EXHIBIT 10.13
SUBLEASE AGREEMENT
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1. PARTIES
This SUBLEASE AGREEMENT ("Sublease") is entered into on this 21st of August
1997 by and between Tesseract Corporation ("Sublessor"), Strategic Interactive
Group, Inc. ("Sublessee"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. ("Parent"), as the
guarantor for Sublessee, as a sublease under the lease dated November 22, 1991,
entered into by Mosten Management Company, Inc., as Landlord, and Tesseract
Corporation as Tenant, attached as Exhibit A (the "Master Lease").
In consideration of mutual covenants set forth herein and for other good
and valuable consideration, Sublessor and Sublessee (collectively, the
"Parties") agree as follows:
2. PROVISIONS CONSTITUTING SUBLEASE
This sublease is subject to all of the terms and conditions of the Master
Lease in Exhibit A and Sublessee shall perform the obligations of Sublessor and
Tenant in said lease, to the extent said terms and conditions are applicable to
the premises subleased pursuant to this sublease.
Each party hereto agrees to perform and comply with the terms, provisions,
covenants and conditions of the Master Lease, and not to do or permit anything
to be done which would result in a default under the Master Lease, or cause the
Lease to be terminated or forfeited.
Each party hereto agrees not to breach or violate any of the terms,
covenants and conditions contained in the Master Lease.
Sublessor represents and covenants that Sublessor is not currently in
default of the Master Lease.
Any insurance carried by Landlord, Sublessor, or Sublessee with respect to
the Premises and property therein or occurrences thereon shall, if it can be so
written without additional premium, or with an additional premium which the
requesting party agrees to pay, include a clause or endorsement denying to the
insurer right of subrogation against that party to the extent rights have been
waived by the insured prior to occurrence of injury or loss. Each party,
notwithstanding any provisions of this Sublease to the contrary, hereby waives
any rights of recovery against the other for property covered by insurance
containing such clause or endorsement to the extent of the indemnification
received thereunder.
Notwithstanding any provision of the Master Lease or the Sublease to the
contrary, Sublessor shall remain primarily liable for all of its obligations
under the Master Lease.
3. PREMISES
Sublessor hereby sublets to Sublessee and Sublessee hereby sublets from
Sublessor the leased premises of 19,430 rentable square feet (the "Premises"),
representing the entire 20th Floor of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as shown on Exhibit B
from the Commencement Date of this Sublease until April 30, 2002.
4. TERM
The term of this sublease shall commence on the Commencement Date and end
on the 30th day of April 2002.
Commencement Date shall occur no later than 45 days following mutual
execution of this Sublease and Landlord consent. At the option of Sublessee,
Commencement Date can occur sooner than the 45 day period if Sublessee notifies
Sublessor in writing of the date of taking occupancy.
5. RENTAL
Sublessee shall pay to Sublessor, without deduction, set off, prior notice
or demand, as rental, the sum of $48,575.00 per month, payable in advance in
lawful money of the United States of America on the first day of each month for
the period starting with the Commencement Date through April 2002. Should the
Commencement Date be earlier than October 1, 1997, Sublessee shall pay the
prorata rent for the period starting with the Commencement date through October
1, 1997.
Payment for rent and any other obligations under the Sublease shall be
delivered to Sublessor's offices on or before the first day of each calendar
month. Sublessee agrees, in the event of default by Sublessee, Sublessor is
entitled to all rights and remedies as defined in paragraphs 3d and 3e of the
Master Lease to cure any such default.
6. TENANT IMPROVEMENTS
Sublessor delivers the Premises to Sublessee in "as-is" condition with the
exception of walls which shall be spackled and painted where necessary and the
carpets which shall be shampooed. Subleases agrees that any and all additional
and subsequent improvement work in the Premises be approved in writing by
Landlord and consented to by Sublessor; such consent will not be unreasonably
withheld or delayed.
Sublessee shall be responsible for any and all modifications to the
existing data and voice wiring and the security access to the Premises.
Sublessor shall assist with any coordination with Sublessee's representatives
where modifications and/or additions to the existing are installed by
Sublessee.
