Exhibit 10.32
SUBLEASE
1. PARTIES
This agreement (the"Sublease") is entered into by and between Celerity Group,
Inc., a California corporation, formerly, Kinetics Fluid Systems, Inc. (as
"Sublessor"), and Kinetic Systems, Inc., a California corporation, (as
"Sublessee"), on April 8, 2003 (the "Effective Date"). This Sublease is subject
to and granted by Sublessor under that certain lease agreement entered into by
and between Prologis Trust, (the" Landlord"), and Sublessor on July 13, 2000
(the "Master Lease"), A copy of the Master Lease is attached hereto as Exhibit
"A."
2. PROVISIONS CONSTITUTING SUBLEASE
This Sublease is subject to all of the terms and conditions of the Master Lease.
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 the Sublease shall
control over the Master Lease. Therefore, for the purposes of this Sublease,
wherever in the Master Lease the word "Landlord" is used, it shall be deemed to
mean the Sublessor herein and wherever in the Master Lease the word. "Tenant" is
used it shall be deemed to mean the Sublessee herein. During the term of this
Sublease and thereafter to the extent of Sublessee's continuing contractual
obligations, Sublessee does hereby expressly assume and agree to perform and
comply with, for the benefit of Sublessor, each and every obligation of
Sublessor under the Master Lease as relates to the Sublease Premises. Sublessee
shall have no duty to perform Sublessor's unperformed obligations under the
Master Lease arising prior to the earlier of the date that Sublessee takes
possession of the Premises or the Effective Date. Sublessor covenants and agrees
that it shall not amend the terms of the Master Lease during the term of this
Sublease in a manner that would adversely affect Sublessee's rights without
Sublessee's prior written consent, which consent shall not be unreasonably
withheld. Except as otherwise provided in this Sublease, or unless the context
requires otherwise, capitalized terms used in this Sublease and not otherwise
defined herein shall have the meanings specified in the Master Lease.
3. SUBLEASE PREMISES
This is a joint tenancy agreement whereby Sublessor agrees to lease to Sublessee
and Sublessee agrees to lease from Sublessor certain space within Building 11 at
000 Xxxxxx Xxxxx, Xxxxxx, Xxxxx 00000 pursuant to the terms and conditions of
this Sublease and as depicted and further described in Exhibit B hereto (the
"Sublease Premises").
The Sublease Premises comprises approximately 5,463 total square feet of space,
consisting of approximately 4,518 square feet of dedicated space for Sublessee's
exclusive use and approximately 945 square feet of common area space to be
jointly occupied and used by Sublessee and Sublessor as depicted in Exhibit B
and Exhibit C. The common area space includes space such as hallways, restrooms,
circulation, break room and lobby area.
4. TERM AND COMMENCEMENT
A. Term:
The term of this Sublease shall commence on the Effective Date
and expire on May 31, 2005. This Sublease may be renewed and
extended for additional one year periods as may be mutually
agreed to by the parties.
B. Rent Commencement:
1) Rent shall commence on the later of the Effective
Date, or upon the date that the Sublease Premises are
made available to Sublessee for its installation of
modular offices and related improvements ("Tenant
Improvements") as generally depicted in Exhibit C
hereto, and shall
be paid in monthly installments on the first day of
each calendar month through the expiration of this
Sublease.
2) In the event Sublessor is unable to deliver
possession of any area of the Sublease Premises, at
the commencement of the term, Sublessor shall not be
liable for any damage caused thereby, nor shall this
Sublease, or any portion thereof, be void or voidable
but Sublessee shall not be liable for rent until such
time as Sublessor offers to deliver possession of the
Sublease Premises to Sublessee. The term hereof shall
not be extended by any such delay. If Sublessee, with
Sublessor's consent, takes possession prior to the
commencement of the term for any area, Sublessee
shall do so subject to all of the covenants and
conditions hereof.
