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EXHIBIT 10.5
SUBLEASE AGREEMENT
THIS SUBLEASE AGREEMENT ("Sublease"), made as of the 2nd day of December,
1998 between ONDISPLAY, INC., a Delaware corporation ("Sublessee") and ▇▇▇▇▇
HOME EQUITY CORPORATION, an Indiana corporation ("Sublessor").
WHEREAS, Sublessor is the Lessee under that certain Second Lease Addendum
("Addendum") (attached hereto as Exhibit "A" and made a part hereof by reference
thereto), dated June 24, 1997 to that certain Lease Agreement ("Master Lease"),
(attached hereto as Exhibit "B" and made a part hereof by reference thereto),
dated October 12, 1995, where Sunset Development Company, the Lessor, leased to
Sublessor approximately 13,140 rentable square feet of space on the third floor
in a building known as ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇ in ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Premises").
WHEREAS, Sublessee desires to sublease from Sublessor the Premises and
certain items of furniture, fixtures, and equipment ("Personal Property"), and
WHEREAS, the Lessor under the Master Lease shall consent to this Sublease
by executing the "Consent of Lessor" (attached hereto as Exhibit "D" and made a
part hereof by reference thereto).
NOW, THEREFORE, for valuable consideration, the receipt, adequacy and
sufficiency of which is hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Demise. Sublessor leases to Sublessee, and Sublessee leases from
Sublessor the (a) Premises which are more particularly described in the
Addendum, and (b) the Personal Property more fully described in Exhibit "C".
2. Guaranty. [Intentionally Deleted]
3. Use. the Premises and Personal Property shall be used and occupied
only for general office use or any other use which is reasonably permitted under
the terms of the Master Lease and for no other purpose.
4. Subject to Master Lease. This Sublease is a sublease by the Sublessor
under the provisions of, and is subject and subordinate to, all of the terms and
conditions of the Master Lease which are incorporated herein by reference and
unless otherwise modified or excluded herein, Sublessee is entitled to the
rights and benefits conferred by the master Lease. All undefined capitalized
terms used herein shall have the meanings ascribed to such terms as set forth in
the Master Lease.
5. Term.
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(a) Commencement Date. The Sublease term shall begin on January 15, 1999
(the "Commencement Date"), and shall continue until midnight on July 30, 2002
(the "Term"). The Sublessor shall deliver the Premises and Personal Property to
the Sublessee on or before December 25, 1998 (the "Delivery Date"), solely for
the purpose of preparing the Premises for Sublessee's use and occupancy
("Pre-Occupancy Period"). In the event that Sublessee reasonably commences
utilizing the Premises for business purposes during this Pre-Occupancy Period,
Base Rent shall commence as of that date. In the event Landlord does not consent
to this Sublease, and/or Sublessor does not deliver the Premises and Personal
Property on or before the Delivery Date, Sublessee shall have a minimum
Pre-Occupancy Period of seven (7) days and Base Rent and Operating Costs shall
not commence until the end of said Pre-Occupancy Period.
(b) Delay in Delivery. In the event that Sublessor is unable to deliver
the Premises on the Delivery Date, Rent shall not due and payable until the
occurrence of delivery. In the event that delivery is delayed for thirty (30)
days beyond the anticipated Commencement Date, Sublessee shall have the right
to terminate this Sublease, by providing Sublessor with written notice of said
termination within fifteen (15) days after the end of said thirty (30) day
period. Upon receipt of said notice of termination, Sublessor shall return all
monies previously paid by Sublessee to Sublessor and the parties shall have no
further rights, responsibilities or obligations toward each other.
(c) Termination of Master Lease. In the event Sublessor's right to occupy
the Premises is terminated at any time following execution of this Sublease as
a result of the termination or expiration of the Master Lease, this Sublease
shall terminate upon the effective terminate date of the Master Lease after
prior written notice and be of no further force and effect, and except for any
indemnity obligations and Sublessee's obligations to remove its personal
property from the Premises (excluding Sublessor's Personal Property as defined
in Exhibit C), the parties hereto shall be released from all duties,
obligations, liabilities and responsibilities under this Sublease.
(d) Option to Extend. Sublessee shall have no right or option to extend
the term of this Sublease beyond the expiration of the original Term.
