Document:

exv10w18

 

EXHIBIT
10.18

SUBLEASE AGREEMENT

     THIS SUBLEASE AGREEMENT (the “Sublease”) entered into as of June 1, 2005, between INFOSONICS
CORPORATION, a Maryland corporation (“Sublandlord”) and Artes Medical USA, Inc., a Delaware
Corporation (“Subtenant”).

RECITALS

     A. Pursuant to that certain Building Lease Agreement dated as of January 26, 2004 (the “Master
Lease”) between ROBERT JEAN LICHTER and GAIL F. LICHTER, Trustees of the LICHTER FAMILY TRUST FIRST
AMENDED AND RESTATED DECLARATION OF TRUST DATED NOVEMBER 7,1996, and KENNETH R. SATTERLEE AND
CANDACE C. SATTERLEE, Trustees of THE SATTERLEE FAMILY TRUST UTD APRIL 24, 1986, as
tenants-in-common (collectively, “Master Landlord”), as Landlord, and Sublandlord, as tenant,
Sublandlord obtained the leasehold estate created by the Master Lease in and to the Premises (said
term and other capitalized terms used herein having the definitions given to such terms in the
Master Lease unless otherwise expressly defined herein), a copy of the Master Lease being attached
hereto and made a part hereof as Exhibit A. Under the Master Lease, the Premises consists of
approximately 31,925 rentable square feet of space.

     B. Sublandlord desires to sublet that portion of the Premises as hereinafter described to
Subtenant and Subtenant desires to sublet such portion of the Premises from Sublandlord upon all of
the terms, covenants and conditions herein stated.

     NOW THEREFORE, in consideration of the mutual agreements set forth herein, the parties hereto,
intending to be legally bound hereby agree as follows:

     1. Premises.

          1.1 Sublease Premises. Sublandlord hereby leases to Subtenant and Subtenant hereby
leases from Sublandlord, upon the terms, covenants and conditions herein set forth, that portion of
the Premises described as the entire second floor mezzanine of the Building of which the Premises
forms a part, consisting of approximately 8,000 square feet, as depicted on Exhibit B attached
hereto and made a part hereof (“Sublease Premises”) including the right to use of the Common Area
upon the Premises to the extent of Sublandlord’s right to use the Common Areas under the Master
Lease, including the use of twenty (20) parking spaces, subject to all of the terms and provisions
of the Master Lease. Sublandlord will deliver the Sublease Premises to Subtenant in their current
“as is” condition. At the termination of this Sublease, Subtenant shall surrender possession of
the Sublease Premises to Sublandlord or Sublandlord’s successors. Sublandlord expressly reserves
the rights of entry provided for in this Sublease and at law and its right of reversion upon the
termination of this Sublease.

          1.2 Term. The term of this Sublease (the “Term”) shall be for approximately five years
and ten months commencing on the Commencement Date (which shall be not later than June 1, 2005) and
continuing through the day immediately prior to the scheduled expiration date of the Master Lease
(i.e., March 31, 2011), unless (i) the Master Lease is earlier terminated pursuant to the
provisions thereof, including without limitation, the provisions of Section 2.4 of the Master
Lease, or (ii) the Sublandlord acquires the Building and the underlying real property from Master
Landlord

 

 

in accordance with Section 37 of the Master Lease and elects, in Sublandlord’s sole and
absolute discretion, to terminate this Sublease. In such event, this Sublease shall be terminated
upon the effective date of any such event without any further action required of Sublandlord,
unless this Sublease is earlier terminated pursuant to the provisions hereof. In no event shall
the expiration date of the Sublease exceed the Termination Date of the Master Lease.

          1.3 Use. Subtenant agrees to use the Sublease Premises in accordance with the
provisions of the Master Lease and this Sublease, and for no other purpose.

     2. Rent.

          2.1 Rent: Base Rent payable for the Sublease Premises (“Base Rent”) during the
initial twelve (12) month period of the Term shall be Twelve Thousand Four Hundred Dollars
($12,400.00) per month. Base Rent shall be increased annually on each anniversary of the
Commencement Date by an amount equal to five percent (5%) of the Base Rent payable for the
immediately preceding twelve (12) month period. Rent shall be payable in advance on the first
(1st) day of each month during the Term, and shall be subject to a late charge equal to
six percent (6%) of such overdue amount if not received by the tenth (10th) day of such
month. Furthermore, in the event that the term of this Sublease begins or ends on a date that is
not the first day of a month, Base Rent will be prorated as of that date. Concurrent with
Subtenant’s execution of this Sublease, Subtenant will deliver to Sublandlord the first month’s
base rent in the amount of Twelve Thousand Four Hundred Dollars ($12,400.00) plus the amount of
Twenty-five Thousand Dollars ($25,000.00) as a security deposit to be held by Sublandlord under the
terms of Section 4 of the Master Lease. The parties acknowledge that Additional Rent shall not
include those costs incurred by Sublandlord under the Master Lease which are defined as Operating
Expenses in Section 3.3 of the Master Lease, except for the proportional cost of water, sewer, gas,
electricity, heating, ventilation, air conditioning and other utilities or services provided to the
Building as defined in the Master Lease, which shall be billed directly to Subtenant all as set
forth in Section 10 herein below.

          2.2 Additional Rent. In addition to Base Rent, Subtenant shall pay as additional rent
(“Additional Rent”) hereunder without notice or demand and without abatement, setoff or deduction
of any amount whatsoever, all other sums, amounts, costs, liabilities, obligations and other
payments required or agreed to be paid by or assumed by Subtenant under this Sublease, including,
without limitation, twenty-five percent (25%) of the cost of utilities services to the Building, as
provided herein below, during the Term, which shall be separately billed to Subtenant on a monthly
basis. In the event of any failure on the part of Subtenant to pay any of the same, Sublandlord
shall have (in addition to all other rights and remedies), all the rights and remedies provided for
herein or by law in the case of non-payment of Base Rent.

