EXHIBIT 10.41
SUBLEASE AGREEMENT
------------------
THIS SUBLEASE AGREEMENT (this "Sublease"), dated as of December 1, 1999, is
made by and between CREATIVE COMPUTERS, INC., a Delaware corporation
("Sublessor") and uBID, INC., a Delaware corporation ("Sublessee").
1. Premises. Sublessor hereby subleases to Sublessee and Sublessee hereby
--------
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain improved space (the "Subleased
Premises") consisting of approximately seventy thousand (70,000) rentable square
feet, situated in that certain industrial building (the "Building") located at
4715 East Shelby Drive, Memphis, Tennessee 38118. A depiction of the Subleased
Premises is attached hereto as Exhibit "A."
----------
2. Master Lease. Sublessor is the lessee of the Subleased Premises and other
------------
additional office space by virtue of that certain Industrial Lease Agreement
dated September 15, 1995 (the "Master Lease"), between Mercy Capital Center
Joint Venture, successor in interest to Corporate Estates, Inc., a California
corporation ("Master Landlord") and Sublessor, as lessee, a copy of which is
attached hereto as Exhibit "B." Additionally, the parties acknowledge and agree
----------
that the Master Lease is subject to that certain Payment in Lieu of Taxes Lease
between the Industrial Development Board of the City of Memphis and the County
of Shelby, Tennessee ("IDB"), as landlord, and Master Landlord, as tenant.
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to such terms in the Master Lease. Sublessor hereby represents and warrants to
Sublessee that Sublessor is not in default under the Master Lease nor is
Sublessor aware of any default of Master Landlord under the Master Lease.
3. Term.
----
3.1 Term. The term (the "Term") of this Sublease shall commence on the
----
"Commencement Date" (as defined below) and expire on the date that the last
business day of the calendar month twenty-two (22) months following the
Commencement Date, unless sooner terminated pursuant to any provision hereof.
The parties acknowledge and agree that the Commencement Date shall occur on the
later of (i) the date that Sublessor delivers written notice to Sublessee that
"Substantial Completion" of the Tenant Improvements (as defined and pursuant to
Section 8, below) has occurred, or (ii) the date the parties obtain Master
- ---------
Landlord's consent pursuant to Section 6 below.
---------
3.2 Early Occupancy. In the event that Sublessee occupies the Subleased
---------------
Premises for business purposes prior to the Commencement Date, such occupancy
shall be subject to all provisions hereof, and such occupancy shall not advance
the termination date.
4. Rent.
----
4.1 Basic Rent. Sublessee shall pay to Sublessor monthly in advance, on
----------
the first (1st) day of each month during the Term, rent (the "Basic Rent") for
the Subleased Premises in an amount equal to (a) Sixteen Thousand Six Hundred
Twenty-Five and No/100 Dollars ($16,625.00), less (b) the Amortized Tenant
Improvement Cost (as defined below). The Amortized Tenant Improvement Cost is
equal to the quotient of (i) the actual incurred Tenant Improvement Costs (as
defined in Section 8(a) below), divided by (ii) twenty-two (22). Rent for any
------------
period during the Term hereof which is for less than one (1) month shall be a
prorata portion of the monthly installment. Rent shall be payable in lawful
money of the United States to Sublessor at the address stated herein or to such
other persons or at such other places as Sublessor may designate in writing.
4.2 Additional Rent.
---------------
(a) Sublessee shall pay to Sublessor as additional rent for the
Subleased Premises Sublessee's proportionate share ("Sublessee's Proportionate
Share") of Tenant's proportionate share of all Additional Rent and "operating
expenses" (as defined and pursuant to Section 6 of the Master Lease) and real
estate taxes and other impositions. Sublessee's Proportionate Share shall be
equal to the fraction, the
numerator consisting of the then existing rentable square feet of the Subleased
Premises and the denominator consisting of 325,000. Sublessee shall pay
Sublessor's Proportionate Share of Additional Rent to Sublessor within ten (10)
days of invoice.
(b) In addition, to the extent that during the term hereof, Sublessee
requires extraordinary services or any resource in excess of that customarily
supplied to Sublessor's other premises under the Master Lease, Sublessee shall
contract, at Sublessee's sole costs and expense, with Master Landlord for such
services. Sublessor and Sublessee acknowledge and agree that Sublessee shall
not be required to pay any additional charge for basic services Master Landlord
is required to so provide without additional charge to Sublessor pursuant to
Section 6 of the Master Lease.
4.3 Payment of Rent and Consent to Sublease. Notwithstanding anything to
---------------------------------------
the contrary contained herein, Basic Rent and Additional Rent shall be payable
in the amounts and at the times set forth in this Section 4 regardless of the
---------
date that the parties hereto receive Master Landlord's consent to this Sublease
pursuant to Section 6 below. In the event, however, Master Landlord denies or
---------
fails to consent to this Sublease prior to the expiration of the Approval Period
(as defined in Section 6 below), Sublessee shall be entitled to the prompt
---------
return of all rent paid applicable to the period following the date Master
Landlord denied the approval of this Sublease and this Sublease shall be of no
further force or effect and the parties hereto shall have no further obligation
to each other.
5. Use. The Subleased Premises shall be used and occupied for office,
---
warehouse and distribution of computers and related equipment and other uses
related to Sublessee's business any other uses permitted under the Master Lease.
