Exhibit 10.2

 

STATE OF HAWAII

 

NATURAL ENERGY LABORATORY OF HAWAII AUTHORITY

 

 

SUBLEASE NO. K-26

between

NATURAL ENERGY LABORATORY OF HAWAII AUTHORITY

 

in relation with the State Department

of Business, Economic Development and

Tourism

 

and

 

CELLANA LLC

 

a Delaware corporation

covering

 

6.216 acres of land at

Keahole, North Kona, Hawaii

 

•

 

 

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TABLE OF CONTENTS

 

TERM OF SUBLEASE 2     RENTAL 2 1. Rental fees 2 2. Reopening of monthly rental
fees 6 3. Determination of fixed rental fees and percentage rent upon reopening
of the annual rent 6 4. Business records 8 5. Royalty fee 9 6. Additional rent 9
      RESERVATIONS 9 7. Minerals and waters 9 8. Prehistoric and historic
remains 10 9. Ownership of fixed improvements 10       AGREEMENTS & COVENANTS
BETWEEN PARTIES 10 10. Payment of rent 10 11. Taxes, assessments, etc 10 12.
Seawater, brackish water, potable water, and groundwater 10 13. Utilities 11 14.
Equipment and apparatus 11 15. Seawater systems and utility connections 12 16.
Operations 12 17. Seawater discharges 12 18. Sublessee responsibility 13 19.
Covenant against discrimination 13 20. Sanitation, etc. 13 21. Waste and
unlawful, improper or offensive use of subleased premises 13 22. Compliance with
laws 14 23. Inspection of subleased premises 14 24. Improvements 14 25. Repairs
to improvements 14 26. Non-adverse effects 14 27. Non-obstruction reservations
14 28. Liens 15 29. Assignments 15 30. Subletting 16 31. Indemnity 16 32. Costs
of litigation 16 33. Liability insurance 17 34. Bond, performance 18 35.
Sublessor's lien 18 36. Mortgage 18 37. Breach and termination 19

 

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38.

Right of holder of record of a security interest

 20

39.

Condemnation

 21

40.

Right to enter

 22

41.

Inspection by prospective bidders

 22

42.

Acceptance of rent not a waiver

 22

43.

Ingress and egress

 23

44.

Extension of time

 23

45.

Justification of sureties

 23

46.

Waiver, modification, reimposition of bond and liability insurance provisions

 23

47.

Suspension of operations

 24

48.

Quiet enjoyment

 24

49.

Surrender

 24

50.

Non-warranty

 24

51.

Hazardous materials

 24

52.

Level one (1) hazardous waste evaluation

 25

53.

Fire and Extended Coverage Insurance

 25

54.

Withdrawal

 28

55.

Governmental permits

 28

56.

Notices

 28

57.

Bond, improvement

 28

58.

No party deemed drafter: Headings

29

59.

Superseding agreement

 29

60.

Modification of sublease

29

61.

Net Agreement

 29

62.

"As-Is" Condition

 29

63.

Accord and Satisfaction

 29

64.

Entire Agreement

 29

65.

Governing law

 30

66.

Exhibits - incorporated in Sublease

 30

67.

Partial invalidity

 30

68.

Time is of the essence

 30

69.

No partnership

 30

70.

Authority

 30

71.

No waiver

 30

72.

Survey monuments

30

73.

Archaeological sites

 30

74.

Environmental regulations

 31

     

SPEC TERMS AND CONDITIONS

31

76.

Design standards

 31

77.

Administrative rules

 31

78.

Restoration of subleased land

 31

79.

Sublease subject to master lease

 32

      DEFINITIONS

32

 

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SIGNATURE PAGE 33     ACKNOWLEDGMENT PAGE 35

 

 

EXHIBIT "A"

Project Proposal

 

 

EXHIBIT "B''

Site Survey Description

 

 

EXHIBIT "C"

Site Survey Map

 

 

EXHIBIT "D"

Federal Aviation Regulations, Part 77

 

 

EXHIBIT "E"

Assignment of Lease Evaluation Policy

   

EXHIBIT "F"

Master Lease

   

EXHIBIT "G"

UCC-1 Form

   

EXHIBIT "H"

NELHA Aquatic Species Health Management Program

 

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STATE OF HAWAII

THE NATURAL ENERGY LABORATORY OF HAWAII AUTHORITY

 

SUBLEASE NO. K-26

 

THIS INDENTURE OF Sublease, made this 3rd. day of January 2008, but effective as
of the first day of the sublease term, December 15th 2007, and superseding all
prior agreements related to the subject property, by and between the NATURAL
ENERGY LABORATORY OF HAWAII AUTHORITY (NELHA), a body corporate and politic and
an instrumentality and agency of the State of Hawaii organized pursuant to
Hawaii Revised Statutes, Chapter 227D, as amended, hereinafter referred to as
the "Sublessor", and whose business and post office address is 73-4460 Queen
Kaahumanu Hwy., #101, Kailua-Kona, Hawaii 96740, and Cellana LLC, a limited
liability corporation, under the laws of the State of Delaware, hereinafter
referred to as "Sublessee", whose business and mailing address is 910 Louisiana
St., Houston TX 77002.

 

 

WITNESSETH:

 

 

WHEREAS, the Sublessee desires to sublease certain NELHA leased land near Kona
International Airport at Keahole, North Kona, Island of Hawaii, only for the
purposes specified in the Sublessee's project proposal attached hereto as
Exhibit "A" and incorporated by reference herein;

 

WHEREAS, the Sublessor recognizes Sublessee's benefits to the public and
Sublessor;

 

WHEREAS, NELHA is the Lessee, and the Board of Land and Natural Resources is the
Lessor under that certain master lease No. S-5619; and

 

WHEREAS, at a meeting of the Board of Land and Natural Resources held on June
22, 2001, the Board authorized its chairperson to review and approve on behalf
of the Board requests made by NELHA to enter into subleases and related matters;

 

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WHEREAS, at a meeting of the Board of Land and Natural Resources held on June
23, 2006 and October 27, 2006, has approved the amendment to General Sublease
S-5619 for the purposes of waiving the lease requirement to obtain prior
approvals for consents to its subleases, from the Board of Land and Natural
Resources, its Chairperson, or its authorized representative.

 

NOW, THEREFORE, in consideration of the mutual promises provided herein, the
parties hereto mutually agree as follows:

 

The Sublessor for and in consideration of the rent to be paid and of the terms,
covenants, and conditions herein contained, all on the part of the Sublessee to
be kept, observed, and performed, does hereby sublease unto the Sublessee, and
the Sublessee does hereby sublease from the Sublessor the subleased premises
identified as:

 

Lease Parcel J-1 being a portion of the NELHA site at Kalaoa 1", North Kona,
Island of Hawaii, County and State of Hawaii, more particularly described in
Exhibit "B" and as shown on the map marked Exhibit "C," hereto attached and made
a part hereof for the only purposes and uses specified in the Sublessee's
project proposal attached hereto as Exhibit "A" (hereinafter "permitted uses"). 

 

 

TERM OF SUBLEASE

 

TO HAVE AND TO HOLD the subleased premises unto the Sublessee for the term of
thirty (30) years, commencing on the 15th day of December 2007, up to and
including the 14th day of December 2037, unless sooner terminated as hereinafter
provided, the Sublessor reserving and the Sublessee yielding and paying to the
Sublessor at the Office of the Natural Energy Laboratory of Hawaii Authority,
Kona, Hawaii, State of Hawaii, a monthly rental as provided herein, and a
percentage of gross sales ("Percentage Rent”) more particularly described as
follows

 

 

RENTAL

 

1.     Rental fees

In consideration of the property and services provided by the Sublessor,
Sublessee agrees to pay Sublessor:

 

a) Fixed rental fee

A monthly fixed rental fee, calculated at ONE THOUSAND FIVE HUNDRED DOLLARS AND
00/100 ($1,500.00) per acre per month for improved/unimproved lands, payable in
advance, without notice or demand, on the first day of each and every month. The
fixed rental fee shall be based upon the entire area of the parcel, gross
acreage of 6.216 acres, as shown on the survey map attached hereto as Exhibit
"C". Based upon the gross acreage of 6.216 acres as shown on Exhibit "C,"
Sublessee shall pay a total monthly fixed fee of NINE THOUSAND THREE HUNDRED
TWENTY FOUR DOLLARS AND 00/100 ($9,324.00).

 

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b) Percentage rent.

If two percent (2%) of Sublessee's gross sales for any calendar year exceeds the
amount of fixed rental fees already paid by Sublessee for such period, then
Sublessee shall pay percentage rent equal to two percent (2%) of Sublessee's
gross sales less the amount of fixed rental fees already received by Sublessor
for said calendar year. The amount of fixed rental fees to be subtracted from
the percentage rent due in any calendar year shall not exceed an amount equal to
twelve (12) months of fixed rental fees. Within ninety (90) days of the end of
each calendar year, Sublessee shall submit to Sublessor an annual report
prepared by its certified public accountant (and/or an independent public
accountant that is acceptable to Sublessor) showing its gross sales less any
exclusions as provided herein. Sublessee shall submit to Sublessor a copy of its
completed annual state of Hawaii general excise tax form at the same time the
general excise tax form is due to the State of Hawaii. Sublessee shall also
submit to Sublessor any other information and evidence requested by Sublessor
related to Sublessee's gross sales. Sublessee shall within' one hundred and
twenty (120) days of the end of each calendar year pay Sublessor any percentage
rent due without further notice or demand.

 

c) Seawater allocation fee

TENANT agrees to pay to NELHA a nonrefundable monthly seawater allocation fee in
order to reserve the right to use up to the allocated amount of deep seawater
during each month of tenancy. The monthly seawater allocation fee shall be
calculated using "monthly DSW volume" data provided to NELHA by TENANT,
multiplied by the then current NELHA seawater rate established by NELHA. The
monthly seawater allocation fee shall be paid to NELHA one month in advance,
without notice or demand, each and every month of the sublease term. The current
NELHA seawater rate is subject to change and is established annually by the
NELHA Board of Directors following an evaluation and review of associated deep
seawater delivery costs.

 

i) SURFACE SEAWATER ALLOCATION:     Sublessee has requested and the NELHA Board
has approved surface seawater use up to a maximum flow rate of      0      and
volume of      0      .