          2.3 Payment of Rent. Rent shall be paid in cash or check, subject to collection, in
such coin or currency of the United States of America as at the time of payment shall be legal
tender for the payment of public and private debts, to Sublandlord at the Premises, or at such
other place or to such other party as Sublandlord may from time to time designate by notice to
Subtenant. As used in this Sublease, the term “Rent” shall mean Base Rent, and Additional Rent.
Any Rent which is not paid when due shall bear interest at the Default Rate from the due date until
paid.

          2.4 No Termination, Abatement, etc. Except as otherwise specifically set forth
herein, this Sublease shall not terminate, nor shall Subtenant be entitled to any abatement,

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deduction, deferment or reduction of Rent, or setoff against Rent, nor shall the respective
obligations of Sublandlord and Subtenant be otherwise affected, by reason of damage to or
destruction of the Sublease Premises from whatever cause, any taking or takings by eminent domain,
the law or unlawful prohibition of the use or occupancy of the Sublease Premises for its intended
purpose, the interference with such use or occupancy by any private person, corporation or other
entity, or for any other cause whether similar or dissimilar to the foregoing, any present or
future law to the contrary notwithstanding. The obligations of Sublandlord and Subtenant hereunder
shall be separate and independent covenants and agreements and the rent payable by Subtenant
hereunder shall continue to be payable in all events unless the obligations to pay the same shall
be terminated pursuant to an express provision of this Sublease. Subtenant shall remain obligated
under this Sublease in accordance with its terms, and shall not take any action to terminate,
rescind or avoid this Sublease, notwithstanding any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting
Sublandlord or any assignee of Sublandlord, and notwithstanding any action with respect to this
Sublease that may be taken by a trustee or receiver of Sublandlord or any assignee of Sublandlord
or by any court proceedings.

     3. Master Lease. As applied to this Sublease, the words “Landlord” and “Tenant” in
the Master Lease will be deemed to refer to Sublandlord and Subtenant, respectively, under this
Sublease.

          3.1 Except as otherwise expressly provided in Section 3 of this Sublease, the covenants,
agreements, provisions, and conditions of the Master Lease, to the extent that they relate to the
Sublease Premises and to the extent that they are not inconsistent with the terms of this Sublease,
are made a part of and incorporated into this Sublease as if recited in full in this Sublease,
including, without limitation, Subtenant’s maintenance obligations with respect to the Sublease
Premises under Section 6.2 of the Master Lease.

          3.2 The rights and obligations of the Master Landlord and the Tenant under the Master Lease
will be deemed the rights and obligations of Sublandlord and Subtenant, respectively, under this
Sublease, and will inure to the benefit of, and be binding on, Sublandlord and Subtenant,
respectively. As between the parties to this Sublease only, in the event of a conflict between the
terms of the Master Lease and the terns of this Sublease, the terms of this Sublease will control.

     4. Performance By Sublandlord; Status of Master Lease

          4.1 Subtenant recognizes that Sublandlord is not in a position to render any of the services
or to perform any of the obligations required of Master Landlord by the terms of the Master Lease.
Therefore, despite anything to the contrary in this Sublease, Subtenant agrees that performance by
Sublandlord of its obligations under this Sublease is conditioned on performance by the Master
Landlord of its corresponding obligations under the Master Lease, and Sublandlord will not be
liable to Subtenant for any default of the Master Landlord under the Master Lease.

          4.2 Subject to master lease, Subtenant will not have any claim against Sublandlord based on
the Master Landlord’s failure or refusal to comply with any of the provisions of the Master Lease
unless that failure or refusal is a result of Sublandlord’s act or failure to act. Despite the
Master Landlord’s failure or refusal to comply with any of those provisions of the Master Lease,
this Sublease will remain in full force and effect and Subtenant will pay the base rent

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and additional rent and all other charges provided for in this Sublease without any abatement,
deduction or setoff. Except as expressly provided in this Sublease, Subtenant agrees to be subject
to, and bound by, all of the covenants, agreements, terms, provisions, and conditions of the Master
Lease, as though Subtenant was the Tenant under the Master Lease.

          4.3 Obtaining Master Landlord’s consent. Whenever the consent of the Master Landlord
is required under the Master Lease, and whenever the Master Landlord fails to perform its
obligations under the Master Lease, Sublandlord agrees to use its reasonable, good faith efforts to
obtain, at Subtenant’s sole cost and expense, that consent or performance on behalf of Subtenant,
as requested by Subtenant for its benefit.

          4.4 No Existing Defaults. Sublandlord represents and warrants to Subtenant that the
Master Lease is in full force and effect, and Sublandlord has neither given nor received a notice
of default under the Master Lease.

          4.5 Preservation of Master Lease. Subtenant and Sublandlord will each refrain from any
act or omission that would result in the failure or breach of any of the covenants, provisions, or
conditions of the Master Lease on the part of the Tenant under the Master Lease.

     5. Insurance and Condemnation Proceedings. Despite anything contained in the Master
Lease to the contrary, as between Sublandlord and Subtenant only, in the event of damage to or
condemnation of the Sublease Premises, all insurance proceeds or condemnation awards received by
Sublandlord under the Master Lease will be deemed to be the property of Sublandlord, and
Sublandlord will have no obligation to rebuild or restore the Subleased Premises.

