Exhibit 10.52
(exchange.doc)
EXCHANGE AGREEMENT
This Agreement (the "Agreement") for the exchange of the properties listed on
Exhibit "A," attached hereto, (the "Properties") is entered into on March 6,
1998 (herein called the "Contract Date") by and between ENERGY ASSET MANAGEMENT
COMPANY, L.L.C. (EAMC), an Arkansas limited liability company, wholse address is
P.O. Box 1714, El Dorado, Arkansas 71731 and SABA ENERGY OF TEXAS, INCORPORATED
(SABA), a Texas Corporation whose address is 1603 SE 19th Street, Suite 203,
Edmond, Oklahoma 73013 and SABA PETROLEUM COMPANY (SPC), a California
Corporation whose address is 3201 Airpark Drive, Suite 201, Santa Maria,
California 93455. Pursuant to the following terms and conditions, EAMC shall
convey to SABA all of EAMC's right, title and interest in and to the Properties
in exchange for Two Hundred Thousand (200,000) shares of Common Stock of SPC,
which stock is traded on the American Stock Exchange under the Symbol SAB.
1. Effective Date and Time of Sale and Purchase Agreement. Unless otherwise
agreed to in writing by EAMC and SABA, the effective date and time
("Effective Date") of this exchange of Properties is January 1, 1998 at
7:00 A.M.C.S.T.
2. Closing. Upon satisfaction of all the terms and conditions contained
herein, EAMC and SABA shall close this exchange on March 6, 1998 (the
"Closing Date") unless otherwise agreed to by both parties in writing.
Closing shall take place at SABA's office, or via mail and facsimile. A one
time extension to the closing date of no more than 10 days shall not be
unreasonably withheld, if requested in writing. At closing, the following
shall occur:
a. EAMC, SABA and SPC shall provide an executed original of this agreement,
each to the other.
b. EAMC and SABA shall execute additional documents, as reasonably required
by SABA for the transfer of assets, or Partnership interests.
c. SPC shall tender one certificate for 200,000 shares of common stock,
free of all restrictions, except as otherwise provided in Article 4g
hereinbelow, to EAMC.
d. SABA shall produce a final closing statement setting forth the final
cash amount due SABA as of the agreed closing and effective dates. In
the event there is a material difference (defined as $50,000) between
$2,615,000.00 and the actual amount due SABA, then SABA shall pay to
EAMC (or EAMC shall pay to SABA) within 45 days of closing the cash
difference, less $50,000.
3. Exchange. This is an exchange of equity interest in the properties for
common stock in SPC. The number of shares of stock set forth in Article 2c
shall constitute the adjusted number of shares with no further increase, or
reduction in the number of shares exchanged pursuant to this Agreement,
except as provided in Article 6b hereinbelow. There shall be no
post-closing adjustments between the parties, except as provided in Article
6b hereinbelow. Adjustments made at closing pursuant to Article 2d are
inclusive of the following considerations: i) The unpaid balance owed by
EAMC for principal and interest payments per prior acquisition agreements,
participation agreements and financing agreements through the date of
closing; ii) The unpaid balance owed by EAMC for operating expenses and
capital expenditures incurred prior to the effective date; iii) Unpaid
Partnership obligations; iv) Revenue paid to EAMC for post effective date
occurences; v) EAMC's share of escrow accounts; vi) EAMC's net share of
value for oil in the tanks as of the effective date; vii) Any other
accounts jointly held between EAMC and SABA, or SPC.
4. Representations with Respect to the Common Stock. EAMC represents to SPC
that:
a. Investment Purpose. As of the date hereof, EAMC is acquiring the
Common Stock for its own account for investment only and not with a
present view towards the public sale or distribution thereof, except
pursuant to sales registered or exempted from registration under the
1933 Act.
b. Accredited Investor Status. EAMC is an "accredited investor" as
that term is defined in Rule 501 (a) of Regulation D.
-------------------------------------
c. Reliance on Exemptions. EAMC understands that the Common Stock are
being offered and sold to it in reliance upon specific exemptions from
the registration requirements of United States federal and state
securities laws and that SABA and SPC are relying upon the truth and
accuracy of, and EAMC's compliance with, the representations,
agreements, acknowledgments and understandings of EAMC set forth herein
in order to determine the availability of such exemptions and the
eligibility of the EAMC to acquire the Common Stock.
d. Information. EAMC and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of SPC
and the Common Stock which have been requested by EAMC or its advisors.
EAMC and its advisors, if any, have been afforded the opportunity to
ask questions of SPC and have received what EAMC believes to be
satisfactory answers to any such inquires. EAMC understands that its
investment in the Common Stock involves a significant degree of risk.
e. Governmental Review. EAMC understands that no United States
federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement
of the ------------------------------- Common Stock.
f. Transfer or Resale. EAMC understands that (i) the Common Stock has
not been registered under the Securities Act of 1933 or any applicable
state securities laws, and may not be transferred unless (a)
subsequently included in an effective registration statement
thereunder, or (b) EAMC shall have delivered to SPC an opinion of
counsel (which opinion shall be reasonably acceptable to SPC) to the
effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration or (c) sold
or transferred to an "affiliate" (as defined under Rule 144) or EAMC,
or (d) sold pursuant to Rule 144 promulgated under the 1933 Act (or a
successor rule); (ii) any sale of such Securities made in reliance on
Rule 144 may be made only in accordance with the terms of said Rule and
further, if said Rule is not applicable, any resale of such Securities
under circumstances in which the seller (or the person through whom the
sale is made) may be deemed to be an underwriter (as that term is
defined in the 1933 Act) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (iii) neither SPC nor any other person is under any
obligation to register such Common Stock under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder (in each case, other than as set forth in the
agreement).
g. Legends. EAMC understands that the Common Stock, until such time
as it shall have been registered under the 1933 Act as
contemplated herein, may bear a restrictive legend in
substantially the following ------------- form (and a
stop-transfer order may be placed against transfer of the
certificates for such securities):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The securities have
been acquired for investment and may not be sold, transferred or assigned in the
absence of an effective registration statement for the securities under said
Act, or an opinion of counsel, in form, substance and scope reasonably
acceptable to SPC, that registration is not required under said Act or unless
sold pursuant to Rule 144 under said Act."
5. Certain Agreements to Register. SPC will file a registration statement with
the Securities and Exchange Commission within sixty (60) days of the
closing of the transaction contemplated hereby, covering the sale of the
Common Stock by EAMC. SPC will use its best efforts to cause the Securities
and Exchange Commission to accept the registration statement. EAMC will, as
a condition to the filing and the effectiveness of such registration
statement, furnish SPC with such information concerning EAMC's intention to
sell the Common Stock as SPC may reasonably request for inclusion in the
registration statement and will indemnify and hold each of SABA and SPC
harmless from and against any loss or liability (including reasonable
attorneys fees and fees of experts) arising out of any claim that such
information is incorrect in any material respect.
6 Organization and Authority Relative to this Agreement.
a. EAMC is a limited liability corporation, duly organized, validly
existing and in good standing as a domestic corporation under the laws
of the State of Arkansas and has full power and authority to enter
into, deliver and perform this Agreement and to consummate the
transaction contemplated hereby. The execution and delivery of this
Agreement by EAMC and the consummation by EAMC of the transaction
contemplated hereby have been duly authorized by all requisite action,
and no other corporate proceedings on the part of EAMC are necessary to
authorize this Agreement or the transaction contemplated hereby. This
Agreement has been duly executed and delivered by EAMC and constitutes
a legally valid and binding obligation of EAMC, enforceable in
accordance with its terms.
b. Notwithstanding the items listed below, there are no suits, judgements,
actions, proceedings, liens, or investigation pending or, to the
knowledge of EAMC, threatened, against or affecting EAMC, its
respective businesses or any of the Properties, in any court or before
or by any governmental or regulatory authority or agency, domestic or
foreign, or any arbitration, which could adversely affect the
Properties or SABA's use of the same, or the ability of EAMC to perform
its obligations under this Agreement, or any instrument to be delivered
pursuant hereto.
1) Docket number 0518643F: Lewis England & Associates, Inc., v.
EAMC, L.L.C. in the 24th Judicial District Court of Jefferson
Parish, Louisiana.
2) Investigations by the British Columbia Financial Institutions
Commission and the British Columbia Securities Commission of Eron
Mortgage Corp., Capital Productions, Inc., Brian Slobogian and
Frank Biller.
EAMC shall indemnify and hold harmless SABA and SPC, its officers,
directors and agents, from and against any and all loss, liability,
cost and expense (including reasonable costs of investigation and
defense) arising out of, or in any way connected with the matters
described in 1) or 2) above, which indemnity shall include attorneys
fees, the costs of experts and other consultants. Should any claim be
asserted against SABA, SPC, or the assets acquired hereunder which
arises out of or is connected with either of the aforementioned
matters, EAMC shall, upon request, advance to, or for the account of
SABA and SPC, the costs of investigating and defending said claim.
Until each of said matters is resolved to the satisfaction of and
without expense to SABA and SPC, SPC shall withhold 10,000 shares of
the commons stock, which shall be held to secure payment sums which may
become due SABA and SPC hereunder. Subject to mutual consent, which
will not be unreasonably withheld by either party, SPC is authorized to
cancel from time to time the number of shares as may be required to
indemnify SABA and SPC under this paragraph. Shares cancelled shall be
deemed to have been reacquired by SPC at the average bid price for the
common stock during the five trading days preceding the date of
cancellation. The foregoing right shall not constitute a limitation on
the indemnity contained in this paragraph.
Until such time as item number 1 above is dismissed, or upon written
agreement by both parties, SPC shall reserve 10,000 shares from the exchange
described in Article 3 hereinabove.
c. SABA is a corporation, is duly organized, validly existing and in good
standing as a corporation under the laws of the State of Texas and has
full corporate power and authority to enter into, deliver and perform
this Agreement and to consummate the transaction contemplated hereby;
the execution and delivery of this Agreement by SABA and the
consummation by SABA of the transaction contemplated hereby have been
duly authorized by all requisite action and no other corporate
proceedings on the part of SABA are necessary to authorize this
Agreement and the transaction contemplated hereby. This agreement has
been duly executed and delivered by SABA and constitutes a legally
valid and binding obligation of SABA, enforceable in accordance with
its terms.
d. SPC is a corporation, is duly organized, validly existing and in good
standing as a corporation under the laws of the State of California
and has full corporate power and authority to enter into, deliver and
perform this Agreement and to consummate the transaction contemplated
hereby; the execution and delivery of this Agreement by SPC and the
consummation by SPC of the transaction contemplated hereby have been
duly authorized by all requisite action and no other corporate
proceedings on the part of SPC are necessary to authorize this
Agreement and the transaction contemplated hereby. This agreement has
been duly executed and delivered by SPC and constitutes a legally
valid and binding obligation of SPC, enforceable in accordance with
its terms.
e. There are no suits, judgements, actions, proceedings, liens, or
investigation pending, or to the knowledge of SABA, or SPC, threatened,
against or affecting SABA, or SPC, its respective businesses or any of
the Properties, in any court or before or by any governmental or
regulatory authority or agency, domestic or foreign, or any
arbitration, which could adversely the ability of SABA, or SPC to
perform its obligations under this Agreement, or any instrument to be
delivered pursuant hereto.
7. Other Documents and Contracts. This Agreement will be made subject to any
and all existing operating agreements, unit agreements, gas purchase or
sale contracts, as well as any and all other agreements to which the
Properties are subject, including, but not limited to, any applicable
farmin agreements. SABA shall assume and be responsible for all obligations
accruing under such agreements as of the Effective Date.
By execution of this Agreement, EAMC and SABA hereby agree to cancel, void,
annul, dissolve, disclaim and forever waive the following agreements:
That certain agreement dated October 4, 1996 by and between
the parties hereto regarding the acquisition of MV Ventures, G.P. and all assets
and liabilities associated with MV Ventures, G.P.
That certain agreement dated September 5, 1997 by and between
the parties hereto regarding the acquisition of the Potash Field from Statoil
Exploration (U.S.), Inc.
That certain Operating Agreement dated September 2, 1997 by
and between the parties regarding the operation of the Potash Field.
By execution of this Agreement, EAMC hereby sets over, conveys and forever
disclaims any interest in, or rights to the following agreements and shall
forever waive any remedy available through the following agreements:
That certain Purchase and Sale Agreement dated October 8, 1996 by and
between DuBose Ventures, Inc., Rockbridge Oil & Gas, Inc., Saba Energy of
Texas, Incorporated and Energy Asset Management Corporation regarding the
sale of MV Ventures, G.P.
That certain Partnership Agreement dated November 1, 1995
regarding the creation of MV Ventures, G.P.
EAMC and SABA shall execute additional documents, either at closing, or
at anytime after closing, as reasonably required by SABA, to document
the transfer of equity, or Partnership interests. EAMC will cooperate
with SABA in perfecting SABA's title.
8. Notices. All communications required or permitted under this Agreement
shall be in writing. Any communication or delivery hereunder shall be
deemed to have been fully made if actually delivered, sent by facsimile
machine, or if mailed by registered or certified mail, postage prepaid, to
the applicable address indicated above.
9. Further Assurances. Each of the parties shall execute acknowledge and
deliver to the other such further instruments, and take such other actions
as may be reasonably necessary to carry out the provisions of this
Agreement.
10. Entire Agreement. This Agreement constitutes the entire understanding
between the parties and it may not be amended nor any rights hereunder
waived except by an instrument in writing signed by the party to be charged
with such amendment or waiver and delivered by such party to the party
claiming the benefit of such amendment or waiver.
If any provision of this Agreement, or the application thereof to any
person or circumstances, shall, to any extent, be held in any proceeding to
be invalid or unenforceable, the remainder of this Agreement, and the
application of such provisions to persons or circumstances other than those
to which it is held to be invalid or unenforceable, shall not be affected
thereby, and shall be valid and enforceable to the fullest extend permitted
by law, but only if and to the extend such enforcement would not materially
and adversely frustrate the parties' essential objectives as expressed
herein.
No party to this Agreement may assign its rights or obligations hereunder
without the written consent of all parties hereto. Subject to the
foregoing, this Agreement shall be binding upon the parties hereto, their
respective successors and assigns, and nothing contained in this Agreement,
express or implied, is intended to confer upon any other person or entity
any benefits, rights, or remedies.
