Exhibit 10.24a
SORRENTOVIEW
INDUSTRIAL REAL ESTATE TRIPLE NET SUBLEASE
July 1, 2001
LANDLORD: Sorrento Montana, L. P.,
a California Limited Partnership
TENANT: Camino Neurocare, Inc. a Delaware
Corporation
Page 1
SORRENTOVIEW
INDUSTRIAL REAL ESTATE TRIPLE NET SUBLEASE
TABLE OF CONTENTS
Page
BASIC TERMS............................................................ 6
1.1 DATE OF SUBLEASE...................................... 6
1.2 LANDLORD.............................................. 6
1.3 TENANT................................................ 6
1.4 PREMISES.............................................. 6
1.5 SUBLEASE TERM......................................... 6
1.6 PERMITTED USES........................................ 6
1.7 TENANTS GUARANTOR..................................... 7
1.8 INITIAL SECURITY DEPOSIT.............................. 7
1.9 RENT AND OTHER CHARGES PAYABLE BY TENANT.............. 7
1.10 RIDERS................................................ 7
1.11 BROKERS. (See Section 13.14). Tenant is not represented
by an outside broker.................................. 7
SUBLEASE TERM.......................................................... 7
2.1 MASTER LEASE.......................................... 7
2.2 SUBLEASE OF PREMISES FOR SUBLEASE TERM................ 7
2.3 DELAY IN COMMENCEMENT................................. 7
2.4 EARLY OCCUPANCY....................................... 8
2.5 HOLDING OVER.......................................... 8
2.6 SURRENDER OF PREMISES................................. 8
BASE RENT.............................................................. 8
3.1 TIME AND MANNER OF PAYMENT............................ 8
3.2 INCREASE.............................................. 8
3.3 SECURITY DEPOSIT INCREASES............................ 8
3.4 TERMINATION; ADVANCE PAYMENTS......................... 9
OTHER CHARGES PAYABLE BY TENANT........................................ 9
4.1 ADDITIONAL RENT....................................... 9
4.2 REAL PROPERTY TAXES................................... 9
4.3 UTILITIES............................................. 10
4.4 INSURANCE............................................. 10
4.5 COMMON AREAS.......................................... 12
4.6 LATE CHARGES.......................................... 15
4.7 INTEREST ON PAST DUE OBLIGATIONS...................... 15
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4.8 IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY
TAXES................................................. 15
USE OF PREMISES........................................................ 15
5.1 PERMITTED USES........................................ 16
5.2 MANNER OF USE......................................... 16
5.3 SIGNS AND AUCTIONS.................................... 17
5.4 HAZARDOUS MATERIALS................................... 17
5.5 INDEMNIFICATION....................................... 19
5.6 LANDLORD'S ACCESS..................................... 19
5.7 QUIET POSSESSION...................................... 19
5.8 WINDOW COVERING....................................... 20
CONDITION OF PREMISES; MAINTENANCE, REPAIRS, AND ALTERATIONS........... 20
6.1 EXISTING CONDITIONS................................... 20
6.2 EXEMPTION OF LANDLORD FROM LIABILITY; WAIVER.......... 20
6.3 TENANT'S OBLIGATIONS.................................. 20
6.4 LANDLORD'S OBLIGATIONS................................ 21
6.5 ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.............. 21
6.6 RULES AND REGULATIONS................................. 22
6.7 CONDITION UPON TERMINATION............................ 24
6.8 MAINTENANCE OF COMMON AREAS........................... 24
DAMAGE OR DESTRUCTION.................................................. 24
7.1 PARTIAL DAMAGE TO PREMISES............................ 24
7.2 TOTAL OR SUBSTANTIAL DESTRUCTION...................... 25
7.3 LANDLORD'S OBLIGATIONS................................ 25
7.4 TEMPORARY REDUCTION OF RENT........................... 25
7.5 WAIVER................................................ 25
CONDEMNATION........................................................... 26
8.1 CONDEMNATION.......................................... 26
8.2 WAIVER................................................ 26
ASSIGNMENT AND SUBLETTING.............................................. 26
9.1 LANDLORD'S CONSENT REQUIRED........................... 26
9.2 TENANT AFFILIATE...................................... 27
9.3 NO RELEASE OF TENANT.................................. 27
9.4 LANDLORD'S ELECTION................................... 27
9.5 NO MERGER............................................. 28
9.6 EXCESS RENTALS........................................ 28
DEFAULTS; REMEDIES..................................................... 28
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10.1 COVENANTS AND CONDITIONS.............................. 28
10.2 DEFAULTS.............................................. 28
10.3 REMEDIES.............................................. 29
10.4 THE RIGHT TO RELET THE PREMISES....................... 30
10.5 WAIVER OF RIGHTS OF REDEMPTION........................ 30
10.6 CUMULATIVE REMEDIES................................... 31
10.7 RIGHT TO CURE......................................... 31
PROTECTION OF CREDITORS................................................ 31
11.1 SUBORDINATION......................................... 31
11.2 ATTORNMENT............................................ 31
11.3 SIGNING OF DOCUMENTS.................................. 31
11.4 ESTOPPEL CERTIFICATES................................. 31
11.5 TENANT'S FINANCIAL CONDITION.......................... 32
LEGAL COSTS............................................................ 32
12.1 ATTORNEYS' FEES....................................... 32
12.2 LANDLORD'S CONSENT.................................... 32
MISCELLANEOUS PROVISIONS............................................... 33
13.1 SUBSTITUTED PREMISES.................................. 33
13.2 LANDLORD'S LIABILITY; CERTAIN DUTIES.................. 33
13.3 SEVERABILITY.......................................... 33
13.4 INTERPRETATION........................................ 34
13.5 INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS...... 34
13.6 NOTICES............................................... 34
13.7 WAIVERS............................................... 34
13.8 NO RECORDATION........................................ 34
13.9 BINDING EFFECT; CHOICE OF LAW......................... 34
13.10 CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY............ 34
13.11 JOINT AND SEVERAL LIABILITY........................... 35
13.12 FORCE MAJEURE......................................... 35
13.13 NO OPTION............................................. 35
13.14 BROKERS............................................... 35
13.15 HAZARDOUS SUBSTANCE CONDITIONS........................ 35
14.0 OPTION TO RENEW....................................... 35
15.0 CROSS DEFAULT......................................... 36
16.0 RIGHT OF FIRST REFUSAL................................ 36
Exhibit "A"................Depiction of Premises
Exhibit "B"................Depiction of Project
Exhibit "C"................Sign Criteria
Page 4
INDEX OF MAJOR DEFINED TERMS
LOCATION
OF DEFINITION
DEFINED TERMS IN INDUSTRIAL SUBLEASE
- ------------- ----------------------
Additional Areas...............................................................
Additional Rent................................................................
Base Rent......................................................................
Broker.........................................................................
Building.......................................................................
Common Area Costs..............................................................
Common Areas...................................................................
Condemnation...................................................................
District.......................................................................
Hazardous Material.............................................................
Hazardous Substance Condition..................................................
Impound Payments...............................................................
Interest Rate..................................................................
Landlord.......................................................................
Landlord Entities..............................................................
Master Lease...................................................................
Premises.......................................................................
Project........................................................................
Real Property Taxes............................................................
Rent...........................................................................
Security Deposit...............................................................
Sublease Term..................................................................
Tenant.........................................................................
Tenant's Affiliate.............................................................
Work...........................................................................
Page 5
SORRENTOVIEW
INDUSTRIAL REAL ESTATE TRIPLE NET SUBLEASE
ARTICLE I
BASIC TERMS
This Article One contains the Basic Terms of this Sublease between the Landlord
and Tenant named below. This Sublease is subject to the Master Lease identified
in Section 2.1 below. Other Articles, Sections, and Subsections of this Sublease
referred to in this Article One explain and define the Basic Terms and are to be
read in conjunction with the Basic Terms.
1.1 DATE OF SUBLEASE July 1, 2001
1.2 LANDLORD Sorrento Montana, L. P., a California Limited
Partnership
Address of Landlord: c/o Sorrento Commercial Properties, Inc.,
dba Sorrento Management Company
10211 Pacific Mesa Boulevard, Suite 406
San Diego, California 92121
1.3 TENANT: Camino NeuroCare, Inc., a Delaware Corporation
Address of Tenant: 5955 Pacific Center Boulevard
San Diego, California 92121
1.4 PREMISES. In consideration of the rents, covenants, and agreement on
the part of the Tenant to be paid and performed, Landlord subleases to Tenant,
and Tenant subleases from Landlord, those certain premises identified on Exhibit
"A" attached hereto and by this reference incorporated herein (the "Premises").
The Premises contain approximately 16,205 square feet of space, and are situated
within that certain building ("Building") known as Building 7 and located at
5965 Pacific Center Boulevard, Suite #706 through #714 and Suite #716, San
Diego, California 92121.
The Building is situated within that certain project ("Project")
known as SORRENTOVIEW, located at the east side of Pacific Mesa Boulevard,
between Pacific Mesa Court and Pacific Center Boulevard, San Diego, California,
more particularly identified on Exhibit "B" attached hereto and by this
reference incorporated herein.
1.5 SUBLEASE TERM. Twenty-four (24) months, beginning on July 1, 2001 or
such other date as is specified in this Sublease (the "Sublease Term") (See
Article 2).
1.6 PERMITTED USES. The Premises shall be used and occupied only for the
research, manufacturing, warehousing and distribution of medical products, and
administrative and storage uses related directly thereto (See Section 5.1).
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1.7 TENANTS GUARANTOR. (IF NONE, SO STATE) None.
1.8 INITIAL SECURITY DEPOSIT. (See Section 3.3) Thirteen Thousand Seven
Hundred Seventy-Four and 25/100 ($13,774.25).
1.9 RENT AND OTHER CHARGES PAYABLE BY TENANT.
1.9.1 BASE RENT. The base rent ("Base Rent") shall be Thirteen Thousand
Seven Hundred Seventy-Four and 25/100 ($13,774.25) per month for the first
Twelve (12) months, as provided in Section 3.1, then Base Rent shall be
increased on each annual anniversary of the Commencement Date, beginning on the
first anniversary of the Commencement Date, by five percent (5%) of the Base
Rent in effect during the immediately preceding one year period. If the
Commencement Date does not occur on the first day of the month, then the
foregoing adjustments to Base Rent shall occur on the first day of the month in
which the Commencement Date occurs.
1.9.2 OTHER PERIODIC PAYMENTS; ADDITIONAL RENT. (i) Real Property Taxes;
(ii) utilities; (iii) insurance premiums; (iv) Common Area Costs; (v) impounds
for insurance premiums and Real Property Taxes; (vi) maintenance, repairs, and
alterations (See Articles Four and Six).
1.10 RIDERS. The following Riders are attached to and made a part of this
Sublease: (If none, so state.) None.________________________________________.
1.11 BROKERS. (See Section 13.14). Tenant is not represented by an outside
broker.
ARTICLE II
SUBLEASE TERM
2.1 MASTER LEASE. Landlord is the ground lessee of the real property
improved with and identified as the Project under that certain Lease dated
August 25, 1987, by and between the San Diego Unified School District
("District) as lessor and Landlord as lessee (the "Master Lease"). The Master
Lease provided that Landlord may construct improvements and sublease portions
thereof to tenants. Accordingly, and subject to the Master Lease, Landlord is
entering into this sublease with Tenant.
2.2 SUBLEASE OF PREMISES FOR SUBLEASE TERM. Landlord subleases the
Premises to Tenant and Tenant subleases the Premises from Landlord for the
Sublease Term. The Sublease Term is for the period stated in Section 1.5 above
and shall begin and end on the dates specified in Section 1.5 above, unless the
beginning or end of the Sublease Term is changed under any provision of this
Sublease. The "Commencement Date" shall be the date specified in Section 1.5
above for the beginning of the Sublease Term, unless advanced or delayed under
any provision of this Sublease.
