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ASSIGNMENT AND SUBORDINATION OF MASTER LEASE AND CONSENT OF MASTER TENANT

Lease Subordination Agreement

ASSIGNMENT AND SUBORDINATION OF MASTER LEASE AND CONSENT OF MASTER TENANT | Document Parties: VENOCO, INC. | 6267 CARPINTERIA AVENUE, LLC, | GERMAN AMERICAN CAPITAL CORPORATION You are currently viewing:
This Lease Subordination Agreement involves

VENOCO, INC. | 6267 CARPINTERIA AVENUE, LLC, | GERMAN AMERICAN CAPITAL CORPORATION

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Title: ASSIGNMENT AND SUBORDINATION OF MASTER LEASE AND CONSENT OF MASTER TENANT
Governing Law: California     Date: 4/5/2006
Law Firm: Sheppard Mullin    

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Exhibit 10.29


ASSIGNMENT AND SUBORDINATION OF MASTER LEASE
AND CONSENT OF MASTER TENANT

        THIS ASSIGNMENT AND SUBORDINATION OF MASTER LEASE AND CONSENT OF MASTER TENANT (this " Agreement ") is made as of December 9, 2004, by and among 6267 CARPINTERIA AVENUE, LLC , a Delaware limited liability company (" Owner "), VENOCO, INC. , a Delaware corporation ("Master Tenant"), and GERMAN AMERICAN CAPITAL CORPORATION , a Maryland corporation (together with its successors and assigns, " Lender ").

RECITALS:

        A.    WHEREAS, Owner, by that certain Promissory Note, dated as of the date hereof, and given by Owner in favor of Lender in the principal amount of $10,000,000.00 (together with all extensions, renewals, modifications, substitutions and amendments thereof, the " Note "), is indebted to Lender for a loan advanced pursuant to the Note (the indebtedness evidenced by the Note, together with such interest accrued thereon, shall collectively be referred to as the " Loan ");

        B.    WHEREAS, the Loan is secured by, among other things, that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (together with all extensions, renewals, modifications, substitutions and amendments thereof, the " Security Instrument "), of even date herewith, which grants Lender a first lien on the improved real property which is commonly known as 6267 Carpinteria Avenue and which is located in the City of Carpinteria, the County of Santa Barbara and the State of California (the " Property ") (the Note, the Security Instrument, this Agreement and any of the other documents evidencing or securing the Loan, together with all extensions, renewals, modifications, substitutions and amendments thereof, are collectively referred to herein as the " Loan Documents ");

        C.    WHEREAS, the Property is encumbered by that certain Building Lease, dated as of November 7, 1996, by and between Bermant Development Company (" BDC "), as master landlord, and Benton Oil and Gas Company (" BOGC "), as master tenant, (a) as assigned pursuant to that certain Assignment of Building Lease and Development and Construction Agreement, dated as of June 19, 1997, from BDC, as assignor, in favor of Carpinteria Bluffs Associates, LLC (" CBA "), as assignee (assigning the master tenant's interest thereunder), (b) as amended by that certain First Amendment to Building Lease, dated as of May     , 2000, by and between BOGC and CBA, (c) as further assigned pursuant to that certain Assignment and Assumption of Lease, dated as of December 28, 2001, from BOGC, as assignor, in favor of Venoco, Inc. (" Master Tenant "), as assignee (assigning the master tenant's interest thereunder), (d) as further assigned pursuant to that certain Assignment and Assumption of Leases, dated as of December 8, 2004, from CBA, as assignor, in favor of Owner, as assignee (assigning, among other things, the master landlord's interest thereunder), and (e) as further amended by that certain Amendment to Lease, dated as of December 8, 2004, between Grantor, as master landlord, and Master Tenant, as master tenant (collectively, and as may be further modified, amended and/or supplemented in accordance with the terms hereof and the other Loan Documents, the " Master Lease "), a true and correct copy of which is attached hereto as Exhibit A ; and

        D.    WHEREAS, Lender requires as a condition to the making of the Loan that Owner, as the borrower under the Loan, assign the Master Lease to Lender and subordinate the Master Lease to the Loan, and that Master Tenant consent to the Loan and agree with Lender and Owner as to certain matters more particularly described herein.


AGREEMENT

        NOW THEREFORE, for good and valuable consideration the parties hereto agree as follows:

        1.     Assignment of Master Lease.     As additional collateral security for the Loan, Owner hereby conditionally transfers, sets over and assigns to Lender all of Owner's right, title and interest in and to the Master Lease, said transfer and assignment to automatically become a present, unconditional assignment, at Lender's option, upon the occurrence of an Event of Default by Owner under the Note, the Security Instrument or any of the other Loan Documents (which has not been waived in writing by Lender).

        2.     Master Tenant's Consent to Assignment.     Master Tenant hereby acknowledges and agrees that (a) Master Tenant hereby consents to the assignment of Owner's interest in the Master Lease by Owner to Lender as additional security for the Loan, and (b) notwithstanding anything to the contrary contained in the Master Lease, (i) no such consent shall be required for the assignment and transfer of the Master Lease to Lender or its nominee following the occurrence of an Event of Default under the Note or the Security Instrument or any of the other Loan Documents, or in connection with a Foreclosure (hereinafter defined) and (ii) Master Tenant shall not unreasonably withhold, condition or delay its consent to the purchase by an entity other than Lender (" Successor Owner ") at a sale by Lender or its nominee subsequent to such Foreclosure. As used in this Agreement, the term " Foreclosure " shall mean any exercise of the remedies available to the Lender or other holder of the Security Instrument, following the occurrence of a Default or Event of Default under the Security Instrument, which results in a transfer of title to or possession of the Property. The term "Foreclosure" shall include, without limitation: (A) a transfer by judicial or non-judicial foreclosure; (B) a transfer by deed in lieu of foreclosure; (C) the appointment by a court of a receiver to assume possession of the Property; (D) a transfer of either ownership or control of the Owner, by exercise of a stock pledge or otherwise; (E) a transfer resulting from an order given in a bankruptcy, reorganization, insolvency or similar proceeding; (F) if title to the Property is held by a tenant under a ground lease, an assignment of the tenant's interest in such ground lease; or (G) any similar judicial or non-judicial exercise of the remedies held by the Lender or other holder of the Security Instrument.

        3.     Subordination of Master Lease: Non-Disturbance.     

        (a)   The Master Lease as the same may hereafter be modified, amended, supplemented and/or extended in accordance with the terms of this Agreement, and all of Master Tenant's right, title and interest in and to the Property, are and all rights and privileges of Master Tenant to any management fee(s) paid thereunder are hereby and shall at all times be subject and subordinate to the Security Instrument and the lien thereof, to all the terms, conditions and provisions of the Security Instrument and to each and every advance made or hereafter made under the Security Instrument, and to all renewals, modifications, supplements, consolidations, replacements, substitutions and extensions of the Security Instrument, the Note and the other Loan Documents and the rights, privileges, and powers of Lender thereunder, so that at all times the Security Instrument shall be and remain a lien on the Property prior and superior to the Master Lease for all purposes.