(e) Early Termination by Sublessor. At any time after May 1, 2000,
Sublessee shall have a continuing right to terminate this Sublease provided,
Sublessee: (i) provides Sublessor with six (6) months advance written notice of
its intent to terminate, and (ii) pays, concurrently with said notice, to
Sublessor the sum of Seventy Eight Thousand Eight Hundred and Forty dollars
($78,840.00) as an early termination penalty, and (iii) Sublessee is not in
default of any of the provisions of this Sublease at the time Sublessee
provides said notice or on the effective date of the early termination.
6. Rent.
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(a) Base Rent. During the Term, Sublease shall pay annual rent of Three
Hundred Fifteen Thousand Three Hundred Sixty dollars and 00/100 ($315,360.00)
to Sublessor, payable in equal monthly installments of Twenty-six Thousand Two
Hundred and Eighty and 00/100 ($26,280.00) with such rent due in advance,
beginning with the Commencement Date and on the first day of each month
thereafter. If Commencement Date is any other day than the first day of a
month, the first monthly installment shall be prorated. Sublessee shall mail
the monthly rental payments, in advance, to the Sublessor, or to such other
person, firm or place as the Sublessor may from time to time, designate in
writing at least thirty (30) days in advance of any rental payment date.
(b) Taxes. Sublease shall be responsible for the reporting and payment
when due of any tax directly related to ownership or operation of its business.
(c) Advance Rent. Concurrently with Sublessee's execution of this
Sublease, Sublessee shall pay to Sublessor the sum of Twenty Six Thousand Two
Hundred and Eighty Dollars ($26,280.00) ("Advance Rent") to be applied against
the first full month's Base Rent when it becomes due.
7. Security Deposit. Upon the execution of this Sublease by Sublessee,
Sublessee shall deposit with Sublessor the sum of Seventy Eight Thousand Eight
Hundred and Forty dollars ($78,840.00) (the "Security Deposit"). The Security
Deposit shall be held by Sublessor as security for the faithful performance by
Sublessor of all of the terms, covenants and conditions of this Sublease to be
performed by Sublessee during the Term. If Sublessee defaults with respect to
any provision of this Sublease, including the provisions relating to the payment
of any Base Rent or Operating Costs, Sublessor may (but shall not be required
to) use, apply or retain all or any part of the Security Deposit to cure such
default or to compensate Sublessor for any other loss or damage which Sublessor
may suffer by reason of Sublessee's default. If any portion of the Security
Deposit is so used or applied, Sublessee shall, within ten (10) days after
written demand for Sublessor, deposit with Sublessor an amount sufficient to
restore the Security Deposit to its original amount. Sublessee shall not be
entitled to interest on such deposit. If Sublessee is in not in default of any
of the provisions of this Sublease, Sublessor agrees to apply the sum of Twenty
Six Thousand Two Hundred Eighty dollars ($26,280.00) against the Base Rent due
for the month of January 2000 when it becomes due. If Sublessee shall fully and
faithfully perform every position of this Sublease as required to be performed
by it under the terms of this Sublease and the Master Lease, the Security
Deposit or any balance thereof shall be returned to Sublessee no later than
thirty (30) days after the expiration of the Term and Sublessee's vacation of
the premises.
8. Operating Costs. Sublessee shall, based on the square footage of the
Premises calculated by dividing the rentable square footage of the Premises by
the rentable
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square footage of the building, pay for its pro-rata share of any increases in
actual operating costs over a Base Year of 1999. For calculation purposes,
Operating Costs pass through increases shall not exceed five (5%) over the
immediately proceeding year.
9. Condition of Premises and Personal Property, Maintenance and
Repair, Alterations.
(a) Sublessee agrees that its act of taking possession will be an
acknowledgement that the Premises and Personal Property are in tenantable and
good condition and that Sublessee takes the Premises and Personal Property on an
"as-is" basis. Sublessee shall, at its sole cost and expense as required by the
terms of the Master Lease, keep and maintain the Premises and Personal Property
(excepting Landlord's obligations in Section 7 and Section 8 of the Master
Lease), including but not limited to windows, doors, and the interior of
Premises in good order, condition and repair. On the termination of this
Sublease, Sublessee shall surrender to Sublessor the Premises, Personal Property
and all improvements thereto, excepting personal property and trade fixtures
owned by the Sublessee, in the same condition as when received, reasonable use
and wear thereof excepted.