11. Venue and Exclusive Jurisdiction. The parties agree that any dispute
arising out of or relating to this Agreement, shall be adjudicated solely
in the Superior Court for the County of Santa Barbara, or the U.S. District
Court for the Southern District of California. Each party consents to the
jurisdiction of each such court.
12. Costs. Except as otherwise agreed upon, each party shall pay its own
costs, including fees and expenses of its own counsel and accountants, in
connection with this Agreement
13. Breech of Contract. Any breech of contract, or inability of any party
to fulfill the terms of this agreement shall cause this agreement to become
null and void and all property, cash and common stock will be restored to
the holders of such rights at the time of execution of this Agreement.
14. Term. Except with respect to Article 6, which shall survive for the period
of the applicable statute of limitations, this Agreement shall expire upon
delivery of the common stock, as agreed in Article 2c, removal of
restrictions to the common stock and upon satisfaction of all terms and
obligations provided for herein, or mutual agreement.
15. Counterparts. This Agreement may be executed by SABA, SPC and EAMC in
any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute but one and the same
instrument.
AGREED AND ACCEPTED
WITNESS: ENERGY ASSET MANAGEMENT COMPANY, L.L.C.
- - -----------------------------------
___________________________________ By: Name: Robert M. Thomasson
-------------------------------------------------- Title: Vice President
WITNESS: SABA ENERGY OF TEXAS, INCORPORATED
- - -----------------------------------
___________________________________ By:
Name: Bradley T. Katzung
Title: President
WITNESS: SABA PETROLEUM COMPANY
- - -----------------------------------
___________________________________ By:
Name: Ilyas Chaudhary
Title: President
STATE OF OKLAHOMA )
)ss
COUNTY OF OKLAHOMA )
Before me, a Notary Public in and for said County and State, on this 9th day of
March, 1998, personally appeared Robert M. Thomasson, to me know to be the
identical person who subscribed the name of the maker thereof to the foregoing
instrument as its Vice President and acknowledged to me that he executed the
same of his free and voluntary act and deed and of the free and voluntary act
and deed of the corporation, for the uses and purposes therein set forth.
Given under my hand and seal of office the day and year last above written.
--------------------------------
Notary Public
My commission expires August 17, 1998
STATE OF OKLAHOMA )
)ss
COUNTY OF OKLAHOMA )
Before me, a Notary Public in and for said County and State, on this 9th day of
March, 1998, personally appeared Bradley T. Katzung, to me know to be the
identical person who subscribed the name of the maker thereof to the foregoing
instrument as its President and acknowledged to me that he executed the same of
his free and voluntary act and deed and of the free and voluntary act and deed
of the corporation, for the uses and purposes therein set forth.
Given under my hand and seal of office the day and year last above written.
--------------------------------
Notary Public
My commission expires August 17, 1998
STATE OF OKLAHOMA )
)ss
COUNTY OF OKLAHOMA )
Before me, a Notary Public in and for said County and State, on this 9th day of
March, 1998, personally appeared Ilyas Chaudhary, to me know to be the identical
person who subscribed the name of the maker thereof to the foregoing instrument
as its President and acknowledged to me that he executed the same of his free
and voluntary act and deed and of the free and voluntary act and deed of the
corporation, for the uses and purposes therein set forth.
Given under my hand and seal of office the day and year last above written.
--------------------------------
Notary Public
My commission expires August 17, 1998
EXHIBIT "A"
Attached to and made a part of that certain Exchange Agreement dated March 6,
1998, by and between ENERGY ASSET MANAGEMENT COMPANY, L.L.C., SABA ENERGY OF
TEXAS, INCORPORATED and SABA PETROLEUM COMPANY
A) LA001: That certain Lease for Oil, Gas and Other Liquid or Gaseous
Minerals dated August 16, 1982, by and between the State Mineral Board of the
State of Louisiana (State Lease No. 10394), as Lessor, and James A. Whitson,
Jr., as Lessee, filed for record in Entry No. 1027740, Mineral Book 38, Folio
436 of the records of Jefferson Parish, Louisiana; and as amended by that
certain Correction of State Mineral Lease No. 10394 dated March 17, 1983, filed
for record in Entry No. 83-22790 of the records of Jefferson Parish, Louisiana.
[CCHC #171480A]
B) LA002: That certain Oil and Gas Lease dated May 1, 1982, by
and between The Louisiana Land and Exploration Company, as
Lessor, and James A. Whitson, Jr., as Lessee, to which a
recording memorandum entitled Declaration has been filed for
record in Entry No. 1015347, Mineral Book 38, Folio 255 of the
records of Jefferson Parish, Louisiana. [CCHC #171480B]
C) LA003: That certain Lease for Oil, Gas and Other Liquid or
Gaseous Minerals dated June 13, 1983, by and between the State
Mineral Board of the State of Louisiana (State Lease No.
10808), as Lessor, and Primary Fuels, Inc., as Lessee, filed
for record in Mineral Book 39, Folio 576 of the records of
Jefferson Parish, Louisiana and in COB Book 571, Folio 664 of
the records of Plaquemines Parish, Louisiana [CCHC #171481]
D) LA004: That certain Oil and Gas Lease dated April 15, 1983, by
and between The Louisiana Land and Exploration Company, as
Lessor, and James A. Whitson, Jr., as Lessee, to which a
recording memorandum entitled Declaration has been filed for
record in Entry No. 8318074, Mineral Book 39, Folio 146 of the
records of Jefferson Parish, Louisiana and in COB Book 565,
Folio 941 of the records of Plaquemines Parish, Louisiana.
[CCHC #171482]
E) LA005: That certain Oil, Gas and Other Hydrocarbon Standard
Development Lease dated November 7, 1990, by and between
Frederick E. Purcell, et al., as Lessor, and Wm. Bullen, Inc.,
as Lessee, filed for record in Entry No. 9104193, COB Book
2930, Folio 213 of the records of Jefferson Parish, Louisiana,
as amended by that certain Lease Amendment and Extension
Agreement dated August 11, 1994 filed for record in Entry NO.
09449744, COB Book 2902, Folio 396 of the records of Jefferson
Parish, Louisiana. [CCHC #171634]
F) LA006: That certain Oil and Gas Lease dated July 1, 1991, by
and between The Louisiana Land and Exploration Company, as
Lessor, and Corpus Christi Hydrocarbons Company, as Lessee, to
which a recording memorandum entitled Declaration has been
filed for record in Entry No. 9138700, Mineral Book 119, Folio
323 of the records of Jefferson Parish, Louisiana. [CCHC
#171647]
G) LA016: That certain oil, gas and mineral lease effective
November 8, 1928, granted by the Board of Levee Commissions of
the Orleans Levee District in favor of Humble Oil & Refining
Company, recorded in COB 66, Folio 518, LESS AND EXCEPT land
lying within the surface boundaries of the Pengo Petroleum,
Inc. Voluntary Unit "B" created by instrument dated effective
July 1, 1978, recorded in COB 482, Folio 429, Entry No. 76
containing 132.846 acres, more or less, from the surface down
to the stratigraphic equivalent of the base of the TEXT W Sand
seen at a depth of 13,500 feet measured depth on the ISF-Sonic
Log, Run No. 1, for the Orleans Levee Board B-1 Well, dated
November 10, 1975, but not less and except the MIO 10 Sand as
found at 9,500 feet to 10,240 feet measured depth on the
ISF-Sonic Log, Run No. 1 for the Orleans Levee Board B-1 Well,
dated November 10, 1975.
H.) LA017: That certain oil, gas and mineral lease granted by the
State of Louisiana to W. T. Burton, effective January 23, 1936,
recorded in COB 81, Folio 4, designated State Lease 335, as to
all land covered thereby lying in Townships 17 and 18 South,
Range 15 East LESS AND ECEPT (1) lands and depths released
therefrom on November 1, 1943, July 30, 1974, February 5, 1986
and September 7, 1989 and (2) all land lying within the surface
boundaries of the Pengo Petroleum, Inc. Voluntary Unit "B"
created by instrument dated effective July 1, 1978, recorded in
COB 482, Folio 429, Entry No. 76, containing 132.846 acres more
or less, from the surface to the stratigraphic equivalent of
the base of the TEXT W Sand seen at a depth of 13,500 feet
measured depth on the ISF-Sonic Log, Run No. 1, for the Orleans
Levee Board B-1 Well, dated November 10, 1975, but not less and
except the Mio10 Sand as found at 9,500 feet to 10,240 feet
measured depth on the ISF-Sonic Log, Run No. 1 for the Orleans
Levee Board B-1 Well, dated November 10, 1975.
I.) LA018: That certain oil, gas and mineral lease dated effective
November 21, 1941, granted by the State of Louisiana in favor
of Humble Oil & Refining Company, recorded in COB 105, Folio
392, designated State Lease 508, LESS AND EXCEPT (1) forty
acres surrounding the State Lease 508 No. 13 Well described as
beginning at the point X-2,517,580.06 and Y-307,462.15, then
South 36(degree) 36' 35" East 1,320 feet, then south 53(degree)
23' 25" West 1,320 feet, then North 36(degree) 36' 35" West
1,320 feet, then North 53(degree) 23' 25" East 1,320 feet to
the point of beginning as to all depths from the surface to 100
feet below the stratigraphic equivalent of the base of the MIO
12F Sand seen at 11,818 feet (log depth) on the electric log
for the Humble State Lease 508 No. 5 Well, (2) forty acres
surrounding the State Lease 508 No. 15/15-D Wells described as
beginning at the point X-2,517,715.00 and Y=307,443.15, then
North 60(degree) East 1,320 feet, then South 30(degree) East
1,320 feet, then South 60(degree) West 1,320 feet, then North
30(degree) West 1,320 feet to the point of beginning as to all
depths from the surface to 100 feet below the stratigraphic
equivalent of the base of the MIO 12F Sand seen at 11,818 feet
(log depth) in the State Lease 508 No. 5 Well and (3) all land
and depths released therefrom on May 6, 1971, September 9,
1983, September 5, 1991, and July30, 1992.
J) (LA019) That certain oil, gas and mineral lease effective March
11, 1947 granted by Board of Levee Commissioners of the Orleans
Levee District to The Superior Oil Company, recorded in COB
130, Folio 556, LESS AND EXCEPT (1) land and depths released on
March 18, 1985, (2) the 160 acres of the lease in Sections 3
and 10, Township 18 South, Range 15 East reserved by The
Superior Oil Company from the sublease to Gulf Oil Corporation
and Humble Oil & Refining Company on December 2, 1959 (3) land
lying within the surface boundaries of the Pengo Petroleum,
Inc. Voluntary Unit "B" created by instrument effective July 1,
1978, recorded in COB 482, Folio 429, Entry No. 76, containing
132.846 acres from the surface to the stratigraphic equivalent
of the base of the TEXT W Sand seen at a depth of 13,500 feet
measured depth on the ISF-Sonic Log, Run No. 1, for the Orleans
Levee Board B-1 Well, dated November 10, 1975, but not less and
except the MIO 10 Sand as found at 9,500 feet to 10,240 feet
measured depth on the ISF-Sonic Log, Run No. 1 for the Orleans
Levee Board B-1 Well, dated November 10, 1975.
1) Any and all leasehold interests in oil, gas, or other minerals, including
working interests, carried working interests, rights of assignment and
reassignment, reversionary interests, and other interests under or in oil, gas
or mineral leases and interests in rights to explore for and produce oil, gas,
and other minerals;
2) Any and all rights and interests in or derived from unit agreements, orders
and decisions of state and federal regulatory authorities establishing units,
joint operating agreements, enhanced recovery and injection agreements, farmout
agreements and farmin agreements, options, drilling agreements, product sales
agreements, exploration agreements, assignments of operating rights, working
interests, subleases, and any and all other agreements to the extent they
pertain to the Assigned Premises (excluding, however, any contracts or
agreements that by their own terms are not transferable);
3) Any and all rights-of-way, easements, servitudes and franchises acquired or
used in connection with operations for the exploration and production of oil,
gas, or other minerals from the Assigned Premises, including those which may be
off the Assigned Premises but are attributable to the production and operation
of the Assigned Premises;
4) Any and all permits and licenses of any nature owned, held, or
operated in connection with operations for the exploration and production
of oil, gas or other minerals, to the extent such permits and licenses are
transferable;
5) Any and all producing, non-producing, shut-in and temporarily
abandoned oil and gas wells, salt water disposal wells and water wells.
6) Any and all surface and down-hole equipment, fixtures, related inventory,
gathering and treating facilities, production barges, crew boats, pipe, tubing,
casing and equipment, used in connection with the properties described in
paragraphs 1-5 hereinabove </TEXT> </DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<DESCRIPTION>OFFICE LEASE AGREEMENT
<TEXT>
Exhibit 10.54
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE-NET
(Do not use this form for Multi-Tenant Property)
1. Basic Provisions ("Basic Provisions")
1.1 Parties: This Lease ("Lease"), dated for reference purposes only, January
9th, 1998 is made by and between Reza Zandian, ("Lessor") and Saba Petroleum, A
Delaware Corporation ("Lessee") Delaware Corporation
(collectively the "Parties" or individually a "Party"). ,
1.2 Premises: That certain real property, including all improvements therein or
to be provided by Lessor under the terms of this Lease, and commonly known by
the street address of 17526 Von Karmen Ave., Ste. 200, Irvine located in the
County of Orange, State of California and generally described as (describe
briefly the nature of the property) Approximatley 1930 square feet of office
space
("Premises"). (See Paragraph 2 for further provisions.)
See Addendum
1.4 Early Possession: ("Early Possession Date").
(See Paragraphs 3.2 and 3.3 for further provisions.)
1.5 Base Rent: $1351.00 ** per month ("Base Rent"), payable on the 1st day of
each month commencing (** .70(cent) per square foot) - January 9, 1998
($1,002.00 transferred from sub-lease for rents owed through .January 31, 1998)
(See Paragraph 4 for further provisions.)
If this box is checked, there are provisions in this Lease for the Base Rent to
be adjusted.
1.6 Base Rent Paid Upon Execution: $ as Base Rent for the period
---------------------------------------------------
1.7 Security Deposit:$1500.00*** ("Security Deposit").(See Paragraph
5 for further provisions.) ------------
1.8 Permitted Use: Genera1 Office (*** 1410.00 transferred from sub-lease) (See
Paragraph 6 for further provisions.)
1.9 Insuring Party: Lessor is the "Insuring Party" unless otherwise stated
herein. (See Paragraph 8 for further provisions.)
