EXHIBIT 10.35

 

FIRST AMENDMENT TO LEASE

 

 

THIS FIRST AMENDMENT TO LEASE (“Amendment”) is made and entered into this
18thday of January, 2002, by and between MARTIN CBP ASSOCIATES, L.P., a Delaware
limited partnership (“Landlord”), and HEARME, a Delaware corporation, formerly
known as Mpath Interactive, Inc. (“Tenant”).

 

R E C I T A L S:

 

This First Amendment is entered into on the basis of the following facts,
understandings and intentions of the parties:

 

A.            Landlord and Tenant entered into that certain lease dated July 30,
1999 (the “Lease”) which demised those certain premises designated as 685 Clyde
Avenue located in Mountain View, California, as more particularly described in
the Lease (the “Premises”).

 

B.            Tenant has informed Landlord that it is experiencing financial
difficulties and desires to provide some limitation on its liability should it
become unable to perform its obligations under the Lease. In exchange for such
limitation of liability, Landlord has requested Tenant to provide, and Tenant
has agreed to provide, additional security for the performance by Tenant of its
obligations under this Lease, subject to such limitation on liability.

 

C.            Landlord and Tenant have agreed to amend the Lease upon the terms
and conditions set forth herein.

 

                NOW, THEREFORE, for good and valuable consideration, including
the mutual covenants contained in the Lease, Landlord and Tenant hereby agree as
follows:

 

                1              Defined Terms. Except as expressly provided in
this First Amendment to the contrary, terms which are defined in the Lease shall
have the same meaning when used in this Amendment.

 

                2              Security Deposit. The Lease is hereby amended
with respect to the Security Deposit as follows:

 

                                2.1           The Summary of Basic Lease Term is
hereby amended to delete the current definition of the “Security Deposit” and to
insert the following in place thereof: “$104,000.00 in cash and a letter of
credit in the amount of $600,000.00.”

 

                                2.2           Section 3.6 of the Lease is hereby
deleted in its entirety and the following paragraphs are inserted in place
thereof:

 

“A.          Security Deposit. Landlord acknowledges that Tenant has previously
deposited with Landlord a cash security deposit in the amount of One Hundred
Four Thousand and 00/100 Dollars ($104,000.00) which is being held by Landlord
to secure the performance of the Tenant under the Lease (the “Cash

 

 

1

--------------------------------------------------------------------------------

 

Security Deposit”). Tenant has agreed to deposit, as additional security for the
performance by Tenant of its obligations under this Lease, an irrevocable
standby letter of credit in the amount of Six Hundred Thousand and 00/100
Dollars ($600,000.00) (the “Letter of Credit”) complying with the terms of this
Section 3.6. For purposes of this Lease, the term “Security Deposit” shall mean
the Cash Security Deposit and the Letter of Credit. If an Event of Tenant’s
Default occurs, Landlord may use, apply or retain all or any part of the Letter
of Credit in addition to the Cash Security Deposit for the payment of any rent
or other sum in default, or for the payment of any other amount which Landlord
may spend or become obligated to spend by reason of such Event of Tenant’s
Default, or to compensate Landlord for any other loss or damage which Landlord
may suffer by reason of such Event of Tenant’s Default. Tenant hereby waives the
provisions of Section 950.7 of the California Civil Code, and all other
provisions of law, now or hereafter in force, which provide that Landlord may
claim from a security deposit (including the Letter of Credit) only those sums
reasonably necessary to remedy efaults in the payment of rent, to repair damage
caused by Tenant or to clean the Premises, it being agreed that Landlord may, in
addition, claim those sums reasonably necessary to compensate Landlord for any
other loss or damage, foreseeable or unforeseeable, caused by the act or
omission of Tenant or any officer, employee, agent or invitee of Tenant. If
Tenant is not otherwise in default, the Security Deposit or any balance thereof
shall be returned to Tenant within thirty (30) days after the expiration of the
Lease Term. Landlord shall not be required to keep this Security Deposit
separate from its general fund and Tenant shall not be entitled to interest on
such Security Deposit. Landlord’s receipt and retention of the Security Deposit
shall not create any trust or fiduciary relationship between Landlord and
Tenant. Upon termination of the original Landlord’s (or any successor owner’s)
interest in the Premises, the original Landlord (or such successor) shall be
released from further liability with respect to the Security Deposit upon the
original Landlord’s (or such successor’s) compliance with California Civil Code
Section 1950.7(d), or successor statute and successor’s written assumption of
Landlord’s obligations with respect to the Security Deposit.

