Last Update 21 October 2017
TABLE OF CONTENTS
SUBLEASE OF CONDOMINIUM
AND
GRANT DEED OF IMPROVEMENTS

  1. ENCUMBRANCES.

    1. Encumbrance of Sublessee's Estate by Sublessee.

      1. Sublessee shall have the right, without Sublessor's prior written consent, to encumber the subleasehold estate created by this Sublease by a mortgage, deed of trust or other security instrument, including, without limitation, an assignment of the rents, issues and profits from the Subleased Property and improvements thereon, to secure repayment of any loan, and associated obligations to Sublessee from an institutional lender (which, for purposes hereof, shall mean any national or state bank, foreign bank agency licensed in California, federal or state savings and loan association, trust company, insurance company, educational institution, pension, retirement, or welfare fund, charitable foundation, or real estate investment trust), upon the condition that all rights acquired under any such Subleasehold Mortgage shall be subject to each and all of the covenants, conditions and restrictions set forth in this Sublease, and to all rights and interests of Sublessor herein, except as expressly provided herein. If Sublessee shall mortgage this subleasehold, or any part or parts thereof, any holder of a Subleasehold Mortgage shall send to Sublessor a true copy thereof, together with written notice specifying the name and address of any such holder and the pertinent recording date with respect to such Subleasehold Mortgage;

      2. As used herein, "Subleasehold Mortgage" shall mean any mortgage, deed of trust or any other security instrument, including, without limitation, an assignment of the rents, issues and profits from the Subleased Property and the improvements thereon, which constitutes a lien on the subleasehold estate created by this Sublease and "Lender" shall mean the owner and holder of a Subleasehold Mortgage;

      3. In the event of any conflict between the provisions of this Sublease and the provisions of any Subleasehold Mortgage, the provisions of this Sublease shall control.

      4. Upon and immediately after the recording of a Subleasehold Mortgage, Sublessee, at Sublessee's expense, shall cause to be recorded in the office of the Recorder of Orange County, California, a written request of Sublessor (Sublessee agreeing to execute and acknowledge such a request) for a copy of any notice of default and of any notice of sale under the Subleasehold Mortgage as provided by the statutes of the State of California relating thereto.

      5. If Sublessee, or Sublessee's successors or assigns, shall mortgage this Sublease in compliance with the provisions herein, then so long as any such mortgage shall remain unsatisfied of record, Sublessor, upon serving upon Sublessee any notice of default pursuant to the provisions hereof, or any other notice under the provisions of or with respect to this Sublease, shall also serve simultaneously, in the same manner provided herein for the service of notice on Sublessee, a copy of such notice upon Lender at the address specified in the notice submitted to Sublessor pursuant to subparagraph (1) above, and no notice by Sublessor to Sublessee hereunder shall be deemed to have been duly given unless and until a copy thereof has been so served upon Lender.

      6. during the continuance of any Subleasehold Mortgage and until such time as the lien of any Subleasehold Mortgage has been extinguished:

        1. Sublessor shall not agree to any mutual termination nor accept any surrender of this Sublease, nor shall Sublessor consent to any amendment or modification of this Sublease, without the prior written consent of Encumbrancer;

        2. Notwithstanding any default by Sublessee in the performance or observance of any agreement, covenant or condition of this Sublease on the part of Sublessee to be performed or observed, Sublessor shall have no right to terminate this Sublease or to re-enter without termination unless an event of default shall have occurred and be continuing, Sublessor shall have given Lender written notice of such event of default, and Lender shall have failed to remedy such default or acquire Sublessee's subleasehold estate created hereby or commence foreclosure or other appropriate proceedings in the nature thereof, all as set forth in, and within the time specified by, this Sublease;

        3. Lender shall have the right, but not the obligation, at any time prior to termination of this Sublease and without payment of any penalty, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes and assessments, to make any repairs and improvements, to do any other act or thing required of Sublessee hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Sublease. All payments so made and all things so done and performed by Lender shall be as effective to prevent a termination of this Sublease as the same would have been if made, done and performed by Sublessee instead of by Lender;