1.10 Real Estate Brokers: The following real estate brokers
(collectively, the "Brokers") and brokerage relationships exist
in this transaction and are consented to by the Parties (check
applicable boxes): represents
Lessor exclusively ("Lessor's Broker"); both Lessor and Lessee, and
represents
Lessee exclusively ("Lessee's Broker"); both Lessee and Lessor. (See
Paragraph 15 for further provisions.)
1.11 Guarantor:The obligations of the Lessee under this Lease are to
be guaranteed by ("Guarantor"). (See Paragraph 37 for further
provisions.) --------------------------------------
1.12 Addenda. Attached hereto is an Addendum or Addenda consisting of Paragraphs
1.3 XXXXXand XXX 49 through 57, inclusive, all of which constitute a part of
this Lease.
2. Premises.
2,1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. Unless otherwise provided
herein, any statement of square footage set forth in this Lease, or that may
have been used in calculating rental, is an approximation which Lessor and
Lessee agree is reasonable and the rental based thereon is not subject to
revision whether or not the actual square footage is more or less.
2.2 Condition. Lessor shall deliver the Premises to Lessee clean and free of
debris on the Commencement Date and warrants to Lessee that the existing
plumbing, fire sprinkler system, lighting, air conditioning, heating, and
loading doors, if any, in the Premises, other than those constructed by Lessee,
shall be in good operating condition on the Commencement Date. If a
non-compliance with said warranty exists as of the Commencement Date, Lessor
shall, except as otherwise provided in this Lease, promptly after receipt of
written notice from Lessee setting forth with specificity the nature and extent
of such non-compliance, rectify same at Lessor's expense. If Lessee does not
give Lessor written notice of a non-compliance with this warranty within thirty
(30) days after the Commencement Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense.
2.3 Compliance with Covenants, Restrictions and Building Code. Lessor warrants
to Lessee that the improvements on the Premises comply with all applicable
covenants or restrictions of record and applicable building codes, regulations
and ordinances in effect on the Commencement Date. Said warranty does not apply
to the use to which Lessee will put the Premises or to any Alterations or
Utility Installations (as defined in Paragraph 7.3(a)) made or to be made by
Lessee. If the Premises do not comply with said warranty, Lessor shall, except
as otherwise provided in this Lease, promptly after receipt of written notice
from Lessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Lessor's expense. If Lessee does not give
Lessor written notice of a non-compliance with this warranty within six (6)
months following the Commencement Date, correction of that non-compliance shall
be the obligation of Lessee at Lessee's sole cost and expense.
2.4 Acceptance of Premises. Lessee hereby acknowledges: (a) that it has been
advised by the Brokers to satisfy itself with respect to the condition of the
Premises (including but not limited to the electrical and fire sprinkler
systems, security, environmental aspects, compliance with Applicable Law as
defined in Paragraph 6.3) and the present and future suitability of the Premises
for Lessee's intended use, (b) that Lessee has made such investigation as it
deems necessary with reference to such matters and assumes all responsibility
therefor as the same relate to Lessee's occupancy of the Premises and/or the
term of this Lease, and (c) that neither Lessor, nor any of Lessor's agents, has
made any oral or written representations or warranties with respect to the said
matters other than as set forth in this Lease.
2.5 Lessee Prior Owner/Occupant. The warranties made by Lessor in this Paragraph
2 shall be of no force or effect if immediately prior to the date set forth in
Paragraph 1.1 Lessee was the owner or occupant of the Premises. In such event,
Lessee shall, at Lessee's sole cost and expense, correct any non-compliance of
the Premises with said warranties.
3. Term.
3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease
are as specified in Paragraph 1.3.
3.2 Early Possession. If Lessee totally or partially occupies the Premises prior
to the Commencement Date, the obligation to pay Base Rent shall be abated for
the period of such early possession. All other terms of this Lease, however,
(including but not limited to the obligations to pay Real Property Taxes and
insurance premiums and to maintain the Premises) shall be in effect during such
period. Any such early possession shall not affect nor advance the Expiration
Date of the Original Term.
NET PAGE 1
3.3. Delay In Possession. If for any reason Lessor cannot deliver possession of
the Premises to Lessees agreed herein by the Early Possession Date, if one is
specified in Paragraph 1.4, or, if no Early Possession Date is specified, by the
Commencement Date, Lessor shall not be subject to any liability therefor, nor
shall such failure affect the validity of this Lease, or the obligations of
Lessee hereunder, or extend the term hereof, but in such case, Lessee shall not,
except as otherwise provided herein, be obligated to pay rent or perform any
other obligation of Lessee under the terms of this Lease until Lessor delivers
possession of the Premises to Lessee. If possession of the Premises is not
delivered to Lessee within sixty (60) days after the Commencement Date, Lessee
may, at its option, by notice in writing to Lessor within ten (10) days
thereafter, cancel this Lease, in which event the Parties shall be discharged
from all obligations hereunder; provided, however, that if such written notice
by Lessee is not received by Lessor within said ten (10) day period, Lessee's
right to cancel this Lease shall terminate and be of no further force or effect.
Except as may be otherwise provided, and regardless of when the term actually
commences, if possession is not tendered to Lessee when required by this Lease
and Lessee does not terminate this Lease, as aforesaid, the period free of the
obligation to pay Base Rent, if any, that Lessee would otherwise have enjoyed
shall run from the date of delivery of possession and continue for a period
equal to what Lessee would otherwise have enjoyed under the terms hereof, but
minus any days of delay caused by the acts, changes or omissions of Lessee.
4. Rent.
4.1 Base Rent. Lessee shall cause payment of Base Rent and other rent or
charges, as the same may be adjusted from time to time, to be received by Lessor
in lawful money of the United States, without offset or deduction, on or before
the day on which it is due under the terms of this Lease. Base Rent and all
other rent and charges for any period during the term hereof which is for less
than one (1) lull calendar month shall be prorated based upon the actual number
of days of the calendar month involved. Payment of Base Rent and other charges
shall be made to Lessor at its address stated herein or to such other persons or
at such other addresses as Lessor may from time to time designate in writing to
Lessee.
5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit set forth in Paragraph 1.7 as security for Lessee's faithful
performance of Lessee's obligations under this Lease. If Lessee fails to pay
Base Rent or other rent or charges due hereunder, or otherwise Defaults under
this Lease (as defined in Paragraph 13.1), Lessor may use, apply or retain all
or any portion of said Security Deposit for the payment of any amount due Lessor
or to reimburse or compensate Lessor for any liability, cost, expense, loss or
damage (including attorneys' fees) which Lessor may suffer or incur by reason
thereof. If Lessor uses or applies all or any portion of said Security Deposit,
Lessee shall within ten (10) days after written request therefor deposit moneys
with Lessor sufficient to restore said Security Deposit to the full amount
required by this Lease. Any time the Base Rent increases during the term of this
Lease, Lessee shall, upon written request from Lessor, deposit additional moneys
with Lessor sufficient to maintain the same ratio between the Security Deposit
and the Base Rent as those amounts are specified in the Basic Provisions. Lessor
shall not be required to keep all or any part of the Security Deposit separate
from its general accounts. Lessor shall, at the expiration or earlier
termination of the term hereof and after Lessee has vacated the Premises, return
to Lessee (or, at Lessor's option, to the last assignee, if any, of Lessee's
interest herein), that portion of the Security Deposit not used or applied by
Lessor. Unless otherwise expressly agreed in writing by Lessor, no part of the
Security Deposit shall be considered to be held in trust, to bear interest or
other increment for its use, or to be prepayment for any moneys to be paid by
Lessee under this Lease.
6. Use.
6.1 Use. Lessee shall use and occupy the Premises only for the purposes set
forth in Paragraph 1.8, or any other use which is comparable thereto, and for no
other purpose. Lessee shall not use or permit the use of the Premises in a
manner that creates waste or a nuisance, or that disturbs owners and/or
occupants of, or causes damage to, neighboring premises or properties. Lessor
hereby agrees to not unreasonably withhold or delay its consent to any written
request by Lessee. Lessees assignees or subtenants, and by prospective assignees
and subtenants of the Lessee, its assignees and subtenants, for a modification
of said permitted purpose for which the premises may be used or occupied, so
long as the same will not impair the structural integrity of the improvements on
the Premises, the mechanical or electrical systems therein, is not significantly
more burdensome to the Premises and the improvements thereon, and is otherwise
permissible pursuant to this Paragraph 6. If Lessor elects to withhold such
consent, Lessor shall within five (5) business days give a written notification
of same, which notice shall include an explanation of Lessor's reasonable
objections to the change in use.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in
this Lease shall mean any product, substance, chemical material or waste whose
presence, nature, quantity and/or intensity of existence, use, manufacture,
disposal, transportation, spill, release or effect, either by itself or in
combination with other materials expected to be on the Premises, is either: (i)
potentially injurious to the public health, safety or welfare, the environment
or the Premises, (ii) regulated or monitored by any governmental authority, or
(iii) a basis for liability of Lessor to any governmental agency or third party
under any applicable statute or common law theory Hazardous Substance shall
include. but not be limited to, hydrocarbons, petroleum, gasoline, crude oil or
any products, by-products or fractions thereof. Lessee shall not engage in any
activity in, on or about the Premises which constitutes a Reportable Use (as
hereinafter defined) of Hazardous Substances without the express prior written
consent of Lessor and compliance in a timely manner (at Lessee's sole cost and
expense) with all Applicable Law (as defined in Paragraph 6.3). "Reportable Use"
shall mean (i) the installation or use of any - above or below ground-storage
tank, (ii) the generation, possession, storage, use, transportation, or disposal
of a Hazardous Substance that requires a permit from, or with respect to which a
report, notice, registration or business plan is required to be filed with, any
governmental authority. Reportable Use shall also include Lessee's being
responsible for the presence in, on or about the Premises of a Hazardous
Substance with respect to which any Applicable Law requires that a notice be
given to persons entering or occupying the Premises or neighboring properties.
Notwithstanding the foregoing, Lessee may, without Lessor's prior consent, but
in compliance with all Applicable Law, use any ordinary and customary materials
reasonably required to be used by Lessee in the normal course of Lessee's
business permitted on the Premises, so long as such use is not a Reportable Use
and does not expose the Premises or neighboring properties to any meaningful
risk of contamination or damage or expose Lessor to any liability therefor. In
addition, Lessor may (but without any obligation to do so) condition its consent
to the use or presence of any Hazardous Substance, activity or storage tank by
Lessee upon Lessee's giving Lessor such additional assurances as Lessor, in its
reasonable discretion, deems necessary to protect itself, the public, the
Premises and the environment against damage, contamination or injury and/or
liability therefrom or therefor, including, but not limited to, the installation
(and removal on or before Lease expiration or earlier termination) of reasonably
necessary protective modifications to the Premises (such as concrete
encasements) and/or the deposit of an additional Security Deposit under
Paragraph 5 hereof.
(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe,
that a Hazardous Substance, or a condition involving or resulting from same, has
come to be located in, on, under or about the Premises, other than as previously
consented to by Lessor, Lessee shall immediately give written notice of such
fact to Lessor. Lessee shall also immediately give Lessor a copy of any
statement, report, notice, registration, application, permit, business plan,
license, claim, action or proceeding given to, or received from, any
governmental authority or private party, or persons entering or occupying the
Premises, concerning the presence, spill, release, discharge of, or exposure to,
any Hazardous Substance or contamination in, on, or about the Premises,
including but not limited to all such documents as may be involved in any
Reportable Uses involving the Premises.
(c) Indemnification. Lessee shall indemnify, protect, defend and hold Lessor,
its agents, employees, lenders and ground lessor, if any, and the Premises,
harmless from and against any and all bass of rents and/or damages, liabilities,
judgments, costs, claims, liens, expenses, penalties, permits and attorney's and
consultant's fees arising out of or involving any Hazardous Substance or storage
tank brought onto the Premises by or for Lessee or under Lessee's control.
Lessee's obligations under this Paragraph 6 shall include, but not be limited
to, the effects of any contamination or injury to person, property or the
environment created or suffered by Lessee, and the cost of investigation
(including consultant's and attorney's fees and testing), removal, remediation,
restoration and/or abatement thereof, or of any contamination therein involved,
and shall survive the expiration or earlier termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee
shall release Lessee from its obligations under this Lease with respect to
Hazardous Substances or storage tanks, unless specifically so agreed by Lessor
in writing at the time of such agreement.
6.3 Lessee's Compliance with Law. Except as otherwise provided in this Lease,
Lessee, shall, at Lessee's sole cost and expense, fully, diligently and in a
timely manner, comply with all "Applicable Law," which term is used in this
Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Lessor's engineers and/or consultants, relating in any manner
to the Premises (including but not limited to matters pertaining to (i)
industrial hygiene, (ii) environmental conditions on, in, under or about the
Premises, including soil and groundwater conditions, and (iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), now in effect or which may hereafter come into effect, and whether or not
reflecting a change in policy from any previously existing policy. Lessee shall,
within five (5) days after receipt of Lessor's written request, provide Lessor
with copies of all documents and information, including, but not limited to,
permits, registrations, manifests, applications, reports and certificates,
evidencing Lessee's compliance with any Applicable Law specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving failure by Lessee or the
Premises to comply with any Applicable Law.
6.4 Inspection; Compliance. Lessor and Lessor's Lender(s) (as defined in
Paragraph 8.3(a)) shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times, for the purpose of
inspecting the condition of the Premises and for verifying compliance by Lessee
with this Lease and all Applicable Laws (as defined in Paragraph 6.3), and to
employ experts and/or consultants in connection therewith and/or to advise
Lessor with respect to Lessee's activities, including but not limited to the
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Premises. The costs and
expenses of any such inspections shall be paid by the party requesting same,
unless a Default or Breach of this Lease, violation of Applicable Law, or a
contamination, caused or materially contributed to by Lessee is found to exist
or be imminent, or unless the inspection is requested or ordered by a
governmental authority as the result of any such existing or imminent violation
or contamination. In any such case, Lessee shall upon request reimburse Lessor
or Lessor's Lender, as the case may be, for the costs and expenses of such
inspections.
7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.
