STANDARD SUBLEASE
American Industrial Real Estate Association
1.Parties. This Sublease, dated, for reference purposes only, October 29,
1996
is made by and between Micro General Corporation(herein called "Sublessor")
and Secure Communication Systems, Inc. (herein called "Sublessee").
2.Premises. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real property situated in the
County
of 0range State of California, commonly known as 1740 E. Wilshire Avenue,
Santa Ana, California and describes approximately 18,550 square feet
industrial facility which is part of a larger approximately 36,000 square
foot
building. Said real property, including the land and all improvements
thereon,
is hereinafter called the "Premises".
3. Term.
3.1Term. The term of this Sublease shall be for twenty-seven (27) months
commencing on January 1, 1997 and ending on March 31, 1999 unless sooner
terminated pursuant to any provision hereof.
3.2Delay in Commencement. Notwithstanding said commencement date, if for any
reason Sublessor cannot deliver possession of the Premises to Sublessee on
said date, Sublessor shall not be subject to any liability therefore, nor
shall such failure affect the validity of this Lease or the obligations of
Sublessee hereunder or extend the term hereof, but in such case Sublessee
shall not be obligated to pay rent until possession of the Premises is
tendered to Sublessee: provided. however, that if Sublessor shall not have
delivered possession of the Premises within sixty (60) days from said
commencement date. Sublessee may, at Sublessee's option. by notice in writing
to Sublessor within ten (10) days thereafter, cancel this Sublease, in which
event the parties shall be discharged from all obligations thereunder. If
Sublessee occupies the Premises prior to said commencement date, such
occupancy shall be Subject to all provisions hereof, such occupancy shall not
advance the termination date and Sublessee shall pay rent for such period at
the initial monthly rates set forth below.
4.Rent. Sublessee shall pay to Sublessor as rent for the Premises equal
monthly payments of $ 8,533, in advance, on the 1st day of each month of the
term hereof. Sublessee shall pay Sublessor upon the execution hereof $18,
179 as rent for January 1997 and a security deposit for the premises.
Rent for any period during the term hereof which is for less than one month
shall be a prorata portion of the monthly installment Rent shall be payable
in
lawful money of the United States to Sublessor at the address stated herein
or
to such other persons or at such other places as Sublessor may designate in
writing.
5.Security Deposit. Sublessee shall deposit with Sublessor upon execution
hereof $9.646 as Security for Sublessee's faithful performance of Sublessee's
obligations hereunder. If Sublessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this
Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or an','
portion of said deposit. Sublessee shall within ten (10) days after written
demand therefore deposit cash with Sublessor in an amount sufficient to
restore Said deposit to the full amount here in above stated and Sublessee's
failure to do so shall be a material breach of this Sublease. Sublessor shall
not be required to keep said deposit separate from its general accounts. If
Sublessee performs all of Sublessee's obligations hereunder, said deposit, or
so much thereof as has not theretofore been applied by Sublessor, shall be
returned. without payment of interest or other increment for its use to
Sublessee (Or at Sublessor~s option, to the last assignee. if any, of
Sublessee's interest hereunder) at the expiration of the term hereof, and
after Sublessee has vacated the Premises. No trust relationship is created
herein between Sublessor and Sublessee with respect to said Security Deposit.
6. Use.
6.1Use. The Premises shall be used and occupied only for administrative
offices, manufacturing assembly, warehousing and distribution of rugged
computer systems and for no other purpose.
6.2Compliance with Law.
(a)Sublessor warrants to Sublessee that the Premises. in its existing
slate. but without regard to the use for which Sublessee will use the
Premises, does not violate any applicable building code regulation or
ordinance at the time that this Sublease is executed. In the event that it is
determimed that this warranty has been violated, then it shall be the
obligation of the Sublessor, after written notice from Sublessee. to
promptly.
at Sublessor's sole cost and expense, rectify any such violation. In the
event
that Sublessee does not give to Sublessor written notice of the violation of
this warranty within 1 year from the commencement of the term of this
Sublease, it shall be conclusively deemed that such violation did not exist
and the correction of the same shall be the obligation of the Sublessee.
