California-Sunnyvale-1306 Orleans Drive Sub-Sublease - Miller Freeman Inc. and CBooks Express
SUB-SUBLEASE
THIS SUB-SUBLEASE (this "Sub-Sublease") is entered into as of the
___ day of November, 1996, by and between (i) MILLER FREEMAN, INC., a Delaware
corporation ("MFI"), and (ii) CBOOKS EXPRESS, a California corporation
("CBOOKS").
A. Pursuant to that certain Lease dated June 1, 1994 (the "Master
Lease"), by and between The Realty Associates Fund, III Limited Partnership (as
the successor to The Prudential Insurance Company of America) ("Master
Landlord"), as landlord, and Control Data Systems, Inc. ("CDS"), as tenant, CDS
is leasing from Master Landlord certain space in a building located at 1306
Orleans Drive, Sunnyvale, California 94089. A copy of the Master Lease is
attached hereto as Exhibit A.
B. Pursuant to that certain Sublease Agreement dated September 15, 1995
(the "Sublease"), CDS subleased to Avid Media Group, Inc. ("Avid") a portion of
the premises covered by the Master Lease consisting of approximately 6,000
rentable square feet as more particularly described in the Sublease (the
"Subleased Premises"). Pursuant to that certain Assignment of Sublease dated
September 27, 1996, Avid assigned its interest as tenant in the Sublease to MFI.
A copy of the Sublease is attached hereto as Exhibit B.
C. CBOOKS desires to sub-sublease the Subleased Premises from MFI and
MFI desires to sub-sublease the Subleased Premises to CBOOKS, on the terms,
covenants and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and
promises of the parties contained herein, the parties hereto agree as follows:
1. Sub-Sublease. MFI subleases to CBOOKS and CBOOKS hires from
MFI the Subleased Premises. The Subleased Premises shall be delivered to CBOOKS
on the Commencement Date in "AS IS" condition, except that the Subleased
Premises shall be delivered in broom-clean condition with the building systems
in good working order on such date.
2. Term. Subject to Paragraph 9 hereof, the term of this
Sub-Sublease shall commence on November 1, 1996 (the "Commencement Date") and
shall expire on July 31, 1999, unless sooner terminated as hereafter provided or
as provided in the Master Lease (the "Term"). Notwithstanding the foregoing,
CBOOKS agrees that in the event of the failure or inability of MFI for any
reason to deliver possession of the Subleased Premises on or before the
Commencement Date:
(i) MFI shall not be liable for any damage caused
thereby; (ii) this Sub-Sublease shall not be void or voidable; (iii) CBOOKS
shall not be liable for rent until such time as MFI delivers possession of the
Subleased Premises to CBOOKS; and (iv) the Term shall not be extended by any
such delay. The Term is also subject to being shortened in the event certain
early termination rights are exercised under the Master Lease.
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3. Rent.
(a) Base Rent. CBOOKS shall pay to MFI during the Term as
base rent for the Subleased Premises the sum of Five Thousand Seven Hundred
Dollars ($5,700.00) per month, which amount shall be prorated for each
fractional month during the Term. The amounts payable pursuant to this Paragraph
3(a) are hereinafter referred to as "Base Rent."
(b) Additional Rent. As additional rent ("Additional
Rent"), beginning on January 1, 1998, CBOOKS shall pay MFI the increase, if any,
in operating expenses paid or incurred by MFI under Section 3 of the Sublease
over the operating expenses paid or incurred by MFI under said Section 3 for the
1997 calendar year. CBOOKS's share of such increases will be payable under the
terms of, and at the same time and in the same manner as required under the
Sublease.
(c) Payment. Base Rent, Additional Rent and any other
charges payable by CBOOKS to MFI under this Sub-Sublease shall be paid to MFI at
the place set forth as MFI's address for notices hereunder, or at such other
place as MFI may from time to time designate by notice to CBOOKS. All such
payments shall be made (i) with respect to Base Rent, on the first day of each
calendar month during the Term of this Sub-Sublease (except that the Base Rent
for the first month of the Term shall be due upon execution of this
Sub-Sublease), without prior notice or demand therefor and without any
deductions or offsets whatsoever; (ii) with respect to Additional Rent, as
provided in Paragraph 3(b) above; and (iii) with respect to all other payments,
fifteen (15) days prior to the date such payments are due to CDS under the
Sublease, or if no regular due date is specified under the Sublease, as
specified in MFI's written notice to CBOOKS. All such amounts shall be prorated
as appropriate.
(d) Late Payments. If any installment of Base Rent,
Additional Rent or any other amount due from CBOOKS under this Sub-Sublease
shall not be received by MFI within five (5) days after the date the same is due
and payable, CBOOKS shall pay to MFI a late charge equal to six percent (6%) of
such unpaid amounts. Acceptance of such late charges by MFI shall in no event
constitute a waiver of CBOOKS' default with respect to such overdue amount nor
shall such acceptance prevent MFI from exercising any of the other rights and
remedies granted to MFI hereunder.
(e) Deposit. Upon the execution of this Lease, CBOOKS
shall pay to MFI the sum of Five Thousand Seven Hundred Dollars ($5,700.00) (the
"Deposit") to be held as a non-interest bearing security deposit for the full
and faithful performance of each of CBOOKS's obligations under this
Sub-Sublease. In the event CBOOKS fails to perform or observe any of the
provisions of the Sub-Sublease to be performed or observed by CBOOKS, then, at
the option of the MFI, MFI may apply the Deposit or any portion thereof as may
be necessary to remedy any default in the payment of rent or otherwise remedy
any nonperformance by CBOOKS, and CBOOKS shall forthwith upon demand restore the
Deposit to the original amount specified. Any remaining portion of the Deposit
shall be returned to CBOOKS within thirty (30) days of the date of termination
of this Sub-Sublease, provided that CBOOKS shall have performed all of the terms
and conditions of this Sub-Sublease throughout the Term, and shall have vacated
the Subleased Premises in accordance with each and every term and condition of
this Sub-Sublease.
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4. Use. CBOOKS shall use the Subleased Premises only for purposes
allowed under the Master Lease and the Sublease and for no other purpose. CBOOKS
shall not do or suffer anything to be done upon the Subleased Premises which
will cause injury to the Subleased Premises. CBOOKS shall comply with all
federal, state, and local laws, ordinances, regulations and standards relating
to its use of the Subleased Premises and its use, storage, sale and disposal of
hazardous or toxic substances, as such terms are defined in any such federal,
state, or local law, ordinance, regulation or standard. CBOOKS shall not use or
bring onto the Subleased Premises any hazardous or toxic substance. CBOOKS shall
provide immediate notice to MFI if a release of any hazardous or toxic substance
occurs or will occur within, on or under the Subleased Premises (whether by air,
water, or other means of transmission) during CBOOKS's tenancy of the Subleased
Premises. Failure to so provide such notice to MFI shall, at MFI's election,
constitute a default under this Sub-Sublease. CBOOKS shall indemnify, defend and
hold harmless MFI from and against any and all cost, expense (including
attorneys' or consultants' fees), damage, liability or loss incurred by MFI in
connection with the release, use, storage or disposal of a hazardous or toxic
substance on or about the Subleased Premises by CBOOKS, its employees, agents,
contractors, or invitees. MFI shall indemnify, defend and hold harmless CBOOKS
from and against any and all cost, expense (including attorneys' and
consultants' fees), damage, liability or loss incurred by CBOOKS in connection
with the release, use, storage or disposal of a hazardous or toxic substance on
or about the Subleased Premises by MFI, Avid or any of their employees, agents,
contractors or invitees.
5. Sub-Sublease Subject to Sublease. This Sub-Sublease shall be
subject to all of the terms and conditions of the Sublease with the exception of
those items excluded pursuant to Paragraph 6(a) below, and from and after the
Commencement Date CBOOKS covenants to perform all of the obligations of
"Sublessee" under the Sublease accruing or required to be performed from and
after the Commencement Date, to the extent said terms and conditions are
consistent with the provisions of this Sub-Sublease, and only except as
otherwise limited by Paragraph 6(a) below. MFI shall be responsible for all of
the obligations of "Sublessee" under the Sublease accruing or required to be
performed prior to the Commencement Date. MFI agrees that it will not
voluntarily terminate the Sublease and that it will pay all rent due under the
Sublease as long as CBOOKS is performing its obligations under this
Sub-Sublease.
6. Incorporation of Sublease.
(a) Exclusions. To the extent consistent with this
Sub-Sublease, all of the terms and conditions of the Sublease are incorporated
herein as terms and conditions of this Sub-Sublease, with references therein to
"Sublessor" and "Sublessee" to be deemed to mean and refer to, respectively, MFI
and CBOOKS herein, and with references therein to "Sublease" to mean this
Sub-Sublease, and along with the sections and paragraphs set out in this
Sub-Sublease, shall be the complete terms and conditions of this Sub-Sublease;
provided, however, that the following sections of the Sublease shall be excluded
from this Sub-Sublease or otherwise revised as indicated: Paragraph 2 (except
that CBOOKS acknowledges the rights of CDS to terminate the Master Lease as
referenced in this Paragraph), Paragraph 3 (except to the extent of the
obligations provided in Paragraph 3(b) of this Sub-Sublease), Paragraph 5,
Paragraph 6 (except that CBOOKs shall have quiet enjoyment of the Subleased
Premises as long as it is not in default under this Sub-Sublease), Paragraph 7,
Paragraph 8 (except that MFI represents and warrants
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that it is not in default under the Sublease), Paragraph 9, Paragraph 13 (except
that the parties recognize that Colliers Parrish International, Inc. is
representing MFI and Wayne Mascia Associates is representing CBOOKS in
connection with the Sub-Sublease and that MFI agrees to pay any commission that
may due said brokers), and Paragraph 14. With respect to the provisions of the
Master Lease incorporated into the Sublease pursuant to Paragraph 4 of the
Sublease, references in such provisions to "Landlord" and "Tenant" shall be
deemed to mean and refer to respectively, the parties defined under the Sublease
as "Sublessor" and "Sublessee."
(b) Recourse to Master Landlord. Notwithstanding
Paragraph 6(a) hereof, it is understood and agreed that MFI shall have no
obligation or responsibility to provide or perform any service, maintenance,
utility, repair, alteration or other similar obligation which is the obligation
of Master Landlord or CDS to provide or perform pursuant to the terms of the
Master Lease or Sublease. If CBOOKS shall notify MFI that Master Landlord or CDS
is not supplying services to the Subleased Premises as required under the Master
Lease or Sublease, MFI will promptly request Master Landlord or CDS, as
appropriate, to perform such services. MFI shall in no event be liable to CBOOKS
nor shall CBOOKS's obligations under this Sub-Sublease be impaired or reduced or
the performance thereof excused because of any failure or delay on Master
Landlord's or CDS's part in providing any such services or in making any repairs
or alterations, or in performing or observing any similar obligation Master
Landlord under the Master Lease or CDS under the Sublease. If CDS shall default
in its obligation to provide services or make repairs as required under the
Sublease to the Subleased Premises, MFI at CBOOKS's request shall exercise
reasonable efforts to enforce MFI's rights against CDS (or to cause CDS to
enforce its rights against Master Landlord with respect to such services or
repairs), but MFI shall have no obligation to bring any legal action or
proceeding against CDS. Notwithstanding the foregoing, (i) if as a result of
CDS's or Master Landlord's failure to provide services or make repairs as
required under the Sublease CBOOK's use of the Subleased Premises is materially
and adversely affected for a period of thirty (30) or more days, and (ii) if MFI
fails to bring a legal action against CDS for such failure within ten (10) days
after CBOOK's written request to do so; then CBOOKS may elect to terminate this
Sub-Sublease provided it provides MFI with written notice of such termination
within thirty (3o) days after the later to occur of (i) and (ii) above.
(c) CBOOKS Has Read Master Lease and Sublease. CBOOKS
hereby acknowledges that it has read and is familiar with the terms of the
Master Lease and Sublease, and agrees that this Sub-Sublease is subordinate and
subject to the Master Lease and Sublease.
7. Assignment and Subletting. CBOOKS shall not sublet the
Subleased Premises or assign this Sub-Sublease without the prior written consent
of Master Landlord and CDS, to the extent such consent is required under the
Master Lease or Sublease. CBOOKS shall not sublet the Subleased Premises or
assign this Sub-Sublease without the prior written consent of MFI, except that
such consent shall not be required under the following circumstances provided
the assignee or sublessee has a net worth immediately following such sublet or
assignment of not less than $2,000,000, and CBOOKS provides MFI with reasonable
evidence of the same:
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(a) Transfer to Purchaser. A transfer of a controlling
interest in CBOOKS, including any transfer of stock occurring in connection with
an initial public offering of stock in CBOOKS.
(b) Transfers to Affiliates. An assignment or sublease to
any corporation which controls, is controlled by or is under common control with
CBOOKS, or to any corporation resulting from the merger or consolidation with
CBOOKS, or to any person or entity which acquires all the assets of CBOOKS as a
going concern of the business that is being conducted on the Subleased Premises,
provided that the assignee assumes, in full, the obligations of CBOOKS under
this Sub-Sublease.
8. Miscellaneous.
(a) Notices. All notices or demands of any kind required
or desired to be given by MFI to CBOOKS or CBOOKS to MFI hereunder shall be in
writing and shall be sent by hand delivery or by a nationally recognized courier
service, in which event they shall be deemed given when the same are received,
or by depositing such notices or demands in the United States mail, certified or
registered, postage prepaid, return receipt requested (unless return receipt
indicates not delivered), in which event it shall be deemed given seventy-two
(72) hours after such deposit. All notices or demands shall be addressed to the
MFI or CBOOKS, as the case may be, at the address set forth after the signatures
to this Sub-Sublease.
(b) Entire Agreement. This Sub-Sublease represents the
entire agreement between the parties to this Sub-Sublease and supersedes all
prior agreements between the parties, whether written or oral. There are no
representations between MFI and CBOOKS other than those contained in this
Sub-Sublease. Any agreement hereafter made shall be ineffective to change,
modify, waive or discharge this Sub-Sublease in whole or in part unless such
agreement is in writing and signed by the party against whom enforcement of the
change, modification, waiver or discharge is sought.
(c) Successors and Assigns. The terms, covenants and
conditions contained in this Sub-Sublease shall, subject to the provisions of
this Sub-Sublease relating to assignment and subletting, apply to, be binding
upon and inure to the benefit of the heirs, successors and assigns of the
parties hereto.
(d) Waivers. No delay or omission in the exercise of any
right or remedy of MFI upon any default by CBOOKS shall impair such right or
remedy or be construed as a waiver of such default. The receipt and acceptance
by MFI of delinquent rents or charges, or the acceptance of partial payments of
such rents or charges, shall not constitute a waiver of any other default. No
act or conduct of MFI, including, without limitation, the acceptance of keys to
the Subleased Premises, shall constitute an acceptance of the surrender of the
Subleased Premises by CBOOKS before the expiration of or sooner termination of
the Term. Only a written notice from MFI to CBOOKS shall constitute acceptance
of the surrender of the Subleased Premises and accomplish a termination of this
Sub-Sublease.
(e) Time of Essence. Time is of the essence of this
Sub-Sublease.
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(f) Attorney's Fees. If any party commences an action
against the other party arising out of or in connection with this Sub-Sublease,
the prevailing party shall be entitled to recover from the nonprevailing party
the cost and expenses of such action, including reasonable attorneys' fees and
court costs. The "prevailing party" will be determined by the court before whom
the action was brought based upon the assessment of which party's major
arguments or positions taken in the suit or proceeding could fairly be said to
have prevailed over the other party's major arguments or positions on major
disputed issues in the court's decision.
(g) Counterparts. This Sub-Sublease may be executed in
counterparts, each of which shall constitute an original and shall be binding
upon all parties, their successors and permitted assigns.
9. Condition Precedent. Notwithstanding Paragraph 2 hereof, the
Commencement Date of this Sub-Sublease shall not occur until the Master Landlord
and CDS have consented to this Sub-Sublease in writing. In the event that such
consents are not obtained on or before November 8, 1996, this Sub-Sublease shall
have no further force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this
Sub-Sublease as of the date first above written.
MFI: CBOOKS:
MILLER FREEMAN, INC. CBOOKS EXPRESS
By: /s/ W. Ambrose By: /s/ Chris MacAskill
---------------------------- --------------------------
Its: Senior Vice President & CFO Its: President
---------------------------- --------------------------
Address: Address:
600 Harrison Street 3347 Shady Spring Lane
San Francisco, CA 94107 Mountain View, CA 94040
Attn: Terry Wynn Attn: Chris MacAskill
CDS:
CONTROL DATA SYSTEMS, INC.
By: /s/ W.D. Seiler
-------------------------
Its: Director Real Estate
-------------------------
Address:
4201 Lexington Avenue, North
Arden Hills, MN 55126
Attn: R/E Dept.
