EXHIBIT 10.5
SUBLEASE
This Sublease, dated January 1, 1999 for reference purposes only, is made
by and between Apple Computer, Inc., a California corporation ("Sublessor"),
whose address is 0 Xxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 and Extreme
Networks, Inc. a California corporation ("Sublessee"), whose address is 00000
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx, with respect to the following facts:
Recitals
--------
A. Sublessor is the tenant under that certain Lease Agreement (the "Master
Lease") dated June 1, 1988, amended by that certain Memorandum of Lease dated
June 1, 1988, First Amendment to Lease dated May 31, 1989, that certain Second
Amendment to Lease dated November 9, 1989, that certain Third Amendment to Lease
dated February 8, 1995, that certain Fourth Amendment to Lease dated March 29,
1995, that certain Fifth Amendment to Lease dated June 20, 1995, and that
certain Sixth Amendment to Lease dated December 22, 1995, of approximately
218,816 square feet of space located at 3515, 3535 and 0000 Xxxxxx Xxxxxx, Santa
Xxxxx, Santa Xxxxx County, State of California (the "Premises"), which Master
Lease was executed by MPJ, a California general partnership, as Landlord (the
"Master Lessor"), and Sublessor as Tenant. A copy of the Master Lease is
attached hereto as Exhibit A and, subject to the terms hereof, is incorporated
herein.
B. Sublessor desires to sublease to Sublessee, and Sublessee desires to
sublease from Sublessor, a portion of the Premises, consisting of approximately
Seventy-Seven Thousand Four Hundred Sixteen (77,416) square feet, commonly known
as 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, as shown on the floor plan
attached hereto as Exhibit B (the "Sublease Premises"), on the terms and
conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
1. Premises. Sublessor hereby subleases the Sublease Premises to Sublessee,
--------
and Sublessee hereby subleases the Sublease Premises from Sublessor, for
the term, at the rental and upon all the conditions set forth herein.
2. Term.
----
2.1 Term. The term of this Sublease shall be for a period commencing on the
----
later of (a) February 9, 1999 or (b) the date the written consent of Master
Lessor to this executed Sublease has been obtained (the "Commencement
Date"). Subject to the terms hereof, this Sublease shall expire on
December 31, 2002 (the "Expiration Date"), unless the Master Lease is
sooner terminated, which termination shall occur without liability on the
part of Sublessor unless such termination resulted solely from a default of
Sublessor thereunder.
2.2 Delay in Commencement.
---------------------
A. Notwithstanding the provisions of Paragraph 2.1, above, if for any reason
Sublessor cannot deliver possession of the Sublease Premises to Sublessee
on the Commencement Date, Sublessor shall not be subject to any liability
on account of said failure to deliver, nor shall such failure affect the
validity of this Sublease or the obligations of Sublessee hereunder or
extend the term hereof. In such event, Sublessee shall not be obligated to
pay rent for the Sublease Premises until possession of the Sublease
Premises is tendered to Sublessee, provided the delay is not attributable
to Sublessee. If the Commencement Date is delayed as a result of any act
or omission of Sublessee, its agents, employees or contractors, the
Commencement Date shall be deemed to be the date the Commencement Date
would have occurred if no Sublessee delay or delays had occurred.
B. Notwithstanding the provisions of Subparagraph 2.2.A, above, if Sublessor
has not delivered the Sublease Premises to Sublessee in the condition
required hereunder, free of occupants and tenants, on or before March 1,
1999, Sublessee shall have the right thereafter, until such possession is
delivered to Sublessee to cancel this Sublease on not less than ten (10)
days prior written notice to Sublessor; if Sublessor delivers the Premises
to Sublessee within such period, Sublessee shall accept possession of the
Premises. Upon any such cancellation, Sublessor shall return to Sublessee
all sums theretofore deposited by Sublessee with Sublessor and neither
party shall have any further liability or obligation to the other under
this Sublease.
C. Sublessor and Sublessee agree to execute a Confirmation of Commencement
Date Agreement in the form attached to this Sublease as Exhibit C,
confirming the date this Sublease commenced.
3. Rent.
----
3.1 Base Monthly Rent.
-----------------
A. No Base Monthly Rent and Additional Rent shall be due for the months of
February, March and April 1999. Beginning on May 1, 1999, Sublessee shall
pay to Sublessor during the entire remaining term of this Sublease the
following amounts as "Base Monthly Rent":
Months Rent/ SF / Mo Rent / Mo
------ ------------- ---------
May 1, 1999 - April 30, 2000 $ 1.25 NNN $ 96,770.00
May 1, 2000 - April 30, 2001 $ 1.50 NNN $116,124.00
May 1, 2001 - April 30, 2002 $ 1.75 NNN $135,478.00
May 1, 2002 - December 31, 2002 $ 1.85 NNN $143,219.60
B. Full Base Monthly Rent and Additional Rent are due and shall be paid in
advance in equal installments on or before the first day of each calendar
month in lawful money of
2
the United States without notice or demand and without any set off,
deduction, abatement or offset whatsoever except as otherwise provided
herein. Base Monthly Rent and Additional Rent for any partial month during
the Sublease term shall be prorated based on the actual number of days in
the partial month. If the Base Monthly Rent and Additional Rent are not
received by Sublessor by the fifth (5th) day of each calendar month a late
charge of six percent (6%) of the overdue amount shall automatically be due
and payable, without any prior written notice. The parties agree this late
charge represents a fair and reasonable estimate of the costs Sublessor
will incur by reason of late payment by Sublessee. Acceptance of such late
charge by Sublessor shall in no event constitute a waiver of Sublessee's
default with respect to such overdue amount, not prevent Sublessor from
exercising any of its other rights and remedies granted under this
Sublease.
