Exhibit 10.14
SECOND AMENDMENT TO
LEASE
(5601 Lindero Canyon
Road)
THIS SECOND AMENDMENT TO LEASE
(“ Second Amendment ”) is made and entered into
as of the 23rd day of May, 2003, by and between ARDEN REALTY
FINANCE PARTNERSHIP, L.P., a California limited partnership
(“ Landlord ”) and DIGITAL INSIGHT CORPORATION,
a Delaware corporation (“ Tenant ”).
R E C I T A
L S :
A. Landlord and Tenant entered into
that certain Standard Office Lease dated as of March 6, 2000 (the
“ Original Lease ”), as amended by that certain
First Amendment to Standard Office Lease dated as of February 15,
2001 (“ First Amendment ”), whereby Landlord
leased to Tenant and Tenant leased from Landlord certain office
space located in that certain building located and addressed at
5601 Lindero Canyon Road, Westlake Village, California (the “
Building ”). The Original Lease, as amended by the
First Amendment, may be referred to herein as the “
Lease ”.
B. By this Second Amendment,
Landlord and Tenant desire to extend the Term of the Lease and to
otherwise modify the Lease as provided herein.
C. Unless otherwise defined herein,
capitalized terms as used herein shall have the same meanings as
given thereto in the Original Lease.
NOW, THEREFORE, in consideration of
the foregoing recitals and the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
A G R E E M
E N T :
1. The Premises . Landlord
and Tenant hereby agree that pursuant to the Lease, Landlord
currently leases to Tenant and Tenant currently leases from
Landlord that certain office space in the Building containing
52,130 rentable square feet located on the first (1st) floor of the
Building and known as Suite 100 (the “ Premises
”), as outlined on Exhibit ”A” to the Original
Lease.
2. Term .
2.1. Extended Term . The
Expiration Date shall be extended such that the Lease shall
terminate on May 31, 2011 (“ New Termination Date
”), subject to early termination as provided in Section 2.2
below and subject to extension as provided in Section 9 below. The
period from April 8, 2005 through the New Termination Date
specified above, shall be referred to herein as the “
Extended Term .”
2.2. Termination Option .
Provided Tenant fully and completely satisfies each of the
conditions set forth in this Section 2.2, Tenant shall have the
option (“ Termination Option ”) to terminate the
Lease (as amended by this Second Amendment) effective as of May 31,
2008 (“ Termination Date ”) only. In order to
exercise the Termination Option, Tenant must fully and completely
satisfy each and every one of the following conditions: (a) Tenant
must give Landlord written notice (“ Termination
Notice ”) of its exercise of the Termination Option,
which Termination Notice must be delivered to Landlord on or before
August 31, 2007, (b) at the time of the Termination Notice, Tenant
shall not be in default under the Lease (as amended by this Second
Amendment) after notice and expiration of applicable cure periods,
and (c) Tenant shall pay to Landlord a termination fee (“
Termination Fee ”) in the amount of Seven Hundred
Forty-Five Thousand Dollars ($745,000.00). However, if as of the
date of the Termination Notice, (1) Landlord has paid to Tenant the
Proposition 13 Purchase Price pursuant to Section 5.4 below, then
the Termination Fee shall be increased by that portion of the
Proposition 13 Purchase Price applicable to the period after the
Termination Date, or (2) Tenant
has exercised its right of first offer pursuant
to Article 32 of the Original Lease (as amended by Section 10
below), then the Termination Fee shall be increased by the sum of
(A) the discounted present value (using a discount factor of ten
percent (10%) per annum) of an amount equal to six (6) installments
of monthly Basic Rental for the First Offer Space at the rate which
would have been payable by Tenant for the First Offer Space for the
first six (6) months after the Termination Date and (B) the
unamortized amount, as of the Termination Date, of any
out-of-pocket sums expended by Landlord in connection with any such
expansion (including, without limitation, any sums expensed by
Landlord to improve the First Offer Space and any brokerage
commissions incurred by Landlord in connection with such expansion)
with such amortization to be calculated over an amortization period
from the effective date of Tenant’s lease of the First Offer
Space until May 31, 2011, based upon equal monthly payments of
principal and interest throughout such amortization period, with
interest imputed on the outstanding principal balance at the rate
of ten percent (10%) per annum. Fifty percent (50%) of the
Termination Fee must be paid by Tenant to Landlord concurrently
with Tenant’s delivery of the Termination Notice (as a
further condition to Tenant’s exercise of the Termination
Option), and the remaining fifty percent (50%) of the Termination
Fee shall be paid by Tenant to Landlord within three (3) months
after the date of delivery of the Termination Notice.
