Document:

stbernard_s8-ex0415.htm

EXHIBIT 4.15

 

 

ST. BERNARD SOFTWARE, INC.

2005 STOCK OPTION PLAN

 

1. PURPOSE. This Stock Option Plan (the “Plan”) is intended to serve as an incentive to, and to encourage stock ownership by certain eligible participants rendering services to St. Bernard Software, Inc., a Delaware corporation, and certain affiliates as set forth below (the “Corporation”), so that they may acquire or increase their proprietary interest in the Corporation and to encourage them to remain in the service of the Corporation.

 

2. ADMINISTRATION.

 

2.1 Committee. The Plan shall be administered by the Board of Directors of the Corporation (the “Board of Directors”), or a committee of two or more members appointed by the Board of Directors (the “Committee”). At the time that the Corporation has a class of equity securities which have been registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or is a publicly-held corporation under Internal Revenue Code Section 162(m), membership in the Committee is limited to Non-Employee Directors as defined in Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of 1934 and outside directors as defined in Treasury Regulation § 1.162-27(e)(3). The Committee shall select one of its members as Chairman and shall appoint a Secretary, who need not be a member of the Committee. The Committee shall hold meetings at such times and places as it may determine and minutes of such meetings shall be recorded. Acts by a majority of the Committee in a meeting at which a quorum is present and acts approved in writing by a majority of the members of the Committee shall be valid acts of the Committee.

 

2.2 Term. If the Board of Directors selects a Committee, the members of the Committee shall serve on the Committee for the period of time determined by the Board of Directors and shall be subject to removal by the Board of Directors at any time. The Board of Directors may terminate the function of the Committee at any time and resume all powers and authority previously delegated to the Committee.

 

2.3 Authority. The Committee shall have sole discretion and authority to grant options under the Plan to eligible participants rendering services to the Corporation or any “parent” or “subsidiary” of the Corporation, as defined in Section 424 of the Internal Revenue Code of 1986, as amended (the “Code”) (“Parent or Subsidiary”), at such times, under such terms and in such amounts as it may decide. For purposes of this Plan and any Stock Option Agreement (as defined below), the term “Corporation” shall include any Parent or Subsidiary, if applicable. Subject to the express provisions of the Plan, the Committee shall have complete authority to interpret the Plan, to prescribe, amend and rescind the rules and regulations relating to the Plan, to determine the details and provisions of any Stock Option Agreement, to accelerate any options granted under the Plan and to make all other determinations necessary or advisable for the administration of the Plan.

 

 

 

  

1

  

 

2.4 Type of Option. The Committee shall have full authority and discretion to determine, and shall specify, whether the eligible individual will be granted options intended to qualify as incentive options under Section 422 of the Code (“Incentive Options”) or options which are not intended to qualify under Section 422 of the Code (“Non-Qualified Options”); provided, however, that Incentive Options shall only be granted to employees of the Corporation, or a Parent or Subsidiary thereof, and shall be subject to the special limitations set forth herein attributable to Incentive Options.

 

2.5 Interpretation. The interpretation and construction by the Committee of any provisions of the Plan or of any option granted under the Plan shall be final and binding on all parties having an interest in this Plan or any option granted hereunder. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any option granted under the Plan.

 

3. ELIGIBILITY.

 

3.1 General. All directors, officers, employees of and certain persons rendering services to the Corporation, or any Parent or Subsidiary relative to the Corporation’s, or any Parent’s or Subsidiary’s management, operation or development shall be eligible to receive options under the Plan. The selection of recipients of options shall be within the sole and absolute discretion of the Committee. No person shall be granted an Incentive Option under this Plan unless such person is an employee of the Corporation on the date of grant. No person shall be granted an option under this Plan unless such person has executed, if requested by the Committee, the grant representation letter set forth on Exhibit “A,” as such Exhibit may be amended by the Committee from time to time.

 

3.2 Termination of Eligibility.

 

3.2.1 If an optionee ceases to be employed by the Corporation, or its Parent or Subsidiary, is no longer an officer or member of the Board of Directors of the Corporation, or no longer performs services for the Corporation, or its Parent or Subsidiary, for any reason (other than for “cause,” as hereinafter defined, or such optionee’s death), any option granted hereunder to such optionee shall expire three months after the date the occurrence giving rise to such termination of eligibility (or 1 year in the event an optionee is “disabled,” as defined in Section 22(e)(3) of the Code) or upon the date it expires by its terms, whichever is earlier. Any option that has not vested in the optionee as of the date of such termination shall immediately expire and shall be null and void. The Committee shall, in its sole and absolute discretion, decide, utilizing the provisions set forth in Treasury Regulations § 1.421-7(h), whether an authorized leave of absence or absence for military or governmental service, or absence for any other reason, shall constitute termination of eligibility for purposes of this Section.

 

3.2.2 If an optionee ceases to be employed by the Corporation, or its Parent or Subsidiary, is no longer an officer or member of the Board of Directors of the Corporation, or no longer performs services for the Corporation, or its Parent or Subsidiary and such termination is as a result of “cause,” as hereinafter defined, then all options granted hereunder to such optionee shall expire on the date of the occurrence giving rise to such termination of eligibility or upon the date it expires by its terms, whichever is earlier, and such optionee shall have no rights with respect to any unexercised options. For purposes of this Plan, “cause” shall mean an optionee’s personal dishonesty, willful misconduct, theft, fraud, embezzlement, alcoholism, or drug abuse or making or attempting to make any unauthorized use or disclosure of confidential information or trade secrets of the Corporation or its parent or subsidiary corporations.

 

 

 

  

2

  

 

3.3 Death of Optionee and Transfer of Option. In the event an optionee shall die, an option may be exercised (subject to the condition that no option shall be exercisable after its expiration and only to the extent that the optionee’s right to exercise such option had accrued at the time of the optionee’s death) at any time within twelve months after the optionee’s death by the executors or administrators of the optionee or by any person or persons who shall have acquired the option directly from the optionee by bequest or inheritance. Any option that has not vested in the optionee as of the date of death or termination of employment, whichever is earlier, shall immediately expire and shall be null and void. No option shall be transferable by the optionee other than by will or the laws of intestate succession.

 

3.3.1 Limitation on Incentive Options. No person shall be granted any Incentive Option to the extent that the aggregate fair market value of the Stock (as defined below) to which such options are exercisable for the first time by the optionee during any calendar year (under all plans of the Corporation as determined under Section 422(d) of the Code) exceeds $100,000.