 

“B.          Letter of Credit Provisions. The Letter of Credit shall be issued
by a money-center bank (a bank which accepts deposits, which maintains accounts,
which has a local Bay Area office which will negotiate a letter of credit and
whose deposits are insured by the FDIC) whose financial strength shall be
sufficient to meet liquidity demands with respect to issued letters of credit
(such as Bank of America, Wells Fargo Bank or Silicon Valley Bank) and which is
otherwise reasonably acceptable to Landlord. The Letter of Credit shall be
issued for a term of at least twelve (12) months and shall be in a form and with
such content reasonably acceptable to Landlord. In the event the Letter of
Credit, or any succeeding Letter of Credit, has an expiry date sooner than the
remaining term of the Lease plus thirty (30) days thereafter, Tenant shall
either replace the expiring Letter of Credit with another Letter of Credit in an
amount equal to the original Letter of Credit or renew the expiring Letter of
Credit, in any event no later than thirty (30) days prior to the expiration of
the term of the Letter of Credit then in

 

 

2

--------------------------------------------------------------------------------

 

effect. If Tenant fails to deposit a replacement Letter of Credit or renew the
expiring Letter of Credit, Landlord shall have the right to draw upon the
expiring Letter of Credit for the full amount thereof. If Tenant does not so
provide Landlord with a substitute Letter of Credit within such time period,
then Landlord shall have the right to draw upon the current Letter of Credit and
hold the funds drawn as the Security Deposit. If Landlord notifies Tenant in
writing that the bank which issued the Letter of Credit has become financially
unacceptable (e.g., the bank is under investigation by governmental authorities,
the bank no longer has the financial strength equivalent to Bank of America,
Wells Fargo Bank or Silicon Valley Bank or has filed bankruptcy or
reorganization proceedings), then Tenant shall have thirty (30) days to provide
Landlord with a substitute Letter of Credit complying with all of the
requirements hereof. Landlord agrees to pay the initial fee charged by the
issuing bank in connection with the Letter of Credit and any other bank fees
(including transfer or assignment fees) associated with, such Letter of Credit.
The Letter of Credit shall be transferable, irrevocable and unconditional, so
that Landlord, or its successor(s) in interest, may at any time draw on the
Letter of Credit against sight drafts presented by Landlord, accompanied by
Landlord’s statement that said drawing is in accordance with the terms and
conditions of this Lease; no other document or certification from Landlord shall
be required to negotiate the Letter of Credit and the Landlord may draw on any
portion of the then uncalled upon amount thereof without regard to and without
the issuing bank inquiring as to the right or lack of right of the holder of
said Letter of Credit to effect such draws or the existence or lack of existence
of any defenses by Tenant with respect thereto. The Letter of Credit shall not
be mortgaged, assigned or encumbered in any manner whatsoever by Tenant without
the prior written consent of Landlord.

 

“C.          Independent Contract. Tenant acknowledges and agrees that the
Letter of Credit constitutes a separate and independent contract between
Landlord and the issuing bank, that Tenant is not a third party beneficiary of
such contract, and that Landlord’s claim under the Letter of Credit for the full
amount due and owing thereunder shall not be, in any way, restricted, limited,
altered or impaired by virtue of any provision of the Bankruptcy Code,
including, but not limited to, Section 502(b)(6) of the Bankruptcy Code.

 

“D.          Transfer of the Letter of Credit. The Letter of Credit shall be
transferable to any of the following parties: (i) any secured or unsecured
lender of Landlord, (ii) any assignee, successor, transferee or other purchaser
of all or any portion of the Building, or any interest in the Building, (iii)
any partner, shareholder, member or other direct or indirect beneficial owner in
Landlord (to the extent of their interest in the Lease), provided that such
transferree agrees to be bound by the provisions of this Section 3.6. Further,
in the event of any sale, assignment or transfer by the Landlord of its interest
in the Premises or the Lease, Landlord shall provide prompt written notice of
such assignment or transfer to Tenant and shall have the right to assign or
transfer the Letter of Credit to its grantee, assignee or transferee; and in the
event of any sale, assignment or transfer, the landlord so assigning or

 

 

3

--------------------------------------------------------------------------------

 

transferring the Letter of Credit shall have no liability to the Tenant for the
return of the Letter of Credit, and Tenant shall look solely to such grantee,
assignee or transferee for such return, so long as such grantee, assignee or
transferee assumes in writing all of Landlord’s obligations with respect to the
Letter of Credit. Tenant shall use reasonable efforts to cooperate with Landlord
and the bank to effect the transfer of the Letter of Credit, provided that
Landlord shall be responsible for all costs of the bank associated therewith.”

