SUBLEASE
* * * * * * * * * * * * * * *
This Sublease (Sublease) dated for reference purposes as of August 1,
1999 is made between Xxx Xxxxx, an individual doing business as X.X. Xxxxx
Company (Sublandlord), and XXXXXXXX.XXX, a California Corporation (Subtenant).
Recitals
A. Sublandlord is the tenant under that certain Lease executed on May
22, 1996 between Xxxx Xxxxxxxx and Xxxxxx Xxxxxxxx as Lessor and Xxx Xxxxx/ dba
X.X. Xxxxx Company as Lessee (Master Lease), pursuant to which Xxxx Xxxxxxxx and
Xxxxxx Xxxxxxxx (Master Landlord) leased to Sublandlord the real property
located in the City of Sebastopol, County of Sonoma, State of California,
described as 0000 Xxxxxxx Xxxxxx (Master Premises).
B. A copy of the Master Lease is attached and incorporated in this
Sublease as Exhibit A.
Section 1. Sublease.
Sublandlord subleases to Subtenant on the terms and conditions in this
Sublease all of the Master Premises and certain other personal property as set
forth herein.
Section 2. Warranty by Sublandlord.
Sublandlord warrants to Subtenant that the Master Lease has not been
amended or modified except as expressly set forth in this Sublease; that
Sublandlord is not now, and as of the commencement of the Term (defined in this
Sublease) of this Sublease will not be, in default or breach of any of the
provisions of the Master Lease; and that Sublandlord has no knowledge of any
claim by Master Landlord that Sublandlord is in default or breach of any of the
provisions of the Master Lease.
Section 3. Term.
(a) The term of this Sublease will commence on August 1, 1999
(Commencement Date), and shall end on June 1, 2004 (Termination Date), unless
terminated sooner. Said period of time hereinafter shall be referred to as the
Term. If the Term commences on a date other than the Commencement Date,
Sublandlord and Subtenant will execute a memorandum setting forth the actual
date of commencement of the Term.
(b) Possession of the Premises (Possession) will be delivered to
Subtenant on the commencement of the Term, subject to Subtenant's successful
receipt of a use permit from the city of Sebastopol. Subtenant shall not be
allowed to occupy the premises unless and until it provides proof of such permit
to Sublandlord. If for any reason Sublandlord does not deliver Possession to
Subtenant on the Commencement of the Term (other than due to Subtenant's failure
to obtain a use permit), Sublandlord will not be subject to any liability for
this failure, the Termination Date will not be extended by the delay, and the
validity of this Sublease will not be impaired. Rent will be abated until
delivery of Possession. However, if Sublandlord has not delivered Possession to
Subtenant within thirty (30) business days after the Commencement Date, at any
time after that and before delivery of Possession (other than due to Subtenant's
failure to obtain a use permit), Subtenant may give written
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notice to Sublandlord of Subtenant's intention to cancel this Sublease. The
notice will set forth an effective date for the cancellation, which will be at
least three (3) days after delivery of notice to Sublandlord. If Sublandlord
delivers Possession to Subtenant on or before this effective date, this Sublease
will remain in full force. If Sublandlord fails to deliver Possession to
Subtenant on or before this effective date, this Sublease will be canceled. Upon
cancellation, all consideration previously paid by Subtenant to Sublandlord on
account of this Sublease will be returned to Subtenant, this Sublease will have
no further force, and Sublandlord will have no further liability to Subtenant
because of this delay or cancellation. If Sublandlord permits Subtenant to take
Possession prior to the commencement of the Term, the early Possession will not
advance the Termination Date and will be subject to the provisions of this
Sublease, including, without limitation, the payment of rent.
(c) The parties agree and acknowledge that Subtenant's ability to
obtain a use permit from the city of Sebastopol is a condition precedent to the
effectiveness of this lease and that this lease shall be of no further force and
effect (and Sublandlord shall return to Subtenant any sums received from
Subtenant) if Subtenant fails to obtain a use permit and provide it to
Sublandlord within forty-five (45) days of the date this lease is signed by
Sublandlord and Subtenant.
Section 4. Rent.
(a) Minimum Rent. Subtenant will pay to Sublandlord as rent (Rent),
without deduction, setoff, notice, or demand, at the offices of Sublandlord or
at any other place Sublandlord designates by notice to Subtenant, the sum of
Five Thousand Dollars per month commencing on the Commencement Date. Said Rent
shall be due and payable on the first day of each month. If the Term begins or
ends on a day other than the first or last day of a month, the rent for the
partial months will be prorated on a per diem basis.
