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EXHIBIT 10.4
SUBLEASE
TORREY HILLS CORPORATE CENTRE
This SUBLEASE is made as of September 29, 1998, between XXXX XXXXXX HILLS
LLC, a California limited liability company ("SUBLESSOR"), and I.T.M., a Nevada
Corporation ("SUBLESSEE"), based on the following:
RECITALS:
A. As of November 21, 1997, 5 Torrey Hills Venture LLC, a California
limited liability company ("LANDLORD"), as "Landlord", and Sublessor, as
"Tenant", entered into that certain Lease ("LEASE"), pursuant to which Landlord
demised to Sublessor all of the rentable square footage on the first floor
("FIRST FLOOR") of that certain office building commonly known as Torrey Hills
Corporate Centre ("BUILDING").
B. Sublessor currently holds the interest of "Tenant" under the Lease.
C. Sublessee desires to sublease and hire from Sublessor, and Sublessor
desires to sublease and demise to Sublessee, that portion of the First Floor of
the Building shown cross-hatched on the floor plan attached hereto as EXHIBIT
"B" ("PREMISES"), all on the terms and subject to the conditions set forth in
this Sublease, The Premises is comprised of approximately 3,928 rentable square
feet and approximately 3,401 usable square feet.
D. Pursuant to Section 17(e) of the Lease, the consent of Landlord is
required for this Sublease.
E. Capitalized terms not defined in this Sublease shall have the
meanings set forth in the Lease.
NOW, THEREFORE, in consideration of the premises set forth in this
Sublease and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Sublessor and Sublessee hereby agree as
follows:
1. SUBLEASE OF PREMISES. Sublessor hereby subleases and demises the
Premises to Sublessee, and Sublessee hereby subleases and hires the Premises
from Sublessor, on all of the terms and conditions of the Lease, expect to the
extent specified to the contrary in this Sublease.
2. TERM. The term of this Sublease ("TERM") shall commence on December
1, 1998 ("COMMENCEMENT DATE") and shall expire at 5:00 p.m. on the fifth
anniversary of the Commencement Date ("EXPIRATION DATE"). Sublessee shall have
no option to extend the Term or to renew this Sublease.
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3. RENT AND SECURITY DEPOSIT.
(a) From and after the Commencement Date, Sublessee agrees to pay
Sublessor, in advance, on the first day of each and every calendar month during
the Term, the following Basic Rent:
MONTHS OF TERMS MONTHLY BASIC RENT
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1-12 $9,034.40
13-24 $9,230.80
25-36 $9,427.20
37-48 $9,623.60
49-60 $9,820.00
Sublessee shall also pay all other charges specified in the Lease if and to the
extent applicable to the Premises. Payment of all such rent and other charges
due Sublessor shall be without offset or demand, shall be in lawful money of
the United States of America and shall be made at the address set forth for
Sublessor in Paragraph 9 or at such other place as Sublessor may direct. All
sums of money required to be paid pursuant to the terms of this Sublease are
defined as "rent", whether or not the same are designated as such elsewhere in
this Sublease.
(b) Sublessee shall pay to Sublessor, immediately upon Sublessee's
signing this Sublease, a security deposit in the amount of Thirty-Six Thousand
One Hundred Thirty-Seven Dollars and Sixty Cents ($36,137.60). Said amount shall
be held by Sublessor as security for the faithful performance by Sublessee of
all of the terms, covenants and conditions of this Sublease to be kept and
performed by Sublessee during the Term. If Sublessee defaults with respect to
any provision of this Sublease, including, but not limited to, the provisions
relating to the payment of rent, Sublessor may (but shall not be required to)
use, apply or retain all or any part of the security deposit for the payment of
any rent or any other amount in default, or for the payment of any other amount
which Sublessor may spend or become obligated to spend by reason of Sublessee's
default or to compensate Sublessor for any other loss or damage which Sublessor
may suffer by reason of Sublessee's default. If any portion of said deposit is
so used or applied, Sublessee shall, upon demand therefor, deposit cash with
Sublessor in an amount sufficient to restore the security deposit to its
original amount and Sublessee's failure to do so shall be a material breach of
this Sublease. Sublessor shall not be required to keep the security deposit
separate from its general funds, and Sublessee shall not be entitled to interest
on such deposit. If Sublessee fully and faithfully performs every provision of
this Sublease to be performed by it, the security deposit or any balance thereof
shall be returned to Sublessee (or at Sublessor's option, to the last assignee
of Sublessee's interests hereunder) at the expiration of the Term, provided that
Sublessor may retain the security deposit until such time as any amount due from
Sublessee under this Sublease has been determined and paid in full.
