Sublease Agreement (2006)Full Document 

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SUBLEASE AGREEMENT

        This SUBLEASE AGREEMENT ("Sublease") is entered into this 26th day of August, 2005, by and between K2 INC., a Delaware corporation ("Sublessor") whose address is 5818 El Camino Real, Carlsbad, CA 92008 and ALPHATEC MANUFACTURING, INC., a California corporation ("Sublessee") whose address is Suite 100, 2051 Palomar Airport Road, Carlsbad, California 92008 ("Premises").

RECITALS

        A.    MG Palomar, LLC, a California limited liability company, as landlord ("Landlord"), and Sublessor, as tenant, entered into a lease dated December 3, 2002 ("Master Lease"), with regard to the Premises. A copy of the Master Lease is attached hereto as Exhibit "A".

        B.    Sublessor, on July 29, 2005, agreed to sublease to Sublessee the entire Premises in accordance with the terms and conditions set forth in the Sublease Agreement, dated as of July 29, 2005 (the "July Sublease") between the parties hereto.

        C.    Sublessor wishes to Sublease to Sublessee, and Sublessee wishes to Sublease from Sublessor, the entire Premises for the term beginning on August 1, 2006 and ending on February 28, 2008 in accordance with the terms and conditions set forth hereinbelow.

        NOW, THEREFORE, Sublessor and Sublessee agree as follows:

AGREEMENT

        1.     Sublease. Sublessor subleases the Subleased Premises to Sublessee, and Sublessee subleases the Premises from Sublessor, according to the terms and conditions of this Sublease. The provisions of the Master Lease (except Paragraphs 39, 52, 53, and 55) are incorporated herein as though Sublessor was landlord under the Master Lease and Sublessee was tenant under the Master Lease.

        2.     Term. The term ("Term") of this Sublease will begin on August 1, 2006 ("Commencement Date"), and will end on February 28, 2008, inclusive.

        3.     Rent. Sublessee will pay Sublessor as rent ("Rent") for the Premises the sum of (a) Thirty Two Thousand Two Hundred Forty-Three Dollars and Forty-Eight Cents ($32,243.48) for the term commencing on August 1, 2006 and ending on February 28, 2007, inclusive, and (b) Thirty Three Thousand Two Hundred Ten Dollars and Seventy-Eight Cents ($33,210.78) for the term commencing on March 1, 2007 and ending on February 28, 2008, inclusive, in each case, in advance, without notice, demand, offset, or counterclaim, on the first day of each month prior to the month such Rent shall be applicable to (e.g.. Rent for August 2006 shall be payable July 1, 2006). Rent and any other sums due to Sublessor from Sublessee under this Sublease will be paid at the following address (unless written notice provided of a change of address): 5818 El Camino Real, Carlsbad, CA 92008. If the Term of this Sublease begins on a day other than the first day of a month or ends on a day other than the last day of a month, Rent will be prorated on a per diem basis.

        4.     Acceptance of the Premises. Sublessee has accepted the Premises in its then present condition pursuant to the terms of the July Sublease and hereby accepts the Premises in its present condition for the Term. Sublessor makes no representation or warranty as to its fitness for Tenant's intended use. Sublessor will not be obligated to make any alterations or improvements to the Subleased Premises on account of this Sublease. Any signage shall be at Sublessee's sole cost and expense pursuant to the approval of Landlord.

        5.     Security Deposit. Pursuant to the July Sublease, Sublessee has deposited with Sublessor the sum of Twenty Eight Thousand Five Hundred Fifty-five and 00/100 Dollars ($28,555.00) that Sublessor



will hold in accordance with Paragraph 5 of the Master Lease (this sum will be held through the Term under the July Sublease and this Sublease).

        6.     Other Charges. During the Term of this Sublease, Sublessee will pay to Sublessor "Lessee's Share" (as such term is defined in the Master Lease) of any Operating Expense Increases payable by Sublessor pursuant to Paragraph 4.2 of the Master Lease. Such payments will be made as and when due under the Master Lease. Sublessee shall also pay for all janitorial services.

        7.     Parking. Sublessor agrees that during the Term of this Sublease, Sublessee will be entitled to non-exclusive use of seventy six (76) vehicle parking spaces in the Project's parking facility at no additional charge to Sublessee.

