Exhibit 10.6.1
AMENDED AND RESTATED SUBLEASE AGREEMENT
(Office Space at 13112 Evening Creek Drive South, San Diego, California)
THIS SUBLEASE AGREEMENT (this "Sublease") is made as of September 1,
2000, by and between Smiths Industries Aerospace & Defense Systems, Inc., a
Delaware corporation ("Sublandlord"), and American Technology Corporation, a
Delaware corporation ("Subtenant").
IN CONSIDERATION OF the mutual covenants, conditions and demise
herein contained, and other good and valuable consideration, receipt of which is
hereby acknowledged by each of Sublandlord and Subtenant, the parties hereto
(together, the "Parties" and each, sometimes, a "Party") do hereby agree and act
as follows:
1. Definitions.
1.1 "Base Rent" means the following amounts payable to Sublandlord by
Subtenant, in accordance with Section 4 of this Sublease:
- ------------------------------------------------------------------------------------------------------------
Time Period Annual Rate Per Annual Base Rent Monthly Base Rent
Square Foot of
Premises Rentable Area
- ------------------------------------------------------------------------------------------------------------
From September 1, 2000 to July $14.64 $177,246.48 $14,770.54
31, 2001
- ------------------------------------------------------------------------------------------------------------
From August 1, 2001 to July $15.24 $184,510.68 $15,375.89
31, 2002
- ------------------------------------------------------------------------------------------------------------
From August 1, 2002 to $15.85 $191,895.96 $15,991.33
July 31, 2003
- ------------------------------------------------------------------------------------------------------------
1.2 "Base Year" means a twelve-month period ending July 31, 2000.
1.3 "Common Areas" means all those areas and facilities of the Master
Premises designated by Sublandlord for the common use and enjoyment of
Sublandlord, subtenants and their respective employees and invitees, including
lobbies, corridors, sidewalks, access driveways, and other public areas and
facilities within the Master Premises.
1.4 "Default" means (A) any Event of Default under the Master Lease,
other than with respect to a Sublandlord Retained Obligation, (B) any failure by
Subtenant to pay Base Rent when due hereunder which is not cured within 3
business days after Sublandlord gives Subtenant written notice thereof, (C) any
assignment, subletting or other transfer by Subtenant of this Sublease or its
interest in the Premises, except as expressly permitted hereunder, (D) any
holding over after the expiration or earlier termination of this Lease without
Sublandlord's prior written consent or any failure to surrender the Premises in
the condition required under Section 5.3 of the Master Lease, or (E) any failure
-----------
by Subtenant to perform any of its covenants under this Sublease, unless such
failure is cured, at the earliest, (i) before maturing into an Event of Default
under the Master Lease or (ii) within 10 days after Sublandlord or Landlord
gives Subtenant written notice of such failure, if reasonably susceptible to
cure within 10 days (and, if not reasonably susceptible to cure within 10 days,
as soon as reasonably diligent efforts allow, so long as Subtenant commences
such efforts within 10 days after receiving such notice).
1.5 "Expense Year" means each twelve month period beginning on August
1, in which any portion of the Term falls beginning August, 2000, through and
including the period in which the Term expires.
1.6 "Incorporated Provisions of the Master Lease" means the sections
and subsections of the Master Lease which are specified in the Schedule of
Incorporated Provisions attached hereto as Schedule 2, as may be limited or
----------
otherwise modified by such Schedule.
1.7 "Landlord" means Bedford Property Investors, Inc., a Maryland
corporation, and any successor Landlord under the Master Lease.
1.8 "Master Lease" means that certain Lease, dated as of August 14,
1996, between Landlord and Sublandlord, as "Tenant," for the Master Premises, a
copy of which is attached hereto as Exhibit A.
---------
1.9 "Master Premises" means the land more particularly described in
the Master Lease attached hereto as Exhibit A, and all rights, easements, and
---------
appurtenances thereunto belonging or pertaining, together with the improvements
thereon (the "Building") containing approximately 109,780 square feet of space,
and fixtures, furnishings and equipment located at 13112 Evening Creek Drive,
South, San Diego, California 92128.
1.10 "Operating Expenses" means those expenses, costs and amounts of
every kind that Sublandlord pays or incurs during any Expense Year because of or
in connection with the ownership, operation, management, maintenance, repair,
replacement, or restoration of the Master Premises, including, without
limitation, all costs incurred by Sublandlord for (a) heat, light, power, air
conditioning and ventilation, and other utilities, and (b) real estate taxes,
and (c) insurance costs.