C. Early Termination:
it is agreed that Sublessor or Sublessee may terminate this
Sublease by giving at least 180 days prior written notice of
its intent to terminate provided that the termination
effective date shall be no earlier than May 31, 2004 ("Notice
of Termination"). In the event either party exercises its
right to terminate this Sublease pursuant to this Section, the
following provisions shall apply:
1) Such termination shall not be effective until the
expiration of the notice period set forth in the
Notice of Termination which shall be at least 180
days following the date of Notice of Termination; and
2) The terminating party shall pay the other party a
termination fee ("Termination Fee") as specified
below:
a. If the Sublease is terminated effective May
31, 2004(with prior 180 day notice), the
Termination Fee shall be $50,000.
b. If the Sublease is terminated (with prior
180 day notice)at anytime between June 1,
2004 and May 31, 2005 (expiration of the
Term), the Termination Fee shall be $37,500.
5. RENTAL
A. Rent payable by Sublessee shall be based on a gross rent basis
(the "Gross Rent") which includes the costs described as
follows:
1) Base Rent: The Base Rent is the rent charge for
occupancy of the Sublease Premises net of Operating
Expenses and Service Fees described below.
2) Operating Expenses: Operating Expenses, as defined in
the Master Lease, are assessments by the Landlord for
costs such as common area charges, taxes, and
insurance and management fees. These expenses are
subject to annual adjustment by the Landlord.
3) Service Fees: Service Fees are assessments by the
Sublessor for the following services to be provided
by Sublessor to Sublessee.
a) Trash Disposal/Janitorial services
b) Security Services as are currently performed
or contracted by Sublessor
c) Utilities
d) Maintenance and repair costs for building
components and systems (exclusive, however,
of any maintenance or repair of Sublessee's
personal assets or equipment)
e) Facilities support services
The above services are based on normal Sublessor
operations as are currently being performed or
provided. Sublessee shall reimburse Sublessor In the
event Sublessee requires additional services or
causes Sublessor to incur extra costs due to above
normal
operations including, but not limited to, multiple
work shifts, additional security services, extra
janitorial services, extraordinary utility usage or
similar type over and above costs.
B. As the payment of Gross Rent under this Sublease during the
Term, Sublessee shall pay Sublessor the amounts set forth
below for the periods specified:
(1) Monthly (2) Monthly (3) Total
Monthly Operating Service Monthly
Rent Period Base Rent Expenses Fees Gross Rent
----------- --------- -------- ---- ----------
A. Period 1: Rent Commencement $2,404.00 $929.00 $1256.00 $4,589.00
Data thru December 31, 2003 ($0.44/SF) ($0.17/SF) (30.23) ($0.84/SF)
B. Period 2: January 1, 2004 thru $2,622.00 to be determined per notes 1 and 2 below
May 31, 2005 ($0.48/SF)
(1) Monthly Operating Expenses are adjusted by Landlord annually on
or about January 1 for the upcoming calendar year in accordance
with provisions of the Master Lease. The Monthly Operating
Expenses will be fixed for Period 1. The Monthly Operating
Expenses for Period 2 will be based on the Landlord assessment on
a per square foot pro-rata basis. With respect to Period 2, if
Landlord reconciliation of actual costs incurred for the Monthly
Operating Expenses exceed the amounts estimated and paid by
Sublessor to Landlord (as evidenced by an invoice from Landlord
to Sublessor), then Sublessee shall reimburse Sublessor its
pro-rata share of such additional costs. Likewise, if it is
determined that the Monthly Operating Expenses were overpaid to
Landlord (as evidenced by a credit by Landlord to Sublessor),
then Sublessor shall reimburse Sublessee its pro-rata share of
the amount of credit from Landlord.
(2) Monthly Service Fees will be fixed for Period 1. The Monthly
Service Fees for Period 2 will be adjusted based on actual costs
incurred in Period 1 and projections for Period 2. The Monthly
Service Fees for Period 2 will foe based on the adjusted cost on
a per square foot pro-rata basis.
(3) The Monthly Gross Rent for Period 1 is fixed. The Monthly Gross
Rent for Period 2 will be adjusted according to notes 1 and 2
above.
