EXHIBIT 10.6
LEASE AGREEMENT
BETWEEN
HUSKERS-RESEARCH, LTD.
as Landlord,
and
MOTIVE COMMUNICATIONS, INC.
as Tenant,
Covering approximately 117,314 square foot Building
known (or to be known)as
RESEARCH PARK
BUILDING 1
located in
Austin, Texas.
TABLE OF CONTENTS
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Page No.
-------- 1. PREMISES, TERM, AND IMPROVEMENTS....................................... 1
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2. BASE RENT, LANDLORD'S SERVICES, ADDITIONAL RENT AND SECURITY DEPOSIT... 1
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3. TAXES.................................................................. 3
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4. LANDLORD'S MAINTENANCE................................................. 3
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5. TENANTS'S MAINTENANCE AND REPAIR OBLIGATIONS........................... 4
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6. ALTERATIONS............................................................ 4
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7. SIGNS.................................................................. 4
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8. UTILITIES.............................................................. 4
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9. INSURANCE.............................................................. 5
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10. CASUALTY DAMAGE........................................................ 5
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11. LIABILITY, INDEMNIFICATION, WAIVER OF SUBROGATION AND NEGLIGENCE....... 5
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12. USE.................................................................... 6
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13. INSPECTION............................................................. 6
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14. ASSIGNMENT AND SUBLETTING.............................................. 6
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15. CONDEMNATION........................................................... 7
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16. SURRENDER OF PREMISES; HOLDING OVER.................................... 7
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17. QUIET ENJOYMENT........................................................ 8
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18. EVENTS OF DEFAULT...................................................... 8
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19. REMEDIES............................................................... 8
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20. LANDLORD'S DEFAULT..................................................... 9
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21. MORTGAGES.............................................................. 9
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22. ENCUMBRANCES........................................................... 9
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23. MISCELLANEOUS.......................................................... 10
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24. NOTICES................................................................ 11
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25. HAZARDOUS WASTE........................................................ 11
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26. LANDLORD'S LIEN........................................................ 12
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27. SPECIAL PROVISIONS..................................................... 12
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LIST OF DEFINED TERMS
Affiliate......................................................... 8 Allowance......................................................... B-1 Base Rent......................................................... 1 Building.......................................................... 1 Building's Structure.............................................. 3 Claimant.......................................................... 8 Commencement Date................................................. 1 Construction Costs................................................ B-1 Design Professional............................................... B-1 Environmental Law................................................. 10 Event of Default.................................................. 7 Hazardous Substances.............................................. 10 HVAC System....................................................... 3 Including......................................................... 9 Land.............................................................. 1 Landlord.......................................................... 1 Landlord's Mortgagee.............................................. 8 Law............................................................... 8 Laws.............................................................. 8 Lease............................................................. 1 Loss.............................................................. 1 Mortgage.......................................................... 8 MSDS.............................................................. 10 Operating Expenses................................................ 1 Permitted Activities.............................................. 10 Permitted Materials............................................... 10 Premises.......................................................... 1 Primary Lease..................................................... 8 Proportionate Share............................................... 1 Rent.............................................................. 2 Repair Period..................................................... 4 Security Deposit.................................................. 2 Substantial completion............................................ B-1 Substantially completed........................................... B-1 Taking............................................................ 6 Taxes............................................................. 2 Tenant............................................................ 1 Tenant Improvements............................................... 1 Tenant Party...................................................... 9 Term.............................................................. 1 Transfer.......................................................... 5 Vacation Date..................................................... 5 Working Drawings.................................................. B-1
LEASE AGREEMENT
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This Lease Agreement (this "Lease") is entered into by Husker-Research,
----- Ltd., ("Landlord"), and Motive Communications, Inc., ("Tenant").
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1. PREMISES, TERM, AND IMPROVEMENTS.