1.11 "Premises" means that portion of the Master Premises that is
described or delineated on Exhibit B attached hereto which contains
---------
approximately 12,974 rentable square feet.
1.12 "Sublandlord Improvements" means those improvements that
Sublandlord shall make, at its sole cost and expense, to the Premises prior to
the Commencement Date, as described on Exhibit C attached hereto.
---------
1.13 "Sublandlord Retained Obligations" means (A) those obligations
and liabilities of Tenant under the Master Lease which are specified in the
Schedule of Sublandlord Retained Obligations attached hereto as Schedule 1 and
----------
(B), whether or not specified on Schedule 1, all of Tenant's obligations and
----------
liabilities under the Master Lease which (i) arise or accrue during, or
otherwise pertain to, periods of the term of the Master Lease that do not fall
within the Term or portions of the Master Premises that do not lie within the
Premises, or (ii)
result from an action on the part of Sublandlord or any of its employees,
contractors or other agents (unless such action is performed at the direction or
request of Subtenant).
1.14 "Sublease Commencement Date" means September 1, 2000.
1.15 "Subtenant Alterations" means those alterations, improvements
and installations (including, without limitation, the Subtenant Improvements
defined below) that Subtenant makes to the Premises, other than trade fixtures
and the installation of equipment or personal property that can be removed from
the Premises without material damage thereto.
1.16 "Subtenant Assumed Obligations" means all obligations and
liabilities of Tenant under the Master Lease except for Sublandlord Retained
Obligations.
1.17 "Subtenant Improvements" means those improvements that Subtenant
shall make, at its sole cost and expense, to the Premises prior to the
Commencement Date, as described on Exhibit D attached hereto.
---------
1.18 "Subtenant's Proportionate Share" shall be 11.0%.
1.19 "Term" means term of this Sublease, beginning on the Sublease
Commencement Date and ending on July 31, 2003, unless sooner terminated in
accordance with the express provisions of this Sublease.
Each of the foregoing terms, and every other term defined in this Sublease,
shall have its defined meaning wherever capitalized herein (including, in any
Exhibit or Schedule hereto). Terms which are not otherwise defined herein, but
are defined in the Master Lease, shall have the meaning assigned to them there
wherever capitalized in this Sublease. As used in this Sublease, the terms
"herein," "hereof" and "hereunder" refer to this Sublease in its entirety and
are not limited to any specific sections; and the term "person" means any
natural person, other legal entity, or combination of natural persons and/or
other legal entities acting as a unit. Wherever appropriate in this Sublease,
the singular shall be deemed to refer to the plural and the plural to the
singular, and pronouns of certain genders shall be deemed to comprehend either
or both of the other genders.
2. Demising Clause. Effective as of the Sublease Commencement Date,
Sublandlord hereby demises and subleases to Subtenant, and Subtenant hereby
accepts and subleases from Sublandlord, the Premises, for the Term, at the rents
and upon all of the other terms and conditions set forth herein. The sublease of
the Premises to Subtenant shall include (a) the non-exclusive right to use the
Common Areas, and (b) the exclusive right to use the modular furniture
(including desks, chairs, cabinets, cubicles) currently located in the Premises.
Subtenant's use of the Common Areas shall be subject to reasonable rules and
regulations of Sublandlord and with respect to parking areas shall be further
subject to the provisions of Section 7 below.
---------
3. Condition of Premises; Improvements.
3.1 Sublandlord shall deliver the Premises to Subtenant on the
Sublease Commencement Date with the Sublandlord Improvements, clean and free of
debris but otherwise in its existing condition, AS-IS, WHERE-IS and with all
faults and defects. Subtenant hereby
acknowledges that Sublandlord has not made, will not make and shall not be
deemed to make any warranties or representations concerning the condition of the
Premises or their suitability for Subtenant's contemplated use or any
undertakings to improve the Premises (except for the Sublandlord Improvements)
or repair the Premises (except as expressly provided herein), and that the
foregoing disclaimer of warranties and representations and Subtenant's agreement
to accept the Premises in their existing condition are a material consideration
to Sublandlord for this Sublease.
3.2 Subtenant shall be responsible for the Subtenant Improvements and
any other Subtenant Alterations or installations to the Premises that Subtenant
desires. Subtenant shall obtain Sublandlord's and Landlord's prior approval of
the Subtenant Improvements and all other Subtenant Alterations, including
submitting detailed plans and specifications for all such work for Sublandlord's
approval, and shall make the same in accordance with the provisions of the
Master Lease, this Sublease and with such approved plans and specifications.
