Exhibit 10.1

 

SUBLEASE

 

THIS SUBLEASE (this “Sublease”) is made and entered into as of the 12th day of
October, 2004, by and between GATEWAY, INC., a Delaware corporation (hereinafter
called “Sublandlord”), and NUVASIVE, INC., a Delaware corporation (hereinafter
called “Subtenant”).

 

W I T N E S S E T H

 

WHEREAS, by that certain Amended and Restated Lease dated as of April 15,1999
(the “Original Lease”) as amended by that certain First Amendment to Amended and
Restated Lease Agreement dated as of April 17, 2000 (the “First Amendment”);
that certain Second Amendment to Amended and Restated Lease dated concurrently
herewith (the “Second Amendment”) and with the Original Lease, the First
Amendment and the Second Amendment are hereinafter collectively referred to as
the “Prime Lease”, a copy of which Prime Lease is attached hereto as Exhibit “A”
and by this reference made a part hereof, Carramerica Development, Inc., a
Delaware corporation (hereinafter, together with its successors and assigns,
called “Landlord”), leased to Sublandlord the entirety of a building located at
4545 Towne Centre Court in San Diego, California containing approximately 62,367
gross rentable square feet (the “Premises” and sometimes also referred to herein
as the “Building”); and

 

WHEREAS, subject to the consent of Landlord, Subtenant desires to sublease from
Sublandlord, and Sublandlord desires to sublease to Subtenant, the entire
Premises, all upon the terms and subject to the conditions and provisions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and promises contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby mutually acknowledged, Sublandlord
and Subtenant hereby agree as follows:

 

1.                                       DEMISE; USE.  SUBLANDLORD HEREBY LEASES
TO SUBTENANT AND SUBTENANT HEREBY LEASES FROM SUBLANDLORD THE PREMISES FOR THE
TERM AND RENTAL AND UPON THE OTHER TERMS AND CONDITIONS HEREINAFTER SET FORTH,
TO BE USED AND OCCUPIED BY SUBTENANT SOLELY FOR MEDICAL AND SCIENTIFIC RESEARCH,
DEVELOPMENT, OPERATING LABORATORY, MACHINE SHOP, STORAGE, WAREHOUSING AND
SHIPPING RELATING THERETO (THE “MEDICAL RESEARCH

 

--------------------------------------------------------------------------------

 

USE”) AND GENERAL OFFICE USE AND FOR NO OTHER PURPOSE, SUBJECT TO THE
LIMITATIONS SET FORTH IN THE PRIME LEASE AS MAY BE AMENDED AND SUPPLEMENTED
PURSUANT TO THE CONSENT AGREEMENT (AS DEFINED BELOW), INCLUDING, WITHOUT
LIMITATION, THE PROVISIONS OF PARAGRAPH 13 OF THE SCHEDULE OF THE PRIME LEASE AS
WELL AS THE PROVISIONS OF PARAGRAPH 6 OF THE PRIME LEASE.  NOTWITHSTANDING THE
FOREGOING, SUBTENANT SHALL BE PERMITTED TO USE THE PREMISES FOR THE MEDICAL
RESEARCH USE ONLY SO LONG AS SUBTENANT HAS OBTAINED LANDLORD’S CONSENT THERETO
AND COMPLIES WITH ALL OF THE TERMS AND CONDITIONS IMPOSED UPON THE MEDICAL
RESEARCH USE AS SET FORTH BY LANDLORD IN THE PRIME LEASE, THE CONSENT AGREEMENT
AND AS SET FORTH IN THIS SUBLEASE.

 

2.                                       TERM.  THE TERM OF THIS SUBLEASE SHALL
COMMENCE (THE “COMMENCEMENT DATE”) ON THE LATER OF (I) THE DATE POSSESSION OF
THE PREMISES IS DELIVERED TO SUBTENANT, (II) ONE (1) DAY AFTER THE FULL
EXECUTION AND DELIVERY TO SUBTENANT OF THIS SUBLEASE AND THE CONSENT AGREEMENT
BY EACH PARTY THERETO AND (III) DECEMBER 1, 2004, AND, UNLESS SOONER TERMINATED
PURSUANT TO THE PROVISIONS HEREOF, SHALL TERMINATE ON THE EARLIER OF AUGUST 31,
2012 AND THE PRIOR TERMINATION OF THE TERM OF THE PRIME LEASE.  NOTWITHSTANDING
THE FOREGOING, SUBLANDLORD AGREES AND ACKNOWLEDGES THAT (A) SUBLANDLORD WILL
DELIVER POSSESSION OF THE PREMISES TO SUBTENANT WITHIN TWO (2) DAYS AFTER THE
FULL EXECUTION AND DELIVERY OF THIS SUBLEASE AND THE CONSENT AGREEMENT BY EACH
PARTY THERETO AND (B) SUBTENANT SHALL HAVE THE RIGHT TO OCCUPY THE PREMISES
SOLELY FOR THE PURPOSE OF COMMENCING SUBTENANT’S WORK (AS HEREAFTER DEFINED) IN
THE PREMISES IMMEDIATELY UPON DELIVERY OF POSSESSION OF THE PREMISES TO
SUBTENANT (THE “EARLY OCCUPANCY PERIOD”); PROVIDED, HOWEVER, IN NO EVENT SHALL
SUBTENANT BE PERMITTED TO COMMENCE THE CONDUCT OF ITS BUSINESS IN THE PREMISES
PRIOR TO THE COMMENCEMENT DATE AND IF SUBTENANT COMMENCES TO CONDUCT ITS
BUSINESS IN ALL OR ANY PORTION OF THE PREMISES PRIOR TO THE COMMENCEMENT DATE
THEN SUCH DATE UPON WHICH SUBTENANT SO COMMENCES THE PERFORMANCE OF ITS BUSINESS
SHALL BE DEEMED THE COMMENCEMENT DATE AND THEREUPON THE EARLY OCCUPANCY PERIOD
SHALL BE DEEMED TO HAVE EXPIRED.  THE EARLY OCCUPANCY PERIOD SHALL BE ON ALL
TERMS AND CONDITIONS AS SET FORTH IN THIS SUBLEASE EXCEPT THAT SUBTENANT SHALL
HAVE NO OBLIGATION TO PAY MINIMUM RENT OR ADDITIONAL RENT DURING THE EARLY
OCCUPANCY PERIOD.  AS USED HEREIN, THE PHRASE “LEASE YEAR” SHALL MEAN THE TWELVE
CALENDAR MONTH PERIOD COMMENCING ON THE COMMENCEMENT DATE (AS HEREINAFTER
DEFINED) (OR, IF THE COMMENCEMENT DATE IS NOT THE FIRST DAY OF A CALENDAR MONTH,
THEN COMMENCING ON THE FIRST DAY OF THE CALENDAR MONTH DURING WHICH THE
COMMENCEMENT DATE OCCURS) AND EACH ANNIVERSARY THEREOF, EXCEPT THAT THE LAST
LEASE YEAR MAY NOT BE TWELVE CALENDAR MONTHS AND SHALL TERMINATE ON THE LAST DAY
OF THE TERM OF THIS SUBLEASE.  NOTWITHSTANDING THE FOREGOING, THIS INSTRUMENT
SHALL BE DEEMED AND AGREED TO BE A SUBLEASE ONLY AND NOT AN ASSIGNMENT.

 

3.                                       MINIMUM RENT.

 

(A)                                  COMMENCING ON THE COMMENCEMENT DATE,
SUBTENANT SHALL PAY TO SUBLANDLORD MINIMUM ANNUAL RENTAL (HEREINAFTER CALLED
“MINIMUM RENT”) FOR THE PREMISES AS FOLLOWS:

 

2

--------------------------------------------------------------------------------

 

Time Period

 

Annual Minimum
Rent Rate Per
Rentable Square
Foot

 

Annual Minimum
Rent (based on
62,367 Rentable
Square Feet)

 

Monthly
Installments

 

First Lease Year*

 

$

18.00

 

$

756,000.00

 

$

63,000.00

 

Second Lease Year

 

$

18.54

 

$

1,156,284.18

 

$

96,357.02

 

Third Lease Year

 

$

19.10

 

$

1,191,209.70

 

$

99,267.48

 

Fourth Lease Year

 

$

19.67

 

$

1,226,758.89

 

$

102,229.91

 

Fifth Lease Year

 

$

20.26

 

$

1,263,555.42

 

$

105,296.29

 

Sixth Lease Year

 

$

20.87

 

$

1,301,599.29

 

$

108,466.61

 

Seventh Lease Year

 

$

21.49

 

$

1,340,266.83

 

$

111,688.90

 

Eighth Lease Year**

 

$

22.14

 

$

1,380,805.38

 

$

115,067.12

 

 

--------------------------------------------------------------------------------

*Note:  Sublandlord and Subtenant acknowledge and agree that for the first Lease
Year of the term of this Sublease, the Minimum Rent shall be determined based on
42,000 rentable square feet of the Premises (notwithstanding that Subtenant
shall be in occupancy of the entire Premises); provided, however, during such
period of time, Subtenant shall be responsible to pay any and all additional
rent due and owing under this Sublease based on the full rentable area of the
Premises.

 

**Note:  Sublandlord and Subtenant acknowledge and agree that as the expiration
of the term of the Prime Lease is August 31, 2012, the eighth Lease Year may not
consist of a full twelve (12) month period and accordingly the Annual Minimum
Rent category for such eighth Lease Year as set forth in schedule above is for
explanatory purposes only.

 

Annual Minimum Rent shall be due and payable in twelve equal installments.  Each
such installment shall be due and payable in advance on the first day of each
calendar month of the term hereof.  If the term of this Sublease commences on a
day other than the first day of a month or ends on a day other than the last day
of a month, Minimum Rent for such month shall be prorated; prorated Minimum Rent
for any such partial first month of the term hereof shall be paid on the date on
which the term commences.  Notwithstanding anything in this Sublease to the
contrary, Subtenant shall pay to Sublandlord the first monthly installment of
Minimum Rent due under this Sublease (in the amount of $63,000.00) upon the
execution and delivery of this Sublease by Subtenant to Sublandlord.

 

3

--------------------------------------------------------------------------------

 

(B)                                 ALL MINIMUM RENT AND ADDITIONAL RENT SHALL
BE PAID WITHOUT SETOFF OR DEDUCTION WHATSOEVER AND SHALL BE PAID TO SUBLANDLORD
AT THE FOLLOWING ADDRESS:  REAL ESTATE ADMINISTRATION, GATEWAY, INC., 610
GATEWAY DRIVE Y91, NORTH SIOUX CITY, SOUTH DAKOTA 97049 OR AT SUCH OTHER PLACE
AS SUBLANDLORD MAY DESIGNATE BY NOTICE TO SUBTENANT.

 

(C)                                  NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED IN THIS SUBLEASE, SUBLANDLORD AND SUBTENANT ACKNOWLEDGE AND AGREE THAT
SO LONG AS SUBTENANT IS NOT IN DEFAULT UNDER THIS SUBLEASE PAST ANY CURE PERIOD
PROVIDED HEREIN, SUBTENANT SHALL BE ENTITLED TO AN ABATEMENT OF THE MINIMUM RENT
DUE AND OWING UNDER THIS SUBLEASE FOR THE SECOND, THIRD AND FOURTH MONTHS OF THE
FIRST LEASE YEAR OF THE TERM OF THIS SUBLEASE.  IN NO EVENT SHALL THE FOREGOING
ABATEMENT LIMIT OR RESTRICT SUBTENANT’S OBLIGATION TO PAY THE FULL AMOUNT OF ANY
AND ALL ADDITIONAL RENT DUE UNDER THIS SUBLEASE.