Sublessee shall pay the Monthly Gross Rent to Sublessor, without any offset,
abatement or deduction whatsoever except as may occur in accordance with the
provisions of this Sublease, in such equal monthly installments, in advance on
the first day of each calendar month. If any rental term of this Sublease
commences or ends at any time other than the first day of a calendar month, then
Monthly Gross Rent will be prorated for such month according to the number of
days of the rental term in such month. The parties acknowledge that Sublessor
and Sublessee are legal entities that, directly or indirectly (through one or
more intermediaries), are under common Control; where "Control" means the
possession of the power to direct, or cause the direction of, the management and
policies of an entity, whether through the ownership of a majority of
outstanding voting securities, by contract, or otherwise ("Related Entities").
As long as Sublessor and Sublessee are Related Entities, Sublessee may effect
payment of the Monthly Gross Rent through such intercompany funds transfer
process as may be in existence between the parties from time to time.
If all or any portion of a sum due under this Sublease is not received within
five (5) days after the due date thereof, then (without in any way implying
Sublessor's consent to such late payment) Sublessee agrees to pay, in addition
to the sum so due, a late payment charge equal to the sum of (i) five percent
(5%) of the sum, or portion thereof, which is overdue; and (ii) any amount which
Sublessor may be required to pay to the Landlord under the Master Lease for such
late payment.
6. SECURITY DEPOSIT
Sublessee shall deposit with Sublessor a security deposit (the "Deposit") in the
amount of $4,589.00 for its faithful performance of all of the conditions of
this Sublease.
If Sublessee defaults in the performance of its obligations hereunder, Sublessor
may use or apply all or a portion of the Deposit to cure the default or to
compensate Sublessor for its damages and expenses resulting from the, default,
in which event Sublessee shall promptly deposit with Sublessor the sum necessary
to restore the Deposit to Its full amount. Sublessor shall not unless otherwise
required by law, be required to keep the Deposit separate from its general
accounts, nor pay interest on the Deposit to Sublessee. If Sublessee has
performed all of Sublessee's obligations hereunder at the end of the Sublease
term, the deposit shall be refunded to Sublessee within thirty (30) days after
the Sublease term expires. No trust relationship is created herein between
Sublessor and Sublessee with respect to the Deposit. Any deposit under the
Master Lease which may be returned by the Landlord will be and shall remain the
property of the Sublessor.
7. USE
A. Sublessee shall use the Sublease Premises for office use and for no
other purpose without the prior written consent of Landlord and
Sublessor.
B. 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
Sublease Premises. Sublessee's business shall be established and
conducted through the term hereof in a first class manner. Sublessee
shall not use the Sublease Premises for, or carry on, or permit to be
carried on, any offensive, noisy or dangerous trade, business,
manufacture or occupation nor permit any auction sale to be held or
conducted on or about the Sublease Premises. Sublessee shall not do or
suffer anything to be done upon the Sublease Premises which will cause
structural injury to the Sublease Premises or the building of which the
Sublease Premises form a part. The Sublease Premises shall not be
overloaded and no machinery, apparatus or other appliance shall be used
or operated in or upon the Sublease Premises which will in any manner
injure, vibrate or shake the Sublease Premises or the building of which
it is a part. No use shall be made of the Sublease Premises which will
in any way impair the efficient operation of the sprinkler system (if
any) within the building containing the Sublease Premises. No music
instrument of any sort, or any noise making device will be operated or
allowed upon the Sublease Premises for the purpose of attracting trade
or otherwise. Sublessee shall not use or permit the use of the Sublease
Premises or any part thereof for any purpose which will increase the
existing rate of insurance upon the building in which the Sublease
Premises are located, or cause a cancellation of any insurance upon the
building in which the Sublease Premises are located, or cause a
cancellation of any insurance policy covering the building or any part
thereof. If any act on the part of Sublessee or use of the Sublease
Premises by Sublessee shall cause, directly or indirectly, any increase
of Sublessor's insurance expense, said additional expense shall be paid
by Sublessee to Sublessor upon demand. No such payment by Sublessee
shall limit Sublessor in the exercise of any other rights or remedies,
or constitute a waiver of Sublessor's right to require Sublessee to
discontinue such act or use.
