Lease Agreement, Dated March 29, 2001

EXHIBIT 10.12


LEASE AGREEMENT


This Lease Agreement ("Lease"), made as of this 1st day of November, 2000, between, K.C. Holdings, Inc., whose address is 16190 Laurel Street, Waukee, Iowa ("Landlord"), and EarthWeb Career Solutions, Inc., a Delaware corporation whose address is 300 Walnut Street, Suite 300, Des Moines, Iowa 50309 ("Tenant").


Article I
Premises


Section 1.1 Building and Leased Premises. Landlord leases to Tenant and Tenant
---------------------------- leases from Landlord space in the building known as the Earthweb Building located at 4101 Northwest Urbandale Drive, Urbandale, Iowa (the "Building") to be constructed by Landlord and identified as "Landlord Work" on Exhibit B. Said space is shown on Exhibit A (attached hereto and by this reference made a part hereof) and contains approximately 90,000 square feet (the "Leased Premises") and 450 parking spaces.


Section 1.2 Tenant Acceptance. During construction of the Building by Landlord,
----------------- Tenant or its designated representative shall be required to make weekly inspections of the work in progress and sign-off on the work performed to date, thereby accepting the work. During the first 12 months following the Commencement Date, Landlord shall take all necessary steps to correct, at its expense, all defective work reported by Tenant. Landlord represents that all warranties given by Landlord's subcontractors and suppliers are assignable to Tenant and Landlord shall assign those warranties to Tenant.


Article II
Term


Section 2.1 Term. The term of this Lease shall be for ten (10) years, commencing
---- on the date of issuance of an occupancy permit by the City of Urbandale (the "Commencement Date"). Tenant shall have the right to immediately occupy the premises for the first 30 days after the Commencement Date without the payment of rent. All other amounts due under the lease will be due and payable according to the terms of this Lease.


Section 2.2 Holding Over. Any holding over after the expiration of the term
------------ hereof, or of any renewal, shall be construed to be a tenancy from month to month, at a monthly rental at one hundred twenty percent (120%) greater than the monthly rental applicable to the rent due for the last month under this Lease.


Section 2.3 Surrender. At the termination of this Lease, whether through the
--------- expiration of the term or otherwise, Tenant agrees at once to surrender the Leased Premises (and all keys) to the Landlord in a condition comparable to the condition on the Commencement Date, less reasonable wear and tear. If excessive wear and tear or other


damage is present, Landlord will notify the Tenant in writing and Tenant shall have three (3) business days to indicate in what manner it will repair the damage. If the Tenant has not responded within the three (3) day period, then Landlord will make the necessary repairs and Tenant agrees to reimburse the Landlord for the cost of the repairs together with a ten percent (10%) fee for Landlord's efforts.


Section 2.4 Showing Premises. During the final four (4) months of the Lease
---------------- term, Landlord shall be permitted to show prospective tenants the Leased Premises upon giving Tenant twenty-four (24) hours' notice.


Section 2.5 Option to Renew. The Tenant shall have an option to renew this Lease for a 10-year term or longer as hereinafter provided with the rental being 90% of the fair market value based upon comparable rentals in the immediate area. Landlord shall be responsible for the selection of comparable rentals and the calculation of a "fair market value." In the event of a dispute as to Landlord's calculation as to the "fair market value", an appraiser shall be selected, by Landlord and Tenant with an average of the two appraisals being determinative of the fair market value. The renewal term may be longer than 10 years, if Tenant so elects, so that the renewal term and the term of the expanded area under Section 20.13 below coincide.


Section 2.6 Landlord shall construct a monument sign at the entrance to the building for Tenant signage, at the sole cost of the Landlord. Building signage will also be available at the Tenant's expense.


Section 2.7 The building is fitted with Medico Controlled Key Locking System. The Tenant access cards is available at an extra charge, included in the Tenant improvement allowance of $15.00 per square foot.