3.3 Upon the expiration or earlier termination of this Sublease,
Subtenant shall return the Premises to Sublandlord in the same condition as the
Premises were delivered by Sublandlord to Subtenant, reasonable wear and tear
excepted. Without limiting the generality of the foregoing:
(a) Upon the expiration or earlier termination of this Sublease,
Subtenant shall remove all of Subtenant's trade fixtures, equipment and personal
property installed or affixed by Subtenant and repair all damage to the Premises
caused by such removal.
(b) By delivery of written notice by Sublandlord to Subtenant no
later than 30 days prior to the expiration of this Sublease (or upon earlier
termination of this Sublease) Sublandlord may elect (i) to retain any of the
Subtenant Alterations made to the Premises by Subtenant, (ii) to require
Subtenant to remove the Subtenant Alterations (or that part of such Subtenant
Alterations identified by Sublandlord to Subtenant in said notice), or (iii)
require Subtenant to pay Sublandlord an amount equal to the estimated cost for
Sublandlord to remove the Subtenant Alterations (or that part of such Subtenant
Alterations identified by Sublandlord to Subtenant in said notice), as estimated
by Sublandlord in Sublandlord's reasonable determination (but in no event shall
the estimated cost of removal of the Subtenant Improvements exceed the cost
originally paid by Subtenant for the Subtenant Improvements, as referenced in
Exhibit D).
3.4 Except for the Sublandlord Improvements, Sublandlord shall have
no obligation to incur, pay or bear any cost or expense for such alterations and
improvements and Subtenant shall hold Sublandlord harmless therefrom.
4. Rent. As rent for the Premises ("Rent"), Subtenant shall pay the
following:
4.1 Subtenant shall pay to Sublandlord for each calendar month
falling wholly or partially within the Term (prorated with respect to any
partial month) the monthly Base Rent. Each installment of the monthly Base Rent
shall be due and payable in advance, by the first day of each calendar month
beginning within the Term (and, in a prorated amount, by the Sublease
Commencement Date for any partial month at the beginning of the Term), except
that the
monthly Base Rent for the first full calendar month of the Term (September 2000)
shall be due and payable upon Subtenant's execution and delivery of this
Sublease.
4.2 Subtenant shall pay to Sublandlord, Subtenant's Proportionate
Share of the Operating Expenses incurred for the Master Premises during any
Expense Year in excess of those incurred for the Master Premises during the Base
Year. If Subtenant uses water, electricity, heat or air-conditioning in the
Premises in excess of that which is customary for office space or after normal
Monday through Friday business hours, Subtenant shall pay to Sublandlord, within
thirty (30) days after billing, Sublandlord's actual cost of providing such
excess service, without profit or overhead. In addition Landlord reserves the
right, at Subtenant's sole cost and expense, to install devices to separately
meter Subtenant's use of one or more utilities.
4.3 Subtenant shall be responsible for any interest or late charge
incurred because of its failure to make timely payment of any Base Rent or
Operating Expenses.
5. Option to Extend Term Sublandlord hereby grants Subtenant three
(3) options (each, an "Extension Option") to extend the Term for a period of one
(1) year (each, an "Option Term"), subject to the conditions described in this
Section 5. Subtenant shall have no other right to extend the Term beyond the
Option Term. Each Extension Option is subject to the following conditions:
5.1 The Extension Option may be exercised only by written notice
delivered by Subtenant to Sublandlord of the exercise of the Extension Option no
earlier than 6 months, but no later than 5 months prior to the expiration of the
then current Term or Option Term (as applicable);
5.2 Subtenant is not in default under this Sublease at the time of
exercise or any time thereafter until the beginning of any such Option Term;
5.3 The exercise of any Extension Option by Subtenant shall be
irrevocable and shall cover the entire Premises subleased by Subtenant pursuant
to this Sublease;
5.4 A later Extension Option cannot be exercised unless the prior
Extension Option has been validly exercised;
5.5 The Annual Base Rent for any Option Term shall be increased by 4%
over the Annual Base Rent that was paid by Subtenant immediately prior to the
commencement of any such Option Term; and
5.6 The rights contained in this Section 5, shall be personal to the
originally name Subtenant and may be exercised only the originally named
Subtenant (and not any assignee, sublessee, or other transferee of Subtenant's
interest in this Lease).
5.7 If Subtenant exercises the Extension Option under this Section 5,
the Term shall be extended for the Option Term.
