California-Los Angeles-1640 S. Sepulveda Boulevard Sub-Sublease - The RHL Group Inc. and E-Sport Inc.
SUB-SUBLEASE AGREEMENT
(E-Sport)
THIS SUB-SUBLEASE is executed as of, by and between The RHL Group, Inc., a
California corporation (the "Sub-Sublessor"), whose address is 1640 S. Sepulveda
Boulevard, Suite 500, Los Angeles, CA 90025, and E-Sport, Inc., a Delaware
corporation,(the "Sub-Sublessee"), whose address is 1640 S. Sepulveda Boulevard,
Suite 500, Los Angeles, CA 90025.
RECITALS
LAOP IV, LLC, a Nevada limited liability company, as Lessor, and SmarTalk
TeleServices, Inc., as Lessee, executed a lease and subsequent amendments 1
through 4 (hereinafter collectively referred to as the "Master Lease"), which is
incorporated into this Sub-Sublease by this reference;
By the terms of the Master Lease, the real property cumulatively referred
to as 1640 S. Sepulveda Boulevard, Suite 500, Los Angeles, CA 90025 (hereinafter
"Suite 500") was leased to SmarTalk TeleServices, Inc. for a term ending on
March 32, 2002, subject to earlier termination as provided in the Master Lease;
Effective April 1, 1998 SmarTalk TeleServices, Inc., as Sublessor, and The
RHL Group, Inc, as Sublessee, entered into that certain sublease agreement
("Sublease") pursuant to which Suite 500 was leased to The RHL Group, Inc. for
the remainder of the term specified in the Master Lease;
Sub-Sublessor desires to sublease to Sub-Sublessee a portion of Suite 500
currently occupied by Sub-Sublessor under the terms of the Master
Lease/Sublease, and Sub-Sublessee desires to lease that portion of Suite 500
from Sub-Sublessor; and
The Lessor under the Master Lease and the Sublessor under the Sublease
shall consent to this Sub-Sublease by executing the "Consent of Lessor"
provision at the end of this Sub-Sublease;
NOW, THEREFORE, Sub-Sublessor and Sub-Sublessee agree as follows:
Leasing and Description of Property
1. Subject to the terms, conditions, and covenants set forth in this Sub-
Sublease, Sub-Sublessor hereby leases to Sub-Sublessee, and Sub-Sublessee hereby
leases from Sub-Sublessor, that portion of Suite 500 as set forth in Exhibit A
hereto and incorporated herein by this reference (the "Premises") containing
approximately 6546.20 rentable square feet. In addition, Sub-Sublessor shall
make available for Sub-Sublessee's use during the term of this Sub-Sublease, (i)
the office furniture presently in place on the Premises, except that no
furniture shall be provided for the executive office(s); and (ii) the telephone
system installed on the
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Premises. Sub-Sublessee acknowledges that (x) the art work on the Premises is
there at the option of the Sub-Sublessor and may be removed and/or replaced as
Sub-Sublessor may determine from time to time; (y) Sub-Sublessee shall be
responsible for the cost of bringing telephone service to the Premises and for
all telephone costs and charges incurred as well as for all postage expenses;
and Sub-Sublessee shall provide its own beverage and coffee service.
Term
2. This Sub-Sublease shall be for forty-eight (48) months, commencing as
of April 1, 1998 and shall end on the date on March 31, 2002, the date on which
the Master Lease terminates or on sublease termination date, whichever is
earlier.
Rent
3. Sub-Sublessee shall pay to Sub-Sublease as rent ("Rent") for the
Premises the following:
a. Base Rent. The base rent for the Term shall be Eight Hundred Four
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Thousand, Four and 30/100 Dollars ($800,004.30), payable in monthly
installments, in accordance with the following schedule, in advance on the first
day of each calendar month during the Term, effective as of April 1, 1998:
April & May 1998 $12,634.17/month $ 25,268.34
June through October 1998 $15,645.42/month $ 78,227.10
November 1998-March 2002 $17,085.58/month $700,508.86
Rent shall be paid to Sub-Sublease at 1640 S. Sepulveda Boulevard, Suite
500, Los Angeles, California 90025, or at any other place designated in writing
by Sub-Sublease. The installment rent payable for any portion of a calendar
month shall be a pro rata portion of the installment payable for a full calendar
month.
b. Other Costs. In addition to the base rent, Sub-Sublessee shall
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pay to Sub-Sublessor (1) One Hundred Dollars ($100.00) monthly, plus a one time
set up fee of One Hundred Fifty Dollars ($150.00), for Special Mail Handling and
Delivery Service; (2) a key deposit of Twenty-Five Dollars ($25.00) for each key
issued, (3) Sub-Sublessee shall pay photocopying charges of $0.07 per copy for
the 1st 25,000 each month and $0.035 per copy for each copy in excess of 25,000
each month; and (4) all costs and charges from any source related to the
customer service area and the area designated as the computer room.