Sublessee's business shall be conducted throughout the term hereof so as not to
violate any term, provision or condition of the Master Lease. Sublessee shall
comply with all applicable statutes, ordinances, rules, regulations, orders,
restrictions of record and requirements in effect during the term hereof
regulating the use by Sublessee of the Subleased Premises; provided however,
Sublessee shall not be responsible for violations of applicable law relating to
the Subleased Premises occurring prior to Sublessee's occupancy of the Subleased
Premises.
6. Consent of Master Landlord. The parties hereto acknowledge that the Master
--------------------------
Lease requires that Sublessor obtain the consent of Master Landlord to any
subletting of the Subleased Premises. Therefore Sublessor and Sublessee agree
that this Sublease shall be terminated pursuant to Section 31 below unless,
----------
within thirty (30) days of the date hereof (the "Approval Period"), Master
Landlord grants its express consent to the terms and conditions of this
Sublease.
7. Environmental Matters.
---------------------
(a) For purposes of this Sublease:
(i) "Contamination" as used herein means the uncontained or
uncontrolled presence of or release of Hazardous Substances (as hereinafter
defined) into any environmental media from, upon, within, below, into or on any
portion of the Subleased Premises or the Building so as to require remediation,
cleanup or investigation under any applicable Environmental Law (as hereinafter
defined).
(ii) "Environmental Laws" as used herein means all federal, state, and
local laws, regulations, orders, permits, ordinances or other requirements,
concerning Hazardous Substances, and the protection of human health, safety and
the environment, all as may be amended from time to time.
(iii) "Hazardous Substances" as used herein means any hazardous or
toxic substance, material, chemical, pollutant, contaminant or waste as those
terms are defined by any applicable Environmental Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. 9601 et seq. ("CERCLA") and the Resource Conservation and
Recovery Act, 42 U.S.C. 6901 et seq. ("RCRA") and any solid wastes,
polychlorinated biphenyls, urea formaldehyde, asbestos, radioactive materials,
radon, explosives, petroleum products and oil.
2
(b) Sublessee represents that all its activities on the Subleased Premises or
the Building during the course of this Sublease will be conducted in compliance
with Environmental Laws. Sublessee warrants that at its warehouse facilities
(i) to Sublessee's actual knowledge, is currently in compliance with all
applicable Environmental Laws and (ii) that there are no pending or threatened
notices of deficiency, notices of violation, orders, or judicial or
administrative actions involving alleged violations by Sublessee of any
Environmental Laws. Sublessee, at Sublessee's sole cost and expense, shall be
responsible for obtaining all permits or licenses or approvals under
Environmental Laws for Sublessee's operation of its business on the Subleased
Premises and shall make all notifications and registrations required by any
applicable Environmental Laws. Sublessee, at Sublessee's sole cost and expense
shall at all times comply with the terms and conditions of all such permits,
licenses, approvals, notifications and registrations with any other applicable
Environmental Laws. Sublessee warrants that it will apply for all such permits,
licenses or approvals and made all such notifications and registrations required
by any applicable Environmental Laws necessary for Sublessee's operation of its
business on the Subleased Premises prior to the Commencement Date and will
obtain prior to the Commencement Date or as soon thereafter as reasonably
possible all such permits, licenses or approvals.
(c) Sublessee shall not cause or permit any Hazardous Substances to be
brought upon, kept or used in or about the Subleased Premises or the Building
without the prior written consent of Sublessor, which consent shall not be
unreasonably withheld; provided, however, that the consent of Sublessor shall
-------- -------
not be required for the use at the Subleased Premises of cleaning supplies,
toner for photocopying machines and other similar materials, in containers and
quantities reasonably necessary for and consistent with normal and ordinary use
by Sublessee, at the Subleased Premises, in the routine operation or maintenance
of Sublessee's office equipment or in the routine janitorial service, cleaning
and maintenance for the Subleased Premises. For purposes of this Section 7,
---------
Sublessor shall be deemed to have reasonably withheld consent if Sublessor
determines that the presence of such Hazardous Substance within the Subleased
Premises could result in a risk of harm to person or property or otherwise
negatively affect the value or marketability of the Building.
(d) Sublessee shall not cause or permit the release of any Hazardous
Substances by Sublessee or its agents, contractors, employees or invitees into
any environmental media such as air, water or land, or into or on the Subleased
Premises or the Building in any manner that violates any Environmental Laws. If
such release shall occur, Sublessee shall (i) take all steps reasonably
necessary to contain and control such release and any associated Contamination,
(ii) clean up or otherwise remedy such release and any associated Contamination
to the extent required by, and take any and all other actions required under,
applicable Environmental Laws, and (iii) notify and keep Sublessor and Master
Landlord reasonably informed of such release and response.
(e) Sublessee shall under no circumstances whatsoever (i) cause or permit
any activity on the Subleased Premises which would cause the Subleased Premises
to become subject to regulation as a hazardous waste treatment, storage or under
RCRA or the regulations promulgated thereunder; (ii) discharge Hazardous
Substances into the storm sewer system serving the Building; or (iii) install
any storage tank or underground piping on or under the Subleased Premises.
