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EXHIBIT 10.2
FIRST AMENDMENT
TO
PROJECT LEASE AGREEMENT
THIS FIRST AMENDMENT TO PROJECT LEASE AGREEMENT (this "AMENDMENT") is
effective as of the 26th day of February, 1997, by and between Triad Park, LLC,
a California limited liability company ("PARK"), intended successor in interest
to 0000 XXXXX XX. CORP., a California corporation ("3055 CORP") and TRIAD
SYSTEMS CORPORATION, a Delaware corporation ("TRIAD") in the following factual
context:
A. On August 1, 1988, Triad, as Tenant and 3055 Corp., as
Landlord, entered into that certain Project Lease Agreement (the "LEASE")
covering a tract of land containing 15.0633 acres, and being Parcel Two of
Parcel Map 5112, filed September 29, 1987 in Book 122 or Parcel Maps, Pages 11
through 14, inclusive, Alameda County Records (the "DEMISED LAND"), which Lease
also covered the improvements on the Demised Land Agreement consisting of three
(3) buildings containing approximately 219,818 square feet (the
"IMPROVEMENTS").
B. On August 23, 1988, 3055 Corp., as Trustor, and Xxxxx-XxXxxxxx
Financial Corporation, as Trustee, executed that certain First Deed of Trust
and Assignment of Rents, Security Agreement and Fixture Filing, for the benefit
of The Variable Annuity Life Insurance Company, as Beneficiary (the "VARIABLE
DEED OF TRUST"), pursuant to which 3055 Corp. agreed to obtain Beneficiary's
prior consent to any amendment to the Agreement; accordingly, Beneficiary joins
in this Amendment to acknowledge the terms and conditions of and to give its
consent to this Amendment.
C. On February 27, 1997, 3055 Corp. will merge up into its parent
Triad, who will succeed by operation of law to all of 3055 Corp.'s assets and
liabilities, including but not limited to all of its rights, title and interest
in and to the Demised Land and the Improvements, subject to the Variable Deed
of Trust, pursuant to the Real Estate Distribution Agreement entered into among
Triad Systems Corporation, 0000 Xxxxx Xx. Corp. and Triad Park, LLC, dated as
of February 27, 1997 (the "REAL ESTATE DISTRIBUTION AGREEMENT").
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D. On February 27 1997, Triad will contribute certain designated
assets to Park, including but not limited to all of Triad's just acquired
rights, title and interest in and to the Demised Land and the Improvements,
subject to the Variable Deed of Trust pursuant to the Real Estate Distribution
Agreement.
E. Subject to all of the terms and conditions of this Amendment,
3055 Corp. and Triad desire to amend the Lease and to anticipate the
acquisition of the Landlord's interest by Park, as more particularly set forth
below.
In this factual context, the parties agree as follows:
SECTION 1. EFFECTIVE DATE.
This Amendment shall be effective on the date (the "EFFECTIVE DATE")
on which Triad contributes the Demised Land subject to the Variable Deed of
Trust to Park pursuant to the Real Estate Distribution Agreement.
SECTION 2. NO MERGER.
Upon the merger of 3055 Corp. into its parent Triad, the interests of
both the Landlord and the Tenant under the Lease shall be held by the same
entity, subject to the assignment for security purposes to The Variable Annuity
Life Insurance Company. The parties agree that the Lease shall not be effected
by Triad having title to both the estates of the Landlord and of the Tenant
under the Lease, that there shall be no merger and that the leasehold estate
shall continue to exist subject to the assignment for security purposes to The
Variable Annuity Life Insurance Company.
SECTION 3. NOVATION.
Upon the transfer by Triad to Park of all of Triad's rights, title and
interest in and to the Demised Land and the Improvements, there shall be a
automatic novation of the Lease resulting in Park being substituted for Triad
(who was the successor to 3055 Corp.) as the Landlord under the Lease and
thereafter Triad and 3055 Corp. shall have no further interest in or liability
for the interest of the Landlord under the Lease. Triad shall continue at all
times to be the Tenant under the Lease.
SECTION 4. TERM.