        (b)   Lender agrees that, if Lender exercises any of its rights under the Loan Documents such that Lender (or a Successor Owner) becomes the owner of the Property, including but not limited to an entry pursuant to the Security Instrument, a foreclosure of the Security Instrument, a power of sale under the Security Instrument or otherwise: (a) the Master Lease shall continue in full force and effect as a direct master lease between Lender (or such Successor Owner, as applicable) and Master Tenant, and (b) Lender (or such Successor Owner, as applicable) shall not disturb Master Tenant's right of quiet possession of the premises demised under the Master Lease so long as Master Tenant is not in default (subject to any available notice requirements and/or grace periods) under any term, covenant or condition of the Master Lease or this Agreement.

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        4.     Termination.     At such time as the Loan is paid in full and the Security Instrument is released or assigned of record, this Agreement and all of Lender's right, title and interest hereunder with respect to the Master Lease shall terminate.

        5.     Master Tenant Estoppel.     Master Tenant represents and warrants that (a) the Master Lease is in full force and effect and has not been modified, amended, supplemented and/or assigned by Master Tenant other than pursuant to this Agreement, (b) Owner is not in default under any of the terms, covenants or provisions of the Master Lease and Master Tenant does not know of any event which, but for the passage of time or the giving of notice or both, would constitute an event of default by Owner under the Master Lease, and (c) Master Tenant has not commenced any action or given or received any notice for the purpose of terminating the Master Lease prior to its expiration according to the terms of the Master Lease.

        6.     No Amendment to Master Lease.     Each of Owner and Master Tenant hereby agrees that it shall not modify, amend, supplement and/or assign the Master Lease without first obtaining the prior written consent of Lender. In addition, Master Tenant hereby agrees that, at all times following notification by Lender that an Event of Default has occurred under the Note, the Security Instrument and/or the other Loan Documents, Master Tenant shall not further sublet any portion of the Property demised to it under the Master Lease, and that it shall not modify, amend, supplement and/or permit the assignment of any existing sublease without first obtaining the prior written consent of Lender not to be unreasonably withheld or delayed.

        7.     Release from Liability.     In the event Lender exercises any rights pursuant to this Agreement, Owner hereby releases Lender and Master Tenant from any liability, costs, damages or other obligations of Lender or Master Tenant to Owner as a result of such exercise of rights except to the extent arising directly from Lender's gross negligence or willful misconduct.

        8.     Liability Continued.     If a Successor Owner shall succeed to the interest of Owner under the Master Lease, in no event shall Successor Owner have any liability under the Master Lease prior to the date Successor Owner shall succeed to the interest of Owner under the Master Tenant, nor any liability for claims, offsets or defenses which Master Tenant might have had against Lender as Owner under the Master Lease prior to the date Successor Owner shall succeed to the interest of Owner under the Master Lease.

        9.     Attornment by Master Tenant.     Owner and Master Tenant hereby agree that upon notification by Lender that it wishes to succeed to the interest of Owner due to the occurrence an Event of Default has occurred under the Note, the Security Instrument and/or the other Loan Documents, or following conveyance of title to the Property, to the Successor Owner, Master Tenant shall attorn to the Successor Owner and shall continue to perform all of Master Tenant's obligations under the terms of the Master Lease with respect to the Property in accordance with the terms of the Master Lease.

        10.     Notice and Opportunity to Cure.     

        (a)   In the event of a default by Owner in the performance or observance of any of the terms and conditions of the Master Lease, Master Tenant shall give a duplicate copy (herein referred to as the " First Notice ") of any notice to be delivered to Owner pursuant to the terms of the Master Lease to Lender in accordance with Section 17 of this Agreement. In addition, in the event that such default is not cured within the applicable cure period under the terms of the Master Lease, and Master Tenant intends to exercise its remedy of terminating the Master Lease, Master Tenant shall send a second notice (the " Second Notice ") to Lender, in accordance with Section 17 hereof, stating Master Tenant's intention to terminate the Master Lease. Unless otherwise required by applicable law, Master Tenant shall forebear from taking any action to terminate the Master Lease for a period of thirty (30) days after the service of the First Notice, and for an additional period of sixty (60) days after the service of the Second Notice (if such Second Notice is required, as set

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forth above) for a monetary event of default or a non-monetary default which is susceptible to being cured by the Lender and for an additional period of two hundred seventy (270) days after the service of the Second Notice for an event of default of a non-monetary nature which is not susceptible to being cured by the Lender.

        (b)   No notice given by Master Tenant to Owner shall be effective as a notice under the terms of the Master Lease unless the applicable duplicate notice to Lender which is required under subsection (a) of this Section 10 (either the First Notice or the Second Notice, as the case may be) is given to Lender in accordance with this Agreement. It is understood that any failure by Master Tenant to give such a duplicate notice (either the First Notice or the Second Notice, as the case may be) to Lender shall not be a default by Master Tenant either under this Agreement or under the Master Lease, but rather shall operate only to void the effectiveness of any such notice by Master Tenant to Owner under the terms of the Master Lease.

        (c)   Master Tenant agrees to accept performance by Lender with the same force and effect as if performed by Owner, in accordance with the provisions and within the cure periods prescribed in the Master Lease (except that Lender shall have such additional cure periods, not available to Owner, as are set forth in subsection (a) hereof).

        11.     Lender's Right to Terminate.     Notwithstanding anything contained in the Master Lease to the contrary, Lender, or Owner at Lender's direction pursuant to the Loan Documents, shall have the right to terminate the Master Lease upon, or at any time after, (a) Master Tenant shall become insolvent or a debtor in a bankruptcy proceeding, (b) an Event of Default shall have occurred and be then continuing under the Note, the Security Instrument and/or under the other Loan Documents, or (c) a default has occurred and is continuing under the Master Lease, in each case, by giving Master Lease thirty (30) days' prior written notice of such termination, in which event Master Tenant shall resign as Master Tenant of the Property effective upon the end of such thirty (30)-day period. Master Tenant agrees not to look to Lender for payment of any accrued but unpaid fees relating to the Property.

        12.     New Master Lease.     Master Tenant agrees that in the event that the Lender forecloses on the Property pursuant to its rights and remedies under the Loan Documents, upon completion of the Foreclosure, Master Tenant shall, if requested by Lender, Lender's nominee, or any Successor Owner, enter into a new master lease with the Lender, Lender's nominee or any such Successor Owner on the same terms and conditions of the then-existing Master Lease.

        13.     Assignment of Proceeds.     As further security for the Note, Owner has executed and delivered to Lender an assignment of leases and rents which is contained within the granting clause of the Security Instrument, assigning to Lender, among other things, all of Owner's right, title and interest in and to all of the revenues of the Property. Master Tenant acknowledges disclosure of the aforesaid assignment.

        14.     Further Assurances.     Master Tenant further agrees to (a) execute such affidavits and certificates as Lender shall reasonably require to further evidence the agreements contained herein, (b) on written request from Lender, furnish Lender with copies of such information as Owner is entitled to under the Master Lease, and (c) cooperate with Lender's representative in any inspection of all or any portion of the Property. Master Tenant hereby acknowledges that some, or all, permits, licenses and authorizations necessary for the use, operation and maintenance of the Property (the " Permits ") may be held by, or on behalf of, the Master Tenant. By executing this Agreement, Master Tenant (x) agrees that it is, or will be, holding or providing all such Permits for the benefit of Owner and (v) hereby agrees that as security for repayment of the Debt by Owner in accordance with the Security Instrument, to the extent permitted by applicable law, Master Tenant hereby grants to Lender a security interest in and to the Permits. Moreover, Master Tenant hereby agrees that, following the occurrence of an Event of Default, it will continue to hold such Permits for the benefit of Lender. Master Tenant agrees that upon termination of the Master Lease, Master Tenant shall (to the extent

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assignable and to the extent permitted by law) assign to Owner or to the new Master Tenant all of Master Tenant's interest in such Permits at Owner's or such new Master Tenant's expense.

