10 days after delivery
of written demand from Sublessor, restore said deposit to its original amount.
Sublessee's failure to do so shall constitute a material breach of this
Sublease, and in such event Sublessor may elect, among or in addition to other
remedies, to terminate this Sublease. Sublessor shall not be a trustee of such
deposit, and shall not be required to keep this deposit separate from its
accounts. Sublessor alone shall be
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entitled to any interest or earnings thereon and Sublessor shall have the free
use of same. If Sublessee fully and faithfully performs all of its obligations
hereunder, then so much of the deposit as remains shall be returned to Sublessee
(without payment of interest or earnings thereon) within 30 days after the later
of (i) expiration or sooner termination of the term hereof, or (ii) Sublessee's
surrender of possession of the Premises to Sublessor.
ARTICLE 5
CONDITION OF PREMISES
5.1 Condition of the Premises Sublessee acknowledges that as of the
Commencement Date, the Premises, and every part thereof, are in good condition
and without need of repair, and Sublessee accepts the Premises "as is",
Sublessee having made all investigations and tests it has deemed necessary or
desirable in order to establish to its own complete satisfaction the condition
of the Premises. Sublessee accepts the Premises in their condition existing as
of the Commencement Date, subject to all applicable zoning, municipal, county
and state laws, ordinances, and regulations governing and regulating the use of
the Premises and any covenants or restrictions of record. Sublessee acknowledges
that neither Sublessor nor Master Lessor have made any representations or
warranties as to the condition of the Premises or its present or future
suitability for Sublessee's purposes.
ARTICLE 6
INSURANCE
6.1 Sublessee's Insurance With respect to the Tenant's insurance under
the Master Lease, the same is to be provided by Sublessee as described in the
Master Lease, and such policies of insurance shall include as named insureds
Master Lessor, Sublessor and any lender as required by Master Lessor.
6.2 Waiver of Subrogation With respect to the waiver of subrogation
contained in the Master Lease, such waiver shall be deemed to be modified to
constitute an agreement by and among Master Lessor, Sublessor and Sublessee (and
Master Lessor's consent to this Sublease shall be deemed to constitute its
approval of this modification).
ARTICLE 7
USE OF PREMISES; ALTERATIONS
7.1 Use of Premises Sublessee shall use the Subleased Premises only for
those purposes permitted in the Master Lease. Sublessee shall not use any
Hazardous Substances as defined in the Master Lease except for ordinary office
supplies (and then only in compliance with the provisions of the Master Lease)
in its use of the Sublease Premises.
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7.2 Alterations Sublessee shall not make any alterations, improvements,
or modifications to the Subleased Premises without the express prior written
consent of Sublessor and of Master Lessor, which consent by Sublessor shall not
be unreasonably withheld. On termination of this Sublease, Sublessee shall
remove any or all of such improvements and to restore the Subleased Premises (or
any part thereof) to the same condition as of the Commencement Date of this
Sublease, reasonable wear and tear and damage due to casualty excepted and
except as otherwise instructed in writing by either Sublessor or Master Lessor
to not remove certain alterations. Should Sublessee fail to remove such
improvements and restore the Subleased Premises on termination of this Sublease
unless instructed otherwise in writing as set forth above, Sublessor shall have
the right to do so, and charge Sublessee therefor. In no event shall Sublessee
be required to remove any Tenant Improvements or Alterations installed by or on
behalf of Sublessor.
ARTICLE 8
ASSIGNMENT, SUBLETTING & ENCUMBRANCE
8.1 Consent Required. Sublessee shall not assign this Lease or any
interest therein nor shall Sublessee sublet, license, encumber or permit the
Premises or any part thereof to be used or occupied by others, without
Sublessor's and Master Lessor's prior written consent, which consent by
Sublessor shall not be unreasonably withheld and which consent by Master Lessor
shall be granted or withheld in accordance with the provisions of the Master
Lease. The consent by Sublessor and Master Lessor to any assignment or
subletting shall not waive the need for Sublessee (and Sublessee's assignee or
subtenant) to obtain the consent of Sublessor and Master Lessor to any different
or further assignment or subletting. All conditions and standards set forth in
the Master Lease regarding assignments and subletting shall apply, and to the
extent there is any Bonus Rental, (Rent paid by such Assignee or SubSublessee in
excess of Rent paid by Sublessee hereunder) the Bonus Rental shall first be
split per the Master Lease and any Bonus Rental to go to Sublessee shall be
split 50/50 with Sublessor to be paid to Sublessor within five (5) days of
receipt by Sublessee.