C. All payments of Rent shall be made payable to Apple Computer, Inc. and
mailed to Sublessor at the following address: Apple Computer, Inc., File
#72435, Xxxx Xxxxxx Xxx 00000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, or to such
other address as may be designated in writing by Sublessor.
Notwithstanding the foregoing, Sublessor shall have the right to direct
Sublessee to pay Rent directly to Master Lessor, and Master Lessor shall
credit such amounts to the Rent due for the Sublease Premises pursuant to
the Master Lease.
3.2 Payment of First Month's Base Monthly Rent. Concurrently with Sublessee's
------------------------------------------
execution of this Sublease, Sublessee shall deposit with Sublessor the sum
of Ninety-Six Thousand Seven Hundred Seventy and 00/100 Dollars
($96,770.00) as payment of the Base Monthly Rent due for the month of May
1999.
3.3 Additional Rent. All moneys other than Base Monthly Rent required to be
---------------
paid by Sublessee under this Sublease, including, without limitation, all
operating expenses, taxes, insurance, maintenance and other expenses and
charges of every kind and nature arising in connection with the Sublease
Premises, this Sublease or the Master Lease (including, without limitation,
all amounts payable under the Master Lease as described in Sections 3.4, 4,
6, 7, and 11 hereof) shall be deemed "Additional Rent". Base Monthly Rent
and Additional Rent shall be referred to collectively herein as "Rent".
For purposes of this Sublease, Sublessee's Pro Rata Share, as defined in
Section 3.4 of the Master Lease, shall be Twenty-Eight and Twelve
Hundredths Percent (28.12%). Sublessee shall not be required to reimburse
Sublessor for Additional Rent items which are passed through from the
Master Landlord until May 1, 1999.
3.4 No Rental Adjustment. The parties agree that any statement of square
--------------------
footage set forth in the Sublease is an approximation which Sublessor and
Sublessee agree is reasonable and the rental based thereon and Tenant's Pro
Rata Share as set forth in paragraph 3.3 is not subject to revisions if the
actual square footage is more or less.
4. Security Deposit. Concurrently with Sublessee's execution of this
----------------
Sublease, Sublessee shall deposit with Sublessor the sum of One Hundred
Fifty Thousand Dollars ($150,000.00). Such deposit which shall be held by
Sublessor as security for Sublessee's faithful performance of all of the
terms of this Sublease. If Sublessee fails to pay Rent or
3
otherwise defaults with respect to any provision of this Sublease, then
Sublessor may draw upon, use, apply or retain all or any portion of the
security deposit after applicable notice and cure periods for the payment
of any Rent or other charge in default, for the payment of any other sum
which Sublessor has become obligated to pay by reason of Sublessee's
default, or to compensate Sublessor for any loss or damage which Sublessor
has suffered thereby. If Sublessor so uses or applies all or any portion of
the security deposit then Sublessee, within fifteen (15) days after written
demand therefor, shall deposit cash with Sublessor in the amount required
to restore the security deposit to the full amount stated above. Within
twenty-one (21) days following the expiration of this Sublease, if
Sublessee is not then in default, Sublessor shall return to Sublessee so
much of the security deposit as has not been applied by Sublessor pursuant
to this Section 4, or which is not otherwise required to cure Sublessee's
defaults with any deductions itemized in writing.
5. Letter of Credit.
----------------
5.1 Irrevocable Standby Letter of Credit.
------------------------------------
A. Concurrently with Sublessee's execution of this Sublease, Sublessee shall
deliver to Sublessor an irrevocable and unconditional standby letter of
credit (the "Letter of Credit") issued by Silicon Valley Bank or a
financial institution satisfactory to Sublessor in its reasonable
discretion, in the amount of One Hundred Fifty Thousand Dollars ($150,000),
renewable on an annual basis for the full term of the Sublease plus ninety
(90) days in the form attached hereto as Exhibit "F". Such Letter of
Credit shall serve as additional security for the obligations of Sublessee
hereunder.