        15.     Default.     The occurrence of any of the following shall constitute an "Event of Default" hereunder:

        (a)   If Owner or Master Tenant fails to make any payment due under this Agreement within five days of the due date therefor.

        (b)   If Owner or Master Tenant fails to perform any other term or condition of this Agreement, and such failure can be cured but continues for thirty (30) days after notice thereof from Lender to such party; provided , that if such failure can be cured but, despite reasonable diligence, not within such time, the time to cure shall be extended up to an additional sixty (60) days if such party has commenced and diligently pursues cure of the default.

        (d)   Any representation or warranty made by Owner or Master Tenant hereunder shall have been false or misleading in any material respect.

        (e)   If the Master Lease is modified, amended, supplemented and/or assigned without the prior written consent of Lender.

The occurrence of an "Event of Default" hereunder shall also constitute an automatic "Event of Default" under, and as defined in the Note, the Security Instrument and the other Loan Documents, and the occurrence of an "Event of Default" under and as defined in the Note, the Security Instrument, and/or under any of the other Loan Documents shall constitute an automatic Event of Default under this Agreement.

        16.     Governing Law.     THE LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED AND APPLICABLE FEDERAL LAW.

        17.     Notices.     All notices and other communications shall have been duly given and shall be effective (a) when delivered, (b) when transmitted via telecopy (or other facsimile device) to the number set forth below, (c) the day following the day on which the same has been delivered prepaid to a reputable national overnight air courier service, (d) the third (3 rd ) Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, or (e) the day a communication sent by registered or certified mail, postage prepaid, is not accepted, in each case to the respective party at the address set forth below, or at such other address as such party may specify by written notice to the other party hereto. No notice of change of address shall be effective except upon actual receipt. This Section 17 shall not be construed in any way to affect or impair any waiver of notice or demand provided in any Loan Document or to require giving of notice or demand to or upon any Person in any situation or for any reason. In addition to the foregoing, the Master Tenant, Lender and Owner may, from time to time, specify to the other party additional notice parties by providing to the other party written notice of the name, address, telephone number and telecopy number of any such

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additional notice party. Each such additional notice party shall be entitled to receive and/or give any notice required or permitted to be given under this Agreement:

Address for Owner:

 

6267 Carpinteria Avenue, LLC
c/o Venoco, Inc.
6267 Carpinteria Avenue
Carpinteria, California 93013
Attention: Harry C. Harper
Facsimile: (805) 745-5146


Address for Master Tenant:


 


Venoco, Inc.
6267 Carpinteria Avenue
Carpinteria, California 93013
Attention: Harry C. Harper
Facsimile: (805) 745-5146


Address for Lender:


 


German American Capital Corporation
60 Wall Street, 11th Floor
New York, New York 10005
Attention.: Sandy Vergano
Facsimile: (732) 578-3928

        18.     No Oral Change.     This Agreement, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Owner, Lender or Master Tenant, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought.

        19.     Successors and Assigns.     This Agreement shall be binding upon and inure to the benefit of Master Tenant, Owner and Lender and their respective successors and assigns forever. Moreover, the term "Lender", for the purposes of this Agreement, shall be deemed to include any nominee or designee appointed by Lender in connection with any Foreclosure and any Successor Owner to whom Master Tenant is required to attorn pursuant to Section 9 hereof.

        20.     Inapplicable Provisions.     If any term, covenant or condition of this Agreement is held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such provision.

        21.     Headings, etc.     The headings and captions of various paragraphs of this Agreement are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof.

        22.     Duplicate Originals, Counterparts.     This Agreement may be executed in any number of duplicate originals and each duplicate original shall be deemed to be an original. This Agreement may be executed in several counterparts, each of which counterparts shall be deemed an original instrument and all of which together shall constitute a single Agreement. The failure of any party hereto to execute this Agreement, or any counterpart hereof, shall not relieve the other signatories from their obligations hereunder.

        23.     Number and Gender.     Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa.

        24.     No Transfer.     Without the consent of Lender, Master Tenant shall not, except as expressly permitted in the Master Lease, sell, transfer, or assign any of Master Tenant's interest in the Master Lease.

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        25.     Miscellaneous.     Wherever pursuant to this Agreement it is provided that Owner shall pay any costs and expenses, such costs and expenses shall include, but not be limited to, legal fees and disbursements of Lender, whether retained fines, the reimbursement for the expenses of in-house staff or otherwise.

        26.     Survival of Agreement.     At such time as the Loan is paid in full the Security Instrument is released or assigned of record, this Agreement and all of Lender's right, title and interest hereunder with respect to the Master Lease shall terminate. Notwithstanding the foregoing, all provisions contained in this Agreement that pertain to the relationship of the Master Tenant to the Lender or the Lender's nominee in the event that the Lender or its nominee have succeeded to the interests of the Owner as "Owner" under the Master Lease, the terms of this Agreement shall survive until such time as the Lender or its nominee is no longer the "Owner" under the Master Lease.

[Signature Page Follows]

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        IN WITNESS WHEREOF the undersigned have executed this Agreement and Consent as of the date and year first written above.

 

 

OWNER:


 


 


6267 CARPINTERIA AVENUE, LLC,
a Delaware limited liability company


 


 


By:


Venoco, Inc.,
a Delaware corporation,
its Sole Member


 


 


By:


/s/  MICHAEL G. EDWARDS      


Name: Michael G. Edwards
Title: Vice President


 


 


MASTER TENANT:


 


 


VENOCO, INC.,
a Delaware corporation


 


 


By:


/s/  MICHAEL G. EDWARDS      


Name: Michael G. Edwards
Title: Vice President


 


 


LENDER:


 


 


GERMAN AMERICAN CAPITAL CORPORATION,
a Maryland corporation


 


 


By:


/s/  SANDY VERGANO      


Name: Sandy Vergano
Title: Vice President


 


 


By:


/s/  JMARTINI      


Name: Joanne Martini
Title: Authorized Signatory


STATE OF CALIFORNIA

 

)

 

 

)

COUNTY OF SANTA BARBARA

 

)

        On December 6, 2004, before me, Debra Lynn Hambleton, a Notary Public in and for said State, personally appeared Michael G. Edwards, personally known to me to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

        WITNESS my hand and official seal.

/s/  DEBRA LYNN HAMBLETON      


Notary Public

 

 


My Commission Expires: Mar. 7, 2008


[SEAL]


 


 

[NOTARIAL SEAL]

 

 


STATE OF CALIFORNIA

 

)

 

 

)

COUNTY OF SANTA BARBARA

 

)

        On December 6, 2004, before me, Debra Lynn Hambleton, a Notary Public in and for said State, personally appeared Michael G. Edwards, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

        WITNESS my hand and official seal.