Upon the execution of this Sub-Sublease, Sub-Sublessee shall pay to Sub-
Sublessor the sum of Seventy-Five Thousand Eighty-Four and 82/00 Dollars
($75,084.82) representing the base rent for the months of April, May and June
1998, a last month's rent of $17,085.58 and a security deposit of $17,085.58.
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Operating Costs
4. Sub-Sublessee shall reimburse Sub-Sublessor the 48.71% of all
operating and other charges payable by Sub-Sublessor to the Lessor and/or the
Sublessor pursuant to the terms of the Master Lease and/or the Sublease
immediately upon presentment to Sub-Sublessee of such invoices or calculations
as received by Sub-Sublessor from the Lessor and/or the Sublessor.
Use of Premises
5. Sub-Sublessee shall use the Premises for business office purposes and
for no other purpose. Sub-Sublessee shall fully comply with all rules and
regulations which the Sub-Sublease or Landlord may promulgate from time to time.
Sub-Sublessee shall not commit or permit any waste or injury to any of the
Premises or the property of which the Premises are a part, nor shall Sub-
Sublessee make any alterations, improvements or changes thereto without prior
written consent of Sub-Sublease and otherwise in accordance with the
requirements and provisions contained in the Lease.
Quiet Enjoyment
6. Sub-Sublease covenants that Sub-Sublessee shall be entitled to quiet
enjoyment of the Premises, provided that Sub-Sublessee complies with the terms
of this Sub-Sublease.
Condition of Premises
7. Sub-Sublessee agrees that Sub-Sublessee's act of taking possession
will be an acknowledgment that the Premises are in a tenantable and good
condition. Sub-Sublessee will, at Sub-Sublessee's own expense, maintain the
Premises in a thorough state of repair and in good and safe condition.
Applicability of Master Lease
8. This Sub-Sublease is subject and subordinate to the terms and
conditions of the Master Lease and the Sublease.
Assumption
9. Sub-Sublessee expressly assumes and agrees to perform and comply with
all the obligations required to be kept or performed by the Lessee under the
provisions of the Master Lease identified in Paragraph 7 of this Sub-Sublease,
to the extent that they are applicable to the subleased Premises.
Sub-Sublessee's Rights Regarding Continuing Possession
10. Sub-Sublessee shall have the right at any time, at Sub-Sublessor's
expense, to take any action required to be taken, but not timely taken, by Sub-
Sublessor, that may be necessary to prevent a default under the terms of the
Master Lease.
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Access by Sub-Sublessor
11. Sub-Sublessee shall permit Sub-Sublessor (and its employees and
agents) to have access to the Premises at all reasonable times for any lawful
purpose.
Sub-Sublessee's Insurance
12. At all times during the Term, Sub-Sublessee shall, at its sole cost
and expense, maintain in full force and effect the following insurance coverage:
(i) Commercial General Liability Insurance with a combined single limit for
bodily injury and property damages of not less than One Million Dollars
($1,000,000) per occurrence and Two Million Dollars ($2,000,000) in the annual
aggregate, including products liability coverage if applicable, covering and
insuring provisions of this Sub-Sublease and the Lease and the performance of
the Sub-Sublessee of the indemnity and exemption of the Sub-Sublessor, the
Sublessor and the Landlord from liability as set forth in section 13, below;
(ii) a policy of standard fire, extended coverage and special extended coverage
(all Risks), including a vandalism and malicious mischief endorsement, sprinkler
leakage coverage and earthquake leakage as specified in the Lease. In addition,
all such policies shall name Sub-Sublessor, Sublessor and Landlord as additional
insureds. Sub-Sublessee shall maintain its own insurance covering Sub-
Sublessee's property (including furniture, trade fixtures and personalty)
located on the Premises.