2.3 DELAY IN COMMENCEMENT. Deleted.
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2.4 EARLY OCCUPANCY. If Tenant occupies the Premises prior to the
Commencement Date, Tenant's occupancy of the Premises shall be subject to all of
the provisions of this Sublease, except for payment of Rent. Early occupancy of
the Premises shall not advance the expiration date of this Sublease.
2.5 HOLDING OVER. Tenant shall vacate the Premises upon the expiration or
earlier termination of this Sublease. Tenant shall reimburse Landlord for and
indemnify Landlord against all damages, loss or liability (including reasonable
attorneys' fees and costs) incurred by Landlord from any delay by Tenant in
vacating the Premises. If Tenant remains in possession of all or any part of the
Premises after the expiration of the term hereof without the express consent of
Landlord, such tenancy shall be from month-to-month only and not a renewal
hereof or an extension for any further term, and in such case, Base Rent then in
effect shall be increased by fifty percent (50%) and other monetary sums due
hereunder shall be payable in the amount and at the time specified in this
Sublease; and such month-to-month tenancy shall be subject to every other term,
covenant and agreement contained herein, except that the month-to-month tenancy
will be terminable on thirty (30) days notice given at any time by either party.
2.6 SURRENDER OF PREMISES. Upon the termination of the Sublease, Tenant
shall surrender the Premises to Landlord in the condition specified in and
according to Section 6.7.
ARTICLE III
BASE RENT
3.1 TIME AND MANNER OF PAYMENT. Upon execution of this Sublease, Tenant
shall pay Landlord the Base Rent in the amount stated in Subsection 1.9.1 above
for the first month of the Sublease Term. On the first day of the second month
of the Sublease Term and each month thereafter, Tenant shall pay Landlord the
Base Rent in United States currency, in advance, without offset, deduction or
prior demand. The Base Rent shall be payable at Landlord's address or at such
other place as Landlord may designate in writing.
3.2 INCREASE. The Base Rent shall be increased at the times specified in
Subsection 1.9.1 above. Tenant shall be obligated to pay the new Base Rent from
its effective date until the next periodic increase without any prior notice
from Landlord.
3.3 SECURITY DEPOSIT INCREASES.
3.3.1 DEPOSIT. Upon the execution of this Sublease, Tenant shall deposit
with Landlord a cash security deposit in the amount set forth in Section 1.8
above (the "Security Deposit"). Landlord may apply all or part of the Security
Deposit to any unpaid rent or other charges due from Tenant or to cure any other
defaults of Tenant. Tenant hereby waives the provisions of Section 1950.7 of the
California Civil Code, and all other provisions of law, now or hereafter in
force, which provide that Landlord may claim from a security deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair
damage caused by Tenant or to clean the Premises, it being agreed that Landlord
may, in addition, claim those sums reasonably necessary to compensate Landlord
Page 8
for any other loss or damage, foreseeable or unforeseeable, caused by the act or
omission of Tenant or any officer, employee, agent or invitee of Tenant. If
Landlord uses any part of the Security Deposit, Tenant shall restore the
Security Deposit to its full amount within ten (10) days after Landlord's
written request. Tenant's failure to do so shall be a material default under
this Sublease. No interest shall be paid on the Security Deposit. Landlord shall
not be required to keep the Security Deposit separate from its other accounts
and no trust relationship is created with respect to the Security Deposit.
3.3.2 INCREASE IN DEPOSIT. Any time Base Rent increases, Tenant shall,
upon written request of Landlord, deposit additional sums with Landlord as an
addition to the Security Deposit so that the total Security Deposit shall at all
times bear the same proportion to the then current Base Rent as the initial
Security Deposit bears to the initial Base Rent.
3.4 TERMINATION; ADVANCE PAYMENTS. Upon termination of this Sublease under
Article Seven (Damage or Destruction), Article Eight (Condemnation), or any
other termination not resulting from Tenant's default, and after Tenant has
vacated the Premises in the manner required by this Sublease, an equitable
adjustment shall be made concerning advance Rent, any other advance payments
made by Tenant to Landlord, and accrued Real Property Taxes, and Landlord shall
refund the unused portion of the Security Deposit to Tenant or Tenant's
successor.
ARTICLE IV
OTHER CHARGES PAYABLE BY TENANT
4.1 ADDITIONAL RENT. All charges payable by Tenant other than Base Rent
are called "Additional Rent." Unless this Sublease provides otherwise, all
Additional Rent shall be paid with the next monthly installment of Base Rent and
shall be in United States currency. The term "Rent" shall mean Base Rent and
Additional Rent.
4.2 REAL PROPERTY TAXES.
4.2.1 PAYMENT OF TAXES. Tenant shall pay its proportionate share of all
Real Property Taxes levied and assessed against the Project. Tenant's
proportionate share of Real Property Taxes shall be the ratio that the total
number of square feet in the Premises bears to the total number of leasable
square feet in the Project existing upon the date the computation is made. Each
year Landlord shall notify Tenant of Landlord's calculation of Tenant's
proportionate share of the Real Property Taxes and together with such notice
shall furnish Tenant with a copy of the tax bill. If any supplemental tax bills
are delivered with respect to the Project, Landlord may notify Tenant of
Landlord's new calculation of Tenant's proportionate share of Real Property
Taxes as soon as such supplemental tax bill is received. Subject to Section 4.8
below, Tenant shall reimburse Landlord for Tenant's proportionate share of Real
Property Taxes semiannually no later than fifteen (15) days before the taxing
authority's delinquency date.
4.2.2 DEFINITION OF "REAL PROPERTY TAXES". "Real Property Taxes" means (i)
any fee, license fee, license tax, commercial rental tax, levy, charge,
assessment, penalty or tax (other than inheritance or estate taxes) imposed by
any authority having the direct or indirect power to tax, including any City,
County, State or Federal government, or any school, agriculture, lighting,
Page 9
drainage or other improvement district thereof, as against any legal or
equitable interest of Landlord in the Premises; (ii) any tax on the Landlord's
right to receive, or the receipt of, rent or income from the Premises or against
Landlord's business of leasing the Premises; (iii) any tax or charge for fire
protection, streets, sidewalks, road maintenance, refuse or other services
provided to the Premises by any governmental agency; (iv) any tax imposed upon
this transaction or based upon a reassessment of the Premises due to a change in
ownership or transfer of all or part of Landlord's interest in the Premises; and
(v) any charge or fee replacing any tax previously included within the
definition of Real Property Taxes. "Real Property Taxes" does not, however,
include Landlord's Federal or State income, franchise, inheritance or estate
taxes.
4.2.3 PERSONAL PROPERTY TAXES.
(a) Tenant shall pay prior to delinquency all taxes charged against trade
fixtures, furnishings, equipment or any other personal property belonging to
Tenant. Tenant shall attempt to have such personal property taxed separately
from the Premises.
(b) If any such taxes on Tenant's personal property are levied against
Landlord or Landlord's property, or if the assessed value of the Premises is
increased by the inclusion therein of a value placed upon such personal property
or trade fixtures of Tenant, then Landlord, after written notice to Tenant,
shall have the right to pay the taxes based upon such increased assessments,
regardless of the validity thereof, but only under proper protest if requested
by Tenant in writing. If Landlord shall do so, then Tenant shall, upon demand,
repay to Landlord the taxes levied against Landlord, or the proportion of such
taxes resulting from such increase in the assessment. In any such event,
however, Tenant, at Tenant's sole cost and expense, shall have the right, in the
name of Landlord and with Landlord's cooperation, to bring suit in any court of
competent jurisdiction to recover the amount of any such taxes so paid under
protest; any amount so recovered to belong the Tenant.
(c) If any of Tenant's personal property is taxed with the Premises,
Tenant shall pay Landlord the taxes for the personal property within fifteen
(15) days after Tenant receives a written statement from Landlord for such
personal property taxes.
4.3 UTILITIES. Tenant shall arrange for and pay, directly to the
appropriate supplier, the cost of all natural gas, heat, light, power, sewer,
telephone, water and other utilities and services supplied to the Premises.
Landlord will cooperate in attempting to have each of the utilities supplied to
the Premises separately metered. However, if any such utilities or services are
jointly metered with other premises within the Project, Landlord shall make a
reasonable determination of Tenant's proportionate share of the cost of such
utilities and services, based on information reasonably available to Landlord,
and Tenant shall pay such share to Landlord within fifteen (15) days after
receipt of Landlord's written statement of such cost.
4.4 INSURANCE.
4.4.1 LANDLORD'S LIABILITY INSURANCE. During the Sublease Term, Landlord
shall maintain a policy of commercial general liability insurance at Tenant's
expense, insuring Landlord against liability arising out of the ownership, use,
occupancy or maintenance of the Premises. The initial amount of such insurance
Page 10
shall be at least $2,000,000.00, and shall be subject to periodic increase based
upon inflation, increased liability awards, recommendations of professional
insurance advisers, and other relevant factors. However, the amount of such
insurance shall not limit Tenant's liability nor relieve Tenant or any
obligation hereunder. Tenant shall, at Tenant's expense, maintain such other
liability insurance as required pursuant to Subsections 4.4 6 and 4 4 7 hereof.
4.4.2 LANDLORD'S HAZARD AND RENTAL INCOME INSURANCE. During the Sublease
Term, Landlord shall, at Tenant's expenses, maintain policies of insurance
covering loss of or damage to the Premises to the extent of at least one hundred
percent (100%) of its replacement value. Such policies shall provide protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, and any other perils which Landlord
deems necessary. Landlord may obtain insurance coverage for Tenant's fixtures,
equipment or building improvements installed by Tenant in or on the Premises.
Tenant shall, at tenant's expense, maintain such primary or additional insurance
on its fixtures, equipment and building improvements as is required pursuant to
Subsections 4.4.6 and 4.4.7 hereof. During the Sublease Term, Landlord may also
maintain a rental income insurance policy at Tenant's expense, with loss payable
to Landlord in an amount equal to one year's Rent. Tenant shall not do or permit
to be done anything which invalidates any such insurance policies.
4.4.3 PAYMENT OF PREMIUMS; INSURANCE POLICIES. Tenant shall pay its pro
rata share of the premiums for maintaining the insurance required by Subsections
4.4.1 and 4.4.2. Tenant's pro rata share of all such premiums shall be based on
the same proportion as used for payment of taxes pursuant to Subsection 4.2.1
hereof. All such amounts will be due and payable upon ten (10) days written
notice.
4.4.4 INCREASE IN FIRE INSURANCE PREMIUM. Tenant agrees that it will not
keep, use, manufacture, assemble, sell or offer for sale in or upon the Premises
any article which may be prohibited by the standard form of fire insurance
policy Tenant agrees to pay any increase in premiums for fire and extended
coverage insurance that may be charged during the term of this Sublease on the
amount of such insurance which may be carried by Landlord on said Premises or
the Building, resulting from the acts or omissions of Tenant, its agents,
servants or employees, or the use or occupancy of the Premises by Tenant or from
the type of materials or products stored, manufactured, assembled or sold by
Tenant in the Premises, whether or not Landlord has consented to the same. In
determining whether increased premiums are the result of Tenant's use of the
Premises, a schedule, issued by the organization making the insurance rate on
the Premises, showing the various components of such rate, shall be conclusive
evidence of the several items and charges which make up the fire insurance rate
on the Premises.
4.4.5 WAIVER OF SUBROGATION. Landlord and Tenant each hereby release and
relieve the other, and waive their entire right to recover damages (whether in
contract or in tort) against the other, for loss or damage arising out of or
incident to the perils required to be insured against under Section 4.4. The
effect of such releases and waivers of the right to recover damages shall not be
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limited by the amount of insurance carried or required, or by any deductibles
applicable thereto. Landlord and Tenant agree to have their respective insurance
companies issuing property damage insurance waive any right to subrogation that
such companies may have against Lessor or Lessee, as the case may be, so long as
the insurance is not invalidated thereby.