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EXHIBIT A
MASTER LEASE AGREEMENT
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EXHIBIT B
SUBLEASE AGREEMENT
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EXHIBIT A
BASIC LEASE INFORMATION
DATE: June 1,1994
LANDLORD: THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation
TENANT: CONTROL DATA SYSTEMS, INC., a Delaware corporation
PREMISES: Building Address: 1306 Orleans Drive
Sunnyvale, CA 94089
USE: General Office, warehouse and light electronic
manufacturing and assembly
TERM: Sixty (60) months
ESTIMATED COMMENCEMENT DATE: August 1, 1994
BASE RENT: $15,000 per month
ADVANCE RENT: $15,000 per month
ESTIMATED EXPENSES: Operating: $1,925.60 per month
Real Property Taxes: $2,007.88 per month
TENANT'S PERCENTAGE SHARE: 50% of Building
25% of Property
SECURITY DEPOSIT: None
BROKERS: Tenant's Brokers: Mr. Eric Anderson
Cornish & Carey Commercial
Mr. Gregg Von Thaden
J.R. Parrish
Landlord's Broker: David P. Jonas
Blickman Turkus Commercial
Industrial Real Estate
CONTRACT MANAGER: Edward Pike Company
ADDRESS FOR NOTICES Landlord: The Prudential Insurance Company
of America
4309 Hacienda Drive, Suite 500
Pleasanton, CA 94588
Contract Manager: Edward Pike Company
P.O. Box 689
Orinda, CA 94563
with a copy to:
Edward Pike Company
2157 O'Toole Avenue
San Jose, CA 95131
Tenant: Control Data Systems, Inc.
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4201 Lexington Avenue North
Arden Hills, MN 55126
Attn: Director of Real Estate
With a copy to: Legal Department
TENANT IMPROVEMENTS: Base Allowance: $205,000
Maximum Allowance: $330,000
EXHIBITS AND ADDENDUM: Exhibit A - Site Plan of Premises
Exhibit B - Commencement Date Memorandum
Exhibit C - ADA Improvements
Exhibit D - Rules and Regulations
Exhibit E - Commission Schedule
INITIALS: /s/ WA /s/ WDS
----------------- ------------------
Landlord Tenant
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THIS LEASE, which is effective as of the date set forth in the
Basic Lease Information, is entered into by Landlord and Tenant, as set forth in
the Basic Lease Information. Terms which are capitalized in this Lease and not
expressly defined herein shall have the meanings set forth in the Basic Lease
Information.
1. Premises. Landlord leases to Tenant, and Tenant leases from
Landlord, the Premises described in the Basic Lease Information, together with
the right in common to use the Common Areas of the Building and the Property (as
shown in Exhibit A). The Common Areas shall mean the areas and facilities within
the Building and the Property provided and designated by Landlord for the
general use, convenience or benefit of Tenant and other tenants and occupants of
the Building and/or the Property (e.g., loading and unloading areas; sidewalks;
walkways; driveways; landscaped areas; common entrances and hallways; trash
disposal facilities; and unreserved parking areas).
2. Term.
(a) Lease Term. The Term of this Lease shall commence on
the Commencement Date (as defined in subsection 2(b)) and, unless terminated on
an earlier date in accordance with the terms of this Lease, shall extend for the
period (i.e., Term) specified in the Basic Lease Information.
(b) Commencement Date. The "Commencement Date" of this
Lease shall be the earliest to occur of the following, as reasonably determined
by Landlord: (i) August 1, 1994, or (ii) the date Tenant occupies the Premises
for the conduct of Tenant's business. For purposes of the foregoing, Tenant
shall not be deemed to be conducting business if Tenant's sole activity in the
Premises is the construction of Tenant Improvements pursuant to Section 7.
(c) Premises Not Delivered. If, for any reason, Landlord
cannot deliver possession of the Premises to Tenant by the Estimated
Commencement Date (as set forth in the Basic Lease Information), (i) Tenant
shall not be obligated to pay Rent until the Commencement Date; (ii) the Term
shall not be extended; (iii} the failure shall not affect the validity of this
Lease, or the obligations of Tenant under this Lease; and (iv) Landlord shall
not be subject to any liability.
(d) Commencement Date Memorandum. When the Commencement
Date is determined, the parties shall execute a Commencement Date Memorandum, in
the form attached hereto as Exhibit B, setting forth the Commencement Date and
the expiration date ("Expiration Date") of this Lease.
(e) Early Entry. If Tenant is permitted to enter the
Premises prior to the Commencement Date for the purposes of fixturing or any
purpose other than occupancy permitted by Landlord, the entry shall be subject
to all the terms and provisions of this Lease, except that the payment of Rent
shall commence as of the Commencement Date.
3. Rent. As used in this Lease, the term "Rent" shall include:
(i) the Base Rent; (ii) Tenant's Percentage Share of the Operating Expenses paid
or incurred by Landlord during the calendar year; and (iii) all other amounts
which Tenant is obligated to pay under the
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terms of this Lease. All amounts of money payable by Tenant to Landlord shall be
paid without prior notice or demand, deduction or offset. This Lease is intended
to be a triple net lease, with all costs, expenses and charges (including the
Operating Expenses) paid by Tenant except as otherwise specifically provided in
subsection 10(b). Tenant hereby acknowledges that late payment by Tenant to
Landlord of Rent will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed on Landlord by the terms of any trust deed covering
the Premises. Accordingly, if any installment of Rent or any other sums due from
Tenant shall not be received by Landlord when due, Tenant shall pay to Landlord
a late charge equal to six percent (6%) of such overdue amount. The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs Landlord will incur by reason of late payment by Tenant. Acceptance of
such late charge by Landlord shall in no event constitute a waiver of Tenant's
default with respect to such overdue amount, nor prevent Landlord from
exercising any of the other rights and remedies granted hereunder. In addition,
any amount which is not paid when due shall bear interest from the date due
until the date paid at the rate equal to the Reference Rate announced from time
to time by the Bank of America plus five percent (5%) ("Interest Rate").
4. Base Rent. Tenant shall pay Base Rent to Contract Manager (or
other entity designated by Landlord), in advance, on the first day of each
calendar month of the Term, at Contract Manager's address for notices (as set
forth in the Basic Lease Information) or at such other address as Landlord may
designate. The Base Rent shall be the amount set forth in the Basic Lease
Information.
5. Operating Expenses.
(a) Operating Expenses as Portion of Rent. Tenant shall
pay as additional Rent Tenant's Percentage Share of the Operating Expenses paid
or incurred by Landlord during the calendar year. Tenant acknowledges that
certain Operating Expenses will be allocated to the Building and certain
Operating Expenses will be allocated to the Property. Landlord's reasonable
allocation of Operating Expenses to the Building and the Property shall be
conclusive and binding on the parties.
(b) Definition of Operating Expenses. The term "Operating
Expenses" shall mean (i) all of Landlord's direct costs and expenses of
operation, repair and maintenance of the Building, the Property and the Common
Areas and supporting facilities, as determined by Landlord in accordance with
generally accepted accounting principles or other recognized accounting
principles, consistently applied; (ii) costs, or a portion thereof, properly
allocable to the Building, Property or Common Areas of any capital improvements
made to the Building, Property or Common Areas by Landlord which comprise
labor-saving devices or other equipment intended to improve the operating
efficiency of any system within the Building, Property or Common Areas (such as
an energy management computer system) to the extent of cost savings in Operating
Expenses as a result of the device or equipment, as reasonably determined by
Landlord; and (iii) costs properly allocable to the Building, Property or Common
Areas of any capital improvements made to the Building, Property or Common Areas
by Landlord that are required under any governmental governmental law or
regulation that was not applicable to the Building, Property and Common Area at
the time they were constructed, or that
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are reasonably required for the health and safety of tenants in the Property or
Building, the costs, or allocable portion thereof, to be amortized over its
useful life as reasonably determined by Landlord and Tenant will pay Tenant's
Percentage Share based on the time remaining in the lease term, together with
interest upon the unamortized balance at the Interest Rate or such higher rate
as may have been paid by Landlord on funds borrowed for the purpose of
constructing the capital improvements. The term "Operating Expenses" shall
include the costs of all utilities (including surcharges) for the Property and
Building; the cost of all insurance which Landlord or Landlord's lender deems
necessary for the Property and Building; a reasonable management fee; and the
Real Property Taxes (as defined in subsection 5(f)). If Landlord elects to
self-insure or includes the Property under blanket insurance policies covering
multiple properties, then the term "Operating Expenses" shall include the
portion of the cost of such self-insurance or blanket insurance allocated by
Landlord to this Property. For each calendar year during the Term, the
percentage increase in the cost of insurance against property damage caused by
earthquake included in Operating Expenses allocated to the Premises over the
cost of such insurance for the immediately prior calendar year shall not exceed
the percentage increase in the CPI (as defined in Subsection 41.c) last
published on or before December 31 of the year in question over the CPI last
published prior to January 1 of such calendar year; provided further that the
amount of such increase in the cost of earthquake insurance included in
Operating Expenses for such calendar year shall deemed to be not be more than
eight percent (8%) nor less than three percent (3%) of the cost of such
earthquake insurance allocated to the Premises for the calendar year immediately
prior to the calendar year in question.
(c) Exclusions from Operating Expenses. The term
"Operating Expenses" shall not include (i) the cost of any additional or
extraordinary services provided to other tenants of the Property; (ii) costs
paid directly by Tenant; (iii) principal and interest payments on loans secured
by deeds of trust recorded against Property; (iv) real estate sales or leasing
brokerage commissions; or (v) executive salaries of off-site personnel employed
by Landlord except for the charge (or pro rata share) of the manager of the
Property and Building. In addition, for each calendar year during the Term, the
Operating Expenses for such calendar year shall not exceed the Operating
Expenses Cap applicable to such year. As used in this Lease, the term "Operating
Expenses Cap" shall mean the following: (i) for the calendar year 1994, there
shall be no Operating Expenses Cap; (ii) for the calendar year 1995, the term
"Operating Expenses Cap" shall mean the Operating Expenses for calendar year
1994 multiplied times one hundred fifteen percent (115%); and (iii) for each
calendar year after 1995, the Operating Expenses Cap shall be an amount equal to
the Operating Expenses Cap in effect for the immediately prior calendar year
multiplied times one hundred fifteen percent (115%).
(d) Estimates of Operating Expenses. During December of
each calendar year during the Term, or as soon thereafter as practicable,
Landlord shall give Tenant written notice of Landlord's estimate of the amount
of Operating Expenses which will be payable for the ensuing calendar year. On or
before the first day of each month during the ensuing calendar year, Tenant
shall pay to Landlord one-twelfth (1/12) of the estimated amount; provided,
however, that if notice is not given in December, Tenant shall continue to pay
on the basis of the then applicable Rent until the month after the notice is
given. If at any time it appears to Landlord that the amount payable for the
current calendar year will vary from Landlord's estimate by more than five
percent (5%), Landlord may give notice to Tenant of Landlord's revised estimate
for the year, and subsequent payments by Tenant for the Year shall
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be based on the revised estimate; provided, however, that Landlord shall not
give notice of a revised estimate for any year more frequently than once a
calendar quarter.
(e) Annual Adjustment. Within one hundred twenty (120)
days after the close of each calendar year of the Term, or as soon after the one
hundred twenty (120) day period as practicable, Landlord shall deliver to Tenant
a statement of the actual Operating Expenses for the prior calendar year. If, on
the basis of the statement, Tenant owes an amount that is less than the
estimated payments for the calendar year previously made by Tenant, Landlord
shall apply the excess to the next payment of Operating Expenses due. If, on the
basis of the statement, Tenant owes an amount that is more than the estimated
payments for the calendar year previously made by the Tenant, Tenant shall pay
the deficiency to Landlord within thirty (30) days after delivery of the
statement. The statement of Operating Expenses shall be presumed correct and
shall be deemed final and binding upon Tenant unless (i) Tenant in good faith
objects in writing thereto within thirty (30) days after delivery of the
statement to Tenant (which writing shall state, in reasonable detail, all of the
reasonable detail, all of the reasons for the objection); and (ii) Tenant pays
in full, within thirty (30) days after delivery of the statement to Tenant, any
amount owed by Tenant with respect to the statement which is not in dispute. If
Tenant objects to Landlord's allocation to this Property of the cost of
self-insurance or blanket insurance, such allocation shall nonetheless be
presumed correct and shall be deemed final and binding upon Tenant unless
Tenant's timely written objection includes credible evidence that Landlord could
have obtained substantially comparable insurance coverage for this Property
alone at lower cost. Tenant shall have the right upon not less than five (5)
business days notice to inspect, at Landlord's office or such other location
reasonably designated by Landlord, at Tenant's sole cost and expense, Landlord's
records related to the amount and calculation of Operating Expenses; provided
however, such inspection must be conducted (if at all) within thirty (30) days
after the delivery of Landlord's Statement of Operating Expenses for such year.
In the event inspection discloses that Tenant has overpaid Operating Expenses
for the calendar year, and the results of such inspection are verified by
Landlord (which verification shall not be unreasonably withheld), then Landlord
shall reimburse Tenant for such overpayment within forty-five (45) days after
the completion of such inspection.
(f) Definition of Real Property Taxes. The term "Real
Property Taxes" shall mean any ordinary or extraordinary form of assessment or
special assessment, license fee, rent tax, levy, penalty (if a result of
Tenant's delinquency), or tax, other than net income, estate, succession,
inheritance, transfer or franchise taxes, imposed by any authority having the
direct or indirect power to tax, or by any city, county, state or federal
government for any maintenance or improvement or other district or division
thereof. The term shall include all transit charges, housing fund assessments,
real estate taxes and all other taxes relating to the Premises, Building and/or
Property, all other taxes which may be levied in lieu of real estate taxes, all
assessments, assessment bonds, levies, fees and other governmental charges
(including, but not limited to, charges for traffic facilities, improvements,
child care, water services studies and improvements, and fire services studies
and improvements)for amounts necessary to be expended because of governmental
orders, whether general or special, ordinary or extraordinary, unforeseen as
well as foreseen, of any kind and nature for public improvement, services,
benefits or any other purposes which are assessed, levied, confirmed, imposed or
become a lien upon the Premises, Building or Property or become payable during
the Term.
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(g) Acknowledgment of Parties. It is acknowledged by
Landlord and Tenant that Proposition 13 was adopted by the voters of the State
of California in the June, 1978 election, and that assessments, taxes, fees,
levies and charges may be imposed by governmental agencies for such purposes as
fire protection, street, sidewalk, road, utility construction and maintenance,
refuse removal and for other governmental services which formerly may have been
provided without charge to property owners or occupants. It is the intention of
the parties that all new and increased assessments, taxes, fees, levies and
charges due to Proposition 13 or any other cause are to be included within the
definition of Real Property Taxes for purposes of this Lease.
(h) Taxes on Tenant Improvements and Personal Property.
Notwithstanding any other provision hereof, Tenant shall pay the full amount of
any Real Property Taxes during the Term resulting from any and all alterations
and tenant improvements of any kind whatsoever placed in, on or about the
Premises for the benefit of, at the request of, or by Tenant. Tenant shall pay,
prior to delinquency, all taxes assessed or levied against Tenant's personal
property in, on or about the Premises. When possible, Tenant shall cause its
personal property to be assessed and billed separately from the real or personal
property of Landlord.
6. Proration of Rent. If the Commencement Date is not the first
day of the month, or if the end of the Term is not the last day of the month,
Rent shall be prorated on a monthly basis (based upon a thirty (30) day month)
for the fractional month during the month which this Lease commences or
terminates. The termination of this Lease shall not affect the obligations of
Landlord and Tenant pursuant to subsection 5(e) which are to be performed after
the termination.
7. Tenant Improvements.
(a) Tenant shall construct within the Premises certain
tenant improvements ("Tenant Improvements") in accordance with this Section 7.
Tenant will provide Landlord with preliminary plans and specifications and
working drawings for the Tenant Improvements, which Landlord shall have the
right to approve, and which approval shall not be unreasonably withheld or
delayed; provided, however, Landlord shall have the right to withhold such
approval acting in Landlord's sole discretion if the proposed Tenant
Improvements materially affect the structure, roof or exterior appearance of the
Premises, except for store front glass replacing the roll up door located within
the Premises (so long as obstacles are placed in front of the glass to prevent
vehicles from inadvertently driving through the glass). Tenant shall be required
to install as part of the Tenant Improvements the improvements specified on
attached Exhibit C. Tenant shall construct the Tenant Improvements in accordance
with the plans and specifications and working drawings, approved by Landlord, in
good and workmanlike manner, using new and refurbished materials and in
accordance with all applicable laws. Any such refurbished materials shall be
shown on the plans and specifications submitted for Landlord's approval. Any
proposed change in the approved plans and specifications and/or the working
drawings shall be subject to Landlord's further approval as specified above. The
initial Tenant Improvements approved by Landlord shall not be considered an
alteration under Section 9 and shall not be required to be removed from the
Premises upon the expiration or earlier termination of the Term. Landlord shall
contribute to the cost of the Tenant Improvements a tenant improvements
allowance (the "Tenant Improvement Allowance") in an amount not to exceed
$330,000, as specified below.
