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EXHIBIT 10.8
SUBLEASE AGREEMENT
1. PARTIES.
This Sublease, dated May 26, 1999, is made between HSN Realty LLC
("Sublessor") and UDS ("Sublessee").
2. MASTER LEASE.
Sublessor is the lessee under a written lease dated December 1, 1986,
wherein G&M Properties, a Nevada Partnership ("Original Lessor"),
Xxxxxxx Industrial Group, a Nevada General Partnership ("Lessor")
leased to Sublessor a portion of the real property located in the City
of Reno, County of Washoe, State of Nevada described as 0000 Xxxxxxx
Xxxx, which portion consists of a 223,200 square foot distribution
warehouse/office facility. Said lease has been amended but, none of the
amendments are relevant to this Sublease other than the change of
Lessor referenced above. Accordingly Sublessee shall not be bound by
such amendments. Said lease without amendments is herein collectively
referred to as the "Master Lease" and is attached hereto as EXHIBIT A.
3. PREMISES.
Sublessor hereby subleases to Sublessee on the terms and conditions set
forth in this Sublease 223,200 square feet of warehouse/office space as
set forth in EXHIBIT B attached hereto ("Premises").
4. WARRANTY BY SUBLESSOR.
Sublessor warrants and represents to Sublessee that the Master Lease
has not been amended or modified except as expressly set forth herein,
that Sublessor is not now, and as of the Commencement Date and during
the Term hereof will not be, except as such default or breach shall
have been directly caused by Sublessee's default or breach of the
Sublease Agreement, be in default or breach of any of the provisions of
the Master Lease, and that Sublessor has no knowledge of any claim or
any facts that would form the basis of any claim by Lessor that
Sublessor is in default or breach of any of the provisions of the
Master Lease.
5. TERM.
Following execution and delivery by the parties of this Sublease, the
Term of this Sublease shall commence upon receipt of Lessor's consent
to this Sublease ("Commencement Date") as required by the Master Lease.
The obligation to pay rent shall not commence until August 1, 1999, and
the Term of the Sublease shall end on September 30, 2002 ("Termination
Date"), unless otherwise sooner terminated in accordance with the
provisions
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of this Sublease. Sublessee's right to occupy the Premises shall
commence upon Lessor's execution and delivery of its consent to this
Sublease.
6. RENT.
Sublessee shall pay to Sublessor as minimum rent, without notice or
demand, at 0 XXX Xxxxx, Xx. Xxxxxxxxxx, XX 00000 or at such other place
as Sublessor shall designate from time to time by written notice to
Sublessee, the sum of Forty Eight Thousand Nine Hundred & No/100
Dollars ($48,900.00) per month, in advance on the first day of each
month of the Term. Sublessee shall pay to Sublessor upon execution of
this Sublease the sum of Forty Eight Thousand Nine Hundred & No/100
Dollars ($48,900.00) as rent for the month of August 1999. The total
amount for taxes, insurance, and common area expenses presently being
paid by Sublessor pursuant to the Master Lease are included in the
amount of monthly rent set forth above, and except for any increases in
the total amount of taxes, insurance, and common area expenses to be
paid under the Master Lease assessed as of or after January 1, 2000,
Sublessee shall have no obligation to pay any such amounts. If there is
any increase in the total amount of taxes, insurance, and common area
expenses assessed as of or after January 1, 2000, upon receipt of
written notice thereof from Sublessor, with such supporting
documentation therefor as Sublessee shall reasonably request, Sublessee
shall pay the monthly amount of any such increase to Sublessor as
additional rent. If Sublessee fails to pay to Sublessor any amount due
hereunder within five (5) days after the due date, Sublessee shall pay
Sublessor upon demand a late charge equal to five percent (5%) of the
delinquent amount. The parties agree the foregoing late charge
represents a reasonable estimate of the cost and expense Sublessor will
incur in processing each delinquent payment. Additionally, if Sublessee
fails to pay the Sublessor any amount when due hereunder, Sublessor
shall be entitled to offset such amount against any amounts Sublessor
may owe Sublessee under this or any other agreement. Rent for any
partial month during the Term shall be prorated by multiplying the
amount of the monthly rent times a fraction the numerator of which is
the number of days in such month to be prorated and the denominator of
which is the total number of days in said in month.