 

ii) DEEP SEAWATER ALLOCATION: Sublessee has requested and the NELHA Board has
approved deep seawater use up to a maximum flow rate of __0___and volume of
_____0____

 

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Actual seawater use which exceeds the maximum allocations stated above, whether
recorded by total volume or maximum flow rate, will be charged to the TENANT as
follows: In any calendar year, for the first month in which actual use exceeds
the monthly allocation, that month's seawater use will be invoiced to TENANT at
a rate of 120% of the then current seawater rate; for the second month of the
same calendar year in which actual use exceeds the monthly allocation, that
month's seawater use will be invoiced to TENANT at rate of 240% of the then
current seawater rate; for the third month of the same calendar year in which
actual use exceeds the monthly allocation, that month's seawater use will be
invoiced to TENANT at rate of 360% of the then current seawater rate; if in any
other month of that same calendar year TENANT's actual use exceeds the monthly
allocation volume, then TENANT's seawater use and allocations shall be subject
to review and any further penalties shall be determined at the discretion of
NELHA by authority of its Board of Directors. However, TENANT understands that
NELHA cannot be expected to provide more than the allocated amounts of seawater
at any time.

 

Any changes to either maximum volume projections or maximum flow rates stated
herein must be approved in advance by the NELHA Executive Director.

 

d) Costs and other fees

Sublessee agrees to pay all costs incurred by Sublessor that result from the
installation of Sublessee's seawater and utility systems, including any metering
and monitoring devices; provided that prior to commencing any work Sublessee and
Sublessor have approved and signed a NELHA work order specifying the work to be
accomplished. Sublessee agrees to pay all other fees and accumulated variable
charges for services and utilities which are based on actual and/or estimated
usage by Sublessee multiplied by the then current rate established by NELHA.
Invoices will be mailed after the fifteenth (15th) day of each month beginning
on the commencement date of this Sublease and are payable within thirty (30)
days. A service fee of TWENTY AND N0/100 DOLLARS ($20.00) will be due for each
check returned due to insufficient funds. All payments shall be made at, or
mailed to, the Sublessor’s business office in Kailua-Kona. Checks shall be made
payable to: NELHA/State of Hawaii.

 

e) Interest rate

The interest rate on any and all unpaid or delinquent rentals shall be at one
percent (1%) per month, plus an administrative fee of FIFTY AND N0/100 DOLLARS
($50.00) per month for each month of delinquency.

 

f) "Gross sales" defined

As used herein, the term "gross sales" means:

 

(i)     All income and revenue derived by Sublessee (or any of Sublessee's
subsidiaries, sister companies, parent company, related companies, affiliates,
officers, directors, shareholders, investors, owners, principals, managers,
members, employees, partners or joint venturers) from, relating to, or connected
with the production, operation, sales, or services rendered under this Sublease
as described in the project proposal attached hereto as Exhibit "A" and
incorporated herein, whether for cash or credit, whether paid or unpaid, and
whether the income or revenue is generated on or off of the subleased premises,
or whether the order is placed by mail, telephone, fax, internet or otherwise;
provided, however, that the following shall be excluded from the computation of
gross sales:

 

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A.

Any and all retail sales taxes, excise taxes, or related direct taxes upon the
consumer and collected by the Sublessee on these sales;

 

 

B.

Receipts from the sale or trade-in value of any furniture, fixtures, or
equipment used upon the subleased premises and owned by the Sublessee;

 

 

C.

Receipts in the form of refunds from or the value of merchandise, supplies, or
equipment returned to shippers, suppliers, or manufacturers;

 

 

D.

Receipts with respect to any sale where the subject of the sale, or some part
thereof, is returned by the purchaser and accepted by the Sublessee, to the
extent of any refund actually granted or adjustment actually made, either in the
form of cash or credit;

 

 

E.

The amount of any cash or quantity discounts received from sellers, suppliers,
or manufacturers;

 

 

F.

Receipts from the sales at cost of uniforms or clothing to Sublessee's
employees' where the uniforms or clothing are required by the Sublessee;

 

 

G.

Receipts for shipping costs to a destination outside of the State of Hawaii;

 

 

H.

Brokerage commissions for foreign sales--To the extent that the amount of any
brokerage commission for foreign sales is included in the sales price charged to
Sublessee's customer, then Sublessee shall be allowed to exclude from its gross
sales such brokerage commission that is directly imposed upon Sublessee by such
foreign broker; or

 

 

I.

Import tariffs-To the extent that the amount of any import tariff is included in
the sales price charged to Sublessee's customer, then Sublessee shall be allowed
to exclude from its gross sales such import tariff that is directly imposed upon
Sublessee by a duly constituted authority.

 

(ii)      The Sublessee shall not be credited with or allowed to have any
reduction in the amount of the gross sales, which results in any arrangements
for a rebate, kickback, or hidden credit given or allowed to any customer. In
order to induce Sublessor to enter into this Sublease, Sublessee represents and
warrants that it shall not attempt to avoid or reduce the percentage rent
provided for herein by, among other things, attempting to reduce its gross sales
or avoid a sale which otherwise would or could have been made at or from the
subleased premises. For example, but not intending to limit the scope of this
provision, Sublessee shall not transfer or move any portion of its operations
(which includes, but is not limited to production, sales or services rendered),
whether existing or planned as described in this Sublease or the project
proposal attached hereto as Exhibit "A," to a site away from the subleased
premises which has the effect of avoiding or reducing the percentage rent as
provided for herein; provided however, Sublessee may, with Sublessor's prior
written approval, transfer or move a portion of its operations to a site away
from the subleased premises as long as Sublessee includes all income and revenue
generated from such off-site operations into Sublessee's "gross sales" for
purposes of determining the percentage rent provided for herein.

 

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g) Incentives

In recognition of the substantial capital investment by Sublessee to the
subleased premises during the early years of the Sublease and the substantial
financial risks under- taken by Sublessee together with other direct and
indirect benefits which will accrue to the State of Hawaii by reason of the
presence of Sublessee at the subleased premises, Sublessee shall be entitled to
an offset against the Percentage Rent payable to Sublessor. The Sublessee shall
be entitled to a maximum total offset of ONE HUNDRED PERCENT (100%) of permanent
land. improvements made by the Sublessee to the subleased premises during the
first FIVE (5) years of the sublease term. The offset shall only be credited
against the amount by which the Percentage Rent exceeds the fixed monthly rental
fee defined above. Offsets may be applied at Sublessee's discretion over the
initial ten year period, but no offsets shall be taken against Percentage Rent
after the tenth (10th) year of the sublease term, i.e. after December 14, 2017.

 

Sublessee shall, within ninety (90) days of the end of each calendar year during
the first five years of the sublease term, submit to Sublessor documentation of
all capital investments which are to .be applied as offsets against the
Percentage Rent due for the preceding year.

 

For purposes of this offset provision, "land improvements" shall mean all
expenditures by Sublessee for permanent site improvements which have been
constructed prior to the sixth (6th) year of the sublease term, including:
grading, contouring, road construction, paving, fill materials, landscaping,
utility installation, and seawater and deep well pipeline installation. It is
specifically understood between the parties that no offsets shall be allowed for
"above ground improvements" or Sublessee's equipment or trade fixtures. "Above
ground improvements" shall mean all expenditures by Sublessee for initial
construction, alterations, additions or improvements to any permanent buildings
or structures. It is the intent of the parties that any offsets allowed
hereunder shall be for the construction of permanent improvements, which
permanent improvements shall remain on the premises at the end of the term of
this Sublease, unless otherwise directed by the Sublessor.

 

2.     Reopening of monthly rental fees

The monthly fixed rental fees and the percentage rent reserved shall be reopened
and redetermined as of the day following the expiration of the FIFTH (5TH) year
and EVERY FIFTH (5TH) YEAR THEREAFTER of the sublease term.

 

 

3.

Determination of fixed rental fees and percentage rent upon reopening of the
annual rent.

 

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a)      The rental fees for any period after fifth year of the sublease term
shall be the fair market rental at the time of reopening, provided however, in
no event shall the fair market rental for the ensuing period be less than the
minimum monthly rent for the preceding rental period. Unless the Sublessor and
the Sublessee mutually agree on the fair market rental for the ensuing period at
least six (6) months prior to the time of reopening, then the fair market rental
shall be determined by an appraiser appointed by Sublessor who is: (i) an
employee of the Department of Land and Natural Resources who is qualified to
appraise lands; or (ii) a disinterested appraiser whose services shall be
contracted for by Sublessor. In determining the fair market rental for the
subleased premises, the appraiser or appraisers shall consider: (i) the
infrastructure and amenities (both tangible and intangible) available to
Sublessee and other tenants within the Natural Energy Laboratory of Hawaii
Authority leased lands (as described in General Lease S-5619, Exhibit "F,"
attached hereto) that enhance or add to the value or desirability of the
subleased premises, including, but not limited to the investment costs incurred
by. Sublessor for the infrastructure, land improvements, freshwater lines,
seawater lines, and other improvements on the premises of neighboring tenants;
(ii) the buildings and other improvements existing on the subleased premises at
the time of reopening that were neither constructed nor placed on the subleased
premises by Sublessee; and (iii) local commercial rates and rents, and any other
applicable and appropriate market evidence. Notwithstanding the foregoing, in no
event shall the fair market rental for the ensuing period be less than the
monthly fixed rent for the preceding rental period. The Sublessee shall be
promptly notified by certified mail, return receipt requested of the fair market
rental as determined by Sublessor's appraiser; provided, that should the
Sublessee fail to notify Sublessor in writing within thirty (30) days after
receipt thereof that Sublessee disagrees with the fair market rental as
determined by Sublessor's appraiser and that Sublessee has appointed its own
appraiser to prepare an independent appraisal report, then the fair market
rental as determined by Sublessor's appraiser shall be deemed to have been
accepted by Sublessee and shall be the fair market rental as of the date of the
reopening. If Sublessee has notified Sublessor and appointed its appraiser as
stated hereinabove, Sublessee’s appraiser shall complete its appraisal. and the
two appraisers shall then exchange their reports within forty-five (45) days
from the date of the Sublessee's appointment of the appraiser.

 

The two appraisers shall review each other’s reports and make every effort to
resolve whatever differences they may have. However, should differences still
exist fourteen (14) days after the exchange, the two appraisers shall within
seven (7) days thereafter appoint a third appraiser who shall also prepare an
independent appraisal report based on the review of the two appraisal reports
prepared and any other data. Copies thereof shall be furnished to the first two
appraisers within forty-five (45) days of the appointment. Within twenty (20)
days after receiving the third appraisal report, all three shall meet and
determine the fair market rental in issue. The fair market rental as determined
by a majority of the appraisers shall be final and binding upon both Sublessor
and Sublessee, unless otherwise modified or corrected for good cause by a
majority of the appraisers within TWENTY (20) days thereafter. Each party shall
pay for its own appraiser and the cost of the services of the third appraiser
shall be borne equally by the Sublessor and the Sublessee. All appraisal reports
shall become part of the public record of the Sublessor.