 

4. IDENTIFICATION OF STOCK. The Stock, as defined herein, subject to the options shall be shares of the Corporation’s authorized but unissued or acquired or reacquired common stock (the “Stock”). The aggregate number of shares subject to outstanding options shall not exceed 3,974,215 shares of Stock (subject to adjustment as provided in Section 6). If any option granted hereunder shall expire or terminate for any reason without having been exercised in full, the unpurchased shares subject thereto shall again be available for purposes of this Plan.

 

Notwithstanding the above, at no time shall the total number of shares of Stock issuable upon exercise of all outstanding options and the total number of shares of Stock provided for under any stock bonus or similar plan of the Corporation exceed 30% as calculated in accordance with the conditions and exclusions of §260.140.45 of Title 10, California Code of Regulations, based on the shares of the issuer which are outstanding at the time the calculation is made.

 

5. TERMS AND CONDITIONS OF OPTIONS. Any option granted pursuant to the Plan shall be evidenced by an agreement (“Stock Option Agreement”) in such form as the Committee shall from time to time determine, which agreement shall comply with and be subject to the following terms and conditions:

5.1 Number of Shares. Each option shall state the number of shares of Stock to which it pertains.

 

 

 

 

 

  

3

  

 

5.2 Option Exercise Price. Each option shall state the option exercise price, which shall be determined by the Committee; provided, however, that (i) the exercise price of any Incentive Option shall not be less than the fair market value of the Stock, as determined by the Committee, on the date of grant of such option, (ii) the exercise price of any Incentive Option granted to an employee who owns more than 10% of the total combined voting power of all classes of the Corporation’s stock, as determined for purposes of Section 422 of the Code, shall not be less than 110% of the fair market value of the Stock, as determined by the Committee, on the date of grant of such option, and (iii) the exercise price of any Non-Qualified Option shall not be less than 100% of the fair market value of the Stock, as determined by the Committee, on the date of grant of such option. In the event that the fair market value of the price of the common stock declines below the price at which the option is granted, the Committee shall have the discretion and authority to cancel, reduce, or otherwise modify the price of any unexercised option, including, but not limited to, a regrant of the option at a new price more commensurate with the fair market value of the stock. The Committee must receive the approval of the Board of Directors before any action is taken in accordance with this provision.

 

5.3 Term of Option. The term of an option granted hereunder shall be determined by the Committee at the time of grant, but shall not exceed ten years from the date of the grant. The term of any Incentive Option granted to an employee who owns more than 10% of the total combined voting power of all classes of the Corporation’s stock, as determined for purposes of Section 422 of the Code, shall in no event exceed five years from the date of grant. All options shall be subject to early termination as set forth in this Plan. In no event shall any option be exercisable after the expiration of its term.

 

5.4 Method of Exercise. An option shall be exercised by written notice to the Corporation by the optionee (or successor in the event of death) and execution by the optionee of an exercise representation letter in the form set forth on Exhibit “B,” as such Exhibit may be amended by the Committee from time to time. Such written notice shall state the number of shares with respect to which the option is being exercised and designate a time, during normal business hours of the Corporation, for the delivery thereof (“Exercise Date”), which time shall be at least 30 days after the giving of such notice unless an earlier date shall have been mutually agreed upon. At the time specified in the written notice, the Corporation shall deliver to the optionee at the principal office of the Corporation, or such other appropriate place as may be determined by the Committee, a certificate or certificates for such shares. Notwithstanding the foregoing, the Corporation may postpone delivery of any certificate or certificates after notice of exercise for such reasonable period as may be required to comply with any applicable listing requirements of any securities exchange. In the event an option shall be exercisable by any person other than the optionee, the required notice under this Section shall be accompanied by appropriate proof of the right of such person to exercise the option.

 

5.5 Medium and Time of Payment. The option exercise price shall be payable in full on or before the option Exercise Date in any one of the following alternative forms:

 

 

 

 

 

 

  

4

  

 

5.5.1 Full payment in cash or certified bank or cashier’s check;

 

5.5.2 Full payment in shares of Stock held by the optionee for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and having a fair market value on the Exercise Date in the amount equal to the option exercise price;

 

5.5.3 Full payment in the form of a promissory note bearing interest at not less than the applicable federal rate in effect at the time of execution of the promissory note;

 

5.5.4 Should the Corporation’s outstanding Stock be registered under Section 12(g) of the Exchange Act, at the time the option is exercised, through a special sale and remittance procedure pursuant to which the optionee shall concurrently provide irrevocable written instruction to (a) a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale;

 

5.5.5 A combination of the consideration set forth in Sections 5.5.1, through 5.5.4 equal to the option exercise price; or

 

5.5.6 Any other method of payment complying with the provisions of Section 422 of the Code with respect to Incentive Options, provided the terms of payment are established by the Committee at the time of grant and any other method of payment established by the Committee with respect to Non-Qualified Options.

 

5.6 Fair Market Value. The fair market value of a share of Stock on any relevant date shall be determined in accordance with the following provisions:

 

5.6.1 If the Stock at the time is neither listed nor admitted to trading on any stock exchange nor traded in the over-the-counter market, then the fair market value shall be determined by the Committee after taking into account such factors as the Committee shall deem appropriate.

 

5.6.2 If the Stock is not at the time listed or admitted to trading on any stock exchange but is traded in the over-the-counter market, the fair market value shall be the mean between the highest bid and lowest asked prices (or, if such information is available, the closing selling price) of one share of Stock on the date in question in the over-the-counter market, as such prices are reported by the National Association of Securities Dealers through its NASDAQ system or any successor system. If there are no reported bid and asked prices (or closing selling price) for the Stock on the date in question, then the mean between the highest bid price and lowest asked price (or the closing selling price) on the last preceding date for which such quotations exist shall be determinative of fair market value.

 

 

 

  

5

  

 

5.6.3 If the Stock is at the time listed or admitted to trading on any stock exchange, then the fair market value shall be the closing selling price of one share of Stock on the date in question on the stock exchange determined by the Committee to be the primary market for the Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no reported sale of Stock on such exchange on the date in question, then the fair market value shall be the closing selling price on the exchange on the last preceding date for which such quotation exists.

 

5.7 Rights as a Shareholder. An optionee or successor shall have no rights as a shareholder with respect to any Stock underlying any option until the date of the issuance to such optionee of a certificate for such Stock. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such Stock certificate is issued, except as provided in Section 6.

 

5.8 Modification, Extension and Renewal of Options. Subject to the terms and conditions of the Plan, the Committee may modify, extend or renew outstanding options granted under the Plan, or accept the surrender of outstanding options (to the extent not exercised) and authorize the granting of new options in substitution therefor.

 

5.9 Vesting and Restrictions. The option agreements authorized under the Plan shall contain such other provisions, including without limitation, restrictions upon the exercise of the option, as the Committee shall deem advisable. Thus, for example, the Committee may require that all or any portion of an option not be exercisable until a specified period of time has passed or some other event has occurred.