7. BASE YEAR AND OPERATING EXPENSE ADJUSTMENT
For purposes of this Sublease the "Base Year" shall be calendar year 1998.
Sublessee agrees to pay Sublessor, upon demand, Sublessee's prorata share of
increases in Building Operating Costs and Property Taxes over the Base Year.
Sublessee's percentage equals 6.25% of the Building square footage. Any utility
expenses passed on by Landlord for operating equipment such as HVAC outside of
business hours or normal usage as these costs pertain to the Premises shall be
passed on to Sublessee.
8. DEPOSIT
A security deposit of $ 48,575.00 shall be provided to Sublessor by Sublessee
on or before the Commencement Date.
9. FURNITURE
Sublessee agrees to purchase from Sublessor certain workstation and freestanding
furniture items as listed in Exhibit C for the sum of $ 70,000.00 due and
payable on the Commencement Date.
10. GUARANTEE
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc., ("Parent"), the parent corporation of Sublessee
joins in this Lease Agreement for the purpose of guaranteeing the duties and
obligations of Sublessee. En the event of a default by Sublessee under this
Sublease Agreement and such default is not cured within five (5) days of
written notice provided by Sublessor to Sublessee, Sublessor will send written
notice of default to Parent. Parent shall immediately cure such default. If such
default is not cured within five(5) days, Sublessor shall have full recourse
against Parent for all actual damages sustained by Sublessor under the terms of
this Sublease.
11. RIGHT OF FIRST OPTION/ADDITIONAL SPACE
Sublessor is actively subleasing space on the 19th Floor and Sublessee shall
have a First Right of Refusal on the entire remaining available space on
the 19th, approximately 5,700 rentable square feet. When Sublessor has agreed in
writing with a prospective tenant ("Prospect") on terms of a sublease on said
space, Sublessor shall provide Sublessee written notice of its intent to enter
into said sublease including a document of evidence of terms and rent payments
agreed upon. From the date of this notice, Sublessee shall have five (5) working
days to respond in writing that it intends to enter into a sublease under the
same terms and conditions as agreed to by Sublessor and Prospect. Unless
Sublessor receives Sublessee's response within five (5) working days, the First
Right of Refusal shall be considered expired.
12. OPTION TO RENEW
At the end of this sublease agreement or Master Lease ("Master Lease Expiration
Date"), Sublessee shall have no options to extend.
13. USE
Lessee shall use the Premises for general office purposes and for no other
purpose without the prior written consent of Sublessor.
Sublessee's business shall be established and conducted throughout the term
hereof in a first class manner. Sublessee shall not use the Premises for, or
carry on, or permit to be carried on, any offensive, noisy or dangerous trade,
business, manufacture or occupation nor permit any auction sale to be held or
conducted on or about the Premises. Sublessee shall not do or suffer anything to
be done upon the Premises which will cause structural injury to the premises or
the building of which the same form a part. The Premises shall not be overloaded
and no machinery, apparatus or other appliance shall be used or operated in or
upon the premises which will injure, vibrate or shake the Premises or the
building of which it is part. No use shall be made of the Premises which will in
any way impair the efficient operation of the sprinkler system (if any) within
the building containing the Premises. No musical instrument of any sort, or any
noise making devise will be operated or allowed upon the premises for the
purpose which will increase the existing rate of insurance upon the building in
which the Premises are located, or cause a cancellation of any insurance policy
covering the building or any part thereof.
If any act on the part of Sublessee or use of the Premises by Sublessee
shall cause, directly or indirectly, any increase of Sublessor's insurance
expense, said additional expense shall be paid by Sublessee to Sublessor upon
demand. No such payment by Sublessee shall limit Sublessor in the exercise of
any other rights or remedies, or constitute a waiver of Sublessor's right to
require Sublessee to discontinue such act or use.
14. ENTRY BY SUBLESSOR
Sublessor reserves the reasonable right to inspect Sublessee's Premises
during business hours and with prior notice to Sublessee.
15. REPAIR AND MAINTENANCE
Sublessee shall use the Premises and any other items which are made
available by Sublessor to Sublessee during the term of this Sublease in a normal
and business-like manner. Sublessee shall return the Premises and such items at
the end of the term to Sublessor in the same condition as on the Commencement
Date, excluding normal wear and tear.