(f) Sublessee shall and hereby does indemnify Sublessor and Master Landlord
and hold Sublessor and Master Landlord harmless from and against any and all
expense, loss, and liability suffered by Sublessor or Master Landlord (with the
exception of those expenses, losses, and liabilities arising from Sublessor's or
Master Landlord's own negligence or willful act), by reason of Sublessee's
improper storage, generation, handling, treatment, transportation, disposal, or
arrangement for transportation or disposal, of any Hazardous Substances (whether
accidental, intentional, or negligent) or by reason of Sublessee's breach of any
of the provisions of this Section 7. Such expenses, losses and liabilities
---------
shall include, without limitation, (i) any and all expenses that Sublessor or
Master Landlord may incur to comply with any Environmental Laws as a result of
Sublessee's failure to comply therewith; (ii) any and all costs that Sublessor
or Master Landlord may incur in studying or remedying any Contamination at or
arising from the Subleased Premises or the Building; (iii) any and all costs
that Sublessor or Master Landlord may incur in studying, removing, disposing or
otherwise addressing any Hazardous Substances; (iv) any and all fines,
3
penalties or other sanctions assessed upon Sublessor or Master Landlord by
reason of Sublessee's failure to comply with Environmental Laws; and (v) any and
all legal and professional fees and costs incurred by Sublessor or Master
Landlord in connection with the foregoing. The indemnity contained herein shall
survive the termination or expiration of this Sublease.
(g) Sublessor and Master Landlord shall have the right, but not the
obligation, to enter the Subleased Premises at reasonable times throughout the
Term upon two (2) business days prior notice, except in the event of any
emergency, to audit and inspect the Subleased Premises for Sublessee's
compliance with this Section 7.
---------
8. Tenant Improvements; Condition of Premises and Alterations.
----------------------------------------------------------
(a) Sublessor shall, at Sublessee's sole cost and expense, acquire, construct
and install the tenant improvements (the "Tenant Improvements") as set forth on
Exhibit "C" attached hereto. Upon the execution of this Sublease, Sublessee
- -----------
shall deliver to Sublessor, in cash or immediately available funds, Three
Hundred Ninety Thousand One Hundred Ninety-Five and No/100 Dollars ($390,195.00)
(the "Tenant Improvement Allowance") to be used by Sublessor to pay for the
Tenant Improvements. In the event that the cost for the acquisition,
installation and construction of the Tenant Improvements (the "Tenant
Improvement Costs") is less than the Tenant Improvement Allowance, Sublessor
shall return the balance of the Tenant Improvement Allowance to Sublessee, and
the parties hereto agree that Basic Rent shall be adjusted as set forth in
Section 4.1. In the event that the Tenant Improvement Costs exceed the Tenant
- -----------
Improvement Allowance, Sublessee shall pay the cost of such overage up to
Twenty-Five Thousand and no/100 Dollars ($25,000.00) (the "Additional
Allowance"). In the event that the Tenant Improvement Costs exceed the sum of
Tenant Improvement Allowance and the Additional Allowance, Sublessor shall pay
such overage. Sublessor shall deliver written notice to Sublessee upon the
occurrence of and evidencing the substantial completion ("Substantial
Completion") of the acquisition, construction and installation of the Tenant
Improvements, subject to minor punch list items.
(b) In the event that Sublessee requests in writing a revision in any plans
approved by Sublessee relating to the Tenant Improvements or otherwise requests
any change to the Tenant Improvements as contemplated in this Sublease, then
provided such requested change is acceptable to Sublessor, in Sublessor's
reasonable discretion, Sublessor shall advise Sublessee by written change order
of any additional cost such change would cause. Sublessee shall approve or
disapprove such change order in writing within five (5) days following its
receipt. Sublessee's approval of a change order shall not be effective unless
accompanied by payment in full of the additional cost, if any, of the tenant
improvement work resulting from the change order. It is understood that
Sublessor shall have no obligation to interrupt or modify the construction and
installation of the Tenant Improvement work pending Sublessee's approval of a
change order.
(c) Except as otherwise set forth in Section 8(a) and Section 8(b) above,
------------ ------------
the Subleased Premises sublet hereunder shall be taken and leased by Sublessee
in their "as is" condition existing as of the date hereof. Except for non-
structural alterations costing less than Ten Thousand and No/100 Dollars
($10,000.00), Sublessee shall not make or suffer to be made any alterations,
additions or improvements to or of the Subleased Premises or any part thereof
without first obtaining the prior written consent of Master Landlord and
Sublessor. Sublessor agrees that Sublessor's consent to such alterations,
additions or improvements shall not be unreasonably withheld or delayed. In the
event Sublessor consents to the making of any alterations, additions or
improvements to the Subleased Premises by Sublessee the same shall be made by
Sublessee at Sublessee's sole cost and expense. All alterations, additions and
improvements made by Sublessee pursuant to this Sublease shall at the expiration
of the Term hereof become the property of Sublessor without any additional
consideration. Upon the expiration or sooner termination of the Term hereof,
Sublessee shall, upon written demand by Sublessor given at least thirty (30)
days prior to the end of the term, at Sublessee's sole cost and expense,
forthwith and with all due diligence remove any alterations, additions, or
improvements made by Sublessee, designated by Sublessor to be removed and
further, Sublessee shall, forthwith and with all due diligence at its sole cost
and expense, repair any damage to the Subleased Premises caused by such removal.
In all events, Sublessee shall maintain the Subleased Premises in good condition
and repair and shall surrender the Subleased Premises
4
to Sublessor upon expiration of this Sublease, or the sooner termination
thereof, in good condition and repair, excluding ordinary wear and tear.