(b)Except as provided in paragraph 6.2(a). Sublessee shall. at
Sublessee's expense, comply promptly with all applicable statutes.
ordinances.
rules. regulations, orders, restrictions of record, and requirements in
effect
during the term or any part of the term hereof regulating the use by
Sublessee
of the Premises. Sublessee shall not use or permit the use of the Premises in
any manner that will tend to create waste or a nuisance or, if there shall be
more than one tenant of the building containing the Premises, which shall
tend
to disturb such other tenants
6.3Condition of Premises. Except as provided in paragraph 6.2(a) Sublessee
hereby accepts the Premises in their condition existing as on the date of the
execution hereof. subject to all applicable zoning, municipal. county and
state laws, ordinances, and regulations governing and regulating the use of
the Premises, and accepts this Sublease subject thereto and to all matters
disclosed thereby and by any exhibits attached hereto. Sublessee
acknowledges
that neither Sublessor or Sublessor's agents have made any representation or
warranty as to the suitability of the Premises for the conduct of Sublessee's
business.
7.Master Lease
7.1Sublessor is the lessee of the premises by virtue of a lease, hereinafter
referred to as the "master Lease", a copy of which is attached hereto marked
Exhibit 1, dated November 8, 1988(and amended February 16, 1994) wherein Shaw
Investment Company (whose interest was subsequently transferred to the
Principal Mutual Life Insurance Company) is the lessor, hereinafter referred
to as the "Master Lease".
7.2This Sublease is and shall be at all times subject and subordinate to the
Master Lease.
7.3The terms, conditions and respective obligations of Sublessor and
Sublessee
to each other under this Sublease shall be the terms and conditions of the
Master Lease except for those provisions of the Master Lease which are
directly contradicted by this Sublease in which event the terms of this
Sublease document shall control over the Master Lease. Therefore, for the
purposes of this Sublease, wherever in the Master Lease the word "Lessee" is
used it shall be deemed to mean the Sublessee herein.
7.4During the term of this Sublease and for all periods subsequent for
obligations which have arisen prior to the termination of this Sublease.
Sublessee does hereby expressly assume and agree to perform and comply with,
for the benefit of Sublessor and Master Lessor, each and every obligation of
Sublessor under the Master Lease except for the following paragraphs which
are
excluded therefrom: N/A.
7.5The Obligations that Sublessee has assumed under paragraph 7.4 hereof are
hereinafter referred to as the "Sublessee's Assumed Obligations". The
obligations that Sublessee has not assumed under paragraph 7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".
7.6Sublessee shall hold Sublessor free and harmless of and from all
liability,
judgements, costs, damages, claims or demands, including reasonable attorneys
fees, arising out of Sublessee's failure to comply with or perform
Sublessee's
Assumed Obligations.
7.7Sublessor agrees to maintain the Master Lease during the entire term of
this Sublease, subject, however, to any earlier termination of the Master
Lease without the fault of the Sublessor, and to comply with or perform
Sublessor's Remaining Obligations and to hold Sublessee free and harmless of
and from all liability, judgments, costs, damages, claims or demands arising
Out of Sublessor's failure to comply with or perform Sublessor's Remaining
Obligations.
7.8Sublessor represents to Sublessee that the Master Lease is in full force
and effect and that no default exists on the part of any party to the Master
Lease.
8. Assignment of Sublease and Default.
8.1Sublessor hereby assigns and transfers to Master Lessor the Sublessor's
interest in this Sublease and all rentals and income arising therefrom,
subject however to terms of Paragraph 8.2 hereof,
8.2Master Lessor, by executing this document, agrees that until a default
shall occur in the performance of Sublessor's Obligations under the Master
Lease, that Sublessor may receive, collect and enjoy the rents accruing under
this Sublease, However, if Sublessor shall default in the performance of its
obligations to Master Lessor then Master Lessor may, at its option, receive
and collect, directly from Sublessee, all rent owing and to be owed under
this
Sublease. Master Lessor shall not, by reason of this assignment of the
Sublease nor by reason of the collection of the rents from the Sublessee, be
deemed liable to Sublessee for any failure of the Sublessor to perform and
comply with Sublessor's Remaining Obligations.