 

5.10 Other Provisions. The Stock Option Agreements shall contain such other provisions, including without limitation, restrictions or conditions upon the exercise of options, as the Committee shall deem advisable.

 

6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

 

6.1 Subdivision or Consolidation. Subject to any required action by shareholders of the Corporation, the number of shares of Stock covered by each outstanding option, and the exercise price thereof, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Stock of the Corporation resulting from a subdivision or consolidation of shares, including, but not limited to, a stock split, reverse stock split, recapitalization, continuation or reclassification, or the payment of a stock dividend (but only on the Stock) or any other increase or decrease in the number of such shares effected without receipt of consideration by the Corporation. Any fraction of a share subject to option that would otherwise result from an adjustment pursuant to this Section shall be rounded downward to the next full number of shares without other compensation or consideration to the holder of such option.

 

 

 

 

 

  

6

  

 

6.2 Capital Transactions.

 

6.2.1 Upon (i) the consummation of a sale, lease, exclusive license or other disposition of all or substantially all of the consolidated assets of the Corporation and its Subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Corporation and its Subsidiaries to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by stockholders of the Corporation in substantially the same proportions as their ownership of the outstanding voting securities of the Corporation immediately prior to such sale, lease, license or other disposition; (ii) the consummation of a merger, consolidation or similar transaction involving (directly or indirectly) the Corporation and, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Corporation immediately prior thereto do not own, directly or indirectly, either (A) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (B) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction, in each case in substantially the same proportions as their ownership of the outstanding voting securities of the Corporation immediately prior to such transaction; or (iii) the stockholders of the Corporation approve or the Board approves a plan of complete dissolution or liquidation of the Corporation, or a complete dissolution or liquidation of the Corporation, or similar transaction as determined by the Committee, shall otherwise occur, except for a liquidation into a parent corporation (“Capital Transaction”), all outstanding options under this Plan shall terminate and cease to be outstanding, unless the successor corporation or parent thereof assumes or continues such outstanding options or substitutes similar options for such outstanding options. In the event of a Capital Transaction in which the successor corporation or parent thereof does not assume or continue such outstanding options or substitute similar options for such outstanding options, then with respect to options that have not been assumed, continued or substituted and that are held by optionees whose Continuous Service has not terminated prior to the effective time of the Capital Transaction, the vesting of such stock options may, in the Board’s sole discretion, be accelerated in full to a date prior to the effective time of such Capital Transaction and such stock options shall terminate if not exercised at or prior to the effective time of the Capital Transaction. Notwithstanding any other provision in this Section 6.2, a Capital Transaction shall not include a merger of the Corporation with or into a shell corporation for the purpose of facilitating a public offering of the stock of the Corporation.

6.2.2 If (i) a Capital Transaction occurs, (ii) the outstanding options are assumed, continued or substituted in connection with the Capital Transaction and (iii) as of, or within one (1) month prior to, or six (6) months after, the effective time of such Capital Transaction the optionee’s Continuous Service, as hereinafter defined, terminates due to an involuntary termination (not including death or “disability” as defined in Section 22(e)(3) of the Code) without “cause” (as defined in section 3.2.2 herein) or due to a voluntary resignation with Good Reason (as hereinafter defined), then the vesting and exercisability of the optionee’s options shall be accelerated in full. If such termination of Continuous Service occurs prior to the applicable Capital Transaction, the vesting and exercisability of the options shall be accelerated on the date of the Capital Transaction and if such termination of Continuous Service occurs on or after the applicable Capital Transaction, the vesting and exercisability of the options shall be accelerated on the date of the termination of Continuous Service.

 

 

 

 

 

  

7

  

 

6.2.3 For purposes of this Plan, “Continuous Service” shall mean that an optionee’s service with the Corporation or any Parent or Subsidiary, whether as an employee, director or consultant, is not interrupted or terminated. A change in the capacity in which the optionee renders service to the Corporation or any Parent or Subsidiary as an employee, consultant or director or a change in the entity for which the optionee renders such service, provided that there is no interruption or termination of the optionee’s service with the Corporation or any Parent or Subsidiary, shall not terminate an optionee’s Continuous Service. For example, a change in status from an employee of the Corporation to a consultant to a Parent or to a director shall not constitute an interruption of Continuous Service. To the extent permitted by law, the Board of Directors or the chief executive officer of the Corporation, in that party’s sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. Notwithstanding the foregoing, a leave of absence shall be treated as Continuous Service for purposes of vesting in an option only to such extent as may be provided in the Corporation’s leave of absence policy, in the written terms of any leave of absence agreement or policy applicable to the optionee, or as otherwise required by law.

 

6.2.4 For purposes of this Plan, “Good Reason” shall mean that one or more of the following are undertaken by the Corporation without the optionee’s express written consent: (i) the assignment to the optionee of any duties or responsibilities that results in a material diminution in the optionee’s function as in effect immediately prior to the effective date of the Capital Transaction; provided, however, that a change in the optionee’s title or reporting relationships shall not provide the basis for a voluntary termination with Good Reason; (ii) a material reduction by the Corporation in the optionee’s annual base salary, as in effect on the effective date of the Capital Transaction or as increased thereafter; provided, however, that Good Reason shall not be deemed to have occurred in the event of a reduction in the optionee’s annual base salary that is pursuant to a salary reduction program affecting substantially all of the employees of the Corporation and that does not adversely affect the optionee to a greater extent than other similarly situated employees; provided further, however, that Good Reason shall be deemed to have occurred if such salary reduction program results in a reduction of the optionee’s annual base salary by more than twenty percent, regardless of whether such reduction affects other similarly-situated employees to the same extent as the optionee; (iii) a relocation of the optionee’s principal place of work to a location that would increase the optionee’s one-way commute from his or her personal residence to the new principal place of work by more than thirty (30) miles; or (iv) a material breach by the Corporation of any provision of the Plan or the Stock Option Agreement or any other material agreement between the optionee and the Corporation concerning the terms and conditions of the optionee’s employment.

 

6.3 Adjustments. To the extent that the foregoing adjustments relate to stock or securities of the Corporation, such adjustments shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.

 

 

 

 

 

  

8

  

 

6.4 Ability to Adjust. The grant of an option pursuant to the Plan shall not affect in any way the right or power of the Corporation to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve, liquidate, sell or transfer all or any part of its business or assets.

 

6.5 Notice of Adjustment. Whenever the Corporation shall take any action resulting in any adjustment provided for in this Section, the Corporation shall forthwith deliver notice of such action to each optionee, which notice shall set forth the number of shares subject to the option and the exercise price thereof resulting from such adjustment.