8. SUBLESSEE TENANT IMPROVEMENTS
a. Sublessee may make tenant improvements within the Sublease
Premises, only after written authorization from the Landlord and
Sublessor. Such authorization shall not be unreasonably withheld by
Sublessor and Sublessor shall work with Sublessee to obtain such
approval from the Landlord. For purposes of this Sublease, tenant
improvements include any alteration, addition, or improvement to the
Sublease Premises (collectively "Tenant Improvements").
b. All Tenant Improvements to any of the Sublease Premises are
subject to the requirements of the Master Lease and this Sublease,
including, without limitation, obtaining Landlord's and Sublessor's
consent prior to performance of any work.
c. Sublessee shall incur all Costs associated with such Tenant
Improvements, including, without limitation, all engineering, permits,
consents, construction, insurance, infrastructure and maintenance. In
addition, Sublessee, at its sols cost, shall comply with provisions of
Section 12 of the Master Lease "Surrender of Premises" for all Tenant
Improvements undertaken by Sublessee during the term of this Sublease .
9. NOTICES
All notices or demand of any kind required or desired to be given by Sublessor
or Sublessee hereunder shall be in writing and shall be deemed delivered
forty-eight (48) hours after depositing the notice or demand in the United
States mail (certified or registered, postage prepaid), addressed to the
Sublessor or Sublessee respective at the addressed set forth after their
signatures at the end of this Sublease. All rent and other payments due under
this Sublease or the Master Lease shall be made by Sublessee to Sublessor at the
following address: Celerity Group, Inc., 000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000 - Attention Controller. Sublessor may amend such payment address at
anytime by giving Sublessee written notice at least 30 days prior to the next
following payment due date.
10. PARKING
Sublessee, its agents, employees, customers, and invitees shall have the
nonexclusive right, at no additional cost, to utilize the parking areas
designated for the Premises, on a first come-first serve basis, subject to such
rules and regulations as Landlord may adopt from time to time for the use of
such areas. The aforesaid parking does not include any reserved parking spaces.
All vehicles parked in the said parking areas shall be at the risk of Sublessee
or the person so utilizing the parking area. Sublessee expressly releases
Sublessor from any claims arising out to any theft, loss or other damage to any
such vehicles.
11. CONFIDENTIALITY
As part of the activities contemplated by this Sublease, the parties may become
aware of processes, designs, equipment, strategies, marketing plans, customer
lists, inventions or other confidential, proprietary or trade secret information
or data of the other or its affiliates. Each party hereto agrees to keep such
confidential, proprietary and trade secret information secret and confidential
and shall not disclose it to third .parties or use any such
confidential,-proprietary or trade secret information to the detriment of the
owner of said information without the prior written consent of the owner of such
confidential, proprietary or trade secret information. Such obligation shall not
apply to information which is in the prior possession of the receiving party, is
in the public domain through no fault of receiving party, is received from a
third party with no confidentiality obligation to the disclosing party, or
independently developed by the receiving party without the use of disclosing
parties' information and which can be adequately documented. The receiving party
shall instruct its employees, officers, agents and directors to observe the
confidentiality obligations imposed hereby. Sublessor may require employees,
consultants and representatives of Sublessee to execute a standard
confidentiality agreement protecting Sublessor's confidential information prior
to issuing a building badge to Sublessee's employees, consultants or
representative or permitting access to confidential information. Each party
agrees that its obligations under this Section 11 are necessary and reasonable
in order to protect the other party and the other party's business, and
expressly agrees that monetary damages would be inadequate to compensate the
other party for any breach of any covenant or agreement set forth herein.
Accordingly, each party agrees and acknowledges that any such violation or
threatened violation will cause irreparable injury to the other party and that,
in addition to any other remedies that may be available, in law, in equity or
otherwise, the other party shad be entitled to obtain injunctive relief against
the threatened breach of this Agreement or the continuation of any such breach,
without the necessity of proving actual damages.