 

4.                                       ADDITIONAL RENT; PAYMENTS; INTEREST.

 

(A)                                  EXCEPT FOR “BASE RENT” (AS SUCH TERM IS
DEFINED IN THE PRIME LEASE AND FOR THE PAYMENT OF WHICH SUBTENANT SHALL HAVE NO
OBLIGATION UNDER THIS SUBLEASE), SUBTENANT SHALL ALSO PAY TO SUBLANDLORD ALL
OTHER AMOUNTS PAYABLE BY SUBLANDLORD UNDER THE PRIME LEASE WHICH ARE
ATTRIBUTABLE TO THE PREMISES OR ATTRIBUTABLE TO SUBTENANT, ITS AGENTS,
EMPLOYEES, CUSTOMERS OR INVITEES, INCLUDING WITHOUT LIMITATION, THE OPERATING
COST SHARE RENT, THE TAX SHARE RENT, AND ADDITIONAL RENT (AS SUCH TERMS ARE
DEFINED IN THE PRIME LEASE).  BY WAY OF EXAMPLE AND NOT BY WAY OF LIMITATION,
CHARGES BY LANDLORD FOR FURNISHING AIR CONDITIONING OR HEATING TO THE PREMISES
AT TIMES IN ADDITION TO THOSE CERTAIN TIMES SPECIFIED IN THE PRIME LEASE, COSTS
INCURRED BY LANDLORD IN REPAIRING DAMAGE TO THE BUILDING CAUSED BY AN EMPLOYEE
OF SUBTENANT, INCREASED INSURANCE PREMIUMS DUE AS A RESULT OF SUBTENANT’S USE OF
THE PREMISES, AND AMOUNTS EXPENDED OR INCURRED BY LANDLORD ON ACCOUNT OF ANY
DEFAULT BY SUBTENANT WHICH GIVES RISE TO A DEFAULT UNDER THE PRIME LEASE WOULD
BE AMOUNTS PAYABLE BY SUBTENANT PURSUANT TO THIS SUBSECTION 4(A).

 

(B)                                 EACH AMOUNT DUE TO PURSUANT TO SUBSECTION
4(A) ABOVE AND EACH OTHER AMOUNT PAYABLE BY SUBTENANT HEREUNDER, UNLESS A DATE
FOR PAYMENT OF SUCH AMOUNT IS PROVIDED FOR ELSEWHERE IN THIS SUBLEASE, SHALL BE
DUE AND PAYABLE ON THE FIFTH DAY FOLLOWING THE DATE ON WHICH LANDLORD OR
SUBLANDLORD HAS GIVEN NOTICE TO SUBTENANT OF THE AMOUNT THEREOF.

 

(C)                                  ALL AMOUNTS OTHER THAN MINIMUM RENT PAYABLE
TO SUBLANDLORD UNDER THIS SUBLEASE SHALL BE DEEMED TO BE ADDITIONAL RENT DUE
UNDER THIS SUBLEASE.  ALL PAST DUE INSTALLMENTS OF MINIMUM RENT AND ADDITIONAL
RENT WHICH ARE NOT PAID ON OR BEFORE THE THIRD (3RD) BUSINESS DAY AFTER SUCH
AMOUNT IS DUE SHALL BEAR INTEREST FROM THE DATE DUE UNTIL PAID AT THE RATE PER
ANNUM EQUAL TO FIVE PERCENT (5%) IN EXCESS OF THE PRIME RATE (AS HEREINAFTER
DEFINED) IN EFFECT FROM TIME TO TIME, WHICH RATE SHALL CHANGE FROM TIME TO TIME
AS OF THE EFFECTIVE DATE OF EACH CHANGE IN THE PRIME RATE, UNLESS A LESSER RATE
SHALL THEN BE

 

4

--------------------------------------------------------------------------------

 

THE MAXIMUM RATE PERMISSIBLE BY LAW WITH RESPECT THERETO, IN WHICH EVENT SAID
LESSER RATE SHALL BE CHARGED.  FOR THE PURPOSES OF THIS SUBLEASE, THE TERM
“PRIME RATE” SHALL MEAN THE RATE OF INTEREST ANNOUNCED FROM TIME TO TIME BY
CHASE MANHATTAN BANK OR ITS SUCCESSORS AS ITS PRIME OR CORPORATE BASE RATE.

 

(D)                                 SUBTENANT SHALL PAY LANDLORD ON THE DUE
DATES FOR SERVICES REQUESTED BY SUBTENANT WHICH ARE BILLED BY LANDLORD DIRECTLY
TO SUBTENANT RATHER THAN SUBLANDLORD.

 

(E)                                  IN ADDITION TO THE MINIMUM RENT PAYABLE
PURSUANT TO SECTION 3 ABOVE, FROM AND AFTER THE COMMENCEMENT DATE, FOR EACH
CALENDAR YEAR OF THE TERM, SUBTENANT, AS ADDITIONAL RENT, SHALL PAY SUBTENANT’S
PERCENTAGE SHARE (WHICH SUBLANDLORD AND SUBTENANT ACKNOWLEDGE AND AGREE IS EQUAL
TO 100%) OF OPERATING COST SHARE RENT, TAX SHARE RENT AND ALL ADDITIONAL RENT
PAYABLE BY SUBLANDLORD UNDER THE PRIME LEASE FOR THE THEN CURRENT CALENDAR
YEAR.  SUBLANDLORD SHALL GIVE SUBTENANT WRITTEN NOTICE OF SUBLANDLORD’S ESTIMATE
OF THE AMOUNT OF ADDITIONAL RENT PER MONTH PAYABLE PURSUANT TO THIS SUBSECTION
FOR EACH CALENDAR YEAR FOLLOWING SUBLANDLORD’S RECEIPT OF LANDLORD’S ESTIMATE OF
SUCH AMOUNTS PAYABLE UNDER THE PRIME LEASE.  THEREAFTER, THE ADDITIONAL RENT
PAYABLE PURSUANT TO THIS SUBSECTION SHALL BE DETERMINED AND ADJUSTED IN
ACCORDANCE WITH THE PROVISIONS BELOW.

 

(F)                                    THE DETERMINATION AND ADJUSTMENT OF
ADDITIONAL RENT CONTEMPLATED UNDER SUBSECTION 4(E) ABOVE SHALL BE MADE IN
ACCORDANCE WITH THE FOLLOWING PROCEDURES:

 

(1)                                  UPON RECEIPT OF A STATEMENT FROM LANDLORD
SPECIFYING THE ESTIMATED OPERATING COST SHARE RENT, TEX SHARE RENT AND ALL
ADDITIONAL RENT TO BE CHARGED TO SUBLANDLORD UNDER THE PRIME LEASE WITH RESPECT
TO EACH CALENDAR YEAR, OR AS SOON AFTER RECEIPT OF SUCH STATEMENT AS
PRACTICABLE, SUBLANDLORD SHALL GIVE SUBTENANT WRITTEN NOTICE OF ITS ESTIMATE OF
ADDITIONAL RENT PAYABLE UNDER SUBSECTION 4(E) FOR THE ENSUING CALENDAR YEAR,
WHICH ESTIMATE SHALL BE PREPARED BASED ON THE ESTIMATE RECEIVED FROM LANDLORD
(AS LANDLORD’S ESTIMATE MAY CHANGE FROM TIME TO TIME), TOGETHER WITH A COPY OF
THE STATEMENT RECEIVED FROM LANDLORD.  SUBLANDLORD’S ESTIMATE OF ADDITIONAL RENT
TO BE PAID BY SUBTENANT PURSUANT TO THIS SUBLEASE SHALL NOT EXCEED SUBTENANT’S
PERCENTAGE SHARE OF LANDLORD’S ESTIMATE DELIVERED TO SUBLANDLORD PURSUANT TO THE
PRIME LEASE (AS LANDLORD’S ESTIMATE MAY CHANGE FROM TIME TO TIME).  ON OR BEFORE
THE FIRST DAY OF EACH MONTH DURING EACH CALENDAR YEAR, SUBTENANT SHALL PAY TO
SUBLANDLORD AS ADDITIONAL RENT ONE-TWELFTH (1/12TH) OF SUCH ESTIMATED AMOUNT
TOGETHER WITH THE MINIMUM RENT.

 

(2)                                  IN THE EVENT SUBLANDLORD’S NOTICE SET FORTH
IN SUBSECTION 4(F)(1) IS NOT GIVEN IN DECEMBER OF THE CALENDAR YEAR PRECEDING
THE CALENDAR YEAR FOR WHICH SUBLANDLORD’S NOTICE IS APPLICABLE, AS THE CASE MAY
BE, THEN UNTIL THE CALENDAR MONTH AFTER SUCH NOTICE IS DELIVERED BY SUBLANDLORD,
SUBTENANT SHALL CONTINUE TO PAY TO SUBLANDLORD MONTHLY, DURING THE ENSUING
CALENDAR YEAR, ESTIMATED PAYMENTS EQUAL TO THE AMOUNTS PAYABLE HEREUNDER DURING
THE CALENDAR YEAR JUST ENDED.  UPON RECEIPT OF ANY SUCH POST-DECEMBER NOTICE
SUBTENANT SHALL (I) COMMENCE AS OF THE IMMEDIATELY

 

5

--------------------------------------------------------------------------------

 

FOLLOWING CALENDAR MONTH, AND CONTINUE FOR THE REMAINDER OF THE CALENDAR YEAR,
TO PAY TO SUBLANDLORD MONTHLY SUCH NEW ESTIMATED PAYMENTS AND (II) IF THE
MONTHLY INSTALLMENT OF THE NEW ESTIMATE OF SUCH ADDITIONAL RENT IS GREATER THAN
THE MONTHLY INSTALLMENT OF THE ESTIMATE FOR THE PREVIOUS CALENDAR YEAR, PAY TO
SUBLANDLORD WITHIN THIRTY (30) DAYS OF THE RECEIPT OF SUCH NOTICE AN AMOUNT
EQUAL TO THE DIFFERENCE OF SUCH MONTHLY INSTALLMENT MULTIPLIED BY THE NUMBER OF
FULL AND PARTIAL CALENDAR MONTHS OF SUCH YEAR PRECEDING THE DELIVERY OF SUCH
NOTICE.

 

(3)                                  WITHIN THIRTY (30) DAYS AFTER THE RECEIPT
BY SUBLANDLORD OF A FINAL STATEMENT OF SUCH COSTS FROM LANDLORD WITH RESPECT TO
EACH CALENDAR YEAR, SUBLANDLORD SHALL DELIVER TO SUBTENANT A STATEMENT OF THE
ADJUSTMENT TO BE MADE PURSUANT TO SECTION 4(F) HEREOF FOR THE CALENDAR YEAR JUST
ENDED, TOGETHER WITH A COPY OF THE STATEMENT RECEIVED BY SUBLANDLORD FROM
LANDLORD.  IF ON THE BASIS OF SUCH STATEMENT SUBTENANT OWES AN AMOUNT THAT IS
LESS THAN THE ESTIMATED PAYMENTS FOR THE CALENDAR YEAR JUST ENDED PREVIOUSLY
PAID BY SUBTENANT, SUBLANDLORD SHALL CREDIT SUCH EXCESS TO THE NEXT PAYMENTS OF
RENT COMING DUE OR, IF THE TERM OF THIS SUBLEASE IS ABOUT TO EXPIRE, SO LONG AS
SUBTENANT IS NOT IN DEFAULT UNDER THIS SUBLEASE, PROMPTLY REFUND SUCH EXCESS TO
SUBTENANT.  IF ON THE BASIS OF SUCH STATEMENT SUBTENANT OWES AN AMOUNT THAT IS
MORE THAN THE ESTIMATED PAYMENTS FOR THE CALENDAR YEAR JUST ENDED PREVIOUSLY
MADE BY SUBTENANT, SUBTENANT SHALL PAY THE DEFICIENCY TO SUBLANDLORD WITHIN
THIRTY (30) DAYS AFTER DELIVERY OF THE STATEMENT FROM SUBLANDLORD TO SUBTENANT.