     6. Insurance. Subtenant shall provide insurance equivalent to the insurance required
of Sublandlord by Section 7 of the Master Lease. The company or companies writing any insurance
which Subtenant is required to take out and maintain or cause to be taken out or maintained
pursuant to the Master Lease, and hereunder, as well as the form of such insurance shall at all
times be subject to Master Landlord’s and Sublandlord’s approval (which approval in the case of
Sublandlord shall not be unreasonably withheld). Public liability and casualty insurance policies
evidencing such insurance shall name Master Landlord and Sublandlord and/or their respective
designees as additional insureds, shall be primary and non-contributory and shall also contain a
provision by which the insurer agrees that such policy shall not be cancelled except after 30 days’
written notice to Master Landlord and Sublandlord and/or such designees. None of the insurance
which Subtenant is required to carry hereunder shall contain any deductible provisions except to
the extent approved by Master Landlord and Sublandlord (which approval in the case of Sublandlord
shall not be unreasonably withheld). All such policies, or certificates thereof, shall be
deposited with Master Landlord and Sublandlord promptly upon commencement of Subtenant’s obligation
to procure the same. At least 30 days prior to the expiration date of any policy, a renewal policy
or certificate thereof shall be deposited with Master Landlord and Sublandlord. If Subtenant shall
fail to perform any of its obligations pursuant to this paragraph, Sublandlord may perform the same
and the cost thereof shall be payable upon Sublandlord’s demand therefor as Additional Rent.

          6.1 Subtenant shall not do or suffer to be done, or keep or suffer to be kept, anything in,
upon or about the Sublease Premises which will contravene Master Landlord’s or Sublandlord’s
policies of hazard or liability insurance or which will prevent Master Landlord or Sublandlord from
procuring such policies from companies acceptable to Master Landlord or

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Sublandlord, as the case may be. If anything done, omitted to be done or suffered by
Subtenant to be kept in, upon or about the Sublease Premises shall cause the rate of fire or other
insurance on the Subleased Premises maintained by Sublandlord to be increased beyond the minimum
rate from time to time applicable to the Sublease Premises or shall result in Sublandlord’s
liability to Master Landlord for any increase in the rate of Master Landlord’s insurance, Subtenant
shall pay to Sublandlord, as Additional Rent, the amount of any such increase upon Sublandlord’s
demand therefor.

     7. Indemnity. Subtenant agrees to protect, defend, indemnify, and hold Sublandlord
harmless from and against any and all liabilities, claims, expenses, losses and damages (including
reasonable attorneys’ fees and costs), that may at any time be asserted against Sublandlord by (a)
the Master Landlord for failure of Subtenant to perform any of the covenants, agreements, terms,
provisions, or conditions contained in the Master Lease that Subtenant is obligated to perform
under the provisions of this Sublease; or (b) any person as a result of Subtenant’s use or
occupancy of the Sublease Premises, except to the extent any of the foregoing is caused by the
negligence or willful misconduct of Sublandlord. Sublandlord agrees to protect, defend, indemnify
and hold Subtenant harmless from and against any and all liabilities, claims, expenses, losses and
damages (including reasonable attorneys’ fees and costs), that may at any time be asserted against
Subtenant by the failure of Sublandlord to perform its obligations under the Master Lease, except
to the extent any of the foregoing is caused by the negligence or willful misconduct of Subtenant
of its obligations hereunder. The provisions of this Section 7 will survive the expiration or
earlier termination of the Master Lease or this Sublease.

     8. Estoppel Certificates. Each party to this Sublease will, from time to time as
requested by the other party, on not less than ten (10) days prior written notice, execute,
acknowledge, and deliver to the other party a statement in writing certifying that this Sublease is
unmodified and in full force and effect (or if there have been modifications that this Sublease is
in full force and effect as modified and stating the modifications). That statement will certify
the dates to which base rent, additional rent, and any other charges have been paid. That
statement will also state whether, to the knowledge of the person signing the certificate, the
other party is in default beyond any applicable grace period provided in this Sublease in the
performance of any of its obligations under this Sublease. If the other party is in default beyond
any applicable grace period, the statement will specify each default of which the signer then has
knowledge. It is intended that this statement may be relied on by others with whom the party
requesting that certificate may be dealing.

     9. Assignment or Sublease. Subject to the rights of the Master Landlord and the
restrictions contained in the Master Lease in connection with a Transfer, Subtenant is not entitled
to assign, mortgage, hypothecate or otherwise transfer all or any part of its interest in this
Sublease, nor sublet the Sublease Premises or any part thereof, nor enter into license agreements
with respect thereto, nor permit occupancy thereof by any person other than Subtenant and its
employees, without in each case first procuring the written consent of consent of Sublandlord.
That consent may be withheld by Sublandlord in its sole and absolute discretion. Any attempted
assignment, subletting, license, mortgage, hypothecation or other transfer of all or any part of
Subtenant’s interest in this Sublease without Sublandlord’s prior written consent shall be void and
shall, at the option of Sublandlord, terminate this Sublease. Subtenant shall reimburse
Sublandlord for Sublandlord’s reasonable attorneys’ fees incurred in connection with the processing
and documentation of this Sublease, including the cost of obtaining Master Landlord’s consent to
this Sublease in an amount not to exceed Two Thousand Five Hundred Dollars ($2,500.00), and of any

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such requested assignment, subletting, license, mortgage, hypothecation or other transfer of
all or any part of Subtenant’s interest in this Sublease. Notwithstanding the foregoing, Subtenant
may assign this Sublease or sublet the Premises or any portion thereof, with Sublandlord’s prior
written consent (which shall not be unreasonably withheld) to any corporation which controls, is
controlled by or is under common control with Subtenant, to any corporation resulting from a merger
or consolidation with Subtenant, or to any person or entity which acquires all the assets of
Subtenant’s business as a going concern; provided, however, that the assignee or sublessee assumes
the obligations of Subtenant hereunder, and Subtenant remains fully liable hereunder, and the use
of the Premises remains unchanged.