 

6.6 Limitation on Adjustments. Any adjustment, assumption or substitution of an Incentive Option shall comply with Section 425 of the Code, if applicable.

 

7. NONASSIGNABILITY. Options granted under this Plan may not be sold, pledged, assigned or transferred in any manner other than by will or by the laws of intestate succession, and may be exercised during the lifetime of an optionee only by such optionee. Any transfer in violation of this Section shall void such option, and any Stock Option Agreement entered into by the optionee and the Corporation regarding such transferred option shall be void and have no further force or effect. No option shall be pledged or hypothecated in any way, nor shall any option be subject to execution, attachment or similar process.

 

8. CASH-OUT OF OPTIONS. Once the Corporation’s outstanding Stock is registered under Section 12(g) of the Exchange Act, one or more optionees subject to the short-swing profit restrictions of the Federal securities laws may, in the Committee’s sole discretion, be granted limited cash-out rights to operate in tandem with their outstanding options under the Plan. Any option with such a limited right in effect for at least six (6) months shall automatically be canceled upon the acquisition of fifty percent (50%) or more of the Corporation’s outstanding Stock (excluding the Stock holdings of officers and directors of the Corporation who participate in this Plan) pursuant to a tender or exchange offer made by a person or group of related persons (other than the Corporation or a person that directly or indirectly controls, is controlled by or is under common control with the Corporation) which the Board of Directors does not recommend the Corporation’s stockholders to accept. In return for the canceled option, the optionee shall be entitled to a cash contribution from the Corporation in an amount equal to the excess of (i) the Cash-Out Price of the shares of Stock in which the optionee is vested under the canceled option over (ii) the aggregate exercise price payable for such vested shares. The cash distribution payable upon such cancellation shall be made within five (5) days following the completion of such tender or exchange offer, and neither the approval of the Committee nor the consent of the Board of Directors shall be required in connection with such cancellation and distribution.

 

 

 

 

  

9

  

 

For purposes of calculating the cash distribution, the Cash-Out Price per share of the vested Stock subject to the canceled option shall be deemed to be equal to the greater of (i) the fair market value per share on the date of surrender, as determined in accordance with the valuation provisions of subsection 5.6, or (ii) the highest reported price per share paid in effecting the tender or exchange offer. However, if the canceled option is an Incentive Option, then the Cash-Out Price shall not exceed the value per share determined under clause (i) above.

 

The shares of Stock subject to any option canceled for an appreciation distribution in accordance with this Section 8 shall not be available for subsequent option grants under the Plan.

 

9. RIGHT OF FIRST REFUSAL.

 

Stock issued pursuant to this Plan together with any rights, securities or additional stock that have been received pursuant to a stock dividend, stock split, reorganization or other transaction that has been received as a result of an employee option or stock acquired pursuant thereto shall be subject to a right of first refusal by the Corporation in the event the holder of such shares proposes to sell, pledge or otherwise transfer said shares or any interest in said shares to any person or entity. Any holder of shares of Stock (or other securities) acquired under the Plan desiring to transfer such Stock (or other securities) or any interest therein shall give written notice to the Corporation describing the proposed transfer, including the price of shares proposed to be transferred, the proposed transfer price and terms, and the name and address of the proposed transferee. Unless otherwise agreed by the Corporation and the holder of such shares, repurchases by the Corporation under this Section shall be at the proposed price and terms specified in the notice to the Corporation. The Corporation’s rights under this Section shall be freely assignable.

 

If the Corporation fails to exercise its right of first refusal within 30 days from the date upon which the Corporation received the shareholder’s written notice, the shareholder may, within the next 90 days, conclude a transfer of the exact number of shares covered by said notice on terms not more favorable to the transferee than those described in the notice. Any subsequent proposed transfer by such transferee shall again be subject to the Corporation’s right of first refusal. If the Corporation exercises its right of first refusal, the shareholder shall endorse and deliver to the Corporation the stock certificates representing the shares being repurchased, and the Corporation shall promptly pay the shareholder the total repurchase price as set forth in the terms of the agreement. The holders of shares being repurchased pursuant to this Section shall cease to have any rights with respect to such shares immediately upon repurchase.

 

No written notice of a proposed transfer shall be required under this Section and no right of first refusal shall exist with respect to transfers by will or the laws of intestate succession.

 

The right of first refusal set forth in this Section shall terminate upon the consummation of an underwritten public offering of the Corporation’s Stock registered under the Securities Act of 1933, as amended (the “Act”).

 

 

 

 

 

  

10

  

 

Any attempted transfer of any Stock or securities subject to this right of first refusal which is not made in compliance with this Section shall be null and void.

 

The Committee may assign the Corporation’s repurchase option under this Section to any person selected by the Committee including one or more or the shareholders of the Corporation.

 

10. NO RIGHT OF EMPLOYMENT. Neither the grant nor exercise of any option nor anything in this Plan shall impose upon the Corporation or any other corporation any obligation to employ or continue to employ any optionee. The right of the Corporation and any other corporation to terminate any employee shall not be diminished or affected because an option has been granted to such employee.

 

11. TERM OF PLAN. This Plan is effective on the date the Plan is adopted by the Board of Directors and options may be granted pursuant to the Plan from time to time within a period of ten (10) years from such date, or the date of any required shareholder approval required under the Plan, if earlier. Termination of the Plan shall not affect any option theretofore granted.

 

12. AMENDMENT OF THE PLAN. The Board of Directors of the Corporation may, subject to any required shareholder approval, suspend, discontinue or terminate the Plan, or revise or amend it in any respect whatsoever with respect to any shares of Stock at that time not subject to options.

 

13. APPLICATION OF FUNDS. The proceeds received by the Corporation from the sale of Stock pursuant to options may be used for general corporate purposes.

 

14. RESERVATION OF SHARES. The Corporation, during the term of this Plan, shall at all times reserve and keep available such number of shares of Stock as shall be sufficient to satisfy the requirements of the Plan.

 

15. NO OBLIGATION TO EXERCISE OPTION. The granting of an option shall not impose any obligation upon the optionee to exercise such option.

 

16. APPROVAL OF BOARD OF DIRECTORS AND SHAREHOLDERS. The Plan shall not take effect until approved by the Board of Directors of the Corporation. This Plan shall be approved by a vote of the shareholders within 12 months from the date of approval by the Board of Directors. In the event such shareholder vote is not obtained, all options granted hereunder, whether vested or unvested, shall be null and void. Further, any stock acquired pursuant to the exercise of any options under this Agreement may not count for purposes of determining whether shareholder approval has been obtained.