Tenant’s delivery of the Termination Fee to Landlord shall
not relieve Tenant of its obligation to make all other payments to
Landlord due under the Lease (as amended by this Second Amendment)
through the Termination Date. Notwithstanding anything contained in
this Section 2.2 to the contrary, in the event Tenant fails to
deliver the remaining fifty percent (50%) of the Termination Fee to
Landlord within three (3) months after the date of delivery of the
Termination Notice, Landlord shall have the option to either (i)
deem the Termination Notice rescinded, in which case the Lease (as
amended by this Second Amendment) shall continue in full force and
effect for the remainder of the Extended Term and Landlord shall
forthwith refund to Tenant the initial fifty percent (50%) of the
Termination Fee previously paid by Tenant less any out-of-pocket
expenses Landlord may have incurred in marketing and attempting to
lease the Premises to a successor tenant(s) after Landlord’s
receipt of Tenant’s Termination Notice ( e.g. ,
advertising costs, costs of printing marketing materials and
attorneys fees and space planning costs incurred in connection with
potential transactions with a successor tenant(s)), or (ii) deem
the Lease (as amended by this Second Amendment) terminated as of
the Termination Date and pursue any remedies Landlord may have
against Tenant for failure to pay such portion of the Termination
Fee.
3. Monthly Basic Rental .
Notwithstanding anything to the contrary in the Lease, during the
Extended Term, Tenant shall pay, in accordance with the provisions
of this Section 3 and subject to abatement pursuant to Section 4
below, monthly Basic Rental for the Premises as follows:
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Period
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Monthly Basic Rental
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Monthly Basic Rental Per
Rentable Square
Foot
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04/08/05 – 05/31/06
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$
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59,428.20
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$
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1.14
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06/01/06 – 11/30/08
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$
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64,641.20
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$
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1.24
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12/01/08 – 05/31/11
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$
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69,854.20
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$
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1.34
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4. Rental Abatement .
Notwithstanding anything to the contrary contained in the Lease or
in this Second Amendment, and provided that Tenant faithfully
performs all of the terms and conditions of the Lease, as amended
by this Second Amendment, Landlord hereby agrees to abate
Tenant’s obligation to pay monthly Basic Rental from April 8,
2005 through May 31, 2005. During such abatement period, Tenant
shall still be responsible for the payment of all of its other
monetary obligations under the Lease, as amended by this Second
Amendment. In the event of a default by Tenant under the terms of
the Lease, as amended by this Second Amendment, that results in
early termination pursuant to the provisions of Article 19 of the
Original Lease, then as a part of the recovery set forth in Article
20 of the Original Lease, Landlord shall be entitled to the
recovery of the monthly Basic Rental that was abated under the
provisions of this Section 4.
5. Tax Costs .
5.1. Reassessment .
Notwithstanding anything to the contrary contained in the Lease, in
the event that during the Extended Term, any sale, refinancing, or
“change in ownership” (as defined in California Revenue
and Taxation Code Section 60, et seq.) of the Real
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Property is consummated, and as a result
thereof, and to the extent that in connection therewith, the Real
Property is reassessed (the “ Reassessment ”)
for real estate tax purposes by the appropriate governmental
authority pursuant to the terms of Proposition 13, then the
following provisions shall apply to such Reassessment of the Real
Property.
5.2. Tax Increase . For
purposes of this Section 5, the term “ Tax Increase
” shall mean that portion of the Tax Costs, after taking into
account the Reassessment, which is attributable solely to the
Reassessment. Accordingly, the term Tax Increase shall not include
any portion of the Tax Costs which (i) is attributable to the
initial assessment of the value of the Real Property, the Base,
Shell and Core of the Building or the tenant improvements located
in the Building, (ii) is attributable to assessments which were
pending immediately prior to the Reassessment which assessments
were conducted during, and included in, such Reassessment or (iii)
is attributable to the annual inflationary increase of real estate
taxes permitted to be assessed annually under Proposition
13.
5.3. Protection . During the
period from April 8, 2003 through May 31, 2008, any Tax Increase
shall be excluded from Tax Costs. During the period from June 1,
2008 through May 31, 2009, seventy-five percent (75%) of any Tax
Increase shall be excluded from Tax Costs. During the period from
June 1, 2009 through May 31, 2010, fifty percent (50%) of any Tax
Increase shall be excluded from Tax Costs. During the period from
June 1, 2010 through the New Termination Date, twenty-five percent
(25%) of any Tax Increase shall be excluded from Tax
Costs.