(b) Subtenant will pay an amount equal to the first month's Rent and
the Security Deposit (as defined in Section 5 of this Sublease) upon execution
of the Sublease.
(c) Operating Costs. Sublandlord and Subtenant agree and acknowledge
that the Master Lease requires Sublandlord to pay all or a portion of the
expenses of operating the Master Premises including but not limited to payment
of utilities under Section 4.01 of the Master Lease, payment of personal
property taxes under Section 4.02 of the Master Lease, and certain maintenance
costs under Sections 5.03 and 5.04 of the Master Lease (collectively, Operating
Costs). Subtenant shall pay to the appropriate creditors for the benefit of
Subtenant and Sublandlord as additional rent (Additional Rent) all of these
Operating Costs associated with Subtenant's use and operation of the Master
Premises.
(d) Subtenant shall pay any increases in Rent as may be paid by
Sublandlord to Master Landlord in accordance with the provisions of Section 2.02
of the Master Lease and any increases in Operating Costs after the initial term
of this Sublease.
Section 5. Security Deposit.
Subtenant will deposit with Sublandlord on execution of this Sublease
the sum of one months' Rent (determined in accordance with Section 4(a)) as
security for Subtenant's faithful performance of Subtenant's obligations under
this Sublease (Security Deposit). If Subtenant fails to pay rent or other
charges when due under this Sublease, or fails to perform any obligations under
this Sublease, Sublandlord may use any portion of the Security Deposit for the
payment of any rent or other amount then due and unpaid, for the payment of any
other sum for which Sublandlord may become obligated because of Subtenant's
default or breach, or for any loss sustained by Sublandlord as a result of
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Subtenant's default or breach. If Sublandlord uses any portion of the Security
Deposit, Subtenant will, within ten (10) days after written demand by
Sublandlord, restore the Security Deposit to the full amount originally
deposited. Subtenant's failure to do so will constitute a default under this
Sublease. Sublandlord will not be required to keep the Security Deposit separate
from its general accounts, and will have no obligation or liability for payment
of interest on the Security Deposit. If Sublandlord assigns its interest in this
Sublease, Sublandlord will deliver to its assignee as much of the Security
Deposit as Sublandlord then holds. Within ten (10) days after the Term has
expired or Subtenant has vacated the Premises or any final adjustment pursuant
to Subsection 4(b) of this Sublease has been made, whichever occurs last, and
provided that Subtenant is not then in default under this Sublease, the Security
Deposit, or as much as remains that has not been applied by Sublandlord, will be
returned to Subtenant or to the last assignee, if any, of Subtenant's interest
under this Sublease.
Section 6. Insurance
(a) Intentionally Omitted
(b) Subtenant agrees to procure and maintain public liability
insurance, including products and completed operations insurance, from a
responsible insurance company authorized to do business in California, with a
combined single limit of not less than One Million Dollars ($1,000,000) for
injury or death to any person or damage to property and Four Million Dollars
($4,000,000) excess umbrella coverage for injury or death or property damage,
for any claims, demands, or causes of action of any person arising out of
accidents occurring on the Premises during the Term or arising out of
Subtenant's use of the Premises.
(c) Each policy of insurance shall be issued by a responsible insurance
company authorized to do business in California, and shall list Master Landlord
and Sublandlord and any beneficiary under any deed of trust covering the
Premises, if required by the deed of trust, as their respective interests may
appear, as additional insureds. Subtenant shall deliver certificates for each
insurance policy to Sublandlord and Master Landlord with all relevant
endorsements. Each policy of insurance shall be primary and noncontributory with
any policies carried by Master Landlord and Sublandlord and, to the extent
obtainable, any loss shall be payable notwithstanding any act or negligence of
Master Landlord or Sublandlord that might otherwise result in forfeiture of
insurance. Each insurance policy shall provide that a thirty (30) day notice of
cancellation and of any material modification of coverage shall be given to all
named insureds. The insurance coverage required under this Section may be
carried by Subtenant under a blanket policy insuring other locations of
Subtenant's business, provided that the Premises covered by this Sublease are
specifically identified as included under that policy. Subtenant agrees that
upon the failure to insure as provided in this Sublease, or to pay the premiums
in the insurance, Sublandlord may contract for the insurance and pay the
premiums, and all sums expended by Sublandlord for the insurance shall be
considered additional rent under this Sublease and shall be immediately
repayable by Subtenant.
(d) So that the business of Subtenant may continue with as little
interruption as possible, Subtenant shall, during the Term and any renewals or
extensions, maintain at Subtenant's own cost and expense, an insurance policy
insuring against damage or destruction by fire, theft, or the elements for their
full insurable value all fixtures and equipment and, to the extent possible, all
merchandise that is on the Premises at any time during the Term or any renewal
or extension.