 

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In the event the appraisers are unable to determine the fair market rental
before the reopening date, or by the foregoing prescribed time, whichever is
later, the Sublessee shall pay the fair market rental as determined by the
Sublessor's appraiser and the rental paid by Sublessee shall then be subject to
retroactive adjustments as appropriate to reflect the fair market rental
determined as set forth hereinabove. However, Sublessee or Sublessee's
appraiser's failure to comply with the procedures set forth above shall
constitute a waiver of Sublessee's right to contest the new rent, and the
Sublessee shall pay the rent as determined by Sublessor’s appraiser without any
retroactive adjustments. Alternatively, Sublessor may treat this failure as a
breach of this Sublease and. terminate the Sublease accordingly.

 

b) Unless otherwise mutually agreed upon by the Sublessor and the Sublessee, the
percentage rent for any ensuing period shall be the same two percent (2%) of
Sublessee's gross sales as provided for in paragraph 1 hereinabove; provided
however, in no event shall the percentage rent for the ensuing period be less
than the percentage rent for the preceding rental period.

 

4.     Business records

The Sublessee shall:

 

a) Prepare and keep for a period of at least five (5) years, all pertinent
original sales records including serially numbered sales slips and all other
sales records whatsoever which would normally be examined by an independent
accountant pursuant to generally accepted auditing standards in performing an
audit of the Sublessee's sales and gross sales.

 

b) Submit to the Sublessor on or before the ninetieth (90th) day following the
end of each calendar year at the place fixed for the payment of rent, a
statement certified as correct by the Sublessee or by a person duly authorized
by the Sublessee, which sets forth in accurate detail the amount of gross sales
during the preceding calendar year, duly verified by an independent certified
public accountant. These statements shall be prepared in compliance with
Generally Accepted Accounting Principles (GAAP).

 

Without prejudice to any remedies provided in this Sublease for Sublessee's
default, if the Sublessee shall fail to promptly furnish any calendar year
report or certified public accountant's annual verification report, the
Sublessor may have the report prepared on Sublessee's behalf by an accountant to
be selected by the Sublessor, at the expense of the Sublessee. The Sublessee
shall furnish to the accountant all records requested for the purpose of
preparing the reports, and the Sublessee shall pay to the Sublessor all expenses
incurred by the Sublessor in securing the reports. In the event that Sublessee
fails to cause its certified public accountant to submit an annual report of
gross sales to Sublessor, Sublessee shall submit copies of its monthly or
quarterly general excise tax returns and shall pay percentage rent based on two
percent (2%) of its gross revenues for the preceding calendar year.

 

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c) Grant unto the Sublessor at all reasonable times access to all books,
accounts, records, and reports including gross income tax reports, showing
sales, and other pertinent records including the following:

 

(i)     shipping costs to foreign destinations;

(ii)    import tariffs;

(iii)   Hawaii general excise tax;

(iv)   Hawaii corporate, partnership, or individual income tax;

(v)    federal corporate, partnership, or individual income tax;

(vi)   records showing capital expenditures made until the full offset against
percentage rent has been achieved, if offset is provided.

 

Sublessee shall at any reasonable time upon five (5) to ten (10) business days
notice, permit the Sublessor’s accountant or a certified public accountant to
complete an audit of the Sublessee’s entire business affairs and records
directly relating to the business conducted on the subleased premises for the
term of the Sublease. The Sublessee shall cooperate fully in making any
inspection, examination, or audit. If the audit by a certified public accountant
or by Sublessor's accountant discloses that rental has been underpaid by two
percent (2%) or more for any period under examination, the Sublessor shall, in
addition to the remedies provided in paragraph b. above, be entitled to
reimbursement of the reasonable cost of the audit in addition to the deficiency.
If the audit by a certified public accountant or by sublessor's accountant shall
disclose that rent has been underpaid by five percent (5%) or more for the
period under examination, the Sublessor shall also have the right to terminate
this Sublease.

 

5.      Paragraph Deleted

 

6.     Additional rent

All taxes, rates, assessments, charges, duties, costs, expenses, interest on
past due accounts, administrative fees for late payments, and charges for
utility services that Sublessee assumes, agrees to, or is obligated to pay
Sublessor under this Sublease and its attachments, shall be deemed additional
rent. In the event of a Sublessee's nonpayment, Sublessor shall . have the same
rights and remedies with respect to the additional rent as is provided for
herein in case of nonpayment of rent. Sublessee shall pay Sublessor the rent,
additional rent, and adjustments of rent provided for in this Sublease, when due
and without notice of demand, at the time and in the manner specified herein.

 

 

RESERVING UNTO THE STATE OF HAWAII AND SUBLESSOR THE FOLLOWING:

 

7.     Minerals and waters

 

a) All minerals as hereinafter defined, in, on or under the subleased premises
and the right, on the State of Hawaii's or Sublessor's own behalf or through
persons authorized by it, to prospect for, mine and remove such minerals and to
occupy and use so much of the surface of the ground as may be required for all
purposes reasonably extending to the mining and removal of such minerals by
means whatsoever, including strip mining. "Minerals", as used herein, shall mean
any or all oil, gas, coal, phosphate, sodium, sulfur, iron, titanium, gold,
bauxite, silver, bauxite clay, diaspore, boehmite, laterite, gibbsite, alumina,
all ores of aluminum and, without limitation thereon, all other mineral
substances and ore deposits, whether solid, gaseous or liquid, including all
geothermal resources in, on, or under the land, fast or submerged; provided,
that "minerals" shall not include sand, gravel, rock or other material suitable
for use and used in general construction in furtherance of the Sublessee's
permitted activities on the subleased premises and not for sale to others.

 

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b) All surface and ground waters appurtenant to the subleased premises (but
specifically excluding seawater) and the right on the State of Hawaii's or
Sublessor's own behalf or through persons authorized by it, to capture, divert
or impound the same and to occupy and use so much of this right reserved;
provided, however, that as a condition precedent to the exercise by the State of
Hawaii or Sublessor of the rights reserved in this paragraph, just compensation
shall be paid to the Sublessee for any of Sublessee's improvements taken.

 

8.      Prehistoric and historic remains

All prehistoric and historic remains found on said subleased premises.

 

9.      Ownership of fixed improvements     

 

The ownership of all improvements of whatever kind or nature, including but not
limited to fences and pipeline system(s) located on the land prior to or on the
date when this Sublease was executed.

 

 

THE SUBLESSEE COVENANTS AND AGREES WITH THE SUBLESSOR AS FOLLOWS:

 

10. Payment of rent

Sublessee shall pay said rent to the Sublessor at the times, in the manner and
form provided in this Sublease and at the place specified above, or at such
other place as the Sublessor may from time to time designate, in legal tender of
the United States of America.

 

11. Taxes, assessments, etc.

Sublessee shall pay or cause to be paid, when due; the amount of all taxes,
rates, and assessments of every description as to which the subleased premises
or any part thereof, or any improvements thereon, the Sublessor or Sublessee are
now or may be assessed or become liable by authority of law during the term of
this Sublease; provided, however, that with respect to any assessment made under
any betterment or improvement law which may be payable in installments,
Sublessee shall be required to pay only such installments, together with
interest, which becomes due and payable during said term.

 

12. Seawater, brackish water, potable water, and groundwater

If applicable, Sublessor will use reasonable efforts to maintain seawater flow
at the times and rates required by Sublessee, but because of the unpredictable
conditions and aging equipment relating to the seawater delivery, Sublessor does
not guarantee a continuous delivery of seawater. Sublessor shall not be liable
for any and all claims, loss, costs, damages, or expenses arising out of
Sublessor's inability to provide seawater to Sublessee. Sublessee may terminate
this Sublease if seawater delivery is permanently discontinued by Sublessor and
is unavailable to the subleased premises.

 

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Sublessee acknowledges that Sublessor cannot warrant, guarantee, or represent
that the quality of its seawater, brackish water, potable water, and groundwater
is never subject to contamination or change. Sublessee’s further acknowledges
that it assumes all risk of loss for injury or property damage which may result
from contamination of seawater, brackish water, potable water, and groundwater
caused by Sublessee. Sublessor shall not be liable for change in quality of or
any and all claims, loss, costs, damages, or expenses arising out of the
contamination or change in quality of seawater, brackish water, potable water,
and groundwater.

 

13. Utilities

Sublessee shall pay when due all charges, duties, and rates of every
description, including water, electricity, sewer, gas, refuse collection, and
any other charges, as to which the subleased premises or any part, or any
improvements the Sublessor or Sublessee may become liable for during the term,
whether assessed to or payable by the Sublessor or Sublessee.

 

Sublessor will use reasonable efforts to accommodate Sublessee's requirements
for utilities at the site. However, Sublessor shall not be responsible for any
inability to provide utilities to Sublessee. In the event that the utilities
furnished to Sublessee must. be interrupted or diminished by Sublessor on a.
scheduled basis, Sublessor will attempt to provide Sublessee with adequate
notice thereof. Sublessor shall not be liable for any and all claims, loss,
costs, damages, or expenses arising out of any interruption of utility service
to the Sublessee.

 

Sublessee recognizes that potable water is in limited supply in the North
Kona-Kohala area and Sublessee agrees that it shall conserve portable water
whenever possible.

 

Provision of potable water will be on a non-guaranteed basis and is subject to
the provisions of the County Department of Water Supply.

 

Subject to Sublessor's prior approval, Sublessee may install its own telephone
equipment using existing utility conduits.

 

14.   Equipment and apparatus

Sublessee shall be solely responsible for any equipment and apparatus provided
and operated by the Sublessee. All Sublessee’s equipment and apparatus that will
be connected to the seawater systems and the electrical systems at the facility
shall be subject to inspection by the Sublessor or its designated representative
prior to any connection. All Sublessee's equipment and apparatus shall be
installed and operated in accordance with applicable standards, regulations,
codes and sound engineering practice. Sublessee shall, at its own expense, keep,
repair and maintain its equipment and apparatus in good order, condition and
repair, reasonable wear and tear excepted. Sublessor or its designated
representative may request additional inspection and certification by outside
experts and/or professional engineers at Sublessor's expense; however, the
expense for the additional inspection and certification shall be paid by the
Sublessee if all of Sublessee's equipment and apparatus have not been installed
and operated according to the foregoing requirements stated herein.

 

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15.   Seawater systems and utility connections

It shall be the responsibility of the Sublessee to make the necessary
connections to the existing seawater, potable water, electrical, process air,
and utility systems. All connections and service lines shall be installed in
accordance with the applicable rules, regulations, laws, and codes and shall be
subject to Sublessor’s prior approval. Sublessee shall discuss with and obtain
the concurrence of the Sublessor or its designated representative as to the
method proposed for each connection and line, and the. days and time that any
proposed connection might cause disruption to Sublessor’s operations, utilities,
or services. Sublessor shall be permitted to inspect the installation of all
connections and service lines.