     10.  Utilities and Other Services. Subtenant agrees to connect to and use such utility
facilities (including electricity, water and sewer, gas, and any other utility) as are supplied to
the Building in accordance with the Master Lease. Subtenant shall be responsible for reimbursing
Sublandlord twenty-five percent (25%) of the total of all charges for use or consumption of sewer,
gas, electricity, water, and all other utilities and services provided to the Building. All
charges for utilities and services which are billed directly to Subtenant by the utility or service
company providing such service shall be paid by Subtenant to such company as and when they become
due. If Sublandlord furnished electric service, water and/or any other utilities or services to the
Sublease Premises, Subtenant shall pay to Sublandlord twenty-five percent (25%) of the total of all
amounts payable by Sublandlord under the Master Lease in connection therewith; such amounts to be
paid by Subtenant, on a monthly basis, upon receipt of Sublandlord’s statement, together with a
copy of Sublandlord’s utility bill(s) for the Building. Sublandlord shall incur no liability to
Subtenant in damages or otherwise in the event that (a) any utility services shall be or become
unavailable from any source of supply, or (b) any interruption in any utility service occurs. Any
such unavailability or interruption shall not constitute a termination of this sublease or a
constructive eviction of Subtenant.

          10.1 Security System. Upon the Commencement Date, the Premises shall be monitored by
Sonitrol Audio Detection, Access Control Security System pursuant to the terms and conditions of a
contract maintained by Sublandlord. Subtenant shall receive twenty (20) access cards for use by
its employees. Subtenant may purchase additional cards for ten dollars ($10.00) per card. The
provider, procedures, terms and/or conditions of the security system maintained by Sublandlord,
including Subtenant’s reasonable cost reimbursement are subject to change at anytime.

          10.2 Signage. Subject to Master Landlord’s approval and Sublandlord’s reasonable
approval as to size, design and placement, and at Subtenant’s sole cost and expense, Sublandlord
shall permit Subtenant to maintain identification signage on the main entrance to and front of the
Building.

     11. Subordination. Subtenant’s rights under this Sublease are and shall remain subject
and subordinate to the operation and effect of the Master Lease, and (b) any mortgage, decd of
trust or other security interest constituting a lien upon, or upon any estate or interest therein
including, but not limited to, a leasehold estate, whether the same shall be in existence at the
date hereof or created hereafter (any such lease, mortgage, deed of trust or other security
instrument being referred to herein as a “Mortgage”, and the party or parties having the benefit of
the same, whether as lessor, mortgagee, trustee or noteholder, being referred to herein as a
“Mortgagee”). Subtenant’s acknowledgment and agreement of subordination as provided for in this
Section 11 is self-operative and no further instrument of subordination shall be required;
provided, however, Subtenant shall

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execute, within 10 days after request therefor, such further assurances thereof as shall be
requested from time to time by Master Landlord, Sublandlord or any mortgages.

     12. Rules and Regulations. Subtenant shall, at its sole cost and expense, comply with
all rules and regulations promulgated by Master Landlord pursuant to the terms of the Master Lease.

     13. Notices. All notices or other communications hereunder shall be in writing and
shall be deemed given when personally delivered or when sent registered or certified mail, return
receipt requested, postage prepaid as follows:

To Sublandlord:

InfoSonics Corporation

Attention: Chief Financial Officer

5880 Pacific Center Blvd.

San Diego, California 92121

To Subtenant:

ARTES Medical

Attention: Chief Financial Officer

5870 Pacific Center Blvd.

San Diego, California 92121

Either of the parties hereto may change the address to which notice shall be sent hereunder by
sending written notice of such changed address to the other party hereto.

     14. General Provisions 

          14.1 Severability. If any provision of this Sublease or the application of any
provision of this Sublease to any person or circumstance is, to any extent, held to be invalid or
unenforceable, the remainder of this Sublease or the application of that provision to persons or
circumstances other than those as to which it is held invalid or unenforceable, will not be
affected, and each provision of this Sublease will be valid and be enforced to the full extent
permitted by law.

          14.2 Entire Agreement; Waiver. This Sublease constitutes the final, complete and
exclusive statement between the parties to this Sublease pertaining to the Subleased Premises,
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 Sublease by, nor is any party relying on,
any representation or warranty outside those expressly set forth in this Sublease. Any agreement
made after the date of this Sublease is ineffective to modify, waive, release, terminate, or effect
an abandonment of this Sublease, in whole or in part, unless that agreement is in writing, is
signed by the parties to this Sublease, and specifically states that that agreement modifies this
Sublease.

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

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          14.4 Further Assurances. Each party to this Sublease will at its own cost and expense
execute and deliver such further documents and instruments and will take such other actions as may
be reasonably required or appropriate to evidence or carry out the intent and purposes of this
Sublease.

          14.5 Governing Law. This Sublease will be governed by and in all respects construed
in accordance with the laws of the state of California.

          14.6 Consent of Landlord. The Master Landlord’s written consent to this Sublease in
accordance with the terms of Section 11 of the Master Lease is a condition subsequent to the
validity of this Sublease. If the Master Landlord’s consent has not been obtained and a copy of
that consent delivered to Subtenant by the thirtieth (30th) day following the date of this
Sublease, Subtenant shall thereafter have the ongoing right, subject to the terms of this Section
14.6, to terminate this Sublease pursuant to a notice (the “Termination Notice”) so stating
delivered to Sublandlord. If Sublandlord fails to deliver to Subtenant the consent of Master
Landlord to this Sublease within ten (10) days following receipt of the Termination Notice (the
“Termination Date”), this Sublease shall automatically terminate and the parties shall be released
from any further obligations under this Sublease. If, however, Sublandlord delivers to Subtenant
the consent of Master Landlord on or before the Termination Date, the condition subsequent set
forth in this Section 14.6 shall be satisfied and this Sublease shall continue in full force and
effect.

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

          14.8 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.