(e) At all times during the Term and any extensions or renewals,
Subtenant agrees to keep and maintain, or cause Subtenant's agents, contractors,
or subcontractors to keep and maintain, workmen s compensation insurance and
other forms of insurance as may from time to time be required
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by law or may otherwise be necessary to protect Sublandlord and the Premises
from claims of any person who may at any time work on the Premises, whether as a
servant, agent, or employee of Subtenant or otherwise. This insurance shall be
maintained at the expense of Subtenant or Subtenant's agents, contractors, or
subcontractors and not at the expense of Sublandlord.
(f) Sublandlord agrees that it will tender and turn over to Subtenant
or to Subtenant's insurers the defense of any claims, demands, or suits
instituted, made, or brought against Sublandlord or against Sublandlord and
Subtenant jointly, within the scope of this Section. However, Sublandlord shall
have the right to approve the selection of legal counsel, to the extent that
selection is within Subtenant's control, which approval shall not be
unreasonably withheld or delayed. In addition, Sublandlord shall retain the
right at Sublandlord `s election to have Sublandlord `s own legal counsel
participate as co-counsel, to the extent that claims are made that may not be
covered by Subtenant's insurers.
(g) Subtenant and Sublandlord each release the other and waive the
entire right of recovery against the other for loss or damage arising out of or
incident to the perils insured against, which perils occur in, on, or about the
Premises, whether due to the negligence of Sublandlord or Subtenant or their
agents, employees, contractors, or invitees. Subtenant and Sublandlord shall,
upon obtaining the required policies of insurance, give notice to the insurance
carriers that this mutual waiver of subrogation is in this Lease.
Section 7. Assignment and Subletting.
Subtenant will not assign this Sublease or further sublet all or any
part of the Premises without the prior written consent of Sublandlord (and the
consent of Master Landlord, if this is required under the terms of the Master
Lease). All rent received by Subtenant from any of its subtenants in excess of
the rent payable by Subtenant to Sublandlord under this Sublease shall be paid
to Sublandlord, or any sums to be paid by an assignee to subtenant in
consideration of the assignment of this sublease shall be paid to Sublandlord.
If Subtenant requests Sublandlord to consent to a proposed assignment or
subletting, subtenant shall pay to Sublandlord, whether or not consent is
ultimately given, Sublandlord's reasonable attorneys' fees incurred in
connection with each such request.
Section 8. Other Provisions of Sublease.
(a) Except as otherwise set forth in this Sublease, all applicable
terms and conditions of the Master Lease are incorporated into and made a part
of this Sublease as if Sublandlord were the landlord, Subtenant the lessee, and
the Premises the Master Premises except for the following:
Master Lease Sections: 1.01, 1.03, 1.04, 1.05, 1.06, 2.01, 2.03, 6.02,
6.04, 9.01, 10.01, 11.02.
Subtenant assumes and agrees to perform all of the remainder of the
lessee's obligations under the Master Lease during the Term to the extent that
these obligations are applicable to the Premises. However, the obligation to pay
rent and operating costs to Master Landlord under the Master Lease will be
considered performed by Subtenant to the extent and in the amount rent and
operating costs are paid to Sublandlord in accordance with Section 4 of this
Sublease. Subtenant will not commit or suffer any act or omission that will
violate any of the provisions of the Master Lease. Sublandlord will exercise due
diligence in attempting to cause Master Landlord to perform its obligations
under the Master Lease for the benefit of Subtenant. if the Master Lease
terminates, at the option of Master Landlord, this Sublease will terminate and
the parties will be relieved of any further liability or
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obligation under this Sublease. However, if the Master Lease terminates as a
result of a default or breach by Sublandlord or Subtenant under this Sublease or
the Master Lease, the defaulting party will be liable to the nondefaulting party
for the damage suffered as a result of the termination. Regardless, if the
Master Lease gives Sublandlord any right to terminate the Master Lease in the
event of the partial or total damage, destruction, or condemnation of the Master
Premises or the building or project of which the Master Premises are a part, the
exercise of this right by Sublandlord will not constitute a default or breach.
(b) Sublandlord shall deliver the Premises to Subtenant "AS IS" in
broom-clean condition with the Premises in their existing condition, with no
alterations being made by Sublandlord on the Commencement Date.
(c) (i) Notwithstanding the provisions of Section 4(a)of this Sublease
and subject to subsection (ii) of this subsection, Sublandlord waives
Subtenant's obligation to pay Base Rent for the first month of this Sublease.