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(a) Landlord leases to Tenant, and Tenant leases from Landlord, the building depicted as "Phase I" on the Site Plan (herein so called) attached as Exhibit A-1 (referred to herein as the "Building" or the "Premises"), located ----------- -------- -------- on the real property described as Phase I on Exhibit A-1 (the "Land"), subject
----------- ---- to the terms and conditions in this Lease. The Building is a part of that multiple building project being a portion of Research Park as more particularly shown on Exhibit A-1 hereto (the "Project").
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(b) The Lease term shall be one hundred twenty (120) months, beginning on (the "Commencement Date") which shall be the later of: (i) the date
----------------- of substantial completion (as defined on Exhibit B) or (ii) the Projected Commencement Date (as defined below), and ending one hundred twenty (120) months thereafter (the "Term", which defined term shall include all renewals and
---- extensions of the Term, if any). Upon the Commencement Date, Landlord and Tenant shall execute a Notice of Commencement in the form attached hereto as Exhibit
------- "C" acknowledging the Commencement Date and the date the Lease will expire. As --- used herein, the term "Projected Commencement Date" shall mean either November 15, 2000 or January 15, 2001, and Landlord shall so designate in writing one of those two dates on or before April 15, 2000 (i.e., in no event shall the Commencement Date occur after November 15, 2000 but before January 1, 2001).
(c) Landlord shall construct the Shell Improvements, the Site Improvements and the Tenant Improvements described on the applicable plans and specifications referenced on Exhibit B, and, by occupying the Premises, Tenant
--------- shall have accepted the Premises in their condition, subject to completion of any punch-list items relating to such improvements.
2. BASE RENT, LANDLORD'S SERVICES, ADDITIONAL RENT AND SECURITY DEPOSIT.
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(a) Tenant shall pay to Landlord "Base Rent", monthly in advance,
--------- without demand, deduction or set off, equal to the following amounts for the following periods of time:
Time Period Annual Base Rent
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Months 1 through 24 $15.50 per square foot in the Premises ($151,530.58 per month)
Months 25 through 60 $16.25 per square foot in the Premises ($158,862.71 per month)
Months 61 through 84 $17.00 per square foot in the Premises ($166,194.83 per month)
Months 85 through 120 $17.85 per square foot in the Premises ($174,504.58 per month)
The first monthly installment, plus the other monthly charges set forth in Section 2(c), shall be due on the date hereof; thereafter, monthly installments of Base Rent shall be due on the first day of each calendar month following the Commencement Date. If the Term begins on a day other than the first day of a month or ends on a day other than the last day of a month, the Base Rent and additional rent for such partial month shall be prorated. Notwithstanding the foregoing, Tenant shall only occupy, and pay Base Rent on, 85,000 square feet of the Premises during the first four (4) months of the Term. Therefore, the Base Rent for months 1 through 4 shall be $109,791.67 (i.e., $15.50 per square foot, based on 85,000 square feet); provided, however, that during the first 4 months of the Term, Tenant shall pay additional Base Rent to Landlord for any space occupied by Tenant over and above 85,000 square feet on a per diem basis at a rate of $15.50 per rentable square foot/year.