6. Right of First Offer Sublandlord hereby grants to Subtenant a
right of first offer ("Right of First Offer") with respect to the e.Digital
Corporation Lab area, consisting of approximately 3,000 square feet, located
adjacent to the Premises as depicted on Exhibit "B" ("Expansion Space").
Subtenant's Right of First Offer shall be on the terms and conditions set forth
in this Section 6. The First Offer Right shall begin only after the expiration
or earlier termination of the Sublease Agreement between Sublandlord and
e.Digital Corporation, a Delaware corporation, including any renewal or
extension of such sublease (whether or not such renewal or extension is under an
express written provision in such sublease or consummated under a sublease
amendment or new sublease). At any time during the term of this Sublease, if
Sublandlord determines that any Expansion Space will become available for lease
to third parties, Sublandlord shall provide Subtenant with written notice
("First Offer Notice"). The First Offer Notice shall (a) describe the Expansion
Space that will become available for lease; and (b) state all the material terms
under which Sublandlord intends to offer such space to other prospective
subtenants. Subtenant shall have five (5) business days from and after the
receipt of the First Offer Notice from Sublandlord, in which to elect to lease
the Expansion Space at the rental rate and on the terms and conditions contained
in the First Offer Notice. If Subtenant does not elect to lease the Expansion
Space, then Subtenant's Right of First Offer shall terminate and Sublandlord
shall be free to lease the Expansion Space to anyone on any terms at any time
during the Term, without any obligation to provide Subtenant with a further
right to lease that space. Subtenant's election to lease the Expansion Space
described in the First Offer Notice, shall be subject to the following
conditions:
6.1 The First Offer Right may be exercised only by written notice
delivered by Subtenant to Sublandlord within the five business day period
following receipt by Subtenant of the First Offer Notice;
6.2 Subtenant is not in default under this Sublease at the time of
exercise or as of the date of the scheduled date of delivery of the specific
Expansion Space;
6.3 The exercise of the First Offer Right by Subtenant shall be
irrevocable and shall cover the entire Expansion Space described in the First
Offer Notice; and
6.4 The rights contained in this Section 6, shall be personal to the
originally name Subtenant and may be exercised only by the originally named
Subtenant (and not any assignee, sublessee, or other transferee of Subtenant's
interest in this Lease).
If Subtenant properly exercises the First Offer Right under this Section 6,
Sublandlord shall deliver the specific Expansion Space to Subtenant on the date
set forth in the First Offer Notice ("Delivery Date") in its AS-IS condition,
the specific Expansion Space shall become part of the Premises, and the Base
Rent and Subtenant's Proportionate Share shall be adjusted (in accordance with
the First Offer Notice) and shall commence on the Delivery Date. Subtenant's
lease of the specific Expansion Space shall be on the same terms and conditions
as affect the original Premises from time to time, except as otherwise provided
in this Section 6.
7. Onsite Parking. Subtenant shall have the right to use 40 unreserved
parking stalls located in the open parking lot within the Master Premises,
except that if the Premises are reduced during the Term, the amount of parking
stalls shall also be reduced to the whole number
which comes closest to that number bearing the same relation as the number of
rentable square feet in the reduced Premises bears to the number of rentable
square feet in the Premises. Subtenant's right to use the parking stalls shall
be conditioned upon Subtenant's abiding by all rules and regulations prescribed
from time to time for the orderly operation and use of the parking lot.
Subtenant shall use all reasonable efforts to ensure that Subtenant's employees
and visitors also comply with such rules and regulations.
8. Security Deposit. As security for Subtenant's performance of its
obligations hereunder, Subtenant shall provide the following security listed in
Section 8.1 below ("Security Deposit"):
8.1 Subtenant has already deposited, in cash, with Sublandlord the
sum of $7,631.24. Subtenant shall deposit additional funds with Sublandlord
prior to the Commencement Date in the amount of $8,197.04, for a total cash
deposit in the amount of $15,828.28.
8.2. Upon any Default by Subtenant, Sublandlord may (but shall not be
obligated to) debit the Security Deposit for the payment of all or any portion
of such delinquent Rent or to compensate Sublandlord for any loss or damage
suffered by reason of such Default. Within ten business days after demand by
Sublandlord, Subtenant shall pay to Sublandlord any amount of the Security
Deposit so debited, thus restoring the Security Deposit to its original amount.