        8.     Services. Sublessor will not be obligated to provide any services to Sublessee. Sublessee's sole source of such services is Landlord, pursuant to the Master Lease. Sublessor makes no representation about the availability or adequacy of such services.

        9.     The Master Lease. This Sublease is subject to the Master Lease. The provisions of the Master Lease are applicable to this Sublease as though landlord under the Master Lease were the Sublessor under this Sublease and tenant under the Master Lease were Sublessee under this Sublease; provided, however, that all communications between Sublessee and Landlord shall be through Sublessor only. Sublessee has received a copy of the Master Lease. Sublessee will not cause or allow to be caused any default under the Master Lease. Sublessee will indemnify Sublessor against any loss, liability, and expenses (including reasonable attorneys' fees and costs) arising out of any default under the Master Lease caused by Sublessee, and Sublessor will indemnify Sublessee against any loss, liability, and expenses (including reasonable attorneys' fees and costs) arising out of any default under the Master Lease caused by Sublessor.

        10.   Consent of Landlord. In the event the Master Lease requires that Sublessor obtain the consent of Landlord to any subletting by Sublessor then, this Sublease shall not be effective unless, within twenty (20) days of the date hereof, Landlord consents to this Sublease in writing.

        11.   Subsequent Subleases, Assignments and Modifications. Sublessee shall not further sublet the Premises or any portion thereof, nor assign, amend or modify this Sublease, without the express prior written consent of Sublessor, which consent may be withheld by Sublessor in its sole and absolute discretion.. Any attempted further subletting of the Premises or assignment, amendment or modification of this Sublease without the express prior written consent of Sublessor shall be void ab initio and shall constitute a material default by Sublessee under this Sublease.

        12.   Attorneys' Fees. In the event suit is brought to enforce or interpret any part of this Agreement, the prevailing party shall be entitled to recover as an element of his costs of suit, and not as damages, reasonable attorneys' fees to be fixed by the court.

        13.   Executed Counterparts. This Agreement may be executed in one or more counterparts, all of which together shall constitute a single agreement and each of which shall be an original for all purposes.

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        IN WITNESS WHEREOF, the parties hereto have caused this Sublease to be duly executed as of the day and year first above written.


SUBLESSOR

 

SUBLESSEE

K2 INC.,
a Delaware corporation

 

ALPHATEC MANUFACTURING, INC.,
a California corporation

By:

 

/s/  
MONTE BAIER      
Name:  Monte Baier
Title:    General Counsel

 

By:

 

/s/  
RONALD G. HISCOCK      
Name:  Ronald G. Hiscock
Title:    President and CEO

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CONSENT TO SUBLEASE AGREEMENT

(Attach copy of Consent to Sublease Agreement)

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Consent To Sublease Agreement

        This Consent to Sublease Agreement (this "Agreement") is made as of September 14, 2005, by and among James C. Coxeter, as Trustee of the Coxeter Survivor's Trust Created Under the Coxeter Family Trust dated April 30, 2003 ("Master Landlord"), K2 Inc., a Delaware corporation ("Sublandlord"), and Alphatec Spine, Inc. (f/k/a Alphatec Manufacturing, Inc.), a California corporation ("Subtenant").


Recitals

        This Agreement is made with regard to the following facts:

            A.    MG Palomar, LLC, a California limited liability company, as Lessor, and Sublandlord, as Lessee, entered into that certain Standard Multi-Tenant Office Lease-Gross and Addenda dated as of December 3, 2002 (the "Master Lease"), for that certain space known as Suite 100 (the "Premises") on the first floor in the office building commonly known as 2051 Palomar Airport Road, Carlsbad, California 92009 (the "Building").

            B.    All right, title, and interest of MG Palomar, LLC, in and to the Master Lease, the Premises, and the Building were duly assigned and transferred by MG Palomar, LLC, to Gold Pointe B, LLC, a California limited liability company, as of January 23, 2004.