7.1 Lessee's Obligations.
(a) Subject to the provisions of Paragraphs 2.2 (Lessor's warranty as to
condition), 2.3 (Lessor's warranty as to compliance with covenants,etc),
NET
PAGE 2
7.2 (Lessor's obligations to repair), 9 (damage and destruction), and 14
(condemnation), Lessee shall, at Lessee's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition and
repair, structural and non-structural (whether or not such portion of the
Premises requiring repairs, or the means of repairing the same, are reasonably
or readily accessible to Lessee, and whether or not the need for such repairs
occurs as a result of use, any prior use, the elements or the age of such
portion of the Premises), including, without limiting the generality of the
foregoing, all equipment or facilities serving the Premises, such as plumbing,
heating, air conditioning, ventilating, electrical, lighting facilities,
boilers, fired or unfired pressure vessels, fire sprinkler and/or standpipe and
hose or other automatic fire extinguishing system, including fire alarm and/or
smoke detection systems and equipment, fire hydrants, fixtures, walls (interior
and exterior), foundations, ceilings, roofs, floors, windows, doors, plate
glass, skylights landscaping, driveways, parking lots, fences, retaining walls,
signs, sidewalks and parkways located in, on, about, or adjacent to the
Premises. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under or about the Premises (including through the plumbing
or sanitary sewer system) and shall promptly, at Lessee's expense; take all
investigatory and/or remedial action reasonably recommended, whether or not
formally ordered or required, for the cleanup of any contamination of, and for
the maintenance, security and/or monitoring of the Premises, the elements
surrounding same, or neighboring properties, that was caused or materially
contributed to by Lessee, or pertaining to or involving any Hazardous Substance
and/or storage tank brought onto the Premises by or for Lessee or under its
control. Lessee, in keeping the Premises in good order, condition and repair,
shall exercise and perform good maintenance practices. Lessee's obligations
shall include restorations, replacements or renewals when necessary to keep the
Premises and all improvements thereon or a part thereof in good order, condition
and state of repair. If Lessee occupies the Premises for seven (7) years or
more, Lessor may require Lessee to repaint the exterior of the buildings on the
Premises as reasonably required, but not more frequently than once every seven
(7) years.
<deleted items>
7.2 Lessor's Obligations. Except for the warranties and agreements of Lessor
contained in Paragraphs 2.2 (relating to condition of the Premises), 2.3
(relating to compliance with covenants, restrictions and building code), 9
(relating to destruction of the Premises) and 14 (relating to condemnation of
the Premises), it is intended by the Parties hereto that Lessor have no
obligation, in any manner whatsoever, to repair and maintain the Premises, the
improvements located thereon, or the equipment therein, whether structural or
non structural, all of which obligations are intended to be that of the Lessee
under Paragraph 7.1 hereof. It is the intention of the Parties that the terms of
this Lease govern the respective obligations of the Parties as to maintenance
and repair of the Premises. Lessee and Lessor expressly waive the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the
terms of this Lease with respect to, or which affords Lessee the right to make
repairs at the expense of Lessor or to terminate this Lease by reason of any
needed repair'.
7.3 Utility Installations; Trade Fixtures; Alterations.
(a) Definitions; Consent Required. The term "Utility Installations" is used in
this Lease to refer to all carpeting, window coverings, air lines, power panels,
electrical distribution, security, fire protection systems, communication
systems, lighting fixtures, heating, ventilating, and air conditioning
equipment, plumbing, and fencing in, on or about the Premises. The term "made
Fixtures" shall mean Lessee's machinery and equipment that can be removed
without doing material damage to the Premises. The term "Alterations" shall mean
any modification of the improvements on the Premises from that which are
provided by Lessor under the terms of this Lease, other than Utility
Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned
Alterations and/or Utility Installations" are defined as Alterations and/or
Utility Installations made by lessee that are not yet owned by Lessor as defined
in Paragraph 7.4(a). Lessee shall not make any Alterations or Utility
Installations in, on, under or about the Premises without Lessor's prior written
consent. Lessee may, however, make non-structural Utility Installations to the
interior of the Premises (excluding the roof), as long as they are not visible
from the outside, do not involve puncturing, relocating or removing the roof or
any existing walls, and the cumulative cost thereof during the term of this
Lease as extended does not exceed $25,000.
(b) Consent. Any Alterations or Utility Installations that Lessee shall desire
to make and which require the consent of the Lessor shall be presented to Lessor
in written form with proposed detailed plans. All consents given by Lessor,
whether by virtue of Paragraph 7.3(a) or by subsequent specific consent, shall
be deemed conditioned upon: (i) Lessee's acquiring all applicable permits
required by governmental authorities, (ii) the furnishing of copies of such
permits together with a copy of the plans and specifications for the Alteration
or Utility Installation to Lessor prior to commencement of the work thereon, and
(iii) the compliance by Lessee with all conditions of said permits in a prompt
and expeditious manner Any Alterations or Utility Installations by Lessee during
the term of this Lease shall be done in a good and workmanlike manner, with good
and sufficient materials, and in compliance with all Applicable Law. Lessee
shall promptly upon completion thereof furnish Lessor with as-built plans and
specifications therefor. Lessor may (but without obligation to do so) condition
its consent to any requested Alteration or Utility Installation that costs
S10,000 or more upon Lessee's providing Lessor with a lien and completion bond
in an amount equal to one and one-half times the estimated cost of such
Alteration or Utility Installation and/or upon Lessee's posting an additional
Security Deposit with Lessor under Paragraph 36 hereof.
(c) Indemnification. Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or for
use on the Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises or any interest therein. Lessee shall
give Lessor not less than ten (10) days' notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post
notices of non-responsibility in or on the Premises as provided by law. If
Lessee shall, in good faith, contest the validity of any such lien, claim or
demand, then Lessee shall, at its sole expense defend and protect itself, Lessor
and the Premises against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement thereof against the
Lessor or the Premises. If Lessor shall require, Lessee shall furnish to Lessor
a surety bond satisfactory to Lessor in an amount equal to one and one-half
times the amount of such contested lien claim or demand, indemnifying Lessor
against liability for the same, as required by law for the holding of the
Premises free from the effect of such lien or claim. In addition, Lessor may
require Lessee to pay Lessor's attorney's fees and costs in participating in
such action if Lessor shall decide it is to its best interest to do so.
7.4 Ownership; Removal; Surrender; and Restoration.
(a) Ownership. Subject to Lessor's right to require their removal or become the
owner thereof as hereinafter provided in this Paragraph 7.4, all Alterations and
Utility Additions made to the Premises by Lessee shall be the property of and
owned by Lessee, but considered a part of the Premises. Lessor may, at any time
and at its option, elect in writing to Lessee to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise instructed per subparagraph 7.4(b) hereof, all Lessee Owned
Alterations and Utility Installations shall, at the expiration or earlier
termination of this Lease, become the property of Lessor and remain upon and be
surrendered by Lessee with the Premises.
(b) Removal. Unless Otherwise agreed in writing, Lessor may require that any or
all Lessee Owned Alterations or Utility Installations be removed by me
expiration or earlier termination of this Lease, notwithstanding their
installation may have been consented to by Lessor. Lessor may require the
removal at any time of all or any part of any Lessee Owned Alterations or
Utility Installations made without the required consent of Lessor.
(c) Surrender/Restoration. Lessee shall surrender the Premises by me end of the
last day of the Lease term or any earlier termination date, with all of the
improvements, parts and surfaces thereof clean and free of debris and in good
operating order, condition and state of repair, ordinary wear and tear excepted.
"Ordinary wear and tear" shall not include any damage or deterioration met would
have been prevented by good maintenance practice or by Lessee performing all of
its obligations under this Lease. Except as otherwise agreed or specified in
writing by Lessor, the Premises, as surrendered, shall include the Utility
Installations. The obligation of Lessee shall include the repair of any damage
occasioned by the installation, maintenance or removal of Lessee's Trade
Fixtures, furnishings, equipment, and Alterations and/or Utility Installations,
as well as me removal of any storage tank installed by or for Lessee, and the
removal, replacement, or remediation of any soil, material or ground water
contaminated by Lessee, all as may then be required by Applicable Law and/or
good service practice. Lessee's Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee subject to its obligation to repair and
restore the Premises per His Lease.
a Insurance; Indemnity.
8.1 Payment for Insurance. Paragraph 8 except to the extent of the cost
attributable to liability insurance carried hy ~ Dolor in o,~cc_. of ~ I,~,uuv
per occurrence. Premiums for policy periods commencing Drior to Or ~ViDr~r~l ~3
b ~ _ ~' '/: Lease term shall be prorated to correspond to me Lease term.
Payment shall be made by Ld~ Loooor within ton (10) days following o cecipt of
an invoice for any amount due.
8.2 Liability Insurance.
(a) Carried by Lessee. Lessee shall obtain and keep in force during the term of
this Lease a Commercial General Liability policy of insurance protecting Lessee
and Lessor (as an additional insured) against claims for bodily injury, personal
injury and property damage based upon, involving or arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such Insurance shall be on an occurrence basis providing
single limit coverage in an amount not less than $1,000,000 per occurrence with
an "Additional Insured-Managers or Lessors of Premises" Endorsement and contain
the "Amendment of the Pollution Exclusions for damage caused by heat, smoke or
fumes from a hostile fire. The policy shall not contain any intra-insured
exclusions as between insured persons or organizations, but shall include
coverage for liability assumed under this Lease as an "insured contract" for the
performance of Lessee's indemnity obligations under this Lease. The limits of
said insurance required by this Lease or as carried by Lessee shall not,
however, limit the liability of Lessee nor relieve Lessee of any obligation
hereunder. All insurance to be carried by Lessee shall be primary to and not
contributory with any similar insurance canted by Lessor, whose insurance shall
be considered excess insurance only.
(b) Carried By Lessor. In me event Lessor is the Insuring Party, Lessor
shall also maintain liability insurance described in Paragraph 8.2(a),
above, in addition to, and not in lieu of, the insurance required to be
maintained by Lessee. Lessee shall not be named as an additional insured
therein.
PAGE 3
8.3 Proporty Insuranoo Etulidtng, l~omonta and Rental V lua. V
(a) Duliding and Impravomonta. The Insuring Party shall obtain and laptop in
forgo during the term of this Loeco D policy or poliolos in the no .` of Lessor,
with loss payable to Lessor and to the holders of any mortgages, deeds of trust
or ground leases on the Premises ("Lender(s)"), insur~oss or damage to the
Premises. The amount of such insurance shall be equal to the full replacement
cost of the Premises, as the same shall exj*tfoilh time to time, or the amount
required by Lenders, but in no event more than the commercially reasonable and
available insurable value th~if, by reason of the unique nature or age of the
improvements involved, such latter amount is less than full replacement cost. If
Lessor is the]neafing Party, however, Lessee Owned Alterations and Utility
Installations shall be insured by Lessee under Paragraph 8.4 rather than by
Lessor. If Coverage is available and commercially appropriate, such policy or
policies shall insure against all risks of direct physical loss or damage
(except tendrils of flood and/or earthquake unless required by a Lender),
including coverage for any additional costs resulting from debris removal and
Enable amounts of coverage for the enforcement of any ordinance or law
regulating the reconstruction or replacement of any undamaged sects me Premises
required to be demolished or removed by reason of the enforcement of any
building, zoning, safety or land use laws as the rest covered cause of loss.
Said policy or policies shall also contain an agreed valuation provision in lieu
of any coinsurance clause, waiver of subrogation, and inflation guard protection
causing an increase in the annual property insurance coverage amount by a factor
of not less man the adjusted. Department of Labor Consumer Price Index for All
Urban Consumers for the city nearest to where the Premises are located. If such
Insuranc~verage has a deductible clause, the deductible amount shalt not exceed
$1,000 per occurrence, and Lessee shall be liable for such deductible A - unt in
the event of an Insured Loss, as defined in Paragraph 9.1(c).
(b) Rental Value. The Insuring Party shall, in addition, obtain ag~ep in force
during the term of this Lease a policy or policies in the name of Lessor, with
loss payable to Lessor and Lender(s), insuring the log the full rental and other
charges payable by Lessee to Lessor under this Lease for one (1) year (including
all real estate taxes, insurance cost, and any scheduled rental increases). Said
insurance shall provide that in the event the Lease is terminated by reason of
an insured loss, th~iod of indemnity for such coverage shall be extended beyond
the date of the completion of repairs or replacement of the Premises, to prove
one full year's loss of rental revenues from the date of any such loss. Said
insurance shall contain an agreed valuation provision in lieu of any Assurance
clause, and me amount of coverage shall be adjusted annually to reflect the
projected rental income, property taxes, insurance premJ~costs and other
expenses, If any, otherwise payable by Lessee, for the next twelve (12) month
period. Lessee shall be liable for any deductible pint in the event of such
loss.
(c) Adiacant Pray. If the Premises are part of s larger building, or If the
Premises are part of a group of buildings owned by Lessor which are adjacent to
the Uses, the Lessee shall pay for any Increase In the premiums for the property
insurance of such building or buildings if said increase is cagey Lessee's acts,
omissions, use or occupancy of the Premises.
(d~nant's Improvements. If the Lessor is the Insuring Party, me Lessor
shall not be required to Insure Lessee Owned Alterations and Utility
Ins~ons unless the item in question has become the property of Lessor under
me terms of this Lease. It Lessee is the Insuring Party, the policy carried
j ~__A o ~ ~ ~ n ~ al I _A ~ A AA ~ ._AA A a--Al ALA ALA ~ ~ --.~ ~A_~AtlA~
A_A _J ~ unuOF t..lS . arG9rGp _._ O G nou._ __oo__ am..__ _._ _ _ _ _
a....., ..._....._.._.
8.4 Lessee's Property Insurance. Subject to the requirements of Paragraph 8.5,
Lessee at its cost shall either by separate policy or, at Lessor's option, by
endorsement to a policy already carried, maintain insurance coverage on all of
Lessee's personal property, Lessee Owned Alterations and Utility Installations
in, on, or about the Premises similar in coverage to that carried by the
Insuring Party under Paragraph 8.3. Such insurance shall be full replacement
cost coverage with a deductible of not to exceed $1,000 per occurrence. The
proceeds from any such insurance shall be used by Lessee for the replacement of
personal property or the restoration of Lessee Owned Alterations and Utility
Installations. Lessee shall be the Insuring Party with respect to the insurance
required by this Paragraph 8.4 and shall provide Lessor with written evidence
that such insurance is in force.
8.5 Insurance Policies. Insurance required hereunder shall be in companies duly
licensed to transact business in the state where the Premises are located, and
maintaining during the policy term a "General Policyholders Rating" of at least
B +, V, or such other rating as may be required by a Lender having a lien on the
Premises, as set forth in the most current issue of "Best's Insurance Guide."
