Exhibit 10.5

 

THIRD AMENDMENT TO LEASE

 

THIS THIRD AMENDMENT TO LEASE (this “Third Amendment”) is made as of February 4,
2005 (the “Effective Date”) between C&B VENTURES – NAPA TWO, LLC, a California
limited liability company (“Landlord”), and SONIC SOLUTIONS, a California
corporation (“Tenant”).

 

RECITALS

 

A. Novato Gateway Associates, a California general partnership, Landlord’s
predecessor-in-interest, and Tenant entered into a Golden Gate Plaza Full
Service Lease dated as of January 26, 1995, as amended by an Amendment to Lease
dated as of November 20, 2000 and a Second Amendment to Lease dated as of
July 2, 2004 (collectively, the “Lease”), whereby Tenant has leased
approximately 38,345 rentable square feet of space in the building commonly
known as 101 Rowland Way located in Novato, California. Capitalized terms not
otherwise defined in this Third Amendment shall have the meanings given to such
terms in the Lease.

 

B. Landlord and Tenant seek to extend the term of the Lease and to otherwise
amend the Lease as provided in this Third Amendment.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1. Extension of the Term. The “Renewal Commencement Date” shall mean February 1,
2005. The term of the Lease, which was originally set to expire on May 31, 2006,
is hereby extended so that the term of the Lease will now expire on January 31,
2010.

 

2. Base Rent. Commencing on the Renewal Commencement Date, the monthly Base Rent
shall be as follows:

 

Period

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   Monthly Base Rent

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February 1, 2005 - January 31, 2006

   $ 88,193.50

February 1, 2006 - January 31, 2007

   $ 90,839.31

February 1, 2007 - January 31, 2008

   $ 93,564.48

February 1, 2008 - January 31, 2009

   $ 96,371.42

February 1, 2009 - January 31, 2010

   $ 99,262.56

 

The parties agree that the size of the Premises shall conclusively be 38,345
rentable square feet, regardless of whether the actual size of the Premises
(whether rentable or useable) is greater or less than this specified size.

 

3. Base Year. Commencing on the Renewal Commencement Date, the Base Year shall
be 2005.

 

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4. Percentage Share. Commencing as of the Renewal Commencement Date,
(i) Tenant’s percentage share of Property Taxes and Operating Expenses for the
Premises shall be calculated based on 38,345 rentable square feet, (ii) Tenant’s
percentage share of Operating Expenses allocated to the Building shall be
sixty-one and 52/100ths percent (61.52%), and (iii) Tenant’s percentage share of
Operating Expenses allocated to the Project shall be thirty-three and 5/100ths
percent (33.05%).

 

5. Tenant Improvement Allowance. Landlord shall provide Tenant with a tenant
improvement allowance of up to Two Hundred Sixty-Eight Thousand Four Hundred
Fifteen Dollars ($268,415.00) (the “Renewal TI Allowance”), to be applied by
Tenant only toward the cost of refurbishing the Premises (e.g., walls, offices,
conference rooms and other similar improvements, new carpet, paint, power
upgrades [excluding, however, any upgrades to redundant power sources such as
uninterrupted power supply and back-up generators], HVAC work, lighting, etc.)
(“Refurbishing”). Tenant cannot use the Renewal TI Allowance to pay for
furniture or trade fixtures or for any other purpose other than Refurbishing the
Premises.

 

Once Tenant has completed and paid for one or more particular Refurbishing
projects, Landlord shall reimburse Tenant for the costs of such Refurbishing
work, in an aggregate amount not to exceed the Renewal TI Allowance, within
thirty (30) days after Landlord’s receipt of the following: (i) a written
request for reimbursement that itemizes, on a line item basis, the Refurbishing
costs for which Tenant seeks payment, (ii) invoices, contracts and other
documents that reasonably evidence that Tenant has actually incurred
Refurbishing costs in an amount equal to or exceeding the Renewal TI Allowance
(provided, however, Tenant can request multiple draws upon the Renewal TI
Allowance for multiple Refurbishing projects so long as the total amount of all
draws does not exceed the maximum Renewal TI Allowance of $268,415.00),
(iii) final, unconditional lien releases from all contractors and material and
service providers who have provided materials and services for the Refurbishing
work, which lien releases comply with California Civil Code Section 3262(d), and
(iv) such other documents and information as Landlord shall reasonably request.

 

6. Right of First Offer. Subject to all existing rights of expansion, rights of
first refusal, rights of first offer or similar rights given to existing tenants
or occupants of the Building, if Landlord anticipates that space on the second
and third floors of the Building (the “Expansion Space”) will become available
due to the expiration or earlier termination of leases or other occupancy
agreements for such Expansion Space, then Landlord shall provide written notice
to Tenant (the “Availability Notice”) stating: (i) the anticipated availability
of the Expansion Space, (ii) the then-current fair market value of such
Expansion Space (including base rent, base year, increases in base rent, tenant
improvement allowances and other relevant economic terms), as determined by
Landlord in its reasonable business judgment, and (iii) Landlord’s good faith
estimate of the date such space will become available for Tenant’s occupancy
(the “Anticipated Expansion Commencement Date”). Landlord shall provide the
Availability Notice to Tenant no earlier than seven months prior to the
anticipated date the Expansion Space will become available.