/s/  DEBRA LYNN HAMBLETON      


Notary Public

 

 


My Commission Expires: Mar. 7, 2008


[SEAL]


 


 

[NOTARIAL SEAL]

 

 


AMENDMENT TO LEASE

        This AMENDMENT TO LEASE, dated as of December 8, 2004 (this " Amendment "), is made by and among 6267 CARPINTERIA AVENUE, LLC, a Delaware limited liability company (" Landlord "), and VENOCO, INC., a Delaware corporation (" Tenant ").

R E C I T A L S:

A.

Bermant Development Company (as predecessor in interest to Carpinteria Bluffs Associates, LLC (" Seller "), as landlord, and Benton Oil and Gas Company (as predecessor in interest to Tenant), as tenant, entered into that certain Building Lease, dated November 7, 1996 (as heretofore amended, supplemented or modified, the " Lease "), providing for the lease of certain premises more particularly described in the Lease (the " Premises ") and located at 6267 Carpinteria Avenue, Carpinteria, CA (the " Property ").

B.

Pursuant to that certain Purchase and Sale Agreement and Joint Escrow Instructions, dated as of September 30, 2004 (the " Purchase Agreement "), between Seller and Tenant, Seller has sold the Property to Landlord (the wholly-owned subsidiary of Tenant), and Landlord purchased the Property from Seller.

C.

In connection with the sale of the Property pursuant to the Purchase Agreement, the parties hereto now desire to make certain amendments to the Lease, all as provided for in this Amendment.

        NOW, THEREFORE, for good and valuable consideration, the adequacy and receipt of which is hereby acknowledged, the parties hereto agree as follows:

A G R E E M E N T:

        1.     DEFINED TERMS.     Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in the Lease. As used in this Amendment, " Effective Date " means December 8, 2004.

        2.     AMENDMENTS.     As of the Effective Date, Landlord and Tenant agree that the Lease is amended as follows:

        (a)     Annual Rent.     Annual rent under the Lease (excluding any additional rent due pursuant to Section 3.2 of the Lease) shall be $1,070,055 ($89,171.25 per month; $21.00 per square foot per year), subject to adjustment in accordance with the terms and conditions of the Lease.

        (b)     Definitions.      Section 3.4(a) of the Lease is hereby amended as follows:

        (i)    The definition of "Building Operating Expenses" shall be amended to include the following additional items:

        (A)  A property management fee of up to four percent (4%) of effective gross income derived from the Property by Landlord; and

        (B)  All of Landlord's actual administrative and overhead expenses.

        (ii)   The following clause is deleted from the end of the first paragraph of Section 3.4(a) : "and an amount equal to 12.5% of all such expenses to cover the Lessor's administrative and overhead expenses."

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        (c)     Rental Adjustment.      Section 3.5 of the Lease is hereby amended and restated in its entirety as follows:

        " 3.5    Rent Adjustment. Beginning on the fifth anniversary of the Rent Commencement Date and every five (5) years thereafter during the term of the Lease, annual rent shall be increased to an amount equal 110% of the annual rent for the immediately preceding five year period."

        (d)     Security Deposit.      Section 4 of the Lease is amended and restated in its entirety as follows:

        "4.     SECURITY DEPOSIT

        The security deposit under the Lease shall be an amount equal to one month's base rent."

        (e)     Term.      Section 5 of the Basic Lease Provisions is amended and restated such that the term of the Lease shall continue for fifteen (15) years after the Effective Date.

        (f)     Rent Commencement Date and Termination Date.      Section 6 of the Basic Lease Provisions is hereby amended such that the Rent Commencement Date shall be December 13, 2004 and the Termination Date shall be December 12, 2019.

        (g)     Damage or Destruction.      Section 8.3(b) of the Lease is amended and restated as follows:

        "(b) If the Lessor is obligated to repair the Premises because the repair can be completed within ninety (90) days or if the Lessor elects to repair the Premises as provided above, but does not commence such repair within one hundred twenty (120) days after the date of the casualty or does not diligently pursue such repair until completion, then, subject to any extension of up to another sixty (60) days for delay beyond the reasonable control of the Lessor, the Lessee may, at the Lessee's option, terminate this Lease by giving the Lessor written notice of the Lessee's election to terminate, in which event this Lease shall terminate thirty (30) days thereafter. If the Lessor is obligated to repair the Premises as a result of a Lessee's Notice and the conditions above are satisfied, there shall be no termination right on the part of the Lessee."

        (h)     Permitted Subletting.      Section 11.9 of the Lease (which section was added to the Lease pursuant to that certain First Amendment to Building Lease, dated as of May     , 2000) is hereby deleted in its entirety.

        (i)     References to Lease.     Upon the effectiveness of this Amendment, references in the Lease to "this Lease" or "the Lease" and similar references shall be deemed to be references to the Lease, as amended by this Amendment.

        3.     FURTHER ASSURANCES.     Each party hereto shall execute, acknowledge and deliver to the other parties all documents, and shall take all actions, reasonably required by such other parties from time to time to confirm or effect the matters set forth herein, or otherwise to carry out the purposes of this Amendment.

        4.     ATTORNEYS' FEES.     In the event that any litigation shall be commenced concerning this Amendment by any party hereto, the party prevailing in such litigation shall be entitled to recover, in addition to such other relief as may be granted, its reasonable costs and expenses, including, without limitation reasonable attorneys' fees and court costs, whether or not taxable, as awarded by a court of competent jurisdiction.

2


 

        5.     NOTICES.     All notices, demands, approvals and other communications provided for in this Amendment shall be in writing and be delivered to the appropriate party at its address as follows:

If to Landlord:

 

6267 Carpinteria Avenue, LLC
c/o Venoco, Inc.
6267 Carpinteria Avenue
Carpinteria, CA 93013
Attention: Harry C. Harper, Esq.


If to Tenant:


 


Venoco, Inc.
6267 Carpinteria Avenue
Carpinteria, CA 93013
Attention: Harry C. Harper, Esq.

        Addresses for notice may be changed, from time to time, by written notice to all other parties. All communications shall be effective when actually received; provided, however , that non-receipt of any communication as the result of a change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication.

        6.     NO OTHER PARTIES BENEFITED.     This Amendment is made for the purpose of setting forth certain rights and obligations of Landlord and Tenant, and no other person shall have any rights hereunder or by reason hereof as a third party beneficiary or otherwise.

        7.     MISCELLANEOUS.     This Amendment shall bind, and shall inure to the benefit of, the successors and assigns of the parties hereto. Except as expressly modified herein, the Lease shall continue in full force and effect without change. This Amendment may be executed in counterparts with the same force and effect as if the parties had executed one instrument, and each such counterpart shall constitute an original hereof. No provision of this Amendment that is held to be inoperative, unenforceable or invalid shall affect the remaining provisions, and to this end all provisions hereof are hereby declared to be severable. Time is of the essence of this Amendment. This Amendment shall be governed by the laws of the State of California.

[Remainder of page intentionally left blank.]

3


        IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written above.

 

 

LANDLORD:


 


 


6267 CARPINTERIA AVENUE, LLC,
a Delaware limited liability company


 


 


By:


Venoco, Inc.