4. USE OF LEASED PREMISES. Sublessee shall use the Premises for general
office purposes and for no other use or purpose without the prior written
consent of Sublessor, which shall not be unreasonably withheld or delayed.
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5. RELATIONSHIP BETWEEN LEASE AND SUBLEASE.
(a) The Lease is hereby incorporated in this Sublease by this
reference, Sublessee acknowledges receipt of a redacted copy of the Lease,
which is attached hereto as EXHIBIT "A".
(b) Except to the extent this Sublease provides to the contrary, this
Sublease is subject and subordinate to all of the terms, conditions and
provisions of the Lease, and Sublessee agrees (1) to be bound thereby to the
same extent Sublessor is bound to Landlord thereunder; and (2) not to violate
any of the terms, conditions or provisions of the Lease. In addition, except
for and subject to the following, and except as otherwise provided in this
Sublease, Sublessee agrees to perform and comply with all of the obligations
required to be kept or performed by the "Tenant" under the Lease:
(i) Sublessor shall cause the Landlord to construct the Tenant
Improvements to be constructed by Landlord pursuant to the Lease for the
First Floor of the Building, and as "Tenant" under the Lease, Sublessor
shall remain obligated under the Lease to pay the cost and expense of such
Tenant Improvements in excess of the Tenant Improvement Allowance stated in
the Lease. Sublessee shall not have the obligations of "Tenant", if any,
which relate to the construction of the Tenant Improvements for the First
Floor of the Building, including, but not limited to, any such obligations
set forth in Section 5 of the Lease or EXHIBIT "C" of the Lease. As
"Tenant" under the Lease, Sublessor shall remain obligated to perform such
obligations, if any. As between Sublessor and Sublessee, the Sublessee
Improvements for the Premises shall be governed by the Sublease Work Letter
Agreement attached hereto as EXHIBIT "C".
(ii) Notwithstanding any provision of this Sublease or of the
Lease to the contrary, if the original Landlord, namely 5 Torrey Hills
Venture LLC, a California limited liability company ("5THV"), voluntarily
or involuntarily conveys fee title to the Project to a transferee
("TRANSFEREE"): (i) Sublessor shall have the option to terminate the Lease
pursuant to Section 17(d) thereof, and any such termination shall be
effective as of the date of such conveyance; and (ii) in the event of any
such termination, Sublessee shall attorn to the Transferee such that this
Sublease shall become a direct lease between the Transferee and Sublessee.
(iii) No parking spaces shall be reserved for Sublessee's
exclusive use. All parking for Sublessee and its employees, agents,
contractors, customers and other invitees shall be on a non-exclusive
basis, and Sublessee shall ensure that none of its employees, agents,
contractors, customers or other invitees park in any parking space which is
reserved for the use of another tenant or occupant.