Article III
Rent


Section 3.1 Annual Rent. During the term of this Lease, and beginning 30 days
----------- after the Commencement Date, Tenant shall pay to the Landlord a fixed annual minimum rent of $11.25 per square foot ("Rent") for the finished section of the building (60,915 square feet). The first monthly payment of rent and expenses shall be paid at signing. The rent for the unfinished shell (29,085 square feet) will be $116,340.00 the first 12-month period beginning 30 days after the Commencement Date, $145,425 the second 12-month period, and $175,000.00 the third through 10th 12-month periods. When the unfinished space become finished space and Tenant agrees to occupy the additional space, the lease rate increases to $11.25 per sq. ft. or $327,206.00 annually. Rent shall be payable in equal monthly installments, in advance on the first day of each month during this Lease term, at Landlord's office or any other place designated by it, without any set-off or deduction except as otherwise provided below. The first monthly payment of rent and expenses payable at signing shall be based on 90,000 square feet. If the Commencement Date is not the first day of a calendar month, Tenant shall pay to Landlord, on the


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Commencement Date, a fraction of the equal monthly installment, the numerator of which is the number of days from the Commencement Date to the end of the calendar month in which that date occurs, and the denominator of which is the total number of days in the calendar month. This payment shall represent the pro rata rent from the Commencement Date to the end of the calendar month. Tenant shall have the right to offset rent in the event of a Landlord bankruptcy or insolvency which prevents Landlord from finishing the work or reconstructing the premises upon construction and as provided in Section 15.4 below. If any monthly rental payment is not received by Landlord by the 5th day of the month by check, cash, wire transfer or other means acceptable to Landlord, Tenant shall, as Additional Rent, pay penalty of 10% of the monthly payment.


Section 3.2 Building Operating Costs. During the term of this Lease, Tenant
------------------------ shall pay on a monthly basis, together with the payment of Rent as specified in section 3.1, Tenant's share of the Building Operating Costs which has been determined to be 100 %. Building Operating Costs shall mean all of Landlord's costs and expenses relating to the use, ownership, operation, maintenance, repair and insurance of the Building, including without limitation, those expenses set forth in Exhibit C. Building Operating Costs shall not include income taxes, promotional or marketing expenses, tenant improvement costs, depreciation of the Building, loan payments, ground lease payments (if any), warranty items or real estate leasing commissions.


Section 3.3 Building Operating Cost Adjustments. Tenant shall continue to make
----------------------------------- the monthly payments of the Building Operating Costs until notified by Landlord of a change in the Building Operating Costs. As soon as practicable after 1st of each year, Landlord shall deliver to Tenant a statement showing (a) the Building Operating Costs for the Building for the prior calendar year and Tenant's allocable share of the Building Operating Costs, and (b) the estimated Building Operating Costs for the then current year (based on the prior year's experience) and Tenant's allocable share of the estimated Building Operating Costs for the then current year. Landlord's determination as to the actual Building Operating Costs for the prior year shall be binding on Landlord and Tenant unless Landlord receives written notice from Tenant stating in detail Tenant's disagreement with Landlord's determination within 30 days after delivery of the statement referred to above. In calculating Building Operating Costs for any fiscal period, if less than ninety-five percent (95%) of the Building is occupied by tenants, then the amount of the Building Operating Costs shall be deemed for the purposes of this section to be increased to an amount equal to the like Building Operating Costs which normally would be expected by Landlord to have been incurred had such occupancy been ninety-five percent (95%) during such entire period. If the total of the monthly payments which Tenant has made for the prior calendar year is less than the Tenant's share of the actual Building Operating Costs for that prior year, then Tenant shall pay Landlord the difference in a lump sum within 10 days after receipt of the statement from Landlord together with the difference between the monthly payments made in the then current year and the amount of monthly payments which are calculated by Landlord as Tenant's share of the estimated Building Operating Costs for the then current year. Any over-payment by Tenant shall be credited towards the monthly Building Operating Costs next coming


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due. Even though the Lease term has ended and Tenant has vacated the Leased Premises, when the final determination is made of Tenant's share of the Building Operating Costs for the year in which this Lease terminated, Tenant shall immediately pay any increase over the estimated Building Operating Costs previously paid and, conversely, any overpayment made shall be immediately rebated by Landlord to Tenant. Failure of Landlord to submit statements as called for in this Lease shall not be deemed to be a waiver of Tenant's requirement to pay sums as provided in this section.


Section 3.4 Additional Rent. All costs, charges, and expenses that Tenant
--------------- assumes, agrees to, or is obligated to Landlord under this Lease shall be deemed "Additional Rent." In the event of nonpayment, Landlord shall have the same rights and remedies with respect to the Additional Rent as is provided for herein in case of nonpayment of Rent. Tenant shall pay Landlord the Rent, Additional Rent, and adjustments of rent provided for in this Lease, when due and without notice or demand, at the time and in the manner specified herein.


Section 3.5 Tenant shall be provided a build out allowance of $15.00 per square foot for the Tenant Work described on Exhibit B. Any unused portion of this build out allowance should be credited to rent or any other leasehold improvements. In addition, Tenant shall be provided an allowance of $1.50 per square of foot of finished space in the Leased Premises to offset Tenant's architect costs.


