EXHIBIT 10.4
SECOND AMENDMENT TO SUBLEASE AND AGREEMENT
This Second Amendment to Sublease and Agreement (the "SECOND AMENDMENT
AND AGREEMENT"), dated as of October 1, 2001, is entered into between
Xxxxxxxx-Sonoma, Inc., a California corporation ("SUBLANDLORD") and Red Xxxxxxx
Communications, Inc. ("SUBTENANT"), with reference to the following facts:
A. Sublandlord and Subtenant entered into that certain Sublease, dated
as of April 1, 2000, as amended by that certain First Amendment to Sublease,
dated as of October 31, 2000 (collectively, the "Sublease").
B. Sublandlord and Subtenant are also parties to that certain Standard
Industrial/Commercial Multi-Tenant Lease - Net, dated as of April 1, 2000, with
respect to premises located at 000 Xxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (the
"IceHouse Lease").
C. Subtenant has represented to Sublandlord that it has experienced
financial hardship and has requested certain modifications to the Sublease and
Sublandlord has agreed to said modifications, as more particularly set forth
herein.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Defined Terms. Capitalized terms used herein but not defined herein
shall have the meanings ascribed to such terms in the Sublease.
2. Minimum Base Rent. Paragraph 4.1 of the Sublease is hereby deleted in
its entirety and replaced with the following:
"4.1. Minimum Base Rent. Commencing October 1, 2001, Subtenant
shall pay annual Base Rent in the amounts set forth below:
FIRST FLOOR
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(02/2000-01/2005) Year 1-5: $28.00 Per Rentable Square Foot Per Year
(02/2005-01/2010) Year 6-10: $32.00 Per Rentable Square Foot Per Year
SECOND FLOOR
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(02/2000-01/2003) Year 1-3: $29.50 Per Rentable Square Foot Per Year
(02/2003-01/2005) Year 4-5: $31.50 Per Rentable Square Foot Per Year
(02/2005-01/2008) Year 6-8: $33.50 Per Rentable Square Foot Per Year
(02/2008-01/2010) Year 9-10: $34.50 Per Rentable Square Foot Per Year
2001-2002 2002-2003 2003-2004 2004-2005 2005
(Oct.-Jan.) (Feb.-Jan.) (Feb.-Jan.) (Feb.-Jan.l) (Feb.-Aug.) TOTAL
-------- ---------- ---------- ---------- -------- ----------
First Floor (20,476 sq. ft.) $191,109 $ 573,328 $ 573,328 $ 573,328 $382,219 $2,293,312
Second Floor (21,340 sq. ft.) $209,843 $ 629,530 $ 672,210 $ 672,210 $417,019 $2,600,813
-------- ---------- ---------- ---------- -------- ----------
Total Lease Rent $400,953 $1,202,858 $1,245,538 $1,245,538 $799,238 $4,894,125
Base Rent shall be paid in equal monthly installments, in advance on the
first day of each month, without deduction, setoff, notice, or demand, at
the address of Sublandlord set forth in Section 18 below, or at any other
place Sublandlord designates by notice to Subtenant. If the Sublease Term
ends on a day other than the first or last day of a month, the Rent for
any partial months shall be prorated on a per diem basis.
3. Initial Improvements.
3.1 Pursuant to the Sublease, Subtenant is obligated to pay for
the cost of all Initial Improvements installed in the Premises and expenses
incurred by Sublandlord in connection therewith. Sublandlord acknowledges that
Subtenant has already paid to Sublandlord one million dollars ($1,000,000) in
tenant improvement costs. Further, Sublandlord and Subtenant acknowledge that
they are not in agreement as to the actual costs incurred by Sublandlord in
connection with the Initial Improvements installed on the Premises. Accordingly,
Sublandlord and Subtenant hereby agree that Subtenant's outstanding obligation
to reimburse Sublandlord for the cost of the Initial Improvements shall be the
sum of Eight Hundred Fifty Two Thousand Two Hundred Ninety Eight Dollars
($852,298). On or before the Effective Date (as hereinafter defined), Subtenant
shall pay to Sublandlord the sum of Five Hundred Thousand Dollars ($500,000).
The remaining balance, in the amount of Three Hundred Fifty Two Thousand Two
Hundred Ninety Eight Dollars ($352,298), shall be reimbursed over the remaining
term, commencing February 1, 2002, and shall be paid in equal monthly
installments of Eight Thousand One Hundred and Ninety Two Dollars and Ninety
Eight Cents ($8,192.98) together with Base Rent. Except for the obligation to
make the payments described in this Section 3.1, Sublandlord does hereby
release, remise, acquit, and forever discharge Subtenant from all claims,
liabilities, demands, indebtedness, causes of action, sums of money, losses,
costs and expenses (including, without limitation, attorneys' fees), of whatever
kind or nature, whether known or unknown, suspected or unsuspected, contingent
or fixed, at law or in equity, which arise or have arisen or occur or have
occurred at any time from the beginning of time solely on account of Subtenant's
obligation to pay for the Initial Improvements arising under Section 3.2 of the
Sublease.
