California-San Luis Obispo-2705 McMillan Road Sublease - United Parcel Service and Central Coast Surfboard
STANDARD SUBLEASE
American Industrial Real Estate Association
1. Parties. This Sublease, dated, for reference purposes only, May 15, 1996,
is made by and between United Parcel Service (UPS) (herein called "Sublessor")
and Central Coast Surfboard (CCS) (herein called "Sublessee").
2. Premises. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental and upon all of the
conditions set forth herein, that certain real property situated in the County
of San Luis Obispo, State of California, commonly known as approximately 5,300
sq. ft. at 2705 McMillan Road and described as outlined in Exhibit A attached
hereto. Sublessee shall have access to and use of the restrooms, break area,
hallway and entrance cross-hatched on Exhibit "A" attached hereto. Said real
property, including the land and all improvements thereon, is hereinafter called
the "Premises".
3. Term.
3.1 Term. The term of this Sublease shall be for 27 1/2 Months commencing
on June 15, 1996 and ending on September 30, 1998 unless sooner terminated
pursuant to any provision hereof.
3.2 [Deleted]
4. Rent. Sublessee shall pay to Sublessor as rent for the Premises equal
monthly payments of $5250.00, in advance, on the 1st day of each month of the
term hereof. Sublessee shall pay Sublessor upon the execution hereof $5250.00 as
rent for July, 1996 and a security deposit of $4520. Sublessee paid Sublessor a
security deposit of $730.00 in September 1995 which shall be applied to the
security deposit to in paragraph 5 below. Rent for any period during the term
hereof which is for less than one month shall be a prorata portion of the
monthly installment. Rent shall be payable in lawful money of the United States
to Sublessor at the address stated herein or to such other person or at such
other places as Sublessor may designate in writing.
5. Security Deposit. Sublessee shall deposit with Sublessor upon execution
hereof $5250.00 as security for Sublessee's faithful performance of Sublessee's
obligations hereunder. If Sublessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Sublease.
Sublessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any other
sum to which Sublessor may become obligated by reason of Sublessee's default, or
to compensate Sublessor for any loss or damage with Sublessor may suffer
thereby. If Sublessor so uses or applies all or any portion of said deposit.
Sublessee shall within ten (10) days after written demand therefore deposit cash
with Sublessor in an amount sufficient to restore said deposit to the full
amount hereinabove stated and Sublessee's failure to do so shall be a material
breach of this Sublease. Sublessor shall not be required to keep said deposit
separate from its general accounts. If Sublessee performs all of Sublessee's
obligations hereunder, said deposit, or
<PAGE>
so much thereof as has not theretofore been applied by Sublessor, shall be
returned, without payment of interest or other increment for its use to
Sublessee (or at Sublessor's option, to the last assignee, if any, of
Sublessee's interest hereunder) at the expiration of the term hereof, and after
Sublessee has vacated the Premises. No trust relationship is created herein
between Sublessor and Sublessee with respect to said Security Deposit.
6. Use.
6.1 Use. The Premises shall be used and occupied only for offices,
warehousing, storage and related operations of Central Coast Surfboard.
6.2 Compliance with Law.
(a) Sublessor warrants to Sublessee that the Premises, in its
existing state, but without regard to the use for which Sublessee will use the
Premises, does not violate any applicable building code regulation or ordinance
at the time that this Subleases is executed. In the event that it is determined
that this warranty has been violated, then it shall be the obligation of the
Sublessor, after written notice from Sublessee, to promptly, at Sublessor's sole
cost and expense, rectify any such violation. In the event that Sublessee does
not give to Sublessor written notice of the violation of this warranty within 1
year from the commencement of the term of this Sublease, it shall be
conclusively deemed that such violation did not exist and the correction of the
same shall be the obligation of the Sublessee.
(b) Except as provided in paragraph 6.2(a), Sublessee shall, at
Sublessee's expense, comply promptly with all applicable statutes, ordinances,
rules, regulations, orders, restrictions of record, and requirements in effect
during the term or any part of the term hereof regulating the use by Sublessee
of the Premises. Sublessee shall not use or permit the use of the Premises in
any manner that will tend to create waste or a nuisance or, if there shall be
more than one tenant of the building containing the Premises, which shall tend
to disturb such other tenants.
6.3 Condition of Premises. Except as provided in paragraph 6.2(a)
Sublessee hereby accepts the Premises in their condition existing as of the date
of the execution hereof, subject to all applicable zoning, municipal county and
state laws, ordinances, and regulations governing and regulating the use of the
Premises, and accepts this Sublease subject thereto and to all matters disclosed
thereby and by any exhibits attached hereto. Sublessee acknowledges that neither
Sublessor nor Sublessor's agents have made any representation or warranty as to
the suitability of the Premises for the conduct of Sublessee's business.