(iv) Pursuant to Section 10 of the Lease, Landlord is obligated
to construct, at Landlord's cost and expense, a monument for signage at the
main entrance to the parking lot for the Building. Sublessee shall not have
any right to install identification signage on the monument for Sublessee's
business, and Sublessee shall not have any right to install identification
signage on the Building. Sublessee shall, however, be entitled, at
Sublessee's cost and expense, to be listed on the directory sign in the
Building's main lobby and on suite identification signage at the main
entrance to the Premises. Any and all identification signage of Sublessee
(i) shall
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be subject to the prior written approval of (A) Sublessor, which shall not be
unreasonably withheld or delayed; and (B) Landlord, which pursuant to Section
10 of the Lease is required not be unreasonably withheld or delayed (however
Sublessor makes no representation or warranty with respect to whether Landlord
will grant its approval); and (ii) shall be in conformance with the sign
criteria for the Project, as approved by the City of San Diego and any other
governmental entities having jurisdiction. Except for the identification
signage expressly permitted pursuant to this Paragraph, Sublessee shall not
place or permit to be placed, any sign, advertisement, notice or other similar
matter on the doors, windows, exterior walls, roof or other areas of the
Premises or Building which are open to the view of persons in the common area
of the Building or the Project, except with the advance written consent of both
Sublessor and Landlord, either of which may be withheld in its respective sole,
absolute and unfettered discretion.
(v) Sublessee shall furnish and pay for, at Sublessee's sole
expense, all utilities for the Premises (including, but not limited to,
electricity, heating, ventilating and air conditioning and telephone service)
and other services which Sublessee requires with respect to the Premises, save
and except for those to be provided by Landlord pursuant to Section 7(a) of the
Lease. Electricity for the Premises shall be separately metered, and the account
therefor shall be in Sublessee's name. Sublessee shall pay for Sublessee's
consumption of electricity directly to the provider before delinquency according
to the amount shown on such separate meter.
(vi) Notwithstanding the preamble of Section 11(a) of the Lease, the
Best's rating of the insurer from which Sublessee shall obtain the required
insurance shall be A: VIII.
(vii) Notwithstanding Section 12(a) of the Lease, if the Premises are
damaged or destroyed to the extent that Sublessor determines that they cannot,
with reasonable diligence, be fully repaired or restored by Sublessor within
ninety (90) days after the date of the damage or destruction, either Sublessor
or Sublessee shall have the right to terminate this Sublease. Sublessor shall
send Sublessee written notice of Sublessor's determination within thirty (30)
days after the date of the damage or destruction. If Sublessor determines that
the Premises can be fully repaired or restored within said ninety (90) day
period, or if it is determined that such repair or restoration cannot be made
within said period but neither party elects to terminate this Sublease within
ten (10) days after the date of said determination, this Sublease shall remain
in full force and effect and Sublessor shall diligently repair and restore the
damage (or cause the same to be done) as soon as reasonably possible.
(viii) Notwithstanding item "(A)" of Section 11(a)(i) of the Lease, the
comprehensive general liability insurance or the commercial general liability
insurance of the Sublessee shall not be required to be endorsed to delete any
employee exclusion on personal and bodily injury coverage.
(ix) Notwithstanding Section 11(a)(iii) of the Lease, the workers'
compensation insurance of the Sublessee shall not be required to be endorsed to
waive the insurer's rights of subrogation against the Sublessor or the Landlord.
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(c) Sublessee agrees to indemnify, defend, protect and hold
Sublessor harmless from and against any and all liabilities, damages, losses,
costs (including attorneys' fees and costs) and expenses incurred by Sublessor
by reason of a default or breach of the Lease which occurs as a result of a
default or breach by Sublessee of its obligations pursuant to this Sublease.
(d) Sublessor covenants that Sublessor's rights with regard to the
Premises are set forth under the terms, conditions and provisions of the Lease.
Sublessor agrees that during the Term: (i) Sublessor will maintain the Lease in
full force and effect, subject, however, to any earlier termination of the Lease
not resulting from a default or breach by Sublessor as the "Tenant" thereunder;
(ii) Sublessor shall perform all obligations of "Tenant" pursuant to the Lease,
except those which are the obligation of Sublessee pursuant to this Sublease;
(iii) Sublessor shall use reasonable efforts in good faith to cause Landlord to
perform Landlord's obligations under the Lease in a timely manner; and (iv)
Sublessor will not voluntarily cause a termination of the Lease without first
securing Sublessee's prior written consent, unless upon such voluntary
termination of the Lease this Sublease will continue as a direct lease between
Landlord and Sublessee, with the otherwise terminated Lease continuing to be
incorporated by reference in this Sublease to the extent necessary to interpret
and implement the provisions of this Sublease.