9. Liens. Sublessee shall keep the Subleased Premises and all alterations,
-----
additions and improvements thereto, free from any liens arising out of any work
performed or obligations incurred by or for Sublessee or materials furnished to
Sublessee. Sublessor shall have the right to post notices of no responsibility
with respect to any work performed or obligations incurred by or for Sublessee
or materials furnished to Sublessee. If Sublessee fails to keep the Subleased
Premises free from any such liens and does not, within ten (10) days following
the imposition of any such lien, cause the same to be released of record by
payment or posting of a proper bond, Sublessor shall have, in addition to all
other remedies provided herein and by law, the right but not the obligation, to
cause the same to be released by such means as it shall deem proper, including
payment of or defense against the claim giving rise to such lien. All sums paid
by Sublessor and all expenses incurred by it in connection therewith (including,
without limitation, reasonable attorneys, fees) shall create automatically an
obligation of Sublessee to pay an equivalent amount as Additional Rent, which
Additional Rent shall be payable by Sublessee on Sublessor's demand with
interest at the maximum rate per annum permitted by law until paid. Such
interest charged shall not constitute Sublessor's exclusive remedy nor
compromise or limit any other rights granted Sublessor by this Sublease or by
law or equity. Nothing herein shall imply any consent by Sublessor to subject
Sublessor's estate to liability under any mechanic's lien law. Sublessee may
contest the validity and/or amount of any lien imposed on the Subleased
Premises, provided that Sublessee has caused such lien to be released of record
by the payment or posting of the proper bond.
10. Repairs. Sublessee shall promptly make all repairs to the Subleased
-------
Premises not required to be made by Master Landlord pursuant to the Master
Lease, including, but not limited to special items and equipment installed by or
on behalf of Sublessee. Sublessee shall pay for any repairs to the Subleased
Premises or the Building made necessary by any act, neglect, misuse or omission
of duty by Sublessee or its assignees, subtenants, employees, invitees or their
respective agents or other persons permitted in the Subleased Premises or on any
other portion of the Building by Sublessee, or any of them, and will maintain
the Subleased Premises, and will leave the Subleased Premises upon termination
of this Sublease, in a safe, clean, neat and sanitary condition. If Sublessee
fails to maintain the Subleased Premises in good order, condition and repair,
Sublessor shall give Sublessee notice to do such acts as are reasonably required
to so maintain the Subleased Premises. If Sublessee fails to promptly commence
such work and diligently prosecute it to completion, Sublessor shall have the
right to do such acts and expend such funds at the expense of Sublessee as are
reasonably required to perform such work. Prior to commencing any item of
repair or maintenance work which is connected to the Building or may affect any
structural portion of the Building or any of its basic systems (including,
without limitation, air conditioning, heating, plumbing, electrical, and light
fixtures), Sublessee shall notify Master Landlord and Sublessor and obtain
Master Landlord's and Sublessor's prior written approval of the contractor who
will perform such work. Master Landlord or Sublessor may elect to perform the
required work at Sublessee's cost. All amounts payable by Sublessee to
Sublessor pursuant to this Section 10 shall be paid as Additional Rent within
----------
ten (10) days after Sublessor delivers to Sublessee invoices or cancelled checks
evidencing such payment obligations. Notwithstanding the foregoing, the parties
hereto acknowledge and agree that Master Landlord shall remain responsible for
the performance of all repairs expressly required to be performed by Master
Landlord pursuant to the terms and conditions of the Master Lease ("Landlord's
Repair Obligations"). Sublessee shall notify both Master Landlord and Sublessor
in the event that Master Landlord shall fail to perform Landlord's Repair
Obligations. Upon such notification and in addition to such other rights and
remedies Sublessor shall have under the Master Lease, Sublessor shall either (i)
take reasonable action under the Master Lease to require Master Landlord to
perform its obligations thereunder, or (ii) permit Sublessee, with Sublessor's
reasonable cooperation, to enforce Master Landlord's repair obligations under
the Master Lease.
11. Damage or Destruction. In the event of damage or destruction to the
---------------------
Building or any part thereof, the Master Lease shall either continue or
terminate pursuant to Section 20 of the Master Lease. If the Master Lease
----------
terminates, the Sublease shall also terminate. If the Master Lease does not
terminate, then Master Landlord shall commence the necessary repair or
restoration of the Building, including that portion
5
of the Subleased Premises, if any, suffering damage or destruction, as required
under the Master Lease. Sublessor shall have no responsibility whatsoever for
the repair or restoration of the Subleased Premises, it being acknowledged by
Sublessee that any repairs must be performed, if at all, by Master Landlord.
There shall be no reduction or abatement of rent for any period during which
Sublessee is unable to use the Subleased Premises, in whole or in part, due to
the repairs or restoration required under this paragraph, unless Sublessor
actually receives a reduction or abatement in rent under the terms of the Master
Lease and then, only to the extent such reduction or abatement relates to the
Subleased Premises. In any event Sublessee shall not be entitled to any
insurance proceeds or other remuneration except for insurance proceeds from
insurance policies it purchased for its own personal property.
12. Eminent Domain or Condemnation. In the event a proceeding in eminent
------------------------------
domain or condemnation is instituted against the Building, or any part thereof,
the Master Lease shall either continue or terminate pursuant to Section 21 of
----------
the Master Lease. If the Master Lease terminates, this Sublease shall also
terminate. If the Master Lease does not terminate and the Subleased Premises
have not been materially affected, then the Sublease shall continue in full
force and effect except that the rental payable hereunder shall be reduced to
the extent that rent applicable to the Subleased Premises is equitably reduced
under the Master Lease. If the Master Lease does not terminate and the
Subleased Premises are materially and substantially affected by the proceeding
in eminent domain or condemnation, then Sublessee shall have the right to
terminate the Sublease. In any event, Sublessee shall not be entitled to any
award of damages for Sublessee's interest in the Subleased Premises.