 

16. Operations

Sublessee shall conduct its activities on the subleased premises in accordance
with all applicable Federal, State, and County statutes, ordinances and
regulations in addition to Sublessor's .rules and regulations. Sublessor will
provide the Sublessee with a copy of its Facilities Use Manual (FUM) which
outlines the day to day operating rules, regulations, and expected conduct on
the subleased premises. All discharges from the Sublessee's project shall be in
conformity with and comply with existing NELHA permits at the site. Sublessee
shall obtain and be responsible for all required species importation permits and
copies of all permits shall be submitted to Sublessor prior to introduction of
any species to the subleased premises.

 

Sublessee also shall comply with and obey all rules and regulations pertaining
to the use and enjoyment of the premises and facilities, including, but not
limited to full compliance with the NELHA Facilities Use Manual, the NELHA
Aquatic Species Health Management Program, the Natural Energy Laboratory of
Hawaii and Hawaii Ocean Science and Technology Park Policy and Procedure Manual.
Sublessor may, in its sole and absolute discretion, amend any existing rule or
regulation, and promulgate or otherwise impose additional rules and regulations
at any time. Sublessee’s breach of any of the aforesaid rules or regulations
shall be deemed a material default under this Sublessee, and Sublessor may, in
its sole and absolute discretion, elect to terminate this Sublessee.

 

17. Seawater discharges

Sublessee shall minimize any adverse environmental effects to the surrounding
ocean waters and to the water returned by Sublessee to the ocean. Sublessee
shall permit Sublessor to monitor the surrounding ocean waters and the water
returned by Sublessee to the ocean. Sublessee shall submit discharge water
quality and quantity samples to Sublessor for inspection, review, and testing
upon request by Sublessor. Water discharged by Sublessee into any disposal
system shall meet the applicable water quality criteria prescribed by the
department of health in its rules relating to water quality standards. Sublessee
shall be responsible and bear all costs incurred for re-treating its discharged
water to meet these standards.

 

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Sublessor may require Sublessee to monitor, record, and report the quality of
Sublessee's discharged water to Sublessor monthly.     Sublessee shall allow
Sublessor to enter the subleased premises at any time for the purpose of taking
samples of Sublessee's water discharge for independent water quality analysis,
In the event that Sublessee's water discharge fails to meet the department of
health's water quality standards, Sublessor shall have the authority to order
the Sublessee to cease all of its operations until the water discharge problem
has been corrected to the satisfaction of the Sublessor and/or the department of
health; provided that Sublessee shall be given reasonable notice of such action,
and shall be afforded reasonable time to shut down Sublessee's operations
without unduly disrupting its business or damaging or endangering its live
stock.     Should the Sublessee fail to cease all of its operations when ordered
to do so by the Sublessor, Sublessee’s actions shall amount to a breach of this
Sublease, thereby entitling the Sublessor to terminate this Sublease in
accordance with paragraph 37 herein. In any event, Sublessee shall be liable for
any and all property or environmental damage resulting from its water discharge.

 

18.   Sublessee responsibility

All persons hired or used by Sublessee shall be considered Sublessee's agents
and employees and Sublessee shall be responsible for all services performed by
its agents and employees. Further, Sublessee intentionally, voluntarily, and
knowingly assumes the sole and entire liability for any of its agents and
employees, and to third persons for all loss, cost, damage, or injury caused,
either directly or indirectly, by Sublessee's agents and employees in the course
of their employment.

 

19.   Covenant against discrimination

The use and employment of the subleased premises shall not be in support of any
policy which discriminates against anyone based upon race, creed, sex, sexual
identity or expression and sexual orientation, color, national origin, religion,
marital status, familial status, ancestry, physical handicap, disability, age,
or HIV (human immunodeficiency virus) infection.

 

20.   Sanitation, etc.

Sublessee shall keep the subleased premises and improvements in a strictly
clean, sanitary, and orderly condition.

 

21.   Waste and unlawful, improper or offensive use of subleased premises

Sublessee shall not commit, suffer, or permit to be committed any waste,
nuisance, strip or unlawful, improper or offensive use of the subleased
premises, or any part, nor, without the prior written consent of the Sublessor,
cut down, remove or destroy, or suffer to be cut down, removed or destroyed, any
trees now growing on the subleased premises.

 

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22. Compliance with laws

Sublessee shall comply with all of the requirements of all county, state, and
federal authorities and observe all county, state, and federal laws (including,
but not limited to the observance of and compliance with the Americans With
Disabilities Act) applicable to the subleased premises, now in force or which
may be in force.

 

23. Inspection of subleased premises

Sublessee shall permit the Sublessor and its agents, at all reasonable times
during the sublease term, to enter the subleased premises and examine the state
of repair and condition of the subleased premises.

 

24. Improvements

Sublessee shall not at any time during said term construct, place, maintain, and
install on the subleased premises any building, structure or improvement of any
kind and description whatsoever except. with the prior written approval of the
Department of Transportation, Airports Division and Sublessor, and upon those
conditions as the Chairperson of the Board of Land and Natural Resources .and
the Sublessor may impose, including any adjustment of rent, unless otherwise
provided in this Sublease. The Sublessee shall own these improvements until the
expiration, surrender, or termination of the Sublease, at which time the
building, structure or improvement shall, at the option of the Sublessor, remain
and become the property of the Sublessor or be removed by the Sublessee at the
Sublessee's expense.

 

All allowed structures and/or improvements shall comply with applicable County
building codes and construction permits. Copies of all required permits shall be
submitted to Sublessor prior to initiating any construction activities. All
buildings, structures, and landscaping shall express the island character and be
of high quality, but,it shall be natural in appearance emphasizing the outdoor
environment. The Sublessee shall provide sufficient landscaping, satisfactory to
Sublessor, to make the project site visually attractive.

 

25. Repairs to improvements

Sublessee shall, at its own expense, keep, repair and maintain all buildings and
improvements now existing or hereafter constructed or installed on the subleased
premises in good order, condition, and repair, reasonable wear and tear
excepted.

 

26. Non-adverse effects

Any building, structure, or improvement erected or constructed by the Sublessee
on the subleased premises, shall not in any way adversely affect the safe and
efficient operations of the Kona International Airport at Keahole and prior to
construction or erection shall be approved in writing by the Sublessor.

 

27. Non-obstruction reservations

The conveyance of this Sublease shall be subject to the following reservations:

 

a) There is hereby reserved to the Department of Transportation, Airports
Division, its successors, and assigns, for the use and benefit of the public, a
right of flight for the passage of aircraft in the airspace above the surface of
the subleased premises herein conveyed. This public right of flight shall
include the right to cause any noise inherent in the landing, departing or
operation of any aircraft used for navigation or flight through the airspace or
on or about the Kona International Airport at Keahole.

 

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b) The erection of structures or growth of natural objects that would constitute
an obstruction to air navigation is prohibited.

 

c) Any activity on the land or along the adjacent coast that would interfere
with or be it hazard to the flight of aircraft over the land or to and from the
Kona International Airport at Keahole or interfere with air navigation and
communication facilities serving said airport is prohibited.

 

d) The height limitations above which no structure or growth shall be permitted
shall be in accordance with the Airport Zoning Regulations all as shown on
Exhibit "D".

 

e) The filing of notice of construction requirements in FAR Part 77 shall remain
in effect.

 

28. Liens

Sublessee shall not commit or suffer any act or neglect which results in the
subleased premises, any improvement, or the leasehold estate of the Sublessor
becoming subject to any attachment, lien, charge, or encumbrance, except as
provided in this Sublease, and shall indemnify, defend, and hold the Sublessor
harmless from and against all attachments, liens, charges, and encumbrances and
all resulting expenses and attorneys' fees.

 

29. Assignments

The Sublessee shall not transfer, assign, or permit any other person to occupy
or use the subleased premises or any portion or transfer or assign this Sublease
or any interest, either voluntarily or by operation of law, except by way of
devise, bequest, or intestate succession, and any transfer or assignment made
shall be null and void; provided that with the prior written approvals of the
Board of Land and Natural Resources and the Sublessor the assignment and
transfer of this Sublease or any portion may be made if (I) in the case of
commercial, industrial, and other business uses, the Sublessee was required to
put in substantial building improvements; (2) the Sublessee becomes mentally or
physically disabled; (3) extreme economic hardship is demonstrated to the
satisfaction of the Board of Land and Natural Resources and the Sublessor; or
(4) it is to the corporate successor of the Sublessee; provided, further, that
prior to the approval of any assignment of sublease, the Sublessor shall have
the right to review and approve the consideration paid the assignee and may
condition consent to the assignment of the Sublease on payment by the Sublessee
to the Sublessor of a premium based on the amount by which the consideration for
the assignment, whether by cash, credit, or otherwise, exceeds the straight-line
depreciated cost of improvements and trade fixtures being transferred to the
assignee pursuant to the Board of Land and Natural Resources' Assignment of
Lease Evaluation Policy, as it may be amended, a copy of which is attached
hereto as Exhibit "E."  The premium on any subsequent assignments shall be based
on the difference in the selling and purchase price plus the straight-line
depreciated cost of any improvements constructed by the then assignor, pursuant
to the abovementioned Evaluation Policy.

 

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With respect to state agricultural or aquaculture subleases, in the event of
foreclosure or sale, the above-described premium shall be assessed only after
the. encumbrances of record and any other advances made by the holders of a
security interest are paid.

 

If the Sublessee is a partnership, joint venture or corporation, the sale or
transfer of 50% interest or more of ownership in one year, or stocks by
dissolution, merger, or any other means shall be deemed an assignment for
purposes of this paragraph and subject to the rights of the Board of Land and
Natural Resources and the Sublessor to impose the foregoing premium as described
in attached Exhibit "E."

 

30. Subletting

The Sublessee shall not rent or sublet the whole or any portion of the subleased
premises, without the prior written approvals of the NELHA Board of Directors
and the Sublessor; provided, however, that prior to this approval, the NELHA
Board and the Sublessor shall have the right to review and approve the rent to
be charged to the proposed Sublessee and that in the case where the Sublessee is
required to pay rent based on a percentage of its gross sales, the receipts of
the proposed Sublessee or any subsequent Sublessee shall be included as part of
the Sublessee's gross sales, and the NELHA Board of Directors and the Sublessor
shall have the right to revise the rent of the subleased premises based upon the
rental rate charged to the proposed Sublessee including the percentage rent, if
applicable, and provided, further, that the rent may not be revised downward.