(e) Sublessor agrees that so long as Sublessee is not in default,
Sublessee shall have quiet and peaceful possession of the Premises and enjoy
all rights granted in this Sublease without interference.
(f) If Sublessor receives a written notice of default under the
Lease from Landlord, then Sublessor shall, as soon as reasonably possible
following the receipt of such written notice, deliver a copy thereof to
Sublessee. If the default to which such notice refers is the result of
Sublessee's failure to perform any obligation of Sublessee pursuant to this
Sublease, then Sublessee shall immediately cure such default at its own expense.
If the default is not the result of Sublessee's failure to perform an
obligation of Sublessee pursuant to this Sublease, then Sublessee may, at its
option, but without obligation to do so, undertake to cure such default,
provided that it does so in a reasonable manner and in accordance with the
terms of the Lease.
(g) If the Lease is terminated for any reason before the natural
expiration of its initial eleven-year (11-year) term, and if Sublessee is not
then in default, the termination of the Lease shall not terminate or affect the
continuing validity of this Sublease. In such event, all of Sublessor's interest
under this Sublease shall be deemed automatically assigned, transferred and
conveyed to Landlord. Landlord shall thereupon be bound under this Sublease to
the same extent as Sublessor was bound under this Sublease, and Landlord shall
have all of the rights of Sublessor under this Sublease. In addition, Sublessee
shall thereupon be deemed to have attorned to Landlord such that this Sublease
shall become a direct lease between Landlord and Sublessee.
6. CONDITION OF PREMISES.
(a) Sublessor shall deliver possession of the Premises to Sublessee
on the Commencement Date in the same condition as Sublessor accepts delivery of
possession of the Premises from Landlord on the Commencement Date. Sublessee's
taking possession of the Premises shall be
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Sublessee's acknowledgment that the Premises are in good and tenantable
condition and that Sublessee accepts the Premises in their then-current
condition, "as is".
(b) On surrendering possession, Sublessee will leave the Premises
broom clean and in good condition, ordinary wear and tear excepted.
7. ESTOPPEL CERTIFICATE. Each party shall, without charge to the other
party, at any time and from time to time, within ten (10) days after receipt by
said party from the other party of written request therefor, deliver a fully
executed certificate certifying, if true: (a) that this Sublease is unmodified
and in full force and effect, or if there have been any modifications, that
same is in full force and effect as modified and stating any such
modifications; (b) whether or not there is then existing any claim of default
of the other party and if so, specifying the nature thereof; and (c) the
current amount of rent payable monthly by Sublessee and the date to which the
same has been paid.
8. BROKERS. Each party warrants to the other that the warranting party
has incurred no obligation by reason of this Sublease for a real estate
brokerage commission or finder's fee for which the other party would be liable.
Each party will indemnify, protect, defend and hold the other party free and
harmless from and against any liability, damage or expense the other party may
incur by reason of the untruth as to the warranting party of the foregoing
warranty, including expenses for attorney's fees and court costs.
9. NOTICES. All notices, demands or requests from one party to another
shall be delivered or sent in accordance with Section 19 of the Lease,
addressed to Sublessee at the address of the Premises and addressed to
Sublessor in care of Xxxx Communities, Inc., 000 Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx Xxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxx or Xxxxxx Xxxxx.
Either party may change its address for notices by delivering a notice to that
effect to the other party.
10. ASSIGNMENT, SUBLETTING AND HYPOTHECATION. Sublessee shall not assign
this Sublease or collaterally assign, pledge or hypothecate its interest under
this Sublease or further sublease all or any portion of the Premises without
the prior written consent of Sublessor, which may be withheld in Sublessor's
sole, absolute and unfettered discretion. No assignment or further sublease
shall release Sublessee, and Sublessee shall remain liable to Sublessor for full
performance of Sublessee's obligations.