        4. Should any event of default under this Sublease occur, Lender shall have sixty (60) days after receipt of notice from Sublessor setting forth the nature of such event of default, and, if the default is such that possession of the Subleased Property and the improvements thereon may be reasonably necessary to remedy the default, a reasonable time after the expiration of such sixty (60) day period, within which to remedy such default, provided that (i) Lender shall have fully cured any default in the payment of any monetary obligations of Sublessee under this Sublease within such sixty (60) day period and shall continue to pay currently such monetary obligations as and when the same are due and (ii) Lender shall have acquired Sublessee's subleasehold estate created hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such period, or prior thereto, and is diligently prosecuting any such proceedings. All rights of Sublessor to terminate this Sublease, or to re-enter the Subleased Property without termination of this Sublease, as the result of the occurrence of any such event of default shall be subject to, and conditioned upon such event of default and Lender having failed to remedy such default or acquire Sublessee's leasehold estate created hereby or commence foreclosure or other appropriate proceedings in the nature thereof as set forth in and within the time specified by this subparagraph.

        5. Any event of default under this Sublease which in the nature thereof cannot be remedied by Lender, including but not limited to the bankruptcy or insolvency of, or appointment of a receiver for, the Sublessee, shall be deemed to be remedied if (i) within sixty (60) days after receiving written notice from Sublessor setting forth the nature of such event of default, or prior thereto, Lender shall have acquired Sublessee's subleasehold estate created hereby or shall have commenced foreclosure or other appropriate proceedings in the nature thereof, (ii) Lender shall diligently prosecute any such proceedings to completion, and (iii) Lender shall have fully cured any default in the payment of any monetary obligations of Sublessee hereunder which do not require possession of the Subleased Property within such sixty (60) days period and shall thereafter continue to faithfully perform all monetary obligations which do not require possession of the Subleased Property, and (iv) after gaining possession of the Subleased Property Lender performs all other obligations of Sublessee hereunder as and when the same are due;

        6. If Lender is prohibited by any process or injunction issued by any court or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Sublessee from commencing or prosecuting foreclosure or other appropriate proceedings in the nature thereof, the times specified in subparagraphs (6)(d) and (6)(e) above for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition; provided that Lender shall have fully cured any default in the payment of any monetary obligations of Sublessee under this Sublease and shall continue to pay currently such monetary obligations as and when the same fall due;

        7. (g) Foreclosure of a Subleased Mortgage or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Subleasehold Mortgage, or any conveyance of the subleasehold estate created hereby from Sublessee to Lender through, or in lieu of foreclosure or other appropriate proceedings in the nature thereof shall not require the consent of Sublessor or constitute a breach of any provision of or a default under this Sublease and, upon such foreclosure, sale or conveyance Sublessor shall recognize Lender, or any other foreclosure sale purchaser, as Sublessee hereunder. In the event Lender becomes Sublessee under this Sublease or under any new sublease obtained pursuant to subparagraph (h) below, Lender shall be personally liable for the obligations of Sublessee under this Sublease or such new sublease only for the period of time that Lender remains Sublessee thereunder. Notwithstanding anything contained in the body of this Sublease, Lender's right thereafter to assign this Sublease or such new sublease or to sublease the Subleased Property and the improvements thereon under this Sublease or such new sublease shall not be subject to restriction; provided that any assignee shall take the subleasehold estate subject to all the covenants and conditions herein contained on the part of Sublessee to be kept observed and performed, and shall, as a condition of such assignment, assume and agree to perform all such obligations, covenants and conditions of Sublessee hereunder, in the event Lender subsequently assigns or transfers its interest under this Sublease after acquiring the same by foreclosure or deed in lieu of foreclosure or subsequently assigns or transfers its interest under any new sublease obtained pursuant to subparagraph (h), and in connection with any such assignment or transfer Lender takes back a mortgage or deed of trust encumbering such subleasehold interest to secure a portion of the purchase price given to Lender for such assignment or transfer, then such mortgage or deed of trust shall be considered a Subleasehold Mortgage as contemplated under this Sublease and Lender shall be entitled to receive the benefit of and enforce the provisions of this Sublease intended for the benefit of the holder of a Subleasehold Mortgage;

        8. Should Sublessor terminate this Sublease by reason of any default by Sublessee hereunder, Sublessor shall, upon written request by Lender given within sixty (60) days after such termination, immediately execute and deliver a new sublease of the Subleased Property to Lender, or its nominee, purchaser, assignee or transferee, for the remainder of the term of this Sublease with the same agreements, covenants and conditions (except for any requirements which have been fulfilled by Sublessee prior to termination) as are contained herein and with priority equal to that hereof; provided, however, that Lender shall promptly cure any defaults of Sublessee susceptible to cure by Lender, and provided further that if more than one Lender requests such new sublease, the Lender holding the most senior Subleasehold Mortgage shall prevail. Upon execution and delivery of such new sublease, title to the improvements on the Subleased Property shall vest in the new sublessee, and Sublessor, at the expense of the new Sublessee, shall take such action as shall be necessary to cancel and discharge this Sublease and to remove Sublessee named herein from the Subleased Property.