8.2 Form of Document. Every assignment, agreement, or sublease shall (i)
recite that it is and shall be subject and subordinate to the provisions of this
Sublease, that the assignee or subtenant assumes Sublessee's obligation
hereunder, that the termination of this Sublease shall at Sublessor's sole
election, constitute a termination of every such assignment or sublease, and
(ii) contain such other terms and conditions as shall be reasonably requested or
provided by Sublessor's attorneys.
8.3 No Release of Sublessee. Regardless of Sublessor's consent, no
subletting or assignment shall release Sublessee of Sublessee's obligation or
alter the primary liability of Sublessee to pay the Rent and to perform all
other obligations to be performed by Sublessee hereunder. The acceptance of Rent
by Sublessor from any other person shall not be deemed to be a waiver by
Sublessor of any provision hereof. In the event of default by any assignee,
subtenant or any other successor of Sublessee, in the performance of any of the
terms hereof,
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Sublessor may proceed directly against Sublessee without the necessity of
exhausting remedies against such assignee, subtenant or successor.
ARTICLE 9
DEFAULT
9.1 Default Described. The occurrence of any of the following shall
constitute a material breach of this Sublease and a default by Sublessee: (i)
failure to pay Rent or any other amount within three (3) business days after
delivery to Sublessee of written notice that such amount has not been paid when
due; (ii) abandonment of the Premises; (iii) assignment, encumbrance or
subletting in violation of the provisions hereof, or waste or nuisance or an
act, omission or condition prohibited hereunder at the Premises or use of the
Premises for an unlawful purpose or failure to perform any provision of this
Sublease which cannot, after such failure, be performed; or (iv) Sublessee's
failure to perform timely any other provision of this Sublease or the Master
Lease as incorporated herein.
9.2 Sublessor's Remedies. Sublessor shall have the remedies set forth in
the Master Lease as if Sublessor is Master Lessor. These remedies are not
exclusive; they are cumulative and in addition to any remedies now or later
allowed by law.
9.3 All Sums Due and Payable as Rent. Sublessee shall also pay without
notice, or where notice is required under this Sublease, immediately upon demand
without any abatement, deduction, or setoff, as additional rent all sums,
impositions, costs, expenses, and other payments which Sublessee in any of the
provisions of this Sublease assumes or agrees to pay, and, in case of any
nonpayment thereof, Sublessor shall have, in addition to all other rights and
remedies, all the rights and remedies provided for in this Sublease or by law in
the case of nonpayment of rent.
9.4 Sublessor Default. For purposes of this Sublease, Sublessor shall
not be deemed in default hereunder unless and until Sublessee shall first
deliver to Sublessor thirty (30) days' prior written notice, and Sublessor shall
fail to cure said default within said thirty (30) day period, or in the event
Sublessor shall reasonably require in excess of thirty (30) days to cure said
default, shall fail to commence said cure with said thirty (30) day period, and
thereafter diligently to prosecute the same to completion.
9.5 Notice of Event of Default under Master Lease Sublessor shall notify
Sublessee of any Event of Default under the Master Lease, or of any other event
of which Sublessor has actual knowledge which will impair Sublessee's ability to
conduct its normal business at the Subleased Premises, as soon as reasonably
practicable following Sublessor's receipt of notice from Master Lessor of an
Event of Default or Sublessor's actual knowledge of such impairment.
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ARTICLE 10
CONSENT OF MASTER LESSOR
10.1 Precondition. The Master Lease requires that Sublessor obtain the
consent of Master Lessor to any subletting by Sublessor. This Sublease shall not
be effective unless Master Lessor signs a consent to this subletting
satisfactory to Sublessor and Sublessee.
Sublessor shall use commercially reasonable efforts to obtain the timely
consent of Master Lessor.
