Exhibit 10.16
Sublease
Section I
This Sublease is by and between SIERRA HEALTH SERVICES, INC. (herein
"Sublessor") and CALIFORNIA INDEMNITY INSURANCE COMPANY, a subsidiary of
Sublessor (herein "Sublessee"). Sublessor is the Tenant under that Lease
Agreement set out as Attachment 1 to this Sublease (herein the "Master Lease").
Section II
Sublessor hereby Subleases to Sublessee the office space consisting of
a portion of the 5th and 6th floors, as highlighted on Exhibit A attached and
made a part of this Sublease, of the building known as 0000 Xxxxx Xxxxxx Xxx
(herein the "Building") and at the same address in the City of Las Vegas, State
of Nevada, referred to below as the Premises.
This Sublease is subject to the provisions of the Master Lease and in
case of any conflict with the applicable terms of the Master Lease, the terms of
the Master Lease shall prevail. The Term of this Sublease may not extend beyond
the Term of the Master Lease. This Sublease shall not affect or reduce any
obligation of the Sublessor as Tenant under the Master Lease or any rights of
the Landlord under the Master Lease. Sublessor may not mortgage or pledge any
right under this Sublease except as expressly permitted under the Master Lease.
Sublessor shall deliver a conformed copy hereof to the Landlord and Lender as
defined under the Master Lease within 10 days after its execution.
Section III
Term
The Premises are Subleased for a term to commence January 1, 2001, and
to end at 11:59 p.m. Las Vegas local time on December 31, 2001, or on such
earlier date as this Sublease may terminate as provided below, except that, if
any such date falls on a Sunday or a holiday, then this Sublease shall end at
11:59 p.m. Las Vegas, Nevada, local time on the business day next preceding the
mentioned date. Unless Subleases shall notify Sublessor in writing otherwise on
or before December 1st of the original or extended term of the Sublease, this
Sublease including all its terms, provisions and covenants will be automatically
extended for an additional period of 1 year, provided, this Sublease may not be
extended longer than the Term permitted under the Master Lease.
Section IV
Rent
The total rent is the sum of Two Dollars and Thirty-Nine Cents ($2.39)
per rentable square foot per month, which sum is payable, in advance, on the
first day of each calendar month during the initial term and if the Sublease is
extended pursuant to the provisions of Section III, the rent for the extended
term shall be as set forth in Section XXX.
Section V
Use and Occupancy
Sublessee shall use and occupy the Premises as a business office to
conduct its affairs as an insurer and for general office purposes and for no
other purpose. Sublessor represents that the Subleased property may lawfully be
used for such purpose.
Section VI
Place for Payment of Rent
Sublessee shall pay rent, and any additional rent as provided below, to
Sublessor at Sublessor's stated address, or at such other place as Sublessor may
designate in writing, without demand and without counterclaim, deduction, or
setoff.
Section VII
Care and Repair of Premises
(a) Sublessee shall commit no act of waste and shall take good care of
the Premises and the fixtures and appurtenances therein, and shall, in the use
and occupancy of the Premises, conform to all laws, orders and regulations of
the federal, state, and municipal governments or any of their departments.
Sublessor shall make all necessary repairs to the Premises, except where the
repair has been made necessary by misuse or neglect by Sublessee or Sublessee's
agents, servants, visitors or licensees. All improvements made by Sublessee to
the Premises which are so attached to the Premises that they cannot be removed
without material injury to the Premises, shall become the property of Sublessor
on installation.
(b) Not later than the last day of the term, Sublessee shall, at
Sublessee's expense, remove all of Sublessee's personal property and those
improvements made by Sublessee that have not become the property of Sublessor,
including trade fixtures, cabinet work, movable paneling, partitions and the
like; repair all injury done by or in connection with the installation or
removal the property and improvements; and surrender the Premises in as good
condition as they were at the beginning of the term, reasonable wear, and damage
by fire, the elements, casualty, or other cause not due to the misuse or neglect
by Sublessee or Sublessee's agents, servants, visitors or licensees, excepted.
All property of Sublessee remaining on the Premises after the last day of the
term of this Sublease shall be conclusively deemed abandoned and may be removed
by Sublessor, and Sublessee shall reimburse Sublessor for the costs of such
removal. Sublessor may have any such property stored at Sublessee's risk and
expense.
