Exhibit 10.24
AMENDMENT OF LEASE AGREEMENT
THIS AMENDMENT OF LEASE AGREEMENT (this "Agreement"), is made and
entered into as of December 28, 2001 by and between ALZA CORPORATION, a Delaware
corporation ("Landlord"), and VENTRO CORPORATION, a Delaware corporation
("Tenant").
RECITALS
A. Landlord and Tenant are the current parties to that certain Office
Lease dated August 13, 1999 (as amended hereby, the "Xxxxxxx Lease") pursuant to
which Tenant leases from Landlord approximately 26,445 RSF on the second floor
of the building located at 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx (the
"Xxxxxxx Premises"). Capitalized terms used in this Agreement and not defined
herein shall have the meanings given them in the Xxxxxxx Lease.
B. In accordance with Article 4 of the Xxxxxxx Lease, Tenant has
delivered to Landlord Letter of Credit No. NZS330632 issued by Xxxxx Fargo Bank,
N.A., for the benefit of Landlord, as beneficiary, in the amount of Six Hundred
Twenty-Five Thousand Dollars ($625,000) to secure the full, faithful and timely
performance of each and every obligation of Tenant under the Xxxxxxx Lease (the
"Xxxxxxx Letter of Credit").
C. Landlord acknowledges and agrees that Tenant has paid all Monthly
Base Rent, Additional Rent and all other charges now accrued under the Xxxxxxx
Lease through the period ending on December 31, 2001.
D. Except for the Xxxxxxx Letter of Credit, Landlord does not hold any
cash Security Deposit under the Xxxxxxx Lease.
E. Tenant has requested that Landlord amend the Xxxxxxx Lease to reduce
the RSF and rent per square foot of the Xxxxxxx Premises from 26,445 RSF to
approximately 17,000 RSF, and Landlord is willing to agree to so reduce the RSF
and rent per square foot of the Xxxxxxx Premises, all on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant covenant and
agree as follows:
1. Incorporation of Recitals. Recitals A through E, inclusive,
set forth above are incorporated in full into this Agreement by this reference.
2. Amendment of Xxxxxxx Lease. Effective as of January 1,
2002, Landlord and Tenant hereby agree to amend and modify the Xxxxxxx Lease as
follows:
2.1 Premises. The first sentence of the description of the
Premises set forth in Item 6 of the Basic Lease Provisions of the
Xxxxxxx Lease is hereby deleted in its entirety and the following
sentences are inserted in its place:
"A portion of the second floor of the two-story freestanding building
located at 0000 Xxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx, containing
approximately 17,000 rentable square feet (RSF), together with the
parking areas, driveways, landscaping, common areas and other
appurtenances constructed or located on or serving the 0000 Xxxxxxx
Xxxx building. A depiction of the revised premises is attached to this
Agreement as Exhibit A and incorporated herein by this reference (the
"Revised Xxxxxxx Premises"). Tenant shall continue to have access to
all of the parking areas, driveways, landscaping, common areas and
other appurtenances constructed or located on or serving the 0000
Xxxxxxx Xxxx building, including, without limitation, the conference
rooms, bathrooms and break areas on the second floor of the 0000
Xxxxxxx Xxxx building and the first floor lobby (but not any other
first floor facilities or first floor common areas); and provided that
in accordance with Section 8.4 of the Xxxxxxx Lease, Tenant shall have
the right to park up to (but not exceeding) sixty-eight (68) cars on a
non-exclusive basis in the unreserved parking spaces presently
servicing the Xxxxxxx Premises. Tenant shall vacate and surrender the
balance of the original Xxxxxxx Premises not included within the
Revised Xxxxxxx Premises to Landlord in the condition required by
Article 45 of the Xxxxxxx Lease on or before December 31, 2001;
provided that upon reasonable prior oral or written notice to Landlord,
Tenant may have access to such vacated Premises through February 28,
2002 to remove its wiring and cabling and any other personal property
of Tenant therefrom. Landlord, at Landlord's sole cost and expense,
shall construct a demising wall ("Demising Wall") separating the
Revised Xxxxxxx Premises from the balance of the original Xxxxxxx
Premises. Landlord shall exercise commercially reasonable efforts to
complete the Demising Wall by January 31, 2002. Tenant acknowledges and
agrees that (i) Landlord may vary the location of the Demising Wall
from that set forth on Exhibit A if required to do so to comply with
applicable building and fire code regulations and/or to best utilize
the existing HVAC system and other building systems as long as the
size, location and accessibility of the Revised Xxxxxxx Premises is not