 

17. WITHHOLDING TAXES. Notwithstanding anything else to the contrary in this Plan or any Stock Option Agreement, the exercise of any option shall be conditioned upon payment by such optionee in cash, or other provisions satisfactory to the Committee, of all local, state, federal or other withholding taxes applicable, in the Committee’s judgment, to the exercise or to later disposition of shares acquired upon exercise of an option (including any repurchase of an option or the Stock).

 

 

 

 

  

11

  

 

18. PARACHUTE PAYMENTS. Any outstanding option under the Plan may not be accelerated to the extent any such acceleration of such option would, when added to the present value of other payments in the nature of compensation which becomes due and payable to the optionee would result in the payment to such optionee of an excess parachute payment under Section 280G of the Code. The existence of any such excess parachute payment shall be determined in the sole and absolute discretion of the Committee.

 

19. SECURITIES LAWS COMPLIANCE. Notwithstanding anything contained herein, the Corporation shall not be obligated to grant any option under this Plan or to sell, issue or effect any transfer of any Stock unless such grant, sale, issuance or transfer is at such time effectively (i) registered or exempt from registration under the Securities Act of 1933, as amended (the “Act”), and (ii) qualified or exempt from qualification under the California Corporate Securities Law of 1968 and any other applicable state securities laws. As a condition to exercise of any option, each optionee shall make such representations as may be deemed appropriate by counsel to the Corporation for the Corporation to use any available exemption from registration under the Act or qualification under any applicable state securities law.

 

20. RESTRICTIVE LEGENDS. The certificates representing the Stock issued upon exercise of options granted pursuant to this Plan will bear any legends required by applicable securities laws as determined by the Committee.

 

21. NOTICES. Any notice to be given under the terms of the Plan shall be addressed to the Corporation in care of its Secretary at its principal office, and any notice to be given to an optionee shall be addressed to such optionee at the address maintained by the Corporation for such person or at such other address as the optionee may specify in writing to the Corporation.

 

22. INFORMATION TO PARTICIPANTS. The Corporation shall make available to all holders of options the information required pursuant to § 260.140.46 of the California Code of Regulations.

 

As amended and restated by the Board of Directors on April 28, 2010.

 

	 	
ST. BERNARD SOFTWARE, INC., 

a Delaware corporation

	 
	 	 	 	 
	
 

	
By: 

	/s/ Louis Ryan	 
	 	 	Louis Ryan, CEO	 
	 	 	 	 
	 	 	 	 

 

 

 

12pet_s1-ex1001.htm

Exhibit 10.1

 

 

LEASE

 

BY AND BETWEEN

 

GRE IRVINE TECH CENTER ONE LP,

 

a Delaware limited partnership

 

as Landlord

 

and

 

PASSIONATE PET, INC.,

 

a California corporation

 

as Tenant

 

June 2, 2009

     

  

  

  

 

LEASE

 

THIS LEASE, dated June 2, 2009 for reference purposes only, is made by and between GRE IRVINE TECH CENTER ONE LP, a Delaware limited partnership ("Landlord"), and PASSIONATE PET, INC., a California corporation ("Tenant"), to be effective and binding upon the parties as of the date the last of the designated signatories to this Lease shall have executed this Lease (the "Effective Date of this Lease").

 

ARTICLE I

 

REFERENCE

 

1.1    References. All references in this Lease (subject to any further clarifications contained in this Lease) to the following terms shall have the following meaning or refer to the respective address, person, date, time period, amount, percentage, calendar year or fiscal year as below set forth:

   

	 	Tenant's Address for Notice:	
18871 Teller Avenue

Irvine, California 92612

	 	 	 
	 	Tenant's Representative:	
Mr. John Dunn

Telephone: (469) 682-8999

	 	 	 
	 	
Landlord's Address for Notices:

	
GRE Irvine Tech Center One LP

c/o Greenlaw Partners LLC

4440 Von Karman Avenue, Suite 150

Newport Beach, California 92660

	 	 	 
	 	Landlord's Representative:	Greenlaw Management, Inc.
	 	Phone Number:	(949) 221-8051
	 	 	 
	 	Intended Commencement Date:	August 1, 2009
	 	 	 
	 	Lease Term:	Ten (10) Years
	 	 	 
	 	Lease Expiration Date:	July 31, 2019
	 	 	 
	 	Options to Extend:	None.
	 	 	 
	 	First Month's Prepaid Rent:	$12,388.95
	 	 	 
	 	Tenant's Security Deposit:	$35,397.00
	 	 	 
	 	Tenant Improvement Allowance:	Up to $10.00 per rentable square foot for Tenant to construct the Tenant Improvements pursuant to a space plan to be prepared by Tenant and approved by Landlord ("Space Plan") using materials approved in advance by Landlord. Upon Landlord's approval, the Space Plan shall be attached hereto as Exhibit "D" and incorporated herein by this reference.

 

  

  

  

   

	 	 	The Tenant Improvement Allowance may only be used for costs associated with the space planning, construction drawings, architectural fees, engineering fees, City permits, project manager fees, construction management fees due Landlord or Landlord's property manager pursuant to the Work Letter, trade fixtures, equipment (e.g., prefabricated kennels and tubs), and labor and materials for construction of the Tenant Improvements. The cost of any portion of the Tenant Improvements costing in excess of the Tenant Improvement Allowance shall be paid by Tenant. Tenant shall be reimbursed up to the amount of the Tenant Improvement Allowance in accordance with the provisions of the Work Letter. No portion of the Tenant Improvement Allowance may be applied to Tenant's Rent obligations and any portion of the Tenant Improvement Allowance which has not been requested within twelve (12) months of the date that Base Monthly Rent is first due shall revert to Landlord and Tenant shall no longer be entitled thereto.
	 	 	 
	 	
Tenant Improvements:

	All work performed by Tenant to prepare the Leased Premises for occupancy and for Tenant's Permitted Use pursuant to the Work Letter Agreement attached hereto as Exhibit "B". Tenant shall construct the Tenant Improvements pursuant to the Space Plan and plans and specifications, all as approved by Landlord using a contractor selected by Tenant following a bidding process and as reasonably approved by Landlord. If Landlord requires Tenant to contract with certain subcontractors, Landlord shall pay the additional costs resulting from using such subcontractors to do the specific work over the amount otherwise charged by subcontractors ordinarily employed by the general contractor to do the same portion of the work as reasonably demonstrated to Landlord. The Tenant Improvements may consist of materials, which shall be high quality, but other than "Building standard", in accordance with Tenant's plans and specifications, provided such non-Building standard materials have been approved in advance by Landlord, which approval shall not be unreasonably withheld. Tenant agrees not to make any physical changes or alterations to the Leased Premises or to begin construction of the Tenant Improvements until Tenant bas received any required City approvals for Tenant's Permitted Use, as described below. Except for Landlord's obligations with respect to the Building Systems, set forth in Paragraph 2.5, the Tenant Improvements to be constructed by Tenant and Landlord's payment of the Tenant Improvement Allowance, Tenant acknowledges that there are no agreements, representations, understandings or obligations on the part. of Landlord to perform or pay for any alterations, repairs or improvements.
	 	 	 