(b) Services. Landlord shall furnish to Tenant: (1) water (hot and
-------- cold) and sewer service at those points of supply depicted on the Working Drawings (as defined on Exhibit "B" hereto); (2) building standard janitorial service to the Premises five (5) days a week (Landlord reserves the right to bill Tenant separately for extra janitorial service requested or required by Tenant) and such window washing as may from time to time in Landlord's judgment be reasonably required; and (3) replacement of Building-standard light bulbs and fluorescent tubes, provided that Landlord's standard charge for such bulbs and tubes shall be paid by Tenant. Landlord shall maintain the common areas of the Building, including but not limited to, any elevators, hallways, restrooms and carpeting in good order and condition consistent with a first-class garden office building, and shall promptly repair and/or replace any portions of the Building which are defective, inoperative or inconsistent with a first-class garden/office building, except for damage occasioned by Tenant, or its employees, agents or invitees. Notwithstanding anything to the contrary contained herein, Landlord shall not be responsible to provide security for the Premises or the Building, and Tenant agrees that it shall be responsible to contract for its own security service for its Premises. Landlord shall use reasonable efforts to provide for the safety of the common areas, but shall not be liable to Tenant, its employees or invitees in the event such efforts are ineffective. Landlord shall use reasonable efforts to restore any of the foregoing services that become unavailable; however, such unavailability shall not render Landlord liable for any damages caused thereby, be a constructive eviction of Tenant, constitute a breach of any implied warranty, or, except as provided in the next sentence, entitle Tenant to any abatement of Tenant's obligations hereunder. However, if Tenant is prevented from making reasonable use of the Premises for more than 15 consecutive days (or 5 consecutive days if the cause of such unavailability is within the reasonable control of Landlord to cure) because of the unavailability of any such service, Tenant shall, as its exclusive
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remedy therefor, be entitled to an equitable adjustment of Base Rent based on the extent Tenant is prevented from using the Premises for each consecutive day (after such 15-day, or 5-day period, as applicable) that Tenant is so prevented from making reasonable use of the Premises. Notwithstanding anything to the contrary contained herein, Tenant shall have the right to select any property manager employed by Landlord.
(c) It is the intention of Landlord and Tenant that, except as provided herein to the contrary, the Base Rent shall be absolutely net to Landlord; that all costs, expenses, and obligations of every kind relating to Tenant's use, occupancy, and possession of the Premises, which may arise or become due during the Term shall be paid by Tenant. Tenant shall pay, as additional rent all costs incurred in owning, operating, managing, and maintaining the Land and the Building (collectively, "Operating Expenses"),
------------------ including, without limitation, the following items: (1) Taxes (defined below) and the cost of any tax consultant employed to assist Landlord in determining the fair tax valuation of the Building and Land; (2) the cost of all utilities used in the Building (including water and sewer) that are not billed directly to Tenant by the utility provider; (3) the cost of insurance; (4) the reasonable cost of repairs, replacement, management fees and expenses, landscape maintenance and replacement, janitorial service, trash service (if provided), and a replacement reserve; (5) the cost of dues, assessments, and other charges applicable to the Land payable to any property or community owner association under restrictive covenants or deed restrictions to which the Land is subject; (6) maintenance of fire sprinkler systems; and (7) alterations, additions, and improvements made by Landlord to comply with Law (defined below) or in order to reduce Operating Expenses. On the same day that Base Rent is due, Tenant shall pay to Landlord an amount equal to 1/12 of Landlord's estimate of annual Operating Expenses. The initial monthly payments are based upon Landlord's estimate of the Operating Expenses for the year in question, and shall be increased or decreased annually to reflect the projected actual Operating Expenses for that year. Within 90 days after each calendar year or as soon thereafter as is reasonably practicable, Landlord shall deliver to Tenant a statement setting forth the actual Operating Expenses for such year. If Tenant's total payments in respect of estimated Operating Expenses for any year are less than actual Operating Expenses for that year, Tenant shall pay the difference to Landlord within ten (10) days after Landlord's request therefor; if such payments of estimated Operating Expenses are more than actual Operating Expenses, Landlord shall retain such excess and credit it against Tenant's future monthly payments, except that any credit remaining at the expiration or earlier termination of this Lease shall be paid to Tenant within thirty (30) days after such expiration or termination. Operating Expenses shall not include the following: (A) any costs for interest, amortization, or other payments on loans to Landlord; (B) commissions or other expenses incurred in leasing or procuring tenants; (C) legal expenses other than those incurred for the general benefit of the tenants of the Building; (D) allowances, concessions, and other costs of renovating or otherwise improving space for occupants of the Building or vacant space in the Building; (E) federal income taxes imposed on or measured by the income of Landlord from the operation of the Building; (F) rents under ground leases; (G) costs incurred in selling, syndicating, financing, mortgaging, or hypothecating any of Landlord's interests in the Building. There shall be no duplication of costs for reimbursements in calculating Operating Expenses; and (H) costs of capital improvements except for those provided in (7) above and except that Landlord may include in Operating Expenses only such portion of capital improvement costs as is necessary to amortize such improvements over their useful life, as defined by the Internal Revenue Service. The amounts of the initial monthly Base Rent (after month 4) and Tenant's Proportionate Share of Operating Expenses (and the part thereof attributable to Taxes) are as follows:
Base Rent (Section 2.(a))................................... $151,530.58
Operating Expenses, excluding Taxes (Section 2.(c))......... $ 26,688.93
Taxes (Sections 2.(c) and 3.(a))............................ $ 31,283.73
Total initial monthly payment............................... $209,503.24
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(d) In the event that the Building becomes a multi-tenant building in the future, then Tenant shall only be required to pay its proportionate share of Operating Expenses, such proportionate share being a fraction the numerator of which is the number of square feet within the Premises and the denominator of which is the number of square feet in the Building.