To the greatest extent permitted, Subtenant waives any applicable law (such as
Section 1950.7 of the California Civil Code) that would impose restrictions,
limitations or conditions on Sublandlord's rights to hold and apply the Security
Deposit which are inconsistent with this Section 8
9. Use. Subtenant may use the Premises for general office, laboratory
and light manufacturing uses only. In its use of the Premises, Subtenant shall
comply with all applicable laws and (except for Sublandlord Retained
Obligations) applicable provisions of the Master Lease, including rules and
regulations now or hereafter adopted by Landlord thereunder and disclosed to
Subtenant.
10. Services.
10.1 Sublandlord shall provide the following utilities and services,
which are included in the payment of Base Rent:
(a) Hot and cold water to the wet stacks of the Building.
(b) Cleaning services as specified in Exhibit E, Monday through
---------
Friday of each week, except on the holidays listed in subparagraph (iii) below.
(c) Heat and air-conditioning to the Premises in season, Monday
through Friday from 8:00 a.m. to 5:00 p.m., except for the following holidays:
New Year's Day, Presidents' Day, Memorial Day, Fourth of July, Labor Day,
Thanksgiving Day and the Friday immediately following Thanksgiving Day, and
Christmas Day, and any other national holiday promulgated by a Presidential
Executive Order or Congressional Act. Sublandlord may agree to provide heat and
air-conditioning at times in addition to those specified in the preceding
sentence, provided Subtenant gives Sublandlord prior reasonable written notice
requesting such after-hours service.
(d) A card-entry or other controlled-access system to the
Premises.
(e) Electricity and electrical facilities to furnish
commercially reasonable amounts of electricity for equipment and machinery of
Subtenant.
10.2 In the event any public utility supplying energy
requires, or government law, regulation, executive or administrative
order results in a requirement, that Sublandlord, Sublandlord or
Subtenant must reduce, or maintain at a certain level, the
consumption of electricity for the Premises or Building, which
affects the heating, air-conditioning, lighting, or hours of
operation of the Premises or Building, Sublandlord and Subtenant
shall each adhere to and abide by said laws, regulations or executive
orders without any reduction in Rent.
10.3 Subandlord's inability to furnish, to any extent or
for any reason, these defined services, or any interruption or
cessation thereof, shall not render Sublandlord liable for damages to
Subtentant, nor be construed as an eviction of Subtenant, nor work as
an abatement of any portion of rent, nor relieve Subtenant from
fulfillment of any covenant or agreement hereto.
11. Master Lease. This Lease is subject and subordinate to the Master
Lease. To the extent applicable to the Premises and the Term, and not directly
contradicted by this Sublease, each of the Incorporated Provisions of the Master
Lease are incorporated herein, and made an integral part hereof, subject to the
following:
11.1 Unless the context plainly otherwise requires, the
terms "Landlord," "Premises," "Tenant," "Term," and "Event of
Default" therein shall refer herein to "Sublandlord," "Premises," (as
defined herein), "Subtenant," "Term" (as defined herein) and
"Default," respectively.
11.2 With respect to obligations of Landlord (including,
without limitation, obligations to maintain, repair, replace and
restore the Building or the Premises) which are not within
Sublandlord's control, Sublandlord's obligation shall be limited to
using commercially reasonable efforts in enforcing its rights under
the Master Lease to cause Landlord to perform (or to compensate
Sublandlord, who in turn shall from amounts so recovered compensate
Subtenant, for Landlord's failure to perform).
11.3 Where Landlord's consent is required, Sublandlord's
obligations shall be (A) to give or withhold its own consent, which
it shall not unreasonably withhold or delay, and (B) unless
reasonably denying its own consent, request Landlord's timely
consent.
11.4 Where Subtenant has a right whose exercise requires
that a request, demand or other notice be made to Landlord,
Sublandlord shall be obligated upon Subtenant's request to make such
communication to Landlord (but Subtenant shall bear and pay any
expenses otherwise incurred by Sublandlord in the exercise of such
right).
11.5. Sublandlord shall provide Subtenant with a copy of
any notice pertaining to Subtenant's occupancy or use of the Premises
that Sublandlord receives from Landlord.
11.6 Any amount which may be payable by Tenant under an
Incorporated Provision shall be payable by Subtenant to Sublandlord,
for payment by Sublandlord to Landlord, unless Sublandlord or Landlord
directs that payment be made directly to Landlord.
11.7 Sublandlord shall not agree to any amendment or other
modification of the Master Lease which would materially impair
Subtenant's occupancy and use of the Premises without Subtenant's prior
written consent, which shall not be unreasonably withheld.