	 	Late Charge Amount:	Five Percent (5%) of the Delinquent Amount
	 	 	 
	 	Tenant's Required Liability Coverage:	$5,000,000 Combined Single Limit
	 	 	 
	 	Landlord's Broker:	Lee & Associates
	 	 	 
	 	Tenant's Broker(s):	Lee & Associates

   

  

  

  

    

	 	Property:	
That certain real property situated in the City of Irvine, County of Orange, State of California, as presently improved with five (5) building(s), which is commonly known as Irvine Technology Center I.

	 	 	 
	 	Building:	That certain building on the Property in which the Leased Premises are located commonly known as 18871 Teller Avenue, Irvine, California (the "Building"), which Building is shown outlined on Exhibit "A" hereto.
	 	 	 
	 	Outside Areas:	The "Outside Areas" shall mean all areas within the Property not reserved for the exclusive use of Landlord, Tenant or any other tenant, which are located outside the Building, such as private roadways, pedestrian walkways, parking areas, landscaped areas, open areas and enclosed trash disposal areas. Landlord reserves the right to make changes to the Outside Areas as it deems necessary, except that unless required by Law or the City (i) Landlord shall make no change to the Restricted Areas (defined below) without obtaining Tenant's prior written consent, which consent shall not be unreasonably withheld, and (ii) Landlord shall make no change to any other portion of the Outside Areas which would permanently (x) reduce the number of parking spaces or impair vehicular circulation within the Property in the Restricted Area, (y) modify or close any driveway along Teller Street or otherwise permanently adversely affect access to the Property from Teller Street, or (z) impair the visibility of any signage on the exterior of the Building runless caused by the growth of existing landscaping. Landlord reserves the right to grant easements and access rights to others to use of the Outside Areas and shall not be liable to Tenant for any diminution in Tenant's right to use the Outside Areas as a result. In addition, the foregoing limitations shall not apply to any temporary closures arising out of any work or repairs done within the Property. As used herein, the term "Restricted Areas" means (i) the parking field immediately south of the Building (between the Building and Teller Street), and (ii) the parking field located to the east of the Building, as such areas are shown on the Site Plan attached hereto as Exhibit A.
	 	 	 
	 	Leased Premises:	All the interior space within the Building, including stairwells, connecting walkways, and atriums, consisting of approximately 23,598 rentable square feet, and, for purposes of this Lease, agreed to contain said number of rentable square feet as depicted on Exhibit "A" attached hereto.
	 	 	 
	 	Tenant's Expense Share:	The term "Tenant's Expense Share" shall mean the percentage obtained by dividing the rentable square footage of the Leased Premises at the time of calculation by the rentable square footage of all buildings located on the Property at the time of calculation. The parties agree that such percentage is currently 17.39%. In the event that any portion of the Property is sold by Landlord, or the rentable square footage of the Leased Premises or the Property is otherwise changed, Tenant's Expense Share shall be recalculated to equal the percentage described in the first sentence of this paragraph, so that the aggregate Tenants Expense Share of all tenants of the Property shall equal 100%.

    

  

  

  

   

	 	Base Monthly Rent:	The term "Base Monthly Rent" shall mean the following:

   

	
Period

	
Rate/RSF/

Month

	
Base Monthly

Rent

	
Base Annual

Rent

	
8/11/09 - 11/30/10

	
$0.00*

	
$0.00*

	
- -

	
2/1/10 - 7/31/10

	
$0.525

	
$12,388.95

	
$148,677.40^

	
8/1/10 - 7/31/11

	
$1.16

	
$27,373.68

	
$328,484.16

	
8/1/11 - 7/31/12

	
$1.21

	
$28,553.58

	
$342,642.96

	
8/1/12 - 7/31/13

	
$1.26

	
$29,733.48

	
$356,801.76

	
8/1/13 - 7/31/14

	
$1.31

	
$30,913.38

	
$370.960.56

	
8/1/14 - 7/31115

	
$1.31

	
$30,913.38

	
$370,960.56

	
8/1/15 - 7/31/16

	
$1.35

	
$31,857.30

	
$382,217.60

	
8/1/16 - 7/31/17

	
$1.40

	
$33,037.20

	
$396,446.40

	
8/1/17 - 7/31/18

	
$1.45

	
$34,217.10

	
$410,605.20

	
8/1/18 - 7/31/19

	
$1.50

	
$35,397.00

	
$424,364.00

*Abated. Base Monthly Rent shall he abated for the first six (6) months of the Term.

    

	 	Parking Spades:	Subject to the rights of existing tenants within the Property as set forth in their leases, ninety-four (94) unreserved parking spaces (calculated based on 4 parking space for each 1,000 square feet of space within the Leased Premises), subject to the provisions of Paragraph 4.5 below.
	 	 	 
	 	
Permitted Use:

	
Subject to Tenant obtaining all necessary licenses, permits and approvals from the City of Irvine ("City") and the provisions of Paragraph 4.7, the retail sale of pet supplies, the boarding of domesticated animals the operation of a "day camp"/boarding resort for such animals, the operation of a training facility, pet grooming services, the operation of a veterinary hospital (which may include, without limitation, the operation of a 24 hour emergency care center), any other use permitted under the City zoning code applicable to the Property for "Domestic Animal Care Facilities" and for no other use. Notwithstanding the foregoing, if Tenant fails to obtain all required City permits and approvals for the Permitted Use by the date which is sixty (60) days after the date of this Lease, Landlord may terminate this Lease upon written notice to Tenant at any time until such required City permits and approvals are received.

	 	 	 
	 	Guarantor: 	John Dunn.
	 	 	 
	 	
Exhibits:

	
The term "Exhibits" shall mean the Exhibits of this Lease which are attached hereto and incorporated herein by this reference as though set forth in full and described as follows:

  

Exhibit "A" - Site Plan showing the Property and delineating the Building in which the Leased Premises are located and the Leased Premises.

  

Exhibit "B" - Work Letter.

  

Exhibit "C" - Guaranty

  

Exhibit "D" - Space Plan delineating the Tenant Improvements to be constructed by Tenant.