(e) If any payment required of Tenant under this Lease is not paid within five (5) days after due, Landlord may charge Tenant a fee equal to 5% of the delinquent payment to reimburse Landlord for its cost and inconvenience incurred as a consequence of Tenant's delinquency.
(f) All payments and reimbursements required to be made by Tenant under this Lease shall constitute "rent" (herein so called).
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(g) Tenant shall deposit with Landlord on the date hereof $148,541.67 (the "Security Deposit"), which shall be held by Landlord to secure
---------------- Tenant's obligations under this Lease; however, the Security Deposit is not an advance rental deposit or a measure of Landlord's damages for an Event of Default (defined below). Landlord may use any portion of the Security Deposit to cure any Event of Default hereunder, without prejudice to any of Landlord's other remedies. If so used, Tenant shall pay Landlord an amount that will restore the Security Deposit to its original amount upon request. In connection with any waiver of a Tenant default or modification of this Lease, Landlord may require that Tenant provide Landlord with an additional amount to be held as part of the Security Deposit. The unused portion of the Security Deposit will be returned to Tenant within a reasonable time after the end of the Term, provided that Tenant has fully and timely performed its obligations hereunder throughout the Term.
In addition to the cash Security Deposit described above, Tenant shall deposit with Landlord on or before April 15, 2000, an irrevocable stand-by letter(s) of credit in the amount of $1,800,000.00 (whether one or more, the "Letter of Credit"), which shall be held and/or applied by Landlord in
---------------- accordance with this Section; however, the Letter of Credit is not an advance rental deposit or a measure of Landlord's damages for an Event of
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3/22/00
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Default (defined below). The Letter of Credit shall be issued by a bank acceptable to Landlord and shall otherwise be in such form and contain such terms as are acceptable to Landlord, and shall be coterminous with the Term hereof. If the Letter of Credit is to be a series of Letters of Credit, for a one year term each, then each such Letter of Credit will contain a provision whereby Landlord may draw on the Letter of Credit if it is not replaced or renewed prior to its expiration date. Upon an event of Default, Landlord may, in addition to all other rights and remedies afforded Landlord hereunder or by law, cash the Letter of Credit (as the same may have been reduced in accordance with the terms hereof) and use and hold the same as a cash security deposit, which shall include the right to use any portion thereof to satisfy Tenant's unperformed obligations hereunder, without prejudice to any of Landlord's other remedies. If so used, Tenant shall pay Landlord an amount that will restore the Letter of Credit to its original amount upon request. The Letter of Credit (as the same may have been reduced in accordance with the terms hereof) will be returned to Tenant within 30 days after the end of the Term, provided that Tenant has fully and timely performed its obligations hereunder throughout the Term. If Landlord sells its interest in the Building, the Letter of Credit shall be transferred to such purchaser, and Tenant hereby agrees to cooperate in effectuating any such transfer. Notwithstanding the foregoing, so long as no Event of Default exists, at such time as Tenant has a public stock offering (or other liquidity event), which raises at least: (i) $40,000,000.00 in equity for Tenant (after deducting all costs of the transaction), the Letter of Credit shall be reduced to $900,000.00, (ii) $60,000,000.00 in equity for the Tenant (after deducting all costs of the transaction), the Letter of Credit shall be reduced to $450,000.00, and (iii) $80,000,000.00 in equity for Tenant (after deducting all costs of the transaction), Landlord shall return the Letter of Credit to Tenant (as the same may have been reduced in accordance with the terms hereof), and Tenant shall have no further obligations hereunder to supply Landlord with a letter of credit.