Lessee shall not do or permit to be done anything which shall invalidate the
insurance policies referred to in this Paragraph 8. If Lessee is me Insuring
Party, Lessee shall cause to be delivered to Lessor certified copies of policies
of such insurance or certificates evidencing the existence and amounts of such
insurance with the insured and loss payable clauses as required by this Lease.
No such policy shall be cancellable or subject to modification except after
thirty (30) days prior written notice to Lessor. Lessee shall at least thirty
(30) days prior to the expiration of such policies, furnish Lessor with evidence
of renewals or "insurance binders" evidencing renewal thereof, or Lessor may
order such Insurance and charge the cost thereof to Lessee, which amount shall
be payable by Lessee to Lessor upon demand. If the Insuring Party shall fail to
procure and maintain the insurance required to be carried by me Insuring Party
under this Paragraph 8, the other Party may, but shall not be required to,
procure and maintain the same, but at Lessee's expense.
8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor ("Waiving Party") each hereby release and relieve the other,
and waive their entire right to recover damages (whether in contract or in tort)
against the other, for loss of or damage to the Waiving Party's property arising
out of or incident to the perils required to be insured against under Paragraph
8. The effect of such releases and waivers of the right to recover damages shall
not be limited by the amount of insurance carried or required, or by any
deductibles applicable thereto.
8.7 Indemnity. Except for Lessor's negligence and/or breach of express
warranties, Lessee shall indemnify, protect, defend and hold harmless the
Premises, Lessor and its agents, Lessor's master or ground lessor, partners and
Lenders, from and against any and all claims, loss of rents and/or damages,
costs, liens, judgments, penalties, permits, attorney's and consultant's fees,
expenses and/or liabilities arising out of, involving, or in dealing with, me
occupancy of the Premises by Lessee, the conduct of Lessee's business, any act,
omission or neglect of Lessee, its agents, contractors, employees or invitees,
and out of any Default or Breach by Lessee in the performance in a timely manner
of any obligation on Lessee's part to be performed under this Lease. The
foregoing shall include, but not be limited to, the defense or pursue of any
claim or any action or proceeding involved therein, and whether or not (in the
case of claims made against Lessor) litigated and/or reduced to judgment, and
whether well founded or not. In case any action or proceeding be brought against
Lessor by reason of any of the foregoing matters, Lessee upon notice from Lessor
shall defend the same at Lessee's expense by counsel reasonably satisfactory to
Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not
have first paid any such claim in order to be so indemnified.
8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or
damage to the person or goods, wares, merchandise or other properly of Lessee,
Lessee's employees, contractors, invitees, customers, or any other person in or
about the Premises, whether such damage or injury is caused by or results from
fire, steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether the said injury or damage results from conditions arising upon the
Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places, and regardless of whether the cause of
such damage or injury or me means of repairing the same is accessible or not.
Lessor shall not be liable for any damages arising from any act or neglect of
any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of
this Lease, Lessor shall under no circumstances be liable for injury to Lessee's
business or for any loss of income or profit therefrom.
9. Damage or Destruction.
9.1 Definitions.
(a) "Premises Partial Damage" shall mean damage or destruction to me
improvements on me Premises, other than Lessee Owned Alterations and Utility
Installations, the repair cost of which damage or destruction is less than 50%
of the then Replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(b) "Premises Total Destruction" shall mean damage or destruction to the
Premises, other than Lessee Owned Alterations and Utility Installations the
repair cost of which damage or destruction is 50% or more of the then
replacement Cost of the Premises immediately prior to such damage or
destruction, excluding from such calculation the value of the land and Lessee
Owned Alterations and Utility Installations.
(c) "Insured Loss" shall mean damage or destruction to improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which
was caused by an event required to be covered by the insurance described in
Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits
involved.
(d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements
owned by Lessor at the time of the occurrence to their condition existing
immediately prior thereto, including demolition, debris removal and upgrading
required by the operation of applicable building codes, ordinances or laws, and
without deduction for depreciation.
(e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a
condition involving the presence of, or a contamination by, a Hazardous
Substance as defined in Paragraph 6.2(a), in, on, or under the Premises.
9.2 Partial Damage-Insured Loss. If a Premises Partial Damage that is an Insured
Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not
Lessee's Trade Fixtures or Lessee Owned Alterations and Utility Installations)
as soon as reasonably possible and this Lease shall continue in full force and
effect; provided, however, that Lessee shall, at Lessor's election, make the
repair of any damage or destruction the total cost to repair of which is $10,000
or less, and, in such event, Lessor shall make the insurance proceeds available
to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing,
if the required insurance was not in force or the insurance proceeds are not
sufficient to effect such repair, the Insuring Party shall promptly contribute
the shortage in proceeds (except as to the deductible which is Lessee's
responsibility) as and when required to complete said repairs. In the event,
however, the shortage in proceeds was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance coverage was
not commercially reasonable and available, Lessor shall have no obligation to
pay for the shortage in insurance proceeds or to fully restore the unique
aspects of the Premises unless Lessee provides Lessor with the funds to cover
same, or adequate assurance thereof, within ten (10) days following receipt of
written notice of such shortage and request therefor. If Lessor receives said
funds or adequate assurance thereof within said ten (10) day period, the party
responsible for making the repairs shall complete them as soon as reasonably
possible and this Lease shall remain in full force and effect. If Lessor does
not receive such funds or assurance within said period, Lessor may nevertheless
elect by written notice to Lessee within ten (10) days thereafter to make such
restoration and repair as is commercially reasonable with Lessor paying any
shortage in proceeds, in which case this Lease shall remain in full force and
effect. If in such case Lessor does not so elect, then this Lease shall
terminate sixty (60) days following the occurrence of the damage or destruction.
Unless otherwise agreed, Lessee shall in no event have any right to
reimbursement from Lessor for
NET
PAGE 4
any funds contributed by Lessee to repair such damage or destruction. Premises
Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3
rather than Paragraph 9.2, notwithstanding that there may be some insurance
coverage but the net proceeds of any such insurance shall be made available for
the repairs if made by either Party.
9.3 Partial Damage-Uninsured Loss If a Premises Partial Damage that is not an
Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in
which event Lessee shall make the repairs at Lessee's expense and this Lease
shall continue in full force and effect, but subject to Lessor's rights under
Paragraph 13), Lessor may at Lessor's option, either: (i) repair such damage as
soon as reasonably possible at Lessor's expense, in which event this Lease shall
continue in full force and effect, or (ii) give written notice to Lessee within
thirty (30) days after receipt by Lessor of knowledge of the occurrence of such
damage of Lessor's desire to terminate this Lease as of the date sixty (60) days
following the giving of such notice. In the event Lessor elects to give such
notice of Lessor's intention to terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's commitment to pay for the repair of such damage
totally at Lessee's expense and without reimbursement from Lessor. Lessee shall
provide Lessor with the required funds or satisfactory assurance thereof within
thirty (30) days following Lessee's said commitment. In such event this Lease
shall continue in full force and effect, and Lessor shall proceed to make such
repairs as soon as reasonably possible and the required funds are available. If
Lessee does not give such notice and provide the funds or assurance thereof
within the times specified above, this Lease shall terminate as of the date
specified in Lessor's notice of termination.
9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises
Total Destruction occurs (including any destruction required by any authorized
public authority), this Lease shall terminate sixty (60) days following the date
of such Premises Total Destruction, whether or not the damage or destruction is
an Insured Loss or was caused by a negligent or willful act of Lessee. In the
event, however, that the damage or destruction was caused by Lessee, Lessor
shall have the right to recover Lessor's damages from Lessee except as released
and waived in Paragraph 8.6.
9.5 Damage Near End of Term. If at any time during the last six (6) months of
the term of this Lease there is damage for which the cost to repair exceeds one
(1) month's Base Rent, whether or not an Insured Loss, Lessor may, at Lessor's
option, terminate this Lease effective sixty (60) days following the date of
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within thirty (30) days after the date of occurrence of such
damage. Provided, however, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this
Lease by, within twenty (20) days following the occurrence of the damage, or
before the expiration of the time provided in such option for its exercise
whichever is earlier ("Exercise Period"), (i) exercising such option and (ii)
providing Lessor with any shortage in insurance proceeds (or adequate assurance
thereof) needed to make the repairs. If Lessee duly exercises such option during
said Exercise Period and provides Lessor with funds (w adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's
expense repair such damage as soon as reasonably possible and this Lease shall
continue In full force and effect. If Lessee fails to exercise such option and
provide such funds or assurance during said Exercise Period, then Lessor may at
Lessor's option terminate this Lease as of the expiration of said sixty (60) day
period following the occurrence of such damage by giving written notice to
Lessee of Lessor's election to do so within ten (10) days after the expiration
of the Exercise Period, notwithstanding any term or provision in the grant of
option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in Paragraph 9.2 (Partial Damage-Insured),
whether or not Lessor or Lessee repairs or restores the Premises, the Base Rent,
Real Property Taxes, insurance premiums, and other charges, if any, payable by
Lessee hereunder for the period during which such damage, its repair or the
restoration continues (not to exceed the period for which rental value insurance
is required under Paragraph 8.3(b)), shall be abated in proportion to the degree
to which Lessee's use of the Premises is impaired. Except for abatement of Base
Rent, Real Property Taxes, insurance premiums, and other charges, if any, as
aforesaid, all other obligations of Lessee hereunder shall be performed by
Lessee, and Lessee shall have no claim against Lessor for any damage suffered by
reason of any such repair or restoration.
(b) If Lessor shall be obligated to repair or restore the Premises under the
provisions of this Paragraph 9 and shall not commence, in a substantial and
meaningful way, the repair or restoration of the Premises within ninety (90)
days after such obligation shall accrue, Lessee may, at any time prior to the
commencement of such repair or restoration, give written notice to Lessor and to
any Lenders of which Lessee has actual notice of Lessee's election to terminate
this Lease on a date not less than sixty (60) days following the giving of such
notice. If Lessee gives such notice to Lessor and such Lenders and such repair
or restoration is not commenced within thirty (30) days after receipt of such
notice, this Lease shall terminate as of the date specified in said notice. If
Lessor or a Lender commences the repair or restoration of the Premises within
thirty (30) days after receipt of such notice, this Lease shall continue in full
force and effect. "Commence" as used in this Paragraph shall mean either the
unconditional authorization of the preparation of the required plans, or the
beginning of the actual work on the Premises, whichever first occurs.
9.7 Hazardous Substance Conditions. If a Hazardous Substance Condition occurs,
unless Lessee Is legally responsible therefor (in which case Lessee shall make
the investigation and remediation thereof required by Applicable Law and this
Lease shall continue in full force and effect, but subject to Lessor's rights
under Paragraph 13), Lessor may at Lessor's option either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably
possible at Lessor's expense, in which event this Lease shall continue in full
force and effect, or (ii) if the estimated cost to investigate and remediate
such condition exceeds twelve (12) times the then monthly Base Rent or S100,000,
whichever is greater, give written notice to Lessee within thirty (30) days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition of Lessor's desire to terminate this Lease as of the date
sixty (60) days following the giving of such notice. In the event Lessor elects
to give such notice of Lessor's intention to terminate this Lease, Lessee shall
have the right within ten (10) days after the receipt of such notice to give
written notice to Lessor of Lessee's commitment to pay for the investigation and
remediation of such Hazardous Substance Condition totally at Lessee's expense
and without reimbursement from Lessor except to the extent of an amount equal to
twelve (12) times the then monthly Base Rent or S100,000, whichever is greater.
Lessee shall provide Lessor with the funds required a! Lessee w satisfactory
assurance thereof within thirty (30) days following Lessee's said commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such investigation and remediation as soon as reasonably
possible and the required funds are available. If Lessee does not give such
notice and provide the required funds or assurance thereof within the times
specified above, this Lease shall terminate as of the date specified in Lessor's
notice of termination. If a Hazardous Substance Condition occurs for which
Lessee is not legally responsible there shall be abasement of Lessee's
obligations under this Lease to the same extent as, worded in Paragraph 9.6(a)
for a period of not to exceed twelve (12) months.
9.8 Termination-Advance Payments. Upon termination of this Lease pursuant to
this Paragraph 9, an equitable adjustment shall be made concerning advance Base
Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's Security Deposit as has not been,
or is not then required to be, used by Lessor under the terms of this Lease.
9.9 Waive Statutes. Lessor and Lessee agree that the terms of this Lease
shall govern the effect of any damage to or destruction of the Premises
with respect to the termination of this Lease and hereby waive the
provisions of any present or future statute to the extent inconsistent
herewith.
10. Real Property Taxes.
~ (a) Poymont at Saxon Losooo oRd pay the Real property Taxoo, as donned in
Paragraph 10.3, applbablo to the Fromicoc during the term of this Lease. Subject
to Paragraph 10.1(b), all such payments shall be made at least ten (10) days
prior to the delinquency date of the applicable instaJl~nt. Lessee shall
promptly furnish Lessor with satisfactory evidence that such taxes hwe been
paid. If any such taxes to be paid by Lessee shiver any period of time prior to
or after the expiration or earlier termination of the term hereof, Lessee's
share of such taxes shall be equitably Drafated to cover only the period of time
within the tax fiscal year this Lease is in effect, and Lessor shall reimburse
Lessee for any overpayme~er such proration. If Lessee shall fail to pay any Real
Property Taxes required by this Lease to be paid by Lessee, Lessor shall hwe the
right ~ the same, and Lessee shall reimburse Lessor therefor upon demand. ~
(b) Advance Payment. In order to insure payment when due and before delinquency
of any or all Real PsDp~ty Taxes, Lessor reserves the right, at Lessor's option,
to estimate the current Real Property Taxes applicable to the Premises, and to
require ~cunent year's Real Property Taxes to be paid in advance to Lessor by
Lessee, either: (i) in a lump sum amount equal to the installment due~fleast
twenty (20) days prior to the applicable delinquency date, or (ii) monthly in
advance with the payment of the Base Rent. If Lessor elec~require payment
monthly in advance, the monthly payment shall be that equal monthly amount
which, over the number of months remaining _~ofe the month in which the
applicable tax installment would become delinquent (and without interest
thereon), would provide a fund large enoug_to~ully discharge before delinquency
the estimated installment of taxes to be paid. When the actual amount of the
applicable tax bill is known, th~arfiount of such equal monthly advance payment
shall be adjusted as required to provide the fund needed to pay the applicable
taxes before deli~ncy. If the amounts paid to Lessor by Lessee under the
provisions of this Paragraph are insufficient to discharge the obligations of
Lessee to p_ - ch Real Property Taxes as the same become due, Lessee shall pay
to Lessor, upon Lessor's demand, such additional sums as are necessary~ay such
obligations. All moneys paid to Lessor under this Paragraph may be intermingled
with other moneys of Lessor and shall not bear interest In the event of a Breach
by Lessee in the performance of the obligations of Lessee under this Lease, then
any balance of funds paid to Lessors the provisions of this Paragraph may,
subject to proration as provided in Paragraph 10.1(a), at the option of Lessor,
be treated as an additio - Security Deposit under Paragraph 5.