4.4.6 TENANT'S REQUIRED INSURANCE. Tenant shall keep in force throughout
the Sublease Term: (a) a commercial general liability insurance policy or
policies to protect the Landlord Entities against any liability to the public or
to any invitee of Tenant or a Landlord Entity incidental to the use of or
resulting from any accident occurring in or upon the Premises with a limit of
not less than $1,000,000.00 per occurrence and not less than $2,000,000.00 in
the annual aggregate, or such larger amount as Landlord may prudently require
from time to time, covering bodily injury, personal injury, property damage and
contractual liability and $1,000,000 products/completed operations aggregate;
(b) Business Auto Liability covering owned, non-owned and hired vehicles with a
limit of not less than $1,000,000 per accident; (c) insurance protecting against
liability under Worker's Compensation Laws with limits at least as required by
statute; (d) Employer's Liability with limits of $500,000 each accident,
$500,000 disease policy limit, $500,000 disease-each employee; (e) All Risk or
Special Form coverage protecting Tenant against loss of or damage to Tenant's
alterations additions, improvements, carpeting, floor coverings, paneling,
decorations, fixtures, inventory, and other personal property situated in or
about the Premises to the full replacement value of the property so insured; (f)
Business Interruption Insurance in such amount as will reimburse Tenant for
direct or indirect earnings attributable to all perils commonly insured against
by prudent tenants or attributable to prevention of access to the Premises as a
result of such perils; and (g) such other reasonable types of insurance and in
such reasonable amounts covering the Premises and operations therein as Landlord
may reasonably require from time to time. The term "Landlord Entities" shall
mean Landlord and any other person or entity that Landlord may designate from
time to time.
4.4.7 REQUIRED INSURANCE POLICIES. Each of the policies required under
Section 4.4.6 shall (a) be provided at Tenant's expense; (b) name the Landlord
Entities as additional insureds; (c) be issued by an insurance company with a
minimum Best's rating of "A:VII" during the Sublease Term; (d) provide that said
insurance shall not be canceled unless thirty (30) days prior written notice
(ten days for non-payment of premium) shall have been given to Landlord; and (e)
be primary to and not contributory with any similar insurance carried by
Landlord. Said policy or policies or certificates thereof shall be delivered to
Landlord by Tenant upon the Commencement Date and at least thirty (30) days
prior to each renewal of said insurance
4.4.8 ADDITIONAL LIABILITY; UNDER CONSTRUCTION. Whenever Tenant shall
undertake any alterations, additions or improvements in, to or about the
Premises ("Work") the aforesaid insurance protection must extend to and include
injuries to persons and damage to property arising in connection with such Work,
together with such other insurance as Landlord shall require; and the policies
of or certificates evidencing such insurance must be delivered to Landlord prior
to the commencement of any such Work.
4.5 COMMON AREAS.
4.5.1 DEFINITION; LOCATION. As used in this Sublease, "Common Areas" shall
mean all areas within the Project which are available for the common use of
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tenants of the Project and which are not leased or held for the exclusive use of
tenants of the Project or which are not leased or held for the exclusive use of
Tenant or other tenants, including, but not limited to, parking areas,
driveways, sidewalks, loading areas, retaining walls, truck service ways,
pedestrian malls, stairs, ramps, restrooms, access roads, corridors,
landscaping, planted areas and trash enclosures. Landlord may from time to time
change the size, location, nature and use of the Common Areas, including
converting Common Areas into leasable areas, construction of additional parking
facilities (including parking structures) in the Common Areas, and increasing or
decreasing Common Area land and/or facilities. Tenant acknowledges that such
activities may result in occasional inconvenience to Tenant from time to time.
Landlord will exercise good faith efforts to minimize any disruption to Tenant's
business caused by such activities, but Tenant hereby releases Landlord from any
and all claims pertaining to such activities.
4.5.2 USE OF COMMON AREAS. Subject to other provisions of this Sublease,
Tenant shall have the nonexclusive right (in common with other tenants and all
others to whom Landlord has granted or may grant such rights) to use the Common
Areas for the purposes intended, subject to such reasonable rules and
regulations as Landlord may establish from time to time. Tenant shall abide by
such rules and regulations and shall use its best effort to cause others who use
the Common Areas with Tenant's expressed or implied permission to abide by
Landlord's rules and regulations. At any time, Landlord may close any Common
Areas to perform any acts in and to the Common Areas as, in Landlord's judgment,
may be desirable to improve the Project. Tenant shall not, at any time,
intentionally interfere with the rights of Landlord, other tenants, or any other
person entitled to use the Common Areas.
4.5.3 VEHICLE PARKING. Tenant shall be entitled to use 3.8 vehicle parking
spaces in the Project for each 1,000 (One Thousand) square feet (a total of
sixty-two (62) spaces) within the Premises without paying any additional rent.
Tenant's parking shall not be reserved and shall be limited to vehicles no
larger than standard size automobiles or pickup or utility vehicles. Tenant
shall not cause large trucks or other large vehicles to be parked within the
Project. Vehicles shall be parked only in striped parking spaces and not in
driveways, loading areas or other locations not specifically designated for
parking. If Tenant parks more vehicles in the parking area than the number
identified herein, such conduct shall be a material breach of this Sublease. No
vehicle may be parked at the Project for more than seventy-two (72) consecutive
hours without Landlord's prior written consent.
4.5.4 MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common
Areas in good order, condition and repair and shall operate the Project, in
Landlord's sole discretion, as a first class industrial/commercial real property
development. Tenant shall pay Tenant's pro rata share (as defined below) of all
costs incurred by Landlord in connection with the ownership, operation and
maintenance of the Common Area ("Common Area Costs"). Common Area Costs include,
but are not limited to, costs and expenses for the following: gardening and
landscaping; pest control and extermination services; utilities, water and
sewage charges; maintenance of signs (other than Tenant's signs); premiums for
liability, property damage, fire and other types of casualty insurance on the
Common Areas and all Common Area improvements; all personal property taxes
levied on or attributable to personal property used in connection with the
Common Areas; straight-line depreciation on personal property owned by Landlord
which is consumed in the operation or maintenance of the Common Areas; fees for
Page 13
required licenses and permits; repairing, resurfacing, repaving, maintaining,
painting, lighting, cleaning, refuse removal, security and similar items;
reserves; and a reasonable allowance to Landlord for Landlord's supervision of
the Common Areas (not to exceed five percent (5%) of the total of all other
Common Area Costs for the calendar year). Landlord may cause any or all of such
services to be provided by third parties, or by entities associated with
Landlord. Common Area Costs shall not include depreciation of real property
which forms part of the Common Area, all Real Property Taxes for which Tenant is
liable under this Sublease, all insurance premiums for which Tenant is liable
under this Sublease, and all maintenance and repair costs for which Tenant is
liable under this Sublease.
4.5.5 TENANT'S SHARE AND PAYMENT. Tenant shall pay Tenants annual pro rata
share of all estimated Common Area Costs, in advance, in monthly installments on
the first day of each month during the Sublease Term (prorated for any
fractional month). Tenant's pro rata share shall be calculated by dividing the
square foot area of the Premises, as set forth in Section 1.4 of this Sublease,
by the aggregate square foot area of the leasable area within the Project
whether currently leased or not upon the date the computation is made. Landlord
may adjust such estimates at any time and from time to time based upon
Landlord's experience and reasonable anticipation of costs. Such adjustments
shall be effective as of the next Rent payment date after notice to Tenant.
Within thirty (30) days after the end of each calendar year of the Sublease
Term, Landlord shall deliver to Tenant a statement prepared in accordance with
generally accepted accounting principles setting forth, in reasonable detail,
the actual Common Area Costs paid or incurred by Landlord during the preceding
calendar year and Tenant's pro rata share. Upon receipt of such statement, there
shall be an adjustment between Landlord and Tenant with payment to or credit
given by Landlord (as the case may be) so that Landlord shall receive the entire
amount of Tenant's share of such costs and expenses for such period. Any delay
or failure of Landlord to deliver such statement within said thirty (30) day
period will not constitute a waiver of Landlord's right to subsequently deliver
such statement and require Tenant to pay any deficiency in Tenant's pro rata
share as may be disclosed by such statement. Tenant shall have the right to
audit within landlord's office the Common Area Costs billed to Tenant by
Landlord. The cost of the audit shall be the responsibility of and paid for by
Tenant, unless the Common Area Costs billed to Tenant by Landlord exceed actual
costs as verified by the audit by more than five (5) percent, in which case the
cost of the audit shall be paid by Landlord.
4.5.5.1 ALTERNATIVE PAYMENT. Notwithstanding the foregoing, Landlord has
the right to notify Tenant on a monthly or other basis of the actual amount
Landlord has expended for all Common Area Costs incurred during the previous
month or period. Such notice shall also set forth Tenant's pro rata share of
such actual costs. Upon receipt of such statement, Tenant shall pay with the
next monthly installment of Rent Tenant's pro rata share of the actual Common
Area Costs incurred during the previous month or period.
4.5.6 ADDITIONAL AREAS. In addition to the Common Areas and costs
associated therewith described in this Section 4.5, Landlord may, but is not
obligated to, provide certain additional spaces and areas within or in close
proximity to the Project ("Additional Areas") as (and included within the
definition of) Common Areas. The Additional Areas may include, but are not
limited to, an office used by and subject to the exclusive control of Landlord
for leasing and/or managing the Project, a conference room available on a
reserved basis for use by tenants within the Project during normal business
hours, maintenance facilities for the storage of equipment and supplies, and a
Page 14
locker room facility for use by tenants of the Project and their employees that
are employed at the Project. Common Area Costs for which Tenant is liable for
its pro rata share as described in Section 4.5.4 shall include costs of
operating and the reasonable rental value of the space occupied by the
Additional Areas.
4.6 LATE CHARGES. Tenant's failure to pay Rent promptly may cause Landlord
to incur unanticipated costs. The exact amount of such costs is impractical or
extremely difficult to ascertain. Such costs may include, but are not limited
to, processing and accounting charges and late charges which may be imposed on
Landlord by any ground lease, mortgage or trust deed encumbering the Premises.
Therefore, if Landlord does not receive any Rent payment within five (5)
business days after it becomes due, Tenant shall pay Landlord a late charge
equal to five percent (5%) of the overdue amount. The parties agree that such
late charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of such late payment.
4.6.1 REPEATED LATE CHARGES. In the event that a late charge is payable
under this Sublease, whether or not collected, for four (4) installments of Base
Rent during any one calendar year of the Sublease Term, then the Base Rent shall
automatically become due and payable quarterly in advance, rather than monthly
All moneys paid to Landlord under this provision may be commingled with other
moneys or Landlord and shall not bear interest.
4.7 INTEREST ON PAST DUE OBLIGATIONS. Any amount owed by Tenant to
Landlord which is not paid when due shall bear interest at (i) the prime or
reference rate, or succeeding similar index, announced by Bank of America (or
its successor) from time to time plus four (4) percentage points or (ii) the
highest rate then permitted by law, whichever is less, from the due date of such
amount (the "Interest Rate"). However, interest shall not be payable on late
charges to be paid by Tenant under this Sublease.
4.8 IMPOUNDS FOR INSURANCE PREMIUMS AND REAL PROPERTY TAXES. If requested
by any ground lessor or lender to whom Landlord has granted a security interest
in the Premises or the Project, or if Landlord deems it necessary in Landlord's
sole and absolute discretion, or if Tenant is more than ten (10) business days
late in the payment of Rent more than once in any consecutive twelve (12) month
period, Tenant shall pay Landlord a sum equal to one-twelfth (1/12) of the
annual Real Property Taxes and/or insurance premiums payable by Tenant under
this Sublease (the "Impound Payments"), together with each payment of Base Rent.
The Improved Payments shall be paid to the ground lessor or lender if required
or held by Landlord with no obligation to pay Tenant interest thereon or keep
the Impound Payments in a separate account. The amount of the Real Property
Taxes and insurance premiums when unknown shall be reasonably estimated by
Landlord. The Impound Payments shall be applied by Landlord to the payment of
Real Property Taxes and insurance premiums when due. Any deficiency of Impound
Payments shall be paid by Tenant to Landlord upon written request. If Tenant
defaults under this Sublease, Landlord may apply the Impound Payments to any
obligation then due under this Sublease.