Notwithstanding the foregoing, nothing contained herein shall prevent Sublessee
from seeking an award against a taking authority for the taking of personal
property and fixtures owned by Sublessee or for moving expenses as a result of
such taking; provided however, the award sought and received by Sublessee shall
not diminish or affect, in whole or in part the award sought by Master Landlord
or Sublessor.
13. Waiver of Liability; Indemnification. Without limiting in any way the
------------------------------------
effect or generality of all indemnification and waiver provisions contained as
part of the terms of the Master Lease, which are incorporated herein pursuant to
Section 15 below, Sublessee hereby agrees that:
- ----------
(a) Sublessor shall not be liable to Sublessee, and Sublessee hereby waives
all claims against Sublessor, for any injury or damage to any person or property
in or about the Subleased Premises by or from any cause whatsoever other than by
reason of the negligent acts or willful misconduct of Sublessor.
(b) Sublessee shall defend, indemnify and hold Sublessor and Master
Landlord harmless against any and all claims or liability for any injury or
damage to any person or property whatsoever when such injury or damage shall be
caused in part or in whole by the act, neglect, fault of, or omission of any
duty with respect to the same, by Sublessee, its agents, servants, employees, or
invitees: (i) occurring in, on, or about the Subleased Premises or any part
thereof, and (ii) occurring in, on, or about any facilities (including, without
prejudice to the generality of the term "facilities," elevators, stairways,
passageways or hallways) the use of which Sublessee may have in conjunction with
other tenants of the Building.
(c) Sublessee and Sublessor each hereby, on behalf of itself and all
persons and parties claiming under or through it, including without limitation
its insurance carrier(s), waives any right of recovery or claim against the
other for any damage to or destruction of any property located in or about the
Subleased Premises which results from or arises out of any casualty or event
insured by any casualty and/or property insurance policy carried by such waiving
party, regardless of the cause or origin of such casualty or event, including
without limitation, the negligence of Sublessee or Sublessor.
14. Assignment and Subletting.
-------------------------
(a) Sublessee shall not sell, assign, encumber or otherwise transfer by
operation of law or otherwise this Sublease or any interest herein, sub-sublet
the Subleased Premises, or suffer any other person to occupy or use the
Subleased Premises or any portion thereof, without the prior written consent of
Sublessor and Master Landlord as provided herein, nor shall Sublessee permit any
lien to be placed on the Sublessee's interest by operation of law or otherwise.
Sublessee shall, by written notice, advise Sublessor of its desire from and
after a stated date (which shall not be less than ten (10) days nor more than
ninety
6
(90) days after the date of Sublessee's notice), to subsublet the Subleased
Premises or any portion thereof for any part of the term hereof. Said notice by
Sublessee shall state the name and address of the proposed sub-subtenant,
together with such proposed sub-subtenant's certified financial statements, and
Sublessee shall deliver to Sublessor a true and complete copy of the proposed
subsublease with said notice. Sublessor shall not unreasonably withhold its own
consent to such sub-sublease, provided Master Landlord shall also give its
consent.
(b) Any sub-subletting hereunder by Sublessee shall not result in Sublessee
being released or discharged from any liability under this Sublease. Any
consent by Sublessor to any sub-subletting of the Subleased Premises or any part
thereof by Sublessee shall not be deemed to be a consent to any other sub-
subletting of the Subleased Premises and shall not constitute a waiver of the
requirements of Sublessor's consent to any other subsubletting of the Subleased
Premises as such requirement is stated herein. Any sale, assignment,
encumbrance, subsubletting, occupation, lien or other transfer of this Sublease
which does not comply with the provisions of this paragraph shall be voidable
and at Sublessor's election shall constitute a default hereunder.
(c) Sublessee shall pay to Sublessor of all rent received by Sublessee from
any sub-subletting hereunder in excess of the rent payable by Sublessee to
Sublessor under this Sublease, and any sums paid to Sublessee by any assignee
hereunder in consideration of the assignment of this Sublease. Sublessee hereby
irrevocably assigns to Sublessor, as security for Sublessee's obligations under
this Sublease, all rent from any sub-subletting provided, however, that until
the occurrence of an event of default by Sublessee hereunder, Sublessee shall
have the right to collect such rent.
15. Incorporation of Terms of Master Lease. It is expressly understood,
--------------------------------------
acknowledged and agreed by Sublessee that all of the other terms, conditions and
covenants of this Sublease shall be those stated in the Master Lease but only to
the extent that the terms of the Master Lease relate to the Subleased Premises,
except for (i) the basic rent obligations set forth in Article 4 of the Master
Lease, (ii) the Additional Rent obligations set forth in Article 6 of the Master
Lease, subject however to Section 4 above and (iii) Articles 16 through 18,
---------
inclusive, 35 through 37, inclusive, 39 and 40 of the Master Lease. Sublessee
shall and hereby agrees to be subject to and bound by and to comply with the
Master Lease with respect to the Subleased Premises and to satisfy all
applicable terms and conditions of the Master Lease for the benefit of both
Sublessor and Master Landlord, and that upon the breach of any of said terms,
conditions or covenants of the Master Lease by Sublessee or upon the failure of
the Sublessee to pay rent or comply with any of the provisions of this Sublease,
Sublessor may exercise any and all rights and remedies granted to Master
Landlord by the Master Lease, as well as any and all rights and remedies granted
to Sublessor by this Sublease. It is further understood and agreed that the
Sublessor has no duty or obligation to the Sublessee under the Master Lease
other than to maintain the Master Lease in full force and effect during the term
of this Sublease, provided, however, that Sublessor shall not be liable to
Sublessee for any earlier termination of the Master Lease which is not due to
the fault of Sublessor. Whenever the provisions of the Master Lease which have
been incorporated as provisions of this Sublease require the written consent of
the Master Landlord, said provisions shall be construed to require the written
consent of both the Master Landlord and the Sublessor. Sublessor hereby
covenants that its consent shall not be unreasonably withheld or delayed.
