EXHIBIT 10.7
L E A S E
THIS LEASE, made and entered into this 18th day of December, 1991 by and
between XXXXXX X. XXXXX, hereinafter referred to as "Lessor" and XXXXXXXX
DEVELOPMENT CORPORATION, A CALIFORNIA CORPORATION AND XXXXXXX XXXXXXXX, an
individual, jointly and severally, hereinafter referred to as "Lessees."
W I T N E S S E T H:
ARTICLE 1 - DESCRIPTION OF PREMISES
Lessor, for and in consideration of the rents, covenants and agreements
contained herein on the part of Lessees do hereby lease unto Lessees that
certain office space known as "Suites A, C, D and E and appurtenant common area
and six (6) parking spaces at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxx.
California, as shown on Exhibit "A," hereto attached.
ARTICLE 2 - TERM
The term of this lease shall be for twenty four months commencing on
February 1, 1992 and terminating on January 31, 1994. Lessees may occupy the
above stated spaces rent free from the date of this lease through January 31,
1992 during which time all other provisions of this Lease remain in force.
ARTICLE 3 - RENT
A) Lessees agree to pay Lessor as rent for the said leased premises the
sum of Four Thousand One Hundred Forty-eight dollars ($4,148.00) per month;
payable on the first day of each month within the terms of this lease. The
monthly rent shall be the same as provided herein except that it shall be
adjusted annually beginning February 1, 1993 and each anniversary thereof, such
that if at the commencement of the year in question the official Consumer's
Price Index (all items 1982-84= 100) of the Bureau of Labor Statistics, United
States Dept. of Labor, pertaining to All Urban Consumers for the Los Angeles--
Anaheim-Riverside area, as published in the official Department of Labor
Publication for the last month of the year in question, is greater than said
index for the month of February 1, 1992, the rent shall be increased in
proportion to the percentage increase of said index between those two specific
months.
B) Lessees shall pay to Lessor concurrently with the execution of this
lease, the first months rent in the amount of Four Thousand One Hundred Forty-
Eight dollars ($4148.00) and an
additional sum of Four Thousand One Hundred Forty-Eight ($4148.00) which shall,
at the time of termination of this Lease, be applied toward the rental for the
last month of the lease term.
ARTICLE 4 - OPTION TO EXTEND TERM
Lessees shall have the option to extend the terms of this lease for two
additional one year periods, the first of which starts on February 1, 1994, and
terminates on January 31, 1995 and the second of which starts on February 1,
1995, and terminates on January 31, 1996-upon the following terms and
conditions:
A) Extention of the term of this Lease shall be accomplished
automatically upon the giving by Lessees to Lessor written notice of his
election so to exercise such option no later that NINETY (90) days prior to the
expiration of the initial Lease period and NINETY (90) days prior to the
expiration of subsequent one (1) year extended terms.
B) Lessees shall have the right to extend this lease as aforesaid only if
Lessees are not in default under any of the terms and provisions hereof either
at the time of the exercise of their option or at the time of the commencement
of the extended term of this lease.
C) Upon the extension of this lease as aforesaid all the terms and
conditions of this lease shall govern and apply during such extended term except
the rent payable.
D) The base monthly rent during the extended term shall be equal to the
base monthly rent paid by Lessees during the initial Lease term, adjusted upward
as described in ARTICLE 3 to the index of the first month of the extended term.
ARTICLE 5 - INTERIOR CONDITION
Lessees accept interior of subject office suite in as is condition. Lessees
may install at own expense, carpet, drapes and or blinds, and paint walls and
ceilings, with Lessor's prior approval of color.
ARTICLE 6 - PARKING
Lessor shall provide for the use of Lessees six (6) parking spaces in the
lot behind said office building at no additional rental. Lessees may rent
additional parking at the rate of $50 per month per space during the initial
term of this lease and at the then prevailing rates for the extended terms in
the adjacent parking lot Lessor leases from Xx. Xxxxxx. The term of the Xxxxxx
Lease expires August 31, 1996 but may be cancelled upon 12 months notice. Should
the Xxxxxx
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Lease be cancelled, then Lessees' option to rent additional parking
from Lessor is automatically voided.
ARTICLE 7 - UTILITIES AND SERVICES
A) Lessor shall provide and pay for trash removal from a designated place
on Lessor's premises.