8.3Sublessor hereby irrevocably authorizes and directs Sublessee, upon
receipt
of any written notice from the Master Lessor stating that a default exists in
the performance of Sublessor's obligations under the Master Lease, to pay to
Master Lessor the rents due and to become due under the Sublease, Sublessor
agrees that Sublessee shall have the right to rely upon any such statement
and
request from Master Lessor. and that Sublessee shall pay such rents to Master
Lessor without any obligation or right to inquire as to whether such default
exists and notwithstanding any notice from or claim from Sublessor to the
contrary and Sublessor shall have no right or claim against Sublessee for any
such rents so paid by Sublessee.
8.4No changes or modifications shall be made to this Sublease without the
consent of Master Lessor.
9. Consent of Master Lessor.
9.1In the event that the Master Lease requires that Sublessor obtain the
consent of Master Lessor to any subletting by Sublessor then, this Sublease
shall not be effective unless, within 10 days of the date hereof, Master
Lessor signs this Sublease thereby giving its consent to this Subletting.
9.2In the event that the obligations of the Sublessor under the Master Lease
have been guaranteed by third parties then this Sublease, nor the Master
Lessor's consent, shall not be effective unless, within 10 days of the date
hereof, said guarantors sign this Sublease thereby giving guarantors consent
to this Sublease and the terms thereof.
9.3 In the event that Master Lessor does give such consent then:
(a)Such consent will not release Sublessor of its obligations or alter
the primary liability of Sublessor to pay the rent and perform and comply
with
alt of the obligations of Sublessor to be performed under the Master Lease.
(b)The acceptance of rent by Master Lessor from Sublessee or any one
else
liable under the Master Lease shall not be deemed a waiver by Master Lessor
of
any provisions of the Master Lease.
(c)The consent to this Sublease shall not constitute a consent to any
subsequent subletting or assignment.
(d)In the event of any default of Sublessor under the Master Lease,
Master Lessor may proceed directly against Sublessor, any guarantors or any
one else liable under the Master Lease or this Sublease without first
exhausting Master Lessor's remedies against any other person or entity liable
thereon to Master Lessor,
(e)Master Lessor may consent to subsequent sublettings and assignments
of
the Master Lease or this Sublease or any amendments or modifications thereto
without notifying Sublessor nor any one else liable under the Master Lease
and
without obtaining their consent and such action(n shall not relieve such
persons from liability.
(f)In the event that Sublessor shall default in its obligations under
the
Master Lease, then Master Lessor, at its option and without being obligated
to
do so, may require Sublessee to attorn to Master Lessor in which event Master
Lessor shall undertake the obligations of Sublessor under this Sublease from
the time of the exercise of said option to termination of this Sublease but
Master Lessor shall not be liable for any prepaid rents nor any security
deposit paid by Sublessee, nor shall Master Lessor be liable for any other
defaults of the Sublessor under the Sublease.
9.4The signatures of the Master Lessor and any Guarantors of Sublessor at the
end of this document shall constitute their consent' to the terms of this
Sublease,
9.5Master Lessor acknowledges that, to the best of Master Lessor's knowledge,
no default presently exists under the Master Lease of obligations to be
performed by Sublessor and that the Master Lease is in full force and effect,
9.6In the event that Sublessor defaults under its obligations to be performed
under the Master Lease by Sublessor, Master Lessor agrees to deliver to
Sublessee a copy of any such notice of default. Sublessee shall have the
right
to cure any default of Sublessor described in any notice of default within
ten
days after service of such notice of default on Sublessee. If such default is
cured by Sublessee then Sublessee shall have the right of reimbursement and
offset from and against Sublessor.
10. Brokers Fee.
10.1Upon execution hereof by all parties, Sublessor shall pay to Lee &
Associates a licensed real estate broker, (herein called "Broker"), a fee as
set forth in a separate agreement between Sublessor and Broker, or in the
event there is no separate agreement between Sublessor and Broker, the sum of
$ as per agreement for brokerage services rendered by Broker to Sublessor in
this transaction.