 

 

Its:

Member


 


 


By:


/s/  TIMOTHY MARQUEZ      


 


 


 


Name:


Timothy Marquez


 


 


 


Title:


Chief Executive Officer


 


 


 


TENANT:


 


 


VENOCO, INC.,
a Delaware corporation


 


 


By:


/s/  TIMOTHY MARQUEZ      


 


 


 


Name:


Timothy Marquez


 


 


 


Title:


Chief Executive Officer


 

4


RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

 

 


Sheppard, Mullin, Richter & Hampton LLP
800 Anacapa Street
Santa Barbara, CA 93101
Attention: James R. Haslem, Esq.


 


 

 

 


 

 

 

(Space above this line for Recorder's use only.)

ASSIGNMENT AND ASSUMPTION OF LEASES

         THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this " Assignment ") is made and entered info as of December 8, 2004 (" Effective Date "), by and among CARPINTERIA BLUFFS ASSOCIATES, LLC, a California limited liability company (" Assignor ") and 6267 CARPINTERIA AVENUE, LLC, a Delaware limited liability company (" Assignee "), with reference to the following facts:


RECITALS

A.

Pursuant to that certain Purchase and Sale Agreement and Joint Escrow Instructions dated September 30, 2004 (" Purchase Agreement ") between Assignor and Assignee, Assignor agreed to sell to Assignee, and Assignee agreed to purchase from Assignor, certain real property located in the City of Carpinteria, County of Santa Barbara, State of California, and more particularly described in Exhibit A attached hereto (the " Property "), upon the terms and subject to the conditions set forth in the Purchase Agreement.

B.

Assignor and/or Assignor's predecessors entered into the Leases described in Exhibit B attached hereto (individually, " Lease " and collectively, " Leases ").

C.

Pursuant to the Purchase Agreement, the parties are obligated to enter this Assignment.

         NOW, THEREFORE , the parties to this Assignment, intending to be legally bound, do hereby covenant and agree as follows:

        1.     Assignment of Leases.     Effective as of the Effective Date, Assignor transfers and assigns to Assignee all of Assignor's right, title and interest and all of Assignor's duties and obligations as the Landlord under the Leases that arise or accrue after the Effective Date.

        2.     Acceptance of Assignment.     Effective as the Effective Date, Assignee accepts the assignment of all of Assignor's right, title and interest and assumes all of Assignor's duties and obligations as the Landlord under the Leases arising or accruing after the Effective Date.

        3.     Indemnification.     

        3.1     Indemnification by Assignor.     Assignor shall defend, indemnify, protect and hold harmless Assignee and its members, managers, officers, directors, employees, agents, representatives, affiliates, successors and assigns, from and against any and all demands, claims, actions, causes of action, damages, losses, fines, penalties, liabilities, obligations, costs and expenses, including, without limitation, attorneys' fees, arising out of, resulting from or relating to any act, event or occurrence relating to the Leases that accrued or arose prior to the Effective Date, including, without limitation, Assignor's performance or failure to perform any obligation, covenant, or condition under any of the Leases.

        3.2     Indemnification by Assignee.     Assignee shall defend, indemnify, protect and hold harmless Assignor and its partners, employees, agents, representatives, affiliates successors and assigns from

1


 

and against any and all demands, claims, actions, causes of action, damages, losses, fines, penalties, liabilities, obligations, costs and expenses, including, without limitation, attorneys' fees, arising out of, resulting from or relating to any act, event or occurrence relating to the Leases that accrues or arises after the Effective Date, including, without limitation, Assignee's performance or failure to perform any obligation, covenant, or condition under any of the Leases.

        4.     Attorneys' Fees.     In the event of any action or proceeding to enforce or construe any of the provisions of this Assignment, the prevailing party in any such action or proceeding shall be entitled to reasonable attorneys' fees and costs, whether or not such action or proceeding proceeds to final judgment.

        5.     Further Assurances.     Each of the parties shall, from time to time at the request of the other party, execute and deliver such other instruments and documents and shall take such other actions as may be required to consummate the transaction contemplated by this Assignment and/or carry out the purposes and terms of this Assignment.

        6.     Governing Law.     This Assignment shall be construed, interpreted and applied in accordance with the laws of the State of California.

        7.     Counterparts.     This Assignment may be executed in any number of counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

2


         IN WITNESS WHEREOF , the parties hereto have executed this Assignment as of the date first set forth above.

 

 

ASSIGNOR:


 


 


CARPINTERIA BLUFFS ASSOCIATES, LLC,
a California limned liability company


 


 


By:


/s/  JEFF C. BERMANT      


 


 


 


Name:


Jeffrey C. Bermant


 


 


 


Title:


President


 


 


 


ASSIGNEE:


 


 


6267 CARPINTERIA AVENUE, LLC,
a Delaware limited liability company


 


 


By:


Venoco, Inc.

 

 

Its:

Member


 


 


By:


/s/  TIMOTHY MARQUEZ      


 


 


 


Name:


Timothy Marquez


 


 


 


Title:


Chief Executive Officer


 

3


STATE OF

 

)

 

 

)ss.

COUNTY OF

 

)

        On December 7, 2004, before me, Elaine M. Georges, Notary Public, personally appeared Jeffrey C. Bermant, personally known to me OR proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

Witness my hand and official seal.
[NOTARY SEAL]

 

 

ELAINE M. GEORGES


(SIGNATURE OF NOTARY)

4


STATE OF CALIFORNIA

 

)

 

 

)

COUNTY OF SANTA BARBARA

 

)

        On December 3, 2004, before me, Debra Lynn Hambleton, a Notary Public in and for said State, personally appear Timothy Marquez, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his authorized capacity, and that by his signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument.

        WITNESS my hand and official seal.

/s/  DEBRA LYNN HAMBLETON      


Notary Public

 

 


My Commission Expires: Mar. 7, 2008


[SEAL]


 


 

[NOTARIAL SEAL]

 

 

5


ASSIGNMENT AND ASSUMPTION OF LEASE

         THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the "Assignment") is between BENTON OIL AND GAS COMPANY , a Delaware corporation (the "Assignor"), and VENOCO, INC. , a Delaware corporation (the "Assignee") and is made with reference to the following facts:

RECITALS:

        A.    Assignor is the original lessee named in that certain Building Lease, a copy of which is attached hereto as Exhibit A, pursuant to which Bermant Development Company ("BDC") is the lessor (the "Lease") for the premises located at 6267 Carpinteria Avenue, Carpinteria, California, (the "Premises" or the "Leased Premises");

        B.    BDC subsequently assigned its interest in the Lease to Carpinteria Bluffs Associates, LLC, a California limited liability company (the "Lessor");

        C.    Assignor also owns an eight percent (8%) membership interest in Lessor; and,

        D.    Assignor desires to assign the Lease and the Economic Interest (as defined in Lessor's Operating Agreement dated as of June 20, 1997) (the "Economic Interest") pursuant to that certain Assignment of Economic Interest between Assignor and Assignee of even date herewith (the "Assignment of Economic Interest"), and Assignee desires to acquire the rights to the Leased Premises under the Lease and the Economic Interest in accordance with the terms set forth in this Assignment; provided , however , that as a contingency to the assignment of the Lease and the Economic Interest, both Lessor and Lessor's lender, CapMark Services, L.P. ("Lender") must consent to the assignment and provided , further , that such consent shall be deemed to be a consent to the assignment only and not to the terms and conditions of this Assignment or the Assignment of Economic Interest.