      7. Notwithstanding anything contained herein, if for any reason this Sublease and the subleasehold estate of Sublessee hereunder is terminated by Sublessor by summary proceedings or otherwise in accordance with the terms of this Subleases, Sublessor covenants and agrees that:

        1. Such termination of this Sublease shall not result in a termination of any subleases affecting the Subleased Property;

        2. All subleases shall continue for the duration of their respective terms and any extensions thereof as a direct sublease between Sublessor hereunder and the Sublessee thereunder, with the same force and effect as if Sublessor hereunder had originally entered into such sublease as Sublessor thereunder (subject, however, to the prior right of the holder of any Subleasehold Mortgage);

        3. Any Sublessee shall not be named or joined in any action or proceeding by Sublessor under this Sublease to recover possession of the Subleased Property or for any other relief. Sublessor shall, upon request, execute, acknowledge and deliver such agreements evidencing and agreeing to the foregoing as each Sublessee shall require.

      8. If Sublessor shall become the holder of any mortgage or deed of trust on any portion of the Condominium granted by this Sublease, or if Sublessor shall acquire said Condominium or any part thereof, or if Sublessee shall acquire the fee simple title or any other freehold estate in the Subleased Property, or if the holder of any mortgage or deed of trust on the Condominium of Sublessee acquires the fee simple title to any portion of the Subleased Property (while such mortgage or deed of trust is in existence and operative on said Condominium), no merger of any estates in said Condominium shall occur and all estates shall always be kept separate and distinct throughout the term of the Sublease.

    2. Encumbrance of Sublessor's Estate by Sublessor.
      During the term of this Sublease, Sublessor shall have the right or power to mortgage or otherwise create a security interest affecting Sublessor's interest in the Subleased Property, and to renew, modify, replace, extend or refinance such mortgage, subject, however, to the following:

      1. All rights acquired under any such mortgage shall be subject and subordinate to (i) the rights and interest of Sublessee under this Sublease, the covenants, conditions and restrictions set forth herein and the subleasehold estate created by this Sublease; (ii) the rights and interests of any Sublessee or assignee permitted hereunder; and (iii) the rights of any Lender.

      2. The holder of such mortgage shall not be deemed a "Lender," and such mortgage shall not be deemed a "Subleasehold Mortgage," as such terms are defined in this Sublease. The holder of such mortgage shall not, in the exercise of any of its rights arising or which may arise out of such mortgage, or any instrument modifying or amending the same or entered into in substitution or replacement thereof, disturb or deprive Sublessee or any Sublessee or assignee permitted hereunder in or of its possession or its right to possession of the Subleased Property or of any part thereof under this Sublease or any permitted sublease, or any right or privilege created for or incurring, provided this Sublease is then in full force and effect.

      3. In the event of a default under such mortgage, and if this Sublease shall immediately prior to such default, be in full force and effect, then, and in such event, Sublessee shall not be made a party in any action or proceeding to foreclose said mortgage, nor shall Sublessee or any Sublessee or assignee permitted hereunder be evicted or removed or its possession or right of possession be disturbed or in any manner interfered with and this Sublease shall continue in full force and effect as a direct sublease from the holder of the said mortgage to Sublessee under the terms and provisions of this Sublease.

      4. Any such mortgage shall provide that the holder of such mortgage, upon serving Sublessor with any notice under such mortgage will simultaneously serve a copy of such notice upon Sublessee, and no notice by the holder of such mortgage to Sublessor shall be deemed to have been duly given unless and until a copy thereof has been so served upon Sublessee.

      5. Sublessor shall, upon request, execute, acknowledge and deliver to Sublessee, an agreement, prepared at the sole cost and expense of Sublessor and in a form satisfactory to Sublessee, between Sublessor, Sublessee and the holder of such mortgage, agreeing to all of the provisions of this subparagraph.
SUBLEASE OF CONDOMIUM
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