 

31. Indemnity

The Sublessee shall indemnify, defend, and hold the State and Sublessor harmless
from and against any claim or demand for loss, liability, or damage including
claims for bodily injury, wrongful death, or property damage, arising out of or
resulting from: (1) any act or omission on the part of Sublessee relating to
Sublessee's or its employee's or agent's use, occupancy, maintenance, or
enjoyment of the subleased premises; (2) any failure on the part of the
Sublessee to maintain the subleased premises and sidewalks, roadways and parking
areas adjacent thereto in Sublessee's use and control, and including any
accident, fire, or nuisance, growing out of or caused by any failure on the part
of the Sublessee to maintain the subleased premises in a safe condition; and (3)
from and against all actions, suits, damages, and claims by whomsoever brought
or made by reason of the Sublessee's non-observance or non-performance of any of
the terms, covenants, and conditions of this Sublease or the rules, regulations,
ordinances, and laws of the federal, state, municipal or county governments.

 

32. Costs of litigation

In case the Sublessor or the State of Hawaii shall, without any fault on its
part, be made a party to any litigation commenced by or against the Sublessee
(other than condemnation proceedings), the Sublessee shall pay all costs,
including reasonable attorney’s fees, and expenses incurred by or imposed on the
Sublessor and the State of Hawaii; furthermore, the Sublessee shall pay all
costs, including reasonable attorney's fees and expenses which may be incurred
by or paid by the Sublessor and the State of Hawaii in enforcing the covenants
and agreements of this Sublease, in recovering possession of the subleased
premises or in the collection of delinquent rental, taxes, and any and all other
charges.

 

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33. Liability insurance

The Sublessee shall procure and maintain, at its cost and expense and acceptable
to the Sublessor, in full force and effect throughout the term of this Sublease,
commercial general liability insurance in an amount of at least $500,000.00 for
each occurrence and $1,000,000.00 aggregate, and commercial general property
damage insurance in an amount of at least $50,000.00 for each occurrence and
$100,000.00 aggregate, with an insurance company or companies rated A or higher
licensed to do business in the State of Hawaii or any other state. The policy or
policies of insurance shall name the State of Hawaii and the Sublessor as
additional insureds. The liability insurance shall cover the entire subleased
premises, including buildings, improvements, and grounds and all roadways or
sidewalks on or adjacent to the subleased premises in the use or control of the
Sublessee.

 

The Sublessee, prior to entry and use of the subleased premises or within
fifteen (15) days from the effective date of this Sublease, whichever is sooner,
shall furnish the Sublessor with a certificate(s) showing the policy(s) to be
initially in force, keep the certificate(s) on deposit during the entire
sublease term, and furnish a like certificate(s) upon each renewal of the
policy(s). This insurance shall not be canceled, 1imited in scope of coverage,
or non renewed until after thirty (30) days written notice has been given to the
Sublessor.

 

The Sublessee agrees that, with respect to any contractors or subcontractors
performing services on the Sublessee's behalf on the subleased premises, the
aforementioned liability insurance requirements shall also apply. The Sublessee
shall provide the required certificate(s) of insurance to Sublessor prior to
commencement of those services.

 

If, in the opinion of the Sublessor, the insurance provisions in this Sublease
do not provide adequate protection for the Sublessor, the Sublessor may require
Sublessee to obtain insurance sufficient in coverage, form, and amount to
provide adequate protection if such insurance is both commercially and
reasonably available. The Sublessor’s requirements shall be reasonable but shall
be designed to assure protection for and against the kind and extent of the
risks which exist at the time a change in insurance is required. The Sublessor
shall notify Sublessee in writing of changes in the insurance requirements and
Sublessee shall deposit copies of acceptable certificate(s) thereof, with the
Sublessor incorporating the changes within thirty (30) days of receipt of the
notice.

 

The procuring of the required policy(s) of insurance shall not be construed to
limit the Sublessee’s liability under this Sublease nor to release or relieve
the Sublessee of the indemnification provisions and requirements of this
Sublease. Notwithstanding the policy(s) of insurance, Sublessee shall be
obligated for the full and total amount of any damage, injury, or loss caused by
Sublessee’s negligence or neglect connected with this Sublease.

 

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It is agreed that any insurance maintained by the Sublessor with respect to the
subleased premises will apply in excess of, and not contribute with, insurance
provided by Sublessee's policy.

 

34.     Bond, performance

The Sublessee shall, at its own cost and expense, within thirty (30) days after
the date of receipt of this sublease document, procure. and deposit with the
Sublessor and thereafter keep in full force and effect during the term of this
Sublease a good and sufficient surety bond, 9onditioned upon the full and
faithful observance and performance by Sublessee of all the terms, conditions,
and covenants of this Sublease, in an amount equal to the annual rent and annual
estimated additional rental then payable. This bond shall provide that in case
of a breach or default of any of the sublease terms, covenants, conditions, and
agreements, the full amount of the bond shall be paid to the Sublessor as
liquidated and ascertained damages and not as a penalty.

 

35.     Sublessor's lien

All buildings, improvements, equipment, fixtures, furniture, furnishings,
inventory, merchandise, goods and other property of every kind and description
which the Sublessee shall during the term of this Sublease construct, install,
place or store, or caused to be constructed, installed, placed or stored, within
the subleased premises whether subsequently, removed therefrom by the Sublessor
to a public warehouse or other place of storage and whether exempt from
execution or not, shall be bound by and subject to a lien in favor of the
sublessor for the payment of the rent and charges herein reserved and any
damages arising from any breach by the Sublessee of any of the terms, covenants
or conditions of this. Sublease; that upon default by the Sublessee, the
Sublessor may take possession of said property or any parts thereof and sell or
cause the same to be sold at public or private sale, with or without notice, to
the highest bidder for cash, and apply the proceeds of said sale toward the cost
thereof and the expenses of moving, preserving, protecting, and storing said
property, and then toward any amount which may be owing to the Sublessor on
account of Sublessee's default. Without limitation to the foregoing, all persons
who have any right, title or interest or security interest in any of the
buildings, improvements, equipment, fixtures, furniture, furnishings, and other
property constructed, installed, placed, or stored within the subleased premises
by Sublessee, shall be deemed to have subordinated all of their right, title and
interest and security interest in and to the same to the lien of the Sublessor
as set forth herein unless they obtain the prior written approval of Sublessor
that their said interest shall have priority. Resort by the Sublessor to the
remedy herein provided shall be in addition to and without prejudice to any
other right or remedy which Sublessor may have or be entitled.

 

36.     Mortgage

Except as provided in this Sublease, Sublessee shall not mortgage, hypothecate
or pledge the subleased premises or any portion, or any interest in this
Sublease, without the prior written approval of Sublessor and the State of
Hawaii’s Board of Land and Natural Resources and mortgage, hypothecation or
pledge without the approval shall be null and void.

 

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That upon due application and with the written consent of the Sublessor and the
State of Hawaii Board of Land and Natural Resources, the Sublessee may mortgage
this Sublease or any interest, or create a security interest in the subleasehold
of the subleased premises. If the mortgage or security interest is to a
recognized lending institution in either the State of Hawaii or elsewhere in the
United States, consent may extend to foreclosure and sale of Sublessee’s
interest at the foreclosure to any purchaser, including the mortgagee, without
regard to whether or not the purchaser is qualified to sublease, own or
otherwise acquire and hold the land or any interest. The interest of the
mortgagee or holder at the foreclosure shall be freely assignable. However the
use of the premises shall be limited to that as set forth in Exhibit ‘A.'  The
term "holder" shall include an insurer or guarantor of the obligation or
condition of such mortgage, including the Department of Housing and Urban
Development through the Federal Housing Administration, the Federal National
Mortgage Association, the Veterans Administration, the Small Business
Administration, Farmers Home Administration, or any other federal agency and
their respective successors and assigns or any lending institution authorized to
do business in the State of Hawaii or elsewhere in the United States; provided,
that the consent to mortgage to a non-governmental holder shall not confer any
greater rights or powers in the holder than those which would be required by any
of the aforementioned Federal agencies.

 

37.     Breach and termination

Time is of the essence, of this agreement.

 

a)    The Sublessor may give the Sublessee five business days’ notice of
intention to terminate this Sublease if a material breach or default shall
occur. The occurrence of any of the following shall constitute a material breach
or default of the Sublease by Sublessee:

 

(i) Sublessee shall fail to pay the rent, additional rent or other monetary
obligation, or any part thereof at the times and in the manner provided in this
Sublease within ten (10) calendar days after delivery by the Sublessor of a
written notice of the breach or default, by personal service, registered mail,
or certified mail to the Sublessee at its last known address and to each
mortgagee or holder of record having a security interest in the subleased
premises.

 

(ii) Sublessee shall become bankrupt, or if any assignment be made of the
Sublessee's property for the benefit of creditors, or if this Sublease and the
subleased premises shall be attached or taken by operation of law.

 

(iii) Sublessee uses the subleased premises for purposes other than as specified
in this Sublease and in Exhibit "A", abandons the subleased premises, or ceases
all activities for a period of three (3) months without the Sublessor's written
consent.

 

(iv) Sublessee fails to comply with or otherwise obey all rules and regulations
pertaining to the use and enjoyment of the premises and facilities, including,
but not limited to the full compliance with NELHA’s Facilities Use Manual, the
Aquatic Species Health Management Program, the Natural Energy Laboratory of
Hawaii and Hawaii Ocean Science and Technology Park Policy and Procedure Manual.

 

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(v) Sublessee wholly ceases all activities on the subleased premises for a
period of three (3) months without the written consent of Sublessor.

 

(vi) Sublessee fails to comply with any statutes, ordinances, laws, rules or
regulations of the federal, state, municipal or county governments affecting the
subleased premise.

 

(vii) Sublessee shall fail to observe and perform any covenant, term or
condition contained in this Sublease and on its part to be observed and
performed, and this failure shall continue for a period of more than sixty (60)
days after delivery by the Sublessor of a written notice of the breach or
default, by personal service, registered mail, or certified mail to the
Sublessee at its last known address and to each mortgagee or holder of record
having a security interest in the subleased premises; provided, that if
Sublessor deems in its sole discretion that such default shall be of such nature
that it cannot with due diligence be cured completely within such sixty (60) day
period, Sublessee may be deemed not to be in default on the condition that the
Sublessee shall within such period commence and thereafter diligently prosecute
the cure to completion upon such terms and conditions as required by Sublessor
at Sublessor's discretion.

 

 

b)

Termination by Sublessor. In the event of any such material breach or default by
Sublessee and with five, business days' notice of termination given to
Sublessee, the Sublessor may, subject to \he provisions of Section 171-21,
Hawaii Revised Statutes, as amended, at once re-enter the subleased premises or
any part thereof, administratively and without the need for a court order, and
upon or without this entry, at its option, terminate this Sublease and all
rights of Sublessee hereunder, and shall have the right to terminate, at its
election, any sublease then in effect without the consent of the Sublessee
concerned and without prejudice to any other remedy or right of action for
arrears of rent or for any preceding or other breach of contract; and in the
event of termination at the option of the Sublessor, all buildings and
improvements shall remain and become the property of the Sublessor or shall be
removed by Sublessee at the Sublessee's cost; furthermore, Sublessor shall
retain all rent paid in advance to be applied to any damages. This does not
prohibit the Sublessor from seeking further damages. Sublessor shall not be
deemed guilty of trespass or become liable for loss or damage which may be
occasioned thereby.