Subtenant shall fully, faithfully and seasonably perform each of Subtenant's
Assumed Obligations (including, without limitation, payment of rents, to the
extent required by Section 3 of the Master Lease), for the benefit of both
Sublandlord and Landlord; and the fact that the Incorporated Provisions do not
contain the provision of the Master Lease which contains a particular Subtenant
Assumed Obligation shall not be construed as negating Subtenant's obligation to
perform the same. Subtenant shall hold harmless, indemnify and defend
Sublandlord from and against any claim by or liability to Landlord, and related
expenses (including attorneys' fees actually and reasonably incurred), based on
breach of any of Subtenant's Assumed Obligations. Sublandlord shall maintain the
Master Lease in effect until the commencement of and throughout the Term (except
for any termination thereof through no fault or act of Sublandlord).
12. Assignment. Subtenant shall not sublease the Premises or any part
thereof or assign or encumber any of its interest under this Sublease without
Sublandlord's prior written consent, which Sublandlord may withhold in its sole
and absolute discretion. No assignment or sublease shall release Subtenant from
its obligations and liabilities hereunder.
13. Notices. Any notice, consent, demand or other communication to be
delivered to a Party hereunder shall be deemed delivered and received when made
in writing and transmitted to the applicable Party either by receipted courier
service, or by the United States Postal Service, first class registered or
certified mail, postage prepaid, return receipt requested, or by electronic
facsimile transmission ("Fax"), at the address or addresses indicated for such
Party below (and/or to such other address as such Party may from time to time by
written notice designate to the other):
If to Sublandlord: Smiths Industries Aerospace
-----------------
& Defense Systems, Inc.
13112 Evening Creek Dr., South
San Diego, CA 92128
Attention: Mr. Barry Golko
FAX: (858) 679-6100
with a copy to: Morgan, Lewis & Bockius, LLP
--------------
300 S. Grand Ave., 22nd Floor
Los Angeles, CA 90071
Attention: Mary L. Dickson, Esq.
FAX: 213-612-2554
If to Subtenant: American Technology Corporation
---------------
13112 Evening Creek Dr., South
San Diego, CA 92128
Attention: Con Bronson
FAX: 858-679-0545
and shall be deemed delivered and received (A) upon actual or attempted delivery
(as evidenced by postal or courier receipt), or completion of fax transmission
(as evidenced by fax machine-generated transmission confirmation report), if
such delivery is made or such fax transmission completed before 5:00pm
recipient's local time on a business day, or such delivery is attempted on a
business day between the hours of 9:00am and 5:00pm recipient's local time, and
(B), otherwise, on the business day following the day on which such delivery is
made or such fax transmission is completed.
14. No Third Party Beneficiaries. Except for Landlord, nothing in this
Sublease is intended or shall be construed to confer any rights or remedies on
any person other than the Parties and their respective successors and assigns,
or to relieve, discharge or alter the obligations of any third person to either
Party or to give any third person any right of subrogation or action over
against any Party.
15. No Brokers. Each Party hereby warrants and represents that it has
not employed, used or otherwise promised any compensation to any broker, finder
or similar intermediary in connection with the transaction contemplated by this
Sublease. Each Party shall hold harmless, indemnify and defend the other from
and against any claim by or liability to any such person for a commission, fee
or other compensation by reason of such transactions, and related expenses
(including attorneys' fees actually and reasonably incurred), where such claim
or liability is based on an action by the indemnifying Party which constitutes a
breach on its part of the foregoing warranty and representation.
16. Consent to Sublease by Landlord. This Sublease shall be contingent
upon and shall not become operative unless and until the Landlord has given its
consent hereto. Sublandlord shall not be responsible for the failure of Landlord
to consent to this Sublease or the failure or refusal of Landlord to grant any
consent of Landlord required by this Sublease or the Master Lease. Should the
Landlord not grant its consent to this Sublease within thirty (30) days from the
date hereof, Sublandlord and Subtenant shall be released from all obligations
with respect hereto and neither shall have any further rights at law or in
equity with respect to this Sublease. The Parties hereby acknowledge that
Landlord's consent to this Sublease shall not make Landlord a party to this
Sublease, shall not create any contractual liability or duty on the part of
Landlord and shall not in any manner increase, decrease or otherwise affect the
rights and obligations of Landlord and Sublandlord with respect to the Master
Premises.