          14.9 Attorneys’ Fees; Jury Trial. If either party named herein brings an action to
enforce the terms hereof or declare rights hereunder, the prevailing party shall be entitled to
reasonable attorneys’ fees paid by the losing party as fixed by the court whether or not such
action is pursued to decision or judgment. The attorneys’ fees award shall not be computed in
accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys’ fees
reasonably incurred in good faith. Sublandlord shall be entitled to reasonable attorneys’ fees and
all other costs and expenses incurred in the preparation and service of notice of default and
consultations in connection therewith, whether or not a legal action is subsequently commenced.
Each party hereby waives any right to a trial by jury in any action to enforce the specific
performance of this Lease, for damages for the breach hereof, or otherwise for enforcement of any
remedy hereunder.

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The parties have executed this Sublease as of the date specified above.

	 	 	 	 	 
	 	Sublandlord:

INFOSONICS CORPORATION, a Maryland corporation

 	 
	 	By:  	/s/ Jeff Klausner
 	 
	 	 	Jeff Klausner, Chief Financial Officer 	 

	 	 	 	 	 
	 	 	 
	 	By:  	       Jeff Klausner
 	 
	 	 	6/15/05, CFO [TITLE] 	 

	 	 	 	 	 
	 	Subtenant:

Artes Medical USA, Inc., a Delaware corporation

 	 
	 	By:  	/s/ Stefan Lemperle, M.D.
 	 
	 	 	Stefan Lemperle, Chief Executive Officer 	 

9exv10w19

 

EXHIBIT
10.19

COMMERCIAL SPACE LEASE AGREEMENT

between

	 	 	 
	Ms. Marianne Kämpf, Buchenrodestr. 26, 60528 Frankfurt,

	 	the Landlord,
	 
	 	 
	and
	 	 
	 
	 	 
	MEDIPLANT GmbH, Rossbergring 107, 64354 Reinheim, Odenw.,

	 	the Tenant.

§ 1 Rental property

	1.	 	165 m2 on the right side of the 5th floor of Ernst-Wiss-Straße 18, 65933
Frankfurt, is being leased as office and commercial space together with 2 parking spaces in
the courtyard.
	 
	2.	 	The Tenant shall receive all necessary keys specified in the handover record.
	 
	3.	 	The premises shall be handed over in renovated condition. MEDIPLANT shall lay down plastic
flooring which does not need to be removed in the event that the premises are vacated. At its
own expense, MEDIPLANT shall make alterations to the walls which also do not need to be
removed when the premises are vacated. The Company A. Kämpf GmbH shall provide a water
connection and 1 drain in each of 2 rooms. MEDIPLANT shall take possession of fixtures from
the previous tenant having a value of DM 1,000.00.

§ 2 Lease Term, termination

The lease agreement begins on November 1, 1999.

	1.	 	The lease agreement runs for 3 years until October 31, 2002. It will be renewed by 12 months
if notice of termination is not provided six months prior to expiration of the lease
agreement.

	2.	 	Notice of termination must be received in writing by the third working day of the first month
of the notice period.

	3.	 	The Landlord’s liability for damages due to the premises not being vacated or ready on time
for the Lessee to take possession is excluded unless it has acted with gross negligence.

	4.	 	In the event of extraordinary termination due to rental arrears, the rental payment shall
also include advance and flat-rate payments for operating costs, as well as extra charges.

 

§ 3 Rental payment

			
	1.	 	a) The net monthly rental payment for the office area is equal to DM 12.00/m2, or
DM 1,980.00, and the net monthly rental payment for parking is equal to DM 40.00 per parking
space, or DM 80.00. There is an additional charge in each case for value-added tax, which is
currently equal to 16%.

b) The following operating costs (explained in Annex 3 of § 27 of the German Second Calculation
Regulation — II. BVO as amended) are not included in the rental payment and shall therefore be
paid separately:

	 	 	 	 	 
	Costs for:	 	Allocation formula:
	 
	 	 	 	 
	1.

	 	Water
	 	according to usable area in m2, in this case 165
m2, or by meter reading
	2.

	 	Sewer — waste water removal
	 	according to usable area in m2, in this case 165
m2, or by meter reading
	3.

	 	Lighting, electricity
	 	according to usable area in m2, in this case 165 m2
	4.

	 	Garbage disposal
	 	according to usable area in m2, in this case 165 m2
	5.

	 	Property tax
	 	according to usable area in m2, in this case 165 m2
	6.

	 	Street cleaning
	 	according to usable area in m2, in this case 165 m2
	7.

	 	Property and casualty insurance
	 	according to usable area in m2, in this case 165 m2
	8.

	 	Caretaker or third-party company
	 	according to usable area in m2, in this case 165 m2
	9.

	 	Landscaping
	 	according to usable area in m2, in this case 165 m2
	10.

	 	Snow removal and salt application for
ice
	 	according to usable area in m2, in this case 165 m2
	11.

	 	Cable connection
	 	paid directly to Telekom by Tenant, if present
	12.

	 	Building cleaning and pest control
	 	according to usable area in m2, in this case 165 m2
	13.

	 	Sidewalk cleaning
	 	according to usable area in m2, in this case 165 m2
	14.

	 	Maintenance costs for fire
extinguishers, autom. gate, tank and
leak-control systems
	 	according to usable area in m2, in this case 165 m2
	15.

	 	Heating (see § 7 (2) of this agreement)
	 	according to usage, 30% base costs (according to according to usable
area in m2), 70% usage
	16.

	 	Hot water (see § 8 of this agreement)
	 	electric hot-water tanks
	17.

	 	Passenger and freight elevators
	 	according to usable area in m2, in this case 165 m2
	18.

	 	Building repairs
	 	according to usable area in m2, in this case 165 m2

c) The Landlord has the right to allocate pro-rated administrative expenses to the tenants.

	2.	 	During the lease term, the Landlord may exercise reasonable discretion in creating a new
allocation formula at the start of a new calculation period. The allocation of costs or new
allocation formula must comply with statutory provisions, in particular the German Heating
Cost Regulation (HeizkostenV)

	3.	 	If the Landlord must bear increased charges due to increases in operating costs or the
introduction of new operating costs, the Tenant shall pay an appropriate additional amount
from the date that these charges are incurred.