(b) Sublessee shall obtain the prior written approval of Sublessor
and Lessor for any alterations, additions or improvements to the Premises,
which approval shall not be unreasonably withheld. Such alterations and
improvements shall be made at Sublessee's sole expense and Sublessee shall be
required to obtain all necessary permits and fees for the alterations and
improvements. Further, Sublessee agrees to remove any tenant improvements,
modifications made by Sublessee and return the space to its original condition
at Sublessee's sole cost and expense if requested to do so by Sublessor or as
required by Master Lease.
(c) Sublessee shall obtain the prior written approval of Sublessor
for any alterations or additions to the Personal Property, which approval shall
not be unreasonably withheld. Such alterations, additions or improvements shall
be made at Sublessee's sole expense. Further, Sublessee agrees to return the
Personal Property to its original condition at Sublessee's sole cost and
expense if requested to do so by Sublessor.
(d) Sublessor shall make reasonable repairs to the damaged wall and
baseboard trim and touch up the paint, where reasonably deemed necessary,
throughout the Premises. Sublessor shall make reasonable commercial efforts to
complete these repairs prior to the Commencement Date.
10. Sublessor's Covenants. Sublessor covenants that during the term
of the Sublease, it shall:
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(a) Except as otherwise set forth in this Sublease, take no action
which would adversely affect Sublessee's use of the Premises or Personal
Property; and
(b) Upon Sublessee's payment of rent and performance of its
covenants, ensure Sublessee's quiet use and enjoyment of the Premises or
Personal Property.
11. Assignment or Subletting, No Liens.
(a) Sublessee shall not assign, convey, sublet or transfer its
interest in the Sublease without first obtaining Sublessor's and Lessor's
written approval in accordance with the terms of the Master Lease.
(b) Sublessee shall keep the Premises and Personal Property free
from any liens arising from any work performed, materials furnished or
obligations incurred by or at the request of Sublessee. All persons either
contracting with Sublessee or furnishing or rendering labor and materials to
Sublessee shall be notified in writing by Sublessee that they must look only to
Sublessee for payment for any labor or materials. If any lien is filed against
the Premises or Personal Property as a result of the acts or omissions of
Sublessee, its employees, agents or contractors, Sublessee shall discharge it
within twenty (20) days after Sublessee learns that the lien has been filed.
12. Insurance, Risk of Loss.
(a) Insurance. Prior to the commencement of the Sublease Term and to
having access to the Premises and Personal Property and at all times during the
tenancy of this Sublease, Sublessee shall provide proof of insurance, as
outlined below, satisfactory to Sublessor, and maintain the coverage's
specified below during the term hereof and until the termination hereof:
Comprehensive General Liability in an aggregate amount of
$2,000,000.
Worker's Compensation Coverage in the statutory amount.
All Risk Insurance with Standard Extended Coverage, Replacement Value
for full replacement of the Personal Property and Sublessee's personal property
located on the Premises.
(b) Additional Insured. Sublessor and Lessor shall be named as
additional insureds on the policy or policies. Sublessee may satisfy this
requirement by obtaining appropriate endorsements to any master or blanket
policy of liability insurance
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Sublessee may maintain. No policy may be cancelable or subject to reduction of
coverage except after thirty (30) days prior written notice to Sublessor.
(c) Sublessor Released from Liability in Certain Events. Except to
the extent caused by the negligent or otherwise wrongful acts or omissions of
Sublessor, its agents or employees, Sublessor shall not be responsible, at any
time or in any event, for any latent defects, deterioration or change in the
condition of the Premises except for circumstances existing prior to the date
hereof caused by or attributable to the use of the Premises by Sublessor.
Except to the extent caused by the negligent or otherwise wrongful acts or
omissions of Sublessor, its agents or employees, Sublessor shall also not be
responsible for any fire or earthquake damage, or overflow or leakage upon or
into the Premises, of water, steam, gas or electricity, or by any breakage in
pipes or plumbing, or breakage, leakage or obstruction of sewer pipes or other
damage occasioned by water being upon or coming through the roof skylight,
trapdoors, walls, basement or otherwise, not for failure of the heating (steam)
plant, nor for loss of property by theft or otherwise, nor for any damage
arising from any act or neglect of any co-tenant or other occupant of the
Premises, or for that of any owner or occupants of adjoining or contiguous
property. Notwithstanding the above, at Sublessee's written request, Sublessor
shall, at Sublessor's expense, take whatever action as is reasonable and
necessary to enforce the rights and benefits accruing to the Sublessee by
virtue of the Master Lease and this Sublease.