ARTICLE V
USE OF PREMISES
Page 15
5.1 PERMITTED USES. Tenant may use the Premises only for the Permitted
Uses set forth in Section 1.6 above.
5.2 MANNER OF USE.
5.2.1 OBJECTIONABLE USES. Tenant shall not do or permit anything to be
done in or about the Premises which will in any way obstruct or interfere with
or infringe on the rights of other occupants of the Project, or injure or annoy
them, or use or allow the Premises to be used for any improper, immoral, or
objectionable purposes; nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises or commit or suffer to be committed any waste in,
on or about the Premises.
5.2.2 NONPERMITTED USES; COMPLIANCE WITH LAW. Tenant shall not do or
permit to be done in or about the Premises, nor bring, keep or permit to be
brought or kept therein, anything which is prohibited by or will in any way
conflict with any law, statute, ordinance or governmental rule or regulation now
in force or which may hereafter be enacted or promulgated, or which is
prohibited by any standard form of fire insurance policy or will in any way
increase the existing rate of or affect any fire or other insurance policy
covering the Project or any part thereof or any of its contents. Tenant shall,
at its sole expense, comply with all governmental laws, ordinances and
regulations, with the requirements of any Board of Fire Underwriters or other
similar body now or hereafter instituted, and with any order, directive or
certificate of occupancy issued pursuant to any law, ordinance or regulation by
any public officer, insofar as the same relates to or affects the condition, use
or occupancy of the Premises; provided, however, Tenant will not be required to
make any structural changes to the Premises unless such structural change is
required due to Tenant's acts or particular occupancy or use of the Premises.
The judgment of any court of competent jurisdiction or the admission of Tenant
in any action against Landlord, whether or not Tenant is a party to such action,
shall be conclusive in establishing such violations between Landlord and Tenant.
5.2.3 NOXIOUS ODORS. Tenant shall not use, keep or permit to be used or
kept any foul or noxious gas or substance in the Premises, or permit or suffer
the Premises to be occupied or used in a manner offensive or objectionable to
Landlord or other occupants of the Project by reason of noise, odors and/or
vibrations, or interfere in any way with other tenants or those having business
therein, nor shall any animals or birds be brought in or kept in or about the
Premises or the Project. Tenant shall not conduct any auction on the Premises.
No cooking shall be done or permitted by Tenant on the Premises, nor shall the
Premises be used for washing clothes, for lodging, or for any improper,
objectionable or immoral purposes. Tenant shall not use or keep in the Premises
or the Project any kerosene, gasoline or inflammable or combustible fluid or
material, or use any method of heating or air conditioning other than that
supplied by Landlord.
5.2.4 PERMIT. Tenant shall obtain, pay for and keep current all permits
required for Tenant's occupancy of the Premises and shall promptly take all
actions necessary to comply with all applicable statutes, ordinances, rules,
regulations, orders and requirements regulating the use by Tenant of the
Premises, including, without limitation, the Occupational Health and Safety Act
and the Americans With Disabilities Act.
Page 16
5.3 SIGNS AND AUCTIONS.
5.3.1 AUCTION. Tenant shall not conduct, or permit to be conducted, any
sale by auction on the Premises.
5.3.2 PROHIBITED SIGNS. Tenant shall not place, or suffer to be placed or
maintained, on any exterior door, wall or window of the Premises any sign,
awning or canopy, or advertising matter or other thing of any kind, and will not
place or maintain any decoration, lettering or advertising mailer on the glass
of any window or door, or that can be seen through the glass, of the Premises
without Landlord's prior written approval. Tenant further agrees to maintain
such sign, awning, canopy, decoration, lettering, advertising matter or thing as
may be approved, in good condition and repair at all times.
5.3.3 SIGN CRITERIA. Unless Tenant and Landlord agree otherwise, Landlord
will install, at Tenant's expense, a sign for Tenant in the Project in
accordance with the criteria described on Exhibit "C' attached hereto and by
this reference incorporated herein.
5.4 HAZARDOUS MATERIALS.
5.4.1 PROHIBITION OF STORAGE; INDEMNITY. Tenant shall not cause or permit
any Hazardous Material (as hereinafter defined) to be brought upon, kept or used
in or about the Premises or the Project by Tenant, its agents, employees,
contractors or invitees, other than those expressly permitted by Landlord in
writing. If Tenant breaches the obligation stated in the preceding sentence, or
if the presence of Hazardous Materials on the Premises caused or permitted by
Tenant (including Hazardous Materials specifically permitted by Landlord)
results in contamination of the Premises or the Project, or if contamination of
the Premises or the Project by Hazardous Material otherwise occurs for which
Tenant is legally liable to Landlord for damage resulting therefrom, Tenant
shall indemnify, defend and hold the Landlord Entities harmless from and against
any and all claims, judgments, damages, penalties, fines, costs, liabilities, or
losses (including without limitation diminution in value of the Premises or any
portion of the Project, damages for the loss or restriction on use of rentable
or usable space or of any amenity of the Premises of the Project, damages
arising from any adverse impact on marketing of spaces in the Premises or the
Project due to Tenant's breach of its obligations under the first sentence
herein, and sums paid in settlement of claims, attorneys' fees, consultant fees
and expert fees) which arise during of after the Sublease Term as a result of
such contamination. This indemnification of the Landlord Entities by Tenant
includes, without limitation, costs incurred in connection with any
investigation of site conditions or any cleanup, remedial, removal, or
restoration work required by any federal, state or local governmental agency or
political subdivision because of Hazardous Material present in the soil or
ground water on or under the Premises. Without limiting the foregoing, if the
presence of any Hazardous Material on the Premises caused or permitted by Tenant
results in any contamination of the Premises or the Project, Tenant shall
promptly take all actions at its sole expense as are necessary to return the
Premises or the Project, as applicable, to the condition existing prior to the
introduction of any such Hazardous Material to the Premises or the Project, as
applicable, provided that Landlords approval of such action shall first be
obtained, which approval shall not be unreasonably withheld so long as such
actions would not potentially have any material adverse long-term or short-term
effect on the Premises or the Project.
Page 17
5.4.2 TERMINATION OF LEASE. Notwithstanding the provisions of Paragraph
5.4.1 above, if (i) any anticipated use of the Premises by Tenant or any
proposed assignee or sublessee of Tenant involves generation, storage, use,
treatment or disposal of Hazardous Material, (ii) Tenant or the proposed
assignee or sublessee has been required by any prior landlord, lender or
governmental authority to take remedial action in connection with Hazardous
Material contaminating a property if the contamination resulted from such
party's action or use of the property in question, or (iii) Tenant or the
proposed assignee or sublessee is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal or storage of a
Hazardous Material, Landlord shall have the right to terminate this Sublease in
Landlord's sole and absolute discretion.
5.4.3 TESTING. At any time prior to the expiration of the Sublease Term
and upon twenty four (24) hours advance notice to Tenant, Landlord shall have
the right to conduct at Landlord's expense (subject to reimbursement as provided
below) appropriate tests of water and soil and to deliver to Tenant the results
of such tests to demonstrate that contamination has occurred as a result of
Tenant's use of the Premises, provided, however, that Landlord shall not
unreasonably interfere with Tenant's business operations. If the results of such
tests demonstrate that contamination has occurred as a result of Tenant's use of
the Premises, Tenant shall reimburse Landlord for the cost of such tests within
ten (10) days following written demand therefor.
5.4.4 UNDERGROUND TANKS. If underground or other storage tanks storing
Hazardous Materials are located on the Premises or are hereafter placed on the
Premises by any party, Tenant shall monitor the storage tanks, maintain
appropriate records, implement reporting procedures, properly close any
underground storage tanks, and take or cause to be taken all other steps
necessary or required under the California Administrative Code, Title 23,
Chapter 3, Subchapter 16, "Underground Storage Tank Regulations," and Division
20, Chapter 6.7 of the California Health & Safety Code, "Underground Storage of
Substances," as they now exist or may hereafter be adopted or amended.
5.4.5 TENANT'S OBLIGATIONS. Tenant's obligations under this Section 5.4
shall survive the termination of this Sublease. During any period of time
employed by Tenant after the termination of this Sublease to complete the
removal from the Premises of any such Hazardous Materials, the provisions of
Section 2.5 shall apply.
5.4.6 DEFINITION OF "HAZARDOUS MATERIAL". As used herein, the term
"Hazardous Material" means any hazardous or toxic substance, material or waste
which is or becomes regulated by any local governmental authority, the State of
California, the United States Government or any agency thereof. The term
"Hazardous Material" includes, without limitation, any material or substance
which is (i) defined as a "hazardous waste," "extremely hazardous waste" or
"restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed
pursuant to Section 25140, of the California Health and Safety Code, Division
20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous
substances" or under Section 25316 of the California Health and Safety Code,
Division 2, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account
Act), (iii) defined as a "hazardous material," "hazardous substance" or
"hazardous waste" under Section 25501 of the California Health and Safety Code,
Division 20, Chapter 6.95 (Hazardous Substances), (v) petroleum, (vi) asbestos,
(vii) listed under Article 9 and defined as hazardous or extremely hazardous
Page 18
pursuant to Article 11 of Title 22 of the California Administrative Code,
Division 4, Chapter 20, (viii) designated as a "hazardous substance" pursuant to
Section 311 of the Federal Water Pollution Control Act (33 U.S.C. Section 1317),
(ix) defined as a "hazardous waste" pursuant to Section 1004 of the Federal
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42
U.S.C. Section 6903), or (x) defined as a "hazardous substance: pursuant to
Section 101 of the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601).
5.5 INDEMNIFICATION. None of the Landlord Entities shall be liable and
Tenant hereby waives all claims against them for any damage to any property or
any injury to any person in or about the Premises or the Project by or from any
cause whatsoever (including without limiting the foregoing, rain or water
leakage of any character from the roof, windows, walls, basement, pipes,
plumbing works or appliances, the Project, or any portion thereof, not being in
good condition or repair, gas, fire, oil, electricity, theft or the presence of
Hazardous Material), except to the extent caused by or arising from the gross
negligence or willful misconduct of Landlord or its agents, employees or
contractors, or failure of Landlord to make repairs after receipt of notice of
defects from Tenant, and then only to the extent such damage or injury is of a
type not insured against, or required to be insured against hereunder, by
Tenant. Tenant shall protect, indemnify, and hold the Landlord Entities harmless
from and against any and all loss, claims, liability or costs (including court
costs and attorney's fees) incurred by reason of (a) any damage to any property
(including but not limited to property of any Landlord Entity) or any injury
(including but not limited to death) to any person occurring in, on or about the
Premises or the Project to the extent that such injury or damage shall be caused
by or arise from any actual or alleged act, neglect or fault by Tenant, its
agents, servants, employees, invitees or visitors, or from any omission by or of
Tenant, its agents, servants, employees, invitees or visitors to meet any
standards imposed by any duty with respect to the injury or damage; (b) the
conduct or management of any work or thing whatsoever done by the Tenant in or
about the Premises or from transactions of the Tenant concerning the Premises;
(c) Tenant's failure to comply with any and all governmental laws, ordinances,
and regulations applicable to the condition or use of the Premises or its
occupancy; or (d) any breach or default on the part of Tenant in the performance
of any covenant or agreement on the part of the Tenant to be performed pursuant
to this Sublease. The provisions of this Section shall survive the termination
of this Sublease with respect to any claims or liability accruing prior to such
termination.
5.6 LANDLORD'S ACCESS. Landlord or its agents may enter the Premises
during normal business hours to show the Premises to potential buyers, investors
or tenants or other parties, or for any other purpose, Landlord deems necessary.
Landlord shall give Tenant prior notice of such entry, except in the case of an
emergency. Landlord may place customary "For Sale" or "For Lease" signs on the
Premises. Notwithstanding the foregoing, Landlord shall not unreasonably
interfere with Tenant's business operations.
5.7 QUIET POSSESSION. If Tenant pays the rent and complies with all other
terms of this Sublease, Tenant may occupy and enjoy the Premises for the full
Sublease Term, subject to the provisions of this Sublease, free from hindrance
by anyone claiming by, through or under Landlord.