AGREEMENT:

         NOW, THEREFORE , the parties to this Assignment, intending to be legally bound, do hereby covenant and agree as follows:

        1.     ASSIGNMENT OF LEASE.     Subject to the terms and conditions stated herein, Assignor hereby transfers and assigns to Assignee effective as of the Effective Date set forth in Section 6, below, the entire right, title and interest of Assignor in and to the Lease, including the entire interest of Assignor in any prepaid rents made by Lessee in accordance with the provisions of the Lease.

        2.     ACCEPTANCE OF ASSIGNMENT.     By its execution of this Agreement, Assignee (a) accepts the assignment of such Lease and assumes all of the duties and obligations of the Assignor named in such Lease, and (b) agrees that, from and after the effective date of this Assignment, Assignee shall perform and be bound by -all of the terms, covenants and conditions of the Assignee under the Lease, to the same extent as though Assignee were the original lessee under the Lease.

        3.     ADDITIONAL AGREEMENTS.     In connection with this Assignment, the patties further agree as follows:

        3.1     Security Deposit.     As of the Effective Date, Assignee shall deposit the sum of One Hundred Forty Seven Thousand ($147,000) with Lessor as a security deposit (the "Deposit") for Assignee's performance under the Lease as provided in Section 4 thereof. Such Deposit shall be in lieu of, and a replacement for, the letter of credit that Assignor issued to Lessor pursuant to Section 4 of the Lease which letter of credit Lessor shall return to Assignor along with written verification of its cancellation upon receipt of the Deposit.

        3.2     QAD Sublease.     Assignee acknowledges that QAD, Inc. ("Subtenant") is a subtenant pursuant to an Amended and Restated Sublease between Assignor and Subtenant effective as of

1


 

April 15, 2000 (the "Sublease"), a copy of which is attached hereto as Exhibit B, and that as of the Effective Date, Assignee shall assume the position of Sublessor under the Sublease. Any prepaid rent shall be prorated through the Effective Date and any prepaid security deposit held by Assignor shall be delivered to Assignee. Furthermore, Assignee acknowledges certain parking spaces in the Premises are allocated to QAD and Assignee agrees that such allocation shall continue.

        4.     WARRANTIES AND REPRESENTATIONS.     Assignor warrants and represents to Assignee that:

        4.1     Right to Convey.     Assignor is the true and lawful owner of the leasehold estate being conveyed hereunder.

        4.2     Required Consents.     Subject to obtaining the consent of the Lessor and Lender as called for by Article 11.4 of the Lease, Assignor has full power and authority to transfer the Lease as provided herein without the consent of any other person.

        4.3     No Encumbrances.     The leasehold estate is not subject to any lien, encumbrance, security interest or other right, claim or interest in favor of any third person.

        4.4     Absence of Default.     On the Effective Date, there will be no uncured defaults under the Lease.

        5.     INDEMNIFICATION     

        5.1     Indemnification by Assignee.     Assignee shall indemnify, defend and hold Assignor, its successors and assigns, free and harmless from and against any loss, liability, damage, claim, cost or expense, including attorneys' fees, arising from Assignee's performance or failure to perform any obligation, covenant or condition assumed by it and which arises after the Effective Date of this Assignment.

        5.2     Indemnification by Assignor.     Assignor shall indemnify, defend and hold Assignee, its successors and assigns, free and harmless from and against any loss, liability, damage, claim, cost or expense, including attorneys' fees, arising from any default in the performance of the Assignor's obligations, covenants and conditions under the Lease existing prior to the Effective Date of this Assignment.

        6.     EFFECTIVE DATE.     The effective date of this Assignment and Assumption of Lease (the "Effective Date") shall be the date on which all of the following conditions have been satisfied:

         6.1     Lessor has received a release fee in good funds in the amount of Two Hundred Thousand Dollars ($200,000) from Assignor; and

         6.2     Assignor and Assignee shall have received the following:

         6.2.1     Consent from Lessor to this Assignment of Lease.

         6.2.2     Consent from Lessor to the Assignment of the Economic Interest.

         6.2.3     Consent from Lender to this Assignment of Lease.

         6.2.4     Consent from Lender to the Assignment of the Economic Interest.

         6.3     Assignee has received all payments called for under that certain Agreement for the Assignment and Assumption of Lease and Membership Interest between Assignor and Assignee, dated November 16, 2001, as amended.

        7.     NOTICES.     Any notices permitted or required hereunder shall be in writing and shall be deemed to have been given (a) on the date of delivery if delivery of a legible copy was made personally

2


or by overnight courier service or by facsimile transmission, or (b) on the second business day after the date on which mailed by registered or certified mail, return receipt requested, addressed to the party for whom intended at the address set forth on the signature page of this Agreement or such other address, notice of which is given as provided herein.

        8.     EXPIRATION DATE.     This Assignment shall be effective as of the Effective Date as described in Section 6, above; provided, however that in no event shall the Effective Date occur prior to December 1, 2001. In addition, if the Effective Date has not occurred prior to December 31, 2001, this Assignment shall be void and of no further effect.

        9.     COMPLETE AGREEMENT.     This written instrument, together with any exhibits or appendices referred to herein, constitutes the entire understanding of the parties with respect to the matters that are the subject of this agreement, and no representations, warranties or covenants not included in this Agreement may be relied upon by any party hereto.

         IN WITNESS WHEREOF , the parties hereto have executed this Assignment and Assumption of Leases on the date(s) set forth below.

ASSIGNOR:

 

ASSIGNEE:


Date:


 


                        


 


 


Date:


 


12/28/01


 


BENTON OIL AND GAS COMPANY,
a Delaware corporation


 


VENOCO, INC.,
a Delaware corporation


By


 


/s/  STEVEN W. THOLEN      


 


 


By


 


/s/  WILLIAM LEE WINELAND      


 

Name:

 

Steven W. Tholen

 

Name:

 

William Lee Wineland

Title:

 

SUP and CFO

 

Title:

 

CFO

3




FIRST AMENDMENT
TO
BUILDING LEASE

         THIS FIRST AMENDMENT TO BUILDING LEASE is entered into by and between BENTON OIL AND GAS COMPANY , a Delaware corporation ("Benton") and CARPINTERIA BLUFFS ASSOCLATES, LLC , a California limited liability company ("Carpinteria Bluffs"), effective as of May    , 2000, with reference to the following facts:

RECITALS :

        A.    Benton and Bermant Development Company ("BDC") entered into that certain Building Lease dated for reference November 7, 1996 (the "Lease");

        B.    Carpinteria Bluffs is the successor in interest to BDC and the owner of the property described in the Lease.

        C.    Benton and Carpinteria Bluffs desire to modify the Lease in the manner provided herein.

AGREEMENTS :

         NOW, THEREFORE , in consideration of the mutual agreements contained herein, the parties hereby agree as follows:

        1.     SUBLETTING AND TRANSFER CONSIDERATION     

        Section 11.9 of the Original Lease is hereby amended in its entirety to read as follows:

11.9

Permitted Subletting .    Notwithstanding any of the provisions in this Lease to the contrary, during the first seven (7) years following the Term Commencement Date, provided that it is not in default under the terms of this Lease, the original Lessee shall have the right, without the Lessor's consent and without payment of any Transfer Consideration, to sublease portions of the Premises to one or more subtenants provided that (i) the total aggregate space subleased to all subtenants at any one time shall not exceed one-half of the Premises and (ii) the Lessee shall remain primarily liable for the performance of all of the terms and conditions of this Lease. If during the first seven (7) years following the Term Commencement Date, the original Lessee enters into any sublease or combination of subleases with Lessor's consent which aggregate more than 50% of the Premises, but no more than 60% of the Premises, commencing on the date of the sublease which causes the subleased portion of the Premises to exceed 50%, Lessee shall pay Lessor 25% of the Transfer Consideration with respect to the entire area subleased under all subleases.