Section VIII
Alternations, Additions or Improvements
Sublessee shall not, without first obtaining the written consent of
Sublessor, make any alterations, additions or improvements in, to or about the
Premises.
Section IX
Prohibition Against Activities Increasing Fire Insurance Rates
Sublessee shall not do or suffer anything to be done on the Premises
that will cause an increase in the rate of fire insurance on the building.
Section X
Accumulation of Waste or Refuse Matter
Sublessee shall not permit the accumulation of waste or refuse matter
on the Subleased Premises or anywhere in or near the building.
Section XI
Abandonment
Sublessee shall not, without first obtaining the written consent of
Sublessor, abandon the Premises, or allow the Premises to become vacant or
deserted.
Section XII
Assignment or Sublease
Sublessee shall not, without first obtaining the written consent of
Sublessor, assign, mortgage, pledge or encumber this Sublease, in whole or in
part, or sublet the Premises or any part of such Premises or any part thereof.
This covenant shall be binding on the legal representatives of Sublessee, and on
every person to whom Sublessee's interest under this Sublease passes by
operation of law, but shall not apply to an assignment or subletting to the
parent or subsidiary of a corporate Sublessee or to a transfer to the
Subleasehold interest occasioned by a consolidation or merger involving such
Sublessee.
Section XIII
Compliance with Rules and Regulations
Sublessee shall observe and comply with the rules and regulations set
forth below, which are made part of this agreement, and with such further
reasonable rules and regulations as Sublessor may prescribe, on written notice
to Sublessee, for the safety, care, and cleanliness of the building and the
comfort, quiet, and convenience of other occupants of the building.
Section XIV
Elevator Service
Sublessor shall furnish passenger elevator service on business days,
and on other days subject to the security of the Premises.
Section XV
Services and Utilities
Provided that Sublessee is not in default hereunder, Sublessor agrees
to furnish to the premises during reasonable hours of generally recognized
business days, to be determined by Sublessor at its reasonable discretion, and
subject to the rules and regulations of the Building of which the Premises are a
part, electricity for normal lighting and fractional horsepower office machines,
heat and air conditioning , landscape maintenance, required for the comfortable
use and occupation of the Premises, and janitorial service. Sublessor shall also
maintain and keep lighted common stairs, common entries and toilet rooms in the
Building of which the Premises are a part. Sublessor shall not be liable for,
and Sublessee shall not be entitled to, any reduction of rental by reason of
Sublessor's failure to furnish any of the foregoing when such failure is caused
by accident, breakage, repairs, strikes, lockouts or other labor disturbances or
labor disputes of any character, or by any other cause similar or dissimilar,
beyond the reasonable control of Sublessor. The costs of any such meters and of
installation maintenance and repair thereof shall be paid for by the Sublessee
and Sublessee agrees to pay to Sublessor promptly upon demand therefor by
Sublessor for all such water and electric current consumed as shown by said
meters, at the rates charged for such services by the local public utility
furnishing the same, plus any additional expense incurred in keeping account of
the water and electric current so consumed. If a separate meter is not
installed, such excess cost for such water and electric current will be
established by an estimate made by a utility company or electrical engineer.
Section XVI
Insurance
(a) Sublessor shall maintain property coverage insurance on the
Building Shell and appurtenant structures in such amounts as Sublessor and any
Mortgagees may deem necessary or appropriate. Such insurance shall be maintained
at the expense of Sublessor (as a part of Operating Expenses), and payments for
losses thereunder shall be made solely to Sublessor or the Mortgagees as their
respective interests shall appear. Sublessee shall obtain and keep in force at
all times during the Sublease Term, a policy or policies of insurance covering
loss or damage to all of the improvements, betterments, income and business
contents located within the Premises other than the in the amount of the full
replacement value thereof as ascertained by the Sublessee's insurance carrier,
as the same may exist from time to time, against all perils normally covered in
an "all risk" policy (including the perils of flood and surface waters), as such
term is used in the insurance industry; provided however, that Sublessee shall
have no obligation to insure against earthquake.