 

 

c)

Termination by Sublessee. Sublessee shall have the right to terminate this
Sublease, on six (6) months prior written notice to the Sublessor, without
penalty at the end of any five (5) year period of the Sublease (to coincide with
the five (5) year re-opening of fees in Section 2 above). If Sublessee sends a
notice of termination at any time that is not at the end of any five (5) year
period of the Sublease, then the Sublease shall pay rent from the date of the
termination until the end of the current five (5) year period of the Sublease
unless Sublessor is able to re-let the subleased premises to another party
earlier at an equal or higher rent under equivalent conditions.

 

38.     Right of holder of record of a security interest

 

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In the event the Sublessor seeks to forfeit the privilege, interest, or estate
created by this Sublease, each recorded holder of a security interest may, at
its option, cure or remedy the default or breach of rent payment within ten (10)
days or any other default or breach within sixty (60) days, from the date of
receipt of the Sublessor's notice, or within such additional period as the
Sublessor may allow for good cause, and add the cost thereof to the mortgage
debt and the lien of the mortgage. Upon failure of the holder to exercise its
option, the Sublessor may: (a) pay to the holder from any moneys at its
disposal, the amount of the mortgage debt, together with interest and penalties,
and secure an assignment of the debt, including interest and penalties,, and all
reasonable expenses incurred by the holder In connection with the foreclosure
and preservation of its security interest, less appropriate credits, including
income received from the privilege, interest, or estate subsequent to the
foreclosure; or (b) if the property cannot be reasonably reassigned without loss
to the Sublessor or State, then terminate the outstanding privilege, interest,
or estate without prejudice to any other right or remedy for arrears of rent or
for any preceding or other breach or default and use its best efforts to
redispose of the affected land to a qualified and responsible person free and
clear of the mortgage and the debt secured; provided that a reasonable delay by
the Sublessor in instituting or prosecuting its rights or remedies shall not
operate as a waiver of these rights or to deprive it of a remedy when it may
still otherwise hope to resolve the problems created by the breach or default.
The proceeds of any redisposition shall be applied, first, to reimburse the
Sublessor for costs and expenses in connection with the redisposition; second to
discharge in full any unpaid purchase price or other indebtedness owing the
Sublessor in connection with the privilege, interest, or estate terminated;
third, to the mortgagee to the extent of the value received by the State upon
redisposition which exceeds the fair market sublease value of the land as
previously determined by the Sublessor's or State's appraiser; and fourth, to
the owner of the privilege, interest, or estate.

 

39.     Condemnation

If at any time, during the term of this Sublease, any portion of the premises
should be condemned or required for public purposes by the State, any county, or
city and county, the rental shall be reduced in proportion to the value of the
portion of the premises condemned. Sublessor shall be entitled to collect and
receive all compensation and damages payable for or on account of all buildings,
fixtures and other improvements existing and located on the premises at the
commencement of the term of this Sublease. Sublessee shall be entitled to
receive from the condemning authority the value of growing crops or animals, if
any, which it is not permitted to harvest. With respect to any improvements
hereafter constructed or placed on the premises by Sublessee during the term of
this Sublease, Sublessee shall be entitled to collect and receive from the
condemning authority the proportionate value of such improvements so taken in
the ratio in which the unexpired term of this Sublease from the effective date
of condemnation bears to the whole term of this Sublease; and Sublessor's
interest in such improvements so taken shall be the ratio in which the expired
term of this Sublease from the effective date of condemnation bears to the whole
term of this Sublease. The foregoing rights of the Sublessee shall be exclusive.
Provided however, to the extent that the improvements hereafter constructed or
placed on the premises by Sublessee during the term of this Sublease are not
part of the aforesaid condemnation or required for public purpose, then
Sublessee may, in the alternative, remove and relocate the aforesaid
improvements to the remainder of the lands occupied by Sublessee under this
Sublease. Sublessee shall not by reason of such condemnation be entitled to any
claim against the condemning authority or Sublessor for condemnation or
indemnity for the subleasehold interest or the land and all compensation payable
or to be paid for or on account of the aforesaid subleasehold interest and the
land shall be payable to and be the sole property of Sublessor. Where the
portion so taken renders the remainder unsuitable for the use or uses for which
the land was subleased, Sublessee shall have the option to surrender this
Sublease and be discharged and relieved from any further liability provided
further, Sublessor may, in its sole discretion, allow Sublessee to remove within
a reasonable period of time the permanent improvements constructed, erected and
placed on the premises by Sublessee during the term of this Sublease.

 

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40.      Right to enter

The State of Hawaii's Board of Land and Natural Resources or Sublessor or the
County, or their respective agents or representatives, upon reasonable notice,
shall have the right to enter and cross any portion of the subleased premises
for the purpose of performing any public or official duties, provided, however,
in the exercise of such rights, the Sublessor, the State of Hawaii Board of Land
and Natural Resources or the County shall not interfere unreasonably with the
Sublessee or Sublessee's use and enjoyment of the subleased premises. The
Sublessor or its designated representative specifically reserves the right to
enter the subleased premises or any part thereof for purposes related to the
State of Hawaii's operation and maintenance of the Kona International Airport at
Keahole, provided that such entry, operation, or maintenance does not
unreasonably interfere with or hinder the use, occupancy, operation, and
enjoyment of the subleased premises by the Sublessee.  In the event Sublessor’s
executive director or such other designated representative determines that an
emergency or potential emergency situation threatens the health, safety, or
welfare of persons, property, or the environment, the Sublessor or its
designated representative may enter the subleased premises or any part thereof
without any notice whatsoever.

 

41.      Inspection by prospective bidders

The Sublessor shall have the right to authorize any person or persons to enter
upon and inspect the subleased premises at all reasonable times following a
published notice for its proposed disposition for purposes of informing and
appraising that person or persons of the condition of the lands prior to the
proposed disposition; provided, however, that any entry and inspection shall be
conducted during reasonable hours after notice to enter is first given to the
Sublessee, and shall, if the Sublessee so requires, be made in the company of
the Sublessee or designated agents of the Sublessee; provided, further, that no
authorization shall be given more than two years before the expiration of the
term of the Sublease.

 

42.      Acceptance of rent not a waiver

The acceptance of rent by the Sublessor shall not be deemed a waiver of any
breach by the Sublessee of any term, covenant, or condition of this Sublease,
nor the Sublessor's right of re-entry for breach of term, condition, or
covenant, nor of the Sublessor's right to declare and enforce a forfeiture for
any breach of any term, covenant, or condition, or to exercise any option
conferred, in any one or more instances, shall not be construed as a waiver or
relinquishment of any term, covenant, condition, or option.

 

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43. Ingress and egress

Sublessee shall possess the right, by the most convenient route(s) as approved
by the Sublessor, of ingress and egress from the subleased premises for
utilities, roadway purposes and pipelines and related facilities necessary for
Sublessee's operations and maintenance, subject to any reasonable safety
requirements of the Sublessor. This right of ingress and egress shall inure to
the benefit of the Sublessee and its duly authorized agents, representatives,
contractors, employees, and invitees.

 

44. Extension of time

Notwithstanding any provision to the contrary contained in this Sublease, when
applicable, Sublessor may for good cause shown, allow additional time beyond the
time or times specified in this Sublease for the Sublessee to comply, observe,
and perform any of the sublease terms, conditions, and covenants.

 

45. Justification of sureties

Any bonds required by this Sublease shall be supported by the obligation of a
corporate surety organized for the purpose of being a surety and qualified to do
business in the State of Hawaii, or not less than two personal sureties,
corporate or individual, for which justifications shall be filed as provided in
Section 78-20, Hawaii Revised Statutes; provided, however, the Sublessee may
furnish a bond in like amount, conditioned as aforesaid, executed by it alone as
obligor, if, in lieu of any surety or sureties, it shall also furnish and at all
times thereafter keep and maintain on deposit with the Sublessor security in
certified checks, certificates of deposit (payable on demand or after such
period as the Sublessor may stipulate), bonds, stocks or other negotiable
securities pro endorsed, or execute and deliver to the Sublessor a deed or deeds
of trust of real property, all of such character which is satisfactory to the
Sublessor and valued in the aggregate at not less than the principal amount of
said bond. It is agreed that the value of any securities which may be accepted
and at any time thereafter held by the Sublessor shall be determined by the
Sublessor, and that the Sublessee may, with the approval of the Sublessor,
exchange other securities or money for any of the deposited securities if in the
judgment of the Sublessor the substitute securities or money shall be at least
equal in value to those withdrawn. It is further agreed that substitution of
securities or the substitution of a deposit of security for the obligation of a
surety or sureties may be made by the Sublessee, but only upon the written
consent of the Sublessor and that until this consent is granted, which shall be
discretionary with the Sublessor, no surety shall be released or relieved from
any obligation.

 

46.      Waiver, modification, reimposition of bond and liability insurance
provisions

Upon substantial compliance by the Sublessee of the terms, covenants, and
conditions contained in this Sublease on its part to be observed or performed,
the Sublessor at its discretion may in writing, waive or suspend the performance
bond and/or improvement bond requirements or may in writing, modify the
particular bond(s) or liability insurance requirements by reducing its amount;
provided, however, that the Sublessor reserves the right to reactivate the bonds
or reimpose the bond(s) and/or liability insurance in and to their original
tenor and form at any time throughout the term of this Sublease.

 

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47. Suspension of operations

In the event of any disaster or pollution, or likelihood of either, having or
capable of having a detrimental effect on public health, safety, welfare, or the
environment. caused in any manner or resulting from operations under this
Sublease, the Sublessee shall immediately take corrective action, seek to
mitigate any damage and promptly notify Sublessor and the State of Hawaii Board
of Land and Natural Resources.

 

48. Quiet enjoyment

Sublessor hereby covenants and agrees with the Sublessee that upon payment of
the rent at the times and in the manner provided and the observance and
performance of the covenants, terms, and conditions on the part of the Sublessee
to be observed and performed, the Sublessee may have, hold, possess and enjoy
the subleased premises for the te1m of the Sublease, without hindrance or
interruption by the Sublessor or any other person or persons lawfully claiming
by, through or under it.