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(b) Tenant shall submit to Landlord invoices and other
reasonable substantiating documentation with respect to the Tenant Improvements,
and within thirty (30) days after Landlord's receipt thereof, Landlord shall pay
to Tenant the amounts requested in the submitted invoices, provided that the
following conditions have been satisfied: (1) on the date of such request,
Tenant is not in default of Tenant's obligations under the Lease; (2) the work
and/or materials for which reimbursement is requested has been completed and
conforms with the approved plans specifications and drawings and otherwise
complies with the requirements of Section 7(a) as reasonably determined by
Landlord; and (3) Tenant shall have delivered to Landlord such mechanic's lien
waivers as Landlord may reasonably request to assure lien-free construction and
completion of the Tenant Improvements. Upon Tenant's request, which request
shall be delivered concurrently with the invoices for which Tenant is requesting
payment, provided that all other conditions to payment have been satisfied,
Landlord shall make payments of the Tenant Improvement Allowance co-payable to
Tenant and Tenant's contractor. Subject to the limitations specified below, this
procedure shall be repeated until Landlord has expended the full Tenant
Improvement Allowance. Tenant shall have six (6) months from August 1, 1994 to
construct the Tenant Improvements and submit invoices, an architect's
certificate certifying compliance with clause (2) above with respect to work for
which payment is requested, and such lien releases as Landlord may request
pursuant to clause (3) above therefor to obtain reimbursement from Landlord from
the Tenant Improvement Allowance. If Tenant does not construct such Tenant
Improvements and submit invoices and such substantiating documentation therefor
within such six (6) month period. Tenant shall be deemed to have waived any
right to claim any further payment under the Tenant Improvement Allowance. In no
event shall Tenant's obligation to pay rent be reduced by any unexpended amount
of the Tenant Improvement Allowance. Tenant shall have the right to apply the
Tenant Improvements Allowance only to costs and fees incurred by Tenant in the
design and construction of the Tenant Improvements, including but not limited
to, telephone wiring and computer cabling.
(c) If Tenant receives more than Two Hundred Five
Thousand Dollars ($205,000) (the "Base Allowance") of the Tenant Improvement
Allowance, then monthly Base Rent shall be increased by an amount equal to
Twenty One and 25/100 Dollars ($21.25) for each One Thousand Dollars ($1,000),
or portion thereof, of the Tenant Improvement Allowance received by Tenant which
exceeds the Base Allowance.
8. Uses of Premises.
(a) Tenant shall use the Premises solely for the use set
forth in the Basic Lease Information, and Tenant shall not use the premises for
any other purpose without obtaining the prior written consent of Landlord, which
consent shall be given or withheld in the sole and absolute discretion of
Landlord without any requirement of reasonableness in the exercise of that
discretion. Tenant shall, at its own cost and expense, comply with all laws,
rules, regulations, orders, permits, licenses and ordinances issued by any
governmental authority (including, without limitation, except as provided in
Section 43, the Americans with Disabilities Act) which relate to the condition,
use or occupancy of the Premises during the term of this Lease. Tenant shall not
use the Premises in any manner that will constitute waste, nuisance, or
unreasonable annoyance (including, without limitation, the use of loudspeakers
or sound or light apparatus that can be heard or seen outside the Premises) to
other tenants in the Building and/or the Property.
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(b) "Hazardous Substance" shall mean the substances
including, within the definitions of the term "Hazardous Substance" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601 et seq., and the California
Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health &
Safety Code Section 25300 et seq., and regulations promulgated thereunder, as
amended. "Hazardous Waste" shall mean to (a) any waste listed as or meeting the
identified characteristics of a "Hazardous Waste" under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., and
regulations promulgated pursuant thereto, collectively "RCRA", or (b) any waste
meeting the identified characteristics of "Hazardous Waste" under California
Hazardous Waste Control Law, California Health and Safety Code Section 25100 et.
seq., and regulations promulgated pursuant thereto, collectively "CHWCL".
"Hazardous Waste Facility" shall mean a hazardous waste facility as defined
under CHWCL.
(c) Tenant covenants that, at its sole cost and expense,
it will comply with all applicable laws, rules, regulations, orders, permits,
licenses and operating plans of any governmental authority with respect to the
use, handling, generation, transportation, storage, treatment and/or disposal of
hazardous substances or wastes which Tenant and/or Tenant's agents, employees
and/or contractors uses on or about the Premises, and Tenant will provide
Landlord with copies of all permits, registrations or other similar documents
that authorize Tenant to conduct any such activities in connection with its
authorized use of the Premises. Additionally, Tenant agrees to comply with the
Rules and Regulations attached hereto as Exhibit D, the requirements of the
Board of Fire Underwriters or Landlord's insurance carrier, and to comply with
covenants, conditions and restrictions ("CC&R's"), if any, applicable to the
Property.
(d) Tenant agrees that it shall not operate on the
Premises any facility required to be permitted or licensed as a Hazardous Waste
Facility or for which interim status as such is required. Nor shall Tenant store
any Hazardous Wastes on the Premises for ninety (90) days or more.
(e) Tenant agrees to comply with all applicable laws,
rules, regulations, orders, and permits relating to underground storage, tanks
(including any installation, monitoring, maintenance, closure and/or removal of
such tanks) as such tanks are defined in California Health and Safety Code,
Section 25281(u), including, without limitation, complying with California
Health and Safety Code Sections 25280-25299.6 and the regulations promulgated
thereunder. Tenant shall furnish to Landlord copies of all registrations and
permits for all underground storage tanks.
(f) If applicable, Tenant shall provide to Landlord in
writing the following information and/or documentation at the Commencement Date
and within sixty (60) days of any change in the required information and/or
documentation:
(i) A list of all hazardous substances and/or
wastes that Tenant uses, handles, generates, transports, stores, treats or
disposes in connection with its operations on the Premises.
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(ii) Copies of all Material Safety Data Sheets
("MSDS's") required to be completed with respect to operations of Tenant at the
Premises in accordance with Title 8, California Code of Regulations Section 5194
or 42 U.S.C. Section 11021, or any amendments thereto. In lieu of this
requirement, Tenant may provide a Hazardous Material Inventory Sheet that
details the MSDS's.
(iii) Copies of all hazardous waste manifests, as
defined in Title 22, California Code of Regulations Section 66481, that Tenant
is required to complete in all connections with its operations at the Premises.
(iv) A copy of any Hazardous Materials Management
Plans required with respect to Tenant's operations.
(v) Copies of any contingency Plans and Emergency
Procedures required of Tenant due to its operations in accordance with Title 22,
Chapter 30, Article 20, of the California Code of Regulations, and any
amendments thereto.
(vi) Copies of any biennial reports to be
furnished to California Department of Health Services relating to hazardous
substances or wastes.
(vii) Copies of all industrial waste water
discharge permits.
(g) Tenant shall secure Landlord's prior written approval
for any proposed receipt, storage, possession, use, transfer or disposal of
"Radioactive Materials" or "Radiation", as such materials are defined in Title
17, California Code of Regulations Sections 30100(w) and (z) or possessing the
characteristics of the materials so defined, which approval Landlord may
withhold in its sole and absolute discretion. The Tenant in connection with any
authorized receipt, storage, possession, use, transfer or disposal of
radioactive materials or radiation shall:
(i) Comply with all federal, state and local
laws, rules, regulations, orders, licenses and permits;
(ii) Furnish Landlord with a list of all
radioactive materials or radiation received, stored, possessed, used,
transferred or disposed; and
(iii) Furnish Landlord with all licenses,
registration materials, inspection reports, orders and permits in connection
with the receipt, storage, possession, use, transfer or disposal or radioactive
materials or radiation.
(h) Tenant agrees to comply with any and all applicable
laws, rules, regulations, and orders with respect to the release into the
environment of any hazardous wastes or substances or radiation or radioactive
materials. Tenant agrees to notify Landlord in writing of any unauthorized
release into the environment within twenty-four (24) hours of the time at which
Tenant becomes aware of such release.
(i) Tenant shall indemnify, defend, and hold Landlord
harmless from any and all claims, losses (including, but not limited to, loss of
rental income and loss due to
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business interruption), damages, (including diminution in value or loss of
rental value following expiration or earlier termination of the Term)
liabilities, costs, legal fees, and expenses of any sort arising out of or
relating to any unauthorized release into the environment of hazardous
substances or wastes or radiation or radioactive materials by Tenant or any of
Tenant's agents, contractors or invitees, or Tenant's failure to comply with
Subparagraphs (a)-(h) of this section of the Lease.
(j) Tenant agrees to cooperate with Landlord in
furnishing Landlord with complete information regarding Tenant's receipt,
handling, use, storage, transportation, generation, treatment and/or disposal of
hazardous substances or wastes or radiation or radioactive materials. Upon
request, Tenant agrees to grant Landlord reasonable access at reasonable times
to the Premises to inspect Tenant's receipt, handling, use, storage,
transportation, generation, treatment and/or disposal of hazardous substances
wastes or radiation or radioactive materials without being deemed guilty of any
disturbance of Tenant's use or possession and without being liable to Tenant in
any manner.
(k) Notwithstanding Landlord's rights of inspection and
review under this paragraph, Landlord shall have no obligation or duty to so
inspect or review, and no third party shall be entitled to rely on Landlord to
conduct any sort of inspection or review by reason of the provisions of this
paragraph.
(l) This Section 8 of the Lease shall survive termination
of the Lease.
9. Alternations.
(a) Permitted Alterations. Tenant shall give Landlord not
less than ten (10) days' notice of any alteration Tenant desires to make to the
Premises. Tenant shall not make any alteration in, on or about the Premises
without the prior written consent of Landlord unless the alteration does not
affect the Building structure, the exterior appearance of the Building, the roof
or the Building systems (e.g., electrical systems) and the aggregate cost of
such alterations during any two (2) year period is not in excess of Fifteen
Thousand Dollars ($15,000.00). Tenant shall comply with all rules, laws,
ordinances and requirements applicable at the time Tenant make any alteration
and shall deliver to Landlord a complete set of "as built" plans and
specifications for each alteration. Tenant shall be solely responsible for
maintenance and repair of all alterations made by Tenant. As used in this
Section 9, the term "alteration" shall include any alteration, addition or
improvement.
(b) Liens. If, because of any act or omission of Tenant
or any subtenant, licensee or invitee of Tenant and/or their respective agents,
employees and/or contractors, any mechanics' lien or other lien is filed against
the Premises, the Building, the Property or against other property of Landlord
(whether or not the lien is valid or enforceable), Tenant, at its own expense,
shall cause it to be discharged of record within a reasonable time, not to
exceed thirty (30) days, after the date of the filing. In addition, Tenant shall
defend and indemnity Landlord and hold it harmless from any and all claims,
losses, damages, judgments, settlements, costs and expenses, including
attorneys' fees, resulting from the lien.
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(c) Ownership of Alterations. Any alteration made by
Tenant immediately shall become Landlord's property. Except as provided in
subsection 9(d), Landlord may require Tenant, at Tenant's sole expense and by
the end of the Term, to remove any alterations made by Tenant and to restore the
Premises to its condition prior to the alteration.
(d) Request Regarding Removal Obligation. At the time
that Tenant requests Landlord's consent to any alteration, Tenant may request
that Landlord notify Tenant if Landlord will require Tenant, at Tenant's sole
expense, to remove any or all of the alteration by the end of the Term, and to
restore the Premises to its condition prior to the alteration.
10. Repairs.
(a) Tenant's Obligation. Except as provided in subsection
10(b), Tenant, at all times during the Term and at Tenant's sole cost and
expense, shall keep the Premises and every part thereof in good condition and
repair, ordinary wear and tear, damage thereto not caused by Tenant, by fire,
earthquake, acts of God or the elements excepted. Upon delivery of the Premises
to Tenant, the plumbing, electrical, and mechanical systems shall be in good
working condition and order. Landlord shall repair, at its sole cost and expense
any defective or malfunctioning component of the heating, ventilation and air
conditioning system (HVAC), the plumbing system and/or electrical system,
provided that Tenant delivers written notice to Landlord describing the nature
or malfunction within one hundred eighty (180) days after delivery of possession
of the Premises to Tenant; provided further that Landlord shall not be
responsible for such repairs, if such repairs are required as a result of an act
or omission of Tenant and/or Tenant's agents, employees and/or contractors
(including, without limitation, the installation by Tenant of the Tenant
Improvements). After the expiration of such one hundred eighty (180) day period,
any maintenance, repair and/or replacement of such utility systems shall be
performed by Tenant at Tenant's sole cost and expense, except for a defect or
malfunction of which Tenant has notified Landlord within such one hundred eighty
(180) day period. Tenant hereby waves all right to make repairs at the expense
of Landlord or in lieu thereof to vacate the Premises as provided in California
Civil Code Section 1942 or any other law, statute or ordinance now or hereafter
in effect.
(b) Landlord's Obligations. Landlord, at Landlord's
expense, shad repair and maintain the structural portions of the roof (but not
roof membrane or other non-structural elements of the roof, except as provided
below) and structural portions of the Building unless the maintenance and repair
are caused in whole or in part by the act, neglect, fault or omission of any
duty of Tenant, its agents, servants, employees or invitees, in which case
Tenant shall pay to Landlord the cost of the maintenance and repairs caused in
whole or in part by Tenant. Not later than sixty (60) days after the
Commencement Date, Landlord shall cause the details of where the HVAC units are
located on the roof and at the point where the flashing terminates at the
perimeter wall to be recaulked, at Landlord's sole cost and expense. There shall
be no abatement of Rent and no liability of Landlord by reason of any injury to
or interference with Tenant's business arising from the making of any repairs,
alternations or improvements in or to the fixtures, appurtenances and equipment
therein. Landlord shall maintain the Common Areas and the costs of such
maintenance shall be included in Operating Expenses.
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11. Damage or Destruction.
(a) Landlord's Obligation to Rebuild. If the Premises are
damaged or destroyed, Landlord promptly and diligently shall repair the Premises
unless Landlord has the option to terminate this Lease as provided herein, and
Landlord elects to terminate.
(b) Right to Terminate. Landlord and Tenant each shall
have the option to terminate this Lease if the Premises or the Building is
destroyed or damaged by fire or other casualty, regardless of whether the
casualty is insured against under this Lease, if Landlord reasonably determines
that the repair of the Premises or the Building cannot be completed within one
hundred eighty (180) days after the casualty. If a party desires to exercise the
right to terminate this Lease as a result of a casualty, the party shall
exercise the right by giving the other party written notice of its election to
terminate within thirty (30) days after the damage or destruction, in which
event this Lease shall terminate fifteen (15) days after the date of the notice.
If neither Landlord nor Tenant exercises the right to terminate this Lease,
Landlord promptly shall commence the process of obtaining necessary permits and
approvals, and shall commence repair of the Premises as soon as practicable and
thereafter prosecute the repair diligently to completion, in which event this
Lease shall continue in full force and effect.
(c) Limited Obligation to Repair. Landlord's obligation,
should Landlord elect or be obligated to repair or rebuild, shall be limited to
the Building shell and any tenant improvements which are constructed and paid
for by Landlord pursuant to Exhibit B. Tenant, at its option and expense, shall
replace or fully repair all trade fixtures, equipment and other improvements
installed by Tenant and existing at the time of the damage or destruction.
(d) Abatement of Rent. In the event of any damage or
destruction to the Premises which does not result in termination of this Lease,
the Base Rent temporarily shall be abated proportionately to the degree the
Premises are untenantable as a result of the damage or destruction, commencing
from the date of the damage or destruction and continuing during the period
required by Landlord to substantially complete its repair and restoration of the
Premises; provided, however, that nothing herein shall preclude Landlord from
being entitled to collect the full amount of any rent loss insurance proceeds.
Tenant shall not be entitled to any compensation or damages from Landlord for
loss of the use of the Premises, damage to Tenant's personal property or any
inconvenience occasioned by any damage, repair or restoration. Tenant hereby
waives the provisions of Section 1932, Subdivision 2, and Section 1933,
Subdivision 4, of the California Civil Code, and the provisions of any similar
law hereafter enacted.
(e) Damage Near End of Term and Extensive Damage. In
addition to the rights to termination under subsection 11(b), either Landlord or
Tenant shall have the right to cancel and terminate this Lease as of the date of
the occurrence of destruction or damage if the Premises or the Building is
substantially destroyed or damaged (i.e., there is damage or destruction which
Landlord determines would require more than six (6) months to repair) and made
untenantable during the last twelve (12) months of the Term. Landlord or Tenant
shall give notice of its election to terminate this Lease under this subsection
11(e) within thirty 130) days after Landlord determines that the damage or
destruction would require more than six (6) months to repair. If neither
Landlord nor Tenant elects to terminate this Lease, the repair of the damage
shall be governed by subsection 11(a) or 11(b), as the case may be.
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(f) Insurance Proceeds. If this Lease is terminated,
Landlord may keep all the insurance proceeds resulting from the damage, except
for those proceeds which specifically insured Tenant's personal property and
trade fixtures.
12. Eminent Domain. If all or any part of the Premises is taken
for public or quasi-public use by a governmental authority under the power of
eminent domain or is conveyed to a governmental authority in lieu of such
taking, and if the taking or conveyance causes the remaining part of the
Premises to be untenantable and inadequate for use by Tenant for the purpose for
which they were leased, then Tenant, at its option and by giving notice within
fifteen (15) days after the taking, may terminate this Lease as of the date
Tenant is required to surrender possession of the Premises. If a part of the
Premises is taken or convoyed but the remaining part is tenantable and adequate
for Tenant's use, then this Lease shall be terminated as to the part taken or
conveyed as of the date Tenant surrenders possession; Landlord shall make such
repairs, alterations and improvements as may be necessary to render the part not
taken or conveyed tenantable; and the Rent shall be reduced in proportion to the
part of the Premises taken or conveyed. All compensation awarded for the taking
or conveyance shall be the property of Landlord without any deduction therefrom
for any estate of Tenant, and Tenant hereby assigns to Landlord all its right,
title and interest in and to the award. Tenant shall have the right, however, to
recover from the governmental authority, but not from Landlord, such
compensation as may be awarded to Tenant on account of (i) the then unamortized
cost of any alterations paid for by Tenant; (ii) the value of Tenant's trade
fixtures; (iii) Tenant's loss of goodwill (so long as such award does not reduce
any award to Landlord); (iv) Tenant's relocation costs and (v) Tenant's loss of
business and business interruption.