Page 19
5.8 WINDOW COVERING. Tenant shall not change the window coverings in the
Premises without Landlord's prior written consent.
ARTICLE VI
CONDITION OF PREMISES;
MAINTENANCE, REPAIRS, AND ALTERATIONS
6.1 EXISTING CONDITIONS. Tenant accepts the Premises in its condition as
of the execution of this Sublease, subject to any other provisions of this
Sublease and to all recorded matters, laws, ordinances, and governmental
regulations and orders. Tenant acknowledges that neither Landlord nor any agent
of Landlord has made any representation as to the condition of the Premises or
the suitability of the Premises for Tenant's intended use.
6.2 EXEMPTION OF LANDLORD FROM LIABILITY; WAIVER. Landlord shall not be
liable for any damage or injury to the person, business (or any loss of income
therefrom), goods, wares, merchandise or other property of Tenant, Tenant's
employees, invitees, customers or any other persons in or about the Premises,
whether such damage or injury is caused by or results from: (a) fire, steam,
electricity, water, gas or rain; (b) the breakage, leakage, obstruction or other
defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or
lighting fixtures or any other cause; (c) conditions (including the presence of
Hazardous Material) arising in or about the Premises or upon other portions of
the Project, or from other sources or places; or (d) any act or omission of any
other tenant of the Project. Landlord shall not be liable for any such damage or
injury even though the cause of or the means of repairing such damage or injury
are not accessible to Tenant. Tenant, as a material part of the consideration to
be rendered to Landlord, hereby waives all claims against Landlord for the
foregoing damages from any cause arising at any time. The provisions of this
Section 6.2 shall not, however, except Landlord from liability for Landlord's
gross negligence or willful misconduct, or for Landlord's failure to observe any
of the terms and conditions of this Sublease, to the extent any damage or injury
resulting therefrom is of a type not covered by the insurance carried, or
required to be carried hereunder, by Tenant.
6.3 TENANT'S OBLIGATIONS.
6.3.1 MAINTENANCE AND REPAIR. Tenant shall keep the Premises (including
all nonstructural, interior and exterior areas, systems and equipment, all
glass, glazing, window moldings, partitions, doors, door hardware, interior
painting, fixtures, and appurtenances thereof (including electrical, lighting,
plumbing, and plumbing fixtures) in good order, condition, and repair during the
Sublease Term. Tenant shall promptly replace any portion of the Premises or
system or equipment in the Premises which cannot be fully repaired, regardless
of whether the benefit of such replacement extends beyond the Sublease Term.
Tenant shall also maintain a preventive maintenance contract providing for the
regular inspection and maintenance of the heating and air conditioning system
(including leaks around ducts, pipes, vents, or other parts of the air
conditioning) by a licensed heating and air conditioning contractor. However,
Landlord shall have the right, upon written notice to Tenant, to undertake the
responsibility for preventive maintenance of the heating and air conditioning
system, at Tenant's expense. It is the intention of the Landlord and Tenant
that, at all times during the Sublease Term, Tenant shall maintain the Premises
in an attractive,
Page 20
first-class fully operative condition. Further, Tenant shall keep the exterior
areas surrounding the Premises free from litter and debris. Tenant waives and
releases its rights under California Civil Code Sections 1932(1), 1941 and 1942
or any other laws granting Tenant the right to terminate this Sublease for
Landlord's failure to make repairs, imposing an obligation of repair on Landlord
or giving Tenant the right to make repairs at Landlord's expense.
6.3.2 TENANT EXPENSE. All of Tenant's obligations under Section 6.3.1
shall be accomplished at Tenant's sole expense. If Tenant refuses or neglects to
properly perform its obligations as required under Section 6.3.1 and to the
reasonable satisfaction of Landlord, Landlord may, on ten (10) days' prior
written notice (except that no notice shall be required in case of emergency)
enter the Premises and perform such obligation on behalf of Tenant without
liability to Tenant for any loss or damage that may accrue to Tenant's
merchandise, fixtures, or other property or to Tenant's business by reason
thereof, and upon completion thereof, Tenant shall pay Landlord's costs for
making such repairs plus fifteen percent (15%) for overhead, upon presentation
of bill therefor, as Additional Rent. Said bill shall include interest at the
Interest Rate on said costs from the date of completion of repairs by Landlord.
6.4 LANDLORD'S OBLIGATIONS. Landlord shall be responsible only for the
maintenance and repair of structural portions of the Premises. As used herein,
structural portions of the Premises shall only refer to the foundation and
slabs, exterior walls, and exterior roof of the Building in which the Premises
are located. If Landlord is required to make repairs to structural portions by
reason of Tenant's conduct or activities, Landlord may add the cost of such
repairs to the Rent which shall thereafter become due. Except for the cost of
repairs subject to reimbursement pursuant to the preceding sentence, Tenant
shall pay its pro rata share, computed in accordance with Subsection 4.2.1
hereof, of all repairs, alterations and improvements made by Landlord to the
structural portions of the Building where the Premises are located. All such
amounts shall be due and payable upon five (5) business days written notice from
Landlord.
6.5 ALTERATIONS, ADDITIONS, AND IMPROVEMENTS.
6.5.1 PROHIBITED ACTIONS. Tenant shall not make any alterations, additions
or improvements to the Premises without Landlord's prior written consent, except
for nonstructural alterations which do not exceed Five Thousand Dollars ($5,000)
per alteration which are not visible from the outside of the Premises. In no
event may Tenant install any antennas, satellite dishes or other devices on the
roof of the Premises without Landlord's prior written consent, which consent
Landlord may withhold in its sole and absolute discretion. Landlord may require
Tenant to provide demolition and/or lien and completion bonds in form and amount
satisfactory to Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Subsection 6.5.1
upon Landlord's written request. All alterations, additions, and improvements
will be accomplished in good and workmanlike manner, in conformity with all
applicable laws and regulations, and by a contractor approved by Landlord. Upon
completion of any such work, Tenant shall provide Landlord with "as built"
plans, copies of all construction contracts, and proof of payment for all labor
and materials. Any additions to, or alterations of, the Premises, except
moveable furniture and trade fixtures, shall become at once a part of the
Premises and belong to Landlord; provided, however, (i) Landlord shall not be
Page 21
obligated to insure or restore such additions or alterations pursuant to
Subsections 4.4.2 and 7.3, respectively, and (ii) Landlord may require Tenant to
remove any such additions to, or alterations of, the Premises by giving Tenant
written notice thereof prior to the termination of this Sublease in which event
Tenant shall remove the same and repair any damage to the Premises caused by
such removal. Nothing in this Section 6.5.1 shall prevent Tenant from installing
trade fixtures, machinery or other trade equipment in conformance to all
applicable laws and regulations, and the same may be removed upon the
termination of this Sublease, provided the Premises are not damaged by such
removal, and provided further that Tenant shall not then be in default under the
terms and conditions of this Sublease.
6.5.2 PAYMENT BY TENANT. Tenant shall pay when due all claims for labor
and material furnished to the Premises.
6.5.3 FREEDOM FROM LIENS. Tenant shall keep the Premises, all other
property therein and the Project free from any liens arising out of any work
performed, material furnished or obligations incurred by Tenant, and shall
indemnify, hold harmless and defend the Landlord Entities from and against any
liens and encumbrances arising out of any work performed or materials furnished
by or at the direction of Tenant. In the event that Tenant shall not, within
twenty (20) days following the imposition of any such lien, cause such lien to
be released of record by payment or posting of a proper bond, Landlord shall
have, in addition to all other remedies provided herein and by law, the right,
but no obligation, to cause the same to be released by such means as it shall
deem proper, including payment of the claim giving rise to such lien. All such
sums paid by Landlord and all expenses incurred by it in connection therewith,
including attorneys' fees and costs, shall be payable to Landlord by Tenant on
demand with interest at the Interest Rate.
6.5.4 WRITTEN NOTIFICATION REQUIRED. Tenant will notify Landlord in
writing thirty (30) days prior to commencing any alterations or additions to
allow Landlord time to file and post notices of nonresponsibility. Landlord
reserves the right to approve any contractor and method of Payment, prior to
said contractor making any improvements to the Premises.
6.6 RULES AND REGULATIONS.
Tenant agrees as follows:
(1) Landlord shall arrange for a trash collection service which will
provide and periodically empty trash containers placed in designated areas for
use by Tenant and other tenants in the Project. Tenant shall be responsible for
placing all of its garbage and trash in such trash containers, and Tenant shall
not permit any of its garbage or trash to accumulate outside of such trash
containers.
(2) No aerial shall be erected on the roof or exterior walls of the
Premises, or on the grounds, without in each instance, the written consent of
the Landlord. Any aerial so installed without such written consent shall be
subject to removal without notice at any time.
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(3) No loudspeakers, televisions, phonographs, radios, or other devices
shall be used in a manner so as to be heard or seen outside of the Premises
without the prior written consent of Landlord.
(4) The outside areas immediately adjoining the Premises shall be kept
clean and free from dirt and rubbish by Tenant to the satisfaction of Landlord,
and Tenant shall not place or permit any obstruction or materials in such areas.
No exterior storage shall be allowed without permission in writing from
Landlord.
(5) The plumbing facilities shall not be used for any other purpose than
that for which they are constructed, and no foreign substance of any kind shall
be thrown therein, and the expense of any breakage, stoppage, or damage
resulting from a violation of this provision shall be borne by Tenant.
(6) Tenant shall not burn any trash or garbage of any kind in or about the
Premises, or the Project.
(7) The sidewalks, halls, passages, exits, entrances, and stairways in and
about the Project shall not be obstructed by Tenant or used for any purpose
other than for ingress to and egress from the Premises. The halls, passages,
exits, entrances, stairways, balconies and roof are not for the use of the
general public and Landlord shall in all cases retain the right to control and
prevent access thereto by all persons whose presence in the judgment of the
Landlord shall be prejudicial to the safety, character, reputation and interests
of the Project, provided that nothing herein contained shall be constructed to
prevent such access to persons with whom Tenant normally deals in the ordinary
course of Tenant's business unless such persons are engaged in illegal
activities. Tenant and its employees and invitees shall not go upon the roof of
the Building.
(8) No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by Tenant, nor shall any changes be made in existing locks
or the mechanisms thereof. Tenant must, upon the termination of Tenant's
tenancy, return to Landlord all keys of stores, offices and toilet rooms either
furnished to or otherwise procured by Tenant, and in the event of the loss of
any keys so furnished Tenant shall pay to Landlord the cost thereof.
(9) Tenant shall not lay linoleum or other similar floor covering so that
the same shall be affixed to the floor of the Premises in any manner except by a
paste, or other material, which may easily be removed with water, the use of
cement or other similar adhesive materials being expressly prohibited. The
method of affixing any such linoleum or other similar floor covering to the
floor, as well as the method of affixing carpets or rugs to the Premises, shall
be subject to approval by Landlord. The expense of repairing any damage
resulting from a violation of this rule shall be borne by Tenant.
(10) Tenant will not install blinds, shades, awnings, or other form of
inside or outside window covering, or window ventilators or similar devices,
without the prior written consent of Landlord.
Landlord reserves the right from time to time to amend or supplement the
foregoing rules and regulations, and to adopt and promulgate additional rules
and regulations applicable to the Premises. Notice of such rules and regulations
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and amendments and supplements thereto, if any, shall be given to the Tenant and
Tenant agrees to comply with all such rules and regulations upon receipt of
notice to Tenant from Landlord. Landlord shall not be liable in any way to
Tenant for any damage or inconvenience caused by any other tenant's
noncompliance with these rules and regulations. Landlord shall, however, use its
best commercially reasonable efforts to cause such compliance.