Sublessee hereby acknowledges that it has read and is familiar with the terms of
the Master Lease, and agrees that this Sublease is subordinate and subject to
the Master Lease and that any termination thereof shall likewise terminate this
Sublease. Sublessee further agrees that, in executing this Sublease and
assuming the obligations of lessee under the Master Lease (to the extent
applicable), it has not been granted any of the rights of Sublessor, as lessee
under the Master Lease, such rights being specifically reserved by Sublessor,
except to the extent granted to Sublessee hereunder. In the event of any
inconsistencies between any of the provisions of this Sublease and the Master
Lease, the terms of this Sublease shall govern.
16. Personal Property Taxes. Sublessee shall pay or cause to be paid, before
-----------------------
delinquency, any and all taxes levied or assessed and which become payable
during the term hereof upon all Sublessee's leasehold improvements, equipment,
furniture, fixtures and personal property located in the Subleased Premises.
7
17. Default and Remedies.
--------------------
(a) The occurrence of any one or more of the following events shall
constitute a material default and breach of this Sublease by Sublessee:
(i) The failure by Sublessee to make any payment of rent or any other
payment required to be made by Sublessee hereunder, as and when due, where such
failure shall continue for a period of three (3) days after written notice
thereof by Sublessor to Sublessee;
(ii) The abandonment (but not vacation of the Subleased Premises
provided Sublessee continue to timely pay all rent due hereunder) of the
Subleased Premises by Sublessee;
(iii) The failure by Sublessee to observe or perform any of the
covenants, conditions or provisions of this Sublease to be observed or performed
by Sublessee, where such failure shall continue for a period of twenty (20) days
after written notice thereof by Sublessor to Sublessee. If the nature of such
default is such that the same cannot be reasonably cured within such twenty (20)
day period, Sublessee shall not be deemed to be in default hereunder if
Sublessee shall within such period commence such cure and thereafter diligently
prosecute the same to completion, provided Master Landlord has not declared a
material default and breach of the Master Lease as a result of Sublessee's
failure to cure such default;
(iv) The making by Sublessee of any general assignment or general
arrangement for the benefit of creditors; or the filing by or against Sublessee
of a petition to have Sublessee adjudged a bankrupt, or a petition for
reorganization or arrangement under any law, now existing or hereafter amended
or enacted, relating to bankruptcy or insolvency (unless, in the case of a
petition filed against Sublessee, Sublessee has not consented to, or admitted
the material allegation of said petition is dismissed within thirty (30) days);
or the appointment of a trustee or a receiver (other than in a bankruptcy or
insolvency proceeding) to take possession of substantially all of Sublessee's
assets located at the Subleased Premises or of Sublessee's interest in this
Sublease, where possession is not restored to Sublessee within thirty (30) days;
or
(v) Sublessee causes a material default and breach under the Master
Lease.
(b) In the event of any such material default or breach by Sublessee,
Sublessor may, at any time thereafter, with or without notice or demand, and
without limiting Sublessor in the exercise of any right or remedy which
Sublessor may have hereunder, under the Master Lease as incorporated herein or
otherwise at law or in equity by reason of such default or breach, including,
but not limited to:
(i) Terminate this Sublease and Sublessee's right to possession of the
Subleased Premises by notice to Sublessee or any other lawful means, in which
case this Sublease shall terminate and Sublessee shall immediately surrender
possession of the Subleased Premises to Sublessor. In such event Sublessor
shall be entitled to recover from Sublessee all unpaid installments of rent and
other sums due and owing under this Sublease as of the date of Sublessee's
default and all damages incurred by Sublessor by reason of Sublessee's default,
including, but not limited to :
(A) The cost of recovering possession of the Subleased Premises;
or
(B) The worth at the time of award by the court having
jurisdiction thereof of the amount by which the unpaid rent for the balance of
the term after the time of such award exceeds the amount of such rental loss for
the same period that Sublessee proves could be reasonably avoided.
Unpaid installments of rent or other sums shall bear interest from the date due
at the highest legal rate permissible in the State where the Subleased Premises
are located. In the event Sublessee shall have abandoned the Subleased
Premises, Sublessor shall have the option of (1) taking possession of the
8
Subleased Premises and recovering from Sublessee the amounts specified
hereinabove, or (2) proceeding under the provisions of the following paragraphs
(ii) and/or (iii).
(ii) Maintain Sublessee's right to possession, in which case this
Sublease shall continue in effect whether or not Sublessee shall have abandoned
the Subleased Premises. In such event Sublessor shall be entitled to enforce
all of Sublessor's rights and remedies under this Sublease, including, without
limitation, the right to recover the rent as it becomes due hereunder.