13. Indemnity and Insurance.
(a) Indemnity. Tenant shall be responsible for, shall
insure against, and shall indemnify Landlord and its constituent parts and hold
them harmless from, any and all liability for any loss, damage or injury to
person or property occurring in, on or about the Premises, and Tenant hereby
releases Landlord and its constituent parts from any and all liability for the
same except to the extent it is determined that such liability arose from the
sole negligence of Landlord, its employees, agents or subcontractors. Tenant's
obligation to indemnify Landlord and its constituent parts hereunder shall
include the duty to defend against any claims asserted by reason of any loss,
damage or injury, and to pay any judgments, settlements, costs, fees and
expenses, including attorney's fees, incurred in connection therewith.
(b) Insurance. At all times during the term of this
Lease, Tenant shall carry, at its own expense, for the protection of Tenant,
Landlord, Landlord's constituent parts and Landlord's management agents, as
their interests may appear, one or more policies of comprehensive general public
liability and property damage insurance, issued by one or more insurance
companies acceptable to Landlord with minimum coverages of One Million Dollars
($1,000,000.00) for injury to one person in any one accident, Three Million
Dollars ($3,000,000.00) for injuries to more than one person in any one accident
and Two Million Dollars ($2,000,000.00) in property damage per accident and
insuring against any and all liability for which Tenant is responsible under
this Lease. The insurance policy or policies shall name Landlord, Landlord's
constituent parts and Landlord's management agents as additional insured, and
shall provide that the policy or policies may not be cancelled on less than
thirty (30)
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days' prior written notice to Landlord. Tenant shall furnish Landlord with
certificates evidencing the insurance. If Tenant fails to carry the insurance
and furnish Landlord with copies of all the policies after a request to do so,
Landlord shall have the right to obtain the insurance and collect the cost
thereof from Tenant as additional Rent.
14. Assignment and Subletting.
(a) Landlord's Consent. Tenant shall not assign, sublet
or otherwise transfer all or any portion of Tenant's interest in this Lease
(collectively, "sublet") without Landlord's prior written consent, which consent
shall not be unreasonably withheld. Consent by Landlord to one sublet shell not
be deemed to be a consent to any subsequent sublet.
(b) Effect of Sublet. Each sublet to which Landlord has
consented shall be by an instrument in writing, in a form satisfactory to
Landlord as evidenced by Landlord's written approval. Each sublessee shall agree
in writing, for the benefit of Landlord, to assume, to be bound by and to
perform the terms, conditions and covenants of this Lease to be performed by
Tenant. Tenant shall not be released from personal liability for the performance
of each term, condition and covenant of this Lease, and Landlord shall have the
right to proceed against Tenant without proceeding against the subtenant.
(c) Information to be Furnished. If Tenant desires at any
time to sublet the Premises, Tenant first shall notify Landlord of its desire to
do so and shall submit in writing to Landlord (i) the name of the proposed
subtenant (ii) the nature of the proposed subtenant's business to be carried on
in the Premises; (iii) the terms and provisions of the proposed sublease and a
copy of the proposed sublease form; and (iv) such financial information,
including financial statements, as Landlord reasonably may request concerning
the proposed subtenant.
(d) Landlord's Election. At any time within fifteen (15)
days after Landlord's receipt of the information specified in subsection 144(c),
Landlord, by written notice to Tenant, may elect to either approve or disapprove
the sublease, which consent shall not be unreasonably withheld. If Landlord
fails to elect either of the alternatives within the twenty (20) day period, it
shall be deemed that Landlord has refused its consent to the sublet. If Landlord
refuses its consent, Landlord shall deliver to Tenant a statement of the basis
for its refusal. Any attempted sublet without Landlord's consent shall not be
effective.
(e) Payment Upon Sublet. If Landlord consents to the
sublet, Tenant thereafter may enter into a valid sublet of the Premises or
portion thereof, upon the terms and conditions set forth in the information
furnished by Tenant to Landlord pursuant to subsection 15(c), subject to the
condition that fifty percent (50%) of any excess of the monies due to Tenant
under the sublet ("subrent") after expenses for tenant improvements, marketing
costs and commissions paid for by Tenant in connection with such subletting over
the Rent required to be paid by Tenant hereunder shall be paid to Landlord. Any
subrent to be paid to Landlord pursuant hereto shall be payable to Landlord as
and with the Base Rent payable to Landlord hereunder pursuant to the terms of
Section 4. The term "subrent" as used herein shall include any consideration of
any kind received, or to be received, by Tenant from the subtenant, it the sums
are related to Tenant's interest in this Lease or in the Premises, including,
without
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limitation, bonus money, and payments (in excess of fair market value thereof)
for Tenant's assets, fixtures, inventory, accounts, goodwill, equipment,
furniture, general intangibles and any capital stock or other equity ownership
of Tenant.
(f) Executed Counterparts. No sublet shall be valid nor
shall any subtenant take possession of the Premises until an executed
counterpart of the sublease has been delivered to Landlord and approved in
writing.
(g) Transfer to Purchaser. A transfer of this Lease to
one or more purchasers of a majority interest in Tenant shall be deemed a sublet
under this Lease, except for a transfer of controlling interest in Control Data
Systems, Inc.
(h) Transfers to Affiliates. Tenant may assign this Lease
or sublet the Premises, without Landlord's consent, to any corporation which
controls, is controlled by or is under common control with Tenant, or to any
corporation resulting from the merger or consolidation with Tenant, or to any
person or entity which acquires all the assets of Tenant as a going concern of
the business that is being conducted on the Premises, provided that the assignee
assumes, in full, the obligations of Tenant under this Lease.
15. Default.
(a) Tenant's Default. At the option of Landlord, a
material breach of this Lease by Tenant shall exist if any of the following
events (severally, "Event of Default"; collectively, "Events of Default") shall
occur: (i) it Tenant shall have failed to pay Rent, including Tenant's
Percentage Share of Operating expenses, or any other sum required to be paid
hereunder when due, together with interest at the Interest Rate, from the date
the amount became due through the date of payment, inclusive; (ii) it Tenant
shall have failed to perform any term, covenant or condition of this Lease
except those requiring the payment of money, and Tenant shall have failed to
cure the breach within fifteen (15) days after written notice from Landlord if
the breach could reasonably be cured within the fifteen (15) day period;
provided, however, it the failure could not reasonably be cured within the
fifteen (15) day period, then Tenant shall not be in default unless it has
failed to promptly commence and thereafter continue to make diligent and
reasonable efforts to cure the failure as soon as practicable as reasonably
determined by Landlord; (iii) if Tenant shall have assigned its assets for the
benefit of its creditors; (iv) if the sequestration of, attachment of, or
execution on, any material part of the property of Tenant or on any property
essential to the conduct of Tenant's business shall have occurred, and Tenant
shall have failed to obtain a return or release of the property within thirty
(30) days thereafter, or prior to sale pursuant to any sequestration, attachment
or levy, whichever is earlier; (v) if Tenant shall have failed to continuously
and uninterruptedly conduct its business in the Premises, or shall have
abandoned or vacated the Premises; (vi) if a court shall have made or entered
any decree or order adjudging Tenant to be insolvent, or approving as properly
filed a petition seeking reorganization of Tenant or directing the winding up or
liquidation of Tenant, and the decree or order shall have continued for period
of thirty (30) days; (vii) if Tenant shall make or suffer any transfer which
constitutes a fraudulent or otherwise avoidable transfer under any provision of
the federal Bankruptcy Laws or any applicable state law: or (viii) if Tenant
shall have failed to comply with the provisions of Section 23 or 25. An Event of
Default shall constitute a default under this Lease.
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(b) Remedies Upon Tenant's Default. Upon an Event of
Default, Landlord shall have the following remedies, in addition to all other
rights and remedies provided by law, equity, statute or otherwise provided in
this Lease, to which Landlord may resort cumulatively or in the alternative:
(i) Upon an Event of Default, Landlord may
continue this Lease in full force and effect, and this Lease shall continue in
full force and effect as long as Landlord does not terminate Tenant's right to
possession, and Landlord shall have the right to collect Rent when due. During
the period Tenant is in default, Landlord may enter the Premises and relet it,
or any part of it, to third parties for Tenant's account, provided that any Rent
in excess of the Rent due hereunder shall be payable to Landlord. Tenant shall
be liable immediately to Landlord for all costs Landlord incurs in reletting the
Premises, including, without limitation, brokers' commissions, expenses of
cleaning and redecorating the Premises required by the reletting and like costs.
Reletting may be for a period shorter or longer than the remaining Term of this
Lease. Tenant shall pay to Landlord the Rent and other sums due under this Lease
on the dates the Rent is due, less the Rent and other sums Landlord receives
from any reletting. No act by Landlord allowed by this subsection (i) shall
terminate this Lease unless Landlord notifies Tenant in writing that Landlord
elects to terminate this Lease.
(ii) Upon an Event of Default, Landlord may
terminate Tenant's right to possession of the Premises at any time by giving
written notice to that effect. No act by Landlord other than giving written
notice to Tenant shall terminate this Lease. Acts of maintenance, efforts to
relet the Premises or the appointment of a receiver on Landlord's initiative to
protect Landlord's interest under this Lease shall not constitute a termination
of Tenant's right to possession. On termination, Landlord shall have the right
to remove all personal property of Tenant and store it at Tenant's cost and to
recover from Tenant as damages: (a) the worth at the time of award of unpaid
Rent and other sums due and payable which had been earned at the time of
termination; plus (b) the worth at the time of award of the amount by which the
unpaid Rent and other sums due and payable which would have been payable after
termination until the time of award exceeds the amount of the Rent loss that
Tenant proves could have been reasonably avoided; plus (c) the worth at the time
of award of the amount by which the unpaid Rent and other sums due and payable
for the balance of the Term after the time of award exceeds the amount of the
Rent loss that Tenant proves could be reasonably avoided; plus (d) any other
amount necessary to compensate Landlord for all the detriment proximately caused
by Tenant's failure to perform Tenant's obligations under this Lease, or which,
in the ordinary course of things, would be likely to result therefrom,
including, without limitation, any costs or expenses incurred by Landlord: (1)
in retaking possession of the Premises, including reasonable attorneys' fees and
costs therefor; (2) maintaining or preserving the Premises for reletting to a
new tenant, including repairs or alterations to the Premises for the reletting;
(3) leasing commissions; (4) any other costs necessary or appropriate to relet
the Premises; and (5) at Landlord's election, such other amounts in addition to
or in lieu of the foregoing as may be permitted from time to time by the laws of
the State of California.
The Worth at the time of award, of the amounts referred to in subsections
(ii)(a) and (ii)(b) is computed by allowing interest at the Interest Rate, on
the unpaid Rent and other sums due and payable from the termination date through
the date of award. The "worth at the time of award" of the amount referred to in
subsection (ii)(c) is computed by discounting the amount at the
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discount rate of the Federal Reserve Bank of San Francisco at the time of award,
plus one percent (1%). Tenant waives redemption or relief from forfeiture under
California Code of Civil Procedure Sections 1174 and 1179, or under any other
present or future law, if Tenant is evicted or Landlord takes possession of the
Premises by reason of any default of Tenant hereunder.
(c) Landlord's Default. Landlord shall not be deemed to
be in default in the performance of any obligation required to be performed by
Landlord hereunder unless and until Landlord has failed to performed the
obligation within thirty (30) days after receipt of written notice by Tenant to
Landlord specifying wherein Landlord has tailed to perform the obligation;
provided, however, that if the nature of Landlord's obligation is such that more
than thirty (30) days are required for its performance, then Landlord shall not
be deemed to be in default if Landlord shall commence the performance within the
thirty (30) day period and thereafter shall diligently prosecute the same to
completion.
16. Landlord's Right to Perform Tenant's Covenants. If Tenant
shall at any time fail to make any payment or perform any other act on its part
to be made or performed under this Lease, Landlord may, but shall not be
obligated to make the payment or perform any other act to the extent Landlord
may deem desirable and, in connection therewith, pay expenses and employ
counsel. Any payment or performance by Landlord shall not waive or release
Tenant from any obligations of Tenant under this Lease. All sums so paid by
Landlord, and all penalties, interest and costs in connection therewith, shall
be due and payable by Tenant on the next day after any payment by Landlord,
together with interest thereon at the Interest Rate, from that date to the date
of payment thereof by Tenant to Landlord, plus collection costs and attorneys'
fees. Landlord shall have the same rights and remedies for the nonpayment
thereof as in the case of default in the payment of Rent.
17. Intentionally omitted.
18. Surrender of Premises. By taking possession of the Premises,
Tenant shall be deemed to have accepted the Premises and the Property in good,
clean and completed condition and repair, subject to all applicable laws, codes
and ordinances. On the expiration or early termination of this Lease, Tenant
shall surrender the Premises to Landlord in its condition as of the Commencement
Date, normal wear and tear excepted. Tenant shall remove from the Premises all
of Tenant's personal property, trade fixtures and any alterations required to be
removed pursuant to Section 9. Tenant shall repair damage or perform any
restoration work required by the removal. If Tenant fails to remove any personal
property, trade fixtures or alterations after the end of the Term, Landlord may
remove the property and store it at Tenant's expense, including interest at the
Interest Rate. It the Premises are not so surrendered at the termination of this
Lease, Tenant shall indemnify Landlord against all loss or liability resulting
from delay by Tenant in so surrendering the Premises, including, without
limitation, any claims made by any succeeding tenant, losses to Landlord due to
lost opportunities to lease to succeeding tenants, and attorneys' fees and
costs.
19. Holding Over. If Tenant remains in possession of all or any
part of the Premises after the expiration of the Term or the termination of this
Lease, the tenancy shall be month-to-month only and shall not constitute a
renewal or extension for any further term. In such event, Base Rent shall be
increased in an amount equal to one hundred fifty percent (150%)
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of the Base Rent during the last month of the Term (including any extensions),
and any other sums due under this Lease shall be payable in the amount, and at
the times, specified in this Lease. The month-to-month tenancy shall be subject
to every other term, condition, covenant and agreement contained in this Lease
and Tenant shall vacate the Premises immediately upon Landlord's request.
20. Access to Premises. Tenant shall permit Landlord and its
agents to enter the Premises at all reasonable times upon reasonable notice,
except in the case of an emergency (in which event no notice shall be
necessary), to inspect the Premises; to post Notices of Nonresponsibility and
similar notices and to show the Premises to interested parties such as
prospective mortgagors, purchasers and tenants to make necessary alterations,
additions, improvements or repairs either to the Premises, the Building or other
premises within the Building; and to discharge Tenant's obligations hereunder
when Tenant has failed to do so within a reasonable time after written notice
from Landlord. The above rights are subject to reasonable security regulations
of Tenant, and to the requirement that Landlord shall at all times act in a
manner to cause the least possible interference with Tenant's operations.
21. Signs. The size, design, color, location and other physical
aspects of any sign in or on the Building shall be subject to the CC&R's, if
any, Rules and Landlord's approval prior to installation, and to any appropriate
municipal or other governmental approvals. The costs of any permitted sign, and
the costs of its installation, maintenance and removal, shall be at Tenant's
sole expense and shall be paid within ten (10) days of Tenant's receipt of a
bill from Landlord for the costs. Tenant shall have the right to install a
monument sign on the Property subject to the following terms and conditions: (a)
the location, size, design and other matters concerning the physical location
and appearance of the sign shall be subject to Landlord's prior written
approval; (b) Tenant shall obtain all necessary approvals and permits for the
installation of the sign and the sign shall be installed in compliance with all
applicable laws; (c) the sign shall be considered an alteration pursuant to
Section 9; and (d) the sign shall not violate the signage rights of any other
tenant on the Property or any CC&Rs.
22. Waiver of Subrogation. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant each hereby waives and releases the other
of and from any and all rights of recovery, claim, action or cause of action
against the other, its subsidiaries, directors, agents, officers and employees,
for any loss or damage that may occur to the Premises, the Building or the
Property; to improvements to the Building or personal property (building
contents) within the Building; or to any furniture, equipment, machinery, goods
and supplies not covered by this Lease which Tenant may bring or obtain upon the
Premises or any additional improvements which Tenant may construct on the
Premises by reason of fire, the elements or any other cause which is required to
be insured against under this Lease, regardless of cause or origin, including
negligence of Landlord or Tenant and their agents, subsidiaries, directors,
officers and employees, to the extent insured against under the terms of any
insurance policies carried by Landlord or Tenant and in force at the time of any
such damage, but only if the insurance in question permits such a partial
release in connection with obtaining a waiver of subrogation from the insurer.