 

                3.             Personal Property. In addition to posting the
Letter of Credit and as additional security, Tenant hereby agrees that if an
Event of Tenant’s Default occurs and as a result thereof Landlord terminates the
Lease pursuant to its rights under Section 13.2, certain personal property owned
by Tenant and scheduled on Exhibit A shall be surrendered with the Premises.
Concurrently herewith, Tenant shall execute and deliver to Landlord a bill of
sale in the form attached hereto as Exhibit B whereby Tenant conveys to Landlord
all of Tenant’s right, title and interest in and to the personal property
identified on Exhibit A. Landlord shall hold such Bill of Sale in escrow
pursuant to the terms of this Paragraph 3. Upon early termination of the Lease
as a result of an Event of Tenant’s Default, the Bill of Sale shall be deemed
released to Landlord. Upon the natural expiration of the Lease and provided
Tenant has performed all of its obligations hereunder, the Bill of Sale shall be
returned to Tenant.

 

                4.             Default. Landlord and Tenant hereby agree that
the cure period set forth in Section 13.1A shall be reduced from 5 days to 1
business day and that if an Event of Tenant’s Default occurs Landlord shall
elect the remedy under Section 13.2C. to terminate the Lease. Upon termination
of the Lease under Section 13.2C, Landlord shall be entitled to retain the
entire Security Deposit and the personal property identified on Exhibit A as
described in Paragraph 3. Landlord agrees that the Security Deposit and personal
property retained by Landlord shall be accepted by Landlord in full satisfaction
of (i) all claims for future rent through the balance of the Lease Term under
Section 1951.2 and 1951.4 of the California Civil Code and (ii) any other damage
or loss which Landlord may suffer by reason of such Event of Tenant’s Default
and /or Landlord’s termination of the Lease as a result thereof, subject to
survival of those matters which, in accordance with the terms of the Lease, were
to survive the expiration or sooner termination of the Lease. Notwithstanding
anything contained herein to the contrary, in the event Landlord is unable to
obtain or keep the full benefit of the Security Deposit for any reason
(including without limitation an avoidance action brought by Tenant, as debtor
or debtor-in-possession, or any of its creditors, or a trustee in bankruptcy),
and Tenant does not provide substitute security or payment within ten (10) days
after written notice from Landlord of its inability to obtain or keep any
portion of the Security Deposit, then Landlord's full claim under the Lease or
under applicable law against Tenant as a result of such Event of Tenant’s
Default will be reinstated and immediately enforceable against Tenant. If Tenant
files or has filed against it a petition under any chapter of Title 11 of the
United States Code, or any similar insolvency proceeding is commenced, within
100 days after Landlord obtains the benefit of any portion of the Security
Deposit, and Landlord is unable to obtain or retain all or part of the Security
Deposit, then any claims of the officers, directors and/or shareholders
("Insiders") of Tenant against Tenant in connection with such case or proceeding
shall hereby be subordinated to the claims of Landlord against Tenant, such that
Landlord shall have the right to full payment of its claims before any payment
is made on account of a claim of any of the Insiders in such

 

 

4

--------------------------------------------------------------------------------

 

case or proceeding. In the event Tenant becomes a debtor in a case under
Title 11 of the United States Code within 100 days after any payment of any
amount of the Security Deposit to Landlord, then any period of limitations or
laches respecting any and all claims of Landlord against Tenant (including
without limitation any claims to recover preferences or fraudulent conveyances
or transfers) shall be tolled and suspended from the date of this amendment
until the date that an order for relief in the case under Title 11 of the United
States Code is entered.

 

                5.             Representations and Warranties. As of the date of
this Amendment:

 

                                5.1.          Authority. Each of Landlord and
Tenant represents and warrants to the other that it has full right, power and
authority to enter into this Amendment, and has obtained all necessary consents
and resolutions from its members required under the documents governing its
affairs in order to consummate this transaction, and the persons executing this
Amendment have been duly authorized to do so. The Agreement and the Lease are
binding obligations of such party, enforceable in accordance with their terms.

 

                                5.2           No Assignments. Tenant represents
and warrants to Landlord that Tenant is the sole tenant under the Lease, and
Tenant has not sublet, assigned, conveyed, encumbered or otherwise transferred
any of the right, title or interest of Tenant under the Lease.

