Exhibit 10.20
SECOND AMENDMENT TO LEASE
THIS SECOND AMENDMENT TO LEASE ("Amendment") is dated for reference
purposes only as of September 4, 2002, and is made by and between XXXXXX X.
PRICE and XXXXXXXXX X. XXXXX, as trustees of the Price Trust UTD October 5, 1984
(collectively, "Landlord") and DIGITALTHINK, INC., a Delaware corporation
("Tenant").
RECITALS
A. Landlord owns that certain real property located in the City and
County of San Francisco, State of California, commonly known as 000 Xxxxxxx
Xxxxxx (the "Premises"), which includes those certain building improvements
located thereon (the "Building").
B. Landlord and Tenant entered into that certain lease dated July 17,
2000 (the " Original Lease"), and First Amendment to Lease effective as of July
20, 2001 (the "First Amendment", which together with the Original Lease is
hereinafter referred to as the "Lease"), for the Premises.
C. At Tenant's request, the parties hereto wish to amend the Lease on
the terms and conditions set forth herein to extend the initial Term of the
Lease to August 31, 2012, to restructure the rental obligations under the Lease
to provide for a deferral of Monthly Basic Rent, and to modify various other
provisions of the Lease.
AGREEMENT
NOW, THEREFORE, for consideration, the adequacy and receipt of which
are hereby acknowledged, Landlord and Tenant agree as follows:
1. Incorporation of Recitals and Definitions. The foregoing recitals are
incorporated into and made a part of this Amendment. Terms which are capitalized
in this Amendment and which are not defined herein shall have the meanings
ascribed to them in the Lease.
2. Modifications of Lease. Notwithstanding anything to the contrary contained in
the Lease, the Lease is modified as follows:
A. Term. Paragraph 2 and any other conflicting term of the Lease are modified as
follows: The Lease Expiration Date shall be extended to August 31, 2012, subject
to extension as provided in this Amendment.
B. Options to Extend Term. The following new Paragraph 2.3 is added to the
Lease: Provided that no monetary or material non-monetary default by Tenant has
occurred under the terms of the Lease (beyond the applicable notice and cure
period) at the time the applicable extension option is exercised or, at
Landlord's option, at the scheduled commencement of the applicable Extended Term
(as hereinafter defined), Tenant shall have the following options to extend the
Term on all the provisions contained in the Lease (except for Monthly Basic Rent
as provided below): four (4) options to extend the Term each for an additional
term of sixty (60) months (each such extension is hereafter referred to as an
"Extended Term") commencing when the initial or the then current Extended Term,
as applicable, expires. The options can only be exercised consecutively (i.e.,
Tenant cannot exercise a succeeding option unless its has exercised any and all
preceding options). Tenant may exercise its option(s) by giving written notice
to Landlord not more than twenty-four (24) months nor less than nine (9) months
before the expiration of the initial Term or then Extended Term, as the case may
be. The Monthly Basic Rent for the Extended Terms shall be as set forth in
Section 2.C below.
C. Monthly Basic Rent. Paragraphs 4.1, 4.2, 4.3, 4.4 and 4.6 of the Lease and
all of the modifications to the Lease contained in the First Amendment (except
those contained in Sections 6, 7, 8, 9 and 10 of the First Amendment), and any
other conflicting provisions of the Lease are superseded and replaced with the
following: Commencing as of September 1, 2002, and continuing throughout the
remainder of the initial Term, Landlord has agreed to defer a portion of the
Monthly Basic Rent due under the Lease pursuant to Paragraph 2D below, and
instead accept the following amounts of Monthly Basic Rent during the remainder
of the initial Term for the entire Premises as follows:
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Period Monthly Basic Rent
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9/1/2002-8/31/2003 $185,000.00
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9/1/2003-8/31/2004 $210,000.00
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9/1/2004-8/31/2005 $235,000.00
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9/1/2005-8/31/2006 $260,000.00
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9/1/2006-8/31/2007 $285,000.00
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9/1/2007-8/31/2008 $372,500.00
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9/1/2008-8/31/2009 $379,950.00
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9/1/2009-8/31/2010 $387,549.00
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9/1/2010-8/31/2011 $395,300.00
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9/1/2011-8/31/2012 $403,206.00
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If Tenant exercises its option(s) pursuant to Section 2.B above, (i) Monthly
Basic Rent for the first twelve (12) months of an Extended Term shall be an
amount equal to one hundred ten percent (110%) of the Monthly Basic Rent in
effect for the calendar month immediately preceding the commencement of such
Extended Term (e.g., Monthly Basic Rent for the first twelve months of the first
Extended Term would be $443,526.60 (110% of $403,206.00)); and (ii) Monthly
Basic Rent for the remainder of each Extended Term shall be determined as
follows: commencing on the first day of the thirteenth (13th) calendar month of
each such Extended Term, and continuing on each anniversary of such day
throughout the remainder of the Extended Term (each such day being referred to
as a "Rent Adjustment Date"), the Monthly Basic Rent shall be adjusted to equal
the product of the Monthly Basic Rent in effect for the calendar month
immediately preceding the Rent Adjustment Date multiplied by a fraction, the
numerator of which is the Consumer Price Index published immediately preceding
the Rent Adjustment Date in question and the denominator of which is the
Consumer Price Index published exactly one year earlier; provided, however, that
any such increase in Monthly Basic Rent on a Rent Adjustment Date shall not be
less than one hundred three percent (103%) of the Monthly Basic Rent due for the
last full calendar month immediately preceding the Rent Adjustment Date in
question. As used herein, the term "Consumer Price Index" shall mean the
Consumer Price Index, for All Urban Consumers, Subgroup "All Items," for the San
Francisco-Oakland-San Xxxx Metropolitan Area (Base Year 1982-84=100), which is
currently being published monthly by the United States Department of Labor,
Bureau of Labor Statistics. If, however, this Consumer Price Index is changed so
that the base year is altered from that used as of the commencement date of an
Extended Term, then the Consumer Price Index shall be converted in accordance
with the conversion factor published by the United States Department of Labor,
Bureau of Labor Statistics, to obtain the same results that would have been
obtained had the base year not been changed. If no conversion factor is
available or if the Consumer Price Index is otherwise changed, revised or
discontinued for any reason, there shall be substituted in lieu thereof and the
term "Consumer Price Index" shall thereafter refer to the most nearly comparable
official price index of the United States Government to obtain substantially the
same result as would have been obtained had the original Consumer Price Index
not been changed, revised or discontinued, which alternative index shall be
subject to Landlord's and Tenant's prior written approval, which approval shall
not be unreasonably withheld or delayed.