 

Tenant shall have thirty (30) days after receipt of the Availability Notice to
notify Landlord in writing if it elects to lease the Expansion Space. If Tenant
timely notifies Landlord of its election to lease the Expansion Space, then,
commencing upon the date Landlord delivers

 

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possession of the Expansion Space to Tenant, but in no event earlier than the
Anticipated Expansion Commencement Date unless otherwise agreed to by Tenant,
the Expansion Space shall become part of the Premises, the Lease shall be deemed
amended to incorporate the economic terms for the Expansion Space as set forth
in the Availability Notice, and the term of the Lease with respect to the
Expansion Space shall run concurrently with the term of the Lease with respect
to the balance of the Premises. Upon the request of either party, the parties
shall execute a written Lease amendment that incorporates the terms described in
this Paragraph 5. Although the failure of the parties to enter into such an
amendment shall not diminish the rights and obligations of Landlord and Tenant
with respect to the Expansion Space as described in this Paragraph 5.

 

If Tenant elects not to lease the Expansion Space, or Tenant fails to respond
within the 30 day period described above, then Tenant shall no longer have the
right to lease the Expansion Space, and Landlord shall be free to market and
lease the Expansion Space on such terms and conditions as it elects, for a
period of six months following Tenant’s election or deemed election to forego
leasing the Expansion Space. If Landlord has not leased the Expansion Space
during this six month period, then Landlord must again provide the Availability
Notice to Tenant and afford Tenant the opportunity to expand into the Expansion
Space on the terms as provided in this Paragraph 5 before Landlord can continue
to market and/or lease the Expansion Space.

 

7. Brokers. Tenant represents and warrants that The Staubach Company is the
exclusive broker for Tenant in connection with this transaction. If a broker or
finder (other than The Staubach Company) claims that it represented Tenant in
connection with this Third Amendment and that it is entitled to a commission or
finder’s fee, then Tenant shall indemnify, protect and defend Landlord from all
loss, claim, cause of action, cost, expense and liability arising out of such
claim, including reasonable attorneys’ fees. Landlord shall pay the commission
owing to The Staubach Company in the amount of $167,882.00, equal to four
percent (4%) of the Base Rent to be paid by Tenant over the incremental term of
the Lease created under this Third Amendment beyond Tenant’s lease obligations
existing prior to this Third Amendment. Landlord shall pay this commission to
The Staubach Company promptly after this Third Amendment has been fully
executed.

 

8. Counterparts. This Third Amendment may be executed in any number of
counterparts, each of which shall constitute an original hereof and all of which
shall constitute one and the same document.

 

9. Entire Agreement. This Third Amendment and the documents described herein
contain the entire agreement between the parties hereto with respect to the
matters described herein and supersede all prior agreements, oral or written,
between the parties hereto with respect to such matters. This Third Amendment
constitutes a part of and is incorporated into the Lease, and the Lease, as
amended by this Third Amendment, remains in full force and effect. In the event
of any conflict between the terms of this Third Amendment and the terms of the
Lease, the terms of this third Amendment shall govern.

 

10. Representations and Warranties. Tenant and Landlord hereby represent,
warrant and agree as follows: (i) Landlord represents and warrants that it is
the Owner of the Property and has the right and authority to enter into this
Lease and convey the leasehold interest

 

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conveyed hereunder; (ii) Landlord and Tenant each represent and warrant that, to
their actual knowledge, without investigation, as of the date of this Third
Amendment, there exists no breach, default or event of default under the Lease,
as amended by this Third Amendment, or any event or condition which, with notice
or passage of time or both, would constitute a breach, default or event of
default on the part of Tenant or Landlord under the Lease, as amended by this
Third Amendment; and (iii) Tenant represents and warrants that, to its actual
knowledge, without investigation, as of the date of this Third Amendment, Tenant
has no offset or defense to its performance or obligations under the Lease, as
amended by this Third Amendment. Furthermore, each individual executing this
Lease on behalf of Tenant, as a California corporation, or on behalf of
Landlord, as a California limited liability company, represents and warrants
that he or she is duly authorized to execute and deliver this Lease on behalf of
Tenant or Landlord, respectively, and that this Lease is binding upon Tenant and
Landlord in accordance with their respective articles of incorporation and
bylaws, or operating agreement.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this third Amendment as of
the date first written above.

 

LANDLORD:  

C&B VENTURES-NAPA TWO, LLC.

a California limited liability company

   

By:

 

G&W Ventures, LLC.

a California limited liability company,

Its Manager

       

By:

 

/s/ Matthew T. White

       

Name:

 

Matthew T. White

       

Its:

 

Manager

TENANT:  

SONIC SOLUTIONS,

a California corporation

   

By:

  /s/ Robert J. Doris    

Name:

  Robert J. Doris    

Its:

  President    

By:

  /s/ A. Clay Leighton    

Name:

  A. Clay Leighton    

Its:

  SVP- CFO

 

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