Section 3.6 If the work to be performed by Landlord is not completed according to the construction schedule attached as Exhibit D, Landlord shall pay any rent due from Tenant on facilities then occupied by Tenant until such time as the Leased Premises are completed. If the work to be performed by Landlord is not completed prior to November 1, 2001, Landlord shall pay a penalty of $1,000 per day until such time as the work is completed plus the rent provided in this paragraph.


Section 3.7 Letter of Credit. Tenant shall enter into a Letter of Credit (or
---------------- replacement Letter[s] of Credit in the event of termination of the original Letter of Credit) in a form satisfactory to and with a bank which meets with the approval of Landlord and Landlord's lender. The Letter of Credit shall be in the initial amount of one million dollars ($1,000,000.00). So long as Tenant is not in default of Section 3.1 of this Lease Agreement, that amount may be decreased by two hundred thousand dollars ($200,000.00) each year for five years until there is no balance remaining. If Tenant shall fail to make timely payments to Landlord pursuant to Section 3.1 of this Lease Agreement, Landlord shall be entitled to draw upon the Letter of Credit in an amount equal to any payment due Landlord from Tenant if such payment is not made within the time constraints of this Lease Agreement. In the event of a draw against the Letter of Credit by Landlord, Tenant shall, within three weeks of any such draw by Landlord, be required to take whatever steps are necessary to restore the Letter of Credit to the balance that existed at the time immediately prior to the draw against the Letter of Credit by Landlord. If the Lease Agreement is terminated as a result of Tenant's default, the entire balance of the Letter of Credit shall be payable to Landlord immediately. If Landlord


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receives notice of the bank's intention to terminate the Letter of Credit, Tenant shall have 21 days to find a replacement letter of credit. If a replacement is not found, Landlord may declare the lease in default and draw and retain the balance of the existing Letter of Credit. Payment of the balance of the Letter of Credit upon Tenant's default shall in no way limit Landlord's ability to recover all of its damages from Tenant. Landlord shall pay monthly fees related to maintaining the Letter of Credit for the months of February, March, April, May, June and July, unless possession is delayed beyond September 1, 2001, in which case, Landlord shall pay such monthly fees until one month prior to possession by Tenant. All other expenses associated with the establishment and maintenance of the Letter of Credit shall be the obligation of Tenant. Except in the event the bank terminates the Letter of Credit or if the lease is terminated as a result of Tenant's default, if the amount paid to Landlord under the Letter of Credit exceeds the amount owed by Tenant to Landlord, upon Tenant's default, then Landlord shall refund the excess to Tenant within five days. In the event the bank terminates the Letter of Credit, Landlord shall refund the excess to Tenant when a new Letter of Credit has been established, or, if no new letter of credit is established, shall refund any excess to Tenant at such time as any damages have been calculated with reasonable certainty. If the lease is terminated as a result of Tenant's default, Landlord shall not be entitled to retain amounts exceeding any actual damages sustained as a result of the termination of the lease, and Landlord shall use its best efforts to mitigate its damages. Any refund payable to Tenant as a result of a termination of the lease shall be paid as soon as the amount (if any) can be ascertained with reasonable certainty.


Article IV
Use of Premises


Section 4.1 Use. The Tenant shall use the Leased Premises for office use and
--- storage and for no other purpose whatsoever.


Section 4.2 Compliance with Laws. Tenant shall comply with all present and
-------------------- future laws or ordinances applicable to the Leased Premises and shall not commit or suffer waste on the Leased Premises, or use or permit anything on the Leased Premises which may be illegal, or constitute a private or public nuisance, or conflict with or invalidate or increase the cost of any of Landlord's fire and extended coverage insurance, or which may be dangerous to persons or the property of the Landlord or other tenants of Landlord's building, their agents, servants, employees, and customers. Notwithstanding the foregoing, Tenant's effecting an increase in the cost of any of Landlord's fire and extended insurance is curable by Tenant's payment of such increase in cost.


Section 4.3 Liens. Tenant agrees not to permit any liens of any type (including
----- mechanic's, materialmen's, vendor's or supplier's liens) to be placed upon the Leased Premises. Should a lien be filed, Tenant agrees to cause the lien to be discharged or provide a bond to the Landlord for the benefit of the Landlord within twenty (20) days of the filing of the lien in the full amount of the lien. If Tenant fails to discharge the lien or provide the required bond, Landlord may upon five (5) days' written notice discharge the


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lien and Tenant agrees to immediately pay to Landlord the full cost of discharging the lien together with Landlord's reasonable and actual legal fees and a fee of ten percent (10%) of the total cost to Landlord.