If during the first seven (7) years following the Term Commencement Date, the original Lessee enters into any sublease or combination of subleases with Lessor's consent which aggregate more than 60% of the Premises, commencing on the date of the sublease which causes the subleased portion of the Premises to exceed 60%, Lessee shall pay Lessor 50% of the Transfer Consideration with respect to the entire area subleased under all subleases. Commencing on the seventh anniversary of the Term Commencement Date, Lessee shall pay Lessor 50% of the Transfer Consideration paid or received after such anniversary date with respect to any subleases entered into during the first seven (7) years following the Term Commencement Date whose terms extend beyond the seventh anniversary of the Term Commencement Date. Any sublease of any portion of the Premises entered into after the seventh anniversary of the Term Commencement Date

1


shall be subject to the requirement that the prior written consent of the Lessor be obtained as provided herein, and Lessee shall pay Lessor 50% of the Transfer Consideration with respect to such sublease and the entire area subleased under all other subleases.

        2.     FULL FORCE AND EFFECT     

        Other than as expressly modified hereby, the Lease remains in full force and effect.

         IN WITNESS WHEREOF , the undersigned have executed this First Amendment to Building Lease as of the date set forth above.

" BENTON "

 

" CARPINTERIA BLUFFS "


BENTON OIL AND GAS COMPANY ,
a Delaware corporation


 


CARPINTERIA BLUFFS ASSOCIATES, LLC ,
a California corporation


By


 


/s/  MICHAEL B. WRAY      


Michael B. Wray,
Office of the Chief Executive


 


By:


 


BERMANT DEVELOPMENT COMPANY, a California corporation

 

 

 

 

By

 

/s/  JEFF C. BERMANT      


Jeffrey C. Bermant, President

2


ASSIGNMENT OF BUILDING LEASE
AND
DEVELOPMENT AND CONSTRUCTION AGREEMENT

        FOR VALUE RECEIVED, BERMANT DEVELOPMENT COMPANY hereby assigns and transfers to CARPINTERIA BLUFFS ASSOCIATES, LLC , a California limited liability company, all of its right, title, and interest in and to the following documents and agreements:

1.

Development and Construction Agreement between Benton Oil and Gas Company and Bermant Development Company dated for reference November 7, 1996, as amended by a First Amendment to Development and Construction Agreement effective as of November 7, 1996 (collectively the "Agreement").

2.

Building Lease between Bermant Development Company, as Lessor, and Benton Oil and Gas company, as Lessee, dated November 7, 1996, relating to the premises described as 6267 Carpinteria Avenue, Carpinteria, California (the "Lease").



    Dated: June 19, 1997.

 

 

 


 


 


BERMANT DEVELOPMENT COMPANY


 


 


By:


/s/  JEFF C. BERMANT      


Jeffrey C. Bermant


ACCEPTANCE OF ASSIGNMENT

        IN CONSIDERATION of the assignment set forth above, CARPINTERIA BLUFFS ASSOCIATES, LLC , a California limited liability company, hereby accepts the assignment described above and agrees to keep and perform all of the covenants and agreements of Bermant Development Company under the Agreement and the Lease from and after the date of this Assignment. The undersigned agrees to indemnify, defend, and hold harmless Bermant Development Company from all costs, expenses, claims, suits, actions and liabilities under the Agreement and the Lease arising after the date of this Assignment.

    Dated: June 19, 1997.

 

 

 


 


 


CARPINTERIA BLUFFS ASSOCIATES,
LLC, a California limited liability company


 


 


By:


/s/  DALE J. MARQUIS      


Dale J. Marquis,
Vice President


 


 


By:


/s/  ARTHUR F. BURKE      


Arthur F. Burke,
Secretary

3


Net, Net, Net
BUILDING LEASE

         THIS BUILDING LEASE dated November 7, 1996, for reference purposes only is made between BERMANT DEVELOPMENT COMPANY, as Lessor, and BENTON OIL AND GAS COMPANY, as Lessee.

BASIC LEASE PROVISIONS

1.

 

Premises:

 

As depicted on Exhibit A.


 


 


Building Name:


 


Benton Oil and Gas Building


 


 


Premises Address:


 


6267 Carpinteria Avenue
Carpinteria, California 93013


 


 


Use of Premises:


 


General and executive offices


2.


 


Leased Area:


 


As depicted on Exhibit A


 


 


Square Feet:


 


See Addendum


3.


 


Initial Annual Rent:


 


See Addendum. ($1.45 per square foot per month)


 


 


Rental Deposit:


 


See Addendum


4.


 


Initial Monthly Rental Installments:


 


See Addendum


5.


 


Term:


 


Fifteen (15) years


6.


 


Rent Commencement Date:


 


Substantial completion of the Tenant Improvements as provided in Paragraph 2.1. To be specified in Addendum.


 


 


Term Commencement Date:


 


First day of the month succeeding substantial completion of Tenant Improvements. To be specified in Addendum.


 


 


Termination Date:


 


Fifteen (15) years after Term Commencement Date.


7.


 


Security Deposit:


 


As described in Paragraph 4.


8.


 


Broker(s):


 


Grubb & Ellis, Inc.


9.


 


Parking Spaces Provided:


 


All available parking at the Project, which shall be at least three (3) spaces for each 1,000 square feet of usable space leased, subject to City of Carpinteria requirements.


10.


 


Submission of this instrument for examination or signature by the Lessee does not constitute a reservation of or option for space and it is not effective as a lease or otherwise until execution by both the Lessee and the Lessor.

4


         IN WITNESS WHEREOF , the parties hereto have executed this Building Lease, consisting of the foregoing Basic Lease Provisions, Articles 1 through 18 which follow, and any attached Exhibits or Addendums, as of the date first above written.