6.7 CONDITION UPON TERMINATION. Upon the termination of the Sublease,
Tenant shall surrender the Premises to Landlord, broom-clean and in the same
condition as received except for ordinary wear and tear which Tenant was not
otherwise obligated to remedy under any provision of this Sublease. However,
Tenant shall not be obligated to repair any damage which Landlord is required to
repair under Article Seven (Damage or Destruction). In addition, and in
accordance with Section 6.5.1, Landlord may require Tenant to remove any
alterations, additions or improvements (whether or not made with Landlord's
consent) prior to the termination of this Sublease. Any alterations, additions
or improvements which Landlord has not required Tenant to remove shall become
Landlord's property and shall be surrendered to Landlord upon the termination of
the Sublease, except that Tenant may remove any of Tenant's machinery or
equipment which can be removed without material damage to the Premises. Tenant
shall repair, at Tenant's expense, any damage to the Premises caused by the
removal of any such machinery or equipment. In no event, however, shall Tenant
remove any of the following materials or equipment without Landlord's prior
written consent: any power wiring or power panels; lighting or lighting
fixtures; wall coverings; drapes, blinds or other window coverings; carpets or
other floor coverings; heaters, air conditioners or any other heating or air
conditioning equipment; fencing or security gates; or other similar building
operating equipment and decorations.
6.8 MAINTENANCE OF COMMON AREAS. Landlord shall maintain the Common Areas
as set forth in Section 4.5 above.
ARTICLE VII
DAMAGE OR DESTRUCTION
7.1 PARTIAL DAMAGE TO PREMISES. Tenant shall notify Landlord in writing
immediately upon the occurrence of any damage to the Premises. If the Premises
are only partially damaged and if the proceeds received by Landlord from the
insurance policies described in Subsection 4.4.2 are sufficient to pay for the
necessary repairs, this Sublease shall remain in effect and Landlord shall
repair the damage as soon as reasonably possible, provided, however, that if
Landlord either (i) fails to commence repairs within thirty (30) days, or (ii)
fails to complete such repairs within 270 days, and further provided that such
damage materially interferes with Tenant's business operations, Tenant may elect
to terminate this Sublease. Landlord may elect, with Tenant's consent, to repair
any damage to Tenant's equipment, fixtures or improvements installed in the
Premises at Tenant's sole cost and expense. If the insurance proceeds received
by Landlord are not sufficient to pay the entire cost of repair, or if the cause
of the damage is not covered by the insurance policies which Landlord maintains
under Subsection 4.4.2, Landlord may elect either to (a) repair the damage as
soon as reasonably possible, in which case this Sublease shall remain in full
force and effect, or (b) terminate this Sublease as of the date the damage
Page 24
occurred. Landlord shall notify Tenant within thirty (30) days after receipt of
notice of the occurrence of the damage whether Landlord elects to repair the
damage or terminate this Sublease. Tenant shall pay to Landlord within thirty
(30) days after request therefor by Landlord the "deductible amount" (if any)
under Landlord's insurance policies if the damage was due to an act or omission
of Tenant. If the damage to the Premises occurs during the last twelve (12)
months of the Sublease Term, Landlord may elect to terminate this Sublease as of
the date the damage occurred, regardless of the sufficiency of any insurance
proceeds, and Landlord may retain all such proceeds. In such event, Landlord
shall not be obligated to repair or restore the Premises, and Tenant shall have
no right to continue this sublease. Landlord shall notify Tenant of its election
within thirty (30) business days after receipt of notice of the occurrence of
the damage.
7.2 TOTAL OR SUBSTANTIAL DESTRUCTION. If the Premises are totally or
substantially destroyed (meaning the cost to repair would exceed twenty-five
percent (25%) of replacement value) by any cause whatsoever, or if the Premises
are in a building which is substantially destroyed (even though the Premises are
not totally or substantially destroyed), or if the Project is substantially
destroyed (even though the Premises are not totally or substantially destroyed),
this Sublease shall, at the election of the Landlord, terminate as of the date
the destruction occurred regardless of whether Landlord receives any insurance
proceeds. Landlord shall notify Tenant of such election within thirty (30)
business days after the occurrence of total or substantial destruction. If the
destruction was caused by an act or omission of Tenant, Tenant shall pay
Landlord the difference between the actual cost of rebuilding and any insurance
proceeds received by Landlord.
7.3 LANDLORD'S OBLIGATIONS. Landlord shall promptly commence and
diligently pursue to completion any repairs which it is obligated to effect
under Section 7.1. Landlord shall not be required to repair any injury or damage
by fire or other cause to (or to make any restoration or replacement of) any
paneling, decorations, partitions, railings, floor coverings, office fixtures or
any other improvements of property installed in the Premises by Tenant or at the
direct or indirect expense of Tenant which are not part of the original Tenant
improvements paid for by Landlord. Tenant shall be required to restore or
replace same in the event of damage except for damage caused solely by the
Landlord's gross negligence or intentional misconduct that is not covered by the
insurance carried, or required to be carried hereunder, by Tenant. Tenant shall
have no claim against Landlord for any damage suffered by reason of any such
damage, destruction, repair or restoration, except to the extent caused by
Landlord's gross negligence or willful misconduct.
7.4 TEMPORARY REDUCTION OF RENT. If the Premises are destroyed or damaged
and Landlord or Tenant repairs or restores the Premises pursuant to the
provisions of this Article Seven, any Base Rent payable during the period of
such damage, repair and/or restoration shall be reduced in proportion to the
rentable space which is unusable by Tenant in the conduct of its business, but
only to the extent that Landlord has obtained rental income insurance to cover
such abatement of Base Rent. Except for such possible reduction in payments
required from Tenant, Tenant shall not be entitled to any compensation,
reduction, or reimbursement from Landlord as a result of any damage,
destruction, repair or restoration of or to the Premises.
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7.5 WAIVER. Tenant waives the provisions of any statute, code or judicial
decision which grants a tenant the right to terminate a lease in the event of
damage or destruction of its premises, including Sections 1932(2) and 1933(4) of
the California Civil Code, due to the fact that Tenant agrees that the
provisions of this Article Seven shall govern the rights and obligations of
Landlord and Tenant in the event of any damage or destruction of the Premises.
ARTICLE VIII
CONDEMNATION
8.1 CONDEMNATION. If all or any portion of the Premises is taken under the
power of eminent domain or sold under the threat of that power (all of which are
called "Condemnation"), this Sublease shall terminate as to the part taken or
sold on the date the condemning authority takes title or possession, whichever
occurs first. If more than twenty percent (20%) of the floor area of the
Premises is taken, either Landlord or Tenant may terminate this Sublease as of
the date the condemning authority takes title or possession, whichever occurs
first, by delivering written notice to the other within ten (10) days after
receipt of written notice of such taking (or in the absence of such notice,
within ten (10) days after the condemning authority takes possession). If more
than twenty percent (20%) of all subleasable space in the Building in which the
Premises are located or in the Project is taken Landlord may elect to terminate
this Sublease by delivering such notice to Tenant. If neither Landlord nor
Tenant terminates this Sublease, this Sublease shall remain in effect as to the
portion of the Premises not taken, except that the Base Rent shall be reduced in
proportion to the reduction in the floor area of the Premises. Any Condemnation
award or payment shall be distributed in the following order: (a) first, to any
ground lessor, mortgagee or beneficiary under a deed of trust encumbering the
Premises, the amount of its interest in the Premises and Tenant hereby assigns
any other rights which Tenant may have now or in the future to any other award
to Landlord; (b) second, to Tenant, only the amount of any award specifically
designated for loss of or damage Tenant's trade fixtures or removable personal
property, and Tenant hereby assigns any other rights which Tenant may have now
or in the future to any other award to the Landlord; and (c) third, to Landlord,
the remainder of such award, whether as compensation for reduction in the value
of the subleasehold, the taking of the fee, or otherwise. If this Sublease is
not terminated, Landlord shall repair any damage to the Premises caused by the
Condemnation, except that Landlord shall not be obligated to repair any damage
for which Tenant has been reimbursed by the condemning authority. If the
severance damages received by Landlord are not sufficient to pay for such
repair, Landlord shall have the right to either terminate this Sublease or make
such repair at Landlord's expense.
8.2 WAIVER. Tenant waives the provisions of any statute, code or judicial
decision which grants a tenant the right to terminate a lease in the event of a
taking of its premises, including California Code of Civil Procedure Section
1265.130, due to the fact that Tenant agrees that the provisions of this Article
Eight shall govern the rights and obligations of Landlord and Tenant in the
event of a taking of the Premises.
ARTICLE IX
ASSIGNMENT AND SUBLETTING
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9.1 LANDLORD'S CONSENT REQUIRED. No portion of the Premises or of Tenant's
interest in this Sublease may be acquired by any other person or entity, whether
by assignment, mortgage, sublease, transfer, operation of law, or act of Tenant,
without Landlord's prior written consent, except as provided in Section 9.2
below. Any attempted transfer without consent shall, at Landlord's option, be
void and shall constitute a noncurable breach of this Sublease. Except as
otherwise provided in Section 9.2, if Tenant is a partnership, limited liability
company or corporation, any cumulative transfer of more than fifty percent (50%)
of the ownership interest in Tenant shall be deemed an assignment of this
Sublease requiring Landlord's consent. If Tenant effects a transfer or requests
the consent of Landlord to any transfer (whether or not such transfer is
consummated), then, upon demand, and as a condition precedent to Landlord's
consideration of the proposed transfer, Tenant agrees to pay Landlord a
non-refundable administrative fee of Five Hundred Dollars ($500.00), plus
Landlord's reasonable attorneys' fees and costs and other costs incurred by
Landlord in reviewing such proposed transfer.
9.2 TENANT AFFILIATE. Tenant may assign this Sublease or sublease the
Premises, without Landlord's consent, to any entity which controls, is
controlled by or is under common control with Tenant, or to any entity resulting
from the merger of or consolidation with Tenant ("Tenant's Affiliate"). In such
case, any Tenant's Affiliate shall assume in writing all of Tenant's obligations
under this Sublease, but Tenant shall remain primarily liable hereunder.
9.3 NO RELEASE OF TENANT. No transfer permitted by this Article Nine,
whether with or without Landlord's consent, shall release Tenant or change
Tenant's primary liability to pay the Rent and to perform all other obligations
of Tenant under this Sublease. Landlord's acceptance of Rent from any other
person is not a waiver of any provision of this Article Nine. Consent to one
transfer is not a consent to any subsequent transfer. If Tenant's transferee
defaults under this Sublease, Landlord may proceed directly against Tenant
without pursuing remedies against the transferee. Landlord may consent to
subsequent assignments or modifications of this Sublease by Tenant's transferee,
without notifying Tenant or obtaining its consent. Such action shall not relieve
Tenant's liability under this Sublease.
9.4 LANDLORD'S ELECTION. Tenant's request for consent to any transfer
described in Section 9.1 above shall be accompanied by a written statement
selling forth the details of the proposed transfer, including the name, business
and financial condition of the prospective transferee, financial details of the
proposed transfer (e.g., the term of any rent and security deposit payable under
any assignment or sublease), and any other information Landlord deems relevant.
Landlord shall have the right (a) to withhold consent in Landlord's reasonable
discretion; (b) to grant consent; or (c) if the transfer is a sublease of the
Premises or an assignment of this Sublease, to terminate this Sublease as of the
effective date of such sublease or assignment, in which case Landlord may elect
to enter into a direct sublease with the proposed assignee or subtenant. By way
of example and without limitation, the parties agree it shall be reasonable for
Landlord to withhold its consent to a proposed transfer if any of the following
situations exist or may exist: (i) the transferee's contemplated use of the
Premises following the proposed transfer is different than the Permitted Uses
set forth in Section 1.6; (ii) in Landlord's reasonable business judgment, the
transferee lacks sufficient business reputation or experience to operate a
successful business of the type and quality permitted under this Lease; (iii) in
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Landlord's reasonable business judgment, the present net worth of the transferee
is less than the greater of Tenant's net worth as of the date Landlord and
Tenant entered into this Lease or Tenant's net worth at the date of Tenant's
request for consent; or (iv) the proposed transfer would breach any covenant of
Landlord respecting radius, location, use or exclusivity in any other lease,
financing agreement, or other agreement to which Landlord is bound.