 

(4)                                  FOR PARTIAL CALENDAR YEARS DURING THE TERM
OF THIS SUBLEASE, THE AMOUNT OF ADDITIONAL RENT PAYABLE PURSUANT TO SUBSECTION
4(F) THAT IS APPLICABLE TO THAT PARTIAL CALENDAR YEAR SHALL BE PRORATED BASED ON
THE RATIO OF THE NUMBER OF DAYS OF SUCH PARTIAL CALENDAR YEAR FALLING DURING THE
TERM OF THIS SUBLEASE TO 365.  THE EXPIRATION OR EARLIER TERMINATION OF THIS
SUBLEASE SHALL NOT AFFECT THE OBLIGATIONS OF SUBLANDLORD AND SUBTENANT PURSUANT
TO THIS SECTION 4, AND SUCH OBLIGATIONS SHALL SURVIVE AND REMAIN TO BE PERFORMED
AFTER ANY EXPIRATION OR EARLIER TERMINATION OF THIS SUBLEASE.

 

5.                                       CONDITION OF PREMISES AND CONSTRUCTION
OF IMPROVEMENTS.  SUBTENANT HEREBY ACKNOWLEDGES AND AGREES THAT IT IS TO DEMISE
THE PREMISES IN AN “AS-IS” CONDITION AND SUBTENANT’S TAKING POSSESSION OF THE
PREMISES SHALL BE CONCLUSIVE EVIDENCE AS AGAINST SUBTENANT THAT THE PREMISES
WERE IN GOOD ORDER AND SATISFACTORY CONDITION WHEN SUBTENANT TOOK POSSESSION. 
NO PROMISE OF SUBLANDLORD TO ALTER, REMODEL OR IMPROVE THE PREMISES, AND NO
REPRESENTATION RESPECTING THE CONDITION OF THE PREMISES HAVE BEEN MADE BY
SUBLANDLORD TO SUBTENANT EXCEPT TO THE EXTENT EXPRESSLY SET FORTH IN THIS
SUBLEASE.  UPON THE EXPIRATION OF THE TERM HEREOF, OR UPON ANY EARLIER
TERMINATION OF THE TERM HEREOF OR OF SUBTENANT’S RIGHT TO POSSESSION, SUBTENANT
SHALL SURRENDER THE PREMISES IN THE CONDITION REQUIRED IN THE PRIME LEASE AND
THE CONSENT AGREEMENT (AND IN CASE OF ANY CONFLICT BETWEEN THE PRIME LEASE AND
THE CONSENT AGREEMENT ON THE SUBJECT, THE CONSENT AGREEMENT SHALL CONTROL).

 

6

--------------------------------------------------------------------------------

 

6.                                       THE PRIME LEASE.

 

(A)                                  THIS SUBLEASE AND ALL RIGHTS OF SUBTENANT
HEREUNDER AND WITH RESPECT TO THE PREMISES ARE SUBJECT TO THE TERMS, CONDITIONS
AND PROVISIONS OF THE PRIME LEASE.  SUBTENANT HEREBY ASSUMES AND AGREES TO
PERFORM FAITHFULLY AND BE BOUND BY, WITH RESPECT TO THE PREMISES, ALL OF
SUBLANDLORD’S OBLIGATIONS, COVENANTS, AGREEMENTS AND LIABILITIES UNDER THE PRIME
LEASE AND ALL TERMS, CONDITIONS, PROVISIONS AND RESTRICTIONS CONTAINED IN THE
PRIME LEASE EXCEPT:

 

(I)                                     FOR THE PAYMENT OF “BASE RENT” (AS SUCH
TERM IS DEFINED IN THE PRIME LEASE);

 

(II)                                  THAT SUBTENANT SHALL NOT HAVE ANY
OBLIGATIONS TO CONSTRUCT OR INSTALL TENANT IMPROVEMENTS EXCEPT AS MAY BE
PROVIDED HEREIN, AND

 

(III)                               THAT THE FOLLOWING PROVISIONS OF THE PRIME
LEASE DO NOT APPLY TO THIS SUBLEASE:  ANY PROVISIONS IN THE PRIME LEASE ALLOWING
OR PURPORTING TO ALLOW SUBLANDLORD ANY RENT CONCESSIONS OR ABATEMENTS OR
CONSTRUCTION OR REFURBISHMENT ALLOWANCES, ANY PROVISIONS ALLOWING SUBLANDLORD TO
EXTEND OR RENEW THE TERM OF THE PRIME LEASE (PROVIDED IF THIS SUBLEASE IS THEN
IN FORCE AND SUBTENANT REMAINS IN POSSESSION OF THE PREMISES, ANY ELECTION OR
RIGHT OF SUBLANDLORD TO RENEW OR EXTEND SHALL NOT ABROGATE OR AFFECT SUBTENANT’S
RIGHT TO EXTEND WITH LANDLORD AS SET FORTH IN THE CONSENT AGREEMENT), ANY
PROVISIONS OF THE PRIME LEASE GRANTING ANY OPTION TO PURCHASE OR LEASE THE
BUILDING OR ANY OTHER SPACE IN THE PROJECT, ANY RIGHT TO AUDIT ANY COSTS PASSED
THROUGH UNDER THE PRIME LEASE (INCLUDING, WITHOUT LIMITATION, THE PROVISIONS OF
SECTION 2.D.(4) OF THE PRIME LEASE), ANY RIGHT TO RECEIVE AN ABATEMENT OF RENT
IN CONNECTION WITH AN INTERRUPTION OF UTILITIES (INCLUDING, WITHOUT LIMITATION,
THE PROVISIONS OF SECTION 4.F. OF THE PRIME LEASE) OTHER THAN AS MAY BE
EXPRESSLY SET FORTH IN THIS SUBLEASE, ANY RIGHT TO TERMINATE THE LEASE AS A
RESULT OF A CASUALTY OR FIRE (INCLUDING, WITHOUT LIMITATION, ANY PROVISION SET
FORTH IN SECTION 9.A. OF THE PRIME LEASE) OTHER THAN AS MAY BE EXPRESSLY SET
FORTH IN THIS SUBLEASE, ANY RIGHT TO ANY ALLOWANCE GRANTED UNDER THE PRIME LEASE
AS SET FORTH IN SECTION 5.G. OF THE PRIME LEASE, ANY RIGHTS DERIVING FROM A
DEFAULT UNDER THE PRIME LEASE BY THE LANDLORD THEREUNDER (INCLUDING, WITHOUT
LIMITATION, THE PROVISIONS OF SECTION 26.J. OF THE PRIME LEASE), ANY EXTENSION
OPTION AS SET FORTH IN SECTION 30 OF THE PRIME LEASE, ANY RIGHT OF FIRST OFFER
SET FORTH IN SECTION 36 OF THE PRIME LEASE, OR ANY RIGHTS WITH RESPECT TO THE
TANABE BUILDING AS SET FORTH IN SECTION 37 OF THE PRIME LEASE.

 

(B)                                 WITHOUT LIMITATION OF THE FOREGOING:

 

(I)                                     SUBTENANT SHALL NOT MAKE ANY CHANGES,
ALTERATIONS OR ADDITIONS IN OR TO THE PREMISES EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED HEREIN OR IN THE CONSENT AGREEMENT; PROVIDED, HOWEVER, THE FOREGOING
SHALL NOT LIMIT OR RESTRICT THE RIGHT OF SUBTENANT TO OBTAIN THE CONSENT OF
SUBLANDLORD TO ANY SUCH CHANGES, ALTERATIONS OR ADDITIONS (SUCH OBLIGATIONS
SHALL BE SATISFIED IF THE CONSENT AGREEMENT CONTAINS THE

 

7

--------------------------------------------------------------------------------

 

CONSENT OF SUBLANDLORD TO SUCH CHANGES, ALTERATIONS OR ADDITIONS).  IN
CONNECTION THEREWITH, SUBLANDLORD AND SUBTENANT ACKNOWLEDGE AND AGREE THAT
SUBTENANT DESIRES TO MAKE CERTAIN ALTERATIONS, ADDITIONS AND/OR IMPROVEMENTS TO
THE PREMISES FOLLOWING ITS OCCUPANCY THEREOF.  IN CONNECTION WITH SUCH WORK
(HEREINAFTER REFERRED TO AS THE “SUBTENANT WORK”), SUCH WORK SHALL BE PERFORMED
AT THE SOLE COST AND EXPENSE OF SUBTENANT, SHALL BE PERFORMED BY A LICENSED
CONTRACTOR WHICH IS REASONABLY ACCEPTABLE TO SUBLANDLORD AND LANDLORD, PURSUANT
TO PLANS AND SPECIFICATIONS WHICH HAVE BEEN APPROVED BY BOTH SUBLANDLORD AND
LANDLORD (WHICH APPROVAL WILL NOT BE UNREASONABLY WITHHELD OR DELAYED) AND SHALL
OTHERWISE STRICTLY CONFORM TO ALL THE TERMS AND PROVISIONS OF THE PRIME LEASE. 
SUBTENANT SHALL OBTAIN THE APPROVAL OF BOTH THE LANDLORD AND SUBLANDLORD WITH
RESPECT TO ANY AND ALL ASPECTS OF THE SUBTENANT WORK PRIOR TO COMMENCING SAME. 
SUBLANDLORD AGREES TO RESPOND TO ANY REQUEST FOR APPROVAL OF ANY SUBTENANT WORK
WITHIN A REASONABLE PERIOD OF TIME.

 

(II)                                  IF SUBTENANT DESIRES TO TAKE ANY OTHER
ACTION AND THE PRIME LEASE AND/OR THE CONSENT AGREEMENT WOULD REQUIRE THAT
SUBLANDLORD OBTAIN THE CONSENT OF LANDLORD BEFORE UNDERTAKING ANY ACTION OF THE
SAME KIND, SUBTENANT SHALL NOT UNDERTAKE THE SAME WITHOUT THE PRIOR WRITTEN
CONSENT OF SUBLANDLORD.  SUBLANDLORD MAY CONDITION ITS CONSENT ON THE CONSENT OF
LANDLORD BEING OBTAINED AND MAY REQUIRE SUBTENANT TO CONTACT LANDLORD DIRECTLY
FOR SUCH CONSENT;

 

(III)                               ALL RIGHTS GIVEN TO LANDLORD AND ITS AGENTS
AND REPRESENTATIVES BY THE PRIME LEASE AND/OR THE CONSENT AGREEMENT TO ENTER THE
PREMISES SHALL INURE TO THE BENEFIT OF SUBLANDLORD AND THEIR RESPECTIVE AGENTS
AND REPRESENTATIVES WITH RESPECT TO THE PREMISES;

 

(IV)                              SUBLANDLORD SHALL ALSO HAVE ALL OTHER RIGHTS,
AND ALL PRIVILEGES, OPTIONS, RESERVATIONS AND REMEDIES, GRANTED OR ALLOWED TO,
OR HELD BY, LANDLORD UNDER THE PRIME LEASE AND/OR THE CONSENT AGREEMENT OR
GRANTED TO LANDLORD IN THE CONSENT AGREEMENT;

 

(V)                                 SUBTENANT SHALL MAINTAIN INSURANCE OF THE
KINDS AND IN THE AMOUNTS REQUIRED TO BE MAINTAINED BY SUBLANDLORD UNDER THE
PRIME LEASE AS WELL AS SET FORTH IN THE CONSENT AGREEMENT.  ALL POLICIES OF
LIABILITY INSURANCE SHALL NAME AS ADDITIONAL INSUREDS THE LANDLORD AND
SUBLANDLORD AND THEIR RESPECTIVE OFFICERS, DIRECTORS OR PARTNERS, AS THE CASE
MAY BE, AND THE RESPECTIVE AGENTS AND EMPLOYEES OF EACH OF THEM; AND

 

(VI)                              SUBTENANT SHALL NOT DO ANYTHING OR SUFFER OR
PERMIT ANYTHING TO BE DONE WHICH COULD RESULT IN A DEFAULT UNDER THE PRIME LEASE
OR PERMIT THE PRIME LEASE TO BE CANCELED OR TERMINATED.