Landlord acknowledges and agrees that Tenant has fully satisfied all of its
payment obligations regarding Monthly Basic Rent and all other Rent for the
Premises through and including August 31, 2002, and no further Monthly Basic
Rent or other Rent with respect to any period prior to August 31, 2002 shall be
due and owing by Tenant.
D. Deferred Rent Payment. The following new Paragraph 4.7 is added to the Lease:
In addition to the Monthly Basic Rent set forth in Section 2.C above, Tenant
shall pay to Landlord on September 1, 2007, an amount equal to Five Million
Dollars ($5,000,000.00) (the "Deferred Rent") which amount represents a portion
of the Monthly Basic Rent due under the Lease which Landlord has agreed to defer
in connection with lowering the Monthly Basic Rent payments due by Tenant
pursuant to Xxxxxxxxx 0X above.
E. Security Deposit. The second grammatical paragraph of Paragraph 6 of the
Lease is deleted and the remainder of Paragraph 6 and any other conflicting
provisions of the Lease are modified as follows: Tenant is currently maintaining
a letter of credit pursuant to Paragraph 6 of the Lease in an amount equal to
One Million Eight Hundred Thousand Dollars ($1,800,000.00) and Tenant shall
continue to maintain a letter of credit in such amount in accordance with the
Lease through August 31, 2011. Provided that Tenant is not then in monetary or
material non-monetary default under the terms of the Lease (beyond the
applicable notice and cure period), then on September 1, 2011, the full amount
of the cash security deposit and letter of credit held by Landlord under the
Lease shall be returned to Tenant, it being understood that Tenant shall not be
obligated to provide any cash security deposit, letter of credit or any other
security deposit to Landlord under the Lease at any time during the last year of
the Term (9/1/2011-8/31/2012) or any Extended Term; provided, however, that (i)
if Tenant is in monetary or material non-monetary default under the terms of the
Lease (beyond the applicable notice and cure period) on September 1, 2001, then
Landlord shall not be obligated to return the cash security deposit or letter of
credit to Tenant until the earlier to occur of (a) the date such default is
cured, and (b) the thirtieth (30th) day after the expiration or earlier
termination of the Lease, less any amounts that are needed by Landlord to cure
any default by Tenant and any damages incurred by Landlord on account of any
such default, and (ii) if any of the improvements identified in the drawings and
specifications for the Building prepared by Studio Architecture dated October
26, 2000, and any subsequent changes(excluding interim phase 2 plans delivered
to Landlord 9/25/02) to such plans and specifications approved by Landlord, have
not been completed by September 1, 2011, then Landlord may deduct the estimated
cost (as reasonably determined by Landlord and Tenant) to complete the
construction of any such improvements, up to a maximum of Two Hundred Thousand
Dollars ($200,000.00), from the cash security deposit that Landlord is obligated
to refund to Tenant hereunder, it being understood that any such deduction shall
in no event exceed Two Hundred Thousand Dollars ($200,000.00).
F. Real Property Taxes. The last sentence of the second grammatical paragraph of
Paragraph 5.2 of the Lease is deleted and the following is substituted therefor:
If all or any portion of the Premises is sold or otherwise transferred by
Landlord at any time during the Term (including any Extended Term) and such sale
or transfer results in an increase in any Real Property Taxes applicable to the
Premises (under Proposition 13 or otherwise), then Tenant shall have no
obligation to pay any portion of such increase and the amount of Real Property
Taxes payable by Tenant under the Lease shall be the amount that would otherwise
be due and payable assuming no such sale or transfer had been made.