10.2 Dethithn d "Real Property Taxers used herein, the term "Real Property
Taxes" shalUnclude any Arm of real estate tax or assessment, general special,
ordinary or extraordinary, an~y license fee, commercial rental tax, improvement
bond or bonds, levy or tax (other than inheritance, personal income or estate
taxes) impo~pon the Premises by any authority having the direct or indirect
power to tax, including any city, state or federal government, or any school -
ricultural, sanitary, fire, street, drainage or other improvement district
thereof, levied against any legal or equitable interest of Lessor in the Preps
or in the real property of which the Premises are a part, Lessor's right to rent
or other income therefrom, and/or Lessor's business of lathe Premises. The term
"Reat Property T xes" shall also include any tax, fee, levy, assessment or
charge, or any increase therein, imposed Mason of events occurring, or changes
in applicable law taking effect, during the term of this Lease, including but
not limited to a change in th~nership of the Premises or in the improvements
thereon, the execution of this Lease, or any modification, amendment or transfer
thereof, and h*~r~ not oontomplatod by the Partiso.
10.3 Joint Assessment. If the Premises are not separately assessed, Lessee's
liability shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations
PAGE 5
assigned In the assessor's work sheets or other information as may be reasonably
available. Lessor's reasonable determination thereof, in good faith shall be
conclusive.
10.4 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes
assessed against and levied upon Lessee Owned Alterations, Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises or elsewhere. When possible, Lessee shall
cause its Trade Fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor. If any of
Lessee's said personal property shall be assessed with Lessor's real property,
Lessee shall pay Lessor the taxes attributable to Lessee within ten (10) days
after receipt of a written statement setting forth the taxes applicable to
Lessee's property or, at Lessor's option, as provided in Paragraph 10.1(b).
11. Utilities Lasses shall pay for all water, gas, heat, light, power,
tclephone, trash disposal end other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately, metered to Lossoe, Lessee shall pay reasonable proportion, to be
determined by Lessor,
12. Assignment and Subletting.
12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or otherwise transfer or encumber (collectively, "assignment") or
sublet all or any part of Lessee's interest in this Lease or in the
Premises without Lessor's prior written consent given under and subject to
the terms of Paragraph 36. (b) A change in the control of Lessee shall
constitute an assignment requiring Lessor's consent. The transfer, on a
cumulative basis, of twenty-five percent (25%) or more of the voting
control of Lessee shall constitute a change in control for this purpose.
(c) The involvement of Lessee or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, refinancing,
transfer, leveraged buy-out or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee's assets occurs, which results or will
result in a reduction of the Net Worth of Lessee, as hereinafter defined, by an
amount equal to or greater than twenty-five percent (25%) of such Net Worth of
Lessee as it was represented to Lessor at the time of the execution by Lessor of
this Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, at whichever time said Net Worth of Lessee was or
is greater, shall be considered an assignment of this Lease by Lessee to which
Lessor may reasonably withhold its consent. "Net Worth of Lessee" for purposes
of this Lease shall be the net worth of Lessee (excluding any guarantors)
established under generally accepted accounting principles consistently applied.
(d) An assignment or subletting of Lessee's Interest in this Lease without
Lessor's specific prior written consent shall, at Lessor's option, be a Default
curable after notice per Paragraph 13.1(c), or a nondurable Breach without the
necessity of any notice and grace period. If Lessor elects to treat such
unconsented to assignment or subletting as a nondurable Breach, Lessor shall
have the right to either: (i) terminate this Lease, or (ii) upon thirty (30)
days written notice ("Lessor's Notice"), increase the monthly Base Rent to fair
market rental value or one hundred ten percent (110%) of the Base Rent then in
effect, whichever is greater. Pending determination of the new fair market
rental value, if disputed by Lessee, Lessee shall pay the amount set forth in
Lessor's Notice, with any overpayment credited against the next installment(s)
of Base Rent coming due, and any underpayment for the period retroactively to
the effective date of the adjustment being due and payable immediately upon the
determination thereof. Further, in the event of such Breach and market value
adjustment, (i) the purchase price of any option to purchase the Premises held
by Lessee shall be subject to similar adjustment to the then fair market value
(without the Lease being considered an encumbrance or any deduction for
depreciation or obsolescence, and considering the Premises at its highest and
best use and in good condition), or one hundred ten percent (110%) of the price
previously in effect, whichever is greater, (ii) any index-oriented rental or
price adjustment formulas contained in this Lease shall be adjusted to require
that the base index be determined with reference to the index applicable to the
time of such adjustment, and (iii) any fixed rental adjustments scheduled during
the remainder of the Lease term shall be increased in the same ratio as the new
market rental bears to the Base Rent in effect immediately prior to the market
value adjustment.
(e) Lessee's remedy for any breach of this Paragraph 12.1 by Lessor shall be
limited to compensatory damages and injunctive relief.
12.2 Terms and Conditions Applicable to Assignment and Subletting.
(a) Regardless of Lessor's consent, any assignment or subletting shall not: (i)
be effective without the express written assumption by such assignee or
subleases of the obligations of Lessee under this Lease, (ii) release Lessee of
any obligations hereunder, or (iii) alter the primary liability of Lessee for
the payment of Base Rent and other sums due Lessor hereunder or for the
performance of any other obligations to be performed by Lessee under this Lease.
(b) Lessor may accept any rent or performance of Lessee's obligations from any
person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of any rent or performance shall constitute a waiver or estoppel of
Lessor's right to exercise its remedies for the Default or Breach by Lessee of
any of the terms, covenants or conditions of this Lease.
(c) The consent of Lessor to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting by Lessee or to any
subsequent or successive assignment or subletting by the sublessee. However,
Lessor may consent to subsequent sublettings and assignments of the sublease or
any amendments or modifications thereto without notifying Lessee or anyone else
liable on the Lease or sublease and without obtaining their consent, and such
action shall not relieve such persons from liability under this Lease or
sublease.
(d) In the event of any Default or Breach of Lessee's obligations under this
Lease, Lessor may proceed directly against Lessee, any Guarantors or any one
else responsible for the performance of the Lessee's obligations under this
Lease, including the sublessee, without first exhausting Lessor's remedies
against any other person or entity responsible therefor to Lessor, or any
security held by Lessor or Lessee.
(e) Each request for consent to an assignment or subletting shall be in writing,
accompanied by information relevant to Lessor's determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a non-refundable
deposit of $1,000 or ten percent (10%) of the current monthly Base Rent,
whichever is greater, as reasonable consideration for Lessor's considering and
processing the request for consent. Lessee agrees to provide Lessor with such
other or additional information and/or documentation as may be reasonably
requested by Lessor.
(f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment or entering into such sublease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than
such obligations as are contrary to or inconsistent with provisions of an
assignment or sublease to which Lessor has specifically consented in writing.
(g) The occurrence of a transaction described in Paragraph 12.1 (c) shall give
Lessor the right (but not the obligation) to require that the Security Deposit
be increased to an amount equal to six (6) times the then monthly Base Rent, and
Lessor may make the actual receipt by Lessor of the amount required to establish
such Security Deposit a condition to Lessor's consent to such transaction.
(h) Lessor, as a condition to giving its consent to any assignment or
subletting, may require that the amount and adjustment structure of the
rent payable under this Lease be adjusted to what is then the market value
and/or adjustment structure for property similar to the Premises is then
constituted.
12.3 Additional Terms and Conditions Applicable to Subletting. The
following terms and conditions shall apply to any subletting by Lessee of
all or any part of the Premises and shall be deemed included in all
subleases under this Lease whether or not expressly incorporated therein:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in
all rentals and income arising from any sublease of all or a portion of the
Premises heretofore or hereafter made by Lessee, and Lessor may collect such
rent and income and apply same toward Lessee's obligations under this Lease;
provided, however, that until a Breach (as defined in Paragraph 13.1) shall
occur in the performance of Lessee's obligations under this Lease, Lessee may,
except as otherwise provided in this Lease, receive, collect and enjoy the rents
accruing under such sublease. Lessor shall not, by reason of this or any other
assignment of such sublease to Lessor, nor by reason of the collection of the
rents from a sublessee, be deemed liable to the sublessee for any failure of
Lessee to perform and comply with any of Lessee's obligations to such sublessee
under such sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Lessor stating that a Breach
exists in the performance of Lessee's obligations under this Lease, to pay to
Lessor the rents and other charges due and to become due under the sublease.
Sublessee shall rely upon any such statement and request from Lessor and shall
pay such rents and other charges to Lessor without any obligation or right to
inquire as to whether such Breach exists and notwithstanding any notice from or
claim from Lessee to the contrary. Lessee shall have no right or claim against
said sublessee, or, until the Breach has been cured, against Lessor, for any
such rents and other charges so paid by said sublessee to Lessor
(b) In the event of a Breach by Lessee in the performance of its obligations
under this Lease, Lessor, at its option and without any obligation to do so, may
require any sublessee to attorn to Lessor, in which event Lessor shall undertake
the obligations of the sublessor under such sublease from the time of the
exercise of said option to the expiration of such sublease; provided, however,
Lessor shall not be liable for any prepaid rents or security deposit paid by
such sublessee to such sublessor or for any other prior Defaults or Breaches of
such sublessor under such sublease.
(c) Any matter or thing requiring the consent of the sublessor under a sublease
shall also require the consent of Lessor herein.
(d) No sublessee shall further assign or sublet all or any part of the Premises
without Lessor's prior written consent.
(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to
the sublessee, who shall have the right to cure the Default of Lessee within the
grace period, if any, specified in such notice. The sublessee shall have a right
of reimbursement and offset from and against Lessee for any such Defaults cured
by the sublessee.
13. Default; Breach; Remedies.
13.1 Default Breach. Lessor and Lessee agree that if an attorney is consulted by
Lessor in connection with a Lessee Default or Breach (as hereinafter defined),
$350.00 is a reasonable minimum sum per such occurrence for legal services and
costs in the preparation and service of a notice of Default, and that Lessor may
include the cost of such services and costs in said notice as rent due and
payable to cure said Default. A "Default" is defined as a failure by the Lessee
to observe, comply with or perform any of the terms, covenants, conditions or
rules applicable to Lessee under this Lease. A "Breach"
PAGE 6
is defined as the occurrence of any one or more of the following Defaults, and,
where a grace period for cure after notice is specified herein, the failure .by
Lessee to cure such Default prior to the expiration in the applicable grace
period, shall entitle Lessor to pay the remedies set forth in Paragraphs 13.2
and/or 13.3:
(a) The vacating of the Premises without the intention to reoccupy same, or the
abandonment of the Premises.
(b) Except as expressly otherwise provided in this Lease, the failure by Lessee
to make any payment of Base Rent or any other monetary payment required to be
made by Lessee hereunder, whether to Lessor or to a third party, as and when
due, the failure by Lessee to provide Lessor with reasonable evidence of
insurance or surety bond required under this Lease, or the failure of Lessee to
fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of three (3) days following
written notice thereof by or on behalf of Lessor to Lessee.
(c) Except as expressly otherwise provided in this Lease, the failure by Lessee
to provide Lessor with reasonable written evidence (in duly executed original
form, if applicable) of (i) compliance with Applicable Law per Paragraph 6.3,
(ii) the inspection, maintenance and service contracts required under Paragraph
7.1 (b), (iii) the recission of an unauthorized assignment or subletting per
Paragraph 12.1 (b), (iv) a Tenancy Statement per Paragraphs 16 or 37, (v) the
subordination or non-subordination of this Lease per Paragraph 30, (vi) the
guaranty of the performance of Lessee's obligations under this Lease if required
under Paragraphs 1.11 and 37, (vii) the execution of any document requested
under Paragraph 42 (easements), or (viii) any other documentation or information
which Lessor may reasonably require of Lessee under the terms of this Lease,
where any such failure continues for a period of ten (10) days following written
notice by or on behalf of Lessor to Lessee.
(d) A Default by Lessee as to the terms, covenants, conditions or provisions of
this Lease, or of the rules adopted under Paragraph 40 hereof, that are to be
observed, complied with or performed by Lessee, other than those described in
subparagraphs (a), (b) or (c), above, where such Default continues for a period
of thirty (30) days after written notice thereof by or on behalf of Lessor to
Lessee; provided, however, that if the nature of Lessee's Default is such that
more than thirty (30) days are reasonably required for its cure, then it shall
not be deemed to be a Breach of this Lease by Lessee if Lessee commences such
cure within said thirty (30) day period and thereafter diligently prosecutes
such cure to completion.
(e) The occurrence of any of the following events: (i) The making by lessee of
any general arrangement or assignment for the benefit of creditors (ii) Lessee's
becoming a "debtor" as defined in 11 U.S.C. ss.101 or any successor statute
thereto (unless, in the case of a petition filed against Lessee, the same is
dismissed within sixty (60) days); (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located at
the Premises or of Lessee's interest in this Lease, where possession is not
restored to Lessee within thirty (30) days, or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or of Lessee's interest in this Lease, where such seizure is not
discharged within thirty (30) days; provided, however, In the event that any
provision of this subparagraph (e) is contrary to any applicable law, such
provision shag be of no force or effect, and not affect the validly of the
remaining provisions.
(f) The discovery by Lessor that any financial statement given to Lessor by
Lessee or any Guarantor of Lessee's obligations hereunder was materially false.
(g) If the performance of Lessee's obligations under this Lease is guaranteed:
(I) the death of a guarantor, (ii) the termination of a guarantor's liability
with respect to this Lease other than in accordance with the terms of such
guaranty, (iii) a guarantor's becoming insolvent or the subject of a bankruptcy
filing, (iv) a guarantor's refusal to honor the guaranty, or (v) a guarantor's
breach of its guaranty obligation on an anticipatory breach basis, and Lessee's
failure, within sixty (60) days following written notice by or on behalf of
Lessor to Lessee of any such event, to provide Lessor with written alternative
assurance or security, which, when coupled with the then existing resources of
Lessee, equals or exceeds the combined financial resources of Lessee and the
guarantors that existed at the time of execution of this Lease.