17. Termination of Existing Sublease; Integration and Binding Effect.
Upon execution of this Sublease, the Parties agree that the certain Sublease
Agreement dated July 11,
1997, as amended by that certain First Amendment to Sublease Agreement dated
November 1, 1999, shall terminate and this Sublease shall constitute the entire
agreement among the Parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings and representations of the
Parties with respect to the subject matter hereof. This Sublease may not be
modified, amended, supplemented or otherwise changed, except by a writing
executed by all Parties. Except as otherwise expressly provided herein, this
Sublease shall bind and inure to the benefit of the Parties and their respective
successors and assigns.
18. Computation of Time. Any time period specified in this Sublease which
would otherwise end on a non-business day shall automatically be extended to the
immediately following business day.
19. Captions. Article and section headings used herein are for convenience
of reference only and shall not affect the construction of any provision of this
Sublease.
20. Further Assurances. Each Party shall each execute and deliver such
additional instruments or other documents as the other Party may reasonably
request to accomplish the purposes and intent of this Sublease; provided,
however, that nothing in this Section shall be deemed to enlarge the obligations
of the Parties hereunder or to require any Party to incur any material expense
or liability not otherwise required of it hereunder.
21. Enforcement Costs. Should either Party institute any action or
proceeding to enforce any provision of this Sublease or for damages by reason of
an alleged breach of any provision hereof, the prevailing Party shall be
entitled to recover from the Party not prevailing all costs and expenses
(including reasonable attorneys' fees) incurred by such prevailing Party in
connection with such action or proceeding. A Party entitled to recover costs and
expenses under this Section shall also be entitled to recover all costs and
expenses (including reasonable attorneys' fees) incurred in the enforcement of
any judgement or settlement obtained in such action or proceeding (and in any
such judgement provision shall be made for the recovery of such post-judgement
costs and expenses).
22. Governing Law. This Sublease shall be deemed to be an agreement made
under the laws of the State of California and for all purposes shall be governed
by and construed in accordance with such laws.
23. Counterparts. This Sublease, and any amendment hereto, may be executed
in any number of counterparts and by each Party on separate counterparts, each
of which when so executed and delivered shall be deemed an original and all of
which taken together shall constitute but one and the same instrument.
24. Signers' Warranty. Each individual executing and delivering this
Sublease on behalf of a corporate Party hereby warrants and represents to the
other Parties that he or she has been duly authorized and empowered to do so.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the Parties have executed and delivered, or caused their
duly authorized representative(s) to execute and deliver, this Sublease as of
the date written above.
SUBLANDLORD: SMITHS INDUSTRIES AEROSPACE & DEFENSE
SYSTEMS, INC., a Delaware corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
SUBTENANT: AMERICAN TECHNOLOGY CORPORATION, a Delaware
corporation
By: /s/ TERRY CONRAD
----------------------------------
Name: Terry Conrad
--------------------------------
Title: President
-------------------------------
Schedule 1
SCHEDULE OF SUBLANDLORD RETAINED OBLIGATIONS
The following obligations and liabilities (collectively, "obligations") of
Tenant under the Master Lease shall remain obligations of Sublandlord and are
not assumed, or to be paid or performed, by Subtenant:
- ------------------------------------------------------------------------------------------------------
(S) of Master Lease Retained Obligation
- ------------------------------------------------------------------------------------------------------
3.1 Payment of Base Rent to Landlord
- ------------------------------------------------------------------------------------------------------
3.2 All of Tenant's obligations under this provision
- ------------------------------------------------------------------------------------------------------
3.3 All of Tenant's obligations under this provision
- ------------------------------------------------------------------------------------------------------
3.4 Any obligation of Tenant related to its own Personal Property
- ------------------------------------------------------------------------------------------------------
3.6 All of Tenant's obligations under this provision
- ------------------------------------------------------------------------------------------------------
3.7 All of Tenant's obligations under this provision
- ------------------------------------------------------------------------------------------------------
5.3 Any obligation of Tenant related to the removal of its own
alterations from the Premises
- ------------------------------------------------------------------------------------------------------
6 Any obligation of Tenant related to repairing and maintaining the
Premises, Building and its systems outside of the Premises and the
grounds and paved areas adjacent to the Building, except for any
repair or maintenance with respect to the Premises or Building and
systems outside of the Premises caused by the negligence, act or
omission of Subtenant, its employees, agents, contractors,
subtenants, licensees or invitees shall be made by Sublandlord at
Subtenants sole cost and expense, which amounts shall be
payable by Subtenant as additional Rent within 10 days after
demand therefor. Subtenant shall promptly notify Landlord
of the need for any such repair or maintenance.
- ------------------------------------------------------------------------------------------------------
27 Any obligation or right of Tenant to exercise the Renewal
provisions.