B. The Letter of Credit may be drawn upon by Sublessor under any of the
following circumstances: (i) after written notice to Sublessee that an
Event of Default has occurred and Sublessee's failure to cure such default
within the applicable grace period, upon presentation to the issuer of the
Letter of Credit written notice certified under penalty of perjury by an
officer of Sublessor stating that an uncured event of default has occurred
and any applicable cure period has expired; and/or (ii) if for any reason
whatsoever the Letter of Credit is not renewed by Sublessee for an
additional year or a substitute Letter of Credit meeting the requirements
set forth herein is not delivered to Sublessor at least thirty (30) days
prior to expiration of the then expiring original, renewed or substitute
Letter of Credit, as applicable. Sublessor shall accept a substitute
letter of credit so long as it meets the criteria set forth in Subparagraph
5.A, above; provided, however, that the issuer of any substitute letter of
credit shall be subject to Sublessor's approval, in Sublessor's reasonable
discretion. Pursuant to this paragraph 5.1.B, Sublessor shall be entitled
to partial draws under the Letter of Credit only in such amount as may be
necessary to cure any such default by Sublessee, provided the Security
Deposit is first exhausted.
C. If Sublessee fails to obtain a replacement Letter of Credit prior to thirty
(30) days before the expiration date of the then-effective Letter of
Credit, Sublessor may draw upon the
4
Letter of Credit for which replacement has been requested without further
notice to Sublessee or any other party. If Sublessee subsequently presents
a Letter of Credit meeting the requirements hereof, then Sublessor shall
accept such Letter of Credit and shall return any funds Sublessor obtained
by drawing down on the prior Letter of Credit.
5.2 Reduction of Letter of Credit. If Sublessee is required to make
-----------------------------
improvements to the Sublease Premises to comply with ADA, then Sublessee,
upon prior written notice to Sublessor, shall have the right to reduce the
Letter of Credit by the amount needed to complete such work; provided,
however, that in no event shall the Letter of Credit be reduced by more
than Fifty Thousand Dollars ($50,000). Sublessee shall provide Sublessor
with a complete description of costs for completing the ADA work. This
provision is only applicable to the extent ADA compliance is triggered by
Sublessee's Improvements; otherwise, Sublessor and Sublessee shall each
bear one-half (1/2) of the costs for such compliance.
6. Use of Premises. The Sublease Premises shall be used and occupied solely
---------------
for the purposes set forth in Section 5.1 of the Master Lease.
6.1. Condition of Demised Premises; Repairs. Subject to the provisions of
--------------------------------------
Paragraph 6.2 below, Sublessor has not agreed to make, and shall not be
required to make, any alterations, repairs or improvements to the Sublease
Premises. By taking possession of the Sublease Premises, Sublessee shall
be conclusively deemed to have accepted the Sublease Premises in their "as-
is" condition existing on the Commencement Date, excluding latent defects,
and subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing or regulating the use or occupancy of
the Sublease Premises. Sublessee acknowledges that neither Sublessor nor
its agents has made any representations or warranties with respect to the
condition of the Sublease Premises or as to the suitability of the Sublease
Premises for the conduct of Sublessee's business. In particular, Sublessor
makes no representation with respect to compliance of the Sublease Premises
or the Complex with the Americans With Disabilities Act of 1990 (the
"ADA"), compliance with which shall be the sole responsibility of Sublessee
as to the Sublease Premises, to the extent such compliance is triggered by
Sublessee's Improvements, and subject to the provisions of Section 5.2
(which provides, inter alia, that Sublessor shall pay fifty percent (50%)
of such costs), except to the extent such compliance is Master Lessor's
obligation under the Master Lease. Sublessor represents and warrants that
(i) the Sublease Premises are in good working condition; (ii) the
mechanical, electrical and plumbing systems and all roll-up doors are in
good working and operating condition; (iii) it has delivered to Sublessee
all reports, if any, with respect to the HVAC and electrical systems, (iv)
the HVAC systems are in good condition and repair; (v) the roof was
installed by Master Landlord in approximately February-March 1985; and (vi)
the parking lot was resealed and restriped on September 25-28, 1998.
6.2 Repairs. Sublessor shall have no obligation whatsoever to make or to pay
-------
the cost of any alterations, improvements or repairs to the Sublease
Premises including without
5
limitation any improvement or repair required to comply with any law,
regulation, building code or ordinance (including the ADA), to the extent
such compliance is triggered by Sublessee's Improvements, and subject to
the provisions of Section 5.2 (which provides, inter alia, that Sublessor
shall pay fifty percent (50%) of such costs), except to the extent such
compliance is Master Lessor's obligation under the Master Lease.