(h) Tenant shall have a period of 60 days following receipt of the statement of actual Operating Expenses, within which to request and obtain, at Tenant's expense, a review of Landlord's records to determine if the expenses in the statement are accurate, reasonable and comply with the Lease. Such inspection may only be done by a generally recognized accounting firm. Should errors found in the statement exceed five percent (5%) of the total of the statement, Landlord shall be responsible for all reasonable fees incurred by Tenant with respect to the review, otherwise Tenant pays for the review. If Tenant shall not have availed itself of its audit rights, Tenant shall be deemed to have accepted final and determinative the amount shown on the statement.
3. TAXES.
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(a) Landlord shall pay all taxes, assessments and governmental charges whether federal, state, county, or municipal and whether they are imposed by taxing or management districts or authorities presently existing or hereafter created (collectively, "Taxes") that accrue against the Land and the
----- building. If, during the Term, there is levied, assessed or imposed on Landlord a capital levy or other tax directly on the rent or a franchise tax, assessment, levy or charge measured by or based, in whole or in part, upon rent, then all such taxes, assessments, levies or charges, or the part thereof so measured or based, shall be included within the term "Taxes".
(b) Tenant shall (1) before delinquency pay all taxes levied or assessed against any personal property, fixtures or alterations placed in the Premises and (2) upon the request of Landlord, deliver to Landlord receipts from the applicable taxing authority or other evidence acceptable to Landlord to verify that such taxes have been paid. If any such taxes are levied or assessed against Landlord or Landlord's property and (A) Landlord pays them or (B) the assessed value of Landlord's property is increased thereby and Landlord pays the increased taxes, then Tenant shall pay to Landlord such taxes within ten days after Landlord's request therefor.
4. LANDLORD'S MAINTENANCE.
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(a) Landlord's shall maintain the Building, including the roof, the foundation piers and structural members of the exterior walls (collectively the "Building's Structure") and the plumbing, hot water equipment and the
-------------------- heating, air conditioning and ventilating equipment ("HVAC System"); however, Landlord shall not be responsible for any such work until Tenant delivers to Landlord written notice of the need therefor, except that in the case of an emergency oral notice shall be considered adequate notice. Landlord's liability for any defects, repairs, replacement or maintenance for which Landlord is responsible hereunder shall be limited to the cost of performing such work. All costs of performing the work described in this section 4(a) (other than repairs of the Building's Structure) shall be included in Operating Expenses.
(b) Additionally, Landlord shall, maintain the parking areas, driveways, alleys and grounds located on the Land in accordance with Law and in a clean and sanitary condition, consistent with the operation of a first-class garden office building, including prompt maintenance, repairs and replacements of (1) any drill or spur tract servicing the Building, (2) the exterior of the Building (including painting), (3) sprinkler systems and sewage lines, and (4) any other items normally associated with the foregoing. Tenant shall promptly notify Landlord of any work required to be performed under this Section 4.(b), and Landlord shall not be responsible for performing such work until Tenant delivers to Landlord such notice, except that in the case of an emergency oral notice shall be adequate notice. All costs in performing the work described in this Section 4.(b) shall be included in Operating Expenses.
(c) Landlord will not cause any waste related to the Building or the land, nor will Landlord perform any activities which constitute a nuisance to occur in, on or around the Building or Land. Landlord shall manage and operate the Building and the Land in a prudent businesslike manner. Landlord will not permit the Building or any part of it and the Land to be used for any purpose which increases the insurance premiums of Tenant or Landlord. If such increased cost are caused by Landlord, then such increase shall not be considered an Operating Expense to be paid by Tenant.
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