 

8

--------------------------------------------------------------------------------

 

(C)                                  NOTWITHSTANDING ANYTHING CONTAINED HEREIN
OR IN THE PRIME LEASE WHICH MAY APPEAR TO BE TO THE CONTRARY, SUBLANDLORD AND
SUBTENANT HEREBY AGREE AS FOLLOWS:

 

(I)                                     SUBTENANT SHALL NOT ASSIGN, MORTGAGE,
PLEDGE, HYPOTHECATE OR OTHERWISE TRANSFER OR PERMIT THE TRANSFER OF THIS
SUBLEASE OR ANY INTEREST OF SUBTENANT IN THIS SUBLEASE, BY OPERATION OF LAW OR
OTHERWISE, OR PERMIT THE USE OF THE PREMISES OR ANY PART THEREOF BY ANY PERSONS
OTHER THAN SUBTENANT AND SUBTENANT’S EMPLOYEES, OR SUBLET THE PREMISES OR ANY
PART THEREOF.  NOTWITHSTANDING THE FOREGOING, SUBTENANT SHALL HAVE THE RIGHT TO
ASSIGN THIS SUBLEASE OR SUB-SUBLET ALL OR ANY PORTION OF THE PREMISES TO AN
ENTITY INTO WHICH SUBTENANT HAS MERGED OR CONSOLIDATED OR TO AN ENTITY TO WHICH
SUBSTANTIALLY ALL OF SUBTENANT’S ASSETS ARE CONVEYED (COLLECTIVELY A “CORPORATE
TRANSACTION”) WITHOUT THE CONSENT OF SUBLANDLORD SO LONG AS SUCH ASSIGNEE OR
SUB-SUBTENANT HAS A NET WORTH REASONABLY ACCEPTABLE TO SUBLANDLORD AND PROVIDED
THAT SUBTENANT DELIVERS NOT LESS THAN THIRTY (30) DAYS PRIOR WRITTEN NOTICE TO
SUBLANDLORD AND LANDLORD, WHICH NOTICE SHALL INCLUDE INFORMATION SATISFACTORY TO
SUBLANDLORD AND LANDLORD IN ORDER TO DETERMINE THE NET WORTH BOTH OF THE
ORIGINAL SUBTENANT NAMED HEREIN AND OF THE SUCCESSOR SUBTENANT IMMEDIATELY PRIOR
TO SUCH ASSIGNMENT OF SUB-SUBLET.  SUBTENANT SHALL OTHERWISE HAVE THE RIGHT TO
ASSIGN THIS SUBLEASE OR SUBLET ALL OR ANY PORTION OF THE PREMISES IN ACCORDANCE
WITH THE TERMS AND PROVISIONS OF THE PRIME LEASE AND SUBLANDLORD SHALL HAVE ALL
OF THE SAME RIGHTS AS THE LANDLORD IN CONNECTION THEREWITH.  FURTHER, ANY RIGHTS
GRANTED TO SUBTENANT HEREIN TO ASSIGN THIS SUBLEASE OR SUB-SUBLET ALL OR ANY
PORTION OF THE PREMISES WITHOUT THE SUBLANDLORD’S CONSENT SHALL BE SUBJECT TO
THE RIGHTS AND OBLIGATIONS OF THE LANDLORD UNDER THE PRIME LEASE TO CONSENT
THERETO.  IN CONNECTION WITH ANY ASSIGNMENT OF THIS SUBLEASE OR SUB-SUBLET OF
ALL OR ANY PORTION OF THE PREMISES AS PERMITTED SUBTENANT HEREINABOVE, SUBTENANT
SHALL REMIT TO SUBLANDLORD FIFTY PERCENT (50%) OF ANY AND ALL EXCESS RENT (AS
DEFINED IN THE PRIME LEASE) RECEIVED BY SUBTENANT IN CONNECTION WITH SUCH
TRANSFER.

 

(II)                                  NEITHER RENTAL NOR OTHER PAYMENTS
HEREUNDER SHALL ABATE BY REASON OF ANY DAMAGE TO OR DESTRUCTION OF THE PREMISES,
OR THE BUILDING OR ANY PART THEREOF, UNLESS, AND THEN ONLY TO THE EXTENT THAT,
RENTAL AND SUCH OTHER PAYMENTS ACTUALLY ABATE UNDER THE PRIME LEASE WITH RESPECT
TO THE PREMISES ON ACCOUNT OF SUCH EVENT AND SUBLANDLORD AND SUBTENANT
ACKNOWLEDGE AND AGREE THAT IN THE EVENT MONTHLY RENT (AS DEFINED IN THE PRIME
LEASE) IS ABATED PURSUANT TO THE PROVISIONS OF SECTION 4.F. OF THE PRIME LEASE,
THEN SUBTENANT SHALL BE ENTITLED TO A CONSEQUENT ABATEMENT OF RENT DUE UNDER
THIS SUBLEASE TO THE EXTENT THAT SUCH MONTHLY RENT (AS DEFINED IN THE PRIME
LEASE) ACTUALLY ABATES UNDER THE PRIME LEASE;

 

(III)                               SUBLANDLORD AND SUBTENANT ACKNOWLEDGE AND
AGREE THAT IN THE EVENT THE PRIME LEASE PERMITS THE TENANT THEREUNDER TO
TERMINATE THE PRIME LEASE IN THE EVENT OF ANY CASUALTY TO THE PREMISES, THEN
EXCEPT AS SET FORTH HEREINBELOW, IN NO EVENT SHALL SUBLANDLORD, AS THE TENANT
UNDER THE PRIME LEASE BE RESTRICTED IN SO TERMINATING THE

 

9

--------------------------------------------------------------------------------

 

PRIME LEASE, PROVIDED, HOWEVER, SO LONG AS (A) SUBTENANT IS NOT THEN IN DEFAULT
UNDER THIS SUBLEASE AFTER WRITTEN NOTICE AND PAST ANY CURE PERIOD PROVIDED UNDER
THIS SUBLEASE, AND (B) SUBTENANT THEN HAS A TANGIBLE NET WORTH IN EXCESS OF
TWENTY MILLION DOLLARS ($20,000,000.00) AS EVIDENCED BY FINANCIAL STATEMENTS
REASONABLY SATISFACTORY TO SUBLANDLORD, IN NO EVENT SHALL SUBLANDLORD, AS THE
TENANT UNDER THE PRIME LEASE, ELECT TO SO TERMINATE THE PRIME LEASE WITHOUT
OBTAINING THE CONSENT OR APPROVAL FROM SUBTENANT AS TO SUCH TERMINATION. 
NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THE RIGHT OF SUBLANDLORD TO
ELECT TO SO TERMINATE THE PRIME LEASE BE LIMITED OR RESTRICTED IN THE EVENT
SUBLANDLORD WOULD HAVE THE RIGHT TO TERMINATE THE PRIME LEASE AS SET FORTH IN
PARAGRAPH 9.A THEREOF IN THE CIRCUMSTANCE WHERE THE TIME TO RESTORE ANY SUCH
CASUALTY WOULD EXCEED TWO (2) MONTHS AND THE RESTORATION WORK WOULD BEGIN DURING
THE LAST TWELVE (12) MONTHS OF THE TERM OF THE PRIME LEASE IF (A) SUBLANDLORD
PROVIDES PRIOR NOTICE OF SUCH ELECTION TO SUBTENANT AND (B) SUCH TERMINATION
RIGHT IS CONDITIONED UPON SUBTENANT HAVING A WRITTEN AGREEMENT WITH LANDLORD TO
CONTINUE IN POSSESSION AND OCCUPY THE PREMISES WITHOUT INTERRUPTION THROUGH
EXERCISE OF SUBTENANT’S OPTION TO EXTEND SET FORTH IN THE CONSENT AGREEMENT;

 

(IV)                              SUBTENANT SHALL NOT HAVE ANY RIGHT TO EXERCISE
OR HAVE SUBLANDLORD EXERCISE ANY OPTION UNDER THE PRIME LEASE, INCLUDING,
WITHOUT LIMITATION, ANY OPTION TO EXTEND THE TERM OF THE PRIME LEASE OR LEASE
ADDITIONAL SPACE (PROVIDED, SUBLANDLORD AND SUBTENANT ACKNOWLEDGE AND AGREE THAT
THE FOREGOING SHALL NOT LIMIT OR RESTRICT ANY SUCH OPTIONS AND RIGHTS THAT MAY
BE GRANTED TO SUBTENANT DIRECTLY FROM LANDLORD IN THE CONSENT AGREEMENT SO LONG
AS SUBLANDLORD INCURS NO LIABILITY OR OBLIGATION IN CONNECTION THEREWITH); AND

 

(V)                                 IN THE EVENT OF ANY CONFLICT BETWEEN THE
TERMS, CONDITIONS AND PROVISIONS OF THE PRIME LEASE AND OF THIS SUBLEASE, THE
TERMS, CONDITIONS AND PROVISIONS OF THIS SUBLEASE SHALL, IN ALL INSTANCES,
GOVERN AND CONTROL.  IN THE EVENT OF ANY CONFLICT BETWEEN THE TERMS, CONDITIONS
AND PROVISIONS OF THIS SUBLEASE AND THE CONSENT AGREEMENT, AS BETWEEN
SUBLANDLORD AND SUBTENANT, THE TERMS, CONDITIONS AND PROVISIONS OF THIS SUBLEASE
SHALL, IN ALL INSTANCES, GOVERN AND CONTROL; PROVIDED, HOWEVER, SUBLANDLORD AND
SUBTENANT ACKNOWLEDGE AND AGREE THAT AS BETWEEN LANDLORD AND SUBTENANT, THE
TERMS, CONDITIONS AND PROVISIONS OF THE CONSENT AGREEMENT SHALL, IN ALL
INSTANCES, GOVERN AND CONTROL.

 

(D)                                 IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT
SUBLANDLORD DOES NOT ASSUME AND SHALL NOT HAVE ANY OF THE OBLIGATIONS OR
LIABILITIES OF LANDLORD UNDER THE PRIME LEASE AND THAT SUBLANDLORD IS NOT MAKING
THE REPRESENTATIONS, WARRANTIES OR INDEMNIFICATIONS, IF ANY, MADE BY LANDLORD IN
THE PRIME LEASE.  WITH RESPECT TO WORK, SERVICES, REPAIRS AND RESTORATION OR THE
PERFORMANCE OF OTHER OBLIGATIONS REQUIRED OF LANDLORD UNDER THE PRIME LEASE,
SUBLANDLORD’S SOLE OBLIGATION WITH RESPECT THERETO SHALL BE TO REQUEST THE SAME,
UPON WRITTEN REQUEST FROM SUBTENANT, AND TO USE REASONABLE EFFORTS, AT
SUBTENANT’S SOLE COST AND EXPENSE, TO OBTAIN THE SAME FROM LANDLORD.