materially adversely affected thereby and (ii) construction of the
Demising Wall will cause certain noise, vibration, dust and disruption
to Tenant's business within the Revised Xxxxxxx Premises and Tenant
waives any claims for damages arising from interference with Tenant's
business operations, constructive eviction, breach of the covenant of
quiet enjoyment and like matters arising from Landlord's construction
of the Demising Wall, provided that Landlord shall use commercially
reasonable efforts to minimize such noise, vibrations, dust and
disruption. Landlord acknowledges and agrees that (x) subject to the
provisions of Section 7.3 of the Xxxxxxx Lease, Tenant will construct
certain improvements and alterations within the Revised Xxxxxxx
Premises (the "Tenant Construction") and (y) the Tenant Construction
will cause certain noise, vibration, dust and disruption to Landlord's
business within and about the Xxxxxxx Premises and Landlord waives any
claims for damages arising from interference with Landlord's business
operations and like matters arising from Tenant's Construction,
provided that Tenant shall use commercially reasonable efforts to
minimize such noise, vibration, dust and disruption. If Landlord fails
to complete the Demising Wall by February 15, 2002, then unless
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such delay is caused by (a) Tenant's construction of its alterations
and improvements within the Xxxxxxx Revised Premises (including,
without limitation, the MDF as defined in Section 2.8 below) which
unreasonably interferes with Landlord's construction of the Demising
Wall or (b) any other act, omission or request by Tenant or any of
Tenant's employees, agents, contractors or subcontractors which
unreasonably interferes with or delays Landlord's ability to timely
complete the Demising Wall, the Vacation and Surrender Date (as defined
in that certain Termination of Lease Agreement for the Plymouth Lease
of even date herewith) shall be extended on a day-by-day basis beyond
February 28, 2002 (without payment of any rent, fee or other charge by
Tenant under the Termination of Lease Agreement for the Plymouth Lease)
for each day of delay in Landlord's completion of the Demising Wall
beyond February 15, 2001. If Landlord's construction of the Demising
Wall or installation of the Added HVAC Work (as defined in Section 2.8)
unreasonably interferes with or delays Tenant's ability to timely
complete its Tenant Construction, then Monthly Base Rent and Additional
Rent under the Xxxxxxx Lease shall be abated on a day-to-day basis for
each day of such delay in Tenant's completion of the Tenant
Construction."
2.2 Monthly Base Rent. Item 8 of the Basic Lease Provisions of
the Xxxxxxx Lease and Exhibit B to the Xxxxxxx Lease are hereby deleted in their
entirety and the following Item 6 is inserted in their place:
"The following Monthly Base Rent for the Revised Xxxxxxx Premises shall
be payable on a triple net basis pursuant to Section 3.1 below: (a) For
the period from January 1, 2002 until December 31, 2002, $40,000 per
month; (b) for the period from January 1, 2003 until December 31, 2003,
$42,000 per month; and (c) for the period from January 1, 2004 until
the February 28, 2005 Expiration Date, $44,000 per month."
2.3 Additional Rent.
2.3.1 Section 1.6 of the Lease is deleted in its entirety.
2.3.2 Section 3.3 of the Lease is deleted in its entirety and
the following Section 3.3 is inserted in its place:
"Additional Rent In addition to the Monthly Base Rent reserved in
Section 3.1 above, Tenant shall pay to Landlord as additional rent an
amount equal to (i) $10,500 per month during the 2002 calendar year,
(ii) $11,000 per month during the 2003 calendar year and (iii) $11,500
per month during the 2004 calendar year and through February 28, 2005
(each such payment, an "Additional Rent Payment"; collectively the
"Additional Rent Payments"). One half (50%) of each Additional Rent
Payment shall be reconciled by Landlord on an annual basis to reflect
any actual changes in the rates charged for gas, electric or water
services, with Tenant reimbursing Landlord for any underpayment within
ten (10) business days of receipt of Landlord's reconciliation and
Landlord crediting any overpayment by Tenant to Additional Rent
Payments next coming due. Notwithstanding anything to the contrary in
this Lease, except for (a) Monthly Base Rent, (b) Additional Rent
Payments set forth above and (c) Tenant's obligations under Articles 6,
9, 12, 15, 19, 25 and 45 of the Xxxxxxx Lease, Tenant shall not be
obligated to pay or reimburse Landlord any amount whatsoever under this
Lease, including, without limitation, under Section 10.2 below."
