EXHIBIT 10.44
LEASE AGREEMENT
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"Landlord:"
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BLUFFS GROUP III,
a California Limited Partnership
"Tenant:"
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DIGITAL SOUND CORPORATION
October 1, 1996
TABLE OF CONTENTS
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1. LEASE OF PREMISES AND CONSTRUCTION BY LANDLORD... 2
1.1. Lease of Premises
1.2. Construction by Landlord
1.3. Description of Premises
1.4. Preparation of Premises; Occupancy
2. TERM OF LEASE.................................... 3
2.1. Initial Term
2.2. Option to Extend Term of Lease
3. RENT............................................. 3
3.1. Minimum Monthly Rent
3.2. Additional Rent
3.3. Time and Manner of Payment
3.4. Adjustment to Minimum Monthly Rent
3.5. Prepaid Rent
3.6. Security Deposit
4. PROPERTY OPERATING EXPENSES...................... 7
4.1. Payment by Tenant
4.2. Definitions
4.3. Books and Records
5. LANDLORD'S MANAGEMENT OF BUILDING................ 9
5.1. Management of Building
5.2. Rules and Regulations
6. USE; LIMITATIONS ON USE.......................... 9
6.1. Tenant's Use of Premises
6.2. Limitations on Use
7. ALTERATIONS...................................... 11
7.1. Changes by Tenant
7.2. Mechanics' Liens
8. UTILITIES........................................ 11
9. TENANT'S PERSONAL PROPERTY....................... 12
9.1. Personal Property Taxes
9.2. Installation of Property
9.3. Removal of Personal Property
10. CARE AND MAINTENANCE............................. 12
10.1. Landlord's Maintenance
10.2. Tenant's Maintenance
10.3. Janitorial Service
11. INDEMNITY AND INSURANCE.......................... 13
11.1. Indemnification Agreement
11.2. Duty to Defend
11.3. Public Liability and Property Damage
11.4. Tenant's Property Insurance
11.5. Proof of Insurance
11.6. Landlord's Insurance
11.7. Waiver of Subrogation
12. DAMAGE OR DESTRUCTION............................ 15
12.1. Landlord to Repair
12.2. Termination; Abatement of Rent
13. CONDEMNATION..................................... 16
13.1 Entire Premises
13.2 Partial Taking
13.3 Transfer Under Threat of Condemnation
13.4. Awards and Damages
13.5. Arbitration
14. ASSIGNING, SUBLETTING AND HYPOTHECATING.......... 17
14.1. Landlord's Consent Required
14.2. Tenant Affiliate
14.3. Applications for Landlord's Consent
14.4. Assumption by Assignee
14.5. Reimbursement of Expenses
14.6. Continuing Obligation
15. DEFAULTS......................................... 19
15.1. Default by Tenant
15.2. Breach of Covenant; Abandonment, Etc.
15.3. Insolvency of Tenant
15.4. Default by Landlord
16. LANDLORD'S REMEDIES.............................. 20
16.1 Termination
16.2 Reentry Without Termination
16.3 Recovery of Rent
16.4 Landlord's Damages
16.5 Assignment of Subrents
16.6 Power of Receiver
16.7 Remedies Cumulative and Not Exclusive
16.8 Rights and Remedies Not Waived
17. LANDLORD'S RIGHT TO CURE DEFAULTS................ 23
18. SUBORDINATION OF LEASE; ESTOPPEL................. 23
18.1. Subordination Estoppel Certificates
18.2. Failure to Deliver
18.3. Attornment
18.4. Financial Statements
19. SIGNS AND ADVERTISING............................ 24
20. LANDLORD'S ENTRY ON PREMISES..................... 24
20.1. Right of Entry
20.2. Exercise of Right
21. SALE OR TRANSFER OF PREMISES..................... 25
22. SURRENDER ON TERMINATION; HOLDING OVER........... 25
22.1. Surrender of Premises
22.2. Removal of Alterations
23. GENERAL PROVISIONS............................... 26
23.1. Notices
23.2. Joint and Several Liability
23.3. Negation of Partnership
23.4. Bindings on Successors, Etc.
23.5. Arbitration
23.6. Legal Fees and Costs
23.7. Partial Invalidity
23.8. Complete Agreement
23.9. Brokers
23.10. Effective Date
EXHIBITS ATTACHED:
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Exhibit A Legal Description
Exhibit B Rendering of Leased Premises in Existing Building
Exhibit C Tenant Improvements to Existing Building
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease") is made and entered into, effective
on the date set forth below, by and between BLUFFS GROUP III, a California
limited partnership ("Landlord"), and DIGITAL SOUND CORPORATION, a
California corporation ("Tenant"), with reference to the following facts:
RECITALS:
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A. Landlord is the owner of that certain parcel of real property (the
"Land"), together with that certain 78,600-square-foot commercial building
situated thereon (the "Existing Building"), located at 6303 and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the Land and the Existing Building and all
future improvements situated on the Land are collectively referred to as the
"Property"), the legal description of which is attached hereto as Exhibit A.
B. Pursuant to that certain:
1) Lease dated December 21, 1989 (the "Master Lease"), Landlord has
leased the entire Existing Building to Digital Sound Corporation
("Digital"); and
2) Sublease dated June 8, 1994 (the "Sublease"), Tenant, has subleased
to Subtenant, MetaTools, approximately 14,580 square feet of the
Existing Building.
C. Tenant desires to reduce the amount of space which it leases at the
Existing Building, and concurrently with the execution of this Lease, Landlord
and Tenant, are executing that certain "Termination of Lease and Sublease
Agreement" in order to terminate the Lease and the Sublease.
D. The parties desire to execute this Lease in order to memorialize their
understandings:
1) That Tenant shall lease from Landlord approximately 53,139 square
feet of space at the Existing Building, including 6,539 square feet
of additional space for new administrative offces and cafeteria
(additional building space).
LEASE AND AGREEMENTS:
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NOW, THEREFORE, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. LEASE OF PREMISES AND CONSTRUCTION BY LANDLORD
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1.1. LEASE OF PREMISES Subject to the terms and conditions set forth below,
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Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord:
1.1.1. Premises in Existing Building That portion of the Existing
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Building consisting of approximately 53,139 square feet, as
depicted on the rendering attached to this lease as Exhibit B.
1.1.2. Additional Building The Additional Building which Landlord is
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required to construct pursuant to Section 1.2.2, below.
1.2. CONSTRUCTION BY LANDLORD Landlord hereby agrees:
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1.2.1. New Addition and Tenant Improvements on Existing Building. To
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construct at the Existing Building on or before October 1, 1996,
at Landlord's sole cost and expense, the Tenant Improvements
described at Exhibit C to this Lease (the "Tenant
Improvements"). Tenant shall cooperate reasonably with
Landlord, its architect, and its construction contractors to
enable Landlord to complete such Tenant Improvements in a prompt
fashion.
1.2.2. Additional Building. To construct additional building space,
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contiguous with the Existing Building, in accordance with the
Construction Agreement set forth as Exhibit D to this Lease
(Architectural Drawings dated April 18, 1996) (a) the
Additional Building, having a 'foot print' of approximately
6,539 square feet, consisting of a one-story structure
containing not less than 6,539 square feet of office space and
a cafeteria.
1.2.3. Warranty and Indemnification. Landlord warrants to Tenant that
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the construction comprising the Tenant Improvements in the
Existing Building and the Additional Building will be free from
latent and patent defects in materials and workmanship and will
comply with the applicable industry standards for like
commercial structures. The provisions of California Civil code
Section 337.15 shall apply to the foregoing warranty. Landlord
shall indemnify, defend and hold harmless Tenant from and
against any loss, cost, liability or expense (including
reasonable attorney's fees) arising out of any breach or
claimed breach of this warranty.
1.3. DESCRIPTION OF PREMISES. Unless the context otherwise requires, the
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term "Premises" shall include the leased Premises in the Existing
Building described in Section 1.1, above, and the Additional Building,
including windows and doors and all fixtures installed by Landlord
within the Premises, but excluding the roof and the exterior surface
of all exterior walls of such Buildings. As long as Tenant is not in
default under this Lease, Tenant shall have the nonexclusive right to
use in common with other tenants of the Buildings the Common Areas and
facilities included in the Buildings, together with such easements for
ingress and egress as are reasonably necessary for Tenant's use and
occupancy of the Premises.
1.4. PREPARATION OF PREMISES; OCCUPANCY. Not later than October 1, 1996
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Landlord shall complete the Tenant Improvements required by Section
1.2.1, above, and deliver possession of the Premises to Tenant.
2. TERM OF LEASE
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The term of this Lease shall consist of the initial term and each extended
term (collectively, the "Lease Term").
2.1. INITIAL TERM. The initial term of this Lease shall commence on or
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about October 1, 1996 and expire on September 30, 2006.
2.2. OPTION TO EXTEND TERM OF LEASE. Landlord hereby grants to Tenant two
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options (the "Lease Options") to elect to extend the term of this
Lease for two (2) periods of five (5) years each following the
expiration of the initial term (the "extended terms"), by delivering
to Landlord notice of exercise of such option (the "option notice")
with respect to each such extended term at least one hundred eighty
(180) days but not more than one (1) year before the expiration of the
immediately preceding term; provided, if Tenant is in material default
of its obligations under this Lease either on the date of giving the
option notice or on the date on which any extended term is to
commence, then at the election of Landlord delivered to Tenant in
writing not later than the end of the immediately preceding term, such
option notice shall be ineffective and the extended term shall not
commence and this Lease shall expire at the end of the then existing
term.