B) Lessees shall pay forty nine and one half percent (49.5%) of
electricity from meter numbers TP 705 and 732, except total monthly charges
resulting from meter TP 705 shall be reduced by twenty percent (20%), for
exterior lights. Lessees shall pay forty nine and one half percent (49.5%) of
monthly charges for natural gas used by Southern California Gas Co. account 08-
4850-959-6202-8. C) Lessor shall provide janitorial service for the common
areas, common restrooms and exterior areas of the leased premises. Lessees shall
provide their own janitorial services for the interior portions of the leased
premises including windows inside and out and for the exterior of the westerly
patio used exclusively by Lessees.
ARTICLE 8 - LIABILITY INSURANCE
Lessees further agree to provide to Lessor, at the sole cost and expense of
Lessees, a public liability insurance policy to protect Lessor against any
liability to the public incident to the use of or resulting from any occurrence
in or about said premises, the limits of liability under such insurance to be
not less than FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) for any one person
injured, aggregate limits of ONE MILLION DOLLARS ($1,000,000.00) for all persons
injured, in any one occurrence, and ONE HUNDRED THOUSAND DOLLARS ($100,000.00)
for property damage arising out of any one occurrence. The inclusion of Lessor
by endorsement or as additional insured under Lessees' own public liability
insurance policy shall constitute compliance with this Article so long as the
coverages and limits of liability are no less than those provided herein.
Lessees shall pay thirty one point four percent (31.4%) of Lessor's annual
Liability insurance cost on the total property.
ARTICLE 9 - INDEMNITY
Lessees agree to indemnify and save Lessor harmless against and from all
claims, charges, damages, losses and liabilities (including reasonable attorneys
fees) arising out of the
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use and occupancy of the premises by Lessees, caused by or resulting from the
negligent or willful act or omission of Lessees, their agents or employees.
ARTICLE 10 - DAMAGE TO OR DESTRUCTION OF PREMISES
If, during the term of this lease, or any renewal or extension thereof the
demised premises are damaged or destroyed by casualty including, but not limited
to, fire or earthquake, and the damage is so extensive that the ordinary
business of Lessees cannot reasonably be conducted therein, and such damage
cannot with reasonable diligence be repaired within 120 days from the happening
of such casualty, then at the option of either Lessor or Lessees, to be
exercised within thirty (30) days after the happening of such casualty, this
lease shall cease and terminate as of the date of such casualty, and Lessees
shall forthwith vacate and surrender said premises. If (1) neither Lessor nor
Lessees shall elect to terminate this lease, or (2) the demised premises are so
damaged by such casualty that the ordinary business of the Lessees cannot
reasonably be conducted therein, but such damage can, with reasonable diligence
be repaired within 120 days, then Lessor shall, with all reasonable diligence,
unless prevented by strikes, lockouts or other labor disturbances or inability
to obtain materials, repair and restore said premises, and no rent shall accrue
or be payable during or for the period from the date of such casualty to the
date when said premises shall have been repaired and restored. If the demised
premises are so slightly damaged by such casualty that the ordinary business of
Lessees can reasonably be conducted therein, then Lessor shall with all
reasonable diligence, unless prevented by strikes, lockouts or other labor
disturbances or inability to obtain materials, repair and restore said premises,
and there shall be no allowance or deduction from the rent herein provided on
account of such damage. Lessees shall promptly notify Lessor in the event the
demised premises are so damaged by such casualty. Lessor's only responsibility
shall be to make repairs if and as herein agreed to be made, and nothing in this
lease is intended to or shall be construed to make Lessor liable for any damage
due to such casualty.
ARTICLE 11 - ASSIGNMENT AND SUBLETTING
Lessees shall not sublet, transfer, assign, hypothecate or encumber this
lease, or any part or interest herein, without first obtaining the written
approval of Lessor; Lessor shall not unreasonably withhold such written
approval. No such assignment, subletting, transfer,
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hypothecation or encumbrance shall affect the obligation of the Lessees herein
to pay the rent herein provided for unless otherwise agreed in writing by
Lessor. Any assignee or subtenant of the Lessees shall be bound by the terms of
this lease.