Because this Section 22 will preclude the assignment of any claim mentioned in
it by way of subrogation or otherwise to an insurance company or any other
person, each party to this Lease agrees immediately to give to each insurance
company written notice of the terms of the mutual waivers contained in this
Section and to have the insurance policies
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properly endorsed, if necessary, to prevent the invalidation of the insurance
coverages by reason of the mutual waivers contained in this Section.
23. Subordination.
(a) Subordinate Nature. Except as provided in Subsection
23(b), this Lease is subject and subordinate to all ground and underlying
leases, mortgages and deeds of trust which now or may hereafter affect the
Property, the Building or the premises, to the CC&R's, if any, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Within ten (10) days after Landlord's written request therefor, Tenant shall
execute any and all documents required by Landlord, the lessor under any ground
or underlying lease ("Lessor"), or the holder or holders of any mortgage or deed
of trust ("Holder") to make this Lease subordinate to the lien of any lease,
mortgage or deed of trust, as the case may be.
(b) Possible Priority of Lease. If a Lessor or a Holder
advises Landlord that it desires or requires this Lease to be prior and superior
to a lease, mortgage or deed of trust, Landlord may notify Tenant. Within seven
(7) days of Landlord's notice, Tenant shall execute, have acknowledged and
deliver to Landlord any and all documents or instruments, in the form presented
to Tenant, which Landlord, Lessor or Holder deems necessary or desirable to make
this Lease prior and superior to the lease, mortgage or deed of trust.
(c) Recognition or Attornment Agreement. If Landlord or
Holder requests Tenant to execute a document subordinating this Lease, the
document shall provide that, so long as Tenant is not in default, Lessor or
Holder shall agree to enter into either a recognition or attornment agreement
with Tenant, or a new lease with Tenant upon the same terms and conditions as to
possession of the Premises, which shall provide that Tenant may continue to
occupy the Premises so long as Tenant shall pay the Rent and observe and perform
all the provisions of this Lease to be observed and performed by Tenant.
24. Transfer of the Property. Upon transfer of the Property and
assignment of this Lease, Landlord shall be entirely freed and relieved of all
liability under any and all of its covenants and obligations contained in or
derived from this Lease occurring after the consummation of the transfer and
assignment. Tenant shall attorn to any entity purchasing or otherwise acquiring
the Premises at any sale or other proceeding.
25. Estoppel Certificates. Within ten (10) days following written
request by Landlord, Tenant shall execute and deliver to Landlord an estoppel
certificate, in the form prepared by Landlord. The certificate shall: (i)
certify that this Lease is unmodified and in full force and effect or, if
modified, state the nature of the modification and certify that this Lease, as
so modified, is in full force and effect, and the date to which the Rent and
other charges are paid in advance, if any; (ii) acknowledge that there are not,
to Tenant's knowledge, any uncured defaults on the part of Landlord hereunder,
or it there are uncured defaults on the part of the Landlord, state the nature
of the uncured defaults; and (iii) evidence the status of the Lease as may be
required either by a lender making a loan to Landlord to be secured by deed of
trust or mortgage covering the Premises or a purchaser of the Property from
Landlord.
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26. Mortgage Protection In the event of any default on the part
of Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgagee of a mortgage covering the Property
and shall offer the beneficiary or mortgagee a reasonable opportunity to cure
the default, including time to obtain possession of the Property or the Premises
by power of sale or a judicial foreclosure, if such should prove necessary to
effect a cure.
27. Attorney's Fees. If either party shall bring any action or
legal proceeding for damages for an alleged breach of any provision of this
Lease, to recover rent or other sums due, to terminate the tenancy of the
Premises or to enforce, protect or establish any term, condition or covenant of
this Lease or right of either party, the prevailing party shall be entitled to
recover, as a part of the action or proceedings, or in a separate action brought
for that purpose, such attorneys' fees and court costs as may be fixed by the
court or jury. The prevailing party shall be the party which secures a final
judgment in its favor.
28. Brokers. Tenant warrants and represents that it has had no
dealings with any real estate broker or agent in connection with the negotiation
of this Lease, except for any brokers(s) specified in the Basic Lease
Information, and that it knows of no other real estate broker or agent who is or
might be entitled to a commission in connection with this Lease. Tenant shall
indemnify and hold harmless Landlord from and against any and all liabilities or
expenses arising out of claims made by any other broker or individual for
commissions or fees resulting from this Lease. Brokerage commissions shall be
paid by Landlord in accordance with attached Exhibit E.
29. Parking. Tenant shall have the right to park in the
Building's parking facilities in common with other tenants of the Building upon
terms and conditions, as may from time to time be established by Landlord.
Tenant agrees not to use in excess of its proportionate share of parking
facilities and agrees to cooperate with Landlord and other tenants in the use of
the parking facilities. Landlord reserves the right, in its absolute discretion,
to determine whether the parking facilities are becoming crowded and to allocate
and assign parking spaces among Tenant and the other tenants. Landlord shall not
be liable to Tenant, nor shall this Lease be affected, if any parking is
impaired by moratorium, initiative, referendum, law, ordinance, regulation or
order passed, issued or made by any governmental or quasi-governmental body. As
of the date of this Lease, there is one (1) parking space for each two hundred
eighty five (285) rentable square feet of building space within the Property.
Landlord acknowledges that Landlord will not construct any additional
improvements on the Property which would cause, the number of parking spaces to
be less than one (1) per two hundred eighty five (285) rentable square feet of
building space on the Property. However, Tenant acknowledges that parking may be
interfered with or impaired as a result of damage, destruction, taking by a
governmental authority, moratorium, initiative, referendum, law, ordinance,
regulation or order passed by a governmental or quasi-governmental authority, or
temporarily as a result of maintenance, repair or other improvements being
performed by Landlord on the Property.
30. Utilities and Services. Tenant shall be solely responsible
for obtaining and paying for all utilities and services, including heating, air
conditioning, ventilation (i.e., HVAC service contracts, janitorial and
security) in connection with the Premises. Landlord shall not be liable for, and
Tenant shall not be entitled to any abatement or reduction of Rent by reason of,
no
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eviction of Tenant shall result from and, further, Tenant shall not be relieved
from the performance of any covenant or agreement in this Lease because of,
Landlord's failure to furnish or Tenant's failure to obtain any such utility or
service any of the foregoing.
31. Modification for Lender. If, in connection with obtaining
financing for the Premises or any portion thereof, Landlord's lender shall
request reasonable modification to this Lease as a condition to such financing,
Tenant shall not withhold, delay or defer its consent thereto, provided such
modifications, do not materially affect Tenant's rights hereunder (as determined
by Tenant acting in Tenants sole discretion but in otherwise good faith).
32. Acceptance. Delivery of this Lease, duly executed by Tenant,
constitutes an offer to lease the Premises as set forth herein, and under no
circumstances shall such delivery be deemed to create an option or reservation
to lease the Premises for the benefit of Tenant. This Lease shall become
effective and binding only upon execution hereof by Landlord and delivery of a
signed copy to Tenant. Upon acceptance of Tenant's offer to lease under the
terms hereof, Landlord shall be entitled to retain any sums received by Landlord
and apply them to damages, costs and expenses incurred by Landlord if Tenant
fails to accept delivery of the Premises. Tenant will pay first months rent upon
receipt of the fully executed lease.
33. Use of Names. Tenant shall not use the name of the Building
or the name of the business park in which the Building is located in the name or
title of its business or occupation without Landlord's prior written consent,
which consent Landlord may withhold in its sole discretion. Landlord reserves
the right to change the name of the Building without Tenant's consent and
without any liability to Landlord.
34. Recording. Neither Landlord nor Tenant shall record this
Lease, nor a short form memorandum of this Lease, without the prior written
consent of the other.
35. Quitclaim. Upon any termination of this Lease pursuant to its
terms, Tenant, at Landlord's request, shall execute, have acknowledged and
deliver to Landlord a quitclaim deed of all Tenant's interest in the Premises,
Building and Property created by this Lease.
36. Notices. Any notice or demand required or desired to be given
under this Lease shall be in writing and shall be given by hand delivery,
telecopy or the United States mail. Notices which are sent by telecopy shall be
deemed to have been given upon receipt. Notices which are mailed shall be deemed
to have been given when seventy-two (72) hours have elapsed after the notice was
deposited in the United States mail, registered or certified, the postage
prepaid, addressed to the party to be served. As of the date of execution of
this Lease, the addresses of Landlord and Tenant are as specified in the Basic
Lease Information. Either party may change its address by giving notice of the
change in accordance with this Section.
37. Landlord's Exculpation. In the event of default, breach or
violation by Landlord (which term includes Landlord's partners, co-venturers and
co-tenants, and officers, directors, employees, agents and representatives of
Landlord and Landlord's partners, co-venturers and co-tenants) of any of
Landlord's obligations under this Lease, Landlord's liability to Tenant shall be
limited to its ownership interest in the Building and Property or the
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proceeds of a public sale of the ownership interest pursuant to the foreclosure
of a judgment against Landlord. Landlord shall not be personally liable, or
liable in any event, for any deficiency beyond its ownership interest in the
Building and Property.
38. Additional Structures. Any diminution or interference with
light, air or view by any structure which may be erected on land adjacent to the
Building shall in no way alter this Lease or impose any liability on Landlord.
39. General.
(a) Captions. The captions and headings used in this
Lease are for the purpose of convenience only and shall not be construed to
limit or extend the meaning of any part of this Lease.
(b) Time. Time is of the essence for the performance of
each term, condition and covenant of this Lease.
(c) Severability. If any provision of this Lease is held
to be invalid, illegal or unenforceable, the invalidity, illegality, or
unenforceability shall not affect any other provision of this Lease, but this
Lease shall be construed as if the invalid, illegal or unenforceable provision
had not been contained herein.
(d) Choice of Law; Construction. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
The language in all parts of this Lease shall in all cases be construed as a
whole according to its fair meaning and not strictly for or against either
Landlord or Tenant.
(e) Gender; Singular; Plural. When the context of this
Lease requires, the neuter gender includes the masculine, the feminine, a
partnership or corporation or joint venture, and the singular includes the
plural.
(f) Binding Effect. The covenants and agreements
contained in this Lease shall be binding on the parties hereto and on their
respective successors and assigns (to the extent this Lease is assignable).
(g) Waiver. The waiver of Landlord of any breach of any
term, condition or covenant of this Lease shall not be deemed to be a waiver of
the provision or any subsequent breach of the same or any other term, condition
or covenant of this Lease. The subsequent acceptance of Rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach at the time
of acceptance of the payment. No covenant, term or condition of this Lease shall
be deemed to have been waived by Landlord unless the waiver is in writing signed
by Landlord.
(h) Entire Agreement. This Lease is the entire agreement
between the parties, and there are no agreements or representations between the
parties except as expressed herein. Except as otherwise provided herein, no
subsequent change or addition to this Lease shall be binding unless in writing
and signed by the parties hereto.
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(i) Waiver of Jury. To the extent permitted by law,
Tenant hereby waives any right it may have to a jury trial in the event of
litigation between Tenant and Landlord pertaining to this Lease.
(j) Counterparts. This Lease may be executed in
counterparts, each of which shall be an original, but all counterparts shall
constitute one (1) instrument.
(k) Exhibits. The Basic Lease Information and all
exhibits attached hereto are hereby incorporated herein and made an integral
part hereof.
(l) Addendum. The Addendum, if any, attached hereto is
hereby incorporated herein and made an integral part hereof.
40. Right to Terminate.
Provided that Tenant is not in default under this Lease, either
at the time of the delivery of the termination notice referenced in Subsection
(a) below, or any time thereafter until the effective date of termination,
Tenant shall have the option to terminate this Lease subject to the terms and
conditions specified below:
(a) Tenant shall have the right to terminate this Lease
effective as of the expiration of the thirty-sixth (36th) full calendar month
following the Commencement Date by delivery of written notice to Landlord of
such termination not later than six (6) months prior to the effective date of
such termination, together with the Lease Termination Payment (as defined
below). If Tenant has not timely delivered the foregoing notice together with
the Lease Termination Payment, Tenant shall be deemed to have waived Tenant's
right to terminate pursuant to this Section 40.
(b) As used herein, the term "Lease Termination Payment"
shall mean an amount equal to the sum of the unamortized portion of the Tenant
Improvement Allowance furnished by Landlord pursuant to Section 7 hereof, and
legal fees (such legal fees not to exceed $1,500) incurred in connection with
this Lease as amortized over the period commencing as of the Commencement Date
and ending on the Expiration Date, together with interest on such unamortized
amount at the rate of ten percent (10%) per annum. The Lease Termination Payment
shall be delivered to Landlord concurrently with the delivery of Tenant's notice
electing to terminate the Lease. If the Lease Termination Payment is not made as
specified above (time being of the essence), at Landlord's election, Tenant's
termination notice shall be deemed to not have been validly delivered, and this
Lease shall remain in full force and effect.
(c) Upon the effective date of the termination of this
Lease pursuant to this Section 40, Tenant shall surrender possession of the
Premises to Landlord subject to the terms of this Lease including without
limitation Section 18 of the Lease.
(d) If Tenant is in default either at the time of the
delivery of Tenant's notice of electing to terminate the lease or at any time
thereafter until the effective date of termination, then, at Landlord's
election, Tenant's election to terminate shall be deemed null and void and this
Lease shall continue in full force and effect.
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<PAGE> 34
41. Option to Extend.
(a) Terms of Option. Provided that Tenant is not in
default under this Lease either at the time of exercise of the right to extend
or on the Expiration Date, Tenant shall have the non-assignable right, at its
option, to extend this Lease for one (1) period of five (5) years (the
"Extension Term") commencing on the Expiration Date. If Tenant elects to extend
this Lease for the Extension Term, Tenant shall give unequivocal written notice
("Exercise Notice") of its exercise to Landlord not less than six (6) months,
nor more than nine (9) months prior to the Expiration Date. Tenant's failure to
give the Exercise Notice in a timely manner shall be deemed a waiver of Tenant's
right to extend. The terms, covenants and conditions applicable to the Extension
Term shall be the same terms, covenants and conditions of this Lease except that
(i) Tenant shall not be entitled to any further option to extend, and (ii) the
Base Rent for the Premises during the Extension Term shall be determined as
provided in Subsection 41.b. below, (iii) Landlord shall have no obligation to
improve or otherwise modify the Premises or to provide any tenant improvement
allowance, and (iv) Tenant shall have no right to terminate this Lease pursuant
to Section 40.
(b) Determination of Base Rent During Extension Term.
(i) Agreement on Rent. Subject to the limitations
of this Section, Landlord and Tenant agree that the initial Base Rent during the
Extension Term shall be equal to ninety-five percent (95%) of the fair market
rental value of the Premises for the Extension Term. Landlord and Tenant shall
have thirty (30) days after Landlord receives the Exercise Notice in which to
agree on the initial Base Rent during the Extension Term. In determining the
fair market rental value of the Premises during the Extension Term,
consideration shall be given to the uses of the Premises permitted under this
Lease, the quality, size, design and location of the Premises, and the rental
value of comparable research and development space located in the proximity of
the Moffett Park, Orleans Drive area in the City of Sunnyvale. In no event shall
the initial Base Rent for the Extension Term be less than the initial Base Rent
last payable under this Lease during the Term. If Landlord and Tenant agree on
the Base Rent for the Extension Term during the thirty (30) day period, they
shall immediately execute an amendment to this Lease stating the initial Base
Rent. The Base Rent shall be subject to adjustment as specified in subsection
41.c. effective upon the first day of the thirty-first (31st) month of the
Extension Term.
(ii) Selection of Appraisers. If Landlord and
Tenant are unable to agree on the initial Base Rent for the Extension Term
within the thirty (30) day period, then within fifteen (15) days after the
expiration of the thirty (30) day period, Landlord and Tenant each, at its cost
and by giving notice to the other party, shall appoint a competent and
disinterested real estate appraiser with at least five (5) years full-time
commercial appraisal experience in Sunnyvale to appraise and set the initial
Base Rent during the Extension Term. If either Landlord or Tenant does not
appoint an appraiser within ten (10) days after the other party has given notice
of the name of its appraiser, the single appraiser appointed shall be the sole
appraiser and shall set the initial Base Rent during the Extension Term. If two
(2) appraisers are appointed by Landlord and Tenant as stated in this section,
they shall meet promptly and attempt to set the initial Base Rent for the
Extension Term. If the two (2) appraisers are unable to agree within thirty (30)
days after the second appraiser has been appointed, they shall attempt to select
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<PAGE> 35
a third appraiser meeting the qualifications stated in this section within ten
(10) days after the last day the two (2) appraisers are given to set the initial
Base Rent. If they are unable to agree on the third appraiser, either Landlord
or Tenant, by giving ten (10) days' notice to the other party, can apply to the
then president of the real estate board of Santa Clara County, or to the
Presiding Judge of the Superior Court of Santa Clara County for, the selection
of a third appraiser who meets the qualifications stated in this section.
Landlord and Tenant each shall bear one-half (1/2) of the cost of appointing the
third appraiser and of paying the third appraiser's fee. The third appraiser,
however selected, shall be a person who has not previously acted in any capacity
for either Landlord or Tenant.
(iii) Value Determined By Three (3) Appraisers.