13.2 Remedies. If Lessee fails to perform any affirmative duty or obligation of
Lessee under this Lease, within ten (10) days after written notice to Lessee (or
in case of an emergency, without notice) Lessor may at its option (but without
obligation to do so), perform such duty or obligation on Lessee's behalf,
including but not limited to the obtaining of reasonably required bonds,
insurance policies, or governmental licenses, permits or approvals. The costs
and expenses of any such performance by Lessor shall be due and payable by
Lessee to Lessor upon invoice therefor. If any check given to Lessor by Lessee
shall not be honored by the bank upon which it is drawn, Lessor, at its option,
may require all future payments to be made under this Lease by Lessee to be made
only by cashier's check. In the event of a Breach of this Lease by Lessee, as
defined in Paragraph 13.1, with or without further notice or demand, and without
limiting Lessor In the exercise of any right or remedy which Lessor may have by
reason of such Breach, Lessor may
(a) Terminate Lessee's right to possession of the Premises by any lawful means,
in which case this Lease and the term hereof shall terminate and Lessee shall
immediately surrender possession of the Premises to Lessor. In such event Lessor
shall be entitled to recover from Lessee: (i) the worth at the time of the award
of the unpaid rent which had been earned at the time of termination; (ii) the
worth at the time of award of the amount by which the unpaid rent which would
have been earned after termination until the time of award exceeds the amount of
such rental loss that the Lessee proves could have been reasonably avoided;
(iii) the worth at the time of award of the amount by which the unpaid rent for
the balance of the term after the time of award exceeds the amount of such
rental loss that the Lessee proves could be reasonably avoided; and (iv) any
other amount necessary to compensate Lessor for all the detriment proximately
caused by the Lessee's failure to perform its obligations under this Lease or
which in the ordinary course of things would be likely to result therefrom,
including but not limited to the cost of recovering possession of the Premises,
expenses of reletting, including necessary renovation and alteration of the
Premises, reasonable attorneys' fees, and that portion of the leasing commission
paid by Lessor applicable to the unexpired term of this Lease. The worth at the
time of award of the amount referred to in provision (iii) of the prior sentence
shall be computed by discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco et the time of award plus one percent (1%).
Efforts by Lessor to mitigate damages caused by Lessee's Default or Breach of
this Lease shall not waive Lessor's right to recover damages under this
Paragraph. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding the unpaid rent and damages as are recoverable therein, or Lessor may
reserve therein the right to recover all or any part thereof in a separate suit
for such rent and/or damages. If a notice and grace period required under
subparagraphs 13.1(b), (c) or (d) was not previously given, a notice to pay rent
or quit, or to perform or quit, as the case may be, given to Lessee under any
statute authorizing the forfeiture of leases for unlawful detainer shall also
constitute the applicable notice for grace period purposes required by
subparagraphs 13.1 (b), (c) or (d). In such case, the applicable grace period
under subparagraphs 13.1 (b), (c) or (d) and under the unlawful detainer statute
shall run concurrently after the one such statutory notice, and the failure of
Lessee to cure the Default within the greater of the two such grace periods
shall constitute both an unlawful detainer and a Breach of this Lease entitling
Lessor to the remedies provided for in this Lease and/or by said statute.
(b) Continue the Lease and Lessee's right to possession in effect (in California
under California Civil Code Section 1951.4) after Lessee's Breach and
abandonment and recover the rent as it becomes due, provided Lessee has the
right to sublet or assign, subject only to reasonable limitations. See
Paragraphs 12 and 36 for the limitations on assignment and subletting which
limitations Lessee and Lessor agree are reasonable. Acts of maintenance or
preservation, efforts to relet the Premises, or the appointment of a receiver to
protect the Lessor's interest under the Lease, shall not constitute a
termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available to Lessor under the laws
w judicial decisions of the state wherein the Premises are located.
(d) The expiration or termination of this Lease and/or the termination of
Lessee's right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during
the term hereof or by reason of Lessee's occupancy of' the, Premises.
13.3 Inducement Recapture In Event Of Breach. Any agreement by Lessor for free
or abated rent or other charges applicable to the Premises, or for the giving or
paying by Lessor to or for Lessee of any cash or other bonus, inducement or
consideration for Lessee's entering into this Lease, all of which concessions
are hereinafter refined to as "Inducement Provisions," shall be deemed
conditioned upon Lessee's full and faithful performance of all of the terms,
covenants and conditions of this Lease to be performed or observed by Lessee
during the term hereof as the same may be extended. Upon the occurrence of a
Breach of this Lease by Lessee, as defined in Paragraph 13.1, any such
inducement Provision shall automatically be deemed deleted from this Lease and
of no further force or effect, and any rent, other charge, bonus, inducement or
consideration theretofore abated, given or paid by Lessor under such an
Inducement Provision shall be immediately due and payable by Lessee to Lessor,
and recoverable by Lessor as additional rent due under this Lease,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
Paragraph shall not be deemed a waiver by Lessor of the provisions of this
Paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance.
13.4 Late Charged Lessee hereby acknowledges that late payment by Lessee to
Lessor of rent and other sums due hereunder will cause Lessor to incur costs not
contemplated by this, Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed upon Lessor by the
terms of any ground lease, mortgage or trust deed covering the Premises.
Accordingly, if any installment of rent or any other sum due from Lessee shall
not be received by Lessor or Lessor's designee within five (5) days after such
amount shall be due, then, without any requirement for notice to Lessee, Lessee
shall pay to Lessor a late charge equal to six percent (6%) of such overdue
amount. The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment by
Lessee. Acceptance of such late charge by Lessor shall in no event constitute a
waiver of Lessee's Default or Breach with respect to such overdue amount, nor
prevent Lessor from exercising any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for three (3) consecutive installments of Base Rent, then
notwithstanding Paragraph 4.1 or any other provision of this Lease to the
contrary, Base Rent shall, at Lessor's option, become due and payable quarterly
in advance.
13.5 Breach by Lessor. Lessor shall not be deemed in breach of this Lease unless
Lessor fails within a reasonable time to perform an obligation required to be
performed by Lessor. For purposes of this Paragraph 13.5, a reasonable time
shall in no event be less than thirty (30) days after receipt by Lessor, and by
the holders of any ground lease, mortgage or deed of trust covering the Premises
whose name and address shall have been furnished Lessee in writing for such
purpose, of written notice specifying wherein such obligation of Lessor has not
been performed; provided, however, that if the nature of Lessor's obligation is
such that more than thirty (30) days after such notice are reasonably required
for its performance, then Lessor shall not be in breach of this Lease if
performance is commenced within such thirty (30) day period and thereafter
diligently pursued to completion.
14. Condemnation. If the Premises or any portion thereof are taken under
the power of eminent domain or sold under the threat of the exercised said
power (all of which are herein called "condemnation"), this Lease shall
terminate as to the part so taken as of the date the condemning authority
takes
PAGE 7
title or possession, whichever first occurs. If more than ten percent (10%) of
the floor area of the Premises or more than twenty-five percent (25%) of the
land area not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of such
notice, within ten (10) days after the condemning authority shall have taken
possession) terminate this Lease as of the date the condemning authority takes
such possession. If Lessee does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion of
the Premises remaining, except that the Base Rent shall be reduced in the same
proportion as the rentable floor area of the Premises taken bears to the total
rentable floor area of the building located on the Premises. No reduction of
Base Rent shall occur if the only portion of the Premises taken is land on which
there is no building. Any award for the taking of all or any part of the
Premises under the power of eminent domain or any payment made under threat of
the exercise of such power shall be the property of Lessor, whether such award
shall be made as compensation for diminution in value of the leasehold or for
the taking of the fee, or as severance damages provided, however that Lessee
shall be entitled to any compensation separately awarded to Lessee for Lessee's
relocation expenses and/or loss of Lessee's Trade Fixtures. In the event that
this Lease is not terminated by reason of such condemnation, Lessor shall to the
extent of its net severance damages received, over and above the legal and other
expenses incurred by Lessor in the condemnation matter, repair any damage to the
Premises caused by such condemnation, except to the extent that Lessee has been
reimbursed therefor by the condemning authority. Lessee shall be responsible for
the payment of any amount in excess of such net severance damages required to
complete such repair.
<deleted items>
16. Tenancy Statement.
16.1 Each Party (as "Responding Party") shall within ten (10) days after written
notice from the other Party (the "Requesting Party") execute, acknowledge and
deliver to the Requesting Party a statement in writing in form similar to the
then most current "Tenancy Statement" form published by the American Industrial
Real Estate Association, plus such additional information, confirmation and/or
statements as may be reasonably requested by the Requesting Party.
16.2 If Lessor desires to finance, refinance, or sell the Premises, any part
thereof, or the building of which the Premises are a part, Lessee and all
Guarantors of Lessee's performance hereunder shall deliver to any potential
lender or purchaser designated by Lessor such financial statements of Lessee and
such Guarantors as may be reasonably required by such lender or purchaser,
including but not limited to Lessee's financial statements for the past three
(3) years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth.
17. Lessor's Liability. The term "Lessor" as used herein shall mean the owner or
owners at the time in question of the fee title to the Premises, or, if this is
a sublease, of the Lessee's interest in the prior lease. In the event of a
transfer of Lessor's title or interest in the Premises or in this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor at the time of such transfer or assignment.
Except as provided in Paragraph 15, upon such transfer or assignment and
delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under
this Lease thereafter to be performed by the Lessor. Subject to the foregoing,
the obligations and/or covenants in this Lease to be performed by the Lessor
shall be binding only upon the Lessor as hereinabove defined.
18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. Interest on Past Due Obligations. Any monetary payment due Lessor hereunder,
other then late charges, not received by Lessor within thirty (30) days
following the date on which it was due, shall bear interest from the
thirty-first (31st) day after it was due at the rate of 12% per annum, but not
exceeding the maximum rate allowed by law, in addition to the late charge
provided for in Paragraph 13.4.
20. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.
21: Rent Defined. All monetary obligations of Lessee to Lessor under the
terms of this Lease are deemed to be rent.
22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be
effective.. Lessor and Lessee each represents and warrants to the Brokers that
it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease
and as to the nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.
23. Notices.
23.1 All notices required or permitted by this Lease shall be in writing and may
be delivered in person (by hand or by messenger or courier service) or may be
sent by regular, certified or registered mail or U.S. Postal Service Express
Mail, with postage prepaid, or by facsimile transmission, and shall be deemed
sufficiently given if served in a manner specified in this Paragraph 23. The
addresses noted adjacent to a Party's signature on this Lease shall be that
Party's address for delivery or mailing of notice purposes. Either Party may by
written notice to the other specify a different address for notice purposes,
except that upon Lessee's taking possession of the Premises, the Premises shall
constitute Lessee's address for the purpose of mailing or delivering notices to
Lessee. A copy of all notices required or permitted to be given to Lessor
hereunder shall be concurrently transmitted to such party or parties at such
addresses as Lessor may from time to time hereafter designate by written notice
to Lessee.
23.2 Any notice sent by registered or certified mail, return receipt requested,
shall be deemed given on the date of delivery shown on the receipt card, or if
no delivery date is shown, the postmark thereon. If sent by regular mail the
notice shall be deemed given forty-eight (48) hours after the same is addressed
as required herein and mailed with postage prepaid. Notices delivered by United
States Express Mail or overnight courier that guarantees next day delivery shall
be deemed given twenty-four (24) hours after delivery of the same to the United
States Postal Service or courier. If any notice is transmitted by facsimile
transmission or similar means, the same shall be deemed served or delivered upon
telephone confirmation of receipt of the transmission thereof, provided a copy
is also delivered via delivery or mail. If notice is received on a Sunday or
legal holiday, it shall be deemed received on the next business day.
24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant
or condition hereof by Lessee, shall be deemed a waiver of any other term,
covenant or condition hereof, or of any subsequent Default or Breach by Lessee
of the same or of any other term, covenant or condition hereof. Lessor's consent
to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor's consent to, or approval of, any subsequent or similar act
by Lessee, or be construed as the basis of an estoppel to enforce the provision
or provisions of this Lease requiring such consent. Regardless of Lessor's
knowledge of a Default or Breach at the time of accepting rent, the acceptance
of rent by Lessor shall not be a waiver of any preceding Default or Breach by
Lessee of any provision hereof, other than the failure of Lessee to pay the
particular rent so accepted. Any payment given Lessor by Lessee may be accepted
by Lessor on account of moneys or damages due Lessor, notwithstanding any
qualifying statements or conditions made by Lessee in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Lessor at or before the
time of deposit of such payment.
25. Recording. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a short form memorandum of this
Lease for recording purposes. The Party requesting recordation shall be
responsible for payment of any fees or taxes applicable thereto.
26 No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or earlier termination of
this Lease.
PAGE 8
27. Cumulative Remedies. No remedy or event hereunder shall be deemed exclusive
but shall, whenever possible, be cumulative with all other remedies at law or in
equity.
28. Covenants and Conditions. All provisions of this Lease to be observed or
performed by Lessee are both covenants and conditions.
29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.
30. Subordination; Attornment; Non-Disturbance.
30.1 Subordination. This Lease and any Option granted hereby shall be subject
and subordinate to any ground lease, mortgage. deed of trust, or other
hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Lessor upon the real property of which the Premises are a
part, to any and all advances made on the security thereof, and to all renewals,
modifications, consolidations, replacements and extensions thereof. Lessee
agrees that the Lenders holding any such Security Device shall have no duty,
liability or obligation to perform any of the obligations of Lessor under this
Lease, but that in the event of Lessor's default with respect to any such
obligation, Lessee will give any Lender whose name and address have been
furnished Lessee in writing for such purpose notice of Lessor's default and
allow such Lender thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Lessee may have by reason thereof.
If any Lender shall elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device and shall give written notice
thereof to Lessee, this Lease and such Options shall be deemed prior to such
Security Device, notwithstanding the relative dates of the documentation or
recordation thereof.
30.2 Attornment. Subject to the non-disturbance provisions of Paragraph 30.3,
Lessee agrees to attorn to a Lender or any other party who acquires ownership of
the Premises by reason of a foreclosure of a Security Device, and that in the
event of such foreclosure, such new owner shall not: (i) be liable for any act
or omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership, (ii) be subject to any offsets or defenses which
Lessee might have against any prior lessor, or (iii) be bound by prepayment of
more than one (1) month's rent.