Indemnity
13. Sub-Sublessee hereby covenants and agrees to defend, hold harmless and
indemnify Sub-Sublessor and its affiliates, directors, officers, members,
employees, partners and/or shareholders from and against any and all expenses,
claims, actions, liabilities, losses and damages of any kind whatsoever
(including without limitation any death or injury to persons and any damage to
property and any diminution in value or loss of income from the Premises)
actually or allegedly arising out of the activities of Sub-Sublessor or its
employees, agents or invitees on the Premises.
Surrender of Premises
14. Upon the termination of this Sub-Sublease, Sub-Sublessee immediately
shall deliver up and surrender the Premises to Sub-Sublessor in as good a state
of order and repair as at the date hereof normal wear and tear excepted. Without
limiting the generality of the foregoing, Sub-Sublessee shall repair any damage
to the Premises caused by the installation or removal of any personal property
or trade fixtures placed in the Premises by Sub-Sublessee.
Assignment
15. This Sub-Sublease may not be assigned, mortgaged or hypothecated by
Sub-Sublessee, nor may the Premises be subleased or subjected to any liens or
claims by Sub-Sublessee, under any conditions without the prior written consent
of Sub-Sublessor in each instance, which consent shall not be unreasonably
withheld. Any assignment, mortgage, hypothecation, sublease, lien or claim made
or created by Sub-Sublessee without
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Sub-Sublessor's consent shall be void and of no force and effect and shall
constitute an immediate and continuing default hereunder.
Casualty
16. In the event the Premises or any part thereof shall be rendered unfit
for occupancy by fire or other casualty, this Sub-Sublease shall not terminate
(unless the Lease shall terminate as a result thereof), but rent shall be abated
on a per them basis in proportion to that arm of the Premises which is thereby
rendered unfit for occupancy.
Default
17. The occurrence of any one or more of the following events shall
constitute an event of default by Sub-Sublessee under this Sub-Sublease:
a. any failure of Sub-Sublessee to pay any monetary obligation of
Sub-Sublessee hereunder within three (3) days after the same is due hereunder,
b. any failure by Sub-Sublessee to comply with any other provision
of this Sub-Sublease, which failure shall continue for ten (10) or more days
after notice thereof from Sub-Sublessor to Sub-Sublessee (provided that if
compliance cannot reasonably be accomplished within such time, such period shall
be extended a reasonable period provided Sub-Sublessee has commences and is
diligently pursuing such compliance); or
c. Sub-Sublessee shall be come insolvent, or bankruptcy proceedings
shall be commenced by or against Sub-Sublessee, or a receiver shall be appointed
to control any part of Sub-Sublessee's business or assets, or Sub-Sublessee
shall make an assignment for the benefit of creditors.
Upon the occurrence of any event of default, Sub-Sublessor shall be
entitled to exercise, concurrently or successively, any one or more of the
following rights and remedies: (1) to pay any sum required to be paid by
Sub-Sublessee hereunder to any person or entity which Sub-Sublessee has
failed to pay, and to perform any obligation required to be performed by
Sub-Sublessee for account of Sub-Sublessee, and any amount so paid shall be
constitute additional rent hereunder and shall be paid by Sub-Sublessee to
Sub-Sublessor forthwith on demand, (2) to bring suit for collection of any
amounts for which Sub-Sublessee may be in default or for specific
performance of any other covenant devolving upon Sub-Sublessee for
performance, and for damages for the non-performance thereof all without
entering into possession of the Premises or terminating this Sub-Sublease;
(3) to reenter the Premises, by summary proceedings or otherwise, with or
without process of law, and take possession thereof without thereby
terminating this Sub-Sublease, whereupon Sub-Sublessor may (i) expel all
persons and remove all property therefrom, without becoming liable in
trespass or otherwise; and (ii) relet all or any portion of the Premises
for such periods (either longer or shorter than or coterminous with, this
Sub-Sublease); it being agreed that no legal or other action initiated by
Sub-Sublessor shall be (x) construed as an election to terminate this
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Sub-Sublease unless Sub-Sublessor shall, in writing, expressly exercise its
election to declare the Term ended and terminate this Sub-Sublease, or (y)
deemed to absolve or discharge Sub-Sublessee from any and all obligations
and liabilities for the remainder of the Term and (4) to terminate this
Sub-Sublease, re-enter the Premises and take possession thereof, eject all
parties therefrom, repossess and enjoy the premises together with all
additions, alterations and improvements thereto. All rights and remedies
granted herein, and any other rights and remedies which Sub-Sublessor may
have at law or in equity are hereby declared t[o] be cumulative and not
exclusive, and the fact that Sub-Sublessor may have exercised any remedy
without terminating this Sub-Sublease shall not impair Sub-Sublessor's
right thereafter to terminate this Sub-Sublease or to exercise any other
remedy granted herein, at law or in equity.