11. OTHER PROVISIONS.
(a) One or more waivers by Sublessor of any breach of any covenant or
condition shall not be construed as a waiver of a subsequent or continuing
breach of the same or of any other covenant or condition, and the consent or
approval by Sublessor to or of any act by Sublessee requiring Sublessor's
consent or approval shall not be deemed to waive or render unnecessary
Sublessor's consent or approval to or of any subsequent act.
(b) This Sublease may be signed in two (2) or more counterparts, each
of which shall be an original, but all of which shall constitute one and the
same instrument.
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(c) This Sublease has been negotiated and entered into in the State
of California, and shall be governed by, construed and enforced in accordance
with the internal laws of the Sate of California applied to contracts made in
California by California residents to be wholly performed in California.
(d) Paragraph titles or captions contained in this Sublease are
inserted as a matter of convenience and for reference and in no way define,
limit, extend or describe the scope of this Sublease or any provision hereof.
No provision in this Sublease is to be interpreted for or against either party
because that party or its legal representative drafted such provision.
(e) If any term, covenant, condition or provision of this Sublease is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remainder of the provisions shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
(f) If Sublessor or Sublessee files a suit against the other which is
in any way connected with this Sublease, the unsuccessful party shall pay to
the prevailing party a reasonable sum for attorneys' fees and costs, which
shall be deemed to have accrued on the commencement of such action and shall be
enforceable whether or not such action is prosecuted to judgment.
(g) The covenants and conditions contained in this Sublease shall,
subject to the provision governing assignment and subletting, apply to and bind
the heirs, successors, executors, administrators and assigns of the respective
parties. If this Sublease is signed by more than one person as Sublessee, their
obligation shall be joint and several.
(h) Time is expressly declared to be of the essence of this Sublease,
and of all covenants and conditions herein contained.
[BALANCE OF PAGE IS LEFT BLANK INTENTIONALLY;
TEXT RESUMES WITH SECTION 11(i) ON PAGE 8]
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(i) This Sublease constitutes the entire agreement between the
parties pertaining to Sublessee's subtenancy of the Premises, fully supersedes
any and all prior proposals, letters of intent, correspondence, understandings,
representations, warranties and agreements between the parties, or any of them,
pertaining to the subject matter of this Sublease, and may be modified only by
written agreement signed by all of the parties.
IN WITNESS WHEREOF, the parties hereto have signed and entered into this
Sublease as of the day and year first above written.
SUBLESSOR:
BUTE TORREY HILLS LLC, a California limited liability
company
BY: BUTE COMMERCIAL CORPORATION, a California corporation,
Manager
By /s/ XXXXXX X. IRISH
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Title Vice President
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By
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Title
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SUBLESSEE:
I.T.M., a Nevada Corporation
By /s/ XXXXXX XXXXX
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Title PRESIDENT
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By
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Title
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EXHIBIT "A"
REDACTED COPY OF THE LEASE
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EXHIBIT "B"
FLOOR PLAN DEPICTING PREMISES
[FLOOR PLAN]
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EXHIBIT "C"
SUBLEASE WORK LETTER AGREEMENT
I.T.M.
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Attention:
--------------
Gentlemen:
You ("SUBLESSEE") and we ("SUBLESSOR") are executing simultaneously with
this Sublease Work Letter Agreement, a written sublease ("SUBLEASE") covering
those certain Premises ("PREMISES") comprised of approximately 3,928 rentable
square feet and approximately 3,401 usable square feet on the First Floor of
the Torrey Hills Corporate Centre, San Diego, California, as depicted on
Exhibit "B" of the Sublease. To induce Sublessee to enter into the Sublease
(which is hereby incorporated by reference to the extent that the provisions of
this Sublease Work Letter Agreement may apply thereto) and in consideration of
the mutual covenants hereinafter contained, Sublessor and Sublessee mutually
agree that certain improvements to the Premises shall be constructed by
Sublessor as follows:
1. DESCRIPTION OF IMPROVEMENTS
(a) The Premises to be provided by Sublessor, at no cost or expense to
Sublessee expense (and exclusive of Sublessee Improvements), shall consist of a
concrete floor, exterior Building walls, off-Premises service points from which
electrical and telephone service to the Premises can be made, off-Premises
service points from which plumbing connections for the supply of water to the
Premises may be made and any "Tenant Improvements" required to be constructed
by the Landlord pursuant to the Lease.