Within thirty (30) days after the selection of the third appraiser, a majority
of the appraisers shall set the Base Rent for the Extension Term. If a majority
of the appraisers is unable to set the Base Rent within the stipulated period of
time, Landlord's appraiser shall arrange for simultaneous exchange of written
appraisals from each of the appraisers and the three (3) appraisals shall be
added together and their total divided by three (3); ninety-five percent (95%)
of the resulting quotient shall be the initial Base Rent for the Premises during
the Extension Term. If, however, the low appraisal and/or the high appraisal
are/is more than ten percent (10%) lower and/or higher than the middle
appraisal, the low appraisal and/or the high appraisal shall be disregarded. If
only one (1) appraisal is disregarded, the remaining two (2) appraisals shall be
added together and their total divided by two (2); ninety-five percent (95%) of
the resulting quotient shall be the initial Base Rent for the Premises during
the Extension Term. If both the low appraisal and the high appraisal are
disregarded as stated in this Paragraph, ninety-five percent (95%) of the middle
appraisal shall be the initial Base Rent for the Premises during the Extension
Term.
(iv) Notice to Landlord and Tenant. After the
initial Base Rent for the Extension Term has been set, the appraisers shall
immediately notify Landlord and Tenant, and Landlord and Tenant shall
immediately execute an amendment to this Lease stating the initial Base Rent.
(c) Effective upon the first day of the thirty-first
(31st) month of the Extension Term {the "Adjustment Date"), the Base Rent shall
be increased to an amount which results from multiplying the Base Rent in effect
immediately prior to the Adjustment Date by a fraction, the numerator of which
shall be the Consumer Price Index ("CPI") now known as the "U.S. Department of
Labor, Bureau of Labor Statistics Consumer Price Index, San
Francisco-Oakland-San Jose Bay Area Region, All Items (1982-84 = 100) last
published prior to the Adjustment Date and the denominator of which shall be the
CPI last published prior to the commencement of the Extension Term; provided,
however, in no event shall the Base Rent ever decrease as a result of the
foregoing computation. For purposes of the foregoing, the increase in Base Rent
as a result of the foregoing adjustment shall not be more than that which would
be payable if the Base Rent were increased eight percent (8%) on each twelve
(12) month anniversary of the commencement of the Extension Term and four
percent (4%) on the Adjustment Date or less than the amount which would be
payable if the Base Rent were increased four percent (4%) on each twelve (12)
month anniversary of the commencement of the Extension Term and two percent (2%)
on the Adjustment Date. In the event the format or components of the CPI are
materially changed or the CPI is discontinued, Landlord may
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<PAGE> 36
reasonably substitute another index which is intended to measure increases in
consumer prices in a manner similar to the foregoing index.
42. Quiet Possession. Upon Tenant paying the rent for the
Premises and observing and performing all of the covenants, conditions and
provisions on Tenant's part to be observed and performed hereunder, Tenant shall
have quiet possession of the Premises for the entire term hereof subject to all
of the provisions of this Lease.
43. Americans With Disabilities Act. Landlord and Tenant
acknowledge that the Premises is a "commercial facility" as such term is defined
in Title III of the Americans with Disabilities Act 42 U.S.C. Section 1201 et
seq. (the "ADA"). If it is determined by a governmental authority with
applicable jurisdiction that, as of the date Landlord delivers the Premises to
Tenant, the Premises is not in compliance with Title III of the ADA as
applicable to commercial facilities, Landlord shall make such modifications to
the Premises as may be required by such governmental authority. Tenant
acknowledges that the foregoing obligation of Landlord shall not apply to
modifications to the Premises required as a result of or related to (a) the
Tenant Improvements, (b) alterations made by or on behalf of Tenant, or (c) the
disability of an employee, prospective employee or contractor of Tenant.
[Remainder of page intentionally left blank]
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<PAGE> 37
IN WITNESS WHEREOF, the parties have executed this Lease
effective as of the date first above written.
"LANDLORD"
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
A NEW JERSEY CORPORATION
By: /s/ Wes Ambrose
-------------------------------------
Its: Vice President
"TENANT"
CONTROL DATA SYSTEMS, INC.
A DELAWARE CORPORATION
By: /s/ W.D. Seiler
-------------------------------------
Its: Director Real Estate
-------------------------------------
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<PAGE> 38
EXHIBIT A
[graphic depiction of site plan]
29
<PAGE> 39
EXHIBIT B
COMMENCEMENT DATE MEMORANDUM
--------------------------------------------------------------------------------
LANDLORD: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
a New Jersey corporation
--------------------------------------------------------------------------------
TENANT: CONTROL DATA SYSTEMS, a Delaware corporation
--------------------------------------------------------------------------------
LEASE DATE: June 1, 1994
--------------------------------------------------------------------------------
PREMISES: 1306 Orleans Drive, Sunnyvale, CA 94089
--------------------------------------------------------------------------------
Pursuant to Section 2.D. of the above-referenced Lease, the Commencement Date
hereby is established as August 1, 1994, and the Expiration Date is hereby
established as July 31, 1999.
LANDLORD
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
a New Jersey corporation
By: /s/ Wes Ambrose
-------------------------------------
Its Vice President
TENANT
CONTROL DATA SYSTEMS, INC.
a Delaware corporation
By: /s/ W. D. Seiler
------------------------------------
Its: Director Real Estate
------------------------------------
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<PAGE> 40
EXHIBIT C
PHASING
I. Contractor should provide a separate price for items: 1, 2, 3, 4, 5, 10, 11,
15.
II. Contractor should provide a separate price for items: 6, 7, 8, 9, 12, 13,
14.
REQUIREMENTS NUMBER OF
LOCATIONS
REQUIRED
1. Provide new HC. van and vehicle parking. 1
2. Provide H.C. hardware pull at door exterior. 3
3. Provide H.C. hardware at door interior. 3
4. Provide 16" high kickplates at doors. 3
5. Provide new H.C. threshold. 6
6. Provide new HC curd cut & ramp. 1
7. Clearance required at edge of door adjacent to latch is 18". 2
Existing clearance is 16". Solution: relocate door and frame
2" over.
8. Vestibule clearance required in direction of travel is 2
5'.0". Existing clearance is 4'. Solution: Remove door and
frame; provide cased opening.
9. Clearance required beneath countertop is 29'. Existing 2
clearance is 27 1/2". Solution: modify apron at front edge of
countertop to provide 29" clearance without raising counter.
10. Water faucets are knobs rather than levers. Solution: 2
change faucets at one sink to have levers.
11. Reverse swing of toilet door. 1
12. Reverse swing of door to locker/shower area. 1
13. Shower stall has sliding glass doors with a lip at 2
threshold. Solution: remove doors and provide plastic curtain on
horizontal rod.
14. Maximum height for countertops is 34". Existing 2
countertops are 36". Solution: Modify existing to 34" or provide
new.
15. Provide a site sign at entrance to parking lot that says 1
"Unauthorized vehicles parked in designated handicapped spaces not
displaying distinguishing placards or license plates issued for
physically
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<PAGE> 41
EXHIBIT D
RULES AND REGULATIONS
1. No sign, placard, picture, advertisement, name or notice shall be
installed or displayed on any part of the outside or inside of the
Building without the prior written consent of Landlord. Landlord shall
have the right to remove, at Tenant's expense and without notice, any
sign installed or displayed in violation of this rule.
2. Except as consented to in writing by Landlord or in accordance with
Building standard improvements, no draperies, curtains, blinds, shades,
screens or other devices shall be hung at or used in connection with any
window or exterior door or doors of the Premises. No awning shall be
permitted on any part of the Premises. Tenant shall not place anything
against or near glass partitions or doors or windows which may appear
unsightly from outside the Promises.
3. Tenant shall not obstruct any sidewalks, halls, lobbies, passages,
exits, entrances, elevators or stairways of the Building. No tenant and
no employee or invitee of any tenant shall go upon the roof of the
Building or make any roof or terrace penetrations.
4. If Tenant requires a burglar alarm, it shall first obtain, and comply
with, Landlord's instructions for its installation.
5. Tenant shall not place a load upon any floor of the Premises which
exceeds the maximum load per square foot which the floor was designed to
carry and which is allowed by law. Tenant's business machines and
mechanical equipment which cause noise or vibration which may be
transmitted to the structure of the Building or to any space therein,
and which is objectionable to Landlord or to any tenants in the
Building, shall be placed and maintained by Tenant, at Tenant's expense,
on vibration eliminators or other devices sufficient to eliminate noise
or vibration.
6. Tenant shall not use or keep in the Premises any toxic or hazardous
materials or any kerosene, gasoline or inflammable or combustible fluid
or material other than those limited quantities necessary for the
operation or maintenance of office equipment. Tenant shall not use or
permit to be used in the Premises any foul or noxious gas or substance,
or permit or allow the Premises to be occupied or used in a manner
offensive or objectionable to Landlord or other occupants of the
Building by reason of noise, odors or vibrations. No animal, except
seeing eye does when in the company of their masters, may be brought
into or kept in the Building.
7. Tenant shall cooperate fully with Landlord to assure the most effective
operation of the Building's heating and air conditioning and to comply
with any governmental energy-saving rules, laws or regulations.
8. Landlord reserves the right, exercisable without notice and without
liability to Tenant, to change the name and street address of the
Building.
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<PAGE> 42
9. Tenant shall close and lock the doors of its Premises, shut off all water
faucets or other water apparatus and turn off all lights and other
equipment which is not required to be continuously run. Tenant shall be
responsible for any damage or injuries sustained by other tenants or
occupants of the Building or Landlord for noncompliance with this Rule.
10. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall
not be used for any purpose other than that for which they were
constructed, and no foreign substance of any kind whatsoever shall be
placed therein. The expense of any breakage, stoppage or damage resulting
from any violation of this rule shall be borne by the tenant who, or
whose employees or invitees, shall have caused it.
11. Tenant shall not install any radio or television antenna, loudspeaker or
other device on the roof or exterior walls of the Building. Tenant shall
not interfere with radio or television broadcasting or reception from or
in the Budding or elsewhere.
12. Tenant shall not affix any floor covering to the floor of the Premises in
any manner except as approved by Landlord. Tenant shall repair, or be
responsible for the cost of repair of any damage resulting from
noncompliance with this Rule.
13. Canvassing, soliciting and distributing handbills or any other written
material and peddling in the Building are prohibited, and each tenant
shall cooperate to prevent these activities.
14. Tenant shall store all its trash and garbage in a separate designated
area. Tenant shall not place in any trash box or receptacle any material
which cannot be disposed of in the ordinary and customary manner of trash
and garbage disposal. All garbage and refuse disposal shall be made in
accordance with directions issued from time to time by Landlord.
15. Use by Tenant of Underwriters' Laboratory approved equipment for brewing
coffee, tea, hot chocolate and similar beverages and microwaving food
shall be permitted, provided that the equipment and use is in accordance
with all applicable federal, state, county and city laws, codes,
ordinances, rules and regulations.
16. Tenant shall not use the name of the Building in connection with or in
promoting or advertising the business of Tenant, except as Tenant's
address, without the written consent of Landlord.
17. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental
agency. Tenant shall be responsible for any increased insurance premiums
attributable to Tenant's use of the Premises, Building or Property.
18. Tenant assumes any and all responsibility for protecting its Premises
from theft and robbery, which responsibility includes keeping doors
locked and other means of entry to the Premises closed.
33
<PAGE> 43
19. Tenant shall not use the Premises, or suffer or permit anything to be
done on, in or about the Premises, which may result in an increase to
Landlord in the cost of insurance maintained by Landlord on the Building
and Common Areas.
20. Tenant shall not park its vehicles in any parking areas designated by
Landlord as areas for parking by visitors to the Building or other
reserved parking spaces. Tenant shall not leave vehicles in the Building
parking areas overnight, nor park any vehicles in the Building parking
areas other than automobiles, motorcycles, motor driven or non-motor
driven bicycles or four-wheeled trucks. Tenant, its agents, employees and
invitees shall not park any one (1) vehicle in more than one (1) parking
space.
21. Landlord may waive any one or more of these Rules and Regulations for the
benefit of Tenant or any other tenant, but no waiver by Landlord shall be
construed as a waiver of the Rules and Regulations in favor of Tenant or
any other tenant, nor prevent Landlord from thereafter enforcing the
Rules and Regulations against any or all of the tenants of the Building.
22. Those Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease of premises in the
Building.
23. Landlord reserves the right to make other reasonable Rules and
Regulations as, in its judgment, may from time to time be needed for
safety and security, for care and cleanliness of the Building and for the
preservation of good order therein. Tenant agrees to abide by all Rules
and Regulations hereinabove stated and any additional rules and
regulations which are adopted.
24. Tenant shall be responsible for the observance of all of the foregoing
rules by Tenant's employees, agents, clients, customers, invitees, and
guests.
34
<PAGE> 44
EXHIBIT E
COMMISSION SCHEDULE
Landlord and Blickman Turkus Commercial Industrial Real Estate (Landlord's
Broker") ate parties to that certain agreement regarding the payment of
brokerage commissions in connection with this Lease. Landlord and the
undersigned Brokers specified in the Basic Lease Information hereby acknowledge
that the total commission payable in connection with this Lease is $70,200, but
that $24,300 of such total commission shall not be payable until Tenant has
irrevocably waived Tenant's right to terminate this Lease pursuant to Section 40
of this Lease. In the event Tenant so terminates this Lease, such $24,300 sum
shall not be payable by Landlord or Tenant to any Broker, and no Broker shall
assert any claim thereto. Upon payment of the foregoing commission by Landlord
to Landlord's Broker, Landlord's Broker shall be responsible for payment of
amounts payable to any other broker.
ACKNOWLEDGED AND AGREED:
BLICKMAN TURKUS COMMERCIAL INDUSTRIAL REAL ESTATE
By: /s/ Dario Jonas
--------------------------
Its: Partner, V.P.
--------------------------
J. R. PARRISH
By: /s/ P. Guggion
--------------------------
Its:
--------------------------
CORNISH & CAREY COMMERCIAL
By: /s/ F. Anderson
--------------------------
Its:
--------------------------
35
<PAGE> 45
EXHIBIT 3
AVID MEDIA GROUP
1306 Orleans Drive
Sunnyvale, California
GENERAL NOTES
ALL AREAS OF NEW WORK ARE CLOUDED.
FLOORING: Existing flooring to remain. Patch carpet and provide floor
base to match existing where existing walls are removed.
WALLS: Existing walls to remain unchanged unless otherwise noted.
Patch, texture and paint existing walls to match existing
where walls are removed.
CEILING: Existing ceiling to remain unchanged.
DOORS: All doors are existing and shall remain unchanged unless
otherwise noted. New doors shall be 3'7" B3 birch in anod
alum. rames to match existing.
LIGHTING: Modify lighting and switching to match existing and per code
requirements where new walls are installed.
FIRE SPRINKLERS: Modify fire sprinklers where new walls are installed per
code requirements.
FIRE EXTINGUISHERS: Provide fire extinguishers per code requirements.
REFERENCE NOTES
A. Remove existing sidelight from door frame and install 20 min. labeled
pair of doors with closers, astragal, coordinator, autoflush bolts and
smoke seals. Also provide magnetic hold opens activated by smoke
detectors. Paint touch-up frame to match existing.
B. Provide new 1-hour F.R. wall to underside of ceiling and provide new 20
minute labeled door and frame to match existing with closer and smoke
seals.
C. Remove portion of wall and provide new 20 min. labeled door and frame to
match existing with closer and smoke seals.
D. Provide new wall to underside of ceiling. Texture, paint to cover, and
provide floor base to match existing.
E. Remove existing door and frame and provide new wall to underside of
ceiling. Texture, paint to cover, and provide floor base to match
existing.
F. Remove existing wall shown dashed.
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<PAGE> 46
G. Remove portion of existing wall and portion of surface mounted wipe
moulding shown dashed. Provide 4'7" gypsum board cased opening.
H. Remove portion of existing wall shown dashed. Provide 6'7" gypsum board
cased opening. Remove any electrical outlets, conduits and wiring to
source.
I. Provide alternative price to install new gyps board o/metal stud
partition to underside of existing 12" high opening, tape texture and
paint to match existing. Also provide new pair of 3'7" B3 birch doors
and anod, alum frame.
[graphics depiction of floor plan 1/8" = 1' - 0"]
37
<PAGE> 47
EXHIBIT B
SUBLEASE AGREEMENT
THIS SUBLEASE, made this 15th day of September, 1995 by and
between Control Data Systems, Inc., a Delaware corporation, hereinafter
designated "Sublessor", and Avid Media Group, Inc., a California corporation,
hereinafter designated "Sublessee".
1. Demise of Premises. In consideration of the rents and
covenants herein stipulated to be paid and performed by Sublessee, Sublessor
hereby demises and sublets to Sublessee, and Sublessee hereby takes from
Sublessor, a portion of that space presently leased by Sublessor containing
6,000 rentable square feet (Sublease Premises), under that certain lease (herein
referred to collectively as the "Master Lease") entered into by and between The
Prudential Insurance Company of America ("Master Landlord") and Sublessee dated
June 1, 1994 and all rights, privileges, and appurtances related to such
Sublease Premises. The Sublease Premises are located at 1306 Orleans Dr.,
Sunnyvale, CA 94089 and outlined as "Space A" on Exhibit "1" attached hereto and
incorporated herein by reference. The Master Lease is attached hereto as Exhibit
"2" and incorporated herein by reference.