Article V
Repairs, Maintenance and Alterations


Section 5.1 Repairs and Maintenance. The Landlord shall make all necessary
----------------------- repairs to the Building, including the Leased Premises, except that the Tenant shall be responsible for all repairs and maintenance to tenant improvements and for any repairs necessitated by the Tenant's neglect or omission. All repairs shall be in quality and class equal to the original work in order to maintain the Building and Leased Premises in good condition and repair. If the Tenant fails to perform any of its obligations of maintenance or repair, the Landlord is authorized to come onto the Leased Premises and make such repairs, and upon billing to the Tenant by the Landlord for the costs of such repairs, Tenant shall reimburse the Landlord.


Section 5.2 Removal of Tenant's Property. Upon the expiration of or prior
---------------------------- termination of this Lease, the Tenant shall remove all property of the Tenant from the premises, except plumbing and other fixtures and leasehold improvements which may have been installed by the Tenant and except as otherwise provided in this Lease, and surrender the Leased Premises to the Landlord "broom clean" in as good order and condition as they were upon Tenant commencing business, or were placed by Tenant thereafter, ordinary wear and tear excepted. Any property left on the Leased Premises after the expiration or other termination of this Lease may be disposed of by Landlord in any manner and without any liability to the Landlord.


Section 5.3 Alterations. The Tenant shall not make any changes, alterations,
----------- additions, or improvements to the Leased Premises without the written consent of the Landlord. Prior to commencing any work or alterations on the Leased Premises, Tenant shall furnish to Landlord:


(a) Copies of all governmental permits and authorizations which may be required in connection with the work.


(b) A certificate evidencing that Tenant (or its contractors) has (have) procured workmen's compensation insurance covering all persons employed in connection with the work who might assert claims for death or bodily injury against Landlord, Tenant, or the Building.


(c) All additional personal injury and property damage insurance (over and above the insurance required to be carried by Tenant under Section 8.1) that Landlord may require because of the nature of the work to be done by Tenant.


Article VI


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Taxes


Section 6.1 Tenant's Share of Real Estate Taxes. Tenant shall pay a
----------------------------------- proportionate share, as determined in Section 3.2 of this Lease, of any and all increases in Real Estate Taxes, as hereinafter defined, above those for the fiscal tax year commencing on July 1, 2002 (hereinafter referred to as the Base Tax Year) imposed on the land and buildings of which the Leased Premises forms a part with respect to every calendar year or part thereof during the term of this Lease, whether any such increase results from a higher tax rate or an increase in the assessed valuation of the property, or both. Tenant shall not be responsible for the payment any Real Estate Taxes after termination of this lease. Real Estate Taxes shall be defined as including the following items: (i) real estate taxes, (ii) assessments levied, assessed, or imposed against such land and/or buildings or the rents or profits therefrom to the extent that the same shall be in lieu of all or any portion of any items hereinabove set forth, and (iii) all water and sewer rents, charges, taxes, and frontage assessed or imposed. If due to a change in the method of taxation, any franchise, income, profit, or other tax, however designated, shall be levied against Landlord's interest in the property in whole or in part for or in lieu of any tax which would otherwise constitute Real Estate Taxes, such taxes shall be included in the term Real Estate Taxes for purposes hereof. All such payments shall be approximately prorated for any partial calendar years in which the term of this Lease shall commence or expire. A copy of the tax bill shall be sufficient evidence of the amount of Real Estate Taxes.


Section 6.2 Tax Reduction. Only Landlord shall be eligible to institute tax
------------- reduction or other proceedings to reduce the assessed valuation of the land and buildings. Should Landlord be successful in any such reduction proceedings and obtain a rebate for periods during which Tenant has paid its share of increases, and provided that Tenant is not in default in payment of rent or additional rent due under this Lease, Landlord shall, after deducting its expenses, including, without limitation, attorneys' fees and disbursements in connection therewith, promptly return Tenant's pro rata share of such rebate after Landlord has received such proceeds. Tenant may not obtain any portion of the benefits which may accrue to Landlord from any reduction in Real Estate Taxes for any year below those imposed in the Base Tax Year.


Section 6.3 Notices of Taxes. Along with notification of any increases in Real
---------------- Estate Taxes for which the Landlord requests payment from Tenant, Landlord shall also furnish (i) a copy of the current tax bill, (ii) a copy of the tax bill for the base year, and (iii) a statement showing calculation of Tenant's proportionate share of the increase in Real Estate Taxes for which payme ...