(b) The additional improvements described on that certain two-page
(2-page) cost breakdown prepared by Burger Construction and Property Services,
a copy of which is attached to this Sublease Work Letter Agreement as
ATTACHMENT "1", which include, but are not limited to, ceilings, interior
partitions, insulation, drywall (including taping and sanding), painting,
window coverings, wood and plastic casework, carpet, lighting fixtures,
electrical systems, plumbing connections and fixtures for the supply of water
to the Premises and the equipment and distribution system for heating,
ventilation and air-conditioning ("HVAC") for the Premises, including, but not
limited to, all ducts, baffles and thermostats to serve the Premises, shall
constitute the "SUBLESSEE IMPROVEMENTS". The Sublessee Improvements all shall
be made by Sublessor pursuant to plans and specifications to be approved in
writing by Sublessor and Sublessee. The work to be done and the responsibility
for preparation of plans and specifications for the Sublessee Improvements is
described in this Sublease Work Letter Agreement.
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2. PLANS AND SPECIFICATIONS
(a) The Sublessee Improvements shall be constructed pursuant to plans
and specifications prepared by Sublessor's space planner or by a space planner
approved by Sublessor and retained by Sublessee. Sublessee shall meet with such
space planner within thirty (30) days after the Sublease is signed for the
purpose of informing such space planner of the nature and extent of the
Sublessee Improvements which Sublessee requests. Following receipt of such
information, the space planner shall provide to Sublessee a general description
of such proposed Sublessee Improvements ("SPACE PLAN"), together with an
estimate of the cost thereof ("COST ESTIMATE"). Sublessee shall have the right,
reasonably, to approve such Space Plan and Cost Estimate, which approval, in
any event, shall be given no more than five (5) days following receipt thereof.
(b) Sublessor will furnish, based upon the approved Space Plan and Cost
Estimate, all architectural, mechanical and electrical engineering plans
required for the construction of the Sublessee Improvements ("WORKING
DRAWINGS"), including complete detailed plans and specifications for partition
layout, ceiling, heating and air conditioning, electrical outlets, and switches
and telephone outlets. Such complete plans and specifications shall be (i)
provided to Sublessee following Sublessee's approval of the Space Plan and Cost
Estimate pursuant to Paragraph 2(a) of this Sublease Work Letter Agreement, and
(ii) reasonably approved by Sublessee no more than three (3) days following
receipt thereof.
3. CONSTRUCTION OF TENANT IMPROVEMENTS
(a) Construction of the Sublessee Improvements pursuant to this
Sublease Work Letter Agreement shall be performed by such contractor as
Sublessor shall reasonably select, under Sublessor's supervision. Construction
shall commence promptly following final approval of the Working Drawings and
acceptance of final pricing by Sublessee (but not before the date on which this
Sublease is signed), and shall be diligently prosecuted to completion
thereafter.
(b) Sublessor reserves the right to use pre-stocked materials in
constructing the Sublessee Improvements, including drywall and studs, lighting
fixtures and air handling boxes. Sublessor represents that all such pre-stocked
items were acquired at the best price available in order to save cost and delay
in constructing the Sublessee Improvements in the Project.
(c) Sublessee shall be permitted, during the course of construction,
upon reasonably notice to Sublessor, and without unreasonably interfering with
the conduct of such construction, to inspect the progress of the work and, upon
written notice to Sublessor, to cause any material defects or deficiencies to
be repaired.
(d) Upon completion of construction of the Sublessee Improvements,
Sublessor shall cause the Premises to be thoroughly cleaned prior to
Sublessee's occupancy of the Premises.
(e) Sublessor shall repair or replace as soon as reasonably possible
all incomplete or defective items identified in any "pick-up list" or
"punchlist" delivered by Sublessee to Sublessor. Sublessee shall deliver such
"pick-up list" or "punchlist" to Sublessor within fifteen (15) days after
commencement of Sublessee's actual occupancy of the Premises.