 

10

--------------------------------------------------------------------------------

 

SUBLANDLORD SHALL NOT BE LIABLE IN DAMAGES, NOR SHALL RENT ABATE HEREUNDER, FOR
OR ON ACCOUNT OF ANY FAILURE BY LANDLORD TO PERFORM THE OBLIGATIONS AND DUTIES
IMPOSED ON IT UNDER THE PRIME LEASE.  SUBLANDLORD AND SUBTENANT ACKNOWLEDGE AND
AGREE THAT ANY REPAIR, MAINTENANCE AND/OR REPLACEMENT OBLIGATIONS WITH RESPECT
TO THE PREMISES WHICH ARE THE RESPONSIBILITY OF THE SUBLANDLORD, AS TENANT UNDER
THE PRIME LEASE, SHALL BE PERFORMED BY SUBTENANT AT SUBTENANT’S SOLE COST AND
EXPENSE.  IN THE EVENT THAT A CONDITION EXISTS IN THE PREMISES THAT LANDLORD IS
OBLIGATED TO REPAIR UNDER THE TERMS OF THE PRIME LEASE, SUBTENANT SHALL SO
ADVISE SUBLANDLORD, AND SUBLANDLORD, IN TURN, SHALL PROMPTLY ADVISE LANDLORD
THEREOF.  AT SUBTENANT’S REQUEST, IN THE EVENT THAT LANDLORD FAILS TO FULFILL
ANY REPAIR OR MAINTENANCE OBLIGATION UNDER THE TERMS OF THE PRIME LEASE WITH
RESPECT TO THE PREMISES, SUBLANDLORD SHALL USE ITS REASONABLE EFFORTS TO HAVE
LANDLORD FULFILL SUCH REPAIR AND MAINTENANCE OBLIGATIONS, ALL OF WHICH
REASONABLE EFFORTS SHALL AT BE SUBTENANT’S SOLE COST AND EXPENSE.

 

(E)                                  EXCEPT FOR THE CONSENT AGREEMENT NOTHING
CONTAINED IN THIS SUBLEASE SHALL CONSTRUED TO CREATE PRIVITY OF ESTATE OR
CONTRACT BETWEEN SUBTENANT AND LANDLORD, EXCEPT THE AGREEMENTS OF SUBTENANT IN
SECTIONS 10 AND 11 HEREOF IN FAVOR OF LANDLORD, AND THEN ONLY TO THE EXTENT OF
THE SAME.

 

7.                                       DEFAULT BY SUBTENANT.

 

(A)                                  UPON THE HAPPENING OF ANY OF THE FOLLOWING:

 

(I)                                     SUBTENANT FAILS TO PAY ANY MINIMUM RENT
WITHIN FIVE (5) DAYS AFTER THE DATE IT IS DUE;

 

(II)                                  SUBTENANT FAILS TO PAY ANY OTHER AMOUNT
DUE FROM SUBTENANT HEREUNDER AND SUCH FAILURE CONTINUES FOR FIVE (5) DAYS AFTER
NOTICE THEREOF FROM SUBLANDLORD TO SUBTENANT;

 

(III)                               SUBTENANT FAILS TO PERFORM OR OBSERVE ANY
OTHER COVENANT OR AGREEMENT SET FORTH IN THIS SUBLEASE AND SUCH FAILURE
CONTINUES FOR FIFTEEN (15) DAYS EXCEPT THAT IF SUCH DEFAULT IS NOT CAPABLE OF
BEING CURED WITHIN SUCH FIFTEEN (15) DAY PERIOD, THEN SO LONG AS SUBTENANT
CONTINUES TO DILIGENTLY ATTEMPT TO CURE SUCH DEFAULT, THE FIFTEEN (15) DAY
PERIOD SHALL BE EXTENDED TO SIXTY (60) DAYS OR SUCH LESSER PERIOD AS IS
REASONABLY NECESSARY TO COMPLETE THE CURE OF SUCH DEFAULT AFTER NOTICE THEREOF
FROM SUBLANDLORD TO SUBTENANT; OR

 

(IV)                              ANY OTHER EVENT OCCURS WHICH INVOLVES
SUBTENANT OR THE PREMISES AND WHICH WOULD CONSTITUTE A DEFAULT UNDER THE PRIME
LEASE IF IT INVOLVED SUBLANDLORD OR THE PREMISES AND SUCH DEFAULT CONTINUES FOR
FIFTEEN (15) DAYS AFTER NOTICE THEREOF FROM SUBLANDLORD TO SUBTENANT EXCEPT THAT
IF SUCH DEFAULT IS NOT CAPABLE OF BEING CURED WITHIN SUCH FIFTEEN (15) DAY
PERIOD, THEN SO LONG AS SUBTENANT CONTINUES TO DILIGENTLY ATTEMPT TO CURE SUCH
DEFAULT, THE FIFTEEN (15) DAY PERIOD SHALL BE EXTENDED TO

 

11

--------------------------------------------------------------------------------

 

SIXTY (60) DAYS OR SUCH LESSER PERIOD AS IS REASONABLY NECESSARY TO COMPLETE THE
CURE OF SUCH DEFAULT; SUBTENANT SHALL BE DEEMED TO BE IN DEFAULT HEREUNDER, AND
SUBLANDLORD MAY EXERCISE, WITHOUT LIMITATION OF ANY OTHER RIGHTS AND REMEDIES
AVAILABLE TO IT HEREUNDER OR AT LAW OR IN EQUITY, ANY AND ALL RIGHTS AND
REMEDIES OF LANDLORD SET FORTH IN THE PRIME LEASE IN THE EVENT OF A DEFAULT BY
SUBLANDLORD THEREUNDER.

 

(B)                                 IN THE EVENT SUBTENANT FAILS OR REFUSES TO
MAKE ANY PAYMENT OR PERFORM ANY COVENANT OR AGREEMENT TO BE PERFORMED HEREUNDER
BY SUBTENANT, SUBLANDLORD MAY MAKE SUCH PAYMENT OR UNDERTAKE TO PERFORM SUCH
COVENANT OR AGREEMENT (BUT SHALL NOT HAVE ANY OBLIGATION TO SUBTENANT TO DO
SO).  IN SUCH EVENT, AMOUNTS SO PAID AND AMOUNTS EXPENDED IN UNDERTAKING SUCH
PERFORMANCE, TOGETHER WITH ALL COSTS, EXPENSES AND ATTORNEYS’ FEES INCURRED BY
SUBLANDLORD IN CONNECTION THEREWITH, SHALL BE ADDITIONAL RENT HEREUNDER.

 

8.                                       NONWAIVER.  FAILURE OF EITHER PARTY TO
DECLARE ANY DEFAULT OR DELAY IN TAKING ANY ACTION IN CONNECTION THEREWITH SHALL
NOT WAIVE SUCH DEFAULT.  NO RECEIPT OF MONEYS BY SUBLANDLORD FROM SUBTENANT
AFTER THE TERMINATION IN ANY WAY OF THE TERM OR OF SUBTENANT’S RIGHT OF
POSSESSION HEREUNDER OR AFTER THE GIVING OF ANY NOTICE SHALL REINSTATE, CONTINUE
OR EXTEND THE TERM OR AFFECT ANY NOTICE GIVEN TO SUBTENANT OR ANY SUIT COMMENCED
OR JUDGMENT ENTERED PRIOR TO RECEIPT OF SUCH MONEYS.

 

9.                                       CUMULATIVE RIGHTS AND REMEDIES.  ALL
RIGHTS AND REMEDIES OF SUBLANDLORD UNDER THIS SUBLEASE SHALL BE CUMULATIVE AND
NONE SHALL EXCLUDE ANY OTHER RIGHTS OR REMEDIES ALLOWED BY LAW.

 

10.                                 WAIVER OF CLAIMS AND INDEMNITY.

 

(A)                                  SUBTENANT HEREBY RELEASES AND WAIVES ANY
AND ALL CLAIMS AGAINST LANDLORD AND SUBLANDLORD AND EACH OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, PARTNERS, AGENTS AND EMPLOYEES FOR INJURY OR DAMAGE TO
PERSON, PROPERTY OR BUSINESS SUSTAINED IN OR ABOUT THE BUILDING OR THE PREMISES
BY SUBTENANT OTHER THAN BY REASON OF THE ACTIVE NEGLIGENCE OR WILLFUL MISCONDUCT
AND EXCEPT IN ANY CASE WHICH WOULD RENDER THIS RELEASE AND WAIVER VOID UNDER
LAW.

 

(B)                                 SUBTENANT AGREES TO INDEMNIFY, DEFEND AND
HOLD HARMLESS LANDLORD AND SUBLANDLORD AND EACH OF THEIR RESPECTIVE OFFICERS,
DIRECTORS, PARTNERS, AGENTS AND EMPLOYEES, FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, COSTS AND EXPENSES OF EVERY KIND AND NATURE, INCLUDING ATTORNEYS’ FEES
AND LITIGATION EXPENSES, ARISING FROM SUBTENANT’S USE AND OCCUPANCY OF THE
PREMISES, SUBTENANT’S CONSTRUCTION OF ANY LEASEHOLD IMPROVEMENTS IN THE
PREMISES, ANY RELEASE, DISCHARGE, STORAGE, PRODUCTION, USE OR DISPOSAL OF
HAZARDOUS SUBSTANCES IN THE PREMISES CAUSED OR PERMITTED BY SUBTENANT OR ITS
AGENTS, CONTRACTORS, EMPLOYEES, LICENSEES OR INVITEES OR IN ANY WAY RELATING TO
ANY HAZARDOUS SUBSTANCES BROUGHT ONTO THE PREMISES BY SUBTENANT OR ITS AGENTS,
CONTRACTORS, EMPLOYEES, LICENSEES OR INVITEES, THE INSTALLATION, MAINTENANCE,
REPAIR AND/OR REMOVAL OF

 

12

--------------------------------------------------------------------------------

 

ANY AND ALL SIGNAGE INSTALLED BY SUBTENANT, INCLUDING, WITHOUT LIMITATION, THE
BUILDING SIGNAGE, OR FROM ANY BREACH OR DEFAULT ON THE PART OF SUBTENANT IN THE
PERFORMANCE OF ANY AGREEMENT OR COVENANT OF SUBTENANT TO BE PERFORMED UNDER THIS
SUBLEASE OR THE CONSENT AGREEMENT OR PURSUANT TO THE TERMS OF THIS SUBLEASE OR
THE CONSENT AGREEMENT, OR FROM ANY ACT OR NEGLECT OF SUBTENANT OR ITS AGENTS,
OFFICERS, EMPLOYEES, GUESTS, SERVANTS, INVITEES OR CUSTOMERS IN OR ABOUT THE
PREMISES.  IN ADDITION, THE FOREGOING INDEMNIFICATION OF SUBLANDLORD AND THE
OTHER NOTED PARTIES HEREIN SHALL INCLUDE ANY AND ALL LIABILITY ASSESSED, IMPOSED
OR CHARGED AGAINST SUBTENANT FOR ANY VIOLATION OF THE PROVISIONS OF THE PRIME
LEASE AND/OR CONSENT AGREEMENT WITH RESPECT TO THEIR RESPECTIVE PROVISIONS
RELATING TO HAZARDOUS SUBSTANCES, WHICH VIOLATION WAS NOT CAUSED BY SUBLANDLORD
OR ITS AGENTS, CONTRACTORS OR EMPLOYEES.  IN CASE ANY SUCH PROCEEDING IS BROUGHT
AGAINST ANY OF SAID INDEMNIFIED PARTIES, SUBTENANT COVENANTS, IF REQUESTED BY
SUBLANDLORD, TO DEFEND SUCH PROCEEDING AT ITS SOLE COST AND EXPENSE BY LEGAL
COUNSEL REASONABLY SATISFACTORY TO SUBLANDLORD.