G. No Continuous Operation. The first sentence of Paragraph 7.1 of the Lease is
deleted and the following is substituted therefor: Tenant may use the Premises
only for multimedia and/or business services, and all other legal uses , and
Tenant may not use or permit the Premises to be used for any other purpose
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. Notwithstanding anything to the contrary in the Lease,
Tenant may vacate all or any portion of the Premises, and shall not be deemed in
default under the Lease as a result of such vacation, so long as Tenant is not
in default in its Rent or any of its other obligations under the Lease.
H. Signs. Article 44 of the Lease is supplemented as follows: Landlord
acknowledges and agrees that it will not withhold its approval of any signage
for the Building requested by Tenant or any of Tenant's subtenants of the
Building in accordance with Article 44 so long as such signage is in full
compliance with all applicable governmental ordinances, statutes and
regulations.
I. Right of First Offer to Purchase. A new Article 50 is added to the Lease as
follows: If at any time during the Term, Landlord elects to sell all or any part
of its interest in the Premises, Landlord shall first notify Tenant in writing
of the terms and conditions upon which Landlord would be willing to sell such
interest to Tenant. For a period of sixty (60) days after its receipt of such
terms and conditions, Tenant shall have an exclusive right to negotiate with
Landlord for the purchase of such interest from Landlord. If Landlord and Tenant
fail to consummate a binding agreement for the purchase of such interest within
such sixty (60)-day period, then Landlord thereafter shall have the right to
sell such interest in the Premises within one hundred eighty (180) days after
the expiration of such sixty (60)-day period on substantially the same terms and
conditions stated in the Landlord's written offer to Tenant; provided, however,
that if the terms and conditions stated in the offer provided to Tenant are
substantially changed or Landlord fails to sell such interest to a third party
within such one hundred eighty (180)-day period, then any further transaction
shall be deemed a new offer to purchase such portion of the Premises and the
provisions of this Paragraph shall again be applicable. For purposes hereof, the
term "substantially" means a purchase price for Landlord's interest in the
Premises that is not less than ninety percent (90%) of the purchase price
offered by Landlord and refused by Tenant.
J. Base Building and Tenant Improvements. Landlord and Tenant confirm and
acknowledge that (i) Landlord will continue to be responsible for the
reimbursement to Tenant (or the direct payment to Tenant's contractor, as may be
consistent with prior practice) of Base Building Costs owed by Landlord pursuant
to Section 1.3.1 of the Work Letter; provided, however, that the remaining
amount of such reimbursements shall in no event exceed One Hundred Fifty
Thousand Dollars ($150,000) in the aggregate, (ii) Tenant has accepted
possession of the Premises, and except for the cost reimbursement obligations
referenced in the foregoing clause (i) and Landlord's continuing repair,
maintenance and reconstruction obligations under the Lease, Landlord has
completed its obligations under the Lease with respect to the construction of
the Base Building Work and delivery of the Premises, and (iii) Tenant shall not
be obligated to complete any Phase I or Phase II Improvements that have not been
completed to date, except for any improvements that are required to be completed
in order to obtain the approvals and permits from the appropriate governmental
authorities required for the legal occupancy of the entire Premises for Tenant's
use. Tenant covenants that it shall have paid all amounts due to Tenant's
contractor for completion of Phase I Improvements on or before January 2, 2003,
or within such earlier time period as Tenant's contractor may require. Landlord
additionally agrees to reasonably approve Phase II Improvements which are
different from those originally approved by Landlord; provided, however, that
such approval shall not in anyway affect Landlord's rights under Paragraph 2(E)
above to deduct up to Two Hundred Thousand Dollars ($200,000.00) from the
security deposit held pursuant to Paragraph 6 of the Lease in order to complete
the construction of those improvements contemplated by the originally
contemplated Phase II Improvements, as set forth in the Studio Architecture
plans and specifications dated October 26, 2000.
K. Landlord's Attorneys' Fees. Prior to the execution and delivery of this
Amendment, Landlord shall provide Tenant with a copy of an invoice from the law
firm of Xxx & Xxxxxx setting forth in reasonable detail all of the fees incurred
by Landlord in connection with negotiating and preparing this Amendment. Tenant
shall be responsible for reimbursing Landlord for such fees up to a maximum of
$10,000, which reimbursement shall be made concurrent with the execution and
mutual delivery of this Amendment.
3. Miscellaneous.
A. Counterparts. This Amendment may be executed in counterparts, each of which
shall constitute an original and all of which together shall constitute one
Amendment.
B. Confirmation. Landlord and Tenant hereby ratify and confirm all of the terms
and provisions of the Lease, as amended by this Amendment, and the Lease, as so
amended, shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment intending it
to be effective as of the day and year first above written.
"Landlord" "Tenant"
Xxxxxx X. Price and Xxxxxxxxx X. Xxxxx, DigitalThink, Inc.,
as trustees of the Price Trust UDT October a Delaware corporation
5, 1984
By: /s/ Xxxxxx X. Price By: /s/ Xxxxxxx Xxxx
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Xxxxxx X. Price Xxxxxxx Xxxx, CEO
By: /s/ Xxxxxxxxx X. Xxxxx
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Xxxxxxxxx X. Xxxxx