13. Indemnification. Except to the extent caused by the sole negligence
or willful misconduct of Sublessor, its agents or employees, Sublessee hereby
agrees to indemnify and save Sublessor and its agents and the Lessor harmless
from any claims, demands, or causes of action for property damage or personal
injuries caused by Sublessee, Sublessee's agents, employees, contractors and
customers, arising out of Sublessee's occupancy of or presence in the Premises.
14. Default.
(a) Each of the following shall be considered a default by the
Sublessee:
(i) The failure to pay the Base Rent or Operating Costs required
hereunder within five (5) days after receipt of Sublessor's
written notice of such failure;
(ii) The failure to cure, within twenty (20) days after receipt
of Sublessor's written notice thereof, any breach of any other term hereof.
Such breach shall not be deemed a default if within said twenty (20) day period
Sublessee has begun the process to cure the breach and is diligently working on
a cure; or
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(iii) The abandonment of the Premises without the payment of
Rent.
(b) Upon an uncured event of default of this Sublease by Sublessee,
and Sublessee's failure to cure as allowed in (a) above, in addition to all
other remedies provided at law or in equity, Sublessor may, after
Sublessor's prior written notice thereof, at its option:
(i) elect to remove all of the merchandise, fixtures and
equipment, without being guilty or liable in any manner for
trespass, thereby terminating this Sublease, and store the
personal property at Sublessee's expense, payable upon demand by
Sublessor, and recover from Sublessee those amounts necessary to
compensate Sublessor as permitted by applicable California law.
(ii) elect to treat this Sublease in full force and effect and
shall be entitled to collect the rent provided for hereunder.
15. Condemnation. If the entire Premises or so much thereof as to
interfere with the use thereof shall be taken or condemned by any competent
authority for any public or quasi-public use or purpose, this Sublease shall
terminate as of the date when possession is taken. In such event, Sublessor
shall be under no liability to Sublessee, and Sublessee shall be entitled to no
part of any condemnation award except so much thereof as the condemning
authority expressly allocates to moving or relocation expenses incurred by
Sublessee. Sublessor shall provide Sublessee with notice in writing of any
actual or threatened condemnation proceedings promptly after receiving notice
thereof.
16. Arbitration. Any dispute as to the interpretation or enforcement
of this Sublease shall be subject to binding arbitration pursuant to Section
25.29 of the Master Lease.
17. Brokers. Sublessee and Sublessor warrant and represent to each
other that in the negotiating or making of this Sublease neither Sublessee or
Sublessor nor anyone acting on their behalf has dealt with any real estate
broker or finder who might be entitled to a fee or commission for this Sublease
other than Ernst & Young, LLP, whose fee is to be paid by Sublessor per a
separate agreement. Each party agrees to indemnify and hold the other harmless
from any claim or claims, including costs, expenses and attorney's fees
incurred by the other asserted by any other broker or finder for a fee or
commission based upon any dealings with or statements made by the respective
party or its agents, employees or representatives.
18. Financial Information. (a) As soon as they become available, and
in no event later than April 30th of each year, Sublessee shall deliver, or
cause to be
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delivered, to Sublessor, copies of its audited consolidated financial
statements of operations, stockholders' equity and cash flows for such fiscal
year, prepared in accordance with generally accepted accounting principals,
consistently applied, and accompanied by the audit opinion of the Sublessee's
independent public accountants.
(b) Sublessor reserves the right to obtain, within sixty days after
the close of each of the first three fiscal quarters of each fiscal year,
copies of Sublessee's unaudited consolidated financial statements of
operations, stockholder's equity and cash flows for such quarter, prepared in
accordance with generally accepted accounting principals, consistently applied.
19. Entirety. This writing constitutes the entire agreement between
Sublessor and Sublessee and any modification hereof must, in order to be
effective, be in writing, signed by authorized representatives of each party.
20. Waiver. Failure or delay on the part of either party to exercise
any right, power, privilege or remedy hereunder shall not operate as a waiver
thereof, nor shall any single or partial exercise of any right under this
Sublease preclude any other or further exercise thereof or the exercise of any
other right.