(b) Sublessee shall, at Sublessee's expense maintain a policy of
Commercial General Liability Insurance insuring Sublessor and Sublessee against
liability arising out of the ownership, use, occupancy or maintenance of the
Premises. The initial amount of such insurance shall be at least One Million
Dollars ($1,000,000), and shall be subject to periodic increase upon reasonable
demand by Sublessor based upon inflation, increased liability awards,
recommendation of professional insurance advisors, and other relevant factors.
However, the limits of such insurance shall not limited Sublessee's liability or
relieve Sublessee of any obligation hereunder. Sublessor shall be named as an
additional insured on said policies and the policies shall contain the following
provision: "Such insurance as afforded by this policy for the benefit of
Sublessor shall be primary as respects any claims, losses or liabilities arising
out the use of Premises by the Sublessee or by Sublessee's operation and any
insurance carried by Sublessor shall be excess and non-contributing." The policy
shall insure Sublessee's performance of the indemnity provisions of this
Sublease.
(c) Insurance required to be maintained by Sublessee hereunder shall be
in companies holding a "General Policyholders' Rating" of A or better and a
"financial rating" of 10 or better, as set forth in the most current issue of
"Best's Insurance Guide." Sublessee shall promptly deliver to Sublessor, within
thirty (30) days of the Commencement Date, original certificates evidencing the
existence and amounts of such insurance. No such policy shall be cancelable or
subject to reduction of coverage excepts after sixty (60) days prior written
notice to Sublessor. Sublessee shall, within thirty (30) days prior to the
expiration, cancellation or reduction of such policies, furnish Sublessor with
renewals or "binders" thereof. Sublessee shall not do or permit to be done
anything which shall invalidate the insurance policies required under this
Sublease.
(d) Sublessee and Sublessor shall obtain from the issuer of the
insurance policy referred to in subsection (a) a waiver of subrogation provision
in said policies and Sublessee and Sublessor hereby re Sublease and relieve, and
waives any and all rights of recovery against Sublessor or Sublessee, or against
the employees, officers, agents and representatives of Sublessor or Sublessee,
for loss or damage arising out of or incident to the perils insured against
under this subsection (a) which perils occur in, on or about the Premises or the
Building, whether due to the negligence of Sublessor or Sublessee or their
agents, employees, contractors or invitees. The extent of any waiver of
subrogation by Sublessee or Sublessor in this subsection (d) is limited to the
extent o insurance carried by Sublessor and Sublessee pursuant to subsection (a)
of this Sublease.
(e) Sublessor presently purchases insurance in which the Sublessor and
the Sublessee, as a wholly owned subsidiary of Sublessor, is also a named
insured. Unless Sublessee shall receive notice from Sublessor to obtain
independent insurance, the insurance the Sublessor so purchases shall be deemed
sufficient to satisfy the requirements under this Sublease and Subsection (a)
through (d) of this Section shall not apply.
Section XVII
Property Taxes
Sublessee shall pay or cause to be paid, before delinquency, any and
all taxes levied or assessed and which become payable during the term hereof
upon all Sublessee's Subleasehold improvements, equipment, furniture, fixtures
and personal property located in the Premises, except that which has been paid
for by Sublessor, and is the standard of the Building. In the event any or all
of the Sublessee's Subleasehold improvements, equipment, furniture, fixtures and
personal property shall be assessed and taxed with the Building, Sublessee shall
pay to Sublessor its share of such taxes within ten (10) days after delivery to
Sublessee by Sublessor of a statement in writing setting forth the amount of
such taxes applicable to Sublessee's property.
Section XVIII
Quiet Enjoyment
Sublessor covenants that if, and so long as, Sublessee pays the rent,
and any additional rent as provided, and performs the covenants of this
Sublease, Sublessee shall peaceably and quietly have, hold, and enjoy the
Premises for the term mentioned, subject to the provisions of this Sublease.
XIX
Effect of Other Representations
No representations or promises shall be binding on the parties to this
agreement except those representations and promises contained or in some future
writing signed by the party making such representations or promises.