Subject to all of the terms and conditions as in the Lease, except as
hereinafter provided, the term of the Lease (the "PRIMARY TERM") is for a
period of five (5) years, commencing on the Effective Date and ending at
midnight on the date that is five (5) years after the Effective Date (the
"PRIMARY TERM ENDING DATE").
SECTION 5. RENEWAL OPTION.
Provided and on the condition that no Event of Default has occurred
and be continuing, and subject to all of the terms and conditions as in the
Lease, except as hereinafter provided, Tenant shall have an option (the
"RENEWAL OPTION") to renew the Lease for one (1) renewal term of five (5)
years. Tenant shall notify Landlord no less than two hundred seventy (270)
days prior to the Primary Term Ending Date of its intent to exercise the
Renewal Option. If Tenant so elects
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to exercise the Renewal Option, the Lease shall extend for a term (the "RENEWAL
TERM") commencing on the day after the Primary Term Ending Date and ending at
midnight on the day that is five (5) years after the Primary Term Ending Date.
Tenant shall have no further right to renew the Lease.
SECTION 6. RENT.
(a) During the first two (2) years of the Primary Term, the Annual
Base Rental payable to Landlord shall be $2,505,720.00, payable monthly in
advance in twelve (12) equal installments, one (1) such installment to be
payable on the first day of each month during the first two (2) years of the
Primary Term.
(b) During the final three (3) years of the Primary Term, the
Annual Base Rental payable to Landlord shall be an amount equal to the then
prevailing market rate ("MARKET RENTAL RATE") in the immediate Alameda County
market area as of the end of the second (2nd) year of the Primary Term (the
"ADJUSTMENT DATE"). At least one-hundred twenty (120) days prior to the end of
the second (2nd) year of the Primary Term, Tenant shall institute the Appraisal
Process (as hereinafter defined) to establish the Market Rate Rental for the
final three (3) years of the Primary Term. If the determination of the Market
Rental Rate is made after the start of the third (3rd) year of the Primary
Term, Tenant shall continue to pay rent at the rate applicable to the preceding
period until the Market Rental Rate is determined. Tenant shall, promptly
after the Market Rental Rate is determined, pay any difference for the period
affected by the adjustment. The Market Rental Rate shall be payable monthly in
advance in twelve (12) equal installments, one (1) such installment to be
payable on the first day of each month during the final three (3) years of the
Primary Term. The foregoing notwithstanding, in no event shall the Annual Base
Rental for the last three (3) years of the Primary Term be less than the rental
called for in Section 6(a) nor more than 1.2 times the rental called for in
Section 6(a).
(c) During the Renewal Term, the Annual Base Rental payable to
Landlord shall be an amount equal to the then prevailing market rate ("RENEWAL
RENTAL RATE") in the immediate Alameda County market area as of the
commencement of the Renewal Term. At least one-hundred twenty (120) days prior
to the end of the Primary Term, Tenant shall institute the Appraisal Process to
establish the Renewal Rental Rate for the Renewal Term. The Adjustment Date
for determining the Renewal Rental Rate shall be the Primary Term Ending Date.
If the determination of the Renewal Rental Rate is made after the start of the
Renewal Term, Tenant shall continue to pay rent at the rate applicable to the
preceding period until the Renewal Rental Rate is determined. Tenant shall,
promptly after the Renewal Rental Rate is determined, pay any difference for
the period affected by the adjustment. The Renewal Rental Rate shall be
payable monthly in advance in twelve (12) equal installments, one (1) such
installment to be payable on the first day of each month during the Renewal
Term.