10.2Sublessor agrees that if Sublessee exercises any option or right of first
refusal granted by Sublessor herein, or any option or right substantially
similar thereto, either to extend the term of this Sublease, to renew this
Sublease, to purchase the Premises, or to lease or purchase adjacent property
which Sublessor may own or in which Sublessor has an interest, or if Broker
is
the procuring, cause of any lease, sublease, or sale pertaining to the
Premises or any adjacent property which Sublessor may own or in which
Sublessor has an interest, then as to any of said transactions Sublessor
shall
pay to Broker a fee, in cash, in accordance with the schedule of Broker in
effect at the time of the execution of this Sublease. Notwithstanding the
foregoing, Sublessor's obligation under this Paragraph 10.2 is limited to a
transaction in which Sublessor is acting as a sublessor, lessor or setter
10.3Master Lessor agrees, by its consent to this Sublease, that if Sublessee
shalt exercise any option or right of first refusal granted to Sublessee by
Master Lessor in connection with this Sublease, or any option or right
substantially similar thereto, either to extend the Master Lease, to purchase
the Premises or any part thereof, or to lease or purchase adjacent property
which Master Lessor may ow or in which Master Lessor has an interest, or if
Broker is the procuring cause of any other lease or sale entered into between
Sublessee and Master Lessor pertaining to the Premises, any part thereof, or
any adjacent property which Master Lessor owns or in which it has an
interest,
then as to any of said transactions Master Lessor shall pay to broker a fee,
in cash, in accordance with the schedule of Broker in effect at the time of
its consent to this Sublease.
10.4Any fee due from Sublessor or Master Lessor hereunder shall be due and
payable upon the exercise of any option to extend or renew, as to any
extension or renewal; upon the execution of any new lease, as to a new lease
transaction or the exercise of a right of first refusal to lease; or at the
close of escrow, as tot he exercise of any option to purchase or other sales
transaction.
10.5Any transferee of Sublessor's interest in this Sublease, or of Master
Lessor's interest in the Master Lease, by accepting an assignment thereof,
shall be deemed to have assumed the respective obligations of Sublessor or
Master Lessor under this Paragraph 10. Broker shall be deemed to be a third
party beneficiary of this paragraph 10.
11.Attorney's fees. If any party or the Broker named herein brings an action
to enforce the terms hereof or to declare rights hereunder, the prevailing
party in any such action, on trial and appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the
Court. The provision of this paragraph shall inure to the benefit of the
Broker named herein who seeks to enforce a right hereunder.
12.Additional Provisions. [if there are no additional provisions draw a line
from this point to the next printed word after the space left here If there
are additional provisions place the same here.
A.Base Rent Increase. Base monthly rent shall increase on the following
schedule:
April 1, 1997 to March 31,1998 - $9,089.00 NNN
April 1, 1998 to March 31,1999 - $9,646.00 NNN
As per the triple net (NNN) lease, Tenant is responsible for prorata
share of operating costs of taxes, insurance and maintenance.
B.Rental Abatement. Sublessor shall grant Sublessee forty-five (45) days
of rent free occupancy. The period from February 1, 1997 to March 14, 1997
shall be free from basic rent.
C.Condition of Premises. Sublessor shall deliver the Premises clean and
free of debris/personal property at the commencement of the lease. Sublessor
shall warranty that as of the commencement date, the electrical, heating, air
conditioning and plumbing are In working condition. Prior to commencement,
Sublessor shall have the carpets steam cleaned. Additionally, Sublessor shall
leave the chain link fence in the warehouse for Sublessee's use.
If this Sublease has been filled in it has been prepared for submission to
your attorney for his approval. No representation or recommendation Is made
by
the real estate broker or its agents or employee as to the legal sufficiency,
legal effect, or tax consequences of this Sublease or the transaction
relating
thereto.
Executed at Santa Ana CaMicro General Corporation
on November 7, 1996By /s/ Thomas E. Pistilli
address1740 E. Wilshire Ave.
Santa Ana, CA 92705 .
"Sublessor (Corporate Seal)
Executed at Santa Ana, Ca Secure Communication Systems, Inc.
On October 30, 1996By. /s/ Allen B. Ronk
Address:1507 E. Mc Fadden Ave.
Santa Ana, CA 92705
"Sublessee"
Principal Mutual Life Insurance Co.
By: /s/ John N. Urban
Assistant Director
Commercial Real Estate