Notwithstanding the foregoing, if Master Lessor fails to perform its
obligations in accordance with the terms of the Master Lease with regard to
repairs to or maintenance of the Sublease Premises, then Sublessor, upon
receipt of written notice from Sublessee of any such failure, shall make
commercially reasonable efforts to have Master Lessor perform its
obligations of under the Master Lease with respect to repairs and
maintenance of the Sublease Premises; provided, however, that Sublessor
shall not be required to spend more than a nominal sum in connection with
any such efforts. Such nominal sum shall be limited to all costs associated
with the preparation of and transmittal to Master Lessor of documentation
from Sublessor or Sublessor's attorneys detailing the obligations to be
performed by Master Lessor under the Master Lease). If, after receipt of
written request from Sublessee, Sublessor fails or refuses to take such
action ("Action"), and provided that the rights of Sublessor as tenant
under the Master Lease are conferred upon and assigned to Sublessee, then
Sublessee shall be subrogated to such rights to the extent that the same
shall apply to the Sublease Premises. If any such Action against Master
Lessor by Sublessee in its own name is barred by reason of lack of privity,
nonassignability or otherwise, then Sublessee may take such Action in
Sublessor's name, provided that Sublessee has obtained Sublessor's prior
written consent (which consent shall not be unreasonably withheld) and
provided further that Sublessee shall indemnify, protect, defend (by
counsel reasonably satisfactory to Sublessor) and hold Sublessor harmless
from and against any and all liability, loss, claims, demands, suits,
penalties or damages (including without limitation reasonable attorneys'
fees and expenses).which Sublessor may incur or suffer by reason of such
Action, except to the extent due to Sublessor's negligent acts or
omissions.
6.3 Alterations. Sublessee's right to make alterations to the Sublease
-----------
Premises is subject to the provisions of Section 7.3 of the Master Lease.
Unless otherwise agreed to in writing by Master Lessor at the time
Sublessee first requests consent to any alterations, at the expiration or,
earlier termination of this Sublease, Sublessee shall: (i) remove all
alterations, additions and improvements to the Sublease Premises made by
Sublessee, (ii) restore the Sublease Premises to their condition prior to
making such alterations, additions and improvements; and (iii) repair all
damage caused in removing such alterations, additions and improvements.
Sublessee agrees that the indemnification provisions of Section 10 of the
Master Lease shall be deemed to include all claims, damages, costs and
expenses arising out of any alterations, additions or other improvements to
the Sublease Premises made by Sublessee. In no event shall Sublessee
commence construction of any improvements in the Subleased Premises prior
to Master Lessor's consent to this Sublease, and the approval of Sublessor
and Master Lessor to any such proposed alterations or improvements.
Provided, however, Sublessee shall have the right to make interior
nonstructural alterations to the Sublease Premises which do not exceed
Twenty-Five Thousand Dollars ($25,000) in cost annually, without obtaining
6
Sublessor's prior consent; and, provided further, if Master Lessor requires
removal of any such alterations at the end of the term of the Sublease
and/or the Master Lease pursuant to the terms of the Master Lease,
Sublessee shall perform or shall bear the cost of performing any such
removal and associated restoration, and shall indemnify and hold Sublessor
harmless of all costs, expenses, claims and liabilities arising out of or
in connection with any such removal and/or restoration.
7. Maintenance.
-----------
A. Sublessee shall maintain the Subleased Premises in good order, condition
and repair, at its sole cost and expense. Sublessee shall have the right
to use contractors of its choice, provided that all such contractors shall
be subject to Sublessor's reasonable approval. If such maintenance is not
performed to the reasonable satisfaction of Sublessor, then Sublessor shall
notify Sublessee of such failure, setting forth, in reasonable detail, the
nature of such failure. Sublessee shall have a reasonable period (such
period to be determined with reference to the impact of such nonperformance
on the equipment, or life and safety of any person, but in no event in
excess of thirty (30) days) within which to remedy such failure. If such
maintenance is not thereafter performed to the reasonable satisfaction of
Sublessor, then Sublessee, at the direction of Sublessor, shall terminate
any contractor not performing to Sublessor's satisfaction as required by
this Section 7. If Sublessee fails to terminate such contract as directed
by Sublessor, then Sublessor shall have the right to terminate such
contract as Sublessee's attorney-in-fact. Sublessee hereby appoints
Sublessor its attorney-in-fact for the sole purpose of terminating any such
contract, subject to the conditions herein above set forth, provided
however that any such termination must be done in accordance in with the
terms of the agreement between Subtenant and such contractor, including
mitigation or payment of any costs associated with any such termination.
B. Sublessee's right to maintain the Sublease Premises may be terminated by
Sublessor upon the occurrence of a default by Sublessee under Paragraph 7
of this Sublease and such default is not cured within any applicable cure
period.
C. Sublessor shall have the right at all times during the term of this
Sublease to monitor Sublessee's performance of any maintenance obligations.
For such purpose, (i) Sublessor and its agents, employees and contractors
shall have the right to inspect such maintenance work during normal
business hours and upon at least one (1) business day's prior notice to
Sublessee, and (ii) Sublessee shall provide Sublessor with monthly reports
(until such time, if any, as Sublessor may deem it appropriate to change
said monthly reporting to quarterly reporting) describing all such
maintenance work, such reports to include (without limitation), a
reasonably complete description of the nature of any maintenance work
performed by or on behalf of Sublessee during such calendar month, copies
of any reasonable invoices for payment, and evidence of payment (if paid).