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(d) The "Appraisal Process" is begun by Tenant's designation of an
appraiser (the "FIRST APPRAISER") to determine the Market Rental Rate or the
Renewal Rental Rate, as the case may be (collectively, the "APPRAISED RATE") of
the Demised Premises. The First Appraiser shall make and deliver to Tenant and
Landlord an appraisal of the Demised Premises Appraised Rate (the "FIRST
APPRAISED RATE") within twenty (20) business days of its appointment. At the
election of Landlord, an appraiser (the "SECOND APPRAISER") shall be appointed
within seven (7) days following delivery of the First Appraised Rate. The
Second Appraiser shall make and deliver to Tenant and Landlord a second
appraisal of the Demised Premises Appraised Rate (the "SECOND APPRAISED RATE")
within twenty (20) business days of its appointment. In the event that the
First Appraised Rate and the Second Appraised Rate do not differ by more than
ten percent (10%) of the lower value, the average of the First Appraised Rate
and Second Appraised Rate shall be deemed to be the Market Rental Rate or the
Renewal Rental Rate, as the case may be. In the event that the First Appraised
Rate and the Second Appraised Rate differ by more than ten percent (10%) of the
lower value, the First Appraiser and the Second Appraiser shall, within seven
(7) days following the delivery of the Second Appraised Rate, appoint a third
appraiser (the "THIRD APPRAISER" and together with the First Appraiser and the
Second Appraiser, the "APPRAISERS"), who shall deliver to Tenant and Landlord
an appraisal of the Demised Premises Appraised Rate (the "THIRD APPRAISED
RATE") within fifteen (15) business days following its appointment by the First
Appraiser and the Second Appraiser. The one, if any, of the First Appraised
Rate, the Second Appraised Rate or the Third Appraised Rate which differs the
most from the other two shall not be considered, and the average of the two
remaining values shall be the Market Rental Rate or the Renewal Rental Rate, as
the case may be. Each of the Appraisers shall make their respective appraisals
as of the Adjustment Date. Each appraisal shall reflect the gross fair market
rental value of the Demised Premises. The Appraisers shall be disinterested,
independent and shall be qualified to appraise premises of the nature of the
Demised Premises, and such Appraisers shall have been actively engaged in the
appraisal of premises of the nature of the Demised Premises for a period of not
less than five (5) years immediately preceding their appointment under this
Amendment. The expenses and fees, including without limitation the fees of the
Appraisers and any legal and accounting fees, incurred in connection with the
appraisal(s) conducted pursuant to this Section 6(d) shall be shared equally by
Tenant and Landlord.
(e) The determination of "gross fair market rental value" shall be
the reasonable good faith estimate of the market rental rate per square foot of
the Demised Premises for office type rental space of comparable size, age,
location and quality.
SECTION 7. ADDITIONAL RENT AND IMPOSITIONS.
In addition, during the Primary Term and the Renewal Term, Tenant
shall pay all other rent and other amounts due under the Lease, including
without limitation, additional rent and other charges described in Article 3 of
the Lease and the Impositions described under Article 4 of the Lease.
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SECTION 8. RIGHT TO SUBLEASE.
Article 10 of the Lease is amended by adding the following Section
10.05:
Section 10.05. In the event Landlord consents to a sublease
of any portion of the Demised Premises, which consent Landlord agrees shall not
be unreasonably withheld, Tenant agrees that if the rental rate agreed upon
between Tenant and its proposed sublessee is greater than the rental rate for
such allocable portion of the Demised Premises that Tenant must pay to Landlord
under this Amendment, all of such excess rent shall be considered additional
rent owed by Tenant to Landlord (less brokerage commissions, attorneys' fees
and other disbursements reasonably incurred by Tenant for such subletting) and
shall be paid by Tenant to Landlord as, if, and when received from such
sublessee in the same manner that Tenant pays Annual Base Rental.
SECTION 9. CONTINUING EFFECT/DEFINED TERMS.
Except as expressly modified herein, the Lease shall continue in full
force and effect in accordance with its terms. All defined terms used herein
without definition shall have the meaning ascribed to such terms as set forth
in the Lease.
SECTION 10. EFFECTIVENESS.
This Amendment does not become effective as an amendment to the Lease
until executed and delivered by both Landlord and Tenant.
The undersigned parties have executed this Amendment as of the day and
year first above written.
LANDLORD:
3055 CORP., a California corporation
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
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Title: President
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SUBSTITUTED LANDLORD
TRIAD PARK, LLC, a California limited
liability company
By 3055 MANAGEMENT CORP., a California
corporation; its sole manager
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
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Title: President
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TENANT:
TRIAD SYSTEMS CORPORATION, a Delaware
corporation
By: /s/ XXXXX X. XXXXXX
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Name: Xxxxx X. Xxxxxx
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Title: President
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Acknowledged and Consented to,
this day of , 1997.
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THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY, as Mortgagee
By:
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Name:
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Title:
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