 

(C)                                  SUBLANDLORD AGREES TO INDEMNIFY, DEFEND AND
HOLD HARMLESS SUBTENANT AND ITS OFFICERS, DIRECTORS, PARTNERS, AGENTS AND
EMPLOYEES, FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, COST AND EXPENSES OF
EVERY KIND AND NATURE, INCLUDING ATTORNEYS’ FEES AND LITIGATION EXPENSES,
ARISING FROM (I) ANY BREACH OR DEFAULT BY SUBLANDLORD UNDER THE PRIME LEASE
(WHICH BREACH OR DEFAULT WAS NOT ATTRIBUTABLE TO SUBTENANT OR ITS AGENTS,
CONTRACTORS, EMPLOYEES, LICENSEES OR INVITEES UNDER THIS SUBLEASE AND/OR THE
CONSENT AGREEMENT), AND (II) THE ACTIVE NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUBLANDLORD OR ITS AGENTS, OFFICERS OR EMPLOYEES OR FROM ANY BREACH OR DEFAULT
ON THE PART OF SUBLANDLORD IN THE PERFORMANCE OF ANY AGREEMENT OR COVENANT OF
SUBLANDLORD TO BE PERFORMED UNDER THIS SUBLEASE.  IN CASE ANY SUCH PROCEEDING IS
BROUGHT AGAINST ANY OF SAID INDEMNIFIED PARTIES, SUBLANDLORD COVENANTS, IF
REQUESTED BY SUBTENANT, TO DEFEND SUCH PROCEEDING AT ITS SOLE COST AND EXPENSE
BY LEGAL COUNSEL REASONABLY SATISFACTORY TO SUBTENANT.

 

11.                                 WAIVER OF SUBROGATION.  ANYTHING IN THIS
SUBLEASE TO THE CONTRARY NOTWITHSTANDING, SUBLANDLORD AND SUBTENANT EACH HEREBY
WAIVE ANY AND ALL RIGHTS OF RECOVERY, CLAIMS, ACTIONS OR CAUSES OF ACTION
AGAINST THE OTHER AND THE OFFICERS, DIRECTORS, PARTNERS, AGENTS AND EMPLOYEES OF
EACH OF THEM, AND SUBTENANT HEREBY WAIVES ANY AND ALL RIGHTS OF RECOVERY,
CLAIMS, ACTIONS OR CAUSES OF ACTION AGAINST LANDLORD AND ITS AGENTS AND
EMPLOYEES FOR ANY LOSS OR DAMAGE THAT MAY OCCUR TO THE PREMISES, OR ANY
IMPROVEMENTS THERETO, OR ANY PERSONAL PROPERTY OF ANY PERSON THEREIN OR IN THE
BUILDING, BY REASON OF FIRE, THE ELEMENTS OR ANY OTHER CAUSE INSURED AGAINST
UNDER VALID AND COLLECTIBLE FIRE AND EXTENDED COVERAGE INSURANCE POLICIES,
REGARDLESS OF CAUSE OR ORIGIN, INCLUDING NEGLIGENCE, EXCEPT IN ANY CASE WHICH
WOULD RENDER THIS WAIVER VOID UNDER LAW.

 

12.                                 BROKERAGE COMMISSIONS.  EACH PARTY HEREBY
REPRESENTS AND WARRANTS TO THE OTHER THAT OTHER THAN JULIEN J. STUDLEY, INC. AND
THE STAUBACH COMPANY, WHOSE COMMISSIONS SHALL BE PAYABLE BY SUBLANDLORD) IT HAS
HAD NO DEALINGS WITH ANY REAL ESTATE

 

13

--------------------------------------------------------------------------------

 

BROKER OR AGENT IN CONNECTION WITH THIS SUBLEASE, AND THAT IT KNOWS OF NO REAL
ESTATE BROKER OR AGENT WHO IS OR MIGHT BE ENTITLED TO A COMMISSION IN CONNECTION
WITH THIS SUBLEASE.  EACH PARTY AGREES TO PROTECT, DEFEND, INDEMNIFY AND HOLD
THE OTHER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS INCONSISTENT WITH THE
FOREGOING REPRESENTATIONS AND WARRANTIES FOR ANY BROKERAGE, FINDER’S OR SIMILAR
FEE OR COMMISSION IN CONNECTION WITH THIS SUBLEASE, IF SUCH CLAIMS ARE BASED ON
OR RELATE TO ANY ACT OF THE INDEMNIFYING PARTY WHICH IS CONTRARY TO THE
FOREGOING REPRESENTATION AND WARRANTIES.

 

13.                                 SUCCESSORS AND ASSIGNS.  THIS SUBLEASE SHALL
BE BINDING UPON AND INURE TO THE BENEFIT OF THE SUCCESSORS AND ASSIGNS OF
SUBLANDLORD AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE SUCCESSORS
OF SUBTENANT AND, TO THE EXTENT ANY SUCH ASSIGNMENT MAY BE APPROVED, SUBTENANT’S
ASSIGNS.  THE PROVISIONS OF SUBSECTION 6(E) AND SECTIONS 10 AND 11 HEREOF SHALL
INURE TO THE BENEFIT OF THE SUCCESSORS AND ASSIGNS OF LANDLORD.

 

14.                                 ENTIRE AGREEMENT.  THIS SUBLEASE CONTAINS
ALL THE TERMS, COVENANTS, CONDITIONS AND AGREEMENTS BETWEEN SUBLANDLORD AND
SUBTENANT RELATING IN ANY MANNER TO THE RENTAL, USE AND OCCUPANCY OF THE
PREMISES.  NO PRIOR AGREEMENT OR UNDERSTANDING PERTAINING TO THE SAME SHALL BE
VALID OR OF ANY FORCE OR EFFECT.  THE TERMS, COVENANTS AND CONDITIONS OF THIS
SUBLEASE CANNOT BE ALTERED, CHANGED, MODIFIED OR ADDED TO EXCEPT BY A WRITTEN
INSTRUMENT SIGNED BY SUBLANDLORD AND SUBTENANT.

 

15.                                 NOTICES.

 

(A)                                  IN THE EVENT ANY NOTICE FROM THE LANDLORD
OR OTHERWISE RELATING TO THE PRIME LEASE IS DELIVERED TO THE PREMISES OR IS
OTHERWISE RECEIVED BY SUBTENANT, SUBTENANT SHALL, AS SOON THEREAFTER AS
POSSIBLE, BUT IN ANY EVENT WITHIN ONE (1) BUSINESS DAY, DELIVER SUCH NOTICE TO
SUBLANDLORD IF SUCH NOTICE IS WRITTEN OR ADVISE SUBLANDLORD THEREOF BY TELEPHONE
IF SUCH NOTICE IS ORAL.

 

(B)                                 IN THE EVENT ANY DEFAULT NOTICE FROM THE
LANDLORD IS RECEIVED BY SUBLANDLORD, SUBLANDLORD SHALL, AS SOON THEREAFTER AS
POSSIBLE, BUT IN ANY EVENT WITHIN ONE (1) BUSINESS DAY, DELIVER SUCH NOTICE TO
SUBTENANT IF SUCH NOTICE IS WRITTEN OR ADVISE SUBTENANT THEREOF BY TELEPHONE IF
SUCH NOTICE IS ORAL.

 

(C)                                  NOTICES AND DEMANDS REQUIRED OR PERMITTED
TO BE GIVEN BY EITHER PARTY TO THE OTHER WITH RESPECT HERETO OR TO THE PREMISES
SHALL BE IN WRITING AND SHALL NOT BE EFFECTIVE FOR ANY PURPOSE UNLESS THE SAME
SHALL BE SERVED EITHER BY PERSONAL DELIVERY WITH A RECEIPT REQUESTED, BY
OVERNIGHT AIR COURIER SERVICE OR BY UNITED STATES CERTIFIED OR REGISTERED MAIL,
RETURN RECEIPT REQUESTED, POSTAGE PREPAID; PROVIDED, HOWEVER, THAT ALL NOTICES
OF DEFAULT SHALL BE SERVED EITHER BY PERSONAL DELIVERY WITH A RECEIPT REQUESTED
OR BY OVERNIGHT AIR COURIER SERVICE, ADDRESSED AFTER THE RENT COMMENCEMENT DATE
TO SUBTENANT AT THE PREMISES AND OTHERWISE AS FOLLOWS:

 

14

--------------------------------------------------------------------------------

 

if to Sublandlord:

GATEWAY, INC.

 

Real Estate Administration

 

610 Gateway Drive Y91

 

North Sioux City, South Dakota 97049

 

 

 

and

 

 

 

GATEWAY, INC.

 

7565 Irvine Center Drive

 

Irvine, California 92618

 

Attn: General Counsel

 

 

if to Subtenant:

NUVASIVE, INC.

 

10065 Old Grove Road

 

San Diego, CA 92131

 

Attn: Carrie Rael

 

Notices and demands shall be deemed to have been given two (2) days after
mailing, if mailed, or, if made by personal delivery or by overnight air courier
service, then upon such delivery.  Either party may change its address for
receipt of notices by giving notice to the other party.

 

16.                                 AUTHORITY.  SUBTENANT REPRESENTS AND
WARRANTS TO SUBLANDLORD THAT THIS SUBLEASE HAS BEEN DULY AUTHORIZED, EXECUTED
AND DELIVERED BY AND ON BEHALF OF SUBTENANT AND CONSTITUTES THE VALID,
ENFORCEABLE AND BINDING AGREEMENT OF SUBTENANT AND OF EACH PARTY CONSTITUTING
SUBTENANT, EACH OF WHOM SHALL BE JOINTLY AND SEVERALLY LIABLE HEREUNDER IN
ACCORDANCE WITH THE TERMS HEREOF.  SUBLANDLORD REPRESENTS AND WARRANTS TO
SUBTENANT THAT THE SUBLEASE HAS BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY
AND BEHALF OF SUBLANDLORD AND CONSTITUTES THE VALID, ENFORCEABLE AND BINDING
AGREEMENT OF SUBLANDLORD.