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2.4 Letter of Credit as Security. The second and third
sentences of Section 4.1 of the Xxxxxxx Lease are deleted in their entirety and
the following sentences are inserted in their place:
"The face amount of the Xxxxxxx Letter of Credit shall be reduced to
Three Hundred Sixty Thousand Dollars ($360,000) on January 1, 2002.
There shall be no further reduction in the face amount of the Letter of
Credit from and after January 1, 2002. Landlord and Tenant shall act
reasonably and in good faith with one another and with Xxxxx Fargo Bank
to effect the foregoing reduction in the face amount of the Letter of
Credit."
2.5 Additional Alterations. The following paragraph is added
at the end of Section 7.3 of the Lease:
"Subject to Tenant's compliance with all of the terms and provisions of
Lease including, without limitation, Section 7.3 thereof, Landlord
agrees that Tenant shall be allowed to construct showers and its MDF
data center solely within the Revised Xxxxxxx Premises, all at Tenant's
sole cost and expense. Landlord agrees that, notwithstanding any other
provision in the Xxxxxxx Lease to the contrary, Tenant shall not be
obligated to restore any portion of the Revised Xxxxxxx Premises to the
condition in which it existed prior to the construction of such
alterations, and that Tenant may leave such alterations in the Revised
Xxxxxxx Premises upon the expiration of the Term or earlier termination
of the Xxxxxxx Lease in the condition required by Article 45 of the
Xxxxxxx Lease. Landlord acknowledges and agrees that Landlord, its
employees, invitees, agents, contractors, lessees, sublessees,
successors and assigns shall not be allowed to use the showers or any
other alterations constructed by Tenant within in the Revised Xxxxxxx
Premises."
2.6 Signs. The following sentence is added at the end of
Section 8.3 of the Lease:
"Subject to the provisions of Section 8.3 of the Xxxxxxx Lease, Tenant
shall have the right to install (i) a sign on the exterior street
signage for the 0000 Xxxxxxx Xxxx xxxxxxxx, (xx) a monument sign on the
0000 Xxxxxxx Xxxx building and (iii) signage in the first floor lobby
of the 0000 Xxxxxxx Xxxx building."
2.7 Use of Corporate Auditorium. The following paragraph is
added as new Article 49 to the Lease:
"Landlord hereby agrees to allow Tenant, at no additional cost to
Tenant (except as set forth in the last sentence of this paragraph), to
use Landlord's corporate
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auditorium located in the 0000 Xxxxxxxxxx Xxxx Xxxxxxxx, Xxxxxxxx Xxxx,
Xxxxxxxxxx for a maximum of two (2) hours on each of one (1) day in
each calendar quarter during the Term. Tenant acknowledges that Tenant
will be required to schedule use of the auditorium space in advance,
and that Tenant's use on any particular date shall be subject to the
then availability of the auditorium. Landlord will provide the name,
e-mail address and phone number of the appropriate contact person with
whom Tenant may reserve use of the auditorium space. On days when
Tenant has scheduled use of the auditorium space, Landlord agrees that
Tenant, at Tenant's sole cost and expense, shall have the right to use
Landlord's in-house catering service to provide coffee, softdrinks,
beverages, cookies and snacks for Tenant's meeting in the auditorium;
provided, however, that Tenant shall have no right to use Landlord's
cafeteria nor have any meals served in the auditorium."