Section XX
Casualty to the Premises
If the Premises or any part thereof suffers a Casualty (as defined in
the Master Lease), Sublessee shall give prompt written notice thereof to the
Sublessor and such notice shall contain the information required under Section
3.2 of the Master Lease. Such notice shall not be required is there is a
Casualty to the Building as a whole and not just to the Premises. If the
Casualty is a (i) Major Casualty (as defined in the Master Lease) or (ii) is a
Casualty relating only to the Premises and the Restoration Cost (as defined in
the Master Lease) related to the Premises exceeds 50% of the Stipulated Loss
Value as defined in the Master Lease multiplied by a fraction of the total
rental square feet leased pursuant to the Master Lease to the total rental
square feet subleased under this Sublease, then Sublessee may give notice of its
intention to terminate this Sublease on the Lease Termination Date as defined in
the Master Lease which shall include, as appropriate the certificate and
documentation required under Section 3.2(c) of the Master Lease as it related to
this Sublease.
Section XXI
Restoration
If the Sublessor is required under Section 3.5 of the Master Lease to restore
the Master Lease Premises (as therein defined), and Sublessee has not given
notice to terminate this Sublease, as permitted hereunder, Sublessee shall
cooperate with Sublessor in such restoration and shall pay to Sublessor a
portion of any costs that Sublessor must bear out of its own funds (as set forth
in Section 3.5 (c) of the Master Lease allocated on the basis of the rentable
square feet subleased under this Sublease to the total rentable square feet
leased under the Master Lease.
Section XXII
Eminent Domain
If there is a Condemnation (as defined in the Master Lease) of Premises
or any part of the Premises or any estate in the Premises, or any other part of
the building materially affecting Sublessee's use of the Premises, Sublessee
shall give Sublessor a notice of such Condemnation. If the Condemnation is Total
Condemnation (as defined in the Master Lease), this Sublease shall terminate on
the Lease Termination Date (as defined in the Master Lease) after receipt of the
notice by the Sublessor. If the Condemnation is a Major Condemnation (as defined
in the Master Lease), Sublessee shall not later than thirty days after such
Major Condemnation, give notice of its intention to terminate this Sublease on
the first Payment Date which occurs not less than 120 nor more than 150 days
after delivery of such notice. Sublessee shall not be entitled to any part of
the award for any Condemnation or any payment in lieu of such payment, but
Sublessee may file a claim for any taking of fixtures and improvements owned by
Sublessee, and for moving expenses.
Section XXIII
Sublessor's Remedies on Default
If Sublessee defaults in the payment of rent, or any additional rent,
or defaults in the performance of any of the other covenants or conditions of
this agreement, Sublessor may give Sublessee notice of such default and if
Sublessee does not cure any rent, or additional rent, default within 15 days, or
other default within 30 days, after the giving of such notice (or if such other
default is of such nature that it cannot be completely cured within such period,
if Sublessee does not commence such curing within such 30 days and thereafter
proceed with reasonable diligence and in good faith to cure such default), then
Sublessor may terminate this Sublease on not less than 15 days' notice to
Sublessee. On the date specified in the notice the term of this Sublease shall
terminate and Sublessee shall then quit and surrender the Premises to Sublessor.
If this Sublease shall have been so terminated by Sublessor, Sublessor may at
any time thereafter resume possession of the Premises by any lawful means and
remove Sublessee or other occupants and their effects.
Section XXIV
Deficiency
In any case where Sublessor has recovered possession of the Premises by
reason of Sublessee's default, Sublessor may, at Sublessor's option, occupy the
Premises or cause the Premises to be redecorated, altered, divided, consolidated
with other adjoining Premises, or otherwise changed or prepared for reletting,
and may relet the Premises or any part of the Premises as agent of Sublessee or
otherwise, for a term or terms to expire prior to, at the same time as, or
subsequent to, the original expiration date of this Sublease, at Sublessor's
option , and receive the rent therefore. Rent so received shall be applied first
to the payment of such expenses as Sublessor may have incurred in connection
with the recovery of possession, redecorating, altering, dividing, consolidating
with other adjoining Premises, or otherwise changing or preparing for reletting,
and the reletting, including brokerage and reasonable attorney fees, and then to
the payment of damages in amounts equal to the rent under this agreement and to
the costs and expenses of performance of the other covenants of Sublessee as
provided. Sublessee agrees, in any such case, whether or not Sublessor has
relet, to pay to Sublessor damages equal to the rent and other sums agreed to be
paid by Sublessee, less the net proceeds of the reletting, if any, and the
damages shall be payable by Sublessee on the several rent days above specified.