2.2.1. Rent During Extended Term. During each extended term of this
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Lease, the amount of Minimum Monthly Rent shall be determined
under Section 3.1, below, and all of the provisions of this
Lease shall remain in full force and effect.
3. RENT
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3.1. MINIMUM MONTHLY RENT. Subject to adjustment pursuant to Section 3.4,
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below, Tenant shall pay to Landlord minimum monthly rent (the "Minimum
Monthly Rent") for the Premises in the amount of Sixty Nine Thousand
and Eighty Dollars ($69,080.00) (representing the agreed Minimum
Monthly
Rent, at $1.30 per square foot, for the entire 53,139 square feet of
space which Landlord has agreed to lease to Tenant in the Existing
Building) per month for the period from the date on which Landlord
completes the Tenant Improvements required to be constructed pursuant to
Section 1.2.1, above, and delivers possession of the Premises to Tenant.
Such amount assumes that upon completion of such Tenant Improvements,
Landlord shall deliver to Tenant possession of 53,139 square feet of
space in the Existing Building.
If Tenant believes that the actual number of square feet provided to
Tenant in the Existing Building is less than 53,139, then Tenant
shall deliver a written objection to Landlord within thirty (30)
days following the Landlord's completion of the Tenant
Improvements. Tenant and Landlord shall endeavor to agree upon
the actual number of such square feet provided to Tenant in the
Existing Building. If they are unable to agree within seven (7)
days, then each shall designate an architect, and the two
architects so selected shall determine (in accordance with
customary practice for measuring the space in similar buildings)
the actual number of square feet of space in the Existing
Building leased to Tenant.
If the actual number of square feet so leased to Tenant in the
Existing Building is less than 53,139, then the amount of Minimum
Monthly Rent payable by Tenant shall be adjusted accordingly, and
Landlord and Tenant shall execute an amendment to this Lease
reflecting such modification. If Tenant fails to object to the
number of square feet leased to Tenant within thirty (30) days
after completion of the Tenant Improvements, then Tenant shall be
deemed to have irrevocably waived such objection.
3.2. ADDITIONAL RENT. Tenant shall pay to Landlord or its designee, as
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additional rent, such other amounts as this Lease requires Tenant to
pay.
3.3. TIME AND MANNER OF PAYMENT.
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3.3.1. Time. All Minimum Monthly Rent shall be due and payable on the
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first day of each calendar month of the Lease Term. Minimum
Monthly Rent for a period constituting less than a full
calendar month shall be prorated on the basis of a thirty (30)
day month. All Minimum Monthly Rent payable by Tenant hereunder
shall be paid to Landlord not later than five o'clock p.m. on
the day on which first due, without any deduction, setoff,
prior notice or demand.
3.3.2. Manner of Payment. All rent shall be paid in lawful money of
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the United States at such place as Landlord shall designate
from time to time in writing. Landlord shall not be obligated
to accept checks (other than cashier's or certified checks)
after any check tendered by Tenant is resumed by Tenant's bank
for any reason other than bank error.
3.3.3. Late Payment and NSF Charges. If Tenant fails to make any
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payment of rent within ten (10) days of the date on which such
payment first becomes due, then Tenant shall pay to Landlord a
late payment penalty equal to one and one-half percent (1.5%),
up to a maximum of three percent (3%) based on Landlord's
Lender requirements for late payment, of the amount of the
delinquency, which amount the parties agree is a reasonable
estimate of the Landlord's damages and additional costs as a
result of the delinquency, including processing and accounting
charges and late charges that may be imposed on Landlord by its
lender. If the delinquency is attributable to a check tendered
by Tenant in payment of rent being resumed to Landlord by
Tenant's bank for any reason other than for bank error, then in
addition to such late payment penalty Tenant shall pay Landlord
a resumed check fee of Twenty Five Dollars ($25.00), which the
parties agree is a reasonable estimate of Landlord's additional
costs as a result of the resumed check. Upon Landlord's
delivering notice of nonpayment to Tenant, the entire amount
due, including rent, late charge, and returned check fee, shall
bear interest at the lesser of ten percent (10.0%) per annum or
the maximum rate then permitted by law until paid in full.
3.4. ADJUSTMENT TO MINIMUM MONTHLY RENT. The Amount of Minimum Monthly Rent
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payable by Tenant under this Lease shall be adjusted as of each
Adjustment Date during the Lease Term.
3.4.1. Definitions. For purposes of this Lease, the term:
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"Adjustment Date" shall mean, commencing with October 1, 1997,
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each October 1 during the Lease Term.
"Base Period" shall mean the calendar month of October 1996.
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"Comparison Period" shall mean the second full calendar month
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immediately preceding the Adjustment Date.
"Index" shall mean the Consumers' Price Index for All Urban
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Consumers, All Items for the Los ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇-▇▇▇▇▇▇ Base, as published by the Bureau of Labor
Statistics. If such Index is no longer published, then the term
"Index" shall refer to each successor or comparable Index
mutually agreed by the parties to be authoritative, and if the
parties are unable to agree, then the substituted Index shall
be selected by the then-presiding judge of the Superior Court
for the County in which the Property is located upon
application of either party.
"Rent Commencement Date" shall mean (a) with respect to the
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portion of the Premises in the Existing Building, the first
date as of which Tenant becomes obligated to pay the Minimum
Monthly Rent.
3.4.2. Adjustment. The amount of Minimum Monthly Rent payable by
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Tenant from each, Adjustment Date until the next following
Adjustment Date shall be determined by multiplying (a) the
Minimum Monthly Rent deemed to be in effect on the Rent
Commencement Date pursuant to Section 3.4.2.A, below, times (b)
a fraction, the numerator of which shall be the Index figure
for the Comparison Period and the denominator of which shall be
the Index figure for the Base Period.
A. For purposes of this Section 3.4.2, the amount of Minimum
Monthly Rent deemed to be in effect on the Rent Commencement Date for:
(1) The portion of the Premises in the Existing Building shall
be equal to the product determined by multiplying (a) One Dollar and
Thirty Cents ($1.30), times (b) the actual number of square feet in
the portion of the Premises in the Existing Building, as determined
pursuant to Section 3.1, above; and
B. In no event shall the amount of the increase in Minimum
Monthly Rent imposed as of any Adjustment Date exceed by more than
five percent (5.0%) the amount of Minimum Monthly Rent due immediately
prior to such Adjustment Date.
C. In no event shall the amount of Minimum Monthly Rent be
reduced below the amount of Minimum Monthly Rent in effect immediately
prior to the Adjustment Date.
3.4.3. Rent Pending Adjustment. If the Comparison Period Index figure
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for an Adjustment Date is not available on such date, then
Tenant shall continue to pay the amount of Minimum Monthly Rent
in effect immediately prior to the Adjustment Date until the
Index figure for the Comparison Period is available, at which
time Tenant immediately shall pay Landlord the amount required
to reflect, retroactive to the Adjustment Date, the increased
Minimum Monthly Rent for such period.
3.4.4. Notice of Adjustment. Landlord shall endeavor to provide Tenant
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written notice of the adjustments pursuant to this Section 3.4,
setting forth the computation thereof, on or before each
Adjustment Date or as soon thereafter as practicable, but no
delay in computing or giving notice of any adjustments shall
constitute a waiver of the right of either party to have
such adjustments made, retroactive to the applicable Adjustment
Date, once such computation has been made.
3.5. PREPAID RENT. Upon execution of this Lease, Tenant shall pay Landlord
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the sum of Sixty-nine Thousand and Eighty Dollars ($69,080.00) as
prepaid Minimum Monthly Rent (the "Prepaid Rent"). Such amount shall
be applied by Landlord against the amount of Minimum Monthly Rent due
during the first month (and, to the extent of any unapplied Prepaid
Rent, the second month) of the Lease Term.
3.6. SECURITY DEPOSIT. Upon execution of this Lease, Tenant shall pay to
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Landlord the sum of Sixty-nine Thousand and Eighty Dollars
($69,080.00) as a security deposit (the "Security Deposit"). Landlord
agrees to credit the Security Deposit paid by Tenant pursuant to the
1989 Master Lease, against the $69,080 and to credit any overage
against Tenant's first months rent hereunder. If Tenant defaults in
the performance of its obligations under this Lease, then Landlord
may, but shall not be obligated to, use the Security Deposit, or any
portion thereof, to cure such default or to compensate Landlord for
any damage, including late charges, sustained by Landlord resulting
from Tenant's default. Immediately upon demand by Landlord, Tenant
shall pay to Landlord an amount equal to the portion of the Security
Deposit so expended or applied by Landlord as provided herein in order
to maintain the Security Deposit in the original amount initially
deposited with Landlord. If Tenant is not in default at the expiration
or termination of this Lease, then Landlord shall return the
unexpended portion of the Security Deposit to Tenant, without
interest. Landlord's obligations with respect to the Security Deposit
shall be those of debtor, and not of trustee, and Landlord shall be
entitled to commingle the Security Deposit with its general funds.
4. PROPERTY OPERATING EXPENSES
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4.1. PAYMENT BY TENANT. Tenant shall pay to Landlord on the first day of
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each full calendar month of the Lease Term as additional rent Tenant's
Proportionate Share of Property Operating Expenses. If the Lease Term
begins on a day other than the first day of a month, then Tenant shall
pay, in advance, its prorated share of the Landlord's Operating Costs
for such partial month. It is the intention of the parties that the
Monthly Minimum Rent shall be absolutely "triple net," and that Tenant
shall reimburse Landlord for Tenant's Proportionate Share of all costs
and expenses paid or incurred by Landlord in connection with the
Property.