7. SECURITY DEPOSIT.
Sublessee shall deposit with Sublessor upon execution of this Sublease
the sum of Forty Eight Thousand Nine Hundred and No/100 Dollars
($48,900.00) as security for Sublessee's faithful performance of
Sublessee's obligations hereunder ("Security Deposit"). If Sublessee
fails to pay rent or other charges when due under this Sublease, or
fails to perform any of its other obligations hereunder Sublessor may
use or apply all or any portion of the Security Deposit for the payment
of any rent or other amount then due hereunder and unpaid, or the
payment of any other sum for which Sublessor may become obligated by
reason of Sublessee's default or breach of this Sublease, or for any
loss or damage sustained by Sublessor directly as a result of
Sublessee's default or breach. If Sublessor so uses any portion of the
Security Deposit, Sublessee shall, within ten (10) days after written
demand by Sublessor, restore the Security Deposit to the full amount
originally deposited, and
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Sublessee's failure to do so shall constitute a default under this
Sublease. Sublessor shall be required to keep the Security Deposit in
trust separate from its general accounts, but shall not be required to
keep such funds in an interest-bearing account for the benefit of
Sublessee. In the event Sublessor assigns its interest in this
Sublease, Sublessor shall deliver to its assignee so much of the
Security Deposit as is then held by Sublessor. Within ten (10) days
after the Term has expired, or Sublessee has vacated the Premises, or
any final adjustment pursuant to Section 6 hereof has been made,
whichever shall last occur, and provided Sublessee is not then in
default of any of its obligations hereunder, the Security Deposit, or
so much thereof as had not therefore been applied by Sublessor, shall
be returned to Sublessee or to the last assignee, of any, of
Sublessee's interest hereunder.
8. ADDITIONAL DEPOSIT.
In addition to the security deposit set forth in Section 7 above, as
additional security for Sublessee's faithful performance of Sublessee's
obligations hereunder, Sublessee shall deposit with Sublessor the
equivalent of Two Hundred Ninety-Three Thousand Four Hundred and
No/100ths Dollars ($293,400.00)(the "Additional Security").
Ninety-Three Thousand Four Hundred and No/100 Dollars ($93,400.00) of
the Additional Deposit shall be deposited with the Sublessor on August
1, 1999. Forty-Six Thousand Seven Hundred and No/100th Dollars
($46,700.00) in cash shall be deposited with Sublessor at the execution
of this Sublease as part of the Additional Deposit, and Forty-Six
Thousand Seven Hundred and No/100ths Dollars ($46,700.00) in cash shall
be deposited with Sublessor on August 1, 1999, as part of the
Additional Deposit. The balance of the Additional Deposit, at
Sublessee's election, shall be made in cash or Tenant Improvements, or
any combination thereof, on or before August 1, 2000. For purposes of
this Section, Tenant Improvements shall include, but not be limited to,
the following: the Repairs, as defined in Section 11; telephone
systems, including wiring and installation costs, improvements of any
nature to the office area portion of the Premises, including painting,
carpeting, and all other improvements; fiber optic lines and computer
cabling, including installation costs; warehouse racking; and all other
tenant improvements of any nature or kind with a useful life of one (1)
year or more. Sublessee shall provide Sublessor with invoices,
receipts, and proof of payment for all Tenant Improvements by Sublessor
as any part of the Additional Deposit. The foregoing notwithstanding,
provided that there is then no uncured material default by Sublessee
existing under the Sublease, the total cash portion of the Additional
Deposit shall be reduced by one-third (1/3) on August 1 of each year
commencing on August 1, 2000.
9. RIGHT TO CURE DEFAULTS, SUBLESSEE.
If Sublessee fails to pay any sum of money to Sublessor, or fails to
perform any other act on its part to be performed hereunder, the
Sublessor may, but shall not be obligated to, after the passage of any
applicable notice and cure periods, make such payment or perform such
act. All such sums paid, and all reasonable costs and expenses of
performing any such act, shall be deemed Additional Rent payable by
Sublessee to Sublessor upon demand, together with
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interest thereon at the rate of one and one-half percent (1-1/2%) per
month from the date of the expenditure until repaid.