ARTICLE 12 - ATTORNEYS FEES
In the event an action is instituted by either party hereto against the
other to enforce any of the terms or provisions of this lease or to determine
the rights of the parties hereunder, the party prevailing in such action or
proceeding shall be entitled to recover reasonable attorneys fees and costs paid
or incurred in connection with such suit or proceeding from the other party. The
entitlement to recover such costs shall not be limited to those costs ordinarily
awarded by a Court to the prevailing party but shall include any and all
reasonable costs and expenses incidental to or concerning the maintenance and
prosecution or defense of such suit or proceeding.
ARTICLE 13 - HOLDING OVER
Should Lessees continue in possession of the premises after the end of the
term hereof with the express or implied consent of Lessor, such holding over
shall be construed to be a tenancy from month to month only and shall be at the
same rent as for the month last preceding such holding over, and otherwise
subject to the covenants and conditions herein contained.
ARTICLE 14 - DEFAULT
It is further expressly understood and agreed that each and all of the
provisions of this lease are conditions precedent to be faithfully and fully
performed and observed by the said Lessees to entitle Lessees to continue in
possession of said premises hereunder and that if default be made by Lessees in
the observance, payment, or performance of any of the provisions, terms, or
conditions hereof, except the payment of rent, and such default shall continue
for (30) days after written demand for performance, specifying the nature of the
default claimed, given by Lessor to Lessees, or should Lessees abandon said
lease premises or any part thereof (absence of ten days after default in payment
of rent shall constitute abandonment), then at the option of Lessor, his
successors or assigns, may, without notice or process of law, re-enter and take
possession of said premises and remove all persons and all Lessees' property
therefrom, placing Lessees' personal property in storage in a public warehouse
at the expense and risk of Lessees,
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make any repairs, changes, alterations, or additions in or to said premises
which may be necessary or convenient, relet said premises, or any part thereof
on such terms, conditions and rentals as Lessor may deem proper, and apply the
proceeds that may be collected from said sub-letting, less the expense of so
doing, upon the rent to be paid by Lessees, and hold Lessees for any balance
that may be due under said lease, or at Lessor's option, Lessees shall be deemed
to have forfeited all rights herein and this lease shall at once be deemed
terminated and at an end, and Lessor shall thereupon be entitled to recover from
the Lessees the worth, at the time of such termination, of the excess if any, of
the amount of rent and charges equivalent to the rent reserved in the lease for
the balance of the term over the reasonable rental value of the demised premises
for the same period. Lessees hereby waives all claims for damages to property or
otherwise that may be caused by Lessor in re-entering and taking possession of
the premises as herein provided, and all claims for damages that may result from
the destruction of or injury to the premises or building.
ARTICLE 15 - WAIVER
The waiver by Lessor of any breach of any term, covenant, or condition
herein contained shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant, or
condition herein contained. The subsequent acceptance of rent hereunder by
Lessor shall not be deemed to be a waiver of any preceding breach by Lessees of
any term, covenant, or condition of this lease, other than the failure of
Lessees to pay the particular rentals so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent.
ARTICLE 16 - REPAIRS
Lessees shall, at his expense, maintain and keep in good order and repair
the interior surfaces of walls and partitions within the leased premises. Lessor
shall maintain and repair the exterior walls, exterior surfaces, roof, common
area and walkways, outside rest rooms, heating and air-conditioning systems,
plumbing, wiring and windows excepting, however, any and all
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damages which may be caused or occasioned by the negligence of or at the fault
of Lessees, their employees or invitees.
ARTICLE 17 - USE
The premises are leased to Lessees for the purpose of a general
professional or business office. Lessees shall not use the premises, or permit
the said premises, or any part thereof, to be used, for any purpose or purposes
other than the above-stated use. Lessor agrees that he shall not rent or lease
any part of either building owned by them at the said 000 Xxxx Xxxxxxxx Xxxxxx
for use in connection with the retail sale of merchandise.
ARTICLE 18 - CONDEMNATION
Throughout this lease, the word "condemnation" is coextensive with the
phrase "right of eminent domain", i.e. the right of people or government to take
property for government use, and shall include the intention to condemn
expressed in writing as well as the filing of any action or proceeding for
condemnation.