 

                                5.3           Lender Consent. Landlord
represents and warrants to Tenant that Landlord has received approval from its
lender for Landlord to enter into this Amendment.

 

                6.             Interpretation of Amendment. This Amendment and
the Lease shall be construed as a whole in order to effectuate the intent of the
parties to amend the Lease in the manner specified in this Amendment. All
provisions of the Lease affected by this Amendment shall be deemed amended
regardless of whether so specified in this Amendment. Subject to the foregoing,
if any provision of the Lease conflicts with any provision of this Amendment,
the

provision of this Amendment shall control.

 

                7.             No Further Amendment. Except as amended by this
Amendment, the Lease shall continue in full force and effect and in accordance
with its terms.

 

                8.             Effective Date of Amendment. The effective date
of this Amendment and each and every provision hereof, unless otherwise
specified herein, shall be the date first hereinabove set forth.

 

                9.             Counterparts. This First Amendment may be
executed in one or more counterparts. All counterparts so executed shall
constitute one contract, binding on all parties, even though all parties are not
signatory to the same counterpart. Execution and transmission by telecopier is
permitted and will create an effective First Amendment.

 

 

 

5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties have duly executed this Amendment on the date
first written above.

 

LANDLORD:

 

MARTIN CBP ASSOCIATES, L.P.,

a Delaware limited partnership

 

By:          Martin/Cypress, LLC,

a California limited liability company

Its: General Partner

 

By:          TMG Partners,

a California corporation

Its: Managing Member

 

By:

 

 

 

 

 

 

 

Its:

 

 

TENANT:

 

HEARME,

a Delaware corporation

 

By:

 

 

 

Its:

 

 

 

 

 

6

--------------------------------------------------------------------------------

EXHIBIT A

LIST OF PERSONAL PROPERTY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

--------------------------------------------------------------------------------

EXHIBIT B

BILL OF SALE

 

                FOR VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, the undersigned, HEARME, a Delaware corporation (“HearMe”) does on
January ___, 2002, grant, convey, transfer, assign, bargain, sell, deliver and
set over unto MARTIN CBP ASSOCIATES, L.P., a Delaware limited partnership, its
successors and assigns (“Martin CBP”) forever, all of the HearMe’s right, title,
and interest in and to the personal property described on Schedule 1 attached
hereto (the “Personal Property”) located in and upon and used in connection with
the operation of all the improvements on the land located in Mountain View,
California, generally known as 685 Clyde Avenue.

 

EXCEPT AS STATED BELOW, ALL OF THE PERSONAL PROPERTY IS USED AND IS CONVEYED AND
ACCEPTED “AS IS” WITHOUT ANY WARRANTIES OR REPRESENTATIONS OF WHATSOEVER KIND OR
NATURE, INCLUDING, WITHOUT LIMITATION, AS TO MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WHETHER EXPRESS OR IMPLIED, OR WHETHER WRITTEN OR ORAL,
CONCERNING ANY AND ALL DEFECTS OF A PHYSICAL NATURE, WHETHER IN MATERIAL OR
WORKMANSHIP AND WHETHER OR NOT SUCH DEFECT WOULD BE VISIBLE OR APPARENT UPON
MARTIN CBP’S FULL INSPECTION AND EXAMINATION OF THE PROPERTY.

 

HearMe does hereby represent and warrant to Martin CBP that HearMe is the lawful
owner of the Personal Property and that the Personal Property is free and clear
from all liens and encumbrances, and HearMe shall indemnify, defend and hold
Martin CBP harmless from and against any and all claims, demands, costs,
liabilities, losses, damages, penalties or expenses of any kind, including
without limitation reasonable attorneys’ and expert witnesses’ fees which may be
brought or made against Martin CBP or which Martin CBP may incur, by reason of
any defect in HearMe’s title to the Personal Property as herein represented and
warranted or as a result of a lien or encumbrance thereon.

 

This Bill of Sale shall in all respects be governed by, and construed in
accordance with the laws of the State of California, including all matters of
construction, validity and performance.

 

IN WITNESS WHEREOF, HearMe has caused this Bill of Sale to be duly executed and
delivered on the day and year first above written.

 

HEARME,

a Delaware corporation

 

By:

 

 

 

Its:

 

 

 

8

--------------------------------------------------------------------------------

 

SCHEDULE 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

--------------------------------------------------------------------------------