7. Master Lease
7.1 Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter referred to as the "Master Lease", a copy of which is attached
hereto marked Exhibit 1, dated July 10, 1990 wherein Michaud, Moresco and
McGurty and Lease modification extension dated June 29, 1995 is the lessor,
hereinafter referred to as the "Master Lessor."
7.2 This Sublease is and shall be at all times subject and subordinate to
the Master Lease.
2
<PAGE>
7.3 The terms, conditions and respective obligations of Sublessor and
Sublessee to each other under this Sublease shall be the terms and conditions of
the Master Lease except for those provisions of the Master Lease which are
directly contradicted by this Sublease in which event the terms of this Sublease
document shall control over the Master Lease. Therefore, for the purposes of
this Sublease, wherever in the Master Lease the word "Lessor" is used it shall
be deemed to mean the Sublessor herein and wherever in the Master Lease the word
"Lessee" is used it shall be deemed to mean the Sublessee herein.
7.4 During the term of this Sublease and for all periods subsequent for
obligations which have arisen prior to the termination of this Sublease.
Sublessee does hereby expressly assume and agree to perform and comply with, for
the benefit of Sublessor and Master Lessor each and every obligation of
Sublessor under the Master Lease except for the following paragraphs which are
excluded therefrom Paragraph 12.a of the Master Lease. Lessee's utility costs
except telephone and trash collection are included in the Sublease payments to
Sublessor.
7.5 The obligation that Sublessee has assumed under paragraph 7.4 hereof
are hereinafter referred to as the "Sublessee's Assumed Obligations". The
obligations that Sublessee has not assumed under paragraph 7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".
7.6 Sublessee shall hold Sublessor free and harmless of and from all
liability, judgments, costs, damages, claims or demands, including reasonable
attorneys fees, arising out of Sublessee's failure to comply with or perform
Sublessee's Assumed obligations.
7.7 Sublessor agrees to maintain the Master Lease during the entire term
of this Sublease, subject, however, to any earlier termination of the Master
Lease without the fault of the Sublessor, and to comply with or perform
Sublessor's Remaining Obligations and to hold Sublessee free and harmless of and
from all liability, judgments, costs, damages, claims or demands arising out of
Sublessor's failure to comply with or perform Sublessor's Remaining Obligations.
7.8 Sublessor represents to Sublessee that the Master Lease is in full
force and effect and that no default exists on the part of any party to the
Master Lease.
8. Assignment of Sublease and Default.
8.1 Sublessor hereby assigns and transfers to Master Lessor the
Sublessor's interest in this Sublease and all rentals and income arising
therefrom, subject however to terms of Paragraph 8.2 hereof.
8.2 Master Lessor, by executing this document, agrees that until a default
shall occur in the performance of Sublessor's Obligations under the Master
Lease, that Sublessor may receive, collect and enjoy the rents accruing under
this Sublease. However, if Sublessor shall default in the performance of its
obligations to Master Lessor then Master Lessor may, at its option, receive and
collect, directly from Sublessee, all rent owing and to be owed under this
Sublease, Master Lessor shall not, by reason of this assignment of the Sublease
nor by reason of the collection of the terms from the Sublessee, be deemed
liable to Sublessee for any failure of the Sublesosr to perform and comply with
Sublessor's Remaining Obligation.
3
<PAGE>
8.3 Sublessor hereby irrevocably authorizes and directs Sublessee, upon
receipt of any written notice from the Master Lessor stating that a default
exists in the performance of Sublessor's obligations under the Master Lease, to
pay to Master Lessor the rents due and to become due under the Sublease.
Sublessor agrees that Sublessee shall have the right to rely upon any such
statement and request from Master Lessor, and the Sublessee shall pay such rents
to Master Lessor without any obligation or right to inquire as to whether such
default exists and notwithstanding any notice from or claim from Sublessor to
the contrary and Sublessor shall have no right or claim against Sublessee for
any such rents so paid by Sublessee.
8.4 No changes or modifications shall be made to this Sublease without the
consent of Master Lessor.
9. Consent of Master Lessor.
9.1 In the event that the Master Lease requires that Sublessor obtain the
consent of Master Lessor to any subletting by Sublessor then, this Sublease
shall not be effective unless, within 10 days of the date hereof, Master Lessor
signs this Sublease thereby giving its consent to this Subletting.
9.2 In the event that the obligations of the Sublessor under the Master
Lease have been guaranteed by third parties then this Sublease, nor the Master
Lessor's consent, shall not be effective unless, within 10 days of the date
hereof, said guarantors sign this Sublease thereby giving guarantors consent to
this Sublease and the terms thereof.