4.1.1. Accounting Period. The accounting period for determining
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Landlord's Property Operating Expenses shall be the calendar
year, except that the first accounting period shall commence on
the effective date and the last accounting period shall end on
the date the Lease Term expires or terminates. Property
Operating Expenses for any portion of an accounting period not
included within the Lease Term shall be prorated on the basis of
a 360-day year.
4.1.2. Estimated Costs: Reconciliation of Payments. Landlord shall
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furnish to Tenant at the commencement of each accounting period
an estimate of the Property Operating Expenses reasonably
anticipated by Landlord for the ensuing accounting period, and
Tenant's monthly Proportionate Share thereof. Within sixty (60)
days after the end of each accounting period, Landlord shall
furnish to Tenant a correct statement showing the actual
Property Operating Expenses for such period, Tenant's
Proportionate Share thereof, and the sum of the estimated
payments made by Tenant during such period. If:
Tenant's Proportionate Share of the actual Property Operating
Expenses for the preceding accounting period exceeds the
estimated payments made by Tenant during that period, then
Tenant shall pay any deficiency to Landlord within thirty (30)
days after Tenant's receipt of Landlord's statement; or
The estimated payments made by Tenant during the preceding
accounting period exceed Tenant's Proportionate Share of the
actual Property Operating Expenses for that period,
then the overage shall be credited against the next payments
of Property Operating Expenses becoming due from Tenant.
4.2. DEFINITIONS. For purposes of this Lease, the term:
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4.2.1. "Common Areas" shall mean all areas and facilities within the
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exterior boundaries of the property which are not specifically
leased or specifically available for lease to Tenants and which
are provided and designated by Landlord for the general use and
convenience of all tenants of the building and their respective
agents, employees, patrons and invitees. Common Areas shall
include, without limitation, exterior walls and roofs, and all
areas outside the exterior walls of demised premises (e.g.,
walkways, patios, landscaped areas, sidewalks, loading areas,
parking areas and roadways).
4.2.2. "Landlord's Insurance" shall mean the premium cost for all
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casualty, public liability, and other insurance maintained by
Landlord in connection with its ownership and operation of the
Property.
4.2.3. "Property Operating Expenses" shall mean the sum of (a) Real
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Property Taxes, (b) Repair and Common Area Maintenance Costs,
and (c) Landlord's Insurance.
4.2.4. "Proportionate Share" shall mean the fraction determined by
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dividing (a) the number of square feet of leasable space in the
Buildings occupied by Tenant, by (b) the total number of square
feet of leasable space in the Buildings (approximately 50%).
4.2.5. "Real Property Taxes" shall mean and include all taxes,
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assessments, and other govermental charges, general and
special, ordinary and extraordinary, of any kind and nature
whatsoever, levied or assessed against all or any part of the
Property, including but not limited to assessment for public
improvements, benefits or facilities (including parking
district assessments) which shall be levied or assessed against
the Property or any part thereof, but excluding franchise,
estate, inheritance, succession, capital levy, transfer, income
or excess profits tax imposed upon Landlord. If at any time
during the Lease Term, under the laws of California (or any
political subdivision thereof), a tax or excise on rents or any
other tax is levied or assessed against Landlord on account of
the rent expressly reserved hereunder, in addition to or as a
substitute in whole or in part for taxes assessed or imposed by
California or such political subdivision on land and/or
buildings, such tax or excise shall be included within the
definition of "real property taxes," but only to the extent of
the amount thereof which is lawfully assessed or imposed as a
direct result of Landlord's ownership of this Lease or of the
rental accruing under this Lease. With respect to any
assessment which is levied against or upon the Property, and
which under the laws then in force may be evidenced by
improvement or other bonds, or may be paid in annual
installments, Tenant shall pay each year only Tenant's
Proportionate Share of the amount of such annual installment or
portion thereof as Landlord shall be required to pay during
such year (with appropriate proration for any partial year),
and Tenant shall have no obligation to continue such payments
after the termination of this Lease.
4.2.6. "Repair and Common Area Expenses" shall mean all expenses paid
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by Landlord and directly connected with the operation, repair
and maintenance of the Property, to the extent that such costs
are not paid directly by Tenant or required to be borne by
Landlord pursuant to the Lease. Such costs shall include (a)
the costs of utilities, heating, air conditioning, and
janitorial services (including trash removal) supplied to any
Common Areas; and (b) direct costs incurred for security and
fire protection.
4.3. BOOKS AND RECORDS. Landlord shall maintain at its principal place of
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business complete and accurate books of account reflecting Property
Operating Expenses, and Landlord's statements to Tenant for those
expenses shall be based upon such books. Landlord shall retain said
books of
account for at least six (6) months after the close of each
accounting period, and Tenant shall have the right at reasonable times
during the Lease Term to inspect said books.
5. LANDLORD'S MANAGEMENT OF BUILDING
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5.1. MANAGEMENT OF BUILDING. Landlord may operate and manage the Property
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either directly or through such third-party managers as Landlord, in
its sole and absolute discretion, deems appropriate. Landlord, in its
sole discretion following reasonable advance notice to Tenant, may (a)
close the Common Areas when and to the extent necessary for
maintenance or renovation purposes; (b) make changes to the Common
Areas, including without limitation changes in the location or nature
of driveways, entrances, exits, parking spaces, or the direction of
the flow of traffic; and (c) subject to Tenant's approval and written
consent, change the plan of the Buildings to the extent necessary for
expansion, remodeling or renovation, so long as the changes do not
unreasonably interfere with ingress to and egress from the Premises
and do not conflict with applicable zoning ordinances for the City of
Carpinteria.
5.2. RULES AND REGULATIONS. Landlord from time to time may promulgate,
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amend and enforce against Tenant and the Premises reasonable rules and
regulations for the safety, care and cleanliness of the Premises and
the Property; provided, however, that all such rules and regulations
shall apply substantially equally and without discrimination to all
tenants of the Property and no such rule or regulation shall require
Tenant to pay additional rent. Tenant shall abide by such rules and
regulations, and a violation of any such rule or regulation shall
constitute a default by Tenant under this Lease.
6. USE: LIMITATIONS ON USE
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Tenant:
6.1. TENANT'S USE OF PREMISES. The Premises shall be used and occupied only
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for office, research and development, electronic products,
manufacturing and assembly, and related uses, and for no other purpose
without Landlord's prior written consent.
6.2. Limitations on Use. Notwithstanding any provision of this Lease to the
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contrary,
6.2.1. Insurance Hazards. Shall neither engage in nor permit others to
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engage in any activity or conduct that will cause the
cancellation of any of Landlord's Insurance. Upon reasonable
notice from Landlord, Tenant shall pay any increase in
insurance premiums to the extent attributable solely to
Tenant's particular use of the Premises.
6.2.2. Compliance with Law. At Tenant's sole cost and expense, shall
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comply with all of the requirements, ordinances and statutes of
all municipal, state and federal authorities now in force, or
which hereafter may be in force, pertaining to the Premises and
the use and occupancy thereof by Tenant, including any statutes
or ordinances requiring modifications to the Premises in order
to protect or promote the health, safety or well-being of
persons who are or may be present therein or to enable the
Premises to be used or any business operated therein to be
conducted in a manner that is more efficient or economical or
with fewer environmental impacts. The judgment of any court of
competent jurisdiction, or the admission of Tenant in any
action or proceeding against Tenant, whether Landlord be a
party thereto or not, that Tenant has violated any such
ordinances or statutes in the use of the Premises shall be
conclusive of that fact as between Landlord and Tenant.
6.2.3. Waste: Nuisance. Shall not commit, or suffer to be committed,
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at the Property, any waste, nuisance, or other unreasonable
annoyance which may disturb the quiet enjoyment of the owners
or occupants of adjacent areas of the Property or other
properties.
6.2.4. Hazardous Substances. Shall not use any Hazardous Materials on
--------------------
or about the Property, shall conduct its business in compliance
with all Hazardous Materials Laws, and shall
indemnify, defend Landlord, and hold Landlord harmless from all
damage, cost, or expense attributable to the use of Hazardous
Materials on or about the Property by Tenant, its agents, and
invitees. The term:
A. "Hazardous Materials" means oil petroleum products or
-------------------
derivatives, PCB's, explosive substances, asbestos,
radioactive materials or waste, other toxic, contaminating
or polluting materials, substances or wastes, or any other
material included from time to time in the definition of
terms such as "hazardous substances," "hazardous wastes,
"hazardous materials," or "toxic wastes," under Hazardous
Material Laws, including any such materials which are or
may have been stored in underground storage tanks or other
storage facilities.
B. "Hazardous Materials Laws" means all federal, state, and
------------------------
local laws, ordinances, regulations, and standards relating
to industrial hygiene, environmental protection or the use,
analysis, generation, manufacture, storage, sale, disposal,
or transportation of any materials which are dangerous or
potentially dangerous to individuals or the environment.