            C.    All right, title, and interest of Gold Pointe B, LLC, in and to the Master Lease, the Premises, and the Building were duly assigned and transferred by Gold Pointe B, LLC, to James C. Coxeter, as Trustee of the Coxeter Survivor's Trust Created Under the Coxeter Family Trust dated April 30, 2003 (the Master Landlord), as of October 4, 2004; and the Master Landlord now duly holds all right, title, and interest in and to the Master Lease, the Premises, and the Building, formerly held by Gold Pointe B, LLC, and by MG Palomar, LLC, before it.

            D.    Under the terms of Paragraph 12 of the Master Lease, Sublandlord has requested Master Landlord's consent to the Sublease Agreement dated August 26, 2005, between Sublandlord and Subtenant (the "Sublease"), which would sublease to Subtenant the Premises, as more particularly described in the Sublease (the "Subleased Premises"). A copy of the Sublease is attached to this Agreement as Exhibit A.

            E.    Master Landlord is willing to consent to the Sublease on the terms and conditions contained in this Agreement.

        NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, the parties agree as follows:

        1.    Master Landlord's Consent.    Master Landlord consents to the Sublease. This consent is granted only on the terms and conditions stated in this Agreement. Master Landlord is not bound by any of the terms, covenants, or conditions of the Sublease. The Sublease is subject and subordinate to the Master Lease. If there is a conflict between this Agreement and the Sublease, the terms, conditions, and obligations of this Agreement shall control.

        2.    Limits of Consent.    Neither the Sublease nor this Agreement will:

            (a)   release Sublandlord from any liability, whether past, present or future, under the Master Lease;

            (b)   alter the primary liability of Sublandlord to pay the Rent and perform all of Lessee's obligations under the Master Lease (including the payment of all bills rendered by Master Landlord for charges incurred by Subtenant for services and materials supplied to the Subleased Premises);

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            (c)   be construed as a waiver of Master Landlord's right to require its prior written consent to any proposed assignment or subletting after the date hereof by Sublandlord under the Master Lease or Subtenant under the Sublease, or as a consent to any portion of the Premises being used or occupied by any other party;

            (d)   grant any rights to Subtenant greater than those rights granted to Sublandlord under the Master Lease;

            (e)   be deemed consent to any other assignment or subletting;

            (f)    be construed as consent by Master Landlord to a term in the Sublease beyond the term of the Master Lease;

            (g)   require Master Landlord to recognize Subtenant in the event of a default in the Master Lease by Sublandlord;

            (h)   enlarge or in any manner increase Master Landlord's obligations or duties under the Master Lease;

            (i)    create obligations or costs to Master Landlord with regard to the Sublease;

            (j)    require Master Landlord to proceed in any action under the Master Lease or this Agreement against either Sublandlord or Subtenant without first exhausting Master Landlord's remedy against the other; or

            (k)   modify, waive, amend, or otherwise affect any provision of the Master Lease.

        Master Landlord may consent to subsequent subleases and assignments of the Sublease or any amendments or modifications to the Sublease without notifying Sublandlord or anyone else liable under the Master Lease, including any guarantor of the Master Lease, and without obtaining their consent.

        No such action by Master Landlord will relieve those persons from any liability to Master Landlord or otherwise with regard to the Premises.

        3.    Relationship with Master Landlord.    

        3.1.    Assignment of Sublandlord's Interest to Master Landlord.    Sublandlord assigns and transfers to Master Landlord Sublandlord's interest in the Sublease and all rentals and income arising from the Sublease, subject to the terms of this section 3. Master Landlord, by consenting to the Sublease, agrees that, until Sublandlord defaults in performing its obligations under the Master Lease, Sublandlord may receive, collect, and enjoy the rents accruing under the Sublease.

        3.2.    Effect of Sublandlord Default Under Master Lease.    If Sublandlord defaults in the performance of its obligations to Master Landlord, under section Paragraph 13 of the Master Lease (whether or not Master Landlord terminates the Master Lease), Master Landlord may, in connection with section Paragraph 13 of the Master Lease, at its option by notice to Sublandlord, do either of the following:

            (a)   Terminate the Sublease; or

            (b)   Elect to receive and collect, directly from Subtenant, all rent and any other sums owing and to be owed under the Sublease, as further set forth in section 3.3, below.