Notwithstanding any election by Sublessor not to terminate this Sublease or
Sublessee's right to possession, and whether or not Sublessor has sublet the
Subleased Premises or any part thereof as provided hereinabove, Sublessor shall
retain the right to and may at any time thereafter elect to terminate this
Sublease or Sublessee's right to possession for any default of Sublessee which
remains uncured or for any subsequent default of Sublessee by giving Sublessee
written notice thereof.
(iii) Pursue any other remedy now or thereafter available to
Sublessor under the laws or judicial decisions of the State in which the
Subleased Premises are located.
(c) No entry or taking of possession of the Subleased Premises or any part
thereof by Sublessor, nor any subletting thereof by Sublessor for Sublessee, nor
any appointment of a receiver, nor any other act of Sublessor, whether
acceptance of keys to the Subleased Premises or otherwise, shall constitute or
be construed as an election by Sublessor to terminate this Sublease or
Sublessee's right to possession of the Subleased Premises unless a written
notice of such election be given to Sublessee by Sublessor.
(d) In the event Sublessor elects to terminate this Sublease or Sublessee's
right to possession hereunder, Sublessee shall surrender and vacate the
Subleased Premises in broom-clean condition, and Sublessor may re-enter and take
possession of the Subleased Premises and may eject all parties in possession or
eject some and not others or eject none. Any personal property of or under the
control of Sublessee remaining on the Subleased Premises at the time of such re-
entry may be considered and treated by Sublessor as abandoned.
(e) Termination of this Sublease or Sublessee's right to possession by
Sublessor shall not relieve Sublessee from any liability to Sublessor under any
provision of this Sublease providing for any indemnification of Sublessor by
Sublessee.
18. Brokers. Sublessee and Sublessor each represent and warrant to one another
-------
that no brokers brought about or had any connection with the procuring,
execution, or delivery of this Sublease, and each party hereto agrees to
indemnify and hold the other harmless against any claims by any broker for
services rendered to the indemnifying party in connection with this Sublease.
19. Insurance. Sublessee shall during the entire Term of this Sublease,
---------
maintain all insurance policies required by Sublessor to be maintained under the
Master Lease in accordance with the terms of the Master Lease to the extent
applicable to the Subleased Premises. Sublessee shall name Sublessor as an
additional insured on all such policies in which Master Landlord is also named
as an additional insured.
20. ADA Compliance. Sublessee shall, at its sole cost and expense, cause the
--------------
Subleased Premises to comply at all times with the requirements of the Americans
With Disabilities Act (42 U.S.C. (S) 12181 et seq.), the regulations now or
hereafter adopted pursuant thereto, and any and all applicable state or local
laws, statutes, ordinances, rules and regulations concerning public
accommodations for disabled persons now or hereafter in effect. Sublessee shall
indemnify, defend (with counsel approved by Sublessor) and hold Sublessor
harmless from and against any and all claims, judgments, damages, penalties,
fines, costs, liabilities and losses (including, without limitation, reasonable
attorneys' fees and disbursements) arising from Sublessee's failure to comply
with this Article.
21. Systems. During the term of this Sublease, Sublessee shall have the right
-------
to use Sublessor's current inventory control and shipping systems ("Systems") to
the extent permitted under Sublessor's
9
license ("Sublessor's Licensing Agreement"). Sublessee acknowledges and agrees
that its use of the Systems are on an "AS-IS" basis. Sublessee shall not be
required to pay any additional amount to Sublessor for the use of Sublessor's
License Agreement but may be required to make payment for such use to the
licensor thereunder. Sublessee shall pay to Sublessor Sublessee's proportional
share of all cost and expense ("Maintenance Costs") necessary for the
maintenance and support of the Systems, including, but not limited to
Sublessor's cost for personnel to maintain the Systems, in accordance with the
schedule attached hereto as Exhibit "D." All Maintenance Costs shall be billed
----------
monthly with Basic Rent and shall be payable within five (5) days of demand. All
other additional costs incurred by Sublessor as a result of Sublessee's use of
the Systems, including but not limited to additional licensing fees and upgrades
in software, shall be reimbursed by Sublessee, as additional rent, within five
(5) days of demand by Sublessor. Notwithstanding the foregoing, Sublessor shall
have no liability whatsoever to Sublessee for any error, act, omission, or
failure associated with the Systems or the use by Sublessee thereof, unless such
error, act, omission or failure is attributable to Sublessor's willful
misconduct or gross negligence. In addition, in no event shall Sublessee be
entitled to any reduction in or offset to Basic Rent or Additional Rent
hereunder as a result of any such error, act, omission or failure or in the
event Sublessee elects at any time to discontinue its use of the Systems.
Notwithstanding anything to the contrary contained in that certain Sublease
Agreement dated July 1, 1998 (the "Prior Sublease") between Sublessor and
Sublessee, Sublessee acknowledges and agrees that following June 30, 2000,
either Sublessee or Sublessor shall have the right upon thirty (30) days prior
written notice to the other, to terminate Sublessor's Licensing Agreement and
(i) Sublessor shall have no liability whatsoever to Sublessee as a result of the
same under this Sublease or the Prior Sublease, (ii) this Sublease shall
continue in full force and effect, and (iii) Sublessee shall not be entitled to
any reduction in or offset to Basic Rent or Additional Rent due hereunder as a
result of such termination.