2. Term. Sublessee shall have and hold the Sublease Premises for
a term of forty-six (46) months commencing on October 1, 1995 and terminating on
July 31, 1999 subject to Sublessor's election to exercise it's early termination
options under the terms of the Master Lease.
Sublessor may, at it's election, exercise the early termination
right contained in Paragraph 40 of the Master Lease and this Sublease shall
terminate on the early termination date as if it were the original Sublease
expiration date. In the event Sublessor elects to exercise it's early
termination right it shall provide written notice to Sublessee prior to January
15, 1997 of it's intent and shall reimburse Sublessee for it's reasonable moving
expenses. Moving expenses shall mean those reasonable costs related to the
physical relocation of Sublessee's furniture, fixtures, and equipment to another
location within a sixty (60) mile radius of the Sublease Premises.
If Sublessor is unable to deliver possession of the Sublease
Premises to Sublessee by October 1, 1995 because Sublessor has not substantially
completed all work to be performed by it pursuant to Paragraph 5 of this
Sublease Agreement, or for any other reason, Sublessor shall have no liability
to Sublessee for damages but the commencement date shall be deferred until the
date on which Sublessor is able to deliver possession of the Sublease Premises
to the Sublessee. In the event the commencement date is other than as stated in
Paragraph 2 of this Sublease Agreement, immediately after the actual
commencement date is determined it shall be confirmed by Sublessor and Sublessee
in writing.
Sublessee shall have access to the Sublease Premises two weeks
prior to the commencement date for the installation of fixtures and equipment.
Sublessee hereby agrees that it will not cause any delays in the completion of
the renovations required to be performed by Sublessor as a result of it's early
access to the Sublease Premises.
<PAGE> 48
3. Rental. Sublessee agrees to pay Sublessor annual rent of Sixty
Four Thousand Eight Hundred Dollars ($64,800.00) payable in monthly installments
of Five Thousand Four Hundred Dollars ($5,400.00), in advance, on the first day
of each calendar month during the Term. Sublessee covenants and agrees to pay
Sublessor rent at the address set forth in the notice provision of this Sublease
or at such other place as Sublessor may designate in writing. Rent shall be
payable without notice or demand, without abatement, deduction or setoff. Rent
for any portion of a month shall be prorated.
In addition to the annual rent payable under this Sublease as set
forth above, Sublessee shall pay to Sublessor as additional rent, any increases
in operating expenses as described in Paragraph 5 of the Master Lease above
those for calendar year 1996. Additional rent payments for operating expense
increases shall commence on January 1, 1997. The current pro rata percentage
applicable to the Sublease Premises is twenty-four (24%) of the operating
expenses billed to Sublessor by Master Landlord. In no event shall the annual
increase in operating expenses exceed One Thousand Seven Hundred Forty Dollars
($1,740.00).
4. Incorporation of the Master Lease. The obligations,
conditions, and rights of Sublessor herein, as Tenant under the Master Lease,
provided in the following paragraphs of the Master Lease, are hereby granted to
and assumed by Sublessee herein - All, except paragraphs 2(a), 2(b), 4, 7,
10(a), 28, 30, 36, 40, and 41.
Breach of the above provisions of the Master Lease or failure to
perform Sublessor's obligations thereunder shall be a breach of this Sublease.
The rights of the Landlord under the above provisions of the Master Lease may be
enforced by, and are for the benefit of, both the Sublessor herein and the
Landlord under the Master Lease. Notwithstanding the foregoing, Sublessee shall
not be responsible to Master Landlord for a default by Sublessor under the
Master Lease unless such default arose from a default by Sublessee under this
Sublease.
5. Preparation of Sublease Premises. Prior to October 1, 1995,
Sublessor shall complete the renovations identified on the plans and
specifications hereto attached as "Exhibit 3" and incorporated herein by
reference. All renovations shall be subject to the terms of the Master Lease and
prior approval of the Master Landlord will be required. Sublessor shall
contribute an amount not to exceed Sixteen Thousand Five Hundred Dollars
($16,500.00) towards the cost of the renovations and Sublessee shall be
responsible for any and all costs related to the renovations in excess of this
amount. Sublessee shall be liable to Sublessor for any such excess which shall
be considered additional rent and due and payable within thirty (30) days of
receipt of a statement from Sublessor.
6. Quiet Enjoyment. Sublessee hereunder shall be guaranteed quiet
enjoyment of the Sublease Premises from Sublessor.
7. Notices. Whenever any notice, demand, approval, consent,
request, or election is given or made pursuant to this Sublease, it shall be in
writing. Communications and payments to the Sublessor shall be addressed as
follows:
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<PAGE> 49
Control Data Systems, Inc.
4201 Lexington Ave. North
Arden Hills, MN 55126
Attn: Real Estate Dept.
or to such other address as may be specified by written notice to Sublessee.
Communications to the Sublessee shall be addressed as follows:
Avid Media Group, Inc.
1306 Orleans Dr.
Sunnyvale, CA 94089
or to such other address as may be specified by written notice to Sublessor. Any
communications so addressed shall be duly served if mailed by registered or
certified mail, return receipt requested.
8. Representations and Warranties. Sublessor hereby warrants and
represents that it is not in default under the Master Lease, and that all rent
and other amounts due Landlord under the Master Lease have been paid. The
representations and warranties shall survive the termination of this Sublease.
9. Prepaid Rent. Concurrently with the execution of this
Sublease, Sublessee shall pay to Sublessor, in the amount set forth hereinabove:
(1) the full amount of the first month's rent in prepayment of the first 30
days' rent, and (2) the full amount of one month's rent, which amount shall be
held by Sublessee as a security deposit.
10. Services and Utilities. Sublessor shall provide janitorial
services to the Sublease Premises to substantially the same extent or to the
extent mutually agreed upon by Sublessee and Janitorial service, and in
substantially the same manner as these services are provided to it's own
organizations within the building. Sublessee shall pay Sublessor a monthly fee
for providing janitorial services which shall represent Sublessee's pro-rata
share of the costs of Sublessor to provide the service. Said cost shall include,
but is not limited to, the costs of labor, materials, supplies, and equipment
used to clean and maintain the building. Sublessor shall invoice Sublessee
monthly for janitorial services and Sublessee's fee shall be considered as
additional rent and shall be due with the rental payment each month during the
term of this Sublease.
Sublessor shall furnish to the Sublease Premises, during usual
business hours, reasonable air conditioning, heating and ventilation. For the
purposes hereof, "usual business hours" shall mean between the hours of 8:00 am
and 6:00 pm, Monday through Friday, except legal holidays.
Sublessor shall furnish the electrical energy necessary for
general illumination of the Sublease Premises by the existing overhead
fluorescent lighting fixtures, and for the operation of 120 and 208 volt
business machines, appliances, and lamps. In the event that Sublessee installs
electrical equipment beyond the above standard or consumes a load which exceeds
two (2) watts per rentable square foot for overhead lighting and two and
one-half (2 1/2) watts per rentable square foot for 120 and 208 convenience
outlets Sublessor may increase the
3
<PAGE> 50
Rent by a reasonable amount to compensate it for the costs incurred by it in
furnishing such additional electrical energy.
Sublessor shall be responsible for maintaining the building
foundation, roof, exterior walls, parking lot foundation, interior, and exterior
in accordance with the terms of the Master Lease.
11. Signage. Sublessee shall have the right to install vinyl
lettering on the front doors of the Sublease Premises and to use the monument
sign adjacent to the Sublease Premises lobby, subject to the terms of the Master
Lease and the consent of the Master Landlord. The cost of installation,
maintenance, and removal shall be at Sublessee's expense.
12. Parking. Sublessee shall have access to the parking areas on
a first-come, first-serve, unassigned basis per the terms of paragraph 29 of the
Master Lease.
13. Real Estate Brokers. Sublessor and Sublessee agree that
Colliers Parrish International, Inc. and Cornish & Carey Commercial are the
recognized real estate brokers representing the parties in connection with this
Sublease. Sublessor agrees to pay any commission that may be due said real
estate brokers.
14. Hazardous Materials. Sublessor represents that to the best of
its knowledge, that as of the date of this Sublease, the Sublease Premises are
free of Hazardous Materials. Sublessor agrees that Sublessee shall have no
liability or responsibility whatsoever for any Hazardous Materials on or about
the Sublease Premises which were not caused by Sublessee. Sublessor shall
indemnify, defend and hold Sublessee harmless against all claims, losses or
liabilities arising out of or in connection with the presence, use, storage,
disposal, removal or clean-up of any Hazardous Materials in or about the
Sublease Premises which were not caused by Sublessee.
SUBLESSOR: Control Data Systems, Inc.
By: /s/ Walter D. Seiler
-----------------------------------
Walter D. Seiler
Date: 9/18/95
-----------------------------------
SUBLESSEE: Avid Media Group, Inc.
By: /s/ Michael Kornet
-----------------------------------
Michael Kornet
Date: 9/15/95
-----------------------------------
4
<PAGE> 51
Landlord's Consent to Sublease
The undersigned ("Landlord"), Landlord under the Master Lease,
hereby consents to the foregoing Sublease without waiver of any restriction in
the Master Lease concerning further assignment or subletting. Landlord certifies
that, as of the date of Landlord's execution hereof, Sublessor is not in default
or breach of any provisions of the Master Lease, and that the Master Lease has
not been amended or modified except as set forth in the foregoing Sublease. In
no event shall Landlord consent to a sublease as provided herein to diminish or
alter the terms and obligations of Tenant under the Master Lease.
By: See attached consent form
-------------------------------------
Date:
-------------------------------------
Title:
-------------------------------------
5
<PAGE> 52
EXHIBIT 1
[Graphic Description of Floor Plan]
6
<PAGE> 53
IN WITNESS WHEREOF, the parties hereto have executed this
Sub-Sublease as of the date first above written.
MFI: CBOOKS:
MILLER FREEMAN, INC. CBOOKS EXPRESS
By: /s/ W. Ambrose By: /s/ Chris MacAskill
----------------------------- --------------------------
Its: Senior Vice President and CFO Its: President
----------------------------- --------------------------
Address: Address:
600 Harrison Street 3347 Shady Spring Lane
San Francisco, CA 94107 Mountain View, CA 94040
Attn: Terry Wynn Attn: Chris MacAskill
CDS: Control Data Systems, Inc.
By: /s/ W. D. Seiler
---------------------------
Its: Director Real Estate
Address:
4201 Lexington Ave. North
Arden Hills, MN 55126
Attn: R/E Dept.
7
<PAGE> 54
[Graphic Description of Floor Plan]
8
<PAGE> 55
CONSENT TO SUBLETTING
I. PARTIES AND DATE.
THIS CONSENT TO SUBLETTING ("Consent") is dated as of November
___, 1996, and is made by and among Control Data Systems, Inc., a Delaware
corporation ("Tenant"), Miller Freeman, Inc., a Delaware corporation (as
successor in interest to Avid Media Group, Inc.) ("Subtenant"), CBooks Express,
a California corporation ("Sub-Subtenant"), and The Realty Associates Fund, III,
a limited partnership (as successor in interest to The Prudential Insurance
Company of America) ("Landlord").
II. RECITALS.
A. Landlord and Tenant are parties to that certain Standard Form
Lease (the "Lease") dated June 1, 1994, for the premises located at 1306-1308
Orleans Drive, Sunnyvale, CA 94089 (the "Premises"). The capitalized terms used
and not otherwise defined herein shall have the same definitions as set forth in
the Lease.
B. Tenant and Subtenant are parties to that certain Sublease
dated September 15, 1995 (the "Sublease") covering a portion of the Premises
consisting of approximately 6,000 square feet of the Premises in the location
depicted on Exhibit "A" attached hereto (hereafter the "Subleased Premises").
Landlord previously consented to such subletting.
C. Subtenant desires to sub-sublet to Sub-Subtenant the Subleased
Premises and Subtenant and Sub-Subtenant desire Landlord and Tenant to consent
to such sub-subletting. Landlord and Tenant are willing to grant such consent,
subject to and conditioned upon the agreements, acknowledgements and
representations of Subtenant and Sub-Subtenant set forth below.
III. TERMS OF CONSENT.
A. Tenant.
For valuable consideration, receipt of which is hereby
acknowledged, Tenant hereby reaffirms the covenants and representations made by
Tenant to Landlord in that certain Consent to Subletting dated September 28,
1995.
B. Subtenant.
For valuable consideration, receipt of which is hereby
acknowledged, Subtenant:
1. Agrees:
a. that it shall not be released from its
obligations under the Sublease, including
all monetary obligations.
<PAGE> 56
b. to promptly perform, or to cause the
performance by Sub-Subtenant, of all duties,
obligations and responsibilities of
Subtenant under the Sublease.
c. that it is, by a separate agreement
("Sub-Sublease Agreement") with
Sub-Subtenant, sub-subleasing to
Sub-Subtenant the Subleased Premises,
subject and subordinate to the Lease and the
Sublease. Tenant has attached a true and
correct copy of the Sub-Sublease Agreement
hereto.
2. Represents and warrants that:
a. it has not failed to disclose to Landlord
and Tenant any information which, if known
by Landlord and Tenant, might provide
grounds for Landlord and Tenant to withhold
its consent to the sub-subletting described
herein pursuant to any of the provisions set
forth under Article XIV of the Lease.
b. neither Subtenant nor, to the best of
Subtenant's knowledge, Tenant is in default
under any term, provision or condition of
the Sublease.
C. Sub-Subtenant.
For valuable consideration, receipt of which is hereby
acknowledged, Sub-Subtenant:
1. Agrees:
a. that the Sub-Sublease Agreement, a true and
correct copy of which is attached hereto, is
expressly subject and subordinate to the
provisions of the Lease and the Sublease.
b. not to violate any of the terms, provisions,
conditions or requirements set forth in the
Lease and the Sublease, whether or not any
of the same are inconsistent with any terms
or provisions of the Sub-Sublease Agreement.
c. that it is not claiming any interest in the
Subleased Premises or the Premises other
than as a sub-subtenant under the
Sub-Sublease Agreement.
d. that if the subletting as evidenced by the
Sub-Sublease Agreement terminates by reason
of a termination of the Lease, Landlord may,
at its option by delivering written notice
to Subtenant, assume the obligations of
Subtenant
2
<PAGE> 57
under the Sub-Sublease Agreement, in which
event Sub-Subtenant shall recognize and
attorn to Landlord as if it were the
"sub-sublessor" under the Sub-Sublease.
2. Acknowledges that Landlord and Tenant have not made
any express or implied oral or written
representation or promise that:
a. future assignments or subletting will be
approved.
b. Sub-Subtenant will enjoy financial success
in operating any business on the Premises.
c. it will grant any extension of the Term or
enter into any other modification of the
Lease.
3. Acknowledges that it has been provided with a copy
of the Lease and the Sublease, as the same are
attached to the Sub-Sublease Agreement, and that it
has read the Lease and the Sublease and all
amendments and fully understands its obligations
and responsibilities under the Lease and Sublease.
4. Represents and warrants to Landlord and Tenant that
all information which it has provided to Landlord,
Tenant or Subtenant which Landlord has reviewed in
connection with its determination to consent to the
subletting described herein is true, accurate and
complete, and fairly and accurately represents the
business, condition and status of Sub-Subtenant.
5. The address of Sub-Subtenant's principal place of
business is:
3347 Shady Spring Lane
Mountain View, CA 94040
Subtenant's Contact: Chris MacAskill
IV. CONSENT.
For valuable consideration, including the agreements,
acknowledgements, and representations of Tenant, Subtenant and Sub-Subtenant set
forth above, Landlord and Tenant consent to Subtenant's sub-subletting of the
Subleased Premises to Sub-Subtenant in accordance with the Sub-Sublease
Agreement.
V. GENERAL.
A. Attorney's Fees.
The provisions of paragraph 27 of the Lease respecting attorney's
fees shall apply to this Consent.
3
<PAGE> 58
B. Authority To Execute Agreement.
Each individual executing this Consent on behalf of a partnership
or corporation represents that he or she is duly authorized to execute and
deliver this Consent on behalf of the partnership and/or corporation and agrees
to deliver evidence of his or her authority to Landlord upon request by
Landlord.
C. Governing Law.
This Consent and any enforcement of the agreements,
acknowledgments and representations set forth above shall be governed by and
construed in accordance with the laws of the State of California.
D. Counterparts.
If this Consent is executed in counterparts, each counterpart
shall be deemed an original.
4
<PAGE> 59
IN WITNESS WHEREOF, the parties hereto have executed this Consent
as of the date and year first above written.
TENANT SUBTENANT
CONTROL DATA SYSTEMS, INC., MILLER FREEMAN, INC.
a Delaware corporation a Delaware corporation
By: /s/ W.D. Seiler By: /s/ W. Ambrose
--------------------------- ---------------------------------
Name: W.D. Seiler Name: Warren Ambrose
--------------------------- ---------------------------------
Its: Director, Real Estate Its: Senior Vice President & CFO
--------------------------- ---------------------------------
SUB-SUBTENANT LANDLORD
CBOOKS EXPRESS, a California THE REALTY ASSOCIATES FUND, III
corporation a limited partnership
by: Realty Associates Fund III GP, LP
(its general partner)
by: Realty Fund III GP, Inc.