	4.	 	If the value-added tax election is chosen, the Landlord has the right to charge value-added
tax at the statutory rates on rental payments, operating costs, and administrative expenses.

2

 

§ 4 Changes to the rental payment

If the monthly cost of living index for a four-person household of middle-income wage earners and
salaried employees published by the German Bureau of Statistics (Statistisches Bundesamt) moves up
or down by more than 5 points relative to the value of the index at the time of conclusion or
renegotiation of the agreement, both contracting parties have the right to request a renegotiation
of the rental payment.

If the other contracting party does not agree to the requested renegotiation of the rental
payment, upon request by one or both of the parties, an expert to be appointed as arbitrator by the
German Chamber of Industry and Commerce (Industrie- und Handelskammer) under § 317 of the German
Civil Code (BGB) shall exercise reasonable discretion in deciding whether and by what amount the
rental payment should change. The rental payment shall be set according to prevailing market rental
rates. Both contracting parties shall thereupon be bound by the new rental payment starting as of
the first day of the month following the initial request asking the contracting party to agree to a
change.

The costs of these proceedings shall be paid by the parties according to the win / lose
relationship of the parties in the proceedings in relation to the state of negotiations before
appeal was made to the Chamber of Industry and Commerce.

§ 5 Payment of rent

	1.	 	The rental payment shall be paid in advance and free of charges into the Landlord’s account
at the Volksbank Griesheim bank, Account No. 12716826, Bank routing number 501 904 00 at the
latest on the third working day of each month. Operating costs shall be paid together with the
rental payment. The date of receipt of funds, not the date that the funds are sent, shall
determine whether a payment has been made on time.
	 
	 	 	An increase or decrease in operating costs entitles the Landlord to make a corresponding
adjustment in advance payments.
	 
	 	 	The current monthly advance payment for heating, hot water, and other operating costs is equal
to DM 4.00/m2 plus value-added tax/month, that is, a total net charge of DM
660.00/month plus value-added tax.
	 
	2.	 	If the Tenant is in arrears with its rental payments, payments shall first be applied to
claims that are in danger of becoming barred by limitation, then to costs, interest and other
amounts owing, unless provisions made by the Tenant stipulate otherwise.

§ 6 Offsetting and retention

	1.	 	The Tenant may only use claims that are undisputed or based on a declaratory judgment as a
basis for retaining amounts from claims for rent and ancillary costs, or offsetting such
claims.

	2.	 	Retention or offsetting based on claims from obligations not arising from this agreement is
not permitted, unless these claims are undisputed or based on a declaratory judgment. Claims
for damages under § 538 BGB are excluded unless the Landlord has acted with gross negligence
or willful intent.

3

 

§ 7 Central heating system

	1.	 	The rental premises shall be provided with heat on working days during the heating period
(October 1 to April 30), provided the Tenant’s operations do not require heat at other times.

	 	 	Outside of the heating period, heat can only be demanded if the outside temperature falls below
12 degrees Celsius at 9 p.m. on three consecutive days.
The Landlord cannot be required to provide heat or replacement heating in the event of
breakdowns, force majeure, official orders, or other circumstances which make it impossible to
provide heat (e.g., fuel shortage), unless the impossibility is due to gross negligence or
willful intent on the part of the Landlord. The Tenant’s rights under § 537 BGB remain
unaffected. The Tenant is not entitled to claims for damages unless the Landlord has acted with
gross negligence or willful intent. The Landlord must ensure that any malfunctions are remedied
as quickly as possible.

	2.	 	The costs of operating the central heating system includes the costs of fuel consumed and the
cost of its delivery, the costs of operation, monitoring, and servicing of the system, and of
regular inspections of the system for operational readiness and safety, including adjustments
performed by a specialist, cleaning of the system, including the oil tank, and the furnace
room, including building cleaning following completion of work, the costs of performing
measurements in accordance with the German Federal Emission Control Act (BImSchG), chimney
cleaning fees, and the costs of rental, or other method of transfer for use, for equipment
which can be used to record usage, the costs of using equipment for recording usage, including
the costs of calculating and allocating usage, the recurring costs of meter calibration, and
the costs of official inspections.

	3.	 	The fact that a rental party makes no use of the heating system shall not release this party
from the obligation to contribute to the heating costs.

	4.	 	The costs of any necessary interim meter readings shall be paid by the tenant concerned.

§ 8 Hot water not provided

§ 9 Elevator use

The Landlord cannot be required to provide elevator use if an elevator has been put out of service
due to power failure, necessary repairs, or official orders, unless the Landlord has acted with
gross negligence or willful intent.

§ 10 Use of the rental premises, transfer for use

	1.	 	The Tenant requires the consent of the Landlord to use the rental premises for purposes and
lines of business other than those stipulated in § 1, and may not fully or partially suspend
its business operations. Such consent shall be provided in writing.
	 
	 	 	Animals may only be kept on the rental property with the consent of the Landlord. Such consent
shall be provided in writing.
	 
	2.	 	The Tenant may only sublet the rental property or transfer it for use to a third party with
the consent of the Landlord. Such consent shall be provided in writing. A change of company
ownership or a change in the legal form of a company is considered to be transfer for use.
Such consent only applies to a specific instance, and may be withdrawn for good cause.
	 
	3.	 	The Tenant hereby makes provision for future cases of transfer for use by assigning to the
Landlord any future claims together with liens that it has against a subtenant or occupant as
security in the amount of the Landlord’s claim to rent.

4

 

	4.	 	The Tenant is not permitted to sell or offer products which are already being permissibly
marketed by another tenant in the building.

	5.	 	The Landlord is under no obligation to operate or make available common technical building
systems outside of normal operating and business hours.