7. ALTERATIONS
-----------
7.1. CHANGES BY TENANT. Tenant shall not undertake during the Lease Term
-----------------
renovations or alterations to the Premises costing more than Five
Thousand Dollars ($5,000.00) in any calendar year without first
submitting to Landlord written plans setting forth any proposed
alterations and obtaining Landlord's prior written consent. Any
additions, improvements or other alterations, including any remodeling
or redecorating, that Tenant may desire to undertake at the Premises
shall be made at Tenant's sole cost and expense and in compliance with
all applicable governmental requirements. Once Landlord has approved
any such proposed alterations, Tenant shall give Landlord not less
than three (3) and not more than ten (10) days prior noitice of the
date on which the construction of such alterations or improvements
will begin and, at the request of Landlord, will post and record a
notice of non-responsibility on the Premises on Landlord's behalf.
Any such alterations or improvements immediately shall become a part
of the Premises and, unless Landlord exercises its right to require
Tenant to remove such alterations, shall be surrendered to Landlord
upon the expiration or sooner termination of this Lease.
7.2. Mechanics' Liens. Tenant shall cause any such alterations to be
----------------
completed in accordance with the plans and specifications presented to
Landlord, shall pay all of the costs thereof, and shall keep the
Property at all times free of mechanics' liens and other liens for
labor, services, supplies, equipment or material furnished or used for
such improvements.
8. UTILITIES
---------
Tenant shall make all arrangements for and shall pay the charges when due for
all water, gas and heat, light, power, telephone service, trash collection and
all other services and utilities supplied to the Premises during the entire
Lease Term, and promptly shall pay all connection and termination charges
therefor. If utilities are not separately metered for the Premises, then Tenant
shall pay its Proportionate Share of the costs of such utilities as a Property
Operating Expense. The suspension or interruption in utility services to the
Premises for causes beyond the reasonable ability of Landlord to control shall
not constitute a default by Landlord or entitle Tenant to any reduction or
abatement of rent.
9. TENANT'S PERSONAL PROPERTY
--------------------------
9.1. PERSONAL PROPERTY TAXES. Tenant shall pay before delinquency all taxes
-----------------------
assessed against Tenant's personal property installed or located in or
upon the Premises and that become payable during the Lease Term.
9.2. INSTALLATION OF PROPERTY. Landlord shall have no interest in any
------------------------
removable equipment, furniture or trade fixtures owned by Tenant or
installed in or upon the Premises solely at the cost and expense of
Tenant, other than heating, ventilating and air-conditioning equipment
installed in or affixed to the Premises, unless Landlord is given a lien
in such personal property by Tenant. Prior to creating or permitting the
creation of any lien or security or reversionary interest in any
removable personal property to be placed in or upon the Premises, Tenant
shall obtain the written agreement of the party
holding such interest to make such repairs necessitated by the removal
of such property as may be necessary to restore the Premises to good
condition and repair, excepting only reasonable wear and tear, in the
event such property thereafter is removed from the Premises by said
party or its agent or a purchaser therefrom pursuant to the exercise or
enforcement of any rights incident to the interest so created, without
any cost or expense to Landlord.
9.3. REMOVAL OF PERSONAL PROPERTY. Provided that Tenant is not then in
----------------------------
default, at the expiration of this Lease, Tenant at its own cost and
expense may remove all removable equipment, furniture or trade fixtures
owned by or installed at the expense of Tenant on the Premises during
the Lease Term, other than any heating, ventilating or air-conditioning
equipment installed by Tenant. All such personal property shall be
removed prior to the close of business on the last day of the Lease
Term, and Tenant shall make such repairs necessitated by the removal of
said property as may be necessary to restore the Premises to good
condition and repair. Any such property not so removed shall be deemed
to have been abandoned as of the end of the Lease Term or, at the option
of Landlord, shall be removed and placed in storage for the account and
at the cost of Tenant.
10. CARE AND MAINTENANCE
--------------------
10.1. LANDLORD'S MAINTENANCE. Landlord shall be responsible:
----------------------
10.1.1. Repair. For the following repairs and maintenance: (a) Repairs
------
or maintenance necessary to preserve the structural integrity
of the Buildings; (b) replacement of structural components of
the shell of the Building, including (1) exterior and load-
bearing walls, foundations, sub-flooring and roof, (2) any
encased plumbing, wiring, pipes, or conduits (unless the
repair thereof is required as a result of Tenant's misuse),
and (3) any machinery or equipment constituting an integral
part of the building or its common facilities, including the
major components of any heating, ventilating or air-
conditioning systems serving the entire building; and (c) the
repair and maintenance of the exterior surfaces and finishes
of the Buildings, including the Building roofs.
10.1.2. Construction Defects. To repair any construction defect to the
--------------------
extent required by Construction Law.
10.1.3. Seismic and Other Requirements. Landlord shall be solely
------------------------------
responsible for ensuring that the Premises comply fully with
all rules, laws, regulations, and ordinances applicable to the
Premises from time to time, including but not limited to (a)
seismic and other similar earthquake safety ordinances or
rules, and (b) the requirements of the Americans with
Disabilities Act and other similar legislation and rules
designed to ensure access for handicapped persons.
10.2. TENANT'S MAINTENANCE. Except for maintenance and repair obligations
--------------------
imposed upon Landlord by Section 10.1, above, Tenant at its own cost
and expense, shall:
10.2.1. Maintain. Maintain throughout the Lease Term in good and
--------
sanitary order, condition, and repair, all interior portion
of the Premises, including without limitation, (a) the
interior of the Premises, including flooring, plumbing,
exposed wiring, paint and finish; (b) any doors, windows or
skylights included within the Premises; and (c) any heating,
ventilating or air-conditioning equipment serving only the
Premises, for which Tenant shall procure a maintenance
contract with a reputable contractor (provided, Tenant shall
not be obligated to bear the capital repair or replacement
costs for such HVAC, the obligation for which is imposed upon
landlord under Section 10.1, above).
10.2.2. Notify. Notify Landlord promptly of any damage to the
------
Building, or the Common Areas resulting from or attributable
to the acts or omissions of Tenant or its agents or
employees, and thereafter promptly repair all such damage at
Tenant's sole cost and expense.
10.3. JANITORIAL SERVICE. Tenant shall provide janitorial services for the
------------------
interior of the Premises. Landlord shall provide janitorial and trash
collection services to the Common Areas and to the exterior of the
Buildings, the cost of which shall be a Property Operating Expense.
11. INDEMNITY AND INSURANCE
-----------------------
11.1. Indemnification Agreement. This Lease is made upon the express
-------------------------
condition that except for Landlord's negligent conduct, willful
misconduct, or breach of its obligations under this Lease, Landlord
shall not have any liability to Tenant or any other person for any
injury to or death of any person or any damage to any property
(including Tenant's property, business, or income) resulting from any
cause which in any way is connected with the Premises, including
without limitation damage or injury caused by the elements or
breakage, leakage, obstruction or other defects of pipes, sprinklers,
wires, plumbing, air conditioning, or other electrical or mechanical
fixtures or equipment. Tenant hereby waives all claims against
Landlord for any liability, damage, loss, cost or expense, including
attorneys' fees, for any such injury or damage resulting from or
attributable to the fault or neglect of Tenant, excluding only
injuries or damages caused by Landlord's negligence, willful
misconduct, or a breach by Landlord of a duty imposed by law or by
this Lease, or the negligence of any of Landlord's employees, agents
or subcontractors.
11.2. DUTY TO DEFEND. If any action or proceeding is commenced against
--------------
Landlord by reason of any claim attributable to the use and occupancy
of the Premises by Tenant, or actions taken by or for or permitted by
Tenant in or about the Premises or the Common Areas, then Tenant
shall defend such claim at Tenant's expense. Tenant shall retain the
sole right to settle or otherwise direct any action or proceeding
arising pursuant to the indemnification described herein.
11.3. PUBLIC LIABILITY AND PROPERTY DAMAGE. Tenant shall maintain
------------------------------------
throughout the Lease Term at Tenant's sole cost and expense a policy
of insurance against any liability to the public incident to the use
of or resulting from any accident occurring in or about the Premises,
with policy limits at least equal to Two Million Five Hundred
Thousand Dollars ($2,500,000.00).
11.3.1. Coverage. Such policy shall insure the contingent liability of
--------
Landlord and the performance by Tenant of its indemnity
obligations under this Lease. Landlord shall be named as an
additional insured in such policy.
11.3.2. Review and Adjustment. Tenant shall review with Landlord every
---------------------
three years the amount of the Tenant's Liability Insurance
Limit in order to ensure that the protection coverage afforded
thereby is in proportion to the protection coverage afforded
at the commencement of this Lease. If the parties are unable
to agree upon the amount of said coverage prior to the
expiration of each such three-year period, then the amount of
the Tenant's Liability Insurance Limit shall be adjusted to
the amount of coverage recommended in writing by an insurance
broker selected by the mutual agreement of Landlord and Tenant
or, if they are unable to agree, then by an independent broker
designated by the Board of Directors of the Association of
Independent Insurance Brokers for Santa ▇▇▇▇▇▇▇ County.
11.4. TENANT'S PROPERTY INSURANCE. Tenant at its own cost shall maintain on
---------------------------
all of its personal property and removable fixtures and equipment
situated in, on or about the Premises a policy of standard fire and
extended coverage insurance, with vandalism and malicious mischief
endorsements, in an amount equal to Tenant's Property Insurance
Limit. The proceeds of such policy that become payable due to damage,
loss or destruction of such property shall be used by Tenant for the
repair or replacement thereof.