If Sublessee is in default under any terms or conditions of this Sublease
beyond any applicable cure period, then any direct costs actually and
reasonably incurred by Sublessor to monitor
7
Sublessee's maintenance work shall be reimbursed to Sublessor by Sublessee
as Additional Rent.
D. Sublessee agrees to perform minimum inspection on all of the HVAC
mechanical equipment every sixty (60) days with the exception of the
chiller (model number CVHE020FAE and serial number L84H21840) (hereinafter
referred to as the "Chiller"). Sublessor shall at Sublessor's sole cost
and expense, shall maintain such Chiller for a one (1) year period
effective as of the Commencement Date or until such later time as Sublessor
deems appropriate. Thereafter, Sublessor shall xxxx Sublessee for all
reasonable costs necessary to maintain and repair said Chiller. Sublessee
shall provide reasonable access for inspections and repairs as needed with
at least one business day's prior notice.
8. Master Lease Provisions.
-----------------------
8.1 Performance of Master Lease Provisions. Sublessee acknowledges and agrees
--------------------------------------
that this Sublease shall be subject and subordinate to the Master Lease,
and neither Sublessee nor Sublessor shall cause or permit any violation of
any term thereof. Sublessee hereby expressly assumes and agrees to perform
and comply with, for the benefit of Sublessor and Master Lessor, each and
every obligation of Sublessor as Tenant under the Master Lease which
relates to the Sublease Premises to the extent incorporated herein.
Sublessor agrees that it shall perform all of its obligations under the
Master Lease which have not been assumed by Sublessee, such that the Master
Lease shall not be terminated due to default by Sublessor during the term
of this Sublease. Sublessor shall indemnify, defend and hold Sublessee
harmless from and against any liability, less, damages, actions,
proceedings or expenses (including but not limited to reasonable attorneys'
fees and costs) arising or resulting from or in connection with a breach of
this obligation or any default by Sublessor under this Sublease.
8.2 Incorporation By Reference. The terms and conditions of this Sublease
--------------------------
shall include all of the provisions of the Master Lease, which are
incorporated into this Sublease as if fully set forth, except that:
(i) Each reference in such incorporated Sections to "Lease" shall be
deemed a reference to this "Sublease".
(ii) Each reference to "Landlord" and "Tenant" shall be deemed a reference
to "Sublessor" and "Sublessee", respectively, except as otherwise
provided herein.
(iii) With respect to work, services, repairs, provision of insurance,
restoration, or the performance of any other obligation of Master
Lessor under the Master Lease including, without limitation, Section
7.1 (Maintenance and Repairs); Section 7.2G and Section 7.3D (Capital
Improvements); Section 10.1 (Landlord's Indemnification); Section
11.2 (Landlord's Insurance); Section 12 (Damage or Destruction);
Section 13 (Condemnation); Section 18.1 (Outside Area); and Section
18.2 (Outside Area Expenses), the sole obligation of Sublessor shall
be as
8
set forth in Paragraph 5.2 of this Sublease above. Sublessor shall
provide Sublessee with copies of all notices given to Sublessor by
Master Lessor which are relevant to this Sublease within three (3)
business days following receipt thereof, including but not limited to
any notice of Sublessor's default or breach of its obligations under
the Master Lease.
(iv) Except as expressly provided herein, with respect to any obligation
of Sublessee to be performed under this Sublease, wherever the Master
Lease grants to Sublessee a specified number of days to perform its
obligations under the Master Lease, Sublessee shall have one-half of
the number of days granted in the Master Lease (rounded up) to
perform the obligation, including, without limitation, curing any
defaults. In addition, the reference in Section 4.1(b) to ten days
shall be twenty (20) days; the reference in Section 4.2(b) to ten
(10) days shall be twenty (20) days; the reference in Section 4.4 to
ten (10) days shall be twenty (20) days; the reference in Section
7.3A to five (5) days shall be ten (10) days, the reference to thirty
(30) days shall be forty (40) days, the reference to one hundred
twenty (120) days shall be one hundred thirty (130) days, and the
reference to ten (10 business days shall be twenty (20) business
days; the reference in Section 9 to ten (10) business days shall be
twenty (20) business days; the references in Sections 14.1B and 14.1C
to fifteen (15) days shall be twenty-five (25) days; and the
references in Section 16.3 to thirty (30) days shall be forty (40)
days.
(v) With respect to any approval or consent required to be obtained from
the "Landlord" under the Master Lease, such approval or consent must
be obtained from both Master Lessor and Sublessor, and the approval
or consent of Sublessor may be withheld if Master Lessor's approval
or consent is not obtained.