        3.3.    Master Landlord's Election to Receive Rents.    Master Landlord will not, as a result of the Sublease, or as a result of the collection of rents or any other sums from Subtenant under section 3.2(b), above, be liable to Subtenant for any failure of Sublandlord to perform any obligation of Sublandlord under the Sublease. Sublandlord irrevocably authorizes and directs Subtenant, on receipt of any written notice from Master Landlord stating that a default exists in the performance of Sublandlord's obligations under the Master Lease, to pay to Master Landlord the rents and any other

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sums due and to become due under the Sublease. Sublandlord agrees that Subtenant has the right to rely on any such statement from Master Landlord, and that Subtenant will pay those rents and other sums to Master Landlord without any obligation or right to inquire as to whether a default exists and despite any notice or claim from Sublandlord to the contrary. Sublandlord will not have any right or claim against Subtenant for those rents or other sums paid by Subtenant to Master Landlord. Master Landlord will credit Sublandlord with any rent received by Master Landlord under this assignment, but the acceptance of any payment on account of rent from Subtenant as the result of a default by Sublandlord will not: (a) be an attornment by Master Landlord to Subtenant or by Subtenant to Master Landlord; (b) be a waiver by Master Landlord of any provision of the Master Lease; or (c) release Sublandlord from any liability under the terms, agreements, or conditions of the Master Lease. No payment of rent by Subtenant directly to Master Landlord, regardless of the circumstances or reasons for that payment, will be deemed an attornment by Subtenant to Master Landlord in the absence of a specific written agreement signed by Master Landlord to that effect.

        3.4.    Master Landlord's Election of Subtenant's Attornment.    In the event the Master Lease is terminated prior to the expiration of the term of the Sublease, Master Landlord shall have the right, pursuant to notice to Subtenant, to succeed to Sublandlord's interest in the Sublease and cause Subtenant to attorn to Master Landlord. Master Landlord will assume the obligations of Sublandlord under the Sublease from the time of the exercise of the option, but Master Landlord will not be:

            (a)   liable for any rent paid by Subtenant to Sublandlord more than one month in advance, or any security deposit paid by Subtenant to Sublandlord;

            (b)   liable for any act or omission of Sublandlord under the Master Lease or for any default of Sublandlord under the Sublease which occurred prior to the Master Landlord's assumption;

            (c)   subject to any defenses or offsets that Subtenant may have against Sublandlord which arose prior to Master Landlord's assumption; or

            (d)   bound by any changes or modifications made to the Sublease without the written consent of Master Landlord.

        3.5    Indemnity.    Subtenant shall hold Master Landlord harmless to the same extent as required by Lessee in Paragraph 8.7 of the Master Lease.

        3.6    Expiration of Master Lease Term.    Unless previously terminated pursuant to the terms of the Master Lease, the term of the Master Lease shall expire on February 28, 2008. The Option, as defined in Paragraph 39.1 of the Master Lease, is personal to K2 Inc. and cannot be assigned or exercised by anyone other than K2 Inc. The Option can only be exercised while K2 Inc. is in full possession of the Premises and without the intention of thereafter assigning or subletting.

        3.7    No Right to Holdover.    There is no right to retain possession of the Premises or any part thereof beyond the expiration or termination of the Master Lease. In the event that either Sublandlord or Subtenant fail to vacate the Premises at the expiration or termination of the Master Lease the then Base Rent, as that term is defined in the Master Lease, shall, pursuant to Paragraph 26 of the Master Lease, increase to 150% of the Base Rent applicable immediately preceding the expiration or termination and Sublandlord and Subtenant shall both remain liable for all payments due under the Master Lease until the holdover is terminated.

        4.    Consideration for Sublease.    Sublandlord and Subtenant represent and warrant that there are no additional payments of rent or any other consideration of any type which has been paid or is payable by Subtenant to Sublandlord in connection with the Sublease, other than as disclosed in the Sublease.

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        5.    General Provisions.    