In the event that any proceeding or action is commenced for the
condemnation, in exercise of the right of eminent domain, of the demised
premises or any portion thereof, or if Lessor is advised in writing by any
government (federal, state or municipal), or agency or department or bureau
thereof, or any entity or body having the right or power of condemnation, of its
intention to condemn the or any portion of the demised premises, Lessees having
the right of possession of the demised premises at the time thereof, or if the
demised premises or any part or portion thereof be condemned through such
action, then and in any of said events:
(a) Lessor may, without any obligation or liability to Lessees, and
without affecting the validity and existence of this lease other than as
hereafter expressly provided, agree to sell and/or convey to the condemnor,
without first requiring that any action or proceeding be instituted, or, if such
action or proceeding shall have been instituted, without requiring any trial or
hearing thereof, and Lessor is expressly empowered to stipulate to judgment
therein, the part or portion of the demised premises sought by the condemnor,
free from this lease and the rights of Lessees hereunder excepting only as
hereinafter in paragraph (b) provided.
(b) Lessees shall have no claim against Lessor nor be entitled to any part
or portion of the amount that may be paid or awarded as a result of the sale,
for the reasons as aforesaid, or
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condemnation of the demised premises or any part or portion thereof, Lessees
hereby assigning, transferring and setting over unto Lessor any interest, if
any, which Lessees would but for this provision have in, to, upon, or against
the demised premises or any part or portion thereof or the amount agreed to be
paid and/or awarded and paid to Lessor, excepting only Lessees shall be entitled
to seek to recover as against the condemnor, and Lessor shall have no claim
therefor or thereto, for Lessees' trade fixtures and any removable structures
and improvements erected and made by Lessees to or upon the demised premises
which Lessees are entitled to remove upon the expiration of the term hereof.
ARTICLE 19 - SIGNS AND DIRECTORY
Lessees agree to pay the cost of any and all signs used by them and that
they shall be consistent with the design presently being utilized in the
building and approved by Lessor.
ARTICLE 20 - GENERAL COVENANTS
Time shall be of the essence of this lease and of each of the provisions
thereof.
No remedy or election given by any provisions in this lease shall be deemed
exclusive unless so indicated, but it shall, wherever possible, be cumulative
with all other remedies in law or equity except as otherwise herein specifically
provided. Each provision hereof shall be deemed both a covenant and condition
and all of the covenants and conditions contained herein shall be covenants
running with the land and shall be construed as such. The article headings in
this lease contained are for convenience only, and do not constitute a part of
the provisions hereof. This lease binds, applies to and inures to the benefit
of, as the case may require, the respective successors and assigns of Lessor and
Lessees.
ARTICLE 21 - RIGHT TO LEASE ADDITIONAL SPACE
Lessees shall have the right of first refusal to lease additional space on
the premises as it becomes available. Lessor shall notify Lessees in writing as
space becomes available including terms and conditions for its lease. Lessees
shall have thirty (30) days to accept or reject said space, after which, Lessees
forefits all rights under this Article and Lessor may lease to others.
ARTICLE 22 - NOTICES
Whenever the delivery or service of a notice from one party to the other
shall become necessary or convenient hereunder, service shall be made in the
following manner:
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Upon Lessor by sending such notices postage prepaid by United States
Certified Mail, addressed to Lessor Xxxxxx X. Xxxxx, 1777 Las Tunas Road, Santa
Barbara, California or at such other address as Lessor may designate.
Upon Lessees by sending such notices postable prepaid by United States
Certified Mail, addressed to Lessees at Suite A, 125 East Victoria Street, Santa
Barbara, California, or at such other place as Lessees may designate.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
XXXXXXXX DEVELOPMENT
CORPORATION
BY:
/s/ Xxxxxxx Xxxxxxxx
--------------------
XXXXXXX XXXXXXXX,
PRESIDENT, LESSEE
/s/ Xxxxxxx Xxxxxxxx
--------------------
XXXXXXX XXXXXXXX,
INDIVIDUALLY, LESSEE
/s/ Xxxxxx X. Xxxxx
-------------------
XXXXXX X. XXXXX, LESSOR
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25 February 1994
Xx. Xxxxxxx Xxxxxxxx, President
XXXXXXXX GROUP, INC.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Subject: 000 X. Xxxxxxxx Xxxxxx
Dear Xxxxxxx:
This letter is to confirm the rent adjustment that is granted to the Xxxxxxxx
Group, Incorporated for lease of Suites A, C, D, and E in my office building
located 000 X. Xxxxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxxxx.