In reletting the Premises, Sublessor may grant rent concessions, and Sublessee
shall not be credited with such concession. No such reletting shall constitute a
surrender and acceptance or be deemed evidence of a surrender and acceptance. If
Sublessor elects, pursuant to this agreement, actually to occupy and use the
Premises or any part of the Premises during any part of the balance of the term
as originally fixed or since extended, there shall be allowed against
Sublessee's obligation for rent or damages as defined, during the period of
Sublessor's occupancy, the reasonable value of such occupancy, not to exceed in
any event the rent reserved and such occupancy shall not be construed as a
relief of Sublessee's liability under this agreement.
Sublessee waives all right of redemption to which Sublessee or any
person claiming under Sublessee might be entitled by any law no or hereafter in
force. Sublessor's remedies under this agreement are in addition to any remedy
allowed by law.
Section XXV
Effect of Failure To Insist on Strict Compliance with Conditions
The failure of either party to insist on strict performance of any
covenant or condition of this agreement, or to exercise any option contained,
shall not be construed as a waiver of such covenant, condition, or option in any
other instance. This Sublease cannot be changed or terminated orally.
Section XXVI
Collection of Rent from any Occupant
If the Premises are sublet or occupied by anyone other than Sublessee
and Sublessee is in default under this agreement, or if this Sublease is
assigned by Sublessee, Sublessor may collect rent from the assignee, subtenant,
or occupant, and apply the net amount collected to the rent reserved. No such
collection shall be deemed a waiver of the covenant against assignment and
subletting, or the acceptance of such assignee, subtenant, or occupant as
Sublessee, or a re Sublease of Sublessee from further performance of the
covenants contained.
Section XXVII
Subordination of Sublease
Sublessee accepts this Sublease subject and subordinate to any
mortgage, deed of trust or other lien presently existing or hereafter arising
upon the Premises, upon the Building as a whole, and to any renewals,
refinancing and extensions thereof, but Sublessee agrees that any such mortgagee
shall have the right at any time to subordinate such mortgage, deed of trust or
other lien to this Sublease on such terms and subject to such conditions as such
mortgagee may deem appropriate in its discretion. Sublessor is hereby
irrevocably vested with full power and authority to subordinate this Sublease to
any mortgage, deed of trust or other lien now existing or hereinafter placed
upon the Premises or the Building as a whole, and Sublessee agrees upon demand
to execute such further instruments subordinating this Sublease or attorning to
the holder of any such liens as Sublessor may request. In the event that
Sublessee should fail to execute any such instrument promptly as requested,
Sublessee hereby irrevocably constitutes Sublessor as its attorney-in-fact to
execute such instrument in Sublessee's name, place and stead, it being agreed
that such power is one coupled with an interest.
Section XXVIII
Sublessee's Estoppel Certificate
Sublessee shall from time to time, on not less than 30 days' prior written
request by Sublessor, execute, acknowledge, and deliver to Sublessor a written
estoppel certificate certifying that the Sublease is unmodified and in full
force and effect, or that the Sublease is in full force and effect as modified
and listing the instruments of modification; the dates to which the rents and
other charges have been paid; and, whether or not to the best of Sublessee's
knowledge Sublessor is in default under this Sublease and, if so, specifying the
nature of the default.
Section XXIX
Sublessor's Right to Cure Sublessee's Breach
If Sublessee breaches any covenant or condition of this Sublease,
Sublessor may, on reasonable notice to Sublessee (except that no notice need be
given in case of emergency), cure such breach at the expense of Sublessee and
the reasonable amount of all expenses, including attorney fees, incurred by
Sublessor in so doing (whether paid by Sublessor or not) shall be deemed
additional rent payable on demand.
Section XXX
Rental Adjustment
(a) The annual rental in the year beginning January 1, 2002, if this
Sublease shall be extended in accordance with its terms and in each of the years
of this Sublease if further extended thereafter shall be increased or decreased
by the amount Sublessor's actual per square foot (I) Rent as adjusted for such
year in the Master Lease and (II) costs of operating and maintaining the
Building have increased or decreased in the immediately preceding Sublease year
over the preceding Sublease year.
(b) Within sixty days after the last day of each Sublease year,
commencing with the last day of the first Sublease year, Sublessor will furnish
to Sublessee a written statement of the total cost of operating and maintaining
the building for each of the prior Sublease year. Such total costs for each such
preceding year shall be divided by the total rentable area in the building, and
the resulting quotient shall be the square foot cost of operating and
maintaining the building for the year.