 

17.                                 LIMITATION ON LIABILITY.  SUBJECT TO THE
PROVISIONS OF SECTION 10(C) HEREOF, SUBLANDLORD SHALL NOT BE LIABLE FOR PERSONAL
INJURY OR PROPERTY DAMAGE TO SUBTENANT, ITS OFFICERS, AGENTS, EMPLOYEES,
INVITEES, GUESTS, LICENSEES OR ANY OTHER PERSON IN THE PREMISES, REGARDLESS OF
HOW SUCH INJURY OR DAMAGE MAY BE CAUSED; PROVIDED, HOWEVER, AS TO ANY CLAIMS FOR
PERSONAL INJURY, THE FOREGOING SHALL NOT LIMIT THE LIABILITY OF SUBLANDLORD WITH
RESPECT TO ANY PERSONAL INJURY CAUSED BY THE INTENTIONALLY OR GROSSLY NEGLIGENT
ACTS OF SUBLANDLORD OR ITS AGENTS, CONTRACTORS OR EMPLOYEES.  ANY PROPERTY OF
SUBTENANT KEPT OR STORED IN THE PREMISES SHALL BE KEPT OR STORED AT THE SOLE
RISK OF SUBTENANT.  SUBTENANT SHALL HOLD SUBLANDLORD HARMLESS FROM ANY CLAIMS
ARISING OUT OF ANY PERSONAL INJURY OR PROPERTY DAMAGE OCCURRING IN THE PREMISES,
INCLUDING SUBROGATION CLAIMS BY SUBTENANT’S INSURANCE CARRIER(S).

 

18.                                 CONSENTS; APPROVALS; AND DEFINITIONS.  IN
ANY INSTANCE WHEN SUBLANDLORD’S CONSENT OR APPROVAL IS REQUIRED UNDER THIS
SUBLEASE, SUBLANDLORD’S REFUSAL

 

15

--------------------------------------------------------------------------------

 

TO CONSENT TO OR APPROVE ANY MATTER OR THING SHALL BE DEEMED REASONABLE IF,
AMONG OTHER MATTERS, SUCH CONSENT OR APPROVAL IS REQUIRED UNDER THE PROVISIONS
OF THE PRIME LEASE INCORPORATED HEREIN BY REFERENCE BUT HAS NOT BEEN OBTAINED
FROM LANDLORD.  EXCEPT AS OTHERWISE PROVIDED HEREIN, SUBLANDLORD SHALL NOT
UNREASONABLY WITHHOLD OR DELAY ITS CONSENT TO OR APPROVAL OF A MATTER IF SUCH
CONSENT OR APPROVAL IS REQUIRED UNDER THE PROVISIONS OF THE PRIME LEASE AND
LANDLORD HAS CONSENTED TO OR APPROVED OF SUCH MATTER.

 

19.                                 CONSENT OF LANDLORD.  THE OBLIGATIONS OF
SUBLANDLORD AND SUBTENANT UNDER THIS SUBLEASE ARE CONDITIONED AND CONTINGENT
UPON THE LANDLORD CONSENTING TO THIS SUBLEASE BY EXECUTING AND DELIVERING A
COUNTERPART OF THE CONSENT OF LANDLORD ATTACHED HERETO AS EXHIBIT ‘E” TO THIS
SUBLEASE (THE “CONSENT AGREEMENT”).  IN THE EVENT LANDLORD’S CONSENT IS NOT
OBTAINED WITHIN THIRTY (30) DAYS AFTER THE DATE HEREOF AS EVIDENCED BY ITS
EXECUTION AND DELIVERY OF THIS SUBLEASE AND THE CONSENT AGREEMENT, THIS SUBLEASE
SHALL AUTOMATICALLY TERMINATE AND BECOME NULL AND VOID AND NEITHER SUBLANDLORD
NOR SUBTENANT SHALL HAVE ANY FURTHER OBLIGATIONS OR LIABILITY HEREUNDER OR TO
EACH OTHER WITH RESPECT TO THE PREMISES.  IN CONNECTION WITH OBTAINING
LANDLORD’S CONSENT, SUBLANDLORD AND SUBTENANT ACKNOWLEDGE AND AGREE THAT
SUBTENANT SHALL PAY ANY AND ALL LEGAL FEES AND COSTS ASSOCIATED WITH OBTAINING
SUCH CONSENT TO THIS SUBLEASE; PROVIDED, HOWEVER, UP TO A MAXIMUM COST TO
SUBLANDLORD OF $1,500.00, SUBLANDLORD SHALL BEAR ONE-HALF (1/2) OF SUCH COST
PAYABLE TO LANDLORD IN CONNECTION WITH OBTAINING ITS CONSENT TO THIS SUBLEASE.

 

20.                                 EXAMINATION.  SUBMISSION OF THIS INSTRUMENT
FOR EXAMINATION OR SIGNATURE BY SUBTENANT DOES NOT CONSTITUTE A RESERVATION OF
OR OPTION FOR THE PREMISES OR IN ANY MANNER BIND SUBLANDLORD, AND NO LEASE,
SUBLEASE OR OBLIGATION ON SUBLANDLORD SHALL ARISE UNTIL THIS INSTRUMENT IS
SIGNED AND DELIVERED BY SUBLANDLORD AND SUBTENANT AND THE CONSENT OF LANDLORD IS
OBTAINED AS DESCRIBED IN SECTION 19 ABOVE; PROVIDED, HOWEVER, THAT THE EXECUTION
AND DELIVERY BY SUBTENANT OF THIS SUBLEASE TO SUBLANDLORD SHALL CONSTITUTE AN
IRREVOCABLE OFFER BY SUBTENANT TO SUBLEASE THE PREMISES ON THE TERMS AND
CONDITIONS HEREIN CONTAINED, WHICH OFFER MAY NOT BE REVOKED FOR FIVE (5)
BUSINESS DAYS AFTER SUCH DELIVERY.

 

21.                                 SECURITY DEPOSIT.  SUBTENANT AT LEAST ONE
(1) BUSINESS DAY PRIOR TO THE COMMENCEMENT OF THE EARLY OCCUPANCY PERIOD AND AS
A CONDITION TO DELIVERY OF POSSESSION OF THE PREMISES BY SUBLANDLORD, SHALL
DEPOSIT WITH SUBLANDLORD CASH OR A LETTER OF CREDIT (THE “LETTER OF CREDIT”)
EQUAL TO SIX (6) MONTH’S MINIMUM RENT (WHICH SUBLANDLORD AND SUBTENANT AGREE IS
EQUAL TO $561,303.00).  SUCH LETTER OF CREDIT SHALL BE IN A FORM SATISFACTORY TO
SUBLANDLORD (IN ITS SOLE AND ABSOLUTE DISCRETION) AND ISSUED UPON A BANK WITH A
MINIMUM LONG TERM CAPITAL RATING OF “AA”, WITH A BRANCH IN SAN DIEGO, CALIFORNIA
FOR PURPOSES OF SUBLANDLORD’S ABILITY TO DRAW THEREON AND SHALL OTHERWISE BE
SATISFACTORY TO SUBLANDLORD (IN ITS SOLE AND ABSOLUTE DISCRETION).  FURTHER,
SUCH LETTER OF CREDIT SHALL BE IRREVOCABLE, “EVERGREEN”, “CLEAN” AND IN THE FULL
AMOUNT REQUIRED NAMING SUBLANDLORD AS BENEFICIARY, AND PROVIDING FOR PARTIAL AND
MULTIPLE DRAWS AND SHALL

 

16

--------------------------------------------------------------------------------

 

OTHERWISE BE SATISFACTORY TO SUBLANDLORD AS SET FORTH HEREINABOVE.  SUCH LETTER
OF CREDIT SHALL BE HELD BY SUBLANDLORD AS SECURITY FOR THE FAITHFUL PERFORMANCE
BY SUBTENANT OF ALL TERMS, COVENANTS AND CONDITIONS OF THIS SUBLEASE.  SUBTENANT
AGREES THAT SUBLANDLORD MAY APPLY (OR DRAW UPON, AS THE CASE MAY BE) THE
SECURITY DEPOSIT TO REMEDY ANY FAILURE BY SUBTENANT TO REPAIR OR MAINTAIN THE
PREMISES OR TO PERFORM ANY OTHER TERMS, COVENANTS AND CONDITIONS CONTAINED
HEREIN OR MAKE ANY PAYMENT OWING HEREUNDER, ALL FOLLOWING THE EXPIRATION OF
APPLICABLE NOTICE AND CURE PERIODS.  IF SUBTENANT HAS KEPT AND PERFORMED ALL
TERMS, COVENANTS AND CONDITIONS OF THIS SUBLEASE DURING THE TERM, SUBLANDLORD
WILL, WITHIN THIRTY (30) DAYS AFTER THE EXPIRATION HEREOF, PROMPTLY RETURN THE
SECURITY DEPOSIT TO SUBTENANT OR THE LAST PERMITTED ASSIGNEE OF SUBTENANT’S
INTEREST HEREUNDER.  SHOULD SUBLANDLORD USE (OR DRAW UPON, AS THE CASE MAY BE)
ANY PORTION OF THE SECURITY DEPOSIT TO CURE ANY DEFAULT BY SUBTENANT HEREUNDER,
SUBTENANT SHALL FORTHWITH REPLENISH THE SECURITY DEPOSIT TO THE ORIGINAL
AMOUNT.  SUBLANDLORD SHALL NOT BE REQUIRED TO KEEP THE SECURITY DEPOSIT SEPARATE
FROM ITS GENERAL FUNDS, AND SUBTENANT SHALL NOT BE ENTITLED TO INTEREST ON ANY
SUCH DEPOSIT.  SUBTENANT HEREBY ACKNOWLEDGES AND AGREES THAT SUBLANDLORD MAY
DRAW UPON SUCH LETTER OF CREDIT AT SUCH TIME AS SUBLANDLORD IS PERMITTED TO DO
SO UNDER THIS PARAGRAPH 21 OR IF SUBTENANT FAILS TO PROVIDE SUBLANDLORD WITH A
REPLACEMENT LETTER OF CREDIT NO LATER THAN THIRTY (30) DAYS PRIOR TO THE
EXPIRATION DATE OF ANY THEN HELD LETTER OF CREDIT IN SUBLANDLORD’S POSSESSION. 
IN THE EVENT SUBLANDLORD DRAWS DOWN SUCH LETTER OF CREDIT, THEN SUBLANDLORD
SHALL HOLD SUCH CASH SECURITY DEPOSIT IN ACCORDANCE WITH THE TERMS AND
PROVISIONS OF THIS PARAGRAPH 21 AND SUBTENANT SHALL HAVE THE RIGHT TO REPLACE
THE LETTER OF CREDIT AND RECEIVE A RETURN OF THE CASH FROM SUBLANDLORD BY
PROVIDING A LETTER OF CREDIT CONSISTENT WITH THE REQUIREMENTS AS SET FORTH IN
THIS PARAGRAPH 21.  NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE AMOUNT
OF THE LETTER OF CREDIT HELD AS A SECURITY DEPOSIT SHALL BE REDUCED ANNUALLY,
COMMENCING UPON THE COMMENCEMENT OF THE SECOND LEASE YEAR, ON A STRAIGHT LINE
BASIS (SUBJECT TO SUBTENANT’S RIGHT TO ACCELERATED REDUCTION (AS HEREINAFTER
DEFINED) AS SET FORTH BELOW) BASED UPON THE TERM OF THIS SUBLEASE (THE
“AUTOMATIC REDUCTION”) UPON THE FOLLOWING TERMS AND CONDITIONS:  (I) SUBTENANT
IS NOT THEN IN MONETARY DEFAULT UNDER THIS SUBLEASE NOR IN NON-MONETARY DEFAULT
UNDER THIS SUBLEASE (AS TO SUCH NON-MONETARY DEFAULT, IN ORDER FOR SUCH
CONDITION TO PROHIBIT SUCH REDUCTION IN THE LETTER OF CREDIT SUCH NON-MONETARY
DEFAULT MUST BE BEYOND APPLICABLE NOTICE AND CURE PERIODS), (II) IN NO EVENT
SHALL SUCH SECURITY DEPOSIT BE LESS THAN $187,101.00 (“MINIMUM AMOUNT”), (III)
SUBTENANT PROVIDES WRITTEN NOTICE TO SUBLANDLORD OF SUBTENANT’S REDUCTION OF
SUCH SECURITY DEPOSIT AND A REPLACEMENT LETTER OF CREDIT IN THE THEN APPROPRIATE
AMOUNT WHICH MEETS THE REQUIREMENTS FOR SUCH A LETTER OF CREDIT AS SET FORTH IN
THIS PARAGRAPH 21, AND (IV) SUBTENANT SHALL BE ENTITLED TO ONE SUCH REDUCTION
EACH YEAR EFFECTIVE AS OF THE ANNIVERSARY OF THE COMMENCEMENT DATE.  AT SUCH
TIME AS SUBTENANT HAS MET THE CONDITIONS SET FORTH ABOVE, SUBLANDLORD SHALL
RETURN THE THEN HELD LETTER OF CREDIT TO SUBTENANT.  IN ADDITION TO THE
AUTOMATIC REDUCTION OF THE SECURITY DEPOSIT AS PROVIDED ABOVE, SUBLANDLORD
AGREES THAT PROVIDED SUBTENANT HAS MET THE CONDITIONS TO THE AUTOMATIC REDUCTION
AS SET FORTH IN SUBPARAGRAPHS (I) THROUGH (III) ABOVE, SUBTENANT SHALL ALSO BE
ENTITLED TO ADDITIONALLY REDUCE THE AMOUNT OF THE LETTER OF CREDIT TO THE
MINIMUM AMOUNT AT SUCH TIME AS SUBTENANT PROVIDES WRITTEN NOTICE AND