3.2 Subtenant acknowledges that the cost of the Initial
Improvements made to the Premises as well as to the balance of the Master
Premises is the subject of on going litigation between Sublandlord and Master
Landlord. In the event Sublandlord prevails in obtaining reimbursement of any
Initial Improvement costs, Subtenant acknowledges that it shall not be entitled
to receive any portion of said reimbursement. Subtenant does hereby release,
remise, acquit, and forever discharge Sublandlord from all
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claims, liabilities, demands, causes of action, sums of money, losses, costs and
expenses (including, without limitation, attorneys' fees), of whatever kind or
nature, whether known or unknown, suspected or unsuspected, contingent or fixed,
at law or in equity, which arise or have arisen or occur or have occurred at any
time from the beginning of time on account of any recovery, refund or
reimbursement of Initial Improvement costs received by or due Sublandlord or any
damages, fees or awards in connection therewith, whether as a result of
judgment, settlement or otherwise. Subtenant acknowledges that Sublandlord has
made no representations or warranties concerning the likelihood or potential
scope of recovery. Subtenant and Sublandlord acknowledge that the amount to be
paid by Subtenant pursuant to Section 3.1 bears no relationship to the amounts
claimed to be due by either party in the litigation.
3.3 Waiver. Sublandlord and Subtenant each further agree,
covenant and warrant that it intends that the claims and other matters released
in Sections 3.1 and 3.2, respectively, shall not be limited to matters known or
disclosed, and it hereby waives and relinquishes all rights and benefits
conferred upon it by the provisions of Section 1542 of the California Civil Code
and any other federal or state statutes or decisional authorities to the same
effect. Section 1542 of the Civil Code of the State of California reads as
follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR"
In waiving the provisions of Section 1542 of the California Civil Code,
Sublandlord and Subtenant each acknowledge that it may hereafter discover facts
in addition to or different from those which it now believes to be true and
Sublandlord and Subtenant may incur or suffer loss, damage or injuries as a
result of the discovery or existence of any such additional facts, but agrees
that it has taken that possibility into account and that the releases hereby
given shall be and remain in effect as a full and complete release of the
matters described in Sections 3.1 and 3.2 hereof, respectively, notwithstanding
the discovery or existence of any such additional or different facts.
Sublandlord and Subtenant expressly assume the risk described herein and the
releases contained herein shall apply to all unknown or unanticipated results,
as well as those known and anticipated.
4. Operating Expenses. On the Effective Date, Subtenant shall deliver to
Sublandlord funds in the amount of Two Hundred Thirty Seven Thousand Nine
Hundred Thirteen Dollars and Sixty Eight Cents ($237,913.68), representing
reimbursement of:
(i) The amount of Fifty Four Thousand One Dollar and
Ninety Cents ($54,001.90) in accordance with Section 4.2 of the Sublease; and
(ii) Common Area Operating Expenses, as defined in
Section 4.2 of the IceHouse Lease, in the amount of One Hundred Eighty Three
Thousand Nine Hundred Dollars and Seventy Eight Cents ($183,911.78). To
Sublandlord's knowledge, these xxxxxxxx represent a true and accurate allocation
of actual expenditures made by Sublandlord. Sublandlord acknowledges that the
Common Area Operating Expenses stated
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herein with respect to the IceHouse Lease constitute Subtenant's total
obligation under Section 4.2 of the IceHouse Leases.
5. Effect of Default. Notwithstanding anything to the contrary contained
herein, the difference between the Base Rent and Initial Improvement costs due
under this Second Amendment and Agreement and the Base Rent and Initial
Improvement costs due under the original Sublease shall be a discount, earned
only upon Subtenant's full and faithful performance of all its obligations under
the Sublease, as amended hereby. The discount shall be revoked, retroactive to
the date hereof, and all sums due and payable under the original Sublease shall
be due and payable upon demand, twenty (20) days after the occurrence of an
Event of Default arising under Sections 19.1(a) or 19.1(b) of the Sublease,
unless cured within said twenty (20) day period. Notwithstanding the foregoing,
Sublandlord shall be permitted to exercise its remedies as provided in the
Sublease prior to the expiration of said twenty (20) day period.
6. Surrender. Upon the expiration or other termination of this Lease,
the 200 Steelcase Answer System Workstations currently located in the Premises
and any replacements thereof (the "Furniture") shall become Sublandlord's
property, free and clear of any and all liens, encumbrances or claims. At
Sublandlord's request, Subtenant shall execute a xxxx of sale to evidence the
transfer of title to the Furniture to Sublandlord.
7. Conditions to Effectiveness. The effective date of this Second
Amendment and Agreement shall be October 1, 2001 ("Effective Date"); provided,
however, if either of the following conditions have not been satisfied by
October 5, 2001, 5:00 p.m. PST, then this Second Amendment and Agreement shall
be void ab initio and the parties' respective obligations shall be governed by
the Sublease and the IceHouse Lease, respectively:
(i) Each of Sublandlord and Subtenant shall have executed two
(2) copies of this Second Amendment and Agreement and delivered same to the
other party hereto.
(ii) Subtenant shall have delivered to Sublandlord by wire
transfer in accordance with Sublandlord's instructions the sum of $1,053.751.93,
representing payment of: (i) the first installment of the Initial Improvement
reimbursement in the amount of $500,000; (ii) Operating Expense reimbursements
in the amount of $237,913.68; (iii) Base Rent for the month of September in the
amount of $215,600; and (iv) Base Rent for the month of October 2001 in the
amount of $100,238.25.
8. Relationship to Sublease. To the extent of any inconsistencies
between this Second Amendment and Agreement and the Sublease, this Second
Amendment and Agreement shall control. The Sublease, as amended by this Second
Amendment and Agreement, is in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Second Amendment and
Agreement as of the date first above written.
SUBLANDLORD
XXXXXXXX-SONOMA, INC.,
a California corporation
By: [SIGNATURE ILLEGIBLE]
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Its: VP
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SUBTENANT
RED XXXXXXX COMMUNICATIONS, INC.,
a California corporation
By: [SIGNATURE ILLEGIBLE]
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Its: COO
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