12. Compliance with Sublessor Safety and Security Procedures
The parties acknowledge and agree that all Sublessee employees, consultants and
representatives (collectively "Sublessee Employees") are subject to Sublessee's
right of direction, control and discipline. Sublessee Employees are not employed
by Sublessor nor shall such persons be entitled to any rights, benefits, or
privileges of a Sublessor employee. Sublessor shall inform Sublessee of
pertinent safety and security policies and requirements which Sublessor deems
necessary relative to Sublessee Employees' access to facility premises (the
"Safety Regulations"). Sublessee shall inform all Sublessee Employees of the
Safety Regulations and require all Sublessee Employees to comply therewith,
including but not limited to PureSafety training requirements and Sublessor's
established security and evacuation procedures and drills. Sublessee agrees to
track and report Sublessee Employees' compliance with the Safety Regulations as
reasonably required by Sublessor. Sublessee agrees to notify Sublessor
Immediately of any changes in its staff of Sublessee Employees with access to
the Sublease Premises or Sublessor's confidential or proprietary information.
13. MISCELLANEOUS
(a) All of the rights and benefits of the Tenant under the Master
Lease shall inure to the benefit of the Sublessee with respect to the
Sublease Premises to the degree and as set forth in this Sublease. Any
notice of default provided under the Master Lease to Sublessor shall be
provided to Sublessee promptly upon receipt thereof by Sublessor.
Sublessor acknowledges that Landlord has certain obligations under the
Master Lease and Sublessor agrees to use commercially reasonable
efforts to cooperate with Sublessee's efforts to assure that such
obligations are performed by Landlord for the benefit of Sublessee as
they pertain to the Sublease Premises. Sublessor shall take such steps
as may be reasonably necessary to assure that Sublessee, on paying the
monthly rent and performing the covenants herein, shall and may
peaceably and quietly hold and enjoy the Sublease Premises during the
term hereof. Sublessor warrants and represents that (i) Sublessor has
full right, power, and authority to enter into this Sublease and (ii)
the Landlord is not in default under the terms of the Master Lease.
(b) This Sublease shall be governed and construed in accordance
with the laws of the State of Texas.
(c) Sublessor and Sublessee hereby represent and warrant each to
the other that they have not employed any agents, brokers or other such
parties in connection with this Sublease.
(d) Sublessee shall procure insurance as required by the Master
Lease, specifically as stated in Section 11 therein. In addition to
those named in Section 11 or elsewhere in the Master Lease, Sublessee
shall also name Sublessor as Additional Insured on such policies.
(e) Sublessee agrees and acknowledges that this Sublease does not
grant Sublessee any ownership in or title to any of Sublessor's
personal property located on the Sublease Premises at any time during
the Sublease term, including but not limited to Sublessor's furniture
and office equipment.
14. LANDLORD'S CONSENT REQUIRED
Sublessee acknowledges that, pursuant to the provisions of the Master Lease,
Sublessor is required to obtain Landlord's written consent to this Sublease, and
accordingly, that obligations of the Sublessor hereunder are expressly subject
to Sublessor obtaining such consent. Landlord's Consent is attached hereto as
Exhibit "D."
15. SHARED SERVICES
The parties are currently considering the feasibility of sharing certain
services with respect to Sublessee's use and occupancy of the Sublease Premise
such as shared telephone services, information technology services and other
services required and used by both parties (the "Additional Services"). Any
agreement
of the parties with respect to the provision of and payment for Additional
Services shall be set forth in a written agreement separate from this Sublease.
(SIGNATURE PAGE FOLLOWS)
SUBLESSOR: CELERITY GROUP, INC. SUBLESSEE: KINETIC SYSTEMS, INC.
By: /s/ Xxxxx Xxxxx By: /s/ Xxxx Xxxxxxxx
-------------------------- ----------------------------
Xxxxx Xxxxx
Title: Vice President Global Facilities Title: V. P. Finance
Date: 4/10/03 Date: 4/8/03
Address: 000 Xxxxxx Xxxxx, Xxxxx 0000 Address:2805 Mission College BNCL
Xxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
Attn: Global Facilities _________________________________
Telephone No.: (000-000-0000) Telephone No (000) 000-0000
EXHIBIT "A"
MASTER LEASE
(Master Lease to be attached)