 

17

--------------------------------------------------------------------------------

 

EVIDENCE TO SUBLANDLORD (WHICH IS REASONABLY SATISFACTORY TO SUBLANDLORD) THAT
THE NET WORTH OF SUBTENANT IS EQUAL TO OR GREATER THAN TWENTY MILLION DOLLARS
($20,000,000.00) AND THAT SUBTENANT HAS MAINTAINED SUCH NET WORTH FOR A MINIMUM
PERIOD OF NOT LESS THAN TWELVE (12) CONSECUTIVE MONTHS IMMEDIATELY PRIOR TO SUCH
ACCELERATED REDUCTION (THE “ACCELERATED REDUCTION”).  AT SUCH TIME AS SUBTENANT
HAS MET THE CONDITIONS FOR THE ACCELERATED REDUCTION AND PROVIDED SUBLANDLORD
WITH THE REPLACEMENT LETTER OF CREDIT IN THE MINIMUM AMOUNT, SUBLANDLORD SHALL
RETURN THE THEN HELD LETTER OF CREDIT TO SUBTENANT.

 

22.                                 FURNITURE AND FIXTURES.  SUBTENANT HEREBY
COVENANTS AND AGREES THAT IT SHALL HAVE THE RIGHT TO USE ALL OF THE FURNITURE
AND FIXTURES LOCATED IN THE PREMISES AND SCHEDULED ON THE SCHEDULE ATTACHED TO
THE SUBLEASE AS EXHIBIT “C” THROUGHOUT THE TERM OF THE SUBLEASE AT NO COST OR
EXPENSE TO SUBTENANT.  UPON THE EXPIRATION OF THE TERM OF THIS SUBLEASE,
SUBTENANT SHALL PURCHASE THE FFE FROM SUBLANDLORD FOR A COST OF $1.00 PURSUANT
TO A FORM OF BILL OF SALE ATTACHED TO THIS SUBLEASE AS EXHIBIT “D”.  SUBLANDLORD
AND SUBTENANT ACKNOWLEDGE AND AGREE THAT SUBLANDLORD IS PROVIDING SUCH FFE TO
SUBTENANT FOR ITS USE IN AN AS-IS BASIS WITHOUT REPRESENTATION OR WARRANTY OF
ANY KIND WHATSOEVER, INCLUDING THE DISCLAIMER OF ANY WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER THING OR NATURE
WHATSOEVER EXCEPT (I) SUBLANDLORD HAS MERCHANTABLE TITLE TO SUCH ITEMS AND (II)
SUCH ITEMS ARE CONVEYED FREE AND CLEAR OF ANY LIENS OR SECURITY INTERESTS OF
LANDLORD OR ANY OTHER PARTY.

 

23.                                 PARKING.  DURING THE TERM OF THIS SUBLEASE,
SO LONG AS SUBTENANT IS NOT IN DEFAULT UNDER THIS SUBLEASE, SUBTENANT AND ITS
EMPLOYEES SHALL BE ENTITLED TO USE SUBTENANT’S PERCENTAGE SHARE OF THE PARKING
RIGHTS GRANTED TO SUBLANDLORD AS TENANT, UNDER THE PRIME LEASE, INCLUDING,
WITHOUT LIMITATION, THE TERMS AND PROVISIONS OF SECTION 4.G. OF THE PRIME
LEASE.  SUBTENANT ACKNOWLEDGES AND AGREES THAT ITS RIGHT TO USE SUCH PARKING
AREA SHALL BE UPON THE TERMS AND CONDITIONS SET FORTH IN THE PRIME LEASE,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL RULES AND REGULATIONS PROMULGATED BY
LANDLORD WITH RESPECT THERETO.  SUBLANDLORD ALSO AGREES, PROVIDED SUBTENANT HAS
OBTAINED THE CONSENT OF LANDLORD THERETO AND SUBLANDLORD AS TO THE PLANS AND
SPECIFICATIONS FOR SAME AS WELL AS ALL ASPECTS OF THE INSTALLATION OF SAME,
SUBTENANT SHALL HAVE THE RIGHT AT ITS SOLE COST AND EXPENSE TO INSTALL A
SECURITY BOOTH AND/OR GATE CONTROL WITH RESPECT TO PARKING AREA PURSUANT TO THE
PROVISIONS OF SECTION 4G OF THE PRIME LEASE.

 

24.                                 ROOF RIGHTS.  SUBLANDLORD AND SUBTENANT
ACKNOWLEDGE AND AGREE THAT SUBTENANT MAY DESIRE, AT ITS SOLE COST AND EXPENSE,
TO INSTALL A SATELLITE DISH ON THE ROOF OF THE BUILDING.  SO LONG AS SUBTENANT
IS NOT IN DEFAULT UNDER THIS SUBLEASE PAST ANY CURE PERIOD PROVIDED HEREIN,
SUBLANDLORD HEREBY CONSENTS TO THE INSTALLATION OF SAME UPON THE FOLLOWING TERMS
AND CONDITIONS:  (I) SUBTENANT SHALL OBTAIN THE APPROVAL OF LANDLORD AND
SUBLANDLORD WITH RESPECT TO ALL ASPECTS OF THE INSTALLATION OF SUCH SATELLITE
DISH, INCLUDING, WITHOUT LIMITATION, THE PLANS AND SPECIFICATIONS THEREFOR, THE
MANNER OF INSTALLATION OF SAME AND THE LOCATION OF SAME; AND (II) THE RIGHT
GRANTED TO SUBTENANT HEREUNDER SHALL BE

 

18

--------------------------------------------------------------------------------

 

SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THE PRIME LEASE.  IN ADDITION TO
SUCH SATELLITE DISH, SUBLANDLORD ACKNOWLEDGES AND AGREES THAT SUBTENANT MAY
DESIRE TO INSTALL A CENTRAL MECHANICAL PLANT ON THE ROOF OF THE PREMISES AND SO
LONG AS THE SUBTENANT OBTAINS THE CONSENT OF LANDLORD AND SUBLANDLORD AS TO THE
PLANS AND SPECIFICATIONS FOR SAME AS WELL AS ALL ASPECTS OF THE INSTALLATION OF
SAME AND OBTAINS ALL NECESSARY APPROVALS UNDER THE PRIME LEASE, SUBTENANT SHALL
BE PERMITTED TO UTILIZE THE ROOF OF THE PREMISES TO INSTALL SUCH A CENTRAL
MECHANICAL PLANT.

 

25.                                 SIGNAGE.  SUBLANDLORD AND SUBTENANT HEREBY
ACKNOWLEDGE AND AGREE THAT SO LONG AS SUBTENANT IS NOT IN DEFAULT UNDER THIS
SUBLEASE PAST ANY CURE PERIOD PROVIDED HEREIN, SUBTENANT SHALL BE GRANTED THE
RIGHT PROVIDED TO SUBLANDLORD, AS TENANT UNDER THE PRIME LEASE, TO INSTALL THE
BUILDING SIGN AS SET FORTH IN SECTION 31 OF THE PRIME LEASE, SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS:

 

(I)                                     IN NO EVENT SHALL SUBTENANT BE PERMITTED
TO INSTALL SUCH BUILDING SIGN UNLESS AND UNTIL SUBTENANT OBTAINS ANY AND ALL
NECESSARY APPROVALS IN CONNECTION THEREWITH, INCLUDING, WITHOUT LIMITATION, THE
APPROVAL OF LANDLORD, SUBLANDLORD AND ANY NECESSARY GOVERNMENTAL ENTITY OR
AGENCY HAVING JURISDICTION OVER THE PREMISES;

 

(II)                                  SUBTENANT SHALL COMPLY WITH ALL OF THE
TERMS AND PROVISIONS OF THE LEASE AND THIS SUBLEASE IN CONNECTION WITH THE
INSTALLATION OF SAME.

 

26.                                 COUNTERPART; EXECUTION.  THIS SUBLEASE MAY
BE EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND
DELIVERED SHALL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH COUNTERPARTS TAKEN
TOGETHER SHALL CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.  SIGNATURE PAGES MAY
BE DETACHED FROM THE COUNTERPARTS AND ATTACHED TO A SINGLE COPY OF THIS SUBLEASE
TO PHYSICALLY FORM ONE DOCUMENT.  THIS SUBLEASE MAY ALSO BE DELIVERED BY
TELEFACSIMILE AND ANY SIGNATURE OF A PARTY ON A TELEFACSIMILE COPY SHALL BE
BINDING.  ANY PARTY DELIVERING AN EXECUTED COUNTERPART OF THIS SUBLEASE BY
TELEFACSIMILE SHALL ALSO DELIVER BY OVERNIGHT SERVICE TO THE OTHER PARTY OR
PARTIES AN ORIGINAL COUNTERPART OF THIS SUBLEASE, PROVIDED THE FAILURE TO
DELIVER AN ORIGINAL COUNTERPART SHALL NOT AFFECT THE VALIDITY, ENFORCEABILITY
AND BINDING EFFECT OF THIS SUBLEASE.

 

19

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Sublandlord and Subtenant have executed this Sublease as of
the date aforesaid.

 

 

 

SUBLANDLORD

 

 

 

 

 

 

 

 

 

GATEWAY, INC.

 

 

 

 

a Delaware corporation

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Its:

 Sr. Director

 

 

 

 

 

 

 

 

SUBTENANT

 

 

 

 

 

 

 

 

 

NUVASIVE, INC.

 

 

 

 

a Delaware corporation

 

 

 

 

 

 

 

 

 

By:

 /s/ Kevin O’Boyle

 

 

 

 

Its:

 CFO

 

 

 

[SIGNATURE PAGE TO SUBLEASE

BETWEEN GATEWAY, INC. & NUVASIVE, INC.]

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

PRIME LEASE

 

A-1

--------------------------------------------------------------------------------

 

EXHIBIT B

 

INTENTIONALLY OMITTED

 

B-1

--------------------------------------------------------------------------------

 

EXHIBIT E

 

CONSENT AGREEMENT

 

E-1

--------------------------------------------------------------------------------