2.8 Added HVAC Work. As part of the relocation of Tenant's
business operations to the Revised Xxxxxxx Premises, Tenant, at Tenant's sole
cost and expense and subject to all of the terms and conditions of the Xxxxxxx
Lease, including, without limitation, Section 7.3 thereof, will be constructing,
installing and equipping a new Main Distribution Facility room (the "MDF") in
the Revised Xxxxxxx Premises. In connection with Tenant's installation of its
MDF, Tenant has requested that Landlord construct and install improvements to
provide the MDF, as constructed by Tenant, with an additional Fifteen (15) Tons
of air conditioning (the "Added HVAC Work"), all at Tenant's sole cost and
expense and in accordance with the provisions of this Section 2.8 and the terms
and conditions of the Xxxxxxx Lease. Landlord is currently obtaining bids for
the Added HVAC Work from certain contractors selected by Landlord. Upon receipt
of at least two (2) written bids from Landlord's contractors for the Added HVAC
Work, Landlord shall provide such bids to Tenant, and Landlord and Tenant shall,
each acting in good faith and within two (2) business days following delivery of
such bids to Tenant, jointly agree upon and accept one of such bids for the
Added HVAC Work. Landlord, at Tenant's sole cost and expense, shall cause the
Added HVAC Work to be installed for Tenant's MDF. Landlord shall exercise
commercially reasonable efforts to complete the Added HVAC Work on or before
January 31, 2002. If Landlord fails to complete the Added HVAC Work by February
15, 2002 then, unless such delay is caused by a Tenant Delay (defined below),
the Vacation and Surrender Date (as defined in Section 2.1 above) shall be
extended on a day-by-day basis beyond February 28, 2002 (without payment of any
rent, fee or other charge by Tenant under the Termination of Lease Agreement for
the Plymouth Premises) for each day of delay in Landlord's completion of the
Added HVAC Work beyond February 15, 2001; provided that the foregoing delay
days, if any, shall not be aggregated with delay days, if any, arising from
Landlord's failure to timely complete construction of the Demising Wall as set
forth in Section 2.1 above. If such delay is caused by a Tenant Delay, there
shall be no extension of the Vacation and Surrender Date beyond February 28,
2002. As used herein, "Tenant Delay" shall mean and include (i) Tenant's failure
to approve a bid for the Added HVAC Work within the two (2) business day period
referred to above, (ii) Tenant's failure to complete its MDF in sufficient time
to permit Landlord to timely install the Added HVAC Work for the MDF, (iii)
delays caused by Tenant's construction of its alterations and improvements
within the Revised Xxxxxxx Premises which unreasonably interferes with
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Landlord's installation of the Added HVAC Work or (iv) any other act, omission
or request by Tenant or any of Tenant's employees, agents, contractors or
subcontractors which unreasonably interferes with or delays Landlord's ability
to timely complete the installation of the Added HVAC Work. Tenant shall
reimburse Landlord for the cost of the Added HVAC Work within ten (10) business
days of Tenant's receipt of the invoice therefor from Landlord. Tenant shall
notify Landlord within ten (10) business days following Landlord's completion of
the Added HVAC Work if the Added HVAC Work is not, in Tenant's reasonable
judgment, providing Fifteen (15) tons of air conditioning to the MDF, in which
event Landlord shall cause the contractor which performed the Added HVAC Work to
correct the Added HVAC Work to provide Fifteen (15) tons of air conditioning.
Except for Landlord's covenant in the immediately preceding sentence to cause
the Added HVAC Work to provide Fifteen (15) tons of air conditioning, Tenant
acknowledges and agrees Landlord has made no covenants, representations or
warranties of any kind or nature whatsoever to Tenant with respect to the
adequacy or sufficiency of the Added HVAC Work for Tenant's MDF, whether the
Added HVAC Work will cool and/or adequately control the temperature within the
MDF or be otherwise suitable or fit for Tenant's intended business and
technological purposes in its MDF or otherwise. If Tenant fails to notify
Landlord within the ten (10) business day period set forth above that the Added
HVAC Work is not providing Fifteen (15) tons of air conditioning to the MDF,
then the Added HVAC Work shall be deemed for all purposes to be providing
Fifteen (15) tons of additional air conditioning.
2.9 Halon Work. As part of the relocation of Tenant's business
operations to the Revised Xxxxxxx Premises, Tenant, at Tenant's sole cost and
expense and subject to all of the terms and conditions of the Lease, including,
without limitation, Section 7.3 thereof, will be constructing and installing
within the MDF a new halon fire suppression system or similar system ("Halon
Work"). Tenant, at Tenant's sole cost and expense, shall obtain all permits and
approvals for the Halon Work and shall comply with all applicable federal,
state, county and municipal rules, regulations, codes and ordinances relating
thereto. Notwithstanding the provisions of Article 6 of the Xxxxxxx Lease,
Tenant, at Tenant's sole cost and expense, shall be responsible for repairing
and maintaining the Halon System during the entire term of the Xxxxxxx Lease.
Tenant's installation of its Halon Work shall not adversely affect the sprinkler
and life safety systems in the Xxxxxxx Building. Tenant shall reimburse to
Landlord within ten (10) business days of receipt of an invoice therefor the
cost to Landlord of any modifications or alterations required to be made by
Landlord to the sprinkler and life safety systems in the Xxxxxxx Building by
reason of Tenant's installation of its Halon System.