 

49.     Surrender

The Sublessee shall, at the end of the term or other sooner termination of this
Sublease, peaceably deliver unto the Sublessor possession of the subleased
premises, together with all improvements existing or constructed thereon, or the
Sublessee at its expense shall remove such improvements, at the option of the
Sublessor. Unless otherwise agreed to in writing by Sublessor, any holding over
after the expiration of the term provided for in this Sublease shall be deemed
to be a tenancy from month to month at 120% of the monthly rental (i.e., 120% of
both the fixed rental fee and percentage rent) and 120%. of all other charges
provided for in this Sublease. Provided further, if at the expiration of the
tem1 or other sooner termination of this Sublease, Sublessee fails and refuses
to yield up possession of the subleased premises to Sublessor, Sublessee shall
pay as liquidated damages an amount equal to 200% of the monthly rent (i.e.,
200% of both the fixed rental fee and percentage rent) and 200% of all other
charges provided for in this Sublease. Furthermore, upon the expiration,
voluntary surrender, termination, and/or revocation of this Sublease, should the
Sublessee fail to remove any and all of the Sublessee's personal property from
the subleased premises, after notice thereof, the Sublessor may remove any and
all personal property from the subleased premises and either deem the property
abandoned and dispose of the property or place the property in storage at the
cost and expense of the Sublessee, and the Sublessee does agree to pay all costs
and expenses for disposal, remov1!l, or storage of the personal property. This
provision shall survive the termination of the Sublease.

 

50.     Non-warranty

Sublessor does not warrant the conditions of the subleased premises, as the same
is being subleased as is.

 

51.      Hazardous materials

Sublessee shall not cause or permit the escape, disposal, or release of any
hazardous materials, except as provided by law. Sublessee shall not allow the
storage or use of such materials, nor allow to be brought onto the subleased
premises any such materials except to use in the ordinary course of Sublessee's
business, and then only after written notice is given to Sublessor of the
identity of such materials and upon Sublessor's consent, which consent may be
withheld at Sublessor's sole and absolute discretion. Sublessor shall have the
sole and absolute discretion to permit such materials to be brought onto and
remain on the subleased premises. Sublessee's failure to comply with Sublessor's
directions under this section shall constitute a breach of this Sublease.  If
any lender or governmental agency shall ever require testing to ascertain
whether or not there has been any release of hazardous materials by Sublessee,
then Sublessee shall be responsible for the reasonable costs thereof. In
addition, Sublessee shall execute affidavits, representations and the like from
time to time at Sublessor's request concerning Sublessee's best knowledge and
belief regarding the presence of hazardous materials on the subleased premises
placed or released by Sublessee.

 

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Sublessee agrees to indemnify, defend and hold Sublessor harmless, from any
damages and claims resulting from the release of hazardous materials on the
subleased premises occurring while Sublessee is in possession, or elsewhere if
caused by Sublessee or persons acting under Sublessee. These covenants shall
survive the expiration or earlier termination of the Sublease.

 

For the purpose of this. Sublease "hazardous material" shall mean any pollutant,
toxic substance, hazardous waste, hazardous material, hazardous substance, or
oil as defined in or pursuant to the Resource Conservation and Recovery Act, as
amended, the Comprehensive Environmental Response, Compensation, and Liability
Act as amended, the Federal Clean Water Act, or any other federal, state, or
local environmental law, regulation, ordinance, rule, or by-law, whether
existing as of the date hereof, previously enforced, or subsequently enacted.

 

52. Level one (1) hazardous waste evaluation

Prior to the termination of this Sublease or the assignment of the subleasehold,
Sublessee shall conduct a Level One (1) Hazardous Waste Evaluation and conduct a
complete abatement and disposal, if necessary, satisfactory to the standards
required by the Federal Environmental Protection Agency and the Department of
Land and Natural Resources. The termination will not be approved by the Board of
Land and Natural Resources unless this evaluation and abatement provision has
been executed.

 

53. Fire and Extended Coverage Insurance

 

a)      At all times during the term of this Agreement, Sublessee shall at
Sublessee's own expense keep insured all improvements now situated, or hereafter
constructed or erected on the premises against loss or damage of fire and the
risks covered by the standard extended coverage endorsement policies as shall be
issued by an insurance company or companies authorized to do business in the
State of Hawaii and as approved by Sublessor and Sublessee. Said policies shall
be issued in the names of Sublessor, Sublessee and any mortgagee as their
interests may appear and shall be in an amount as near as practicable to the
full replacement cost of said improvements. Sublessee will pay all premiums
thereon when due and from time to time upon receiving the same will promptly
deposit with Sublessor a certificate of insurance coverage as described.
Sublessor shall have the right to maintain any policy required under this
paragraph 53 whereupon Sublessee shall promptly reimburse Sublessor for all
premiums paid by Sublessor with respect thereto and Sublessor will promptly
deposit with Sublessee a certificate of insurance coverage.

 

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b)     The aforesaid fire insurance policy shall be issued to Sublessee and
Sublessor and shall contain an endorsement requiring thirty (30) days' written
notice from the insurance company or companies to Sublessor and Sublessee before
cancellation or change in the coverage, scope or amount of any policy.

 

c)     Payment of Insurance Proceeds. Every policy of such insurance shall be
issued to cover and insure all of the several interests in such buildings,
fixtures and improvements of Sublessor, Sublessor's mortgagee, if any, Sublessee
and any mortgagees under any mortgage of this Sublease, as their respective
interests shall appear, and shall be made payable in case of loss or damage to.
any bank or trust company authorized by law to exercise corporate trust powers
in the State of Hawaii and having its principal office in Honolulu as shall from
time to time be designated by Sublessee with the approval of Sublessor, as
trustee of all proceeds of such insurance.  Such trustee shall have no
obligation whatsoever to effect, maintain or renew such insurance, or to attend
to any claim for loss or damage thereunder, or the collection of any proceeds
thereof, or to incur any expenses therefor, and shall be responsible only for
the proper custody and application as herein provided of all proceeds of such
insurance that shall actually come into its possession, and Sublessee will pay
all fees and expenses of such trustee for or in connection with its services. 
The respective interests of Sublessor, Sublessee and any mortgagees in any
proceeds of such insurance payable for loss or damage to such buildings,
fixtures and improvements shall be fixed and determined as of the date of such
loss or damage as follows:

 

(i) Sublessor shall be entitled to collect and receive all proceeds payable for
loss or damage to any building, fixtures or other improvements existing and
located on the premises at the commencement of the term of this Sublease.

 

(ii) With respect to any proceeds payable for loss or damage to any building,
fixtures or other improvements hereafter constructed and placed on the subleased
premises by Sublessee, and at the cost and expense of Sublessee, the interest of
Sublessor shall be a proportionate amount thereof in the ratio which the expired
portion of the term of this Sublease from the date of such loss or damage, bears
to the whole term of this Sublease. The interest of Sublessee therein shall be
the balance of such proceeds.

 

(iii) The interest of any of Sublessee's mortgagees in any of such proceeds
shall be limited to the amount of and encumber only the interest of Sublessee in
such insurance proceeds. The respective interests and rights of two or more
mortgagees in and to such interest of Sublessee shall be determined between them
in accordance with the priority of and the unpaid amounts secured by their
respective mortgages.

 

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d)      Use of insurance Proceeds. In case such buildings, fixtures or other
improvements, or any part thereof, shall be destroyed or damaged by fire or
other casualty herein required to be insured against, then, and as often as the
same shall happen, all proceeds of such insurance, including the interest
therein of Sublessor, shall be available to and used with all reasonable
dispatch by Sublessee in rebuilding, repairing or otherwise reinstating such
buildings, fixtures and other improvements in a good and substantial manner
according to the plan and elevation thereof, or according to such modified plan
for the same or substitute buildings, fixtures and other improvements as shall
be approved in writing by the parties hereto, and in case such proceeds shall be
insufficient in amount to so rebuild, repair or reinstate such buildings,
fixtures and other improvements, Sublessee shall make up the deficiency for such
purpose out of Sublessee's own funds; PROVIDED, HOWEVER, that if such loss shall
occur in the last ten (10) years of the term of this Sublease and such insurance
proceeds shall be insufficient for rebuilding, repairing or otherwise
reinstating such buildings, fixtures and other improvements as aforesaid, then
Sublessee, in lieu of making up the deficiency, may request in writing to
Sublessor within thirty (30) days after such destruction, damage or casualty,
that Sublessee, at its own expense, be allowed to promptly remove from the
subleased premises all remains of such buildings, fixtures, and other
improvements and all debris resulting from such casualty and to restore the land
to good and orderly condition and even grade. If approved in writing by
Sublessor, and only after such prompt removal and restoration by Sublessee, then
Sublessee shall be relieved of all further obligations hereunder with respect to
such buildings, fixtures and other improvements.

 

e)      Termination of Agreement. If Sublessee requests to terminate this
Agreement and to remove from the subleased premises all remains of such
buildings, fixtures and other improvements destroyed or damaged by fire or other
such casualty and all debris resulting from such casualty and to restore the
land to good and orderly condition and even grade as hereinabove provided, and
if Sublessor approves such request in writing, then after such removal and
restoration by Sublessee and upon the payment by Sublessee of the real property
taxes for the whole tax fiscal year in which such damage or destruction shall
occur, either party hereto shall have the right, at its option, by giving twenty
(20) days' written notice to the other party, to terminate this Sublease.  Upon
such termination, Sublessee shall be relieved of all further obligations under
this Sublease, and the insurance proceeds payable for loss or damage to such
buildings and improvements, shall be payable to the parties in accordance with
their interest in the proceeds set forth hereinabove.

 

f) No Abatement. No damage or destruction of the subleased premises or any
portion thereof shall cause the rent or other charges to be abated, and
Sublessee shall continue to pay Sublessor all such rents and other charges from
the time of such damage or destruction to the time. of completion of the repair
work or reconstruction of the subleased premises. Sublessee agrees that in the
event of damage or destruction of the subleased premises or any portion thereof,
Sublessee will keep in effect the bond referred to in Section 34 above.

 

g) All rights or claims of subrogation against Sublessor and the State of
Hawaii, and their respective officers, directors, employees, and agents are
hereby waived by Sublessee and any person or entity claiming by, through or
under Sublessee.

 

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54. Withdrawal

The Sublessor shall have the right to withdraw the subleased premises, or any
portion, at any time during the term of this Sublease upon giving of reasonable
notice and without compensation, except as provided in the Sublease, for public
uses or purposes, including, but not limited to residential, commercial,
industrial, or resort developments, for roadway and airport uses, for
constructing new roads or extensions, or changes in line or grade of existing
roads, for rights of way and easements of all kinds, and shall be subject to the
right of the Sublessor to remove all soil, rock or gravel as may be necessary
for the construction of roads and rights of way within or without the subleased
premises; provided, that upon the withdrawal, or upon the taking which causes
any portion of the land originally subleased to become unusable for the specific
use or uses for which it was subleased, the rent shall be reduced in proportion
to the value of the land withdrawn or made unusable, and if any permanent
improvement constructed upon the land by the Sublessee is destroyed or made
unusable in the process of the withdrawal or taking, the proportionate value
thereof shall be paid by the Sublessor based upon the unexpired term of the
sublease as it bears to the whole term.