Notices
18. Any notice or other communication required or permitted to be given
hereunder by either parry hereto to the other shall be deemed to have been
properly given (a) when hand delivered, or (b) one (1) day after being deposited
with an overnight courier company, or (c) five (5) days after being deposited in
the United States mail, certified, registered or express mail, postage prepaid,
return receipt requested, in each case addressed to such other party at the
address first written above or to such other address or such additional party as
may be designated from time to time by such other parry hereto by notice given
in the manner provided in this section.
Successors and Assigns
19. This Sub-Sublease shall be binding upon and inure to the benefit of
Sub-Sublessor and Sub-Sublessee and their respective successors and permitted
assigns.
Entire Agreement; Amendments; No Waiver.
20. This Sub-Sublease contains the entire agreement between the parties
and no promise, representation, warranty, covenant, agreement or understanding
not specifically set forth in this Sub-Sublease shall be binding upon or inure
to the benefit of, either party. The Sub-Sublease may not- be amended, altered,
modified or supplemented in any manner except by an instrument in writing duly
executed by the parties. The failure of Sub-Sublessor to strictly enforce the
conditions or covenants of this Sub-Sublease or to exercise any remedy herein
conferred, or the acceptance by Sub-Sublessor of any installment of rent after
any breach by Sub-Sublessee, in any one or more instances, shall not be
construed or deemed to be a waiver by Sub-Sublessor of any such conditions,
covenants or remedies, but the same shall continue in full force and effect.
Termination of Master Lease
21. If the Master Lease is terminated, this Sub-Sublease shall terminate
simultaneously and the Sub-Sublease and Sub-Sublessee shall thereafter be
released from all
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obligations under this Sub-Sublease, and Sub-Sublease shall refund to Sub-
Sublessee any unearned rent paid in advance.
Attorney's Fees
22. If any action or other proceeding arising out of this Sub-Sublease is
commenced by either party to this Sub-Sublease concerning the Premises, then as
between Sub-Sublease and Sub-Sublessee, the prevailing party shall be entitled
to receive from the other party, in addition to any other relief that may be
granted, the reasonable attorney's fees, costs, and expenses incurred in the
action or other proceeding by the prevailing party.
Governing Law
23. This Sub-Sublease shall be governed, interpreted and construed in
accordance with the laws of the State of California.
Payment of Costs for Landlord Approval
24. Sub-Sublessee shall reimburse Sub-Sublessor for all costs associated
with obtaining Landlord's approval of this Sub-Sublease (up to $1,000.00) to be
paid by Sub-Sublessee to Sub-Sublessor within five (5) days of receipt of an
invoice therefor from Sub-Sublessor.
IN WITNESS WHEREOF, the parties have executed this Sub-Sublease at Los
Angeles, California, on the date specified in the first paragraph of this Sub-
Sublease.
SUB-SUBLESSOR
THE RHL GROUP, INC., a California corporation
/s/ Robert H. Lorsch
_________________________________
Robert H. Lorsch, President
SUB-SUBLESSEE
E-SPORT, INC., a Delaware corporation
/s/
_________________________________
[name of signing party]
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Consent of Sublessor
The undersigned as the Lessor under the Master Lease and as Sublessor under
the Sublease, respectively, described in the foregoing Sub-Sublease, hereby
consent to the Sub-Sublease of the Premises described in this Sub-Sublease to
Sub-Sublessee. In granting this consent, the undersigned do not waive any of
the Lessor's or Sublessor's rights under the Master Lease as to the Lessee or
under the Sublease as to the Sub-Sublessee.
SUBLESSOR
_________________________________
[name of signing party]
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