9.3 In the event that Master Lessor does give such consent then:
(a) Such consent will not release Sublessor of its obligations or
after the primary liability of Sublessor to pay the rent and perform and comply
with aft of the obligations of Sublessor to be performed under the Master Lease.
(b) The acceptance of rent by Master Lessor from Sublessee or any one
else Liable under the Master Lease shall not be deemed a waiver by Master Lessor
of any provisions of the Master Lease.
(c) The consent to this Sublease shall not constitute a consent to
any subsequent subletting or assignment.
(d) In the event of any default of Sublessor under the Master Lease,
Master Lessor may proceed directly against Sublessor, any guarantors or any one
else liable under the Master Lease or this Sublease without first exhausting
Master Lessor's remedies against any other person or entity liable thereon to
Master Lessor.
(e) Master Lessor may consent to subsequent sublettings and
assignments of the Master Lease or this Sublease or any amendments or
modifications thereto without notifying Sublessor nor any one else liable under
the Master Lease and without obtaining their consent and such action shall not
relieve such persons from liability.
4
<PAGE>
(f) In the event that Sublessor shall default in its obligations
under the Master Lease, then Master Lessor, at its option and without being
obligated to do so, may require Sublessee to attorn to Master Lessor in which
event Master Lesser shall undertake the obligations of Sublessor under this
Sublease from the time of the exercise of said option to termination of this
Sublease but Master Lessor shall not be liable for any prepaid rents nor any
security deposit paid by Sublessee, nor shalt Master Lessor be liable for any
ether defaults of the Sublessor under the Sublease.
9.4 The signatures of the Master Lessor and any Guarantors of Sublessor at
the end of this document shall constitute their consent to the terms of this
Sublease.
9.5 Master Lessor acknowledges that, to the best of Master Lessor's
knowledge, no default presently exists under the Master Lease of obligations to
be performed by Sublessor and that the Master Lease is in full force and effect.
9.6 In the event that Sublessor defaults wider its obligations to be
performed under the Master Lease by Sublessor, Master Lessor agrees to deliver
to Sublessee a copy of any such notice of default. Sublessee shall have the
right to cure any default of Sublessor described in any notice of default within
ten days after service of such notice of default en Sublessee. If such default
is cured by Sublessee then Sublessee shalt have the right of reimbursement and
offset from and against Sublessor.
10. Brokers Fee.
10.1 Upon execution hereof by all parties, Sublessor shall pay to
Patterson Realty, a licensed real estate broker (herein called "Broker"), a fee
as set forth in a separate agreement between Sublessor and Broker, the sum of
$5% of agreed for brokerage services rendered by Broker to Sublessor in this
transaction.
10.2 Sublessor agrees that if Sublessee exercises any option or right of
first refusal granted by Sublessor herein, or any option or right substantially
similar thereto, either to extend the term of this Sublease, to renew this
Sublease, to purchase the Premises, or to lease or purchase adjacent property
which Sublessor may own or in which Sublessor has an interest, or if Broker is
the procuring cause of any lease, sublease, or sale pertaining to the Premises
or any adjacent property which Sublessor may own or in which Sublessor has an
interest, then as to any of said transactions Sublessor shall pay to Broker a
fee, in cash, in accordance with the schedule of Broker in effect at the time of
the execution of this Sublease. Notwithstanding the foregoing. Sublessor's
obligation under this Paragraph 10.2 is limited to a transaction in which
Sublessor is acting as a sublessor, lessor or seller.
10.3 Master Lessor agrees, by its consent to this Sublease, that if
Sublessee shall exercise any option or right of first refusal granted to
Sublessee by Master Lessor in connection with this Sublease, or any option or
right substantially similar thereto, either to extend the Master Lease, to renew
the Master Lease, to purchase the Premises or any part thereof, or to lease or
purchase adjacent property which Master Lessor may own or in which Master Lessor
has an interest, or if Broker is the procuring cause of any other lease or sale
entered into between Sublessee and Master Lessor pertaining to the Premises, any
part thereof, or any adjacent
5
<PAGE>
property which Master Lessor owns or in which it has an interest, then as to any
of said transactions Master Lessor shall pay to Broker a fee, in cash, in
accordance with the schedule of Broker in effect at the time of its consent to
this Sublease.
10.4 Any fee due from Sublessor or Master Lessor hereunder shall be due and
payable upon the exercise of any option to extend or renew, as to any extension
or renewal; upon the execution of any new lease, as to a new lease transaction
or the exercise of a right of first refusal to lease; or at the close of escrow,
as to the exercise of any option to purchase or other sale transaction.