First: All terms and conditions of the original lease for said office suites
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dated 18 December 1991 and the Assignment and Assumption of Lease to
the Xxxxxxxx Group, Inc. dated 1/28/93 remain in effect except as
modified by this letter.
Second: The base rent listed in ARTICLE 3 - RENT, Paragraph A, shall be
------
changed to $3,780 dollars per month effective March 1, 1994. For
purposes of any subsequent annual rent adjustment, the Consumer Price
Index (CPI) for February 1994 shall be used as the base index month.
Third: The CPI annual rent adjustment for February 1, 1993 to January 31, 1994
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has not been changed, nor paid, and is hereby intentionally waived.
Fourth: In addition to the six uncovered parking spaces included in the Lease,
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the Xxxxxxxx Group will continue to rent extra parking spaces #18, 20
and 21 at $50 per month per space and one garage space at $80 per
month, for a total of $230 per month. Xxxxxxxx will cease renting
extra parking space #25 at the end of this month.
Fifth: The first option to extend the term of the Lease until January 31,
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1995 is hereby exercised at the following monthly rate:
Base Rent: $3,780
Extra Parking: 230
----------------- ------
Total Rent: $4,010
This letter will serve as Amendment #1 to the subject Lease by your signing and
returning a copy of this letter to me.
Your continued tenancy is much appreciated.
Sincerely,
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Lessor
RSG/sg
Approved
Lessee: /s/ by Xxxxxxx Xxxxxxxx Date: 2/28/94
----------------------- -------
Xxxxxxxx Group, Inc.
Xxxxxxx Xxxxxxxx, President
17 May 1995
Xx. Xxxxxxx Xxxxxxxx
XXXXXXXX GROUP, INC.
000 X. Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxx Xxxxxxx, XX 00000
Subject: Lease Amendment #2
Dear Xxxxxxx:
This letter will serve to confirm the agreement reached between us during our
meeting of 3/20/95 and become Amendment #2 to your lease dated December 18,
1991, and its Amendment #1 dated February 25, 1994. The terms of your lease are
hereby modified as follows:
a. The period of the extended lease shall be for twelve months, beginning
April 1, 1995.
b. The base rent shall be Thirty-Two Hundred Seventy-Four Dollars ($3,274.00)
per month.
c. The extra covered space shall be retained at the rate of $80.00 per month,
making the total monthly rent payment Thirty-Three Hundred Fifty-Four
Dollars ($3,354.00).
d. All other terms and conditions of the lease and Amendment #1 mentioned
above shall remain in force.
Please sign and return one copy of this letter to me in the enclosed envelope.
Your continued tenancy is much appreciated.
Very truly yours, Approved:
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Lessor /s/ Xxxxxxx Xxxxxxxx 5/6/95
-------------------- ------
0000 Xxx Xxxxx Xxxx Xxxxxxx Xxxxxxxx Date
Xxxxx Xxxxxxx, XX 00000 Xxxxxxxx Group, Inc., Lessee
25 March 1996
Xx. Xxxxxxx Xxxxxxxx
XXXXXXXX GROUP, INC.
000 X. Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxx Xxxxxxx, XX 00000
Subject: Lease Amendment #3
Dear Xxxxxxx:
This letter will serve to confirm your request for a six (6) month extension of
your lease dated December 18, 1991, and as amended by Amendment #1 dated
February 25, 1994 and, Amendment #2 dated May 17, 1995 and become Amendment #3
to your lease dated December 18, 1991. The terms of your lease are hereby
modified as follows:
a. The period of the extended lease shall be for six months, beginning April
1, 1996 and ending September 30, 1996.
b. The base rent shall be Thirty-Three Hundred Seventy-Four Dollars
($3,374.00) per month.
c. The extra covered space shall be retained at the rate of $80.00 per month,
making the total monthly rent payment Thirty-Three Hundred Fifty-Four
Dollars ($3,354.00).
d. All other terms and conditions of the lease and Amendments #1 and #2
mentioned above shall remain in force.
Please sign and return one copy of this letter to me in the enclosed envelope.
Your continued tenancy is much appreciated.
Very truly yours, Approved:
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx, Lessor /s/ Xxxxxxx Xxxxxxxx 4/11/96
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0000 Xxx Xxxxx Xxxx Xxxxxxx Xxxxxxxx Date
Xxxxx Xxxxxxx, XX 00000 Xxxxxxxx Group, Inc., Lessee