(c) The words "actual per square foot cost of maintaining and operating
the building" as used in this section, shall mean the total of all amounts
actually expended in a Sublease year by Sublessor in operating and maintaining
the building (including, but not by way of limitation, the amounts expended for
electricity, heat, taxes, and insurance premiums, excluding depreciation)
divided by the total number of square feet of rental space in the office
building.
(d) Until receipt of such statements pertaining to cost in any Sublease
year, commencing with the second Sublease year, Sublessee shall continue to pay
the monthly installment of rental paid by Sublessee during the prior Sublease
year. Commencing with the first day of the calendar month immediately following
receipt of such statement, Sublessee shall pay monthly rental installments based
upon the newly determined annual rent. Within fifteen days after receipt of the
statement, Sublessee shall pay to Sublessor any additional rental due for the
previous month or months of the then current Sublease year resulting from the
increase in the annual rental rates. Any credit due to Sublessee as a result of
the decrease of the annual rental shall be credited by Sublessor upon
Sublessee's monthly rental installment due on the first day of the month
immediately following the delivery of such certified statement by Sublessor to
Sublessee.
Section XXXI
Notices
Any notice by either party to the other shall be in writing and shall
be deemed to have been duly given only if delivered personally or sent by
registered or certified mail in an addressed postpaid envelope; if to Sublessee,
at the Building; if to Sublessor the Building; or, to either, at such other
address as Sublessee or Sublessor, respectively, may designate in writing.
Notice shall be deemed to have been duly given, if delivered personally, on
delivery, and if mailed, on the 3rd day after the mailing of such notice.
Section XXXII
Sublessor's Right to Inspection Repair, and Maintenance
Sublessor may enter the Premises at any reasonable time, on adequate
notice to Sublessee (except that no notice need be given in case of emergency)
for the purpose of inspection or the making of such repairs, replacements, or
additions in, to on and about the Premises or the building, as Sublessor deems
necessary or desirable. Sublessee shall have no claim or cause of action against
Sublessor by reason of such entry except as provided in Section XXXIII of the
agreement.
Section XXXIII
Interruption of Services or Use
Interruption or curtailment of any service maintained in the building,
if caused by strikes, mechanical difficulties, or any causes beyond Sublessor's
control whether similar or dissimilar to those enumerated, shall not entitle
Sublessee to any claim against Sublessor or to any abatement in rent, and shall
not constitute constructive or partial eviction, unless Sublessor fails to take
such measures as may be reasonable in the circumstances to restore the service
without undue delay. If the Premises are rendered untenantable in whole or in
part, for a period of 15 business days, by the making of repairs, replacements,
or additions, other than those made with Sublessee's consent or caused by misuse
or neglect by Sublessee or Sublessee's agents, servants, visitors, or licensees,
there shall be a proportionate abatement of rent during the period of such
untenantability.
Section XXXIV
Conditions of Sublessor's Liability
Sublessee shall not be entitled to claim a constructive eviction from
the Premises unless Sublessee shall have first notified Sublessor in writing of
the condition or conditions giving rise to such eviction, and, if the complaints
be justified, unless Sublessor shall have failed within a reasonable time after
receipt of such notice to remedy such conditions.
Section XXXV
Binding Effect on Successors and Assigns
The provisions of this Sublease shall apply to, bind, and insure to the
benefit of Sublessor and Sublessee, and their respective heirs, successors,
legal representatives, and assigns. It shall be deemed without further agreement
that the purchaser or the mortgagee in possession has assumed and agreed to
carry out any and all covenants and obligations of Sublessor under this
agreement.
Section XXXVI
Section Headings
The Section headings in this Sublease are intended for convenience only
and shall not be taken into consideration in any construction or interpretation
of this Sublease or any of its provisions.
This Sublease is entered into to be effective January 1, 2001
SUBLESSOR
Sierra Heath Services, Inc.
By_______________s/____________ Dated: January 25, 2001
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
Administrative Services
SUBLESSEE
California Indemnity Insurance Company
By___________s/________________ Dated: January 25, 2001
Name: Xxxxxxxx X. Xxxxxx
Title: Chairman, President and Chief Executive Officer