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(f) Following completion of the Sublessee Improvements, Sublessor will
cause to be prepared a set of as-built plans and specifications of the
Sublessee Improvements, the cost of which plans and specifications shall be
included in the cost of the Sublessee Improvements to which the Sublessee
Improvement Allowance applies, pursuant to Paragraph 4 of this Sublease Work
Letter Agreement.
4. CHANGE ORDERS
After approval of the Space Plan and Cost Estimate, any material change
desired by Sublessee ("CHANGE ORDER") shall be requested of Sublessor in
writing. Upon receipt of a Change Order request, Sublessor shall cause the
modification to be incorporated into the Working Plans and transmitted to the
contractor for pricing and for an estimate of the delay, if any, which would be
caused by incorporation of the requested Change Order. Upon receipt of pricing
information, Sublessor shall forward the cost of the work, including the
overhead of the contractor, the space planner and Sublessor, and a statement of
the estimated number of additional working days, if any, required to execute
the change, to Sublessee for approval. Work with respect to the Change Order
shall proceed only upon Sublessee's written approval of the pricing and
estimated delay. Whether or not a requested Change Order is ultimately
approved by Sublessee or incorporated in the Sublessee Improvements, all of
Sublessor's expenses associated with the requested Change Order, including
modification of the Working Drawings, shall be charged to the Sublessee
Improvement Allowance.
5. PAYMENT OF COST OF CONSTRUCTION
(a) Sublessor shall pay for the Sublessee Improvements in an amount not
to exceed the sum of One Hundred Ten Thousand Three Hundred Forty-Five Dollars
($110,345.00) ("SUBLESSEE IMPROVEMENT ALLOWANCE").
(b) In addition to the hard costs of constructing the Sublessee
Improvements, the Sublessee Improvement Allowance shall be used to pay for
Sublessor's expenses, if any, in connection with preparation of the Space Plan,
Working Drawings and other plans and specifications necessary to the
construction of the Sublessee Improvements.
(c) Notwithstanding the Cost Estimate delivered to Sublessee pursuant
to Paragraph 2(b) of this Sublease Work Letter Agreement, any cost for
Sublessee Improvements in excess of the Sublessee Improvement Allowance,
including the cost of any Change Orders, shall be paid by Sublessee. Such
excess shall be payable in full upon the later of commencement of construction
of the Sublessee Improvements or written demand by Sublessor.
6. ESTIMATED COMPLETION DATE
(a) The Estimated Completion Date with respect to the Sublessee
Improvements is November 1, 1998.
(b) If the Sublessee Improvements have not been completed on or before
the Estimated Completion Date, (i) Sublessor shall not be liable for any
damage incurred by Sublessee as a result
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thereof, (ii) this Sublease shall not thereby become void or voidable, (iii)
the Commencement Date shall not be delayed but shall be the date specified in
Paragraph 2 of the Sublease, and (iv) Sublessee shall not be entitled to any
abatement of rent; provided, however, if Sublessee demonstrates, to Sublessor's
reasonable satisfaction, that Sublessor's contractor could not have completed
the Sublessee Improvements contemplated by the original Space Plan and Working
Drawings (without reference to any Change Orders) on or before the Estimated
Completion Date, then Sublessee shall be entitled to a per diem credit against
Basic Rent next payable to Sublessor for each day after the Estimated
Completion Date until the Sublessee Improvements are substantially complete.
(The amount of such per diem credit shall be determined by dividing the initial
Basic Rent set forth in Paragraph 3(a) of the Sublease by thirty (30).)
Notwithstanding the foregoing, either party shall be entitled to terminate this
Sublease if the Sublessee Improvements have not been substantially completed
within three hundred sixty-five (365) days after the Estimated Completion Date.