(its general partner)
By: /s/ Chris MacAskill By: signature illegible
--------------------------- ---------------------------------
Name: Chris MacAskill Name:
--------------------------- ---------------------------------
Its: President Its:
--------------------------- ---------------------------------
5
<PAGE> 60
SUBLEASE AGREEMENT
THIS SUBLEASE, made this 25th day of June 1997 by and between
Control Data Systems, Inc., a Delaware corporation, hereinafter designated
"Sublessor", and CBooks Express Inc., a California corporation, hereinafter
designated "Sublessee."
1. DEMISE OF PREMISES. In consideration of the rents and
covenants herein stipulated to be paid and performed by Sublessee, Sublessor
hereby demises and sublets to Sublessee, and Sublessee hereby takes from
Sublessor, a portion of that space presently leased by Sublessor, containing
7,635 rentable square feet hereinafter designated "Sublease Premises," under
that certain lease (herein referred to collectively as the "Master Lease") dated
June 1, 1994 and all rights, privileges, and appurtances related to such
Sublease Premises. The Sublease Premises are located at 1306 Orleans Dr.,
Sunnyvale, CA 94089 and highlighted on "Exhibit 1" attached hereto and
incorporated herein by reference. The Master Lease is attached hereto as
"Exhibit 2" and incorporated herein by reference.
2. TERM. Sublessee shall have and hold the Sublease Premises for
a term of twenty-five months (25) commencing on July 1, 1997 and terminating on
July 31, 1999. In the event Sublessor is unable to deliver possession of the
Sublease Premises to Sublessee by July 1, 1997 because Sublessor has not
substantially completed all work to be performed by it pursuant to Paragraph 5
of this Sublease Agreement, or for any other reason, Sublessor shall have no
liability to Sublessee for any damages but the commencement date shall be
deferred until the date on which Sublessor is able to deliver possession of the
Sublease Premises to Sublessee. In the event the commencement date is other than
as stated in Paragraph 2 of this Sublease Agreement, immediately after the
actual commencement date is determined it shall be confirmed by Sublessor and
Sublessee in writing.
In the event Sublessor does not deliver the Sublease Premises to
Sublessee by August 15, 1997, Sublessee, shall have the right to terminate this
Sublease Agreement upon written notice to Sublessor. Said notice shall be
provided to Sublessor no later than August 18, 1997.
Sublessee may enter upon the Sublease Premises prior to the
Commencement Date for the purpose of moving or installing Sublessee's furniture,
equipment, fixtures, business machines, or other personal property. In the event
Sublessee does so, it is hereby agreed that Sublessee shall hold Sublessor
harmless from any and all liability for any interruption or loss of Sublessee's
business or damage to Sublessee's property from any cause or occurrence
whatsoever.
3. RENTAL. The monthly rent for the Sublease Premises over the
term of this Sublease Agreement shall be as set forth in the following schedule:
LEASE PERIOD MONTHLY RENT
------------ ------------
July 1, 1997 to December 31, 1997 $ 9,543.75
January 1, 1998 to December 31, 1998 $ 9,925.50
January 1, 1998 to July 31, 1999 $10,307.25
<PAGE> 61
Sublessee agrees to pay Sublessor rent in advance, on the first
day of each calendar month during the Term. Sublessee covenants and agrees to
pay Sublessor rent at the address set forth in the notice provision of this
Sublease Agreement or at such other place as Sublessor may designate in writing.
Rent shall be payable without notice or demand, without abatement, deduction or
setoff. Rent for any portion of a month shall be prorated. If any installment of
rent or any other sums due from Sublessee shall not be received by Sublessor
within five days after receipt of written notice by Sublessee, Sublessee shall
pay Sublessor a late charge equal to six percent (6%) of such overdue amount.
Acceptance of late charge by Sublessor shall in no event constitute a waiver of
Sublessee's default with respect to such overdue amount, nor prevent Sublessor
from exercising any of the other rights and remedies granted hereunder.
4. PARAGRAPHS INCORPORATED FROM THE MASTER LEASE. With regards to
the Sublease Premises from the commencement date of this Sublease Agreement to
it's termination, the obligations, conditions, and rights of Sublessor herein,
as Tenant under the Master Lease, provided in the following paragraphs of the
Master Lease, are hereby granted to and assumed by Sublessee herein - All
paragraphs, except paragraphs 2, 3, 4, 5, 7, 10(a), 19, 28, 30, 36, 40, 41, and
43. Breach of the above provisions of the Master Lease or failure to perform
Sublessor's obligations thereunder shall be a breach of this Sublease. The
rights of the Lessor under the above provisions of the Master Lease may be
enforced by, and are for the benefit of, both the Sublessor herein and the
Lessor under the Master Lease.
5. PREPARATION OF PREMISES. Sublessee accepts the Sublease
Premises "as is" except that prior to July 15, 1997, Sublessor shall, at it's
expense, complete the renovations identified on the plans and specifications
attached hereto as "Exhibit 3" and "Exhibit 4" and incorporated herein by
reference. All renovations shall be subject to the terms of the Master Lease and
prior approval of the Master Landlord will be required. Sublessee agrees to
comply with the terms and conditions of Paragraph 9 of the Master Lease with
regards to all alterations it may make.
6. QUIET ENJOYMENT. Sublessee hereunder shall be guaranteed quiet
enjoyment of the premises.
7. NOTICES. Whenever any notice, demand, approval, consent,
request, or election is given or made pursuant to this Sublease, it shall be in
writing. Communications and payments to the Sublessor shall be addressed as
follows:
Control Data Systems, Inc.
4201 Lexington Ave. North
Arden Hills, MN 55126
Attn: Real Estate Director
2
<PAGE> 62
or to such other address as may be specified by written notice to Sublessee.
Communications to the Sublessee shall be addressed as follows:
CBooks Express, Inc.
1308 Orleans Dr.
Sunnyvale, CA 94089
Attn: Chris MacAskill
or to such other address as may be specified by written notice to Sublessor. Any
communications so addressed shall be duly served if mailed by registered or
certified mail, return receipt requested.
8. REPRESENTATIONS AND WARRANTIES. Sublessor hereby warrants and
represents that it is not in default under the Master Lease, and that all rent
and other amounts due Landlord under the Master Lease have been paid. The
representations and warranties shall survive the termination of this Sublease.
9. SECURITY DEPOSIT. Concurrently with the execution of this
Sublease, Sublessee shall pay to Sublessor the full amount of one month's rent
of Nine Thousand Five Hundred Forty-Three and 75/100 dollars ($9,543.75) which
shall be held by Sublessor as a security deposit. If Sublessee fails to pay rent
or other charges due hereunder, or otherwise defaults with respect to any
provisions of this Sublease, Sublessor may use, apply or retain all or any
portion of said deposit for the payment of any rent or other charge in default
for the payment of any other sum to which Sublessor may become obligated by
reason of Sublessee's default, or to compensate Sublessor for any loss or damage
which Sublessor may suffer thereby. If Sublessee performs all of Sublessee's
obligations hereunder, said deposit shall be returned, without payment of
interest, to Sublessee at the expiration of the term hereof, and after Sublessee
has vacated the Premises.
10. SERVICES & UTILITIES. Sublessor shall provide janitorial
services to the Sublease Premises to substantially the same extent and in
substantially the same manner as these services are provided to it's own
organizations within the building.
Sublessor shall furnish to the Sublease Premises, during usual
business hours, reasonable heating, ventilation, and air conditioning. For the
purposes hereof, "usual business hours" shall mean between the hours of 8:00
a.m. and 6:00 p.m, Monday through Friday and 9:00 a.m. and 1:00 p.m. on
Saturday, legal holidays excepted. If and when requested to do so by Sublessee
at least twenty-four (24) hours in advance, Sublessor shall furnish reasonable
heating, ventilation, and air conditioning to the Sublease Premises at times
other than usual business hours. Sublessor shall invoice Sublessee for such
after-hours heating, ventilation, and air conditioning at the rate of Eight
Dollars ($8.00) per hour per HVAC zone utilized, and Sublessee shall pay each
such invoice as additional rent hereunder within thirty (30) days after receipt
thereof. Sublessor reserves the right to increase this hourly rate from time to
time to reflect increases in it's costs to provide the services.
Sublessor shall furnish the electrical energy necessary for
general illumination of the Sublease Premises by the existing overhead
fluorescent lighting fixtures, and for the operation of 120 and 208 volt
business machines, appliances, and lamps. In the event that
3
<PAGE> 63
Sublessee installs electrical equipment beyond the above standard or consumes a
load which exceeds two (2) watts per rentable square foot for overhead lighting
and two and one-half (2 1/2) watts per rentable square foot for 120 and 208 volt
convenience outlets, Sublessor may increase the Rent by a reasonable amount to
compensate it for costs incurred in furnishing such additional electrical energy
11. PARKING. Sublessee shall have access to the parking areas on
a first-come, first-served, unassigned basis per the terms of Paragraph 29 of
the Master Lease.
12. HOLDING OVER. Sublessor and Sublessee agree that in no event
shall Sublessee hold over in the Sublease Premises or in any portion thereof
beyond the term of this Sublease. If Sublessee holds over beyond the term of
this Sublease, Sublessee hereby agrees to assume all financial and legal
liabilities incurred by Sublessor as a result of Sublessee's holding over. Such
liabilities may include, but are not limited to, rent, additional rent, and
damages for all space leased by Sublessor as Tenant under the Master Lease.
13. RENEWAL OPTION. In the event Sublessor elects to exercise the
Option to Extend contained in paragraph 41 of the Master Lease, Sublessee shall
be granted first right of refusal to sublease the Sublease Premises at terms
acceptable to Sublessor.
14. REAL ESTATE BROKERS. Sublessor and Sublessee agree that
Colliers Parrish International, Inc. is the recognized real estate brokers
representing the parties in connection with this Sublease. Sublessor agrees to
pay any commission that may be due said real estate brokers.
SUBLESSOR: Control Data Systems, Inc.
By:
-------------------------------
Walter D. Seiler
Date:
SUBLESSEE: CBooks Express, Inc.
By: /s/ Chris MacAskill
-------------------------------
Date:
-------------------------------
AGREED TO BY LESSOR UNDER THE MASTER LEASE:
By:
-------------------------------
Date:
-------------------------------
4
<PAGE> 64
EXHIBIT 1
[Graphic - Description of Site Plan]
5
<PAGE> 65
EXHIBIT 3
[Graphic - Description of Site Plan]
6
<PAGE> 66
EXHIBIT 4
RENOVATIONS TO SUBLEASE PREMISES
1. Remove approximately nine linear feet of existing partition running
between corridor and office. Repair remaining partitions and floor
covering to match existing.
2. Remove existing door and frame and repair partitions and floor covering to
match existing.
3. Install double fire doors and frame as shown. Use doors removed from #4
below.
4. Remove existing double fire doors and frame and repair partitions and
floor covering to match existing.
5. Provide and install approximately 35 linear feet of drywall partition as
shown on sketch. Partition should extend from raised floor to dropped
ceiling. Finish to match existing. Rewire lights in computer room to be
controlled by separate switches at each entrance.
6. Remove existing double doors and frame and install partitions to close
opening. Finish to match existing.
7
<PAGE> 67
CONSENT TO SUBLETTING
I. PARTIES AND DATE.
THIS CONSENT TO SUBLETTING ("Consent") is dated as of August 7,
1997, and is made by and among Control Data Systems, a Delaware
corporation ("Tenant"), CBooks Express Inc., a California corporation
("Subtenant"), The Realty Associates Fund III, L.P., ("Landlord").
II. RECITALS.
A. Landlord and Tenant are parties to that certain Standard Form
Lease (the "Lease") dated June 1, 1994, for the Premises known as 1306 Orleans
Drive, Sunnyvale, California. The capitalized terms used and not otherwise
defined herein shall have the same definitions as set forth in the Lease.
B. Pursuant to Article XIV of the Lease, Tenant has a limited
right, subject to the consent of Landlord and conditioned upon certain
requirements and payments to Landlord as set forth therein, to sublet all or a
portion of the Premises.
C. Tenant desires to sublet to Subtenant a portion of the
Premises consisting of approximately 7,635 square feet of the Premises in the
location depicted on Exhibit "A" attached hereto (hereafter the "Subleased
Premises"), and Tenant and Subtenant desire Landlord to consent to such
subletting. Landlord is willing to grant such consent, subject to and
conditioned upon the agreements, acknowledgments and representations of Tenant
and Subtenant set forth below.
III. TERMS OF CONSENT.
A. Tenant.
For valuable consideration, receipt of which is hereby
acknowledged, Tenant:
1. Agrees:
a. that it shall not be released from its
obligations under the Lease, including all
monetary obligations.
b. to promptly perform, or to cause the
performance by Subtenant, of all duties,
obligations and responsibilities of Tenant
under the Lease.
c. that it is, by a separate agreement
("Sublease Agreement") with Subtenant,
subleasing to Subtenant the Subleased
<PAGE> 68
Premises, subject and subordinate to the
Lease. Tenant has attached a true and
correct copy of the Sublease Agreement
hereto.
d. to promptly pay to Landlord all "Bonus
Value" which Tenant may receive arising out
of the subletting consented to hereunder, in
accordance with Section 14.5 of the Lease.
2. Represents and warrants that:
a. it has not failed to disclose to Landlord
any information which, if known by Landlord,
might provide grounds for Landlord to
withhold its consent to the subletting
described herein pursuant to any of the
provisions set forth under Article XIV of
the Lease.
b. neither Tenant nor, to the best of Tenant's
knowledge, Landlord is in default under any
term, provision or condition of the Lease.
B. Subtenant
For valuable consideration, receipt of which is hereby
acknowledged, Subtenant:
1. Agrees:
a. that the Sublease Agreement, a true and
correct copy of which is attached hereto, is
expressly subject and subordinate to the
provisions of the Lease.
b. at the request of Landlord, to pay over to
Landlord all Rent and other sums due and
payable by Subtenant under the Sublease
Agreement. In no event shall Sublessee be
required to pay Rents due under this
Agreement to both Tenant and Landlord.
c. not to violate any of the terms, provisions,
conditions or requirements set forth in the
Lease, whether or not any of the same are
inconsistent with any terms or provisions of
the Sublease Agreement.
d. that it is not claiming any interest in the
Subleased Premises or the Premises other
than as a subtenant under the Sublease
Agreement.
e. that if the subletting as evidenced by the
Sublease Agreement terminates by reason of a
termination of the Lease, Landlord may, at
its option by delivering written
2
<PAGE> 69
notice to Subtenant, assume the obligations of
Tenant under the Sublease Agreement, in which
event Subtenant shall recognize and attorn to
Landlord as if it were the "sublessor" under the
Sublease.
2. Acknowledges that Landlord has not made any express
or implied oral or written representation or
promise that:
a. future assignments or subletting will be
approved.
b. Subtenant will enjoy financial success in
operating any business on the Premises.
c. it will grant any extension of the Term or
enter into any other modification of the Lease.
3. Acknowledges that it has been provided with a copy
of the Lease, together with all amendments, if any,
and that it has read the Lease and all amendments
and fully understands its obligations and
responsibilities under the Lease.
4. Represents and warrants to Landlord that all
information which it has provided to Tenant or
Landlord which Landlord has reviewed in connection
with its determination to consent to the subletting
described herein is true, accurate and complete,
and fairly and accurately represents the business,
condition and status of Subtenant.
5. The address of Subtenant's principal place of
business is:
---------------------------------------------------
---------------------------------------------------
Subtenant's Contact:
---------------------------------------------------
Telephone:
-----------------------------------------
IV. CONSENT.
For valuable consideration, including the agreements,
acknowledgments, and representations of Tenant and Subtenant set forth
above, Landlord consents to Tenant's subletting of the Subleased
Premises to Subtenant in accordance with the Sublease Agreement.
3
<PAGE> 70
V. GENERAL.
A. Attorney's fees
The provisions of the Lease respecting attorney's fees shall
apply to this Consent.
B. Authority to Execute Agreement
Each individual executing this Consent on behalf of a partnership
or corporation represents that he or she is duly authorized to execute and
deliver this Consent on behalf of the partnership and/or corporation and agrees
to deliver evidence of his or her authority to Landlord upon request by
Landlord.
C. Governing Law
This Consent and any enforcement of the agreements,
acknowledgments and representations of Assignor and Assignee set forth above
shall be governed by and construed in accordance with the laws of the State of
California.
D. Counterparts
If this Consent is executed in counterparts, each counterpart
shall be deemed an original.
4
<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have executed this Consent
as of the date and year first above written.
TENANT SUBTENANT
CONTROL DATA SYSTEMS, INC. CBOOKS EXPRESS, INC.,
a Delaware corporation a California corporation
By: /s/ W. D. Seiler By: /s/ Chris MacAskill
--------------------------- ------------------------------
Name: W.D. Seiler Name: Chris MacAskill
--------------------------- ------------------------------
Its: Director, Real Estate Its: CEO 8/27/97
--------------------------- ------------------------------
LANDLORD
THE REALTY ASSOCIATES FUND III, L.P.
By: Realty Associates Fund III, GP,
Limited Partnership (its general
partner)
By: Realty Fund III GP, Inc.
(its general partner)
By:
-----------------------------------
Michael A. Ruane, Chairman or
Arthur I. Segel, President
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