    

  

  

  

 

ARTICLE 2

 

LEASED PREMISES, TERM AND POSSESSION

 

2.1    Demise Of Leased Premises. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord for the Permitted Use in the conduct of Tenant's business and not for purposes of speculating in real estate, for the Lease Term and upon the terms and subject to the conditions of this Lease, that certain interior space described in Article 1 as the Leased Premises. Tenant's lease of the Leased Premises, together with the appurtenant right to use the Outside Areas as described in Paragraph 2.2 below, shall be conditioned upon and subject to the continuing compliance by Tenant with (i) all the terms and conditions of this Lease, (ii) all Laws and Restrictions governing the use or occupancy of the Leased Premises and the Property, (iii) all easements and other matters now of public record respecting the use of the Leased Premises and Property, (iv) all reasonable rules and regulations from time to time established by Landlord, and (v) payment of all taxes, assessments, license fees, sales tax, use fees, permit fees and public charges assessed due to Tenant's Permitted Use. Subject to the provisions of this Lease, Landlord shall provide to Tenant twenty four (24) hours per day, seven day per week, access to and use of the Leased Premises and all Outside Areas (including parking). Notwithstanding any provision of this Lease to the contrary, Landlord hereby reserves to itself and its designees all rights of access, use and occupancy of the Building roof, and Tenant shall have no right of access, use or occupancy of the Building roof.

 

2.2    Right To Use Outside Areas. As an appurtenant right to Tenant's right to the use and occupancy of the Leased Premises, Tenant shall have the non-exclusive right to use the Outside Areas in conjunction with its use of the Leased Premises solely for the purposes for which they were designed and intended and for no other purposes whatsoever. Tenant's right to use the Outside Areas shall be subject to the limitations on such use as set forth herein and any rules and regulations established by Landlord pursuant to Paragraph 4.13 below and shall terminate concurrently with any termination of this Lease.

 

2.3    Lease Commencement Date And Lease Term. Subject to Paragraph 2A below, the term of this Lease shall begin, and the Lease Commencement Date shall be deemed to have occurred, on the Intended Commencement Date, as set forth in Article I (the "Lease Commencement Date"). The term of this Lease shall end on the Lease Expiration Date (as set forth in Article 1), unless sooner terminated or extended, as provided herein. The Lease Term shall be that period of time commencing on the Lease Commencement Date and ending on the Lease Expiration Date (the "Lease Term").

 

2.4    Delivery Of Possession. Notwithstanding anything contained herein to the contrary, Tenant acknowledges that the terms and provisions of this Lease are specifically contingent upon Landlord obtaining uncontested, exclusive legal right, title, interest and possession of the Leased Premises from the existing occupant In the event Landlord does not obtain such possession within thirty (30) days following the Intended Commencement Date, either party may, by written notice to the other, terminate this Lease and neither party shall be liable to the other for any costs, expenses or liabilities incurred by the other in connection with the preparation for Tenant's occupancy of the Leased Premises. Landlord shall use commercially reasonable efforts to substantially complete the Landlord's Work, if any, as set forth in Exhibit "13" attached hereto and deliver possession of the Leased Premises to Tenant free and clear of all tenancies and rights of others on or before the Intended Commencement Date. Unless the Building Systems are not operational in accordance with the provisions of Paragraph 2.5 on the Delivery Date, Tenant shall be deemed to have accepted the Leased Premises in their current "AS-IS" condition and the Leased Premises shall be deemed to be in "Delivery Condition". Upon the date that the entire Leased Premises is in Delivery Condition, Tenant shall begin paying one hundred percent (100%) of all Rent due in accordance with the schedule set forth in Article 1. If Landlord, for any reason, fails to deliver the Leased Premises to Tenant, on or before the Intended Commencement Date, this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant in any way as a result of such failure, it being understood and agreed that Tenant shall not be obligated to commence the payment of Rent in accordance with the schedule set forth in Article 1 until the Leased Premises have been delivered to Tenant in the Delivery Condition, unless Tenant is using the Leased Premises for its business operations. Notwithstanding the foregoing, Landlord shall not be required to deliver to Tenant possession of the Leased Premises until all the following conditions have been met: (i) this Lease has been fully executed and delivered by the parties, (ii) Tenant has delivered to Landlord the Security Deposit and First Month's Prepaid Rent, and (iii) Tenant (and its contractors) has delivered to Landlord the insurance certificates or other evidence of the insurance coverage required herein. The date possession is delivered to Tenant is referred to herein as the "Delivery Date". It is agreed that by occupying the Leased Premises, subject to Paragraph 2.5, Tenant formally accepts the Leased Premises and acknowledges that the Leased Premises are in the condition required for delivery under the terms of this Lease. If Tenant occupies the Leased Premises prior to the Intended Commencement Date, such occupancy shall be subject to the terms of this Lease, except that Tenant's obligation to pay Rent shall not commence until the Intended Commencement Date. Tenant, however, shall be responsible to commence payment of utility charges for the Leased Premises as of the date Tenant takes possession of the Leased Premises if prior to the Intended Commencement Date.

   

  

  

  

   

2.5    Acceptance Of Possession; Performance Of Improvement Work. Tenant acknowledges that Tenant has had sufficient opportunity to inspect the Leased Premises and the Property, and, subject to Landlord's completion of the Landlord's Work, if any, and Landlord's obligations under this Paragraph 2.5, Tenant accepts the Leased Premises in their "AS-IS" condition, with all existing faults. Tenant hereby waives all rights to make repairs at the expense of Landlord or in lieu thereof to vacate the Leased Premises. Landlord shall ensure that the roof, HVAC system, windows and seals, structural components and all electrical and plumbing systems and equipment servicing the Leased Premises (collectively, the "Building Systems") are in good working condition as of the Delivery Date, but no representation is made as to the sufficiency of the Building Systems for Tenant's use and Landlord shall not be responsible for making any changes to the Building Systems so that such Building Systems are sufficient for Tenant's use. Landlord shall be responsible for any repairs or replacements to the Building Systems occurring during the first twelve (12) months of the Lease Term, at its sole cost and expense (and not as an item of Property Operating Expenses) unless such repairs are necessitated by Tenant's non-standard use of any such Building System. No representations or warranties respecting the condition of the Leased Premises, the Building, the Outside Areas or the Property have been made by Landlord to Tenant, except as specifically herein set forth.

 

2.6    Early Entry. Provided Tenant has delivered the Security Deposit, First Month's Prepaid Rent and Tenant's insurance certificate to Landlord and has received all required City approvals and permits, Tenant may prior to the Intended Commencement Date, enter the Leased Premises upon receipt of Landlord's prior consent to commence construction of the Tenant Improvements and install Tenant's trade fixtures; provided, however, Tenant shall not interfere with Landlord's completion of Landlord's Work, if any. All of the provisions of this Lease shall apply to Tenant during any early entry, but excluding the obligation to pay Rent. If Tenant makes early entry, Landlord shall not be responsible for any loss, including theft, damage or destruction to any work or material installed or stored by Tenant at the Leased Premises or for any personal injury to Tenant or its agents, employees, contractors, subcontractors, subtenants, assigns or invitees. Tenant agrees that it will not operate its business or construct any of the Tenant Improvements prior to obtaining all permits and approvals required for the operation of the Permitted Use or construction of the Tenant Improvements.