11.5. PROOF OF INSURANCE. Each policy of insurance required of Tenant by
------------------
this Lease shall be a primary policy, issued by an insurance company
reasonably satisfactory to Landlord, and shall contain an endorsement
requiring thirty (30) days written notice from the insurer to
Landlord before cancellation or substantial change in the nature,
scope or amount of coverage. At the commencement of the Lease Term
and thereafter prior to expiration of any such policy, Tenant shall
deliver to Landlord a
certificate evidencing that each policy required by Tenant under this
Lease is in effect and that the premiums therefor have been prepaid
for at least the ensuing twelve-month period.
11.6. LANDLORD'S INSURANCE. Landlord shall maintain, at Tenant's prorated
--------------------
expense, casualty insurance on each Building in which the Premises
are situated, insuring against loss by fire and the perils covered by
an extended coverage endorsement, and public liability insurance
insuring against personal injury and property damage, in such amount
as Landlord reasonably determines to be appropriate and agreed to by
Tenant.
11.7. WAIVER OF SUBROGATION. Landlord and Tenant each release the other and
---------------------
their respective agents and representatives from any claims for
damage to any person or property or to the Premises that are caused
from risks covered by insurance under this Lease which is in force at
the time of the loss, and each party shall cause each policy of
insurance obtained by it hereunder to provide for a waiver of
subrogation against either party in connection with any loss covered
by the policy.
12. DAMAGE OR DESTRUCTION
---------------------
12.1. LANDLORD TO REPAIR. If the Premises or the Building in which the
------------------
Premises are situated are totally or partially damaged or destroyed,
then Landlord promptly shall repair the same, except that Landlord
shall have the option to terminate this Lease if (a) the Premises or
the Building in which the Premises are situated cannot reasonably be
expected to be restored under existing law to substantially the same
condition as existed prior to such damage or destruction within ninety
(90) days from the date that the insurance proceeds become available
to Landlord; or (b) if the costs of such restoration would exceed one-
half (1/2) of the full insured value of the building and other
improvements in which the Premises are situated; or (c) if the damage
or destruction is uninsured and results from a casualty not
customarily insured against by a policy of standard fire and extended
coverage insurance having vandalism and malicious mischief
endorsements. Any notice of termination given hereunder shall be given
to Tenant within fifteen (15) days after Landlord determines the
period of time required for and the estimated costs of such repair or
restoration.
12.2. TERMINATION: ABATEMENT OF RENT. This Lease shall not be terminated by
------------------------------
any damage to or destruction of the Premises or the Building of which
the Premises are a part unless notice of termination is given by
Landlord to Tenant, or by Tenant to Landlord as provided by this
Section 12.
12.2.1. ABATEMENT. If the Premises are damaged or destroyed at any
---------
time during the Lease Term, then there shall be an abatement
or reduction of the Minimum Monthly Rent between the date of
destruction and the date of completion of restoration, based
on the extent to which the destruction interferes with
Tenant's use of the Premises. If any repairs or restoration of
the Premises permitted or required by Landlord are of such a
nature that they cannot reasonably be expected to be
substantially completed within 270 days from the date any
insurance proceeds first become available to Landlord, then
Tenant shall have the right to terminate this Lease by giving
notice of termination to Landlord, specifying the effective
date thereof, within ten (10) days after the period required
to restore the Premises has been determined.
12.2.2. TERMINATION. If then-applicable laws or zoning ordinances
-----------
preclude the restoration or replacement of the Premises in the
manner herein before provided, then Landlord shall have the
right to terminate this Lease immediately by giving written
notice of termination to Tenant and thereupon both parties
shall be released from all further liability under this Lease.
13. CONDEMNATION
------------
13.1. ENTIRE PREMISES. If title or possession of the whole of the Premises
---------------
is taken by duly constituted authority in condemnation proceedings
under the exercise of the right of eminent domain, or if a partial
taking renders the remaining portion of the Premises wholly
unsusceptible for occupation, then this Lease shall terminate upon the
vesting of title or taking of possession by the condemning authority.
13.2. PARTIAL TAKING. Landlord shall have the right to terminate this Lease
--------------
by giving thirty (30) days prior written notice to Tenant within
thirty (30) days after the nature and extent of the taking is finally
determined if any portion of the Premises or the building and other
improvements in which the Premises are 16 situated is taken by eminent
domain. If Landlord does not terminate this Lease as provided herein,
then this Lease shall remain in full force and effect. In such event,
Landlord shall promptly make any necessary repairs or restoration at
the cost and expense of Landlord, and the Minimum Monthly Rent from
and after the date of the taking shall be reduced in the proportion
that the value of the area of the portion of the Premises taken bears
to the total value of the Premises immediately prior to the date of
such taking or conveyance.
13.3. TRANSFER UNDER THREAT OF CONDEMNATION. Any sale or conveyance by
-------------------------------------
Landlord to any person or entity having the power of eminent domain,
either under threat of condemnation or while condemnation proceedings
are pending, shall be deemed to be a taking by eminent domain under
this Section 13.
13.4. AWARDS AND DAMAGES. All payments made on account of any taking by
------------------
eminent domain shall be made to Landlord, except that provided it is
separately designated in the award, Tenant shall be entitled to any
and all awards or payments made in the condemnation proceedings in
respect to any damage to (a) Tenant's leasehold interest, (b) any
improvements constructed on the Premises by Tenant and, (c) Tenant's
trade fixtures and equipment. In the event that this Lease is not
terminated by reason of such condemnation, Landlord shall to the
extent of severance damages received by Landlord in connection with
such condemnation, repair any damage to the to the Premises caused by
such condemnation except to the extent that Tenant has been reimbursed
therefore by the condemning authority. Landlord shall pay any amount
in excess of such severance damages required to complete such repair.
13.5. ARBITRATION. If a dispute arises concerning the extent to which a
-----------
taking by condemnation renders the Premises unsuitable for continued
occupancy and use by Tenant, and such dispute is not resolved within
thirty (30) days after one party delivers to the other a written
notice invoking the provisions of this Section 13.5, then such dispute
shall be submitted to arbitration in Santa Barbara, California, in
accordance with the then-existing rules of the American Arbitration
Association. The decision of the arbitrator shall be final and
judgment thereon may be entered in a court of competent jurisdiction.
14. ASSIGNING SUBLETTING AND HYPOTHECATING
--------------------------------------
14.1. LANDLORD'S CONSENT REQUIRED. Tenant shall not voluntarily or by
---------------------------
operation of law assign, transfer, mortgage, sublet, or otherwise
transfer or encumber all or any part of Tenant's interest in this
Lease or in the Premises, without Landlord's prior written consent,
which Landlord shall not unreasonably withhold. Landlord shall respond
to Tenant's request for consent hereunder in a timely manner and any
attempted assignment, transfer, mortgage, encumbrance or subletting
without such consent shall be void, and shall constitute a breach of
this Lease.
14.2. TENANT AFFILIATE. Notwithstanding the provisions of Section 14.1
----------------
hereof, Tenant may assign or sublet the Premises, or any portion
thereof, without Landlord's consent, to any corporation which
controls, is controlled by or is under common control with Tenant, or
to any corporation resulting from the merger or consolidation with
Tenant, or to any person or entity which acquires all the assets of
Tenant as a going concern of the business that is being conducted on
the Premises, provided that the assignee assumes, in full, the
obligations of Tenant under this Lease. Any such assignment shall not,
in any way, affect or limit the liability of Tenant under the terms of
this Lease.
14.3. APPLICATIONS FOR LANDLORD'S CONSENT. If Tenant desires to assign this
-----------------------------------
Lease or to sublet all or any portion of the Premises, then Tenant
first shall request Landlord's consent therefor, and shall submit to
Landlord in writing (a) the name of the proposed subtenant or
assignee; (b) the nature of the proposed subtenant's or asignee's
business to be carried on in the Premises; (c) all of the terms and
provisions of the proposed sublease or assignment; (d) such reasonable
financial information as
Landlord may request concerning the proposed subtenant or assignee,
including but not limited to a balance sheet as of a date within
ninety (90) days of the request for Landlord's consent, statements of
income or profit and loss for the two-year period preceding the
request for Landlord's consent and a written statement in reasonable
details as to the business experience of the proposed subtenant or
assignee during the five (5) years preceding the request for
Landlord's consent; and (e) the name and address of subtenant's or
assignee's present or previous landlord.
14.3.1. Guaranty by Parent/Affiliate. Landlord, as a condition to
----------------------------
granting such consent, may require that the obligations of any
assignee which is a subsidiary or affliate of another
corporation be guaranteed by the parent or controlling
corporation.
14.3.2. Subject to Lease. Any sublease, license, concession, franchise
----------------
or other permission to use the Premises shall be expressly
subject and subordinate to all applicable terms and conditions
of this Lease.
14.4. ASSUMPTION BY ASSIGNEE. Each permitted assignee or transferee of this
----------------------
Lease shall assume all obligations of Tenant under this Lease and
shall be and remain liable jointly and severally with Tenant for the
payment of the rent, and for the due performance of all the terms,
covenants, conditions and agreements to be performed by Tenant
hereunder; provided, however, that a transferee other than an
assignee shall be liable to Landlord for rent only in the amount set
forth in the assignment or transfer. no assignment shall be binding
on Landlord unless such assignee or Tenant shall deliver to Landlord
a counterpart of such assignment satisfactory in substance and form
to Landlord, consistent with the requirements of this Section 14.4.
14.5. REIMBURSEMENT OF EXPENSES. Concurrently with Landlord's consent to a
-------------------------
proposed assignment or subletting, and as a condition thereto, Tenant
shall reimburse Landlord for the reasonable costs and expenses,
including attorneys' fees, incurred by Landlord in connection with
the processing and documentation of the proposed transfer, assignment
or sublease.