10. RIGHT TO CURE DEFAULTS, SUBLESSOR.
If Sublessor fails to pay any sum of money to Lessor, or fails to
perform any other act on its part to be performed under the Master
Lease, the Sublessee may, but shall not be obligated to, after the
passage of any applicable notice and cure periods, make such payment
or perform such act. All such sums paid, and all reasonable costs and
expenses of performing any such act, shall be payable by Sublessor to
Sublessee upon demand, together with interest thereon at the rate of
one and one-half percent (1-1/2%) per month from the date of the
expenditure until repaid.
11. MAINTENANCE AND REPAIRS.
Except for maintenance of the structural condition of the exterior
walls, roof, and foundation of the Premises, which shall be at the
sole obligation and expense of the Sublessor, Sublessee shall, at
Sublessee's sole expense maintain all other parts of the premises in
good, clean and secure condition and promptly make all necessary
repairs and replacements, including but not limited to all windows,
glass, doors, walls and wall finishes, floor covering, heating,
ventilating and air conditioning systems, truck doors, dock bumpers,
dock seals and levelers, electrical lighting systems, and fire
sprinklers. Sublessee shall, at Sublessee's sole expense, also perform
regular removal of trash and debris. Except for those items of
maintenance and repair set forth on EXHIBIT C attached hereto (the
"Repairs"), which shall have been made by Sublessor prior to August 1,
1999, Sublessor shall deliver premises to Sublessee in "as is"
condition broom cleaned. Sublessee's obligations under this Paragraph
11 shall commence as of the Commencement Date of the Term.
12. PERSONAL PROPERTY OF SUBLESSOR.
Sublessor, at or prior to the date of this Sublease Agreement shall
provide Sublessee with a list of all personal property of Sublessor
located in, on, or about the Premises (the "Personal Property"), and
with respect to such Personal Property, shall: (a) provide Sublessee
with a letter declaring that the Personal Property is intended to be
included with the Premises and may be used by Sublessor during the
Term of this Sublease; (b) provide Sublessee with a letter of
abandonment regarding the Personal Property; or (c) remove at
Sublessor's sole cost and expense all Personal Property not otherwise
disposed of by Sublessor under (a) and (b) above.
13. UTILITIES.
Sublessee shall be responsible for paying its own utilities, including
gas, electric and water.
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14. HAZARDOUS MATERIALS.
Sublessee shall use no Hazardous Materials in, on, under or about the
Premises or any part of the Master Premises, except for normal types
and quantities of Hazardous Materials typically used in connection
with use of real property for warehouse distribution purposes, which
Sublessee may use, in compliance with all applicable laws and
regulations, on the Premises.
15. USE OF PREMISES.
The premises shall be used and occupied only for light assembly,
warehousing, distribution, administration, and general office use, and
for no other use or purpose.
16. ASSIGNMENT AND SUBLETTING.
Sublessee shall not assign this Sublease or further sublet all or any
part of the Premises without the prior written consent of Sublessor,
which consent shall not be unreasonably withheld or delayed, and the
consent of Lessor.
17. OTHER PROVISIONS OF SUBLEASE.
All applicable terms and conditions of the Master Lease not
inconsistent herewith are incorporated into and made a part of this
Sublease as if Sublessor were the lessor thereunder, Sublessee the
lessee thereunder. Sublessee assumes and agrees to perform the Lessee's
obligations under the Master Lease during the Term to the extent that
such obligations are applicable to the Premises, except that the
obligation to pay rent to Lessor under the Master Lease shall be
considered performed by Sublessee to the extent and in the amount rent
is paid to Sublessor in accordance with Section 6 of this Sublease.
Neither Sublessor nor Sublessee shall commit or suffer any act or
omission that will violate any of the provisions of the Master Lease.