ARTICLE 11
MISCELLANEOUS
11.1 Conflict with Master Lease; Interpretation. In the event of any
conflict between the provisions of the Master Lease and this Sublease as between
Sublessor and Sublessee, the Master Lease shall govern and control except to the
extent directly contradicted by the terms of this Sublease. As between Master
Lessor on the one hand and Sublessor and Sublessee on the other hand, the Master
Lease shall govern and control, except to the extent this Sublease or Master
Lessor's consent hereto reflects an express agreement by Master Lessor to be
bound by the terms of this Sublease. No presumption shall apply in the
interpretation or construction of this Sublease as a result of Sublessor having
drafted the whole or any part hereof.
11.2 Remedies Cumulative. The rights, privileges, elections, and
remedies of Sublessor in this Sublease, at law, and in equity are cumulative and
not alternative.
11.3 Waiver of Redemption. Sublessee hereby expressly waives any and all
rights of redemption to which it may be entitled by or under any present or
future laws in the event Sublessor shall obtain a judgment for possession of the
Premises.
11.4 Holding Over. This Sublease is subject to the terms of Paragraph 19
of the Master Lease where Tenant shall mean Sublessee and Landlord shall mean
Sublessor.
ARTICLE 12
BROKER'S COMMISSIONS
12.1 Commission. Sublessor and Sublessee represent and warrant to each
other that each has dealt with the following brokers: BT Commercial (Sublessor's
Broker) and Cornish & Xxxxx (Sublessee's Broker) and with no other agent,
finder, or other such person with respect to this Sublease and each agrees to
indemnify and hold the other harmless from any claim asserted against the other
by any broker, agent, finder, or other such person not
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identified above as Sublessor's Broker or Sublessee's Broker. The commission to
the Brokers is pursuant to separate agreement.
ARTICLE 13
NOTICES AND PAYMENTS
13.1 Certified Mail. Any notice, demand, request, consent, approval,
submittal or communication that either party desires or is required to give to
the other party or any other person shall be in writing and either served
personally or sent by prepaid, first-class certified mail or commercial
overnight delivery service. Such Notice shall be effective on the date of actual
receipt (in the case of personal service or commercial overnight delivery
service) or two days after deposit in the United States mail, to the following
addresses:
Sublessor at: Legato Systems, 0000 Xxxxxx Xxxxx, Xxxx Xxxx, XX 00000.
Sublessee at the Premises, unless Sublessee has abandoned or vacated
the Premises and notified the Sublessor of any other address.
ARTICLE 14
ATTORNEYS' FEES
14.1 Attorneys' Fees. In the event any party shall bring any action,
arbitration proceeding or legal proceeding alleging a breach of any provision of
this Sublease, to recover rent, to terminate this Sublease, or to enforce,
protect, determine or establish any term or covenant of this Sublease or rights
or duties hereunder of either party, the prevailing party (as defined in
Paragraph 29 of the Master Lease) shall be entitled to recover from the
non-prevailing party as a part of such action or proceeding, or in a separate
action for that purpose, reasonable attorneys' fees, expert witness fees, court
costs and other reasonable expenses incurred by the prevailing party.
ARTICLE 15
EXHIBITS
15.1 Exhibits and Attachments. All exhibits and attachments to this
Sublease are a part hereof.
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IN WITNESS WHEREOF, Sublessor and Sublessee have executed and delivered
this Sublease on the date first set forth above.
SUBLESSOR SUBLESSEE
LEGATO SYSTEMS, INC. DIGITAL IMPACT, INC.
a California corporation a California corporation
By: By:/s/ Signature Illegible
--------------------------
Its: Its: PRESIDENT
-------------------------
By: By:
------------------------- -----------------------
Its: Its:
------------------------- -----------------------
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EXHIBIT "C"
BASE RENT
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RENTAL PERIOD Monthly Rent
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From Lease Commencement through $40,200.00
3/31/2000 (to allow for phase-in of
the space used)
4/01/2000 through 3/31/2001 $64,212.40
4/01/2001 through 3/31/2002 $65,156.70
4/01/2002 through Expiration Date $66,701.00
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