	6.	 	MEDIPLANT shall sublet a portion of the premises to Mr. Dinkelaker.

§ 11 Signs, advertising fixtures

	1.	 	The Tenant has the right to mount a company sign. The Landlord shall indicate a place for the
sign, and specify the type and design.

	 	 	The rental and use of exterior walls, incl. the design of windows, requires a separate
agreement.

	2.	 	At the end of the rental agreement, the Tenant must remove signs and advertising fixtures,
and repair damage caused by installation, operation, and removal. The Tenant may, however,
leave or mount a small sign indicating the location of its new premises for 6 months, and at
least 3 months, at a location to be determined by the Landlord.

§ 12 Official permits, operational hazards from equipment and fixtures operated by the Tenant

	1.	 	The Landlord assumes no liability for the issue of permits for the intended business
operation and its equipment, or for the continuation of existing permits. This applies in
particular to licenses. At its own expense, the Tenant must ensure initial and ongoing
compliance with all requirements for the operation of its business. This also applies to
advertising fixtures, etc. The Tenant must satisfy conditions imposed by the commercial
business inspection department or other bodies at its own expense.

	2.	 	§ 12 (1) shall not apply, however, if the nature and location of the rental property are not
suitable for the stipulated purpose of the agreement.

	3.	 	Before installing machinery, heavy objects, or other equipment and fixtures in the rental
premises, the Tenant must request information from the Landlord with regard to the permissible
floor loading limit and obtain the consent of the Landlord. Such consent shall be provided in
writing. The Tenant is liable for damages arising due to non-compliance with these provisions.
If the equipment and fixtures have negative effects on the building, vibration, cracks, etc.,
the Landlord may withdraw its permission. The Tenant is liable for all installed or operated
equipment and fixtures. If the installation or operation of the Tenant’s equipment or fixtures
causes unacceptable disadvantages or hazards of a detrimental nature, and the Tenant is unable
to find a remedy, the Tenant shall remove or discontinue operation of said equipment or
fixtures.

	4.	 	The Tenant is responsible for safety in the rental premises, the entrances to the property,
and on the public roadway in front of the property.

§ 13 Maintenance and repair of the rental property

	1.	 	The Tenant must ensure that the rental property is adequately cleaned, ventilated, and heated
and that the premises and the equipment and fixtures within them are handled with care and
kept free of pests.

	2.	 	The Tenant is liable for any damages to the rental property or building, or to equipment
belonging to the rental premises or building, that are caused by the Tenant, persons belonging
to its operations, or its subtenants. This also applies to damages caused by visitors,
suppliers, or workmen who are vicarious agents of the Tenant. The Tenant is responsible for
providing proof that no fault existed.

5

 

	3.	 	The Tenant shall ensure in particular that cosmetic repairs in the rental premises
(wallpaper, painting or plastering of walls and ceilings, painting of heat radiators, incl.
heating pipes, interior doors, and the interior side of windows and exterior doors, carpet and
floor cleaning) are performed at appropriate intervals at its own expense. In addition, the
Tenant must maintain and repair the following items, provided they lie within its direct
sphere of control, in particular window and door latches, as well as closing devices for
roller blinds, lighting and bell systems, heat meters, locks, water taps, lavatory flushers,
sinks incl. supply and drain lines, electric devices and similar fixtures, and hot water
systems incl. supply and outlet lines, as well as replace damaged panes of glass, unless the
Tenant can demonstrate that it was not at fault.
	 
	 	 	The Tenant shall perform professional maintenance, cleaning, and inspection of heating,
ventilation, and similar systems, instantaneous water heaters, and hot water systems at least
once a year.
	 
	4.	 	At the end of the rental agreement, the Tenant shall remove anchor inserts, and properly fill
holes so that they are no longer visible. The Tenant is liable for damages due to alterations
of this nature for which the Landlord has not expressly given its consent, or for which, in
order to safeguard its interests, it should not have given its consent.
	 
	 	 	If the Tenant does not fulfil its obligations in spite of a request to this effect, including a
deadline for performance and the threat of refusal to accept performance after the deadline, the
Landlord may have the necessary work performed at the Tenant’s expense.
	 
	5.	 	The Landlord also has the right to assert the claims for performance and damages under points
1 to 4 if the rental agreement has ended and a subsequent tenant has performed or will perform
the necessary work.
	 
	6.	 	The Tenant must notify the Landlord immediately of all damages caused within or to the rental
property. The Tenant is liable for damages resulting from the lack of timely notification if
the Tenant intentionally remained silent about the defect or was grossly negligent in not
recognizing its existence.
	 
	7.	 	Regardless of the nature, source, duration, or extent of the causes, the Landlord is not
liable for damages caused to the Tenant’s goods, furnishings or fixtures unless the Landlord
brought about the damages intentionally or as a result of gross negligence. As a rule, in all
other cases, the Landlord’s liability is limited to the amount and scope of liability
insurance coverage.

§ 14 Alterations made to and within the rental property by the Tenant

	1.	 	Alterations made to and within the rental property, in particular building modifications and
additions, installations, and the like, are to be performed only with the written consent of
the Landlord. At the Landlord’s request, and without the Landlord being required to make a
qualification to this effect when providing its consent, the Tenant shall remove the
modifications or additions when vacating the premises, and restore the rental property to its
original condition.

	2.	 	If, at the end of the rental agreement, the Tenant wants to remove fixtures that it has added
to the rental property, it must first offer them to the Landlord. The Tenant must inform the
Landlord of its asking price, the manufacturing cost, and the date of manufacture. If the
Landlord wishes to take possession of the fixtures, it must provide fair compensation to the
Tenant.

	3.	 	Electrical devices may only be connected to the existing power system if this does not result
in exceeding the load limit specified for the rental property . Any additional devices are to
be connected only with the consent of the Landlord. Such consent may be refused if the
existing power system is not capable of bearing an additional load and the Tenant refuses to
pay the costs of making the necessary changes to the power system.