 

2.7    Surrender Of Possession. Immediately prior to the expiration or upon the sooner termination of this Lease, Tenant shall remove all of Tenant's signs from the exterior of the Building, if any (the foregoing shall not imply any right to place signs on the exterior of the Building, it being agreed that any such rights shall be pursuant to Paragraph 4.6 only) and shall remove all alterations made which are specific to Tenant's specific use unless the Building is scheduled for demolition upon the expiration or sooner termination of the Lease, Tenant's equipment (excluding telecommunications wiring and cabling), trade fixtures, furniture, supplies, wall decorations and other personal property from within the Leased Premises, the Building and the Outside Areas, and shall vacate and surrender the Leased Premises, the Building, the Outside Areas used by Tenant, including the Restricted Areas, and the Property to Landlord in good condition and repair, broom clean, reasonable wear and tear excepted. Upon the request of Landlord, Tenant shall repair any damage to the Leased Premises, the exterior of the Building and the Outside Areas caused by Tenant's removal of Tenant's property. Tenant shall, with respect to telecommunications wiring and cabling, leave the same in good condition and repair and labeled and/or coded sufficiently so that Landlord can readily determine the origin, destination and function of the wires and cables. If the Building is not scheduled for demolition at the time Tenant vacates the Leased Premises, Tenant shall (a) patch and refinish, to Landlord's reasonable satisfaction, all penetrations made by Tenant or its employees to the floor, walls or ceiling of the Leased Premises, whether such penetrations were made with Landlord's approval or not; (b) repair or replace all stained or damaged ceiling tiles, wall coverings and floor coverings to the reasonable satisfaction of Landlord; and (c) repair all damage caused by Tenant to the exterior surface of the Building and the paved surfaces of the Outside Areas and, where necessary, replace or resurface same. Thirty (30) days prior to the expiration or earlier termination of the Lease, Landlord and Tenant shall perform a walk-thru of the Leased Premises at which time Landlord shall indicate which improvements must be removed; provided, however, Tenant may request that such walk-thru occur up to one hundred twenty (120) days prior to the expiration or sooner termination of this Lease. Additionally, to the extent that Landlord notifies Tenant in accordance with the foregoing sentence or if Landlord shall have notified or is deemed to have notified Tenant in writing at the time the installation of improvements was approved by Lender that it desired to have certain improvements made by Tenant or at the request of Tenant removed at the expiration or sooner termination of the Lease, Tenant shall, upon the expiration or sooner termination of the Lease, unless the Building is scheduled for demolition upon the expiration or sooner termination of the Lease, remove any such improvements constructed or installed by Landlord or Tenant and repair all damage caused by such removal. If the Leased Premises, the Building, the Outside Areas and the Property are not surrendered to Landlord in the condition required by this paragraph at the expiration or sooner termination of this Lease, Landlord may, at Tenant's expense, so remove Tenant's signs and/or personal property and/or improvements not so removed and make such repairs and replacements not so made or hire, at Tenant's expense, independent contractors to perform such work. Tenant shall be liable to Landlord for all costs incurred by Landlord in returning the Leased Premises, the Building and the Outside Areas to the required condition, together with interest on all costs so incurred from the date paid by Landlord at the lesser of ten percent (10%) or the maximum rate of interest not prohibited or made usurious by law until paid. Tenant shall pay to Landlord the amount of all costs so incurred plus such interest thereon, within thirty (30) days of Landlord's billing Tenant for same. Tenant shall indemnify Landlord against loss or liability resulting from delay by Tenant in surrendering the Leased Premises in the condition required herein, including, without limitation, any claims made by any succeeding Tenant.

    

  

  

  

   

ARTICLE 3

 

RENT, LATE CHARGES AND SECURITY DEPOSITS

 

3.1    Base Monthly Rent. Commencing on the Lease Commencement Date and continuing throughout the Lease Term, Tenant shall pay to Landlord, without prior demand therefor, in advance on the first day of each calendar month, the amount set forth as "Base Monthly Rent" in Article 1 (the "Base Monthly Rent"); provided, however, that Tenant shall pay to Landlord the security deposit and Base Monthly Rent for the first month of the Term in which Base Monthly Rent is due on the date of Tenant's execution of this Lease which shall be applied to the first payment of Base Monthly Rent due under the terms of this Lease. If the term of this Lease commences on a day other than the first day of a calendar month or ends on a day other than the last day of a calendar month, the Base Monthly Rent for the first and last fractional months of a term hereof shall be appropriately prorated.

 

3.2    Additional Rent. Commencing on the Lease Commencement Date and continuing throughout the Lease Term, in addition to the Base Monthly Rent and to the extent not required by Landlord to be contracted for and paid directly by Tenant, Tenant shall pay to Landlord as additional rent (the "Additional Rent") the following amounts:

 

(a)   An amount equal to all Property Operating Expenses (as defined in Article 13) incurred or to be incurred by Landlord. Payment shall be made by whichever of the following methods (or combination of methods) is (are) from time to time designated by Landlord:

 

(i)    Landlord may forward invoices or bills for such expenses to Tenant, and Tenant shall, no later than ten (10) days prior to the due date, pay such invoices or bills and deliver satisfactory evidence of such payment to Landlord, and/or

 

(ii)   Landlord may bill to Tenant, on a periodic basis not more frequently than monthly, the amount of such expenses (or group of expenses) as paid or incurred by Landlord, and Tenant shall pay to Landlord the amount of such expenses within ten days after receipt of a written bill therefor from Landlord, and/or

 

(iii)    Landlord may deliver to Tenant Landlord's reasonable estimate of any given expense (such as Landlord's Insurance Costs or Real Property Taxes), or group of expenses, which it reasonably anticipates will be paid or incurred for the ensuing calendar or fiscal year, as Landlord may determine, and Tenant shall pay to Landlord an amount equal to the estimated amount of such expenses for such year in equal monthly installments during such year with the installments of Base Monthly Rent. Landlord reserves the right to revise such estimate from time to time.

     

  

  

  

   

Landlord reserves the right to change from time to time the methods of billing Tenant for any given expense or group of expenses or the periodic basis on which such expenses are billed.

 

If any portion of the Property Operating Expenses relates solely to the Building and/or certain other buildings (and not to all