 

 

LESSOR:


 


 


BERMANT DEVELOPMENT COMPANY


 


 


By /s/ [illegible]


 


 


 


Address:


 


 


130 Cremona Drive, Suite D
Goleta, CA 93117-3075


 


 


LESSEE:


 


 


BENTON OIL AND GAS COMPANY, INC.,
a Delaware corporation


 


 


By:

 

 

Name and Title:


 


 


Address prior to Rent Commencement Date:


 


 


    1145 Eugenia Place, Suite 200
    Carpinteria, CA 93013


 


 


Address following Rent Commencement Date:


 


 


    6267 Carpinteria Avenue
    Carpinteria, CA 93013

5


        1.     LEASE OF PREMISES     

        Concurrently with the execution of this Lease, Lessor and Lessee have entered into a Development and Construction Agreement ("the Development Agreement") which provides for the construction by the Lessor of a building at 6267 Carpinteria Avenue, Carpinteria, California (the "Premises"), which will be leased entirely by Lessee. Upon completion of the demising walls in the building, the parties shall measure the Premises using the American National Standard ANSI Z65.1-1996 as published by the Building Owners and Managers Association International to determine the precise rentable area of the Premises. Within ten (10) days following the completion of such measurements, Lessor and Lessee shall complete and initial the Addendum attached hereto stating the total number of square feet in the Premises, the Initial Monthly Rental Installments, and the Initial Annual Rent.

        The Lessor hereby leases to the Lessee and the Lessee leases from the Lessor for the term, at the rental, and upon all of the conditions set forth in this Lease, the Premises identified in Item 1 of the Basic Lease Provisions. The approximate anticipated configuration and the location of the building and parking areas is indicated on Exhibit "B". The size, location and function of the buildings and related structures depicted here are approximate. Subject to the terms of the Development Agreement, the configuration of the development, the design, size, function and location of all other improvements, are subject to change for any reason deemed sufficient by Lessor. The Lessor reserves the right to alter the configuration of the Project to construct additional improvements thereon, to withdraw areas therefrom from time to time and alter the configuration of the associated parking areas, provided that the number of parking spaces intended for the Lessee's use shall not thereby be materially diminished. The Lessee shall be allocated the number of parking spaces set forth in Item 9 of the Basic Lease Provisions. Nothing in this Lease shall cause the Lessor in any way to be construed as an employer, employee, fiduciary, a partner, a joint venturer or otherwise associated in any way with the Lessee in the operation of the Premises, or to subject the Lessor to any obligation, loss, charge or expense connection with or arising from the Lessee's operation or use of the Premises.

        The parties intend this Lease to be a net, net, net Lease with the Lessee paying its all real property taxes, insurance and certain operating costs for the Premises and the land on which it is situated. Lessee shall have no right to reduce or offset the rent payable hereunder for any reason.

        2.     TERM     

        2.1     Commencement of Term     

        (a)   The term of this Lease shall commence upon the Term Commencement Date. Not less than ten (10) days prior to the date of scheduled substantial completion of the Tenant Improvements, Lessor and Lessee shall complete and initial the Addendum attached hereto specifying the term and rent commencement dates. The Lessor shall deliver possession of the Premises upon substantial completion of the Tenant Improvements. The Lease will end upon the Termination Date as provided in item 7 of the Basic Lease Provisions unless sooner terminated pursuant to any provision hereof.

        2.2     Delay in Commencement.     Except as provided in the Development Agreement, if the Lessor cannot deliver possession of the Premises to the Lessee on the Rent Commencement Date, the Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or the obligations of the Lessee hereunder or extend the term hereof provided, however, that the Lessee shall not be obligated to pay rent until delivery of the Premises has occurred in accordance with the terms of the Development Agreement.

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        3.     RENT     

        3.1     Initial Annual Rent.     The Lessee shall pay the Initial Monthly Rental for the first month of the term of the Lease on the Rent Commencement Date. Commencing on the month immediately following the Rent Commencement Date, the Lessee shall pay to the Lessor in advance on the first day of each month, the Initial Monthly Rental installments for the remaining eleven (11) months in the first year of the term. In the event that the Rent Commencement Date is other than the first day of a month the rent for the second month of the term of this Lease shall be prorated.

        In the event that a portion of the Tenant Improvement Allowance to be provided by the Lessor, as described in the Development Agreement, remains unused after completion of the Tenant Improvements and the payment of all of the Tenant's Improvement Expenses, as defined in the Development Agreement, the rent payable by Lessee under the terms of this Lease for the initial term shall be reduced by the unused portion of the Tenant Improvement Allowance, multiplied by twelve percent (12%), ratably spread over the initial term. By way of example, if the unused portion of the Tenant Improvement Allowance was One Hundred Thousand Dollars, the rent reduction would be calculated as follows:

Reduction in annual rent @ 12%

 

(12,000.00

)

 


Reduction in monthly rent


 


(1,000.00


)


 


Rent per the lease at $1.45 per sq. foot assuming 50,000 sq. feet (monthly)


 


72,500.00


 


1.45 / sq.ft


Adjusted Rent if actual TI costs are $100,000 less than the allowance


 


71,500.00


 


1.43 / sq.ft.

        3.2     Additional Rent.     Throughout the initial and any renewal term of the Lease, the Lessee shall reimburse the Lessor, as additional rent, in the manner and at the times provided, for all Building Operating Expenses (as hereinafter defined) incurred by the Lessor.

        3.3     No Reduction or Offset.     All Rent due under this Lease shall be payable without deduction, abatement or offset.

        3.4     Definitions:     For purposes of this Article 3:

        (a)   Building Operating Expenses shall mean the sum of all expenses incurred by the Lessor in connection with the operation, repair and maintenance of the Premises and the project, including, but not limited to, heating and air conditioning; all real property taxes (as hereinafter defined) imposed upon or with respect to the Premises and related improvements; all fire and extended coverage, earthquake, loss of rents, vandalism, malicious mischief, public liability and other insurance covering the Premises and the project and losses suffered which fall below the insurance deductible (in amounts that are commercially reasonable at the time); utilities; materials and supplies; salaries, wages and other expenses incurred with respect to the operation, repair and maintenance of the Premises and the project, the cost of maintaining, repairing, and replacing all improvements constituting a portion of the Premises; expenses incurred by the Lessor in connection with the operation and maintenance of driveways, landscaping, walkways, plazas, parking facilities, and perimeter property including, but not limited to all items described in Section 6.1 hereof except as expressly excluded in that Section; gardening, landscaping, repaving, repainting and trash removal; depreciation of equipment used in such maintenance; security and fire protection; utilities; amortization of capital investments for improvements which are designed to reduce operating costs, improve operations or comply with governmental conservation or safety programs over such reasonable period as the Lessor shall determine (together with interest at five

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(5) percentage points above the discount rate of the Federal Reserve Bank of San Francisco on the unamortized amount excluding improvements that relate exclusively to the roof structure, foundation or exterior and load-bearing walls); and an amount equal to 12.5% of all such expenses to cover the Lessor's administrative and overhead expenses.

        Notwithstanding anything to the contrary contained in the Lease, Building Operating Expenses shall not include (i) expenditures classified as capital improvements in accordance with generally accepted accounting principles, (ii) any penalty or charge for late payment of any operating cost by Lessor, (iii) amounts expended to correct construction defects in the Premises or to correct faulty workmanship.

        (b)   Real Property Taxes shall mean all real and personal property taxes and assessments incurred during any calendar year, including, but not limited to: special and extraordinary assessments, meter and sewer rates and charges, occupancy taxes or similar taxes imposed on or with respect to the real property or personal property used in connection with the Premises, whether or not imposed on or measured by the rent payable by the Lessee, and other governmental levies and charges, general and special, ordinary and extraordinary, unforeseen as well as foreseen, of any kind and nature whatsoever relating to


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