14.6. CONTINUING OBLIGATION. No assignment or subletting by Tenant shall
---------------------
relieve Tenant of its obligations under this Lease, and Tenant shall
remain fully responsible to Landlord for the performance of all its
obligations under this Lease, regardless of any assignment or
subletting. any such transfer, assignment or subletting shall be
subject to all of the terms and conditions of this Lease, and each
successive transfer, assignment or subletting shall be made only upon
like conditions.
15. DEFAULTS
--------
15.1. DEFAULTS BY TENANT. The occurrence of any one or more of the
------------------
following events shall constitute a material default and breach of
this Lease by Tenant:
a) the vacating or abandonment of the Premises by Tenant for more
than thirty (30) days.
b) the failure of Tenant to make any payment of rent or any other
payment required to be made for more than thirty (30) days by
Tenant hereunder, as and when due, where such failure shall
continue for a period of ten (10) days after written notice
thereof from Landlord to Tenant. in the event that Landlord
serves Tenant with a Notice to Pay Rent or Quit pursuant to
applicable Unlawful Detainer statutes such Notice to Pay Rent
or Quit shall also constitute the notice required by this
section.
15.2. BREACH OF COVENANT: ABANDONMENT, ETC. If Tenant (a) defaults in
------------------------------------
fulfilling any of the other covenants or conditions of this Lease, or
(b) abandons the Premises; provided, however, that a default which is
capable of being cured shall not constitute an Event of Default
unless Landlord has given notice of such default to Tenant and Tenant
has failed to cure such default within ten (10) days after its
receipt of such notice or, in the case of a default which cannot with
due diligence be cured within a period of ten (10) days, if the
Tenant has failed to proceed promptly after the service of such
notice to prosecute the curing of such default with all due diligence
within a reasonable period of time.
15.3. INSOLVENCY OF TENANT If (a) Tenant makes an assignment for the
--------------------
benefit of creditors; or (b) a voluntary or involuntary petition is
filed by or against the Tenant under any law having for its purpose
the adjudication of the Tenant as bankrupt, or the extension of time
of payment, composition, adjustment, modification, settlement or
satisfaction of the liabilities of the Tenant, or to which any
property of the Tenant may be subject and, if the petition is
involuntary, if said petition is granted; or (c) a receiver is
appointed for the Premises by reason of the insolvency or alleged
insolvency of the Tenant and said receiver is not discharged within
ten (10) days, or upon the hearing of a timely filed petition to
dismiss or otherwise terminate the receivership, whichever occurs
later; or (d) any department of the state or federal govemment, or
any officer thereof duly authorized shall take possession of the
Premises and the improvements thereon by reason of the insolvency of
the Tenant and the taking of possession is followed by a legal
adjudication of the insolvency, or bankruptcy, or receivership of
Tenant.
15.4. DEFAULT BY LANDLORD. Landlord shall not be in default unless Landlord
-------------------
fails to perform material obligations required of Landlord within a
reasonable time, but in no event later than thirty (30) days after
written notice by Tenant to Landlord and to the holder of any first
mortgage or deed of trust covering the Premises whose name shall have
been furnished to Tenant in writing, and specifying wherein Landlord
has failed to perform such obligation; provided, however, that if the
nature of Landlord's obligation is such that more than thirty (30)
days are required for performance then Landlord shall not be in
default if Landlord commences performance within such 30-day period
and thereafter diligently prosecutes the same to completion.
16. LANDLORD'S REMEDIES
-------------------
Upon the occurrence of any Event of Default:
16.1. TERMINATION. Landlord may, at Landlord's election, terminate this
-----------
Lease by giving Tenant such notice as is required by Section 1161 of
the California Code of Civil Procedure, or any successor statute. On
the giving of any such notice, this Lease shall be terminated and the
same shall expire as fully and completely as if the day of such
notice were the date herein specifically filed for the expiration of
the Lease Term, and all of Tenant's rights in the Premises and in all
improvements situated thereon shall terminate. Promptly after
receiving notice of termination, Tenant shall surrender and vacate
the Premises and all such improvements in broom-clean condition, and
Landlord may reenter and take possession of the Premises and all
remaining improvements and eject all parties in possession (other
than subtenants not in default whose possession Landlord had agreed
not to disturb) or eject some and not others, or eject none.
Termination of this Lease pursuant to this Section 16.1 shall not
relieve Tenant from the payment of any sum then due to Landlord or
from any claim for damages previously accrued or then accruing
against Tenant.
16.2. REENTRY WITHOUT TERMINATION. Landlord may, at Landlord's election,
---------------------------
reenter the Premises and, without terminating this Lease, at any
time, and from time to time relet the Premises and improvements or
any part of them for the account and in the name of Tenant or
otherwise. Any reletting may be for the remainder of the Lease Term
or for a longer or shorter period. Landlord may execute any leases
made under this provision in Landlord's name and shall be entitled to
all rents from the use, operation, or occupancy of the Premises or
improvements or both. Tenant shall nevertheless pay to Landlord on
the due date specified in this Lease the equivalent of all sums
required to be paid by Tenant under this Lease, plus Landlord's
expenses, but less the proceeds of any reletting or attornment. No
act by or on behalf of Landlord under this provision shall constitute
a termination of this Lease unless Landlord gives notice of
termination pursuant to Section 16.1, above.
16.3. RECOVERY OF RENT. Landlord shall be entitled at Landlord's election
----------------
to each installment of rent or to any combination of installments for
any period before temmination, plus late charges and interest as
provided by Section 3.3.3, above. The proceeds of any reletting or
attornment shall be applied, when received, first to the out-of-
pocket costs and expenses incurred by Landlord in recovering
possession
of the Premises and/or effecting such reletting, including
but not limited to attorneys' fees, court costs, brokerage
commissions and any costs of remodeling or renovation, second to any
amounts then due and unpaid by Tenant under this Lease, to the extent
that such proceeds for the period covered do not exceed the amount
due from and charged to Tenant for the same period, and any remaining
balance shall be held for the account of Tenant.
16.4. LANDLORD'S DAMAGES. Landlord shall be entitled, at Landlord's
------------------
election, to recover from Tenant all damages suffered by Landlord as
a result of Tenant's default, including without limitation the worth
at the time of the award (computed in accordance with paragraph (b)
of Section 1951.2 of the California Civil Code) of the amount by
which the rent then unpaid for the balance of the Lease Term exceeds
the amount of such rental loss for the same period which the Tenant
proves could be reasonably avoided by Landlord.
16.5. ASSIGNMENT OF SUBRENTS. Tenant assigns to Landlord all subrents and
----------------------
other sums becoming due from subtenants, licensees and
concessionaires (referred to collectively herein as "subrents")
during any period in which Landlord has the right under this Lease,
whether exercised or not, to reenter the Premises on account of a
default by Tenant, and Tenant shall not have any right to such sums
during that period. This assignment is specifically subject and
subordinate to any and all assignments of the same subrents and other
sums made to a leasehold mortgagee under any leasehold mortgage
permitted by the provisions of this Lease. Landlord may at Landlord's
election reenter the Premises and improvements, without terminating
this Lease, and either collect these sums or bring an action for the
recovery of such sums from the obligors.
16.6. POWER OF RECEIVER. Landlord shall have the right to obtain the
-----------------
appointment of a receiver to take possession of the Premises and/or
to collect the rents or profits derived therefrom, and Tenant
irrevocably agrees that any such receiver may, if it be necessary or
convenient in order to collect such rents and profits, conduct the
Business then being carried on by Tenant on said Premises and that
said receiver may take possession of any personal property belonging
to Tenant and used in the conduct of such business, and may use the
same in conducting such business on the Premises to Tenant for such
use. Neither the application for nor the appointment of such a
receiver shall be construed as an election on Landlord's part to
terminate this Lease unless a written notice of such intention is
given by Landlord as provided in Section 16.1, above.
16.7. REMEDIES CUMULATIVE AND NOT EXCLUSIVE. The rights, powers and
-------------------------------------
remedies of Landlord hereunder shall be in addition to all rights,
powers and remedies given by statute, rule of law and in equity, and
all such remedies shall be cumulative. The exercise of any one or
more such right, power and remedy shall not be construed as a waiver
or election by Landlord of any other rights, powers or remedies of
Landlord under any provision of law or this Lease.
16.8. RIGHTS AND REMEDIES NOT WAIVED. No course of dealing between Tenant
------------------------------
and Landlord or any failure or delay on the part of the Landlord in
exercising any rights or remedies pursuant to law or arising pursuant
to this Lease shall operate as a waiver of any rights or remedies of
Landlord. Neither the subsequent acceptance by Landlord of any
amounts paid to it on account of or with respect to amounts owed by
Tenant pursuant to this Lease, or the application of any such amounts
in reduction of outstanding rent or other obligations due from Tenant
shall constitute a waiver or cure of default, other than default in
the timely payment of the amount so accepted, regardless of
Landlord's knowledge of the preceding breach. Landlord's acceptance
of rent or any other payment after termination of this Lease shall
not entitle Tenant to have this Lease reinstated. Any waiver, express
or implied, by any party hereto, of any breach by any party of any
covenant or provision of this Lease, shall not be or be construed as
a waiver of any subsequent breach of the same or any other provision
of this Lease.