10.5 Any transferee of Sublessor's interest in this Sublease, or of Master
Lessor's interest in the Master Lease, by accepting an assignment thereof, shall
be deemed to have assumed the respective obligations of Sublessor or Master
Lessor under this Paragraph 10. Broker shall be deemed to be a third-party
beneficiary of this paragraph 10.
11. Attorney's fees. If any party or the Broker named herein brings and action
to enforce the terms hereof or to declare rights hereunder, the prevailing
partying any such action, on trial and appeal, shall be entitled to his
reasonable attorney's fees to be paid by the losing party as fixed by the Court.
The provisions of this paragraph shall inure to the benefit of the Broker named
herein who seeks to enforce a right hereunder.
12. Additional Provisions. [If there are no additional provisions draw a line
from this point to the next printed word after the space. If additional
provisions place the same here.]
13. Sublessor agrees to install doors and partitions to adequately provide
security for Sublessor and Sublessee and Master Lessor consents to the
modifications.
14. The above Sublease includes all utility usage by Sublessee.
15. Sublessee shall be entitled to 35 on site parking spaces. Parking spaces to
be designated on Exhibit B attached hereto specifying specific parking spaces
for Sublessee.
16. Sublessor agrees to have all articles removed from the warehouse area not
later than June 15, 1996.
Previous Sublease between the parties of approximately 1400 sq. ft. of 2705
McMillan Road and executed by Sublessee on September 21, 1995, is cancelled
effective June 15, 1996.
If this Sublease has been filled in it has been prepared for submission to your
attorney for his approval, representation or recommendation is made by the real
estate broker or its agents or employees as to the sufficiency, legal effect, or
tax consequences of this Sublease or the transaction relating thereto.
6
<PAGE>
Executed at San Ramon, CA UNITED PARCEL SERVICE (UPS)
-------------------------- --------------------------------------
on June 18, 1996 By /s/ Michael W. [ ]
----------------------------------- ------------------------------------
address 2000 Crow Canyon Pl. By____________________________________
------------------------------
San Ramon, CA 94583 "Sublessor" (Corporate Seal)
--------------------------------------
Executed at San Luis Obispo, CA CENTRAL COAST SURFBOARD (CCS)
-------------------------- --------------------------------------
on June 13, 1996 By /s/ James R. Hall, CFO
----------------------------------- ------------------------------------
address ______________________________ By ___________________________________
"Sublessee" (Corporate Seal)
______________________________________
Executed at __________________________ Arthur Segal Trust
-------------------------------------
on ___________________________________ By /s/ Arthur Segal [ ]
------------------------------------
address ______________________________ By ___________________________________
"Master Lessor" (Corporate Seal)
______________________________________
Executed at __________________________ ______________________________________
on ___________________________________ ______________________________________
address ______________________________ ______________________________________
"Guarantors"
______________________________________
For these forms call the American Industrial Real Estate Association, (213) 687-
8777
7
<PAGE>
Exhibit A
UPS - CCS SUBLEASE
[FLOOR PLAN APPEARS HERE]
EXHIBIT B
UPS/CCS
[FLOOR PLAN APPEARS HERE]
8
<PAGE>
FIRST ADDENDUM TO STANDARD SUBLEASE
This is an amendment to the standard sublease dated May 15th, 1996 between
United Parcel Service (UPS), sublessor, and Central Coast Surfboard, (CCS)
sublessee.
The Sublease is hereby amended as follows:
PARAGRAH 3, TERM:
The term of the Sublease shall be for 3 years commencing October 1, 1998 and
expiring on September 30th, 2001.
RENT:
Rental shall be payable as follows:
October 1998 through September 1999 $5250.00/mo.
October 1999 through September 2000 $5400.00/mo.
October 2000 through September 2001 $5550.00/mo.
PREMISES:
The Premises shall be the identical premises contained in the original sublease.
RIGHT OF CANCELLATION:
CCS to have the right to cancel the sublease with an effective cancellation date
any time after October 1, 2000 by providing USP 6 months or more advance notice
of intent to cancel the Sublease.
RECOVERY OF PREMISES BY LANDLORD.
In the event CCS elects to terminate it's sublease any time after October 1,
2000, UPS' leased premises shall be modified on the effective date of
termination to be only those premises currently occupied by UPS (approximately
5550 sq. ft. as identified on Exhibit "A" of the sublease.)
All other terms and conditions of the previously existing sublease remain in
effect.
UNITED PARCEL SERVICE
By /s/ Robert W. [ ]
------------------------------
CENTRAL COAST SURFBOARD
By /s/ Michael Chaney .
------------------------------
THE ARTHUR SEGAL TRUST
By /s/ Arthur Segal, Trustee .
------------------------------
9