	4.	 	The rental and use of exterior walls, including the design of windows, requires a separate
agreement. The Tenant shall obtain the necessary official permits at its own expense.

6

 

§ 15 Structural changes and improvements made by the Landlord

	1.	 	The Landlord may undertake improvements and structural changes which become necessary for
maintaining the property, improving economic use of the property, extending the building or
rental property, preventing imminent danger, or repairing damages, even without the consent of
the Tenant. This also applies to work and construction that, while not necessary, is
advisable, in particular for the purpose of modernizing the building. The Tenant must ensure
that the areas in question remain accessible and do not impair or delay the performance of the
work; otherwise, the Tenant shall be liable for any resulting damages. The business interests
of the Tenant shall be taken into consideration.

	2.	 	If work which increases the utility value of the rental property is performed, such as the
expansion of a traffic area, installing a sewer system, installing building connections to
supply lines, or reinforcing or making improvements to pipe lines, the Landlord has the right
to increase the rent by an annual surcharge equal to 14% of the costs that it incurred for
construction and fixtures.
	 
	 	 	The new rental payment shall become payable after completion at the beginning of the month
following the Landlord’s request to this effect.

§ 16 Access to the rental premises

The Tenant must ensure that the Landlord, its agents, experts, and interested parties are able,
after notification, to inspect the rental property (4-7 pm business days) for justified reasons. In
the event of danger, access must be made possible at all times of the day or night.

§ 17 Termination of the lease agreement

	1.	 	Independent of the obligation to perform cosmetic repairs, the Tenant must surrender the
rental property in renovated condition. If the Tenant does not fulfil this obligation, or does
not fulfil this obligation in timely fashion, the Landlord may have the rental property
renovated and cleaned at the Tenant’s expense.

	 	 	The Tenant’s duty to vacate the premises extends to all property in the rental area that does
not belong to the Landlord. If Tenant does no comply with this provision, Lessor has the right
to have these objects removed at the cost of Tenant. The Landlord is under no obligation to
provide safekeeping.

	 	 	If the lease agreement is terminated by the Landlord without notice, the Tenant is liable until
the end of the agreed lease period, or until such time as the rental agreement could have been
terminated, for lost rent due to the rental property remaining unoccupied, or, if it is rented
again, for the difference in lost rent if it cannot be rented out at the previous rental rate.

	2.	 	If the parties have agreed that tenants contribute to operating costs that are invoiced once
per year, this arrangement shall remain as is. For all operating costs whose amount is
determined only once per year, these charges shall be divided between a tenant vacating the
premises and the subsequent tenant according to the length of rental time, unless a special
meter reading is arranged.
	 
	 	 	If the rental property is equipped with utility company metering devices when the Tenant takes
possession, the Tenant shall surrender the rental property with the same connected supply
facilities.

7

 

§ 18 Amendments to the agreement

Ancillary agreements, amendments, supplements and termination of the agreement must be agreed to
in writing. The same applies for consent, approval, waivers and settlements of all types.

§ 19 Place of performance

The place of performance for all obligations arising from this agreement is Frankfurt am Main.

§ 20 Provision of security

	1.	 	The Tenant shall provide the Landlord security in the amount of DM 9,465.00 (nine thousand
four hundred and sixty-five German Marks) for the fulfillment of its obligations under this
agreement. The security may be provided in the form of funds, a bank guaranty, or a security
deposit savings account book. The security is due at the time of entering the agreement.

	2.	 	The Landlord shall deposit the security deposit separate from its assets into a savings
account subject to the statutory withdrawal notice period. The interest accrues to the
security deposit amount. This security deposit shall be repaid to the Tenant at the end of the
lease agreement if there are no claims against it.

	3.	 	If the property is sold, the Tenant agrees to its security deposit being transferred to the
buyer.
	 
	 	 	The Landlord guaranties the Tenant that if the property is sold, the buyer will be put under an
obligation to return the security to the extent that there are no charges against it.

§ 21 Validity of the provisions of the agreement

	1.	 	Should one or more of the provisions of this agreement prove to be invalid, the validity of
the remaining provisions shall not be affected thereby.

	2.	 	This lease agreement supersedes any previous agreements.

§ 22 Building rules

The annexed building rules are an integral part of this lease agreement.

§ 23 Storage and transfer of lease agreement data

The Tenant agrees that information on the amount of the rental payment, and the type, size,
amenities, nature, and location of the apartment is being disclosed to third parties for the
purpose of preparing rental payment summaries and comparative rent collections and that this
information is being stored by those third parties. Upon request by the Tenant, the Landlord shall
provide the Tenant with information on the persons and organizations to which its data is
transferred.

8

 

§ 24Other provisions

The rental payment is calculated as follows:

	 	 	 	 	 	 	 	 	 
	Rent
	 	165 m2 x DM 12.00	 	 	1,980.00	 
	Parking spaces
	 	2 x DM 40.00	 	 	80.00	 
	Ancillary costs
	 	165 m2 x DM   4.00	 	 	660.00	 
	 
	 	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	 	2,720.00	 
	 
	 	 	 	 	 	 	 	 
	+ 16% value-added tax
	 	 	 	 	 	 	435.20	 
	 
	 	 	 	 	 	 	 	 
	Total monthly costs
	 	 	 	 	 	 	3,155.20	 
	 
	 	 	 	 	 	 	 	 
	Security deposit
	 	3 x DM 3,155.20	 	 	9,465.60	 

	 	 	 
	Frankfurt, the 27th day of September 1999
	 

	 	MEDIPLANT GmbH
	/s/ Marianne Kämpf

	 	/s/ J. Pabst
	Landlord

	 	Tenant (Dr. J. Pabst)

9

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