22. Notices. All notices and demands which may or are required to be given by
-------
either party to the other hereunder shall be in writing and shall be personally
delivered or sent by United States certified or registered mail, postage
prepaid, return receipt requested, or sent by reputable overnight courier (such
as Federal Express, UPS or DHL with delivery confirmation) and addressed as
follows:
TO SUBLESSOR: CREATIVE COMPUTERS, INC.
2555 West 190th Street
Torrance, California 90504
Attn: Chief Financial Officer
With a copy to: MORRISON & FOERSTER LLP
19900 MacArthur Boulevard
Suite 1200
Irvine, California 92612
Attention: William B. Tate II, Esq.
TO SUBLESSEE: uBID, INC.
2525 Busse Highway
Elk Grove Village, Illinois 60007
Attn: Chief Financial Officer
With a copy to: WINSTON & STRAWN
35 West Wacker Drive
Chicago, Illinois 60601-9703
Attention: Helen Shapiro, Esq.
All notices shall be deemed to have been received at the time of delivery, if
personally delivered, or three (3) business days after deposit in the United
States mail as specified above, if mailed or one (1) business day if sent by
overnight courier for next business day delivery. Either party may from time to
time change the address for delivery of notices and demands by giving notice of
such change as specified above. Sublessor shall promptly provide Sublessee with
a copy of any notice of default under the Master Lease and any notice relating
to the Subleased Premises received by Sublessor from Master Landlord. Sublessee
10
shall forward concurrently to Sublessor any notices sent or received from Master
Landlord relating to the Subleased Premises.
23. Hold Over. In the event of any holding over without the consent of
---------
Sublessor beyond the end of the term, this Sublease shall be deemed a tenant at
sufferance upon the covenants and conditions herein contained and upon payment
of (i) 150% the monthly rental last paid by Sublessee and (ii) prompt
reimbursement to Sublessor of all loss, cost, expense and consequential damages
incurred by Sublessor as a result of such continued tenancy.
24. Captions. The captions of sections of this Sublease are not a part of this
--------
Sublease and shall have no effect upon the construction or interpretation of any
part hereof.
25. Successors and Assigns. The covenants and conditions herein contained,
----------------------
subject to the provisions as to assignment, apply to and bind the heirs,
successors, executors, administrators, legal representatives and assigns of the
parties hereto.
26. Attorneys' Fees. In the event of any legal action or proceeding brought by
---------------
either party against the other arising out of this Sublease (an "Action"), the
prevailing party shall be entitled to the payment by the losing party of its
reasonable attorneys' fees, court costs and litigation expenses, as determined
by the court.
27. Post-Judgment Attorneys' Fees. The prevailing party in any Action shall be
-----------------------------
entitled, in addition to and separately from the amounts receivable under
Section 26 above, to the payment by the losing party of the prevailing party's
- ----------
reasonable attorneys' fees, court costs and litigation expenses incurred in
connection with (a) any appellate review of the judgment rendered in such Action
or of any other ruling in such Action, and (b) any proceeding to enforce a
judgment in such Action. It is the intent of the parties that the provisions of
this Section 27 be distinct and severable from the other rights of the parties
----------
under this Lease, shall survive the entry of judgment in any Action and shall
not be merged into such judgment.
28. Gender and Number. Wherever the context so requires, each gender shall
-----------------
include any other gender, and the singular number shall include the plural and
vice-versa.
29. Cumulative Remedies. No remedy or election hereunder shall be deemed
-------------------
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
30. Separability. Any provision of this Sublease which shall prove to be
------------
invalid, void or illegal shall. in no way affect, impair, or invalidate any
other provision hereof and all such other provisions shall remain in full force
and effect.
31. Effectiveness. This Sublease shall become effective when executed by all
-------------
the parties hereto. In the event Master Landlord and IDB, however fail to
expressly consent to the same within the Approval Period, this Sublease shall
terminate. Sublessor shall return to Sublessee the initial payment of Basic
Rent delivered to Sublessor concurrently with the execution hereof by Sublessee,
and the parties hereto shall have no further obligation or liability to the
other. This Sublease may be executed by telefacsimile.
32. Quiet Enjoyment. Upon Sublessee paying all Basic Rent, Additional Rent and
----------------
other charges due hereunder and observing and performing all of the covenants,
conditions and provisions to be performed by Sublessee hereunder, Sublessee
shall have quiet possession of the Subleased Premises for the entire term
hereof, subject to all of the provisions of this Sublease and the Master Lease.
33. Time of the Essence. Time is of the essence of each provision of this
-------------------
Sublease where time is an element.
11
34. Counterparts. This Sublease may be executed in counterparts, each is
------------
hereby declared to be an original; all, however constitute but one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Sublease on the date
first above written.
Executed at Torrance, CA CREATIVE COMPUTERS, INC.,
------------------------ a California corporation
on December 1, 1999
- By: /s/ Ted Sanders
-------------------------------
Name: Ted Sanders
--------------------------
Title: Chief Financial Officer
-------------------------
By: /s/ Scott Klein
-------------------------------
Name: Scott Klein
--------------------------
Title: President
--------------------------
"Sublessor" (Corporate Seal)
Executed at Chicago, IL uBID, INC., a Delaware corporation
------------------------
on January 5, 2000
-
By: /s/ Rhytas Kleiza
-------------------------------
Name: Rhytas Kleiza
--------------------------
Title: Director of Distribution
-------------------------
By: /s/ Timothy Takesue
-------------------------------
Name: Timothy Takesue
--------------------------
Title:
Vice President-Merchandising
----------------------------
"Sublessor" (Corporate Seal)
12