- ------------------------------------------------------------------------------------------------------
29 Any obligation or right of Tenant to participate in the Right of
First Negotiation.
- ------------------------------------------------------------------------------------------------------
Schedule 2
SCHEDULE OF INCORPORATED PROVISIONS OF THE MASTER LEASE
- -----------------------------------------------------------------------------------------------------
(S) of Master Lease Limitation or Modification
- -----------------------------------------------------------------------------------------------------
3.5 None
- -----------------------------------------------------------------------------------------------------
3.7 Rent shall be payable to Sublandlord at the Master Premises
- -----------------------------------------------------------------------------------------------------
3.8 None
- -----------------------------------------------------------------------------------------------------
4 Subtenant's use of the Premises shall be limited as set forth
in Section 9 of the Sublease
- -----------------------------------------------------------------------------------------------------
5 Sublandlord shall not require Subtenant's removal ofany of
Alterations installed by Sublandlord.
- -----------------------------------------------------------------------------------------------------
7 None
- -----------------------------------------------------------------------------------------------------
8.2 None
- -----------------------------------------------------------------------------------------------------
9 Sublandlord's consent to any assignment or subletting may be
withheld in its sole and absolute discretion.
- -----------------------------------------------------------------------------------------------------
10 The term "Landlord" under Article 10 of the Master Lease shall
expressly refer to both the Landlord under the Master Lease
and Sublandlord.
- -----------------------------------------------------------------------------------------------------
11 Sublandlord's exercise of any right of termination under
Article 11 of the Master Lease shall be in its sole discretion.
Subtenant shall not have any right to terminate for damage or
destruction unless Sublandlord also has a right to terminate.
- -----------------------------------------------------------------------------------------------------
12 Sublandlord's exercise of any right of termination under
Article 12 of the Master Lease shall be in its sole discretion.
Subtenant shall not have any right to terminate for
condemnation unless Sublandlord also has a right to terminate.
- -----------------------------------------------------------------------------------------------------
13 In the event of any inconsistency between Section 13.1 of the
Master Lease and the definition of Default under the Sublease,
the provisions of the Sublease shall control.
- -----------------------------------------------------------------------------------------------------
14 None
- -----------------------------------------------------------------------------------------------------
15 None
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
(S) of Master Lease Limitation or Modification
- -----------------------------------------------------------------------------------------------------
16 Excluding Section 16.5 and any other provision obligating
Sublandlord to deliver a non-disturbance agreement to Subtenant.
- -----------------------------------------------------------------------------------------------------
17 None
- -----------------------------------------------------------------------------------------------------
18 None
- -----------------------------------------------------------------------------------------------------
19 None
- -----------------------------------------------------------------------------------------------------
20 None
- -----------------------------------------------------------------------------------------------------
21 None
- -----------------------------------------------------------------------------------------------------
22 None
- -----------------------------------------------------------------------------------------------------
23 None
- -----------------------------------------------------------------------------------------------------
24 Subtenant shall be obligated to deliver an Estoppel Certificate
within ten (10) days of request.
- -----------------------------------------------------------------------------------------------------
25 None
- -----------------------------------------------------------------------------------------------------
28.7 In addition to Lender, Subtenant agrees to modify the Sublease
as may be required by Landlord.
- -----------------------------------------------------------------------------------------------------
28.8 None
- -----------------------------------------------------------------------------------------------------
28.9 None
- -----------------------------------------------------------------------------------------------------
28.11 None
- -----------------------------------------------------------------------------------------------------
Exhibit A
MASTER PREMISES
All those plots, pieces and parcels of land situate, lying or being in the City
of San Diego, County of San Diego, State of California more particularly
described as follows:
PARCELS 1 AND 2 OF PARCEL MAP NO. 14228, IN THE CITY OF SAN DIEGO, COUNTY
OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY
RECORDER OF SAN DIEGO COUNTY, MARCH 24, 1986 AS FILE PAGE NO. 85-111959 OF
OFFICIAL RECORDS
TOGETHER WITH all rights, easements and appurtenances thereunto belonging or
pertaining, including all improvements and fixtures, furniture and equipment
located thereon, and commonly known as 13112 Evening Creek Drive South, San
Diego, California 92128
Exhibit B
PREMISES
Exhibit C
SUBLANDLORD IMPROVEMENTS
NONE
Exhibit D
SUBTENANT IMPROVEMENTS
SEE ATTACHED
Exhibit E
MAINTENANCE SCHEDULE
SEE ATTACHED