        5.1.    Brokerage Commission.    Sublandlord and Subtenant agree that Master Landlord will not be liable for any brokerage commission or finder's fee in connection with the consummation of the Sublease or this Agreement. Sublandlord and Subtenant will protect, defend, indemnify, and hold Master Landlord harmless from any brokerage commission or finder's fee in connection with the consummation of the Sublease or this Agreement, and from any cost or expense (including attorney fees) incurred by Master Landlord in resisting any claim for any such brokerage commission or finder's fee. The provisions of this section 5.1 shall survive the expiration or earlier termination of the Sublease and this Agreement.

        5.2.    Notice.    Any notice that may or must be given by any party under this Agreement will be delivered (i) personally, (ii) by certified mail, return receipt requested, or (iii) by a nationally recognized overnight courier, addressed to the party to whom it is intended. Any notice given to Master Landlord, Sublandlord or Subtenant shall be sent to the respective address set forth on the signature page below, or to such other address as that party may designate for service of notice by a notice given in accordance with the provisions of this Section 5.2. A notice sent pursuant to the terms of this Section 5.2 shall be deemed delivered (A) when delivery is attempted, if delivered personally, (B) three (3) business days after deposit into the United States mail, or (C) the day following deposit with a nationally recognized overnight courier.

        5.3.    Controlling Law.    The terms and provisions of this Agreement will be construed in accordance with, and will be governed by, the laws of the State of California.

        5.4.    Entire Agreement; Waiver.    This Agreement constitutes the final, complete and exclusive statement between the parties to this Agreement pertaining to the terms of Master Landlord's consent to the Sublease, supersedes all prior and contemporaneous understandings or agreements of the parties, and is binding on and inures to the benefit of their respective heirs, representatives, successors and assigns. No party has been induced to enter into this Agreement by, nor is any party relying on, any representation or warranty outside those expressly set forth in this Agreement. Any agreement made after the date of this Agreement is ineffective to modify, waive, or terminate this Agreement, in whole or in part, unless that agreement is in writing, is signed by the parties to this Agreement, and specifically states that agreement modifies this Agreement.

        5.5.    Word Usage.    Unless the context clearly requires otherwise, (a) the plural and singular numbers will each be deemed to include the other; (b) the masculine, feminine, and neuter genders will each be deemed to include the others; (c) "shall," "will," "must," "agrees," and "covenants" are each mandatory; (d) "may" is permissive; (e) "or" is not exclusive; and (f) "includes" and "including" are not limiting.

        5.6.    Captions.    Captions to the sections in this Agreement are included for convenience only and do not modify any of the terms of this Agreement.

        5.7.    Capitalized Terms.    All terms spelled with initial capital letters in this Agreement that are not expressly defined in this Agreement will have the respective meanings given such terms in the Master Lease.

        5.8.    Partial Invalidity.    If any term, covenant, or condition in this Agreement is, to any extent, held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement, or the application of that term, covenant, or condition to persons or circumstances other than those as to which it is held to be invalid or unenforceable, will not be affected by that invalidity or unenforceability, and all other terms, covenants, and conditions of this Agreement will be valid and enforceable to the fullest extent permitted by law.

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        5.9.    Waiver of Jury Trial; Attorney Fees.    If any party commences litigation against any other party for the specific performance of this Agreement, for damages for the breach hereof or otherwise for enforcement of any remedy hereunder, the parties waive any right to a trial by jury and, in the event of any commencement of litigation, the prevailing party shall be entitled to recover from the applicable party such costs and reasonable attorney fees as may have been incurred.

        5.10.    Liability for Master Landlord's Attorney and Administrative Fees.    Sublandlord and Subtenant shall be jointly and severally liable for the payment of Master Landlord's actual attorney fees incurred in reviewing, preparing, and negotiating the Sublease and this Agreement, whether or not Master Landlord provides its consent to the proposed Sublease. Additionally, Sublandlord and Subtenant shall be jointly and severally liable for the payment of Master Landlord's administrative fee, not to exceed $500, for Master Landlord to review and consent to this Sublease and this Agreement. Payment of the attorney fees and administrative fees called for pursuant to this paragraph within ten (10) days following the receipt of an invoice for such fees shall be a condition of Master Landlord's consent to the Sublease.

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        IN WITNESS WHEREOF, the parties have executed this Consent to Sublease Agreement as of the date first shown above.