17. LANDLORD'S RIGHT TO CURE DEFAULTS
---------------------------------
Subject to the provisions of Sections 15.1 and 15.2, Landlord, at any time
after Tenant commits a default in the performance of any of Tenant's obligations
under this Lease, shall be entitled to cure such default, or to cause
such default to be cured, at the sole cost and expense of Tenant. If, by reason
of any default by Tenant, Landlord incurs any expense or pays any sum, or
performs any act requiring Landlord to incur any expense or to pay any sum,
including attorneys fees and reasonable costs and expenses paid or incurred by
Landlord in order to prepare and post or deliver any notice permitted or
required by the provisions of this Lease or otherwise permitted or contemplated
by law, to appear in any bankruptcy or insolvency proceedings, or otherwise to
enforce any of its rights under this Lease, then the amount so paid or incurred
by Landlord shall be immediately due and payable to Landlord by Tenant as
additional rent. Tenant hereby authorizes Landlord to deduct said sums from any
Security Deposit held by Landlord. If there is no Security Deposit, or if
Landlord elects not to use any such Security Deposit, then such sums shall be
paid by Tenant immediately upon demand by Landlord, and shall bear interest at
the highest rate then permitted by law from the date on which such demand is
made until paid in full.
18. SUBORDINATION OF LEASE: ESTOPPEL
--------------------------------
18.1. SUBORDINATION: ESTOPPEL CERTIFICATES. Tenant shall execute,
-------------------------------------
acknowledge and deliver to Landlord upon request:
18.1.1. Subordination. Such documents and instruments as may be
-------------
necessary to subordinate this Lease to (a) any mortgages or
trust deeds that now exist or may hereafter be placed upon the
Premises by Landlord, (b) to any and all advances made or to
be made thereunder, (c) to the interest on all obligations
secured thereby, and (d) to all renewals, modifications,
consolidations, replacements and extensions thereof; provided,
however, that in each case the mortgagee or beneficiary named
in any such mortgage or trust deed shall agree in writing
that, as long as Tenant performs its obligations under this
Lease, no foreclosure or deed in lieu of foreclosure, or sale
under the encumbrance or other procedures to enforce the
rights incident thereto, shall affect Tenant's rights under
this Lease.
18.1.2. Estoppel. An estoppel certificate certifying in effect that
--------
this Lease is in full force and effect, that Landlord is not
in default hereunder, that Tenant claims no offsets or other
amounts against Landlord, and such other information as
Landlord may reasonably request.
18.2. FAILURE TO DELIVER. If Tenant fails to execute, acknowledge and
------------------
deliver any such subordination instrument or estoppel certificate,
then in addition to other available remedies, Landlord may execute,
acknowledge and deliver the instrument as the attorney-in-fact of
Tenant and in Tenant's name and place, and Tenant hereby irrevocably
makes, constitutes and appoints Landlord, its successors and assigns,
such attorney-in-fact for that purpose.
18.3. ATTORNMENT. Tenant shall attorn to any purchaser at any foreclosure
----------
sale or to any grantee or transferee designated in any deed given in
lieu of foreclosure.
18.4. FINANCIAL STATEMENTS. Tenant from time to time upon request shall
--------------------
deliver to Landlord such financial statements as are customarily
prepared by Tenant if requested by a prospective lender or purchaser
in connection with a proposed sale or refinancing of the Property. To
the extent prepared by Tenant, such financial statements shall
include the most recent balance sheet prepared by Tenant and income
and loss statements for the two (2) most recently completed fiscal
years. All such financial statements shall be received and held by
Landlord in confidence and shall be used only for the purposes
contemplated by this Section 18.4, but Landlord may furnish such
financial statements to any prospective lender or purchaser.
19. SIGNS AND ADVERTISING
---------------------
To display its trade name, Tenant may place and maintain on the exterior of
the Premises a sign reasonably approved by Landlord, which sign shall conform to
the reasonable requirements of Landlord as to size and format; provided,
Landlord shall coordinate and bear the cost of removing Tenant's sign from the
north side of the Existing Building and erecting one or more signs or monuments
at the Property to display Tenant's corporate name in a prominent manner. In
addition, Tenant shall be entitled to display its name and the names of a
reasonable number of its principals in any building directory. No other signs,
advertisements, notices or other exterior decoration or
personal property of Tenant shall be placed upon or displayed by Tenant on any
part of the building or the windows of the Premises, or upon or about the
exterior of the Premises, without the prior written consent of Landlord.
20. LANDLORD'S ENTRY ON PREMISES
----------------------------
20.1. RIGHT OF ENTRY. Landlord and its authorized representatives shall have
--------------
the right to enter the Premises at all reasonable times in order (a)
to determine whether the Premises are in good condition and whether
Tenant is complying with its obligations under this Lease; (b) to do
any necessary maintenance, repairs, restoration or remodeling to the
building or the Premises that Landlord has the right or obligation to
perform; (c) to serve, post, and keep posted any notices required or
allowed under the provisions of this Lease, including "For Rent" or
"For Lease" notices during the last six (6) months of this Lease, or
during any period while Tenant is in default, and any notices provided
by law for the protection of Landlord's interest in the Premises; and
(d) to shore the foundations, footings, and walls of the building and
to erect scaffolding and protective barricades around and about the
building, but not so as to prevent entry to the Premises, and to do
any other act or thing necessary for the safety or preservation of the
Premises and the building if any excavation or other construction is
undertaken or is about to be undertaken on any adjacent property or
area.
20.2. EXERCISE OF RIGHT. Tenant shall not be entitled to an abatement or
-----------------
reduction of Minimum Monthly Rent on account of Landlord's entry
pursuant to this Section 20, and Landlord shall not be liable for any
inconvenience, disturbance, loss of business, nuisance, or other
damage arising out of such entry, except damage resulting from the
negligent or tortious acts or omissions of Landlord or its authorized
representatives.
21. SALE OR TRANSFER OF PREMISES
----------------------------
If Landlord sells or transfers all or any portion of the Premises or the
Property, then on consummation of the sale or transfer, Landlord shall be
released from any liability thereafter accruing under this Lease. If any
Security Deposit or Prepaid Rent has been paid by Tenant and not applied toward
Tenant's obligations under this Lease as of the time of such sale or transfer,
then Landlord shall transfer the unapplied Security Deposit or Prepaid Rent To
Landlord's successor and thereupon be discharged from further liability with
respect thereto. The obligations contained in this Lease to be performed by
Landlord shall be binding on Landlord's successors and assigns during their
respective periods of ownership.
22. SURRENDER ON TERMINATION: HOLDING OVER
--------------------------------------
22.1. SURRENDER OF PREMISES. At the expiration or sooner termination of the
---------------------
Lease Term, Tenant shall return the Premises (except removable trade
fixtures, furniture and equipment owned or installed by Tenant) to
Landlord in good condition and repair, reasonable wear and tear
excepted. If after expiration of the Lease Term Tenant holds the
Premises, then such holding over shall be only a month-to-month
tenancy and shall be subject to all of the conditions and agreements
set forth in this Lease, and Tenant shall remain obligated to perform
all other duties and obligations imposed on Tenant under this Lease.
22.2. REMOVAL OF ALTERATIONS. By giving written notice to Tenant not less
----------------------
than sixty (60) days before the expiration or termination of the Lease
Term, Landlord may require Tenant to remove any alterations that
Tenant has made to the Premises. If Landlord so delivers a notice,
then Tenant at its sole cost and expense shall remove the alterations
specified by Landlord in its notice, and shall make such repairs
necessitated by the removal of said alterations as may be necessary to
restore the Premises to good condition and repair, excepting only
reasonable wear and tear, before the last day of the Lease Term.
23. GENERAL PROVISIONS
------------------
23.1 NOTICES. All notices permitted or required under this Lease shall be in
-------
writing and shall be deemed to be delivered and received (a) when
personally delivered, (b) on the date on which transmitted by
facsimile or another similar electronic means generating a receipt
evidencing a successful transmission, or (c) on the second(2nd)
business day following the date on which sent by United States
certified mail, postage prepaid, retum receipt requested, addressed to
the party for whom intended at the address or facsimile number set
forth on the signature page of this Lease, or such other address or
facsimile number, notice of which is delivered in a manner permitted by
this Section 25.1.
23.2. JOINT AND SEVERAL LIABILITY. Each person or entity named as a Tenant
---------------------------
in this Lease, or who hereafter becomes a party to this Lease as a
tenant in the Premises or as an assignee of Tenant, shall be jointly
and severally liable for the full and faithful performance of each
and every covenant and obligation imposed up on Tenant under this
Lease.
23.3. NEGATION OF PARTNERSHIP. Nothing in this Lease is intended and no
-----------------------
provision of this Lease shall be construed to make Landlord a partner
of or a joint venture with Tenant, or associated in any other way
with Tenant in the operation of the Premises, or to subject Landlord
to any obligation, loss, charge or expense resulting from or
attributable to Tenant's operation or use of the Premises.
23.4. BINDINGS ON SUCCESSORS, ETC. This Lease shall be binding upon, and
---------------------------
inure to the benefit of, each of the parties hereto, as well as their
respective heirs, executors, administrators, representatives,
successors and assigns.
23.5. ARBITRATION. If any dispute arises under this Lease and is not
-----------
resolved within thirty (30) days after one party delivers to the
other a written notice invoking the arbitration provisions of this
Section 23.5, then such dispute shall be resolved by binding
arbitration in the City of Carpinteria, California, under the rules
then-obtaining of the American Arbitration Association. The decision
of the arbitrator shall be final and binding, and judgment thereon
may be entered in a court of competent jurisdiction. The costs and
fees of the arbitration shall be borne in such manner as the
arbitrator deems appropriate.