5.4. Landlord’s Purchase of
Protection . The amount of Tax Costs which Tenant is not
obligated to pay or will not be obligated to pay during the
Extended Term in connection with a particular Reassessment pursuant
to the terms of Section 5.3 above, shall be sometimes referred to
hereafter as a “ Proposition 13 Protection Amount
.” If the occurrence of a Reassessment is reasonably
foreseeable by Landlord and the Proposition 13 Protection Amount
attributable to such Reassessment can be reasonably quantified or
estimated for each Lease Year commencing with the Lease Year in
which the Reassessment will occur, the terms of this Section 5.4
shall apply to each such Reassessment. Upon notice to Tenant,
Landlord shall have the right to purchase the Proposition 13
Protection Amount relating to the applicable Reassessment (the
“ Applicable Reassessment ”), at any time during
the Extended Term, by paying to Tenant an amount equal to the
Proposition 13 Purchase Price, as that term is defined below,
provided that the right of any successor of Landlord to exercise
its right of repurchase hereunder shall not apply to any
Reassessment which results from the event pursuant to which such
successor of Landlord became the Landlord under the Lease. As used
herein, “ Proposition 13 Purchase Price ” shall
mean the present value of the Proposition 13 Protection Amount
remaining during the Extended Term, as of the date of payment of
the Proposition 13 Purchase Price by Landlord. Such present value
shall be calculated (i) by using the portion of the Proposition 13
Protection Amount attributable to each remaining Lease Year (as
though the portion of such Proposition 13 Protection Amount
benefited Tenant at the end of each Lease Year), as the amounts to
be discounted, and (ii) by using discount rates for each amount to
be discounted equal to (A) the prime interest rate, as reported in
the Wall Street Journal as of the date of Landlord’s exercise
of its right to purchase, as set forth in this Section 5.4, plus
(B) two percent (2%) per annum. Upon such payment of the
Proposition 13 Purchase Price, the provisions of Section 5.3 above
shall not apply to any Tax Increase attributable to the Applicable
Reassessment. Since Landlord is estimating the Proposition 13
Purchase Price because a Reassessment has not yet occurred, then
when such Reassessment occurs, if Landlord has underestimated the
Proposition 13 Purchase Price, then upon notice by Landlord to
Tenant, Tenant’s Basic Rental next due shall be credited with
the amount of such underestimation, and if Landlord overestimates
the Proposition 13 Purchase Price, then upon notice by Landlord to
Tenant, Tenant’s Basic Rental next due shall be increased by
the amount of the overestimation.
6. Condition of the Premises
. Except as set forth in Section 7 below, Tenant hereby agrees to
accept the Premises in its “as-is” condition. Tenant
also acknowledges that Landlord has made no representation or
warranty regarding the condition of the Premises.
7. Refurbishment of the
Premises . Notwithstanding anything to the contrary contained
herein, Tenant shall be entitled to renovate the then-existing
tenant improvements in the Premises in accordance with this Section
7. In connection therewith, Tenant shall be entitled to a one-time
tenant refurbishment allowance (the “ Refurbishment
Allowance ”) in the amount of Seven Dollars ($7.00) per
rentable square foot of the Premises for the costs relating to
the
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design and construction of renovations to the
then-existing tenant improvements in the Premises that are to be
permanently affixed to the Premises (the “ Refurbished
Improvements ”). In no event shall Landlord be obligated
to make disbursements under this Section 7 in a total amount which
exceeds the Refurbishment Allowance, and in no event shall Tenant
be entitled to any credit for any unused portion of the
Refurbishment Allowance (except for the Rent Credit and the
Calabasas Allowance as provided in Section 7.2.3 below) not applied
by Tenant by December 31, 2006.
7.1. Refurbishment Allowance
Items . The Refurbishment Allowance shall be disbursed by
Landlord for costs incurred to design and construct the Refurbished
Improvements (collectively the “ Refurbishment Allowance
Items ”), including without limitation, payment of the
fees of the architect and engineer(s) retained by Tenant (if any),
in connection with the preparation of the plans and specifications
prepared for the Refurbished Improvements (“ Refurbishment
Drawings ”). In addition, the Refurbishment Allowance
Items may include architectural fees, permit fees, costs of
installation of cabling and internal relocation fees (collectively
“ Soft Costs ”); provided, however, that such
Soft Costs shall not exceed Three and 50/100 Dollars ($3.50) per
rentable square foot of the Premises.
7.2. Disbursement of
Refurbishment Allowance . During the construction of the
Refurbished Improvements, but not prior to April 8, 2005, Landlord
shall make monthly disbursements of the Refurbishment Allowance for
Refurbishment Allowance Items as follows:
7.2.1 Monthly Disbursements .
On or before the first day of each calendar month during the
construction of the Refurbished Improvements, Tenant may deliver to
Landlord: (i) a request for payment of Tenant’s general
contractor (“ Contractor ”) and such Contractor
(if Tenant elects to retain a general contractor, provided that
Tenant must retain a general contractor if Landlord reasonably
determines that one is necessary given the scope of the job) shall
be subject to Landlord’s prior written approval, which
approval shall not be unreasonably withheld, delayed or
conditioned, and which request shall be approved by Tenant, in a
form to be provided by Landlord; (ii) invoices from all
subcontractors, laborers, materialmen and suppliers (together with
the Contractor (if applicable) “ Tenant’s Agents
”), for labor rendered and materials delivered to the
Premises; and (iii) executed conditional mechanics’ lien
releases from all of Tenant’s Agents which shall comply with
the appropriate provisions, as reasonably determined by Landlord,
of the California Civil Code. In addition, Tenant shall deliver to
Landlord a copy of Tenant’s construction contract with the
Contractor or a schedule of values for the construction job
indicating a breakdown by trade. Within thirty (30) days after the
later of Landlord’s receipt of all the information listed in
this Section 7.2.1 above or April 8, 2005, Landlord shall deliver a
check payable jointly to Tenant and Tenant’s Agents in
payment of the lesser of: (A) the amounts so requested by Tenant,
as set forth in this Section 7.2.1 above, less a ten percent (10%)
retention (the aggregate amount of such retentions to be known as
the “ Final Retention ”), and (B) the
bal