9.5 NO MERGER. No merger shall result from Tenant's sublease of the
Premises under this Article Nine. Tenant's surrender of this Sublease or the
termination of this Sublease in any other manner. In any such event, Landlord
may terminate any or all subtenancies or succeed to the interest of Tenant as
sublandlord thereunder.
9.6 EXCESS RENTALS. Tenant agrees to pay to Landlord, as additional rent,
all sums and other consideration payable to and for the benefit of Tenant by the
assignee or sublessee in excess of the rent payable under this Lease for the
same period and portion of the Premises. In calculating excess rent or other
consideration which may be payable to Landlord under this Section 9.6, Tenant
will be entitled to deduct commercially reasonable third party brokerage
commissions and attorneys' fees and other amounts reasonably and actually
expended by Tenant in connection with such assignment or subletting if
acceptable written evidence of such expenditures is provided to Landlord.
ARTICLE X
DEFAULTS; REMEDIES
10.1 COVENANTS AND CONDITIONS. Tenant's performance of each of Tenant's
obligations under this Sublease is a condition as well as a covenant. Tenant's
right to continue in possession of the Premises is conditioned upon such
performance. Time is of the essence in the performance of all covenants and
conditions.
10.2 DEFAULTS. Tenant shall be in material default under this Sublease:
10.2.1 VACATION OR ABANDONMENT. If Tenant abandons or vacates the Premises
or if such abandonment or vacation of the Premises results in the cancellation
of any insurance described in Section 4.4; or
10.2.2 FAILURE TO PAY. If Tenant fails to pay rent or any other charge
required to be paid by Tenant, as and within five (5) business days of the date
when due. The notice required by this Subsection is intended to satisfy any and
all notice requirements imposed by California Code of Civil Procedure Section
1161 et seq. or any other applicable law and is not in addition to any such
requirements; or
10.2.3 FAILURE TO PERFORM. If Tenant fails to perform any of Tenant's
nonmonetary obligations under this Sublease for a period of thirty (30) days
after written notice from Landlord; provided that if more time is required to
complete such performance, Tenant shall not be in default if Tenant commences
such performance within the thirty (30) day period and thereafter diligently
pursues its completion. However, Landlord shall not be required to give such
notice if Tenant's failure to perform constitutes a non-curable breach of this
Sublease. The notice required by this Subsection is intended to satisfy any and
all notice requirements imposed by California Code of Civil Procedure Section
1161, et seq. or any other applicable law and is not in addition to any such
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requirements. Notwithstanding the foregoing, Tenant shall be obligated to
commence performance to cure matters related to the storage or use of hazardous
materials within fifteen days of receipt of notice from Landlord.
10.2.4 OTHER DEFAULTS. (i) If Tenant makes a general assignment or general
arrangement for the benefit of creditors; (ii) if a petition for adjudication of
bankruptcy or for reorganization or rearrangement is filed by or against Tenant
and is not dismissed within thirty (30) days; (iii) if a trustee or receiver is
appointed to take possession of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Sublease and possession is not
restored to Tenant within thirty (30) days; or (iv) if substantially all of
Tenant's assets located at the Premises or of Tenant's interest in this Sublease
is subjected to attachment, execution or other judicial seizure which is not
discharged within thirty (30) days; or (iv) if substantially all of Tenant's
assets located at the Premises or of Tenant's interest in this Sublease is
subjected to attachment, execution or other judicial seizure which is not
discharged within thirty (30) days. If a court of competent jurisdiction
determines that any of the acts described in this Subsection 10.2.4 is not a
default under this Sublease, and a trustee is appointed to take possession (or
if Tenant remains a debtor in possession) and such trustee or Tenant transfers
Tenant's interest hereunder, then Landlord shall receive, as Additional Rent,
the difference between the Rent (or any other consideration) paid in connection
with such assignment or sublease and the Rent payable by Tenant hereunder.
10.3 REMEDIES. On the occurrence of any material default by Tenant,
Landlord may, at any time thereafter, with or without notice or demand and
without limiting Landlord in the exercise of any right or remedy which Landlord
may have:
10.3.1 TERMINATION OF POSSESSION. Terminate Tenant's right to possession
of the Premises by any lawful means, in which case this Sublease shall terminate
and Tenant shall immediately surrender possession of the Premises to Landlord.
In such event Landlord shall have the immediate right to re-enter and remove all
persons and property and such property may be removed and stored in a public
warehouse or elsewhere at the cost of, and for the account of Tenant, all
without service of notice or resort to legal process and without being deemed
guilty of trespass, or becoming liable for any loss or damage which may be
occasioned thereby; and Landlord shall be entitled to recover from Tenant all
damages incurred by Landlord by reason of Tenant's default, including (i) the
worth at the time of the award of all Base Rent, Additional Rent and other
charges which were earned or were payable at the time of the termination; (ii)
the worth at the time of the award of the amount by which the unpaid Base Rent,
Additional Rent and other charges which would have been earned or were payable
after termination until the time of the award exceeds the amount of such Rental
loss that Tenant proves could have been reasonably avoided; (iii) the worth at
the time of the award of the amount by which the unpaid Base Rent, Additional
Rent and other charges which would have been payable for the balance of the
Sublease Term after the time of award exceeds the amount of such Rental loss
that Tenant proves could have been reasonably avoided; and (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant's failure to perform its obligations under this Sublease or which in the
ordinary course of things would be likely to result therefrom, including, but
not limited to, any costs or expenses incurred by Landlord in maintaining or
preserving the Premises after such default, the cost of recovering possession of
the Premises, expenses of reletting, including necessary renovation or
Page 29
alteration of the Premises, Landlord's reasonable attorneys' fees incurred in
connection therewith, and any real estate commissions or other such fees paid or
payable.
As used in subparts (i) and (ii) above, the "worth at the time of
the award" is computed by allowing interest on unpaid amounts at the Interest
Rate. As used in subpart (iii) above, the "worth at the time of the award" is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of the award, plus one percent (1%). If Tenant
shall have abandoned the Premises, Landlord shall have the option of (i)
retaking possession of the Premises and recovering from Tenant the amount
specified in this Subsection 10.3.1, or (ii) proceeding under Subsection 10.3.2.
10.3.2 MAINTENANCE OF POSSESSION. Maintain Tenant's right to possession,
in which case this Sublease shall continue in effect whether or not Tenant shall
have abandoned the Premises. In such event, Landlord shall be entitled to
enforce all of Landlord's rights and remedies under this Sublease, including the
right to recover the Rent as it becomes due hereunder as permitted by California
Civil Code Section 1951.4 or any successor statute.
10.3.3 OTHER REMEDIES. Pursue any other remedy now or hereafter available
to Landlord under the laws or judicial decisions of the State of California.
10.4 THE RIGHT TO RELET THE PREMISES. Should Landlord elect to re-enter,
as herein provided, or should it take possession pursuant to legal proceedings
or pursuant to any notice provided for by law, it may either terminate this
Sublease or it may from time to time without terminating this Sublease, make
such alterations and repairs as may be necessary in order to relet the Premises,
and relet the Premises or any part thereof for such term or terms (which may be
for a term extending beyond the term of this Sublease) and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole
discretion may deem advisable; upon each such reletting all rentals received by
Landlord from such reletting shall be applied, first, to the repayment of any
indebtedness other than Rent due hereunder from Tenant to Landlord; second, to
the payment of any costs and expenses of such reletting, including brokerage
fees and attorneys' fees and of costs of such alterations and repairs; third, to
the payment of Rent due and unpaid hereunder, and the residue, if any, shall be
held by Landlord and applied in payment of future Rent as the same may become
due and payable hereunder. If such Rentals received from such reletting during
any month are less than that to be paid during that month by Tenant hereunder,
Tenant shall pay any such deficiency to Landlord. Such deficiency shall be
calculated and paid monthly. No such re-entry or taking possession of the
Premises by Landlord shall be construed as an election on its part to terminate
this Sublease unless a written notice of such intention be given to Tenant or
unless the termination thereof be decreed by a court of competent jurisdiction.
10.5 WAIVER OF RIGHTS OF REDEMPTION. Tenant hereby expressly waives any
and all rights of redemption granted by or under any present or future laws in
the event of Tenant being evicted or dispossessed for any cause, or in the event
of Landlord obtaining possession of the Premises, by reason of the violation by
Tenant of any of the covenants or conditions of this Sublease, or otherwise.
Page 30
10.6 CUMULATIVE REMEDIES. Landlord's exercise of any right or remedy shall
not prevent it from exercising any other right or remedy.
10.7 RIGHT TO CURE. If Tenant fails, refuses or neglects to perform any
obligation under this Sublease in the time and manner required herein, Landlord
shall have the right, but not the obligation, to do the same, but at the expense
and for the account of Tenant. The amount of money so expended or obligations so
incurred by Landlord, together with interest thereon at the Interest Rate, shall
be repaid to Landlord as Additional Rent within ten (10) days of Tenant's
receipt of written notice thereof. Landlord's performance of such obligations
shall not waive any default by Tenant hereunder.
ARTICLE XI
PROTECTION OF CREDITORS
11.1 SUBORDINATION. This Sublease is and shall remain subordinate to the
Master Lease. In addition, this Sublease is and shall remain subordinate to any
other ground lease, deed of trust or mortgage encumbering the Premises, any
advances made on the security thereof and any renewals, modifications,
consolidations, replacements or extensions thereof, whenever made or recorded.
If any ground lessor, beneficiary or mortgagee elects to have this Sublease
prior to the lien of its ground lease, deed of trust or mortgage and gives
written notice thereof to Tenant, this Sublease shall be deemed prior to such
ground lease, deed of trust or mortgage whether this Sublease is dated prior or
subsequent to the date of said ground lease, deed of trust or mortgage of the
date of recording thereof. Landlord shall, however, with respect to any existing
encumbrance exercise its best efforts to deliver to Tenant within thirty (30)
days following the Commencement Date a non-disturbance agreement in a
commercially reasonable form, in which such ground lessor or the beneficiary or
holder of such encumbrance shall agree to honor all of Tenant's rights and
remedies under this sublease.
11.2 ATTORNMENT. If Landlord's interest in the Premises is acquired by any
ground lessor, beneficiary under a deed of trust, mortgagee, or purchaser at a
foreclosure sale, Tenant shall attorn to the transferee of or successor to
Landlord's interest in the Premises and recognize such transferee or successor
as Landlord under this Sublease. Tenant waives the protection of any statue or
rule of law which gives or purports to give Tenant any right to terminate this
Sublease or surrender possession of the Premises upon the transfer of Landlord's
interest.
11.3 SIGNING OF DOCUMENTS. Tenant shall sign and deliver any instrument or
documents necessary or appropriate to evidence any such attornment or
subordination or agreement to do so. If Tenant fails to do so within fifteen
(15) days after written request, Tenant shall be in material default under this
Sublease and, in addition, Tenant hereby makes, constitutes and irrevocably
appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.
11.4 ESTOPPEL CERTIFICATES.
11.4.1 LANDLORDS REQUEST. Upon Landlords written request, Tenant shall
execute, acknowledge and deliver to Landlord a written statement certifying: (i)
that none of the terms or provisions of this Sublease have been changed (or if
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they have been changed, stating how they have been changed); (ii) that this
Sublease has not been canceled or terminated; (iii) the last date of payment of
the Base Rent and other charges and the time period covered by such payment;
(iv) that Landlord is not in default under this Sublease (or, if the Landlord is
claimed to be in default, stating why); and (v) as to such other matters as may
be reasonably requested of Tenant. Tenant shall deliver such statement to
Landlord within ten (10) days after Landlord's request. Any such statement by
Tenant may be given by Landlord to any prospective purchaser or encumbrancer of
the Premises. Such purchaser or encumbrancer may rely conclusively upon such
statement as true and correct.
11.4.2 FAILURE TO DELIVER. If Tenant does not deliver such statement to
Landlord within such ten (10) day period, Tenant shall be in material default
under this Sublease and, in addition, Landlord, and any prospective purchaser or
encumbrancer, may conclusively presume and rely upon the facts set forth in such
Statement. In such event, Tenant shall be estopped from denying the truth of
such facts.