Sublessor shall utilize its utmost best efforts and exercise due
diligence to cause Lessor to perform its obligations under the Master
Lease for the benefit of Sublessee. If the Master Lease terminates,
this Sublease shall terminate and the parties shall be relieved of any
further liability or obligation under this Sublease, provided however,
that if the Master Lease terminates as a result of a default or breach
by Sublessor or Sublessee under this Sublease and/or the Master Lease,
then the defaulting party shall be liable to the nondefaulting party
for the damage suffered as a result of such termination.
Notwithstanding the foregoing, if the Master Lease gives Sublessor any
right to terminate the Master Lease in the event of the partial or
total damage, destruction, or condemnation of the Master Premises or
the building or project of which the Master Premises are a part, the
exercise of such right by Sublessor shall not constitute a default or
breach hereunder.
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18. ATTORNEYS' FEES.
If Sublessor, Sublessee, or Broker shall commence an action against the
other arising out of or in connection with this Sublease, the
prevailing party shall be entitled to recover its costs of suit and
reasonable attorney's fees.
19. AGENCY DISCLOSURE.
Sublessor and Sublessee each warrant that they have dealt with no
other real estate broker in connection with this transaction except:
XXXXXXX REALTY, INC., and XXXXXXX & WAKEFIELD OF CALIFORNIA, INC., who
represents the Sublessor and XXXXX & XXXXX/NEVADA COMMERCIAL GROUP, who
represents the Sublessee.
20. NOTICES.
All notices and demands, which may or are to be required or permitted
to be given by either party hereunder shall be in writing. All notices
and demands by the Sublessor to Sublessee shall be sent by United
States Mail, postage prepaid, addressed to the Sublessee at the
Premises, and to the address hereinbelow, or to such other place as
Sublessee may from time to time designate in a notice to the Sublessor.
All notices and demands by the Sublessee to Sublessor shall be sent by
United States Mail, postage prepaid, addressed to the Sublessor at the
address set forth herein, and to such other person or place as the
Sublessor may from time to time designate in a notice to the Sublessee.
To Sublessor: HSN Realty LLC
Xxxx Xxxxxxx
0 XXX Xxxxx
Xx. Xxxxxxxxxx, XX 00000
To Sublessee: UDS
Xxxxxxx Xxxx
0000 Xxxxxxx Xxxx
Xxxx, XX 00000
21. CONSENT BY LESSOR.
THIS SUBLEASE SHALL BE OF NO FORCE OR EFFECT UNLESS CONSENTED TO IN
WRITING BY LESSOR WITHIN 15 DAYS AFTER EXECUTION HEREOF. IF LESSOR
SHALL FAIL OR REFUSE TO CONSENT TO THIS SUBLEASE WITHIN THE FOREGOING
TIME PERIOD, UPON THE LAPSE OF THE TIME PERIOD, SUBLESSOR SHALL
IMMEDIATELY RETURN ALL FUNDS DELIVERED TO IT BY SUBLESSEE.
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22. COMPLIANCE.
The parties hereto agree to comply with all applicable federal, state
and local laws, regulations, codes, ordinances and administrative
orders having jurisdiction over the parties, property or the subject
matter of this Agreement, including, but not limited to, the 1964 Civil
Rights Act and all amendments thereto, the Foreign Investment In Real
Property Tax Act, the Comprehensive Environmental Response Compensation
and Liability Act, and the Americans With Disabilities Act.
23. ASSURANCES.
Within five (5) days following receipt thereof, Sublessor shall provide
Sublessee with copies of all notices or correspondence Sublessor
receives from Lessor with respect to the Lease, and Sublessor, within
five (5) days following a request therefore, shall provide Sublessee
with such evidence of payment of the rent under the Lease as Sublessee
may from time to time demand. The foregoing notwithstanding, any notice
from the Lessor to pay rent or quit the Premises received by Sublessor
shall be immediately sent to Sublessee by facsimile transmission at
000-000-0000, or such other number as Sublessee shall from time to time
designate in a writing sent to Sublessor in accordance with Section 20
above.
SUBLESSOR: SUBLESSEE:
HSN REALITY LLC U D S
By: /s/ Xxx Blue By: /s/ Xxxxxxx Xxxx
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Xxxxxxx Xxxx, President
Title: President
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