(vi) The following provisions of the Master Lease are not incorporated
into this Sublease, or are incorporated as modified herein: Sections
1, 2, 3.1, 3.2, 3.3; the last full paragraph of Section 3.4; the
second paragraph of Section 5.1; the second sentence of Section
7.2.F; the proviso in the first sentence of Section 7.3.A; the
reference to "Landlord" in the first sentence of Section 6.3 shall
apply only to the Master Lessor; the word "negligence" in the last
sentence of Section 10.2 is replaced with the phrase "gross
negligence"; the termination rights of Tenant set forth in Section 12
shall apply only with respect to the Sublease Premises; the proviso
in the first sentence of Section 15.1; Section 17; the first sentence
of the second paragraph of Section 18.1; the reference to "Landlord"
in the third sentence of Section 18.2 shall apply only to the Master
Lessor; Section 19; the fourth sentence in Section 20.3C; the proviso
in the second sentence of Section 20.11; the addresses set forth in
Section 20.16 are replaced with the addresses set forth below in
Paragraph 13.4 of this Sublease; Section 20.18; Section 21; Sections
22B through 22F; Exhibits A and B; and all amendments to the Master
Lease described in Recital A above.
9
9. Right to Cure. If Sublessee fails to pay any sum of money to Sublessor or
-------------
to Master Lessor or fails within any applicable grace periods to perform
any other act on its part to be performed hereunder, then Sublessor may but
shall not be obligated to make such payment or perform such act. All such
sums paid and all costs and expenses of performing any such act shall be
deemed Additional Rent payable by Sublessee to Sublessor upon demand,
together with interest thereon at the interest rate provided in Section
20.14 of the Master Lease.
10. Insurance. Sublessee shall obtain and maintain in full force and effect
---------
during the entire term of this Sublease the insurance coverage described in
Section 11.1 of the Master Lease. Sublessee shall name Sublessor as an
additional insured under the required insurance policies. Prior to
occupancy of the Sublease Premises, Sublessee shall deliver to Sublessor
and to Master Lessor certificate of insurance evidencing the required
coverage. The waivers of rights of recovery and subordination set forth in
Paragraph 11.3 of the Master Lease shall be deemed a three party agreement
binding among and inuring to the benefit of Sublessor, Sublessee and Master
Lessor.
11. Assignment and Subletting.
-------------------------
11.1 Restriction on Assignment and Subletting. Sublessee shall not assign,
----------------------------------------
sublease, transfer or encumber this Sublease or any interest therein or
grant any license, concession or other right of occupancy of the Sublease
Premises or any portion thereof or otherwise permit the use of the Sublease
Premises or any portion thereof by any party other than Sublessee (any of
which events is hereinafter called a "Transfer") without the prior written
consent of the Master Lessor pursuant to Section 14 of the Master Lease and
the Sublessor, which consent of Sublessor shall not be unreasonably
withheld or delayed. Sublessor's consent shall be considered reasonably
withheld if (i) the proposed transferee is determined by Sublessor to not
be financially sound applying generally accepted accounting principles in
making such determination; (ii) Sublessee is, either at the time of the
request or as of the effective date of the proposed Transfer, in default
hereunder; or (iii) any portion of the Sublease Premises would become
subject to additional or different governmental laws or regulations as a
consequence of the proposed Transfer and/or the proposed transferee's use
and occupancy of the Sublease Premises and/or which impose significant
financial burden on Sublessor as a result thereof. Sublessee acknowledges
that the foregoing is not intended to be an exclusive list of the reasons
for which Sublessor may reasonably withhold its consent to a proposed
Transfer.
11.2 Permitted Transfers. Notwithstanding the provisions of Subparagraph 11.1,
-------------------
above, Sublessee shall be permitted the rights of assignment or subletting
described in Section 14.1E of the Master Lease (the "Permitted Transfers")
provided that (i) Sublessee gives written notice to Sublessor at least ten
(10) business days prior to such proposed Transfer, together with
substantiation that the proposed Transfer qualifies for the exemption set
forth in Section 14.1E of the Master Lease; (ii) the proposed transferee
delivers to Sublessor concurrent with any such assignment or subletting an
assumption agreement whereby the proposed transferee assumes and agrees to
perform, observe and
10
abide by the terms, conditions, obligations and provisions of the Sublease;
and (iii) in the case of a proposed Transfer to an affiliate, the entity
status is not established as a subterfuge in an attempt to avoid the
provisions of this Sublease respecting assignment and subletting.
11.3 Required Notice. If Sublessee requests Sublessor's consent to a Transfer,
---------------
Sublease shall, together with such request, provide Sublessor with the name
of the proposed transferee and the nature of the business of the proposed
transferee, the term, use, rental rate and all other material terms and
conditions of the proposed Transfer, including, without limitation, a copy
of the proposed assignment, sublease or other contractual documents, and
evidence satisfactory to Sublessor that the proposed transferee is
financially sound. Sublessor shall, within ten (10) business days after
its receipt of all information and documentation required herein, by
written notice to Sublessee, consent to or refuse to consent to such
Transfer. If Sublessor consents to any such Transfer, the Transfer and
consent thereto shall be in a form reasonably approved by Sublessor, and
Sublessee shall reimburse Sublessor for all actual costs and expenses
incurred by Sublessor in connection with the review and approval of such
assignment or sublease documentation, including reasonable legal fees for
review of Sublessee's proposed Transfer documents not to exceed One
Thousand Dollars ($1,000).