16. ALTERATIONS
Any and all alteration to the Premises shall be reviewed and approved by
Sublessor prior to any such alteration being performed. Such approval shall not
be unreasonably withheld or delayed. Sublessee is responsible for any Landlord-
assessed
costs for alterations incurred at Sublessee's sole option, including any costs
at the end of this Sublease as mandated by Landlord.
17. BROKERS
Sublessor and Sublessee warrant that ▇▇▇▇▇▇▇ & Wakefield acted as
Sublessor's only broker and that TRI Commercial acted as Sublessee's only
broker. Sublessor shall provide TRI Commercial with a real estate brokerage
commission equal to $1.00 per rentable square foot per year payable on the
Commencement Date. The same schedule shall remain in effect for any additional
space Sublessee leases from Sublessor at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
18. CONFLICT WITH MASTER LEASE
Any and all conflicts between the Master Lease and this Sublease shall be
resolved per the Master Lease.
19. NOTICES OF DEFAULT
Sublessor agrees to notify Sublessee of any event of default by Sublessee
within five (5) days of default or notice of default received by Sublessor from
Landlord. If Sublessee's default remains uncured for five (5) days from date of
notice, Sublessor shall notify Parent of such default.
20. PARKING
Unless Subleases is in default hereunder, and subject to any and all
restrictions placed upon Sublessor by Landlord in the Master Lease, Sublessee
shall be entitled to park six (6) automobiles in the Building's parking garage,
subject to all of the rules and regulations applicable to such parking as are
promulgated by Landlord and the Garage Operator (the "Operator") and to any
restrictions or regulations at any time imposed by the City and County of San
Francisco on Landlord's ability to offer such parking. The rental rate for such
parking shall be equal to the rate from time to time charged by the Operator or
Landlord to the public for comparable parking privileges in the building and
shall be paid directly by Sublessee to the Operator as directed in the
Operator's sole discretion.
21. RIGHT TO SUBLEASE
Pursuant to the Letter Agreement dated August 13, 1997 by and between
Mosten Management Company, Inc. ("Landlord"), Tesseract Corporation
("Sublessor"), Strategic Interactive group, Inc. ("Sublessee"), and ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc. ("Parent"), Sublessee shall be entitled to sublease or
assign all or a portion of the Premises (including any additional premises
Sublessee may sublease from Sublessor at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ during the term of
the Sublease) with the consent of Landlord and Sublessor, which shall not be
unreasonably withheld or delayed.
22. ADDRESS FOR NOTICES
Sublessor's address for notices: Tesseract Corporation
President's ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sublessee's address for notices: Strategic Interactive Group, Inc.
Attn: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, Vice-President
Director of Finance & Operations
The Prudential Tower
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Parent's address for notices: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Inc.
The Prudential Tower
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Sublessor: Sublessee: Parent:
/s/ [ILLEGIBLE]^^ /s/ [ILLEGIBLE]^^
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9/21/97
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The undersigned, Landlord under the Master Lease, hereby consents to the
subletting of Premises on the terms and conditions contained in this sublease.
This consent shall apply only to this sublease and shall not be deemed to be a
consent to any other sublease.
Landlord:
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EXHIBIT "C"
Strategic Interactive Group
Furniture Proposal
Everything is standard except where noted on the floor plan.