Sublandlord and Subtenant agree that for purposes of this subsection, the Base
Rent foregone by Sublandlord shall be equal to Five Thousand Dollars ($5,000)
(the "Free Rent").
(ii) Subtenant agrees that Sublandlord's agreement to waive Base Rent
as provided in subsection (i) of this Section is conditioned upon occurrence of
no default on the part of Subtenant under this Sublease during the Term of this
Sublease. If a default shall occur during the Term of this Sublease then the
aggregate amount of the Free Rent provided to Subtenant prior to such default
shall become immediately due and owing as additional rent under this Lease.
(d) Subtenant shall have the right to place a sign on the Premises, in
accordance with the terms and conditions of the Master Lease.
(e) Sublandlord and Subtenant agree that Subtenant shall have free use
of the existing telecommunications system in the Premises which is the sole
property of Sublandlord. Subtenant accepts the telecommunications system "AS IS"
in its existing condition. Subtenant will be responsible at its sole cost for
the installation of any other telecommunications system, and the maintenance and
repair of all telecommunications systems, wiring, and risers running throughout
the Premises, together with all of Subtenant's telephones, telecopiers,
computers, telephone switching, telephone panels and related equipment, whether
provided by Sublandlord or by other vendors. Subtenant agrees to install,
maintain and repair all such telecommunications equipment in a good and proper
manner. Subtenant agrees to indemnify, release, defend and hold Sublandlord
harmless from and against any damages, claims, or other liability resulting from
Subtenant's installation, maintenance and repair of such equipment.
(f) Compliance with Legal Requirements; No Waste.
(i) Compliance with Legal Requirements. At Subtenant's sole cost,
Subtenant will promptly comply with all laws, statutes, ordinances, rules,
regulations, orders, recorded covenants and restrictions, and requirements of
all municipal, state, and federal authorities now or later in force, including,
but not limited to, all provisions of the Americans with Disabilities Act; the
requirements of any board of fire underwriters or other similar body now or in
the future constituted; and the direction or occupancy certificate issued by
public officers (Legal Requirements), insofar as they relate to the condition,
use, or occupancy of the Premises. However, Subtenant's compliance will not be
required for:
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(A) tenant improvements to be made pursuant to this Lease by
Sublandlord, if any; and
(B) work necessitated by defects in the construction of the
Building.
The judgment of any court of competent jurisdiction or the admission of
Subtenant in any action or proceeding against Subtenant that Subtenant has
violated any Legal Requirement in the condition, use, or occupancy of the
Premises, will be conclusive of that fact as between Sublandlord and Subtenant.
(ii) No Waste. Subtenant will not commit or allow any waste on the
Premises or any nuisance or other act or thing that may disturb the quiet
enjoyment of any other tenant in the building in which the Premises may be
located.
(g) Event of Default and Remedies
A breach of the terms and conditions of this Sublease or of the Master
Lease shall constitute an event of default ("Event of Default"). Upon the
occurrence of an Event of Default, Sublandlord is entitled at its option to the
following:
(i) to reenter and take exclusive possession of the Premises;
(ii) to collect immediately the present value of the unpaid rent
reserved for the entire term, or to collect each installment of rent as it
becomes due;
(iii) to continue this Sublease in force or to terminate it at any
time;
(iv) to relet the Premises for any period on Subtenant's account and
at Subtenant's expense, including real estate commissions actually paid, and to
apply the proceeds received during the balance of Term to Subtenant's continuing
obligations under this Sublease;
(v) to take custody of all personal property on the Premises and to
dispose of the personal property and to apply the proceeds from any sale of that
property to Subtenant's obligations under this Sublease;
(vi) to recover from Subtenant the damages described in Civil Code
ss. 1951.2(a)(l), 1951.2(a)(2), 1951.2(a)(3), and 1951.2(a)(4), the provisions
of which are expressly made a part of this Lease;
(vii) to restore the Premises to the same condition as received by
Subtenant, or to alter the Premises to make them suitable for reletting, all at
Subtenant's expense; and
(viii) to enforce by suit or otherwise all obligations of Subtenant
under this Sublease and to recover from Subtenant all remedies now or later
allowed by law.
Any act that Sublandlord is entitled to do in exercise of Sublandlord's
rights upon an Event of Default may be done at a time and in a manner deemed
reasonable by Sublandlord in Sublandlord's sole discretion, and Subtenant
irrevocably authorizes Sublandlord to act in all things done on Subtenant's
account.
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Section 9. Attorney Fees.
If either party commences an action against the other in connection
with this Sublease, the prevailing party will be entitled to recover costs of
suit and reasonable attorney fees.
Section 10. No Broker.