11.4 Bonus Rent. If Sublessor consents to any Transfer pursuant to this
----------
Section 11, then Sublessee may, within one hundred twenty (120) days
thereafter, enter into such Transfer, upon the terms and conditions set
forth in the notice furnished to Sublessee pursuant to Subparagraph 11.3
above. Fifty percent (50%) of any rent or other consideration realized by
Sublessee under any such Transfer (the "Transfer Consideration") in excess
of the Rent payable hereunder (or the amount thereof proportionate to the
portion of the Sublease Premises subject to such sublease or assignment)
shall be paid to Sublessor, after deducting therefrom all actual costs and
reasonable expenses incurred by Sublessee to effect the Transfer including
but not limited to rent concessions, tenant improvements (amortized over
the sub-sublease term) advertising costs, any customary broker's
commissions and reasonable attorneys' fees, amortized on a straight line
basis (without interest) over the term of the Transfer. Sublessee hereby
covenants and agrees to pay the Transfer Consideration to Sublessor
promptly upon receipt thereof by Sublessee, but in no event more than ten
(10) days after receipt thereof.
11.5 Effect of Transfer. Any Transfer consented to by Sublessor in accordance
------------------
with this Section 11 shall be only for the use permitted by Section 5.1 of
the Master Lease and for no other purpose. In no event shall any Transfer
release or relieve Sublessee or any Guarantor from any obligations under
this Sublease. Any attempted Transfer in violation of the terms of this
Paragraph 9 shall, at Sublessor's option, be void. Consent by Sublessor to
one or more Transfers shall not operate as a waiver of Sublessor's rights
as to any subsequent Transfers.
12. Sublessor's Representations, Warranties and Covenants. Sublessor hereby
-----------------------------------------------------
represents and warrants to Sublessee that, as of the Commencement Date, (i)
the document attached as
11
Exhibit "A," hereto is a true, correct and complete copy of the Master
Lease, and that the Master Lease represents the entire agreement between
Sublessor and Master Lessor with respect to the Sublease Premises, (ii) to
the best knowledge of Sublessor, there is no default or any condition which
with the passage of time or the giving of notice or both would constitute a
default on the part of either party to the Master Lease, (iii) Sublessor
has not assigned, encumbered or otherwise transferred any of its interest
under the Master Lease with respect to the Sublease Premises, (iv) the
Expiration Date of the Master Lease is December 31, 2002, (v) there are no
third party consents required with respect to this Sublease other than the
consent of Master Lessor, and (vi) Sublessor has duly authorized this
Sublease.
13. Amendments to Master Lease. Sublessor agrees that it shall not, without
--------------------------
the prior written consent of Sublessee, which consent shall not be
unreasonably withheld or delayed, enter into any amendment to the Master
Lease which prevents or materially adversely affects the use by Sublessee
of the Sublease Premises in accordance with the terms of this Sublease,
materially increases the obligations of Sublessee under this Sublease, or
materially decreases Sublessee's rights under this Sublease.
14. Miscellaneous.
-------------
14.1 Attorneys' Fees. If either Sublessor or Sublessee brings any action or
---------------
proceeding, whether legal, equitable or administrative, to enforce rights
and obligations under this Sublease, or to declare rights hereunder, the
prevailing party in any such action or proceeding shall be entitled to
recover from the other party reasonable attorneys' fees and costs of suit,
in addition to any other relief allowed by the court.
14.2 Brokers. The parties agree that they have dealt with no real estate
-------
broker in connection with this Sublease other than Cornish and Xxxxx, and
they agree to indemnify and hold each other harmless from and against any
damage or expense incurred by reason of any other broker claiming a right
to any commission or compensation as a result of its dealings with the
indemnifying party. Sublessor shall pay all brokerage commissions in
connection with this Sublease.
14.3 Authority to Execute. Sublessee and Sublessor each represent and warrant
--------------------
to the other that the person(s) executing this Sublease on behalf of each
party is (are) duly authorized to execute and deliver this Sublease on that
party's behalf.
14.4 Notices. Any notice required or permitted to be given under this
-------
Sublease, including any change of address for purpose of giving notice,
shall be in writing, and shall be given as provided in Section 20.16 of the
Master Lease.
12
For purposes of this Sublease, the addresses of the parties are set forth
below:
If to Sublessor:
---------------
Apple Computer, Inc.
1 Infinite Loop
Mail Stop 35-AOK
Xxxxxxxxx, XX 00000
Attention: Real Estate Department
With copies of default notices only to:
--------------------------------------
Apple Computer, Inc.
0 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel/esm
If to Sublessee:
---------------
Extreme Networks, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Chief Financial Officer
14.5 Incorporation of Prior Agreements. This Sublease incorporates all
---------------------------------
agreements of the parties with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties, whether
oral or written.