23.6. FEES AND COSTS. If any action or other proceeding is commenced to
--------------
construe or enforce the rights created in this Lease, then the party
prevailing in such action or proceeding shall be entitled to recover
from each other party all costs and reasonable attorneys' fees set by
the court or arbitrator, and the costs and fees incurred in enforcing
any judgment entered therein. In addition to all other fees and
charges imposed on Tenant under this Lease, if Tenant fails to pay
any rent when due and Landlord consequently prepares a "Three Day
Notice to Quit or Pay Rent," or any associated documents necessary or
appropriate for undertaking to evict Tenant from the Premises, then
Tenant shall be obligated to reimburse Landlord for the actual costs
of preparing such Notice and other documents, but in any event not
less than Fifty Dollars ($50.00)
23.7. PARTIAL INVALIDITY. If any provision of this Lease or the application
------------------
thereof to any circumstance shall be invalid or unenforceable to any
extent, then the remainder of this Lease or the application of such
term or provision to other circumstances shall not be affected
thereby, and of this Lease shall be valid and enforceable to the
fullest extent permitted by law.
23.8. COMPLETE AGREEMENT. This Lease (including the attachments and
------------------
exhibits hereto) constitutes the entire agreement between the parties
concerning Tenant's use of any portion of the Property, and
supersedes all prior or contemporaneous understandings, whether oral
or written. This Lease may not be modified or amended, except by a
written instrument signed by the parties hereto
23.9. BROKERS. Landlord and Tenant represent and warrant to each other that
-------
(a) no person is entitled to receive any commission, brokers' fee, or
other similar amount as a result of the execution of this Lease.
23.10. EFFECTIVE DATE. The effective date of this Lease shall be October 1,
--------------
1996.
(Signatures appear on the following page).
IN WITNESS WHEREOF the parties hereto have executed this Lease, effective on the
date set forth above
"LANDLORD":
For BLUFFS GROUP III, a California limited partnership
By ▇▇▇▇ ▇▇▇▇, General Partner
For Notices:
Bluffs Group III, ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone ▇▇▇.▇▇▇.▇▇▇▇ Facsimile 805.544.5637
"TENANT":
For DIGITAL SOUND CORPORATION, a California corporation
By B. ▇▇▇▇▇▇ ▇▇▇, Vice President/CFO
For Notices:
Digital Sound Corporation, B. ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Telephone ▇▇▇.▇▇▇.▇▇▇▇ Facsimile 805.566.1420
September 4, 1996
▇▇▇▇ ▇▇▇▇
▇▇▇▇ Ventures
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇▇,
In light of our agreement that Digital Sound will now be responsible for certain
tenant improvements, the following amendments to the lease agreement between
Bluffs Group III ("Landlord") and Digital Sound Corporation ("Tenant") for ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("Property") must be agreed. Below are the revised terms and
conditions (including paragraph numbers consistent with the original lease
document) that we verbally discussed and agreed:
1.2.1 New Addition and Tenant Improvements in Existing Building:
---------------------------------------------------------
To construct at the Existing Building on or before October 1, 1996, at
Landlord's sole cost and expense, the Tenant Improvements described in
Exhibit C to this Lease (the "Tenant Improvements). Tenant shall cooperate
reasonably with Landlord, its architect, and its construction contractors
to enable Landlord to complete such Tenant Improvements in a prompt
fashion.
The Tenant Improvements described in Exhibit C will be accomplished in
agreement with the scheduled occupancy date. Any costs borne by Tenant
associated with the failure to complete these changes by the Landlord will
be offset against rents due.
The finish and quality of the Tenant Improvements will be consistent with
the level and style in the other portion of the premise. Tenant will review
and approve the proposed finish schedules.
1.2.4 Additional Buildings:
---------------------
Tenant will have the right of first refusal to lease any additional
buildings built on the property within 48 months of the execution of the
lease, with the exception of the two buildings currently under negotiation
with MetaTools (as defined as buildings 1 and 2 in exhibit B).
2.1.1 Early Termination:
-----------------
Either the Landlord or Tenant may terminate the lease for any reason with
twelve (12) months written notice delivered to and confirmed by the other
party after October 1, 2000.
3.1 Minimum Monthly Rent:
--------------------
Beginning on January 1, 1997, Tenant shall pay to Landlord minimum monthly
rent ("Minimum Monthly Rent") for the Property based upon the square
footage occupied by the Tenant and per the rent scale as noted below:
Prior Year Revenue is
---------------------
Greater than
------------
or Equal to: but Less Than: Rent/SF/Month
------------ ---------- -------------
$30,000,000 $1.00
$30,000,000 $45,000,000 $1.10
$45,000,000 $60,000,000 $1.20
$60,000,000 $75,000,000 $1.30
$75,000,000 $90,000,000 $1.40
$90,000,000 $1.50
The rent scale is based upon the Tenant's prior year published audited
annual revenue (For example, if the Tenant's prior year annual revenue was
$80,000,000, then the Minimum Monthly Rent would be $1.40 per square foot
occupied per month). Landlord and Tenant shall endeavor to agree upon the
actual number of such square feet occupied by the Tenant. If they are
unable to agree within seven (7) days, then each shall designate an
architect, and the two architects so selected shall determine (in
accordance with customary practice for measuring space in similar
buildings) the actual number of square feet of space occupied by the
Tenant.
3.4 Adjustment to Minimum Monthly Rent:
----------------------------------
The rent per square foot per month will be adjusted annually according to
the table noted in Section 3.3 beginning on March 1, 1997 and every March 1
thereafter through the term of the Lease (the rate will be in effect for a
twelve (12) month period beginning on March 1st and ending on February
28th/29th of the following year).
3.4.1 Minimum Commitment:
------------------
If Tenant's 1998 revenue does not exceed $60,000,000, then Tenant will
commit to a monthly rate of $1.30 for the period of March 1, 1999 through
February 28, 2000 and if Tenant's 1999 revenue does not exceed $75,000,000,
Tenant will commit to a monthly rate of $1.40 for the period of March 1,
2000 through February 28, 2001.
3.4.2 Upward Only Adjustment to Minimum Monthly Rent:
----------------------------------------------
Once a given rent per square foot per month is achieved or committed to by
Tenant, then adjustments to this rate can never lower the rent per square
foot per month, except:
In the event that the construction of additional buildings on the property
negatively impacts the view, parking or access to the leased premises, the
lease rate will be reduced. The amount of reduction will be appropriate for
the degree of impact which will be determined by good faith negotiation At
least two independent appraisals will be used if agreement cannot be
reached.
4.2.1 "Common Areas":
------------
shall mean all areas and facilities within the exterior boundaries of the
Property which are not specifically leased or specifically available for
lease to Tenants and which are provided and designated by Landlord for
general use and convenience of all tenants of the building and their
respective agents, employees, patrons and invitees. Common areas shall
include, without limitation, exterior walls and roofs, and all areas
outside the exterior walls of demised premises (e.g. walkways, patios,
landscaped areas, sidewalks, loading areas, parking areas and roadways).
All parking areas, with the exception of a number of designated visitor
parking positions, limited to 15 per building tenant, will be considered
common areas.
19 Signs and Advertising:
---------------------
To display its trade name, Tenant may place and maintain on the exterior of
the Premises a sign reasonably approved by the City of Carpinteria and by
Landlord, which sign shall conform to the reasonable requirements of
Landlord as to size and format; provided, Landlord shall coordinate and
bear the cost of removing Tenant's sign from the north side of the Existing
Building and erecting one or more signs or monuments at the Property to
display Tenant's corporate name in a prominent manner. In addition, Tenant
shall be entitled to display its name and the names of a reasonable number
of its principals in any building directory. No other signs,
advertisements, notices or other exterior decoration or personal property
of Tenant shall be placed upon or displayed by Tenant on any part of the
building or the windows of the Premises, or upon or about the exterior of
the Premises, without the prior written consent of Landlord.
Tenant has the option of replacing the existing sign on the North wall of
the building if in the Tenant's sole opinion, the proposed monument sign
does not adequately project the appropriate company image. Tenants to
mutually agree on final signage with City of Carpinteria's approval.
23.10 Effective date:
---------------
The effective date of this lease shall be the earlier of the date when
Tenant vacates the approximately 15360 square feet currently occupied in
the east portion of the building, or January 31, 1997.
23.11 New buildings:
--------------
Other than Buildings 1 and 2 defined in Exhibit B, no new buildings will
be added to the property before October 1, 2000 without Tenant's written
consent.
Tenant agrees that the initial rent per square foot per month effective January
1, 1997 will be $1.00 and will be adjusted according to the rent scale on March
1, 1997. In the event the Landlord is able to secure new permanent financing for
the Property prior to January 1, 1997, then the rate of $1.30 per square foot
per month will take effect upon the effective date of such new financing.
The above mentioned amendments to the Lease replace and supersede paragraphs and
sub paragraphs contained within sections 1.2.1, 3.1, 3.4, 4.1, 4.2.1, 19 and
23.10 and add paragraphs 1.2.4, 2.1.1 and 23.11.
Truly,
B. ▇▇▇▇▇▇ ▇▇▇
Vice President & CFO
DIGITAL SOUND CORPORATION
Agreed to by:
▇▇▇▇ ▇▇▇▇
General Partner
BLUFFS GROUP III