Sublandlord and Subtenant each warrant that they have not dealt with
any real estate broker in connection with this transaction. Sublandlord and
Subtenant each agree to indemnify, defend, and hold the other harmless against
any damages incurred as a result of the breach of the warranty contained in this
Sublease.
Section 11. Notices.
All notices and demands that may be required or permitted by either
party to the other will be in writing. All notices and demands by the
Sublandlord to Subtenant will be sent by United States Mail, postage prepaid,
addressed to the Subtenant at the Premises, and to the address in this Sublease
below, or to any other place that Subtenant may from time to time designate in a
notice to the Sublandlord. All notices and demands by the Subtenant to
Sublandlord will be sent by United States Mail, postage prepaid, addressed to
the Sublandlord at the address in this Sublease, and to any other person or
place that the Sublandlord may from time to time designate in a notice to the
Subtenant.
To Sublandlord:
Xxx Xxxxx
000 Xxxxxxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
To Subtenant:
ZAP XXXXX.XXX
Main Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Section 12. Successors and Assigns.
This Sublease will be binding on and inure to the benefit of the
parties to it, their heirs, executors, administrators, successors in interest,
and assigns.
Section 13. Attornment.
If the Master Lease terminates, this Sublease shall survive said
termination and Subtenant will, if requested, attorn to Master Landlord and
recognize Master Landlord as Sublandlord under this Sublease. However,
Subtenant's obligation to attorn to Master Landlord will be conditioned on
Subtenant's receipt of a nondisturbance agreement.
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Section 14. Entry.
Sublandlord reserves the right to enter the Premises on reasonable
notice to Subtenant to inspect the Premises or the performance by Subtenant of
the terms and conditions of this Sublease and, during the last three (3) months
of the Term, to show the Premises to prospective subtenants. In an emergency, no
notice will be required for entry.
Section 15. Late Charge and Interest.
The late payment of any Rent will cause Sublandlord to incur additional
costs, including the cost to maintain in full force the Master Lease,
administration and collection costs, and processing and accounting expenses. If
Sublandlord has not received any installment of Rent within ten (10) days after
that amount is due, Subtenant will pay five percent (5%) of the delinquent
amount, which is agreed to represent a reasonable estimate of the cost incurred
by Sublandlord. In addition, all delinquent amounts will bear interest from the
date the amount was due until paid in full at a rate per annum (Applicable
Interest Rate) equal to the greater of (a) two percent (2%) per annum plus the
then federal discount rate on advances to member banks in effect at the Federal
Reserve Bank of San Francisco on the 25th day of the month preceding the date of
this Sublease or (b) ten percent (10%). However, in no event will the Applicable
Interest Rate exceed the maximum interest rate permitted by law that may be
charged under these circumstances. Sublandlord and Subtenant recognize that the
damage Sublandlord will suffer in the event of Subtenant's failure to pay this
amount is difficult to ascertain and that the late charge and interest are the
best estimate of the damage that Sublandlord will suffer. If a late charge
becomes payable for any three (3) installments or Rent within any twelve (12)
month period, the Rent will automatically become payable quarterly in advance.
Section 16. Entire Agreement.
This Sublease sets forth all the agreements between Sublandlord and
Subtenant concerning the Premises, and there are no other agreements either oral
or written other than as set forth in this Sublease.
Section 17. Time of Essence.
Time is of the essence in this Sublease.
Section 18. Governing Law.
This Sublease will be governed by and construed in accordance with
California law.
Section 19. Advice of Counsel
This Sublease has been prepared by the firm of Mclnerney & Xxxxxx, P.C.
for the benefit if its client Xxx Xxxxx. Subtenant is advised to consult with an
attorney on the legal requirements of this Sublease. The parties hereto state
that they have been fully advised by their respective counsel (or if no counsel
has been consulted, then in reliance on their own officers and directors) as to
the contents of this Sublease and each provision thereof and understand its
content and effect. The parties further represent that they do not rely and have
not relied upon any representation or statement made by any of the other parties
with regard to the subject matter, basis or effect of this agreement, other than
the express provisions contained within this agreement.
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In Witness Whereof the parties have executed this Sublease effective as
of the date first above written.
Sublandlord
Date Signed: 8/13/99 By: /s/ Xxx Xxxxx
--------------------- -------------------------
Xxx Xxxxx
XXXXXXXX.XXX
A California Corporation
Date Signed: 8/3/99 By: /s/ Xxx XxXxxxx
--------------------- -------------------------
Xxx XxXxxxx, President
Date Signed: 8/13/99 By: /s/ Xxxxx X. Xxxxxxx
--------------------- -------------------------
Secretary
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EXHIBITS
Exhibit A--Copy of Master Lease
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