14.6 Modifications, This Sublease may be modified or amended only by an
-------------
instrument in writing, executed by both parties in interest hereunder.
14.7 Governing Law; Severability. This Sublease shall be governed by and
---------------------------
construed in accordance with the laws of the State of California. If any
term or provision of this Sublease is found by a court of competent
jurisdiction to be void or unenforceable, such term or provision shall be
deemed severed from the remainder of the terms and provisions of this
Sublease, and said remainder shall remain in full force and effect,
according to its terms, to the extent permitted by law.
14.8 Parking. Subject to the provisions of Section 18.1 of the Master Lease,
-------
Sublessee shall have the non-exclusive right, at no additional cost, to use
all parking spaces located in the Outside Area as shown on Exhibit "D"
attached hereto. Sublessor has counted Two Hundred and Fifty (250) actual
existing parking spaces in the Outside Area for the Sublease Premises. In
order to provided Sublessee with an additional thirteen (13) parking
spaces, as requested by Sublessee, Sublessor shall, at no cost to
Sublessee, remove the basketball area, the raised concrete slab and the
bike lockers, and shall
13
restripe the motorcycle parking area for compact parking. In addition the
parking spaces in front of the Building shall marked as designated for use
by Sublessee's visitors.
14.9 Hazardous Materials. Attached hereto as Exhibit "E" is an environmental
-------------------
report prepared by Xxxxxxx/Xxxxx Consultants with respect to the Sublease
Premises. Other than the information contained in such report, Sublessor
represents and warrants that it has not received any written notice of the
release or disposal of any Hazardous Materials on or about the Sublease
Premises in violation of any Hazardous Materials Laws. Sublessor
represents and warrants that it has not released or disposed of any
Hazardous Materials on or about the Sublease Premises in violation of
Hazardous Materials Laws. Except as otherwise provided herein and except
for the foregoing representation, Sublessor makes no representation or
warranty of any kind whatsoever with respect to any Hazardous Materials on
or about the Premises. Sublessor hereby agrees to indemnify and hold
harmless Sublessee from and against any and all claims, liabilities,
losses, damages, penalties and expenses (including reasonable attorneys'
fees) incurred by Sublessee arising out of, from or in connection with
Sublessor's breach of this provision and any release of hazardous
materials or toxic substances and wastes in the Sublease Premises
(including the land thereunder) attributable to the acts or omissions of
Sublessor.
14.10 Signage. Sublessee's signage rights shall be subject to the provisions
-------
of Section 20.12 of the Master Lease, as amended hereby. If requested by
Sublessee, Sublessor shall work with Sublessee to prepare a signage
program for submittal to Master Landlord, provided however that (i)
Sublessor shall have no responsibility or obligation whatsoever if Master
Landlord rejects all or any portion of any such signage program or
requires changes to any such program, and (ii) Sublessor shall bear no
expense or cost whatsoever with respect to any signage installed by
Sublessee in on or about the Premises and/or the Sublease Premises.
14.11 Subordination; Nondisturbance Agreement. Prior to the Commencement Date,
---------------------------------------
Sublessor shall request from Master Lessor a nondisturbance agreement from
Master Lessor's lender which is reasonably acceptable to Sublessee, and
Sublessor shall use reasonable efforts to obtain the same from Master
Lessor; provided, however, that Sublessee's receipt of a non-disturbance
agreement from Master Lessor's lender shall not be a condition to the
effectiveness of this Sublease.
14.12 Exhibits. Subject to the terms hereof, all exhibits attached hereto are
--------
incorporated herein and are as follows: Exhibit "A" (Master Lease);
Exhibit "B" (plat of Sublease Premises), Exhibit "C" (form of Confirmation
of Commencement Date Agreement), Exhibit "D" (plat of the Parking Area),
and Exhibit "E" (environmental report), Exhibit "F" (form of Letter of
Credit), and Exhibit "G" ( Sublessee's Improvements).
15. Effectiveness; Consent of Master Landlord. This Sublease shall be of no
-----------------------------------------
force or effect unless and until the Master Lessor has executed and
delivered to Sublessee and Sublessor a fully executed consent to this
Sublease, which the parties will pursue promptly and in good faith,
provided such consent shall be obtained no later than twenty-one (21) days
14
following execution of this Sublease or this Sublease shall be void and
have no further force or effect.
16. Counterparts. This Sublease may be executed in any number of counterparts,
------------
each of which shall be deemed an original, and when taken together they
shall constitute one and the same sublease.
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this Sublease on
the dates set forth below, to be effective as of the date first set forth above.
SUBLESSOR SUBLESSEE
--------- ---------
APPLE COMPUTER, INC. EXTREME NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxxxxxx Xxxxx
----------------------------------- --------------------------
Its: Executive Vice President and Chief Its: Vice President of
----------------------------------- --------------------------
Financial Officer Corporate Development
----------------------------------- --------------------------
Date: 2/4/99 Date: 2/2/99
--------------------------------- -------------------------
15