2.10 Security. Section 10.1.6 of the Lease is deleted in its
entirety and the following Section 10.1.6 is inserted in its place:
"10.1.6 Security Services. Landlord shall provide substantially similar
security services for the Premises as Landlord provides for its own
premises within the 0000 Xxxxxxx Xxxx Building including monitoring
ingress and egress to and from the Premises."
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2.11 Beverages. The following Section 10.1.7 is hereby
inserted immediately following Section 10.1.6 of the Lease:
"10.1.7. Beverages. Landlord shall provide to Tenant and its employees
and invitees, at no cost to Tenant, access to complimentary beverages
including dispensed water, soda foundations, coffee and tea."
2.12 Plymouth Lease. All references to the Plymouth Lease and
the Plymouth Premises are hereby deleted from the Xxxxxxx Lease.
3. Mechanics Liens. Tenant acknowledges and agrees that
Tenant's covenants and agreements in Section 7.4 of the Xxxxxxx Lease shall
survive the expiration date or earlier termination of the Xxxxxxx Lease.
4. Authority of Parties; No Mortgage. Tenant does hereby
covenant, represent and warrant that (i) Tenant is a duly authorized and
existing corporation; (ii) Tenant is qualified to do business in the State of
California and is in good standing in the jurisdiction of its formation; (iii)
Tenant has full right and authority to enter into this Agreement; (iv) each
person signing on behalf of the corporation was authorized to do so; (v) Tenant
has not made any assignment, sublease, transfer or other disposition of its
interest in the Premises or under the Xxxxxxx Lease; and (vi) the Agreement is
valid and legally binding on Tenant. Landlord does hereby covenant, represent
and warrant that (i) Landlord is a duly authorized and existing corporation;
(ii) Landlord is qualified to do business in the State of California and is in
good standing in the jurisdiction of its formation; (iii) Landlord has full
right and authority to enter into this Agreement; (iv) each person signing on
behalf of the corporation was authorized to do so; (v) Landlord has not made any
assignment, lease, transfer, conveyance or other disposition of its interest in
the Premises or under the Xxxxxxx Lease; and (vi) the Agreement is valid and
legally binding on Landlord. Landlord further represents and warrants that its
fee interest in the 0000 Xxxxxxx Xxxx building is not encumbered by any mortgage
or deed of trust.
5. Attorney's Fees. If either party commences an action
against the other party arising out of or in connection with this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees and
expenses from the other.
6. Severability. If any one or more of the provisions
contained in this Agreement is for any reason held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
7. Notices. All notices, demands or other communications given
pursuant to this Agreement shall be in writing and shall be deemed given if
given in the manner specified in Article 23 of the Xxxxxxx Lease.
8. Binding Agreement. All provisions contained in this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the respective successors and assigns of Landlord and Tenant.
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9. Governing Law; Interpretation. This Agreement shall be
interpreted under the laws of California. The Section and subsection captions
are for the convenient reference of the parties only and are not intended to and
shall not be deemed to modify the interpretation of the Section or subsection
from that which is indicated by the text of the Section or subsection alone.
This Agreement is the product of negotiation between the parties and their
respective counsel, and the parties agree that it shall be interpreted in
accordance with its fair and apparent meaning and not for or against either
party. All of the representations, warranties and indemnities contained in this
Agreement shall survive indefinitely the termination of the Xxxxxxx Lease and
the performance of this Agreement.
10. Merger; Amendment. This Agreement (together with the
Xxxxxxx Lease, as amended hereby) sets forth the entire agreement between the
parties with respect to the subject matter hereof and all prior negotiations or
agreements, whether oral or written, are superseded and merged herein. This
Agreement may not be altered or amended except by a writing duly authorized and
executed by the party against whom enforcement is sought. Except as amended,
modified or terminated hereby, the Xxxxxxx Lease shall remain in full force and
effect in accordance with its terms.
11. Counterparts; Facsimile. This Agreement may be executed in
multiple counterparts, which together shall constitute an original Agreement.
The signature of either party hereto sent to the other via facsimile shall
constitute the valid execution and delivery of this Agreement by such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
[SIGNATURE BLOCK ON NEXT PAGE]
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Landlord:
ALZA CORPORATION,
a Delaware Corporation
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
---------------------------------------
Its: Sr. VP, Operations
----------------------------------------
Tenant
VENTRO CORPORATION,
A Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxx
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XXXXX X. XXXXXXXX
CHIEF FINANCIAL OFFICER
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