21. Binding Effect. This Sublease shall extend to and bind the heirs,
personal representatives, successors, assigns, or its successors in interest of
the parties hereto.
22. Governing Law. This Sublease and performance hereunder shall be
governed, interpreted, construed and regulated by the laws of the State of
California without regard to its conflict of laws principles.
23. Notice. All notice and payments due hereunder shall be deemed
validly given if sent by certified mail, return receipt requested, or with a
nationally recognized courier which provides notice of receipt, postage fully
prepaid, addressed as follows, or to such other addresses as may be given from
either party in writing to the other:
SUBLESSEE: SUBLESSOR:
OnDisplay, Inc. ▇▇▇▇▇ Home Equity Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇, President Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President, Finance
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With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇▇ Vice President, Chief Counsel
▇▇▇▇▇ Home Equity Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
▇▇▇▇▇ Financial Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇ Vice President, Legal
24. Headings. Section headings in this Sublease are included for the
convenience of reference only and shall not constitute a part of this Sublease
for any other purpose.
25. Counterparts. This Sublease may be executed in any number of
counterparts, each of which shall be an original, but all for which together
shall constitute but one instrument.
26. Authority. Each party hereby represents and warrants to the other
that all necessary corporate authorizations required for execution and
performance of this Sublease have been given and that the undersigned officer is
duly authorized to execute this Sublease and bind the party for this it signs.
27. Expansion Rights. Section 25.20 of the Master Lease,
notwithstanding, Sublessee is not granted any rights to expand its Premises by
virtue of this Sublease.
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
ONDISPLAY, INC. ▇▇▇▇▇ HOME EQUITY CORPORATION
by: [sig illegible] by: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------- -------------------------------
Title: CEO Title: VP Finance
Attest: Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------- ---------------------------
Secretary Assistant Secretary
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EXHIBIT A
Second Lease Addendum, dated June 24, 1997, by and between SDC 7 (Landlord) and
▇▇▇▇▇ Home Equity Corporation (Tenant)
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EXHIBIT B
Master Lease dated September 11, 1995, by and between Sunset Development Company
(Landlord) and ▇▇▇▇▇ Home Equity Corporation (Tenant)
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▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ PROPERTY INVENTORY
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DESCRIPTION QUANTITY
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1. Blue Desk Chairs (1 each at every cubicle) 52
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2. Conference Room Chairs 10
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3. Conference Room Table 1
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4. Wood Guest Chairs for Private Offices 12
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5. Regular Size Cubicles (6 x 7.5) 47
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6. Large Size Cubicles (7.5 x 9.25) 5
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7. Overhead Cabinet with light fixture 51
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8. Furnished Regular Size Private Offices 11
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9. Furnished Large Size Private Offices 1
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10. Five-Drawer Lateral Filing Cabinets 17
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11. Two-Drawer Lateral Filing Cabinets 47
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12. One Dishwasher 1
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13. Three-Drawer Pedestal 52
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14. Desk Chairs for Private Offices 12
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15. ▇▇▇▇ Visual Boards 3
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16. One Refrigerator 1
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17. One Wood Credenza in Office 301 1
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18. System Rack/Cabling 1
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19. Honeywell Security System 1
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EXHIBIT "C"
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[SDC7 LETTERHEAD]
December 18, 1998
Fax ▇▇▇-▇▇▇▇
▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ HOME EQUITY CORPORATION
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Landlord's Consent to Sublease
Sublessee: OnDisplay, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇
Dear ▇▇▇▇:
Pursuant to Section 15 Assignment and Subletting, Subsection 15.1 Landlord's
Consent Required, of that certain Lease dated September 11, 1995, by and between
SDC7 as Landlord and ▇▇▇▇▇ Home Equity Corporation as Tenant, Landlord hereby
consents to the Sublease of 13,140 square feet on the third floor of ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, to OnDisplay, Inc.
Consent to this Sublease does not release ▇▇▇▇▇ Home Equity Corporation or
▇▇▇▇▇ Financial Corporation of any of their obligations under the Lease.
This consent shall not be in effect until Landlord has received a fully
executed copy of the Sublease.
Sincerely,
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President
EH:pm/b/f
cc: ▇▇▇▇ ▇▇▇▇▇, Sunset Development Company
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, via fax 415/▇▇▇-▇▇▇▇
Exhibit "D"