68 Steelcase Workstations
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. Inside Cubes: Standard with 3 drawer file cabinet
. Window Cubes: Standard with 2 drawer file cabinet
10 Manager Offices: Standard Setup, black cabinet, 3 shelf bookcase
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3 Corner Offices: 1. 2 oval table, 1 round table, 1-4 drawer file cabinet
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2. 2 oval table, 1 round table, 1-4 drawer file cabinet
3. Wooden executive furniture, bookcase, 1-4 drawer cabinet,
6 chairs, 1 conference table
Reception: Reception Desk, Sectional chairs
Training Room: 8 two drawer file cabinets, 6 round tables, 4 computer tables
3 oval tables - located north side
Computer Room: patch panels for RJ45 ethernet on 20th floor
100 ▇▇▇▇▇▇ ▇▇▇▇▇▇ chairs
Conference Room 20A: Conference table (16' long x 54" wide), 14 streamline
chairs
Conference Room 20B: Conference table (9' long x 42" wide), 6 streamline
chairs
EXHIBIT "B"
[DIAGRAM APPEARS HERE]
[LETTERHEAD OF TRI COMMERCIAL APPEARS HERE]
August 13, 1997
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ Beardaley
▇▇▇▇▇▇▇ & Wakefield of California, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Letter Agreement
Dear ▇▇▇▇ and ▇▇▇▇▇:
Per your request, we have prepared the following Letter Agreement which will
modify the Assignment and Subletting provision of the Master Lease between
Mosten Management Company, Inc., and Tesseract Corporation as that Master Lease
pertains to the proposed sublease between Tesseract Corporation (Sublessor) and
Strategic Interactive Group (Sublessee). The change shall be incorporated into
the referenced proposed sublease.
The agreement is as follows:
Section 26(e) as found on page 28 of the Master lease dated November 22, 1991 by
and between Mosten Management Company, Inc., and Tesseract Corporation is hereby
deleted and without legal effect as it pertains to the rights and duties of
Mosten Management Company, Inc., U.B.S. Asset Management and Tesseract
Corporation in the sublease document dated August 21, 1997 between Strategic
Interactive Group (Sublessee) and Tesseract Corporation.
The sublease agreement dated 8/21/97 by and between Tesseract Corporation
(Sublessor) and Strategic Interactive Group (Sublessee) for space at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ shall include the following paragraph:
"Pursuant to the Letter Agreement dated August 11, 1997 by and between
Mosten Management Company, Inc. (Landlord), Tesseract Corporation
(Tenant/Sublessor) and Strategic Interactive Group (Sublessee), Sublessee
shall be entitled to sublease or assign all or a portion of the subleased
premises (including any additional premises sublessee may sublease from
Sublessor at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ during the term of the sublease) with the
consent of Mosten Management Company, Inc., and Tesseract Corporation which
shall not be unreasonably withheld or delayed.
It is further agreed and understood that this consent does not constitute
Mosten Management Company, Inc.'s official and final consent to the
proposed sublease."
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
August 13, 1997
Page 2
AGREED AND ACCEPTED:
Mosten Management Company, Inc. Strategic Interactive Group
By:/s/ [ILLEGIBLE]^^ By: /s/ [ILLEGIBLE]^^
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Dated: 8/18/97 Dated: 8/18/97
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Tesseract Corporation
By: /s/ [ILLEGIBLE]^^
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Dated: 8/19/97
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Thank you for your attention to this matter.
Sincerely,
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Executive Vice President
JWC/mz
cc: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Mr. ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
CONSENT TO SUBLEASE
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The undersigned, MOSTEN MANAGEMENT COMPANY, INC., a Delaware corporation,
the landlord ("Landlord") under that certain Office Lease, dated November 22,
1991, (the "Master Lease") hereby consents to that certain Sublease, dated
August 11, 1997 by and between Tesseract Corporation ("Sublessor") and Strategic
Interactive Group ("Subtenant"), of the Premises described in the Master Lease.
Nothing contained in this Consent shall or shall be deemed in any way to:
1. Constitute a waiver, amendment or modification of any term or condition
of the Master Lease, including, without limitation, the restrictions in the
Master Lease against further assignment or subletting by the Subtenant;
2. Create a contractual or other direct relationship between Subtenant and
Landlord;
3. In any way limit the obligations of Sublessor or the rights of Landlord
under the Master Lease;
4. Constitute approval or acceptance by landlordof any terms or conditions
contained in the Sublease; or
5. Constitute Landlord's consent to any future or additional subleases of
any portion of the Premises covered by the Master Lease.
A copy of the Sublease to which this Consent applies is attached to this
Consent as Exhibit A.
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This consent was executed as of this 22 day of August 1997.
MOSTEN MANAGEMENT COMPANY, INC.
a Delaware corporation
By /s/[ILLEGIBLE]
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Its ____________________________________________