11.5 TENANT'S FINANCIAL CONDITION. Tenant shall, upon ten (10) days prior
written notice, provide Landlord with a financial statement for the prior year
and, if available, the current year, to the extent such statements are then in
existence, prepared in accordance with generally accepted accounting principles
and, if such is Tenant's normal practice, audited by an independent certified
public accountant.
ARTICLE XII
LEGAL COSTS
12.1 ATTORNEYS' FEES. If either party commences litigation against the
other for the specific performance of this Sublease, for damages for the breach
hereof or otherwise for enforcement of any remedy hereunder, the parties agree
to and hereby waive any right to a trial by jury and, in the event of any such
commencement of litigation, the prevailing party shall be entitled to recover
from the other party such costs and reasonable attorneys' fees as may have been
incurred.
Further, if for any reason Landlord consults legal counsel or otherwise incurs
any costs or expenses as a result of its rightful attempt to enforce the
provisions of this Sublease after Tenant's grace or notice period has expired,
after written notice to Tenant from Landlord that Landlord is seeking the advice
of counsel, even though no litigation is commenced, or if commenced is not
pursued to final judgment, Tenant shall be obligated to pay to Landlord, in
addition to all other amounts for which Tenant is obligated hereunder, all of
Landlord's costs, expenses and reasonable attorneys' fees incurred in connection
with obtaining such advice.
12.2 LANDLORD'S CONSENT. Tenant shall pay Landlord's reasonable attorneys'
fees (not to exceed $1,000 per occurrence) incurred in connection with Tenant's
request for Landlord's consent under Article Nine (Assignment and Subletting),
or in connection with any other act which Tenant proposes to do and which
requires Landlord's consent.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 SUBSTITUTED PREMISES. Deleted
13.2 LANDLORD'S LIABILITY; CERTAIN DUTIES.
13.2.1 LANDLORD. As used in this Sublease, the term "Landlord" means only
the current owner or owners of the leasehold estate under the Master Lease at
the time in question. Each Landlord is obligated to perform the obligations of
Landlord under this Sublease only during the time such Landlord owns such
interest or title. Any Landlord who transfers its title or interest is relieved
of all liability with respect to the obligations of Landlord under this Sublease
to be performed on or after the date of transfer. However, each Landlord shall
deliver to its transferee all funds previously paid by Tenant if such funds have
not yet been applied under the terms of this Sublease. Notwithstanding the
foregoing, for purposes of Tenant's indemnification obligations under this
Sublease, the term "Landlord" shall include the current owner(s) of the
leasehold estate under the Master Lease and all prior owner(s) thereof during
the Sublease Term.
13.2.2 WRITTEN NOTICE. Tenant shall give written notice of any failure by
Landlord to perform any of its obligations under this Sublease to Landlord and
to the District, any ground lessor, mortgagee or beneficiary under any deed of
trust encumbering the Premises whose name and address have been furnished to
Tenant in writing. Landlord shall not be in default under this Sublease unless
Landlord (or the District, or such ground lessor, mortgagee or beneficiary)
fails to cure such non-performance within thirty (30) days after receipt of
Tenant's notice. However, if such non-performance reasonably requires more than
thirty (30) days to cure, Landlord shall not be in default if such cure is
commenced within such thirty (30) day period and thereafter diligently pursued
to completion.
13.2.3 EXCULPATION. It is expressly understood and agreed that,
notwithstanding anything in this Sublease to the contrary, and notwithstanding
any applicable law to the contrary, the liability of Landlord hereunder and any
recourse by Tenant against Landlord shall be limited solely and exclusively to
the interest of Landlord in and to the Project, and neither Landlord, nor any of
its constituent partners or subpartners, shall have any personal liability
therefor, and Tenant, on behalf of itself and all persons claiming by, through
or under Tenant, hereby expressly waives and releases Landlord and such partners
and subpartners from any and all personal liability.
13.2.4 FAILURE TO GIVE CONSENT. If Landlord impermissibly fails to give
any consent required hereunder, Tenant shall be entitled to specific performance
in equity and shall have such other remedies as are reserved to it under this
Sublease, but in no event shall this Lease be subject to termination or shall
Landlord be responsible in monetary damages for such failure to give consent
unless said consent is withheld maliciously or in bad faith.
13.3 SEVERABILITY. A determination by a court of competent jurisdiction
that any provision of this Sublease or any part thereof is illegal or
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unenforceable shall not cancel or invalidate the remainder of such provision or
this Sublease, which shall remain in full force and effect.
13.4 INTERPRETATION. The captions of the Articles or Sections of this
Sublease are to assist parties in reading this Sublease and are not a part of
the terms of provisions of this Sublease. Whenever required by the context of
this Sublease, the singular shall include the plural and the plural shall
include the singular. The masculine, feminine, and neuter genders shall each
include the other. In any provision relating to the conduct, acts or omissions
of Tenant, the term "Tenant" shall include Tenant's agents, employees,
contractors, invitees, successors or others using the Premises with Tenant's
expressed or implied permission.
13.5 INCORPORATION OF PRIOR AGREEMENTS; MODIFICATIONS. This Sublease is
the only agreement between the parties pertaining to the sublease of the
Premises and no other agreements are effective. All amendments to this Sublease
shall be in writing and signed by all parties. Any other attempted amendment
shall be void.
13.6 NOTICES. All notices required or permitted under this Sublease shall
be in writing and be personally delivered or sent by certified mail, return
receipt requested, postage prepaid. Notices to Tenant shall be delivered to the
address specified in Section 1.3 above, except that upon Tenants taking
possession of the Premises, the Premises shall be Tenant's address for notice
purposes Notices to Landlord shall be delivered to the address specified in
Section 1.2 above. If personally delivered, notice shall be effective upon
personal delivery or refusal. If mailed as aforesaid notice shall be effective
upon delivery or refusal as evidenced by the return receipt Either party may
change its notice address upon written notice to the other party.
13.7 WAIVERS. All waivers must be in writing and signed by the waiving
party. Landlord's failure to enforce any provision of this Sublease or its
acceptance of rent shall not be a waiver and shall not prevent Landlord from
enforcing that provision or any other provision of this Sublease in the future.
No statement on a payment check from Tenant or in a letter accompanying a
payment check shall be binding on Landlord. Landlord may, with or without notice
to Tenant, negotiate such check without being bound to the conditions of such
statement.
13.8 NO RECORDATION. Tenant shall not record this Sublease without prior
written consent from Landlord. However, Landlord may require that a "Short Form"
memorandum of this Sublease be executed by both parties and recorded.
13.9 BINDING EFFECT; CHOICE OF LAW. This Sublease binds any party who
legally acquires any rights or interest in this Sublease from Landlord or
Tenant. However, Landlord shall have no obligation to Tenant's successor unless
the rights or interests of Tenant's successor are acquired in accordance with
the terms of this Sublease. The laws of the State of California shall govern
this Sublease.
13.10 CORPORATE AUTHORITY; PARTNERSHIP AUTHORITY. If Tenant is a
corporation, each person signing this Sublease on behalf of Tenant represents
and warrants that he has full authority to do so and that this Sublease binds
the corporation. Within five (5) days after this Sublease is signed, Tenant
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shall deliver to Landlord a certified copy of a resolution of Tenant's Board of
Directors authorizing the execution of this Sublease or other evidence of such
authority reasonably acceptable to Landlord. If Tenant is a partnership, each
person signing this Sublease for Tenant represents and warrants that he is a
general partner of the partnership, that he has full authority to sign for the
partnership and that this Sublease binds the partnership and all general
partners of the partnership. Tenant shall give written notice to Landlord of any
general partner's withdrawal or addition. Within five (5) days after this
Sublease is signed, Tenant shall deliver to Landlord a copy of Tenant's recorded
statement of partnership or certificate of limited partnership.
13.11 JOINT AND SEVERAL LIABILITY. All parties signing this Sublease as
Tenant shall be jointly and severally liable for all obligations of Tenant.
13.12 FORCE MAJEURE. If Landlord cannot perform any of its obligations due
to events beyond Landlord's control, the time provided for performing such
obligations shall be extended by a period of time equal to the duration of such
events. Events beyond Landlord's control include, but are not limited to, acts
of God, war, civil commotion, labor disputes, strikes, fire, flood or other
casualty, shortages of labor or material, government regulation or restriction
and weather conditions.
13.13 NO OPTION. The submission of this Sublease for examination does not
constitute a reservation of or option to sublease the Premises and this Sublease
becomes effective only upon execution and delivery thereof by Landlord and
Tenant.
13.14 BROKERS. Deleted.
13.15 HAZARDOUS SUBSTANCE CONDITIONS. If a Hazardous Substance Condition
occurs, unless Tenant or its agents, employees, contractors or invitees are
responsible therefor in accordance with Section 5.4, Landlord may at Landlord's
option either (i) investigate and remediate such Hazardous Substance Condition,
if required, as soon as reasonably possible at Landlord's expense, in which
event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to investigate and remediate such condition exceeds twelve (12)
times the then monthly Base Rent or $100,000 whichever is greater, give written
notice to Tenant within thirty (30) days after receipt by Landlord of knowledge
of the occurrence of such Hazardous Substance Condition of Landlord's intent to
terminate this Lease as of the date sixty (60) days following the date of such
notice. In which event, this Sublease shall terminate as of the date specified
in Landlord's notice of termination. A "Hazardous Substance Condition" is the
occurrence or discovery of a condition involving the presence of, or
contamination by, Hazardous Material.
ARTICLE XIV
14.0 OPTION TO RENEW Tenant shall, provided Tenant is not in default of
this Sublease, have a one-time option to renew ("Option") this Sublease of the
premises in an "as is" condition for a two-year term commencing July 1, 2003 and
continuing for twenty-four (24) consecutive months. Beginning Base Rent for the
Option Period shall be ninety percent (90%) of the then-prevailing market rate
for comparable space in the general area, but in no event less than $0.89 NNN
per square foot per month. Tenant shall exercise the Option by notifying
Landlord in writing on or before December 31, 2002 of Tenant's intention to
renew. Tenant's failure to exercise the Option on or before December 31, 2002
shall be considered a waiver of the Option.
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ARTICLE XV
15.0 CROSS DEFAULT Tenant and Landlord have concurrently entered into a
July 1, 2001 Sublease of approximately 19,897 square feet of Premises within
Sorrento View Business Park commonly known as 5955 Pacific Center Boulevard,
Suites #600, San Diego, California 92121. A default of this Sublease shall also
be considered a default of Tenant's Sublease of Premises at 5955 Pacific Center
Boulevard; conversely, a default of the Sublease of Premises at 5955 Pacific
Center Boulevard shall also be considered a default of this Sublease.
ARTICLE XVI
16.0 RIGHT OF FIRST REFUSAL. Tenant shall, provided Tenant is not in
default, have a Right of First Refusal ("Right") to sublease additional premises
within Building 7 as the additional premises may become available from time to
time during the term of this Sublease. Landlord shall, upon receipt of a bona
fide offer to sublease received from an outside third party and conditionally
accepted by Landlord, notify Tenant of the terms and conditions of the offer
received from the an a seven (7) working days from receipt of notification by
Landlord within which to commit to Landlord in writing to sublease the
additional premises upon the same terms and conditions as offered by the outside
third part. Tenant's failure to respond within the seven day period shall be
deemed a waiver of Tenants Right if First Refused.
LANDLORD: TENANT:
SORRENTO MONTANA, L.P., CAMINO NEUROCARE, INC.,
a California Limited Partnership a Delaware Corporation
By: Sorrento Commercial Properties, Inc. By: /s/ David B. Holtz
d.b.a Sorrento Management Company, Name: David B. Holtz
A California Corporation Title: Vice President, Finance
Date: 7/2/01
By: /s/ Roger W. Hillbrook
Name: Roger W. Hillbrook
Title: Vice President/Corporate Broker
Date: 7/3/01
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