30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor
after the execution of this Lease, Lessee's subordination of this Lease shall be
subject to receiving assurance (a "non-disturbance agreement") from the Lender
that Lessee's possession and this Lease, including any options to extend the
term hereof, will not be disturbed so long as Lessee is not in Breach hereof and
attorns to the record owner of the Premises.
30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any such
subordination or non-subordination, attornment and/or non-disturbance agreement
as is provided for herein.
31. Attorney's Fees. It any Party or Broker brings an action or proceeding to
enforce the terms hereof or declare rights hereunder, the Prevailing Party (as
hereafter defined) or Broker in any such proceeding, action, or appeal thereon,
shall be entitled to reasonable attorney's fees. Such fees may be awarded in the
same suit or recovered in a separate suit, whether or not such action or
proceeding is pursued to decision or judgment. The term "Prevailing Party" shall
include, without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether; by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense. The attorney's fees award shall not be computed in accordance
with any court fee schedule, but shall be such as to fully reimburse all
attorney's fees reasonably incurred. Lessor shall be entitled to attorney's
fees, costs and expenses incurred in the preparation and service of notices of
Default and consultations in connection therewith, whether or not a legal action
is subsequently commenced in connection with such Default or resulting Breach.
32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and making such alterations,
repairs, improvements or additions to the Premises or to the building of which
they are a part, as Lessor may reasonably deem necessary. Lessor may at any time
place on or about the Premises or building any ordinary "For Sale" signs and
Lessor may at any time during the last one hundred twenty (120) days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Lessor shall be without abatement of rent or liability to Lessee.
33. Auctions. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. Signs. Lessee shall not place any sign upon the Premises, except that Lessee
may, with Lessor's prior written consent, install (but not on the roof) such
signs as are reasonably required to advertise Lessee's own business. The
installation of any sign on the Premises by or for Lessee shall be subject to
the provisions of Paragraph 7 (Maintenance, Repairs, Utility Installations,
Trade Fixtures and Alterations). Unless otherwise expressly agreed herein,
Lessor reserves all rights to the use of the roof and the right to install, and
all revenues frown the installation of, such advertising signs on the Premises,
including the roof, as do not unreasonably interfere with the conduct of
Lessee's business.
35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, Lessor shall, in the event of any such surrender,
termination or cancellation, have the option to continue any one or all of any
existing subtenancies. Lessor's failure within ten (10) days following any such
event to make a written election to the contrary by written notice to the holder
of any such lesser interest, shall constitute Lessor's election to have such
event constitute the termination of such interest.
36. Consents.
(a) Except for Paragraph 33 hereof (Auctions) or as otherwise provided herein,
wherever in this Lease the consent of a Party is required to an act by or for
the other Party, such consent shall not be unreasonably withheld or delayed.
Lessor's actual reasonable costs and expenses (including but not limited to
architects', attorneys', engineers' or other consultants' fees) incurred in the
consideration of, or response to, a request by Lessee for any Lessor consent
pertaining to this Lease or the Premises, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
practice or storage tank, shall be paid by Lessee to Lessor upon receipt of an
invoice and supporting documentation therefor. Subject to Paragraph 1 2.2(e)
(applicable to assignment or subletting), Lessor may, as a condition to
considering any such request by Lessee, require that Lessee deposit with Lessor
an amount of money (in addition to the Security Deposit held under Paragraph 5)
reasonably calculated by Lessor to represent the cost Lessor will incur in
considering and responding to Lessee's request. Except as otherwise provided,
any unused portion of said deposit shall be refunded to Lessee without interest.
Lessor's consent to any act, assignment of this Lease or subletting of the
Premises by Lessee shall not constitute an acknowledgement that no Default or
Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver
of any then existing Default or Breach, except as may be otherwise specifically
stated in writing by Lessor at the time of such consent.
(b) All conditions to Lessor's consent authorized by this Lease are acknowledged
by Lessee as being reasonable. The failure to specify herein any particular
condition to Lessor's consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given.
<deleted items>
38. Quiet Possession. Upon payment by Lessee of the rent for the Premises and
the observance and performance of all of the covenants, conditions and
provisions on Lessee's part to be observed and performed under this Lease,
Lessee shall have quiet possession of the Premises for the entire term hereof
subject to all of the provisions of this Lease.
39. Options.
39.1 Definition. As used in this Paragraph 39 the word "Option" has the
following meaning: (a) the right to extend the term of this Lease or to renew
this Lease or to extend or renew any lease that Lessee has on other property of
Lessor; (b) the right of first refusal to lease the Premises or the right of
first offer to lease the Premises or the right of first refusal to lease other
property of Lessor or the right of first offer to lease other property of
Lessor; (c) the right to purchase the Premises, or the right of first refusal to
purchase the Premises, or the right of first offer to purchase the Premises, or
the right to purchase other property of Lessor, or the right of first refusal to
purchase other property of Lessor, or the right of first offer to purchase other
property of Lessor.
39.2 Options Personal To Original Lessee. Each Option granted to Lessee in this
Lease is personal to the original Lessee named in Paragraph 1.1 hereof, and
cannot be voluntarily or involuntarily assigned or exercised by any person or
entity other than said original Lessee while the original Lessee is in full and
actual possession of the Premises and without the intention of thereafter
assigning or subletting. The Options, if any, herein granted to Lessee are not
assignable, either as a part of an assignment of this Lease or separately or
apart therefrom, and no Option may be separated from this Lease in any manner,
by reservation or otherwise. //
PAGE 9
39.3 Multiple Options. In the event that Lease has any Multiple Options to
extend or renew this Lease a later Option cannot be exercised unless the prior
Options to extend or renew this Lease have been validly exercised.
39.4 Effect of Default on Options.
(a) Lessee shall have no right to exercise an Option, notwithstanding any
provision in the grant of Option to the contrary: (i) during the perioed
commencing with the giving of any notice of Default under Paragraph 13.1 and
continuing until the noticed Default is cured, or (ii) during the period of time
any monetary obligation due Lessor from Lessee is unpaid (without regard to
whether notice thereof is given Lessee), or (iii) during the time Lessee is in
Breach of this Lease, or (iv) in the event that Lessor has given to Lessee three
(3) or more notices of Default under Paragraph 13.1, whether or not the Defaults
are cured, during the twelve (12) month period immediately preceding the
exercise of the Option.
(b) The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee's inability to exercise an Option
because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall terminate and
be of no further force or effect, notwithstanding Lessee's due and timely
exercise of the Option, if, after such exercise and during the term of this
Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a
period of thirty (30) days after such obligation becomes due (without any
necessity of Lessor to give notice thereof to Lessee), or (ii) Lessor gives to
Lessee three (3) or more notices of Default under Paragraph 13.1 during any
twelve (12) month period, whether or not the Defaults are cured, or (iii) if
Lessee commits a Breach of this Lease.
40. Multiple Buildings. If the Premises are part of a group of buildings
controlled by Lessor, Lessee agrees that it will abide by, keep and observe all
reasonable rules and regulations which Lessor may make from time to time for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of such other buildings and their
invitees, and that Lessee will pay its fair share of common expenses incurred in
connection therewith.
4t. Security Measures. Lessee hereby acknowledges that the rental payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of the Premises, Lessee, as
agents and Invitees and their property from the acts of third parties.
42. Reservations. Lessor reserves to itself the right, from time to time, to
grant, without the consent or Joinder of Lessee, such easements, rights and
dedications that Lessor deems necessary, and to cause the recordation of parcel
maps and restrictions, so long as such easements, rights, dedications, maps and
restrictions do not unreasonably interfere with the use of the Premises by
Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to
effectuate any such easement rights, dedication, map or restrictions.
43. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a Voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as was not legally required to pay under the provisions of this Lease.
44. Authority. If either Party hereto is a corporation, trust, or general or
limited partnership, each individual executing this Lease on behalf of such
entity represents and warrants that he or she is duly authorized to execute and
deliver this Lease on its behalf. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after request by Lessor,
deliver to Lessor evidence satisfactory to Lessor of such authority
45. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. Offer. Preparation of this Lease by Lessor or Lessor's agent and
submission of same to Lessee shall not be deemed an offer to lease to
Lessee. This Lease is not intended to be binding until executed by all
Parties hereto.
47. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. The parties shall amend
this Lease from time to time to reflect any adjustments that are made to the
Base Rent or other rent payable under this Lease. As long as they do not
materially change Lessee's obligations hereunder, Lessee agrees to make such
reasonable non-monetary modifications to this Lease as may be reasonably
required by an Institutional, insurance company, or pension plan Lender in
connection with the obtaining of normal financing or refinancing of the property
of which the Premises are a part.
48. Multiple Parties. Except as otherwise expressly provided herein, if
more than one person or entity is named herein as either Lessor or Lessee,
the obligations of Such Multiple Parties shall be the joint and several
responsibility of all persons or entities named herein as such Lessor or
Lessee.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN, IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR
ATTORNEY FOR HIS APPROVAL. FURTHER, - EXPERTS SHOULD BE CONSULTED TO EVALUATE
THE CONDITION OF THE PROPERTY AS TO THE POSSIBLE PRESENCE OF ASBESTOS, STORAGE
TANKS OR HAZARDOUS SUBSTANCES. NO REPRESENTATION OR RECOMMENDATION IS MADE BY
THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER(S)
OR THEIR AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT OR TAX
CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES; THE PARTIES
SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN COUNSEL AS TO THE LEGAL AND TAX
CONSEQUENCES OF THIS LEASE. IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER
THAN CALIFORNIA, AN ATTORNEY FROM THE STATE WHERE THE PROPERTY IS LOCATED SHOULD
BE CONSULTED.
The parties hereto have executed this Lease at the place on the dates specified
above by their respective signatures.
Executed at Paris
on 3/7/98
by LESSOR: Reza Zandian
PO Box 5506
Irvine, CA 92716
Executed at Santa Maria, California
on 2-16-98
LESSEE: Saba Petroleum Company
A. Delaware Corporation
By
Name Printed: Ilyas Chaudhary
The: Chief Executive Officer
3201 Airpark Drive, Suite 201
Santa Maria, CA 93455
(805)347-8700
(805)347-1072
PAGE 10
OFFICE / INDUSTRIAL LEASE ADDENDUM
EFFECT OF THIS ADDENDUM
This addendum to the office / industrial lease ("Lease"), dated this 9th day of
January, 1998, between Reza Zandian ("Lessor") and Saba Petroleum Company
("Lessee"), relating to the real property located at 17526 Von Karman Avenue,
Suite 200, Irvine, California ("Premises"), shall constitute additional
agreements between the parties and shall provide Lessee with notice of certain
conditions which may affect Lessee's use and occupation of the Premises.
1.3 Term of the Lease.
This paragraph shall replace paragraph 1.3 of the original Lease document. The
Premises will be leased to Lessee, commencing on January 9, 1998, ("Commencement
Date") on a "month-to-month" rental basis. This month to month lease may be
canceled by Lessee at any time or by Lessor only after September 30, 1998, by
providing written notice, thirty (30) days prior to the date that the party
wishes to terminate the lease. However, this lease may be canceled by Lessor at
any time (a) the City of Irvine mandates that Lessee vacate the premises, (b)
Lessor is required to make repairs to the Premises which cannot be commenced
until Lessee vacates the Premises, or (c) if Lessee fails to pay rent due to
Lessor in a timely manner. (See paragraph 3 of the Lease for further
provisions.)
1
NOTIFICATION OF CONDITION OF PREMISES
49. Lessor Wishes to Inform Lessee of the Following:
A) Excluding the portion of the premises leased hereunder, certain
portions of the real property located at 17526 Von Karman Avenue, Suite 200,
Irvine, California, have not been granted building and/or occupancy permits by
the City of Irvine.
B) The City of Irvine has issued a notice that certain portions of the
real property located at 17526 Von Karman Avenue, Suite 200, Irvine, California,
excluding the portion of the premises leased hereunder, are unsafe and that the
City of Irvine may take legal action to vacate any and all occupants of the
Premises. Such remedial action, if taken by the City of Irvine, may negatively
affect Lessee's quiet enjoyment of the Premises.
Lessor does not have a permit for the mezzanine area of the Premises.
Consequently, it is possible that Lessor may be required to destroy the
mezzanine area of the Premises to comply with Irvine City regulations. Any such
construction, demolition or repair may adversely affect Lessee's quiet use and
enjoyment of the Premises.
50. BASE RENT
The base rent of $ 1351.00 per month shall include all utilities and association
dues, except for telephone service. All telephone service(s) and janitorial
service(s) shall be paid by Lessee.
51. PARKING
Lessor shall provide eight (8) reserved parking spaces, free for the Lease term,
subject to Community Association and/or management company's approval.
52. UTILITIES
Lessor shall be responsible for all utilities, with the exception of telephone
service. All telephone service(s) shall be paid by Lessee.
53. LESSOR'S OBLIGATION
Lessor shall be responsible for repairs and maintenance of the Premises,
including plumbing, heating, air conditioning, electrical, lighting (except for
light bulbs), fire extinguishing system, landscaping, driveways, parking lot and
sidewalks. Lessee shall be responsible for replacing all light bulbs and/or
flourescent bulbs.
54. TENANT IMPROVEMENTS
Lessee shall accept the Premises in its current condition, subject to the
following conditions:
(a) All mechanical, electrical, HVAC systems, and plumbing systems are to be in
good working order.
(b) Any and all notices regarding the condition of the property issued by the
City of Irvine, including but not limited to that certain prior "Notice of
Dangerous Condition" and "Notice to Vacate."
55. OPERATING EXPENSES
Lessee shall not be responsible for any pass through of operating expenses
during its Lease term, including but not limited to common area maintenance
expenses, or Lessor's capital improvements to the Premises.
56. SIGNAGE
Lessee shall, at Lessee's expense, have the right to place a sign at its
entrance to the Premises, subject to Association approval and guidelines.
57. HVAC (HEATING, VENTILATING AND AIR CONDITIONING)
Lessor shall supply HVAC, per industry standards, pertaining to a hill
service gross lease. The standard hours of operation shall be 8:00 a.m. to
6:00 p.m. Monday through Friday and 9:00 a.m. to 1:00 p.m. on Saturday,
except for national holidays. Lessor reserves the right to place a timer on
the thermostats.
I ACCEPT AND AGREE TO THE FOREGOING:
Date 3/7/98 Reza Zandian (Lessor)
Date:2-16-98 Saba Petroleum Company (Lessee)