"SUBSTANTIAL COMPLETION", for purposes of this Paragraph 6(b), shall mean
completion of construction sufficient for Sublessee to occupy the Premises for
fixturing or for the use intended, subject only to punchlist items, including
completion of the ceiling system, electrical service, and floor finishes. The
completed work shall be clean and free of debris or obstructions, and floors to
receive carpeting shall be cleaned.
If the foregoing correctly sets forth our understanding, kindly sign this
Sublease Work Letter Agreement where indicated.
SUBLESSOR:
XXXX XXXXXX HILLS LLC, a California limited liability company
BY: XXXX COMMERCIAL CORPORATION, a California corporation,
Manager
By /s/ XXXXXX X. IRISH
----------------------------------------------------------
Title Vice President
-------------------------------------------------------
By
----------------------------------------------------------
Title
--------------------------------------------------------
ACCEPTED AND APPROVED:
_________________________, 19__.
SUBLESSEE:
I.T.M., a Nevada Corporation
By /s/ XXXXXX XXXXX
----------------------------------------------------------
Title PRESIDENT
--------------------------------------------------------
By
-----------------------------------------------------------
Title
---------------------------------------------------------
-4-
15
ATTACHMENT "1" TO SUBLEASE WORK LETTER AGREEMENTS
COST BREAKDOWN
-1-
16
BURGER
CONSTRUCTION AND PROPERTY SERVICES 000 XXXXX XXXXXXX 000 XXXXX 000
XXXXXX XXXXX, XX 00000
Invoice No. 504587
COST DIVISION
DIVISION DESCRIPTION TOTAL TOTAL
-------- ----------- ----- --------
1 GENERAL CONDITIONS
SUPERINTENDENT $ 2,500.00
PROJECT MANAGEMENT $ 250.00
JOBSITE LABOR $ 200.00
TRASH REMOVAL $ 550.00
FINAL CLEAN $ 350.00
CONSTRUCTION FACILITIES $ 300.00
$ 4,150.00
----------
6 WOOD AND PLASTIC, CABINETS
CASEWORK $ 7,000.00
$ 7,000.00
----------
7 THERMAL & MOISTURE PROTECTION
INSULATION
SOUND ATTENUATION XXXXX $ 900.00
$ 900.00
----------
8 DOORS AND WINDOWS
GLAZING $ 3,000.00
DOORS/FRAMES & HARDWARE $10,200.00 $13,200.00
----------
9 FINISHES
DRYWALL & METAL STUD FRAMING $12,675.00
ACOUSTICAL CEILING $ 5,735.00
PAINTING $ 2,800.00
CARPET $ 7,500.00
BASE $ 950.00
$29,660.00
----------
10 SPECIALTIES
FIRE EXTINGUISHERS $ 150.00
WINDOWCOVERINGS $ 1,900.00
$ 2,050.00
----------
15 MECHANICAL
PLUMBING $ 2,500.00
HVAC $20,835.00
$23,335.00
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Page 1
17
COST DIVISION
DIVISION DESCRIPTION TOTAL TOTAL
-------- ----------- ----- --------
16 ELECTRICAL $ 19,115.00
------------
$ 19,115.00
============
SUBTOTAL $ 99,410.00
PROFIT & OVERHEAD $ 9,941.00
INSURANCE $ 994.10
------------
TOTAL $ 110,345.10
============
$32.44 per square foot based on 3,401 square feet
Page 2
18
CONSENT OF LANDLORD
Effective as of the date of the foregoing Sublease, the undersigned, as
the "Landlord" under the Lease (defined in the Sublease), hereby consents to
the foregoing Sublease of the Premises (also defined in the Sublease), which is
a portion of the First Floor of the Building (also defined in the Sublease) to
I.T.M., a _______________________.
LANDLORD:
5 TORREY HILLS JOINT VENTURE, a California limited liability
company
BY: XXXX XXXXXX HILLS LLC, a California limited liability
company, Manager
BY: XXXX COMMERCIAL CORPORATION,
a California corporation, Manager
By /s/ XXXXXX X. IRISH
----------------------------------
Title Vice President
----------------------------------
By
----------------------------------
Title
----------------------------------
-2-