 

55.   Governmental permits

Sublessee shall comply with all applicable federal, state and county permitting
requirements including those relating to shoreline management area, shoreline
setback requirements, state conservation district requirements, subdivision
permits and building standards. The Sublessor does not warrant or guarantee that
the applicable federal, state or county authority will permit the construction
or installation of improvements that may be required by Sublessee. All costs
associated with obtaining the building and other permits or approvals will be
borne by the Sublessee.

 

56. Notices

Sublessor may give any notice or deliver any document hereunder to Sublessee by
mailing the same by registered or certified mail addressed to Sublessee's
address above or by delivering the same in person to any officer of Sublessee.
Sublessee may give any notice or deliver any document hereunder to Sublessor by
mailing the same by registered or certified mail addressed to Sublessor's
address above or by delivering the same to Sublessor in person. For the purposes
of this paragraph, either party may change its address by written notice to the
other. In case of any notice or document delivered by certified or registered
mail, the same shall be deemed delivered when deposited in any United States
post office, properly addressed as herein provided, with postage fully prepaid.

 

57. Construction All Risks Insurance. improvement

Prior to the start of any construction and upon receipt of the appropriate
building permit, the Sublessee shall procure Construction All Risks Insurance up
to the estimated value of the work to be performed, and in any case not to
exceed the cost of construction, acceptable to the Sublessor, which policy shall
name the State and Sublessor as additional insureds. The Construction All Risk
Insurance shall be in force until final completion of the work.

 

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58. No party deemed drafter: Headings

This Sublease has been submitted to the scrutiny of all parties hereto and their
counsel if desired, and shall be given a fair and reasonable interpretation in
accordance with the words hereof, without consideration or weight being given to
its having been drafted by any party hereto or its counsel. The article and
paragraph headings are inserted only for the convenience of the Sublessor and
the Sublessee and are not intended to construe the intent or meaning of any of
the provisions thereof.

 

59. Superseding agreement

This Sublease supersedes and terminates all prior leases, subleases, facilities
rental agreements, facilities use agreements and option agreements previously
made between the Sublessor and Sublessee, provided that Sublessee shall continue
to remain liable to the Sublessor and the State for all monetary and insurance
obligations incurred prior to the date of this Sublease.

 

60. Modification of sublease

Any modification, alteration, or change in this Sublease shall be made only by
written agreement executed by the parties.

 

61. Net Agreement

Notwithstanding any provision herein to the contrary, it is the intention of the
parties that the rent shall be net to Sublessor. All costs, expenses and
obligations relating to the premises shall be paid by Sublessee.

 

62. "As-Is" Condition

Sublessee represents and warrants to Sublessor that Sublessee has fully
inspected the premises and does hereby agree to accept the premises in its "as
is" and "where is" condition.

 

63. Accord and Satisfaction

No payment by Sublessee or receipt by Sublessor of a lesser amount than the
monthly rent herein stipulated shall be deemed to be other than on account of
the earliest stipulated rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as rent be deemed an
accord and satisfaction, and Sublessor may accept such check or payment without
prejudice to Sublessor's right to recover the balance of such rent or pursue any
other remedy provided in this Agreement.

 

64. Entire Agreement

This Agreement and the Exhibits attached hereto and forming a part hereof set
forth all the covenants, promises, agreements, conditions and understandings
between Sublessor and Sublessee concerning the premises, and there are no
covenants, promises, agreements, conditions or understandings. between them
other than what is set forth herein. Unless otherwise provided for herein, no
subsequent alteration, amendment, change or addition to this Agreement shall be
binding upon Sublessor or Sublessee unless reduced to writing and signed by all
parties.

 

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65.     Governing law

This Sublease shall be construed, interpreted, and governed by the laws of the
State of Hawaii.

 

66. Exhibits- incorporated in Sublease

All exhibits referred to are attached to this Sublease and. hereby are deemed
incorporated by reference.

 

67. Partial invalidity

If any term, provision, covenant, or condition of this Sublease should be held
to be invalid, void, or unenforceable, the remainder of this Sublease shall
continue in full force and effect and shall in no way be affected, impaired, or
invalidated thereby.

 

68. Time is of the essence

Time is of the essence in the performance of each and every provision of this
Sublease.

 

69. No partnership

The Sublessor is not a partner nor joint venturer with Sublessee in connection
with the business carried on under this Sublease and shall have no obligation
with respect to Sublessee's debts or other liabilities, and likewise shall not
be entitled to share in the profits of any sale of Sublessee's business.

 

70. Authority

The persons w)lo have executed this Sublease represent and warrant that they are
duly authorized to execute this Sublease in their individual or representative
capacity as indicated.

 

71. No waiver

Waiver by either party of strict performance or any provisions of this Sublease
shall not be a waiver nor prejudice of the party's right to require strict
performance of the same provision in the future or of any other provision.

 

72. Survey monuments

Any legal land subdivision survey corners, reference points or monuments are to
be preserved. If such are destroyed or disturbed by Sublessee, Sublessee shall
reestablish them by a licensed land surveyor in accordance with U.S. General
Land Office standards at Sublessee's own expense. Corners and/or reference
points or monuments that must necessarily be disturbed or destroyed in the
process of carrying out the operations allowed by this Sublease must be properly
and adequately referenced and/or replaced. Such references must be approved by
the Sublessor prior to removal of said corners, reference points or monuments.

 

73.     Archaeological sites

In the event any unanticipated sites or remains such as shell, bone, charcoal
deposits, human burials, rock or coral alignments, pavings or walls are found on
the subleased premises, the Sublessee and the Sublessee's agents, employees and
representatives shall immediately stop all land utilization and/or work and
contact the Historic Preservation Office at (808) 692-8015 in compliance with
Chapter 6E, Hawaii Revised Statutes.

 

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74.      Environmental regulations

Sublessee shall comply with all applicable federal, state and county
environmental impact regulations, including but not limited to Chapter 343,
Hawaii Revised Statutes, as amended, and regulations governing historic
preservation.

 

Sublessee shall also comply with NELHA 's Aquatic Species Health Management
Program, as may be amended from time to time in NELHA's sole and absolute
discretion. The current version of NELHA's Aquatic Species Health Management
Program is attached hereto as Exhibit "H" and incorporated herein by this
reference. A violation of NELHA's Aquatic Species Health Management Program
shall be deemed a material default under this Sublease, and Sublessor may, in
its sole and absolute discretion elect to terminate this Sublease.

 

75. No third partv beneficiary enforcement

It is agreed that enforcement of the terms and conditions of this agreement, and
all rights of action relating to such enforcement, shall be strictly reserved to
the Sublessor, the Board of Land and Natural Resources, the State of Hawaii, and
the Sublessee, and nothing contained in this agreement shall give, or allow any
claim or right of action whatsoever by anx other person on this agreement. The
Sublessor and Sublessee intend that any entity, other than the Sublessor, the
Board of Natural Resources, the State of Hawaii, or the Sublessee receiving
services or benefits under this agreement, shall be deemed and incidental
beneficiary only.

 

THIS SUBLEASE IS ALSO SUBJECT TO THE FOLLOWING SPECIAL TERMS AND CONDITIONS:

 

76. Design standards

The Sublessee shall comply with any applicable design standards of the Sublessor
or the Board of Land and Natural Resources in the preparing, design and
construction of structures and other site improvements.

 

77. Administrative rules

The Sublessee shall comply with all administrative rules adopted by Sublessor
pursuant to Chapter 91 and Chapter 227D, Hawaii Revised Statutes, as amended,
relating to the Natural Energy Laboratory of Hawaii Authority.

 

78. Restoration of subleased land

Upon termination, surrender, or expiration of this Sublease, the Sublessor may
require the Sublessee to restore the lands covered herein to its original
condition insofar as it is reasonable to do so within ninety (90) calendar days
thereof, except for such roads, excavations, alterations or other improvements
which may be designated for retention by the Sublessor or a State agency having
jurisdiction over said lands. When determined by the Sublessor or such State
agency, cleared sites and roadways shall be replanted with grass, shrubs, or
trees by the Sublessee.

 

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79. Sublease subject to master lease

This Sublease is subject to the terms and conditions of the master lease
(including without limitation General Leases No. S-5619, S-4717, and S-5157)
between the Board of Land and Natural Resources of the State of Hawaii and
Sublessor, a copy of which is attached hereto as Exhibit "F." Any conflicts
between the provisions of this Sublease and the foregoing master lease shall be
resolved in favor of the master lease.

 

 

DEFINITIONS

 

30. The use of any gender shall include all genders, and if there is more than
one Sublessee, then all words used in the singular shall extend to and include
the plural.

 

As used herein, unless clearly repugnant to the context:

 

a) "County" means the County of Hawaii and any governmental agencies or
authorities thereof.

 

b) "Sublessee" means and includes the Sublessee, its officers, employees,
invitees, successors or permitted assigns.

 

c) "Holder of a record of a security interest" means any person who is the owner
or possessor of a security interest in the land subleased and who has filed with
the Natural Energy Laboratory of Hawaii Authority and with the Bureau of
Conveyances of the State of Hawaii a copy of such interest.

 

d) "Premises" means the subleased land and all buildings and improvements now or
hereinafter constructed and installed on the subleased land.

 

e) "Waste" includes, but is not limited to, (1) permitting the subleased
premises or any portion thereof to become unduly eroded or failure to take
proper precautions or make reasonable effort to prevent or correct the erosion;
(2) permitting a substantial increase in noxious weeds in uncultivated portions
of the subleased premises; and (3) failure to employ all of the usable portions
of the subleased premises.

 

f) "Improved land" is defined as land that has been leveled or filled to
allow the construction of tenant facilities. The installation of utilities into
the property is not a requirement to categorize the property as improved.

 

g) "Unimproved land" is defined as land that has not been leveled or filled to
allow the construction of tenant facilities. The installation of utilities to
the boundary of the property alone does not categorize the property as improved.

 

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IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed
this      day of            (date).

 

 

"SUBLESSOR":

      NATURAL ENERGY LABORATORY OF HAWAII AUTHORITY       By: /s/ Ronald Nelson
Baird   Its Chief Executive Officer      

"SUBLESSEE":

CELLANA LLC

      By: /s/ Ariel Martinez   Its President

 

 

 

APPROVED AS TO FORM:       /s/ Bryan C. Yu   Deputy Attorney General      
Dated:               

 

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