Master Landlord:    

 

 

          

James C. Coxeter,
as Trustee of the Coxeter Survivor's Trust
Created Under the Coxeter Family Trust dated April 30, 2003

 

 

Master Landlord Address:

 

 

 

 

J.C. Coxeter Enterprises, Inc.
642 Oakhaven Avenue
Brea, CA 92823

 

 

Sublandlord:

 

 

 

 

K2 Inc.
A Delaware corporation

 

 

 

 

By:

 

          

Name:
Title:

 

 

Sublandlord Address:

 

 

 

 

K2 Inc.
5818 El Camino Real
Carlsbad, CA 92008

 

 

Subtenant:

 

 

 

 

Alphatec Spine, Inc.
(f/k/a Alphatec Manufacturing, Inc.)
a California corporation

 

 

 

 

By:

 

          

Name:
Title:

 

 

Subtenant Address:

 

 

 

 

Alphatec Spine, Inc.
2051 Palomar Airport Road, Suite 100
Carlsbad, CA 92009

 

 

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EXHIBIT A
[Attach the Sublease]


EXHIBIT "A"
MASTER LEASE

(Attach copy of Master Lease)


[LOGO]


STANDARD MULTI-TENANT OFFICE LEASE—GROSS
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1.    Basic Provisions ("Basic Provisions")    

        1.1    Parties:    This Lease ("Lease") dated for reference purposes only December 3, 2002 is made by and between MG Palomar, LLC ("Lessor") and K2, Inc., a Delaware Corporation ("Lessee") (collectively the "Parties" or individually a "Party")

        1.2(a)    Premises:    That certain portion of the Project (as defined below) known as Suite Numbers(s) 100, first (1st) floor(s); consisting of approximately 19,863 (see addendum) rentable square feet and approximately            useable square feet ("Premises"). The Premises are located at: 2051 Palomar Airport Road, in the City of Carlsbad, County of San Diego, State of California with zip code 92009. In addition to Lessee's rights to use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 27 below) as hereinafter specified but shall not have any rights to the roof the exterior walls, the area above the dropped ceilings or the utility raceways of the building containing the Premises ("Building") or to any other buildings in the Project. The Premises, the Building, the Common Areas, the land upon which they are located, along with all other buildings and improvements thereon, are herein collectively referred to as the 'Project'. The Project consists of approximately 210,688 rentable square feet. (See also Paragraph 2)

        1.2(b)    Parking:    Eighty (80) unreserved and N/A reserved vehicle parking spaces at a monthly cost of $N/A per unreserved space and $N/A per reserved space. (See Paragraph 2.6)

        1.3    Term:    Five (5) years and zero (0) months ("Original Term") commencing ("Commencement Date") and ending February 28, 2008 ("Expiration Date"). (See also Paragraph 3)

        1.4    Early Possession:    February 1, 2003 or upon SUBSTANTIAL COMPLETION of Tenant Improvements, whichever is later ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3)

        1.5    Base Rent:    $30,787.65 per month ("Base Rent"), payable on the first (1st) day of each month commencing March 1, 2003. (See also Paragraph 4)

ý
If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.

        1.6    Lessee's Share of Operating Expense Increase:    9 and 43/100 percent (9.43%) ("Lessee's Share") Lessee's Share has been calculated by dividing the approximate rentable square footage of the Premises by the total approximate square footage of the rentable space contained in the Project and shall not be subject to revision except in connection with an actual change in the size of the Premises or a change in the space available for lease in the Project.

        1.7    Base Rent and Other Monies Paid Upon Execution:    

            (a)   Base Rent: $30,787.65 for the period March 1 through 31, 2003.

            (b)   Security Deposit: $34,641.07. ("Security Deposit"). (See also Paragraph 5)

            (c)   Parking: $N/A for the period N/A.

            (d)   Other: $N/A for N/A.

            (e)   Total Due Upon Execution of this Lease: $65,428.72.

        1.8    Agreed Use:    General administrative offices. (See also Paragraph 6)

        1.9    Base Year; Insuring Party.    The Base Year is 2003. Lessor is the "Insuring Party". (See also Paragraph 4.2 and 8)

        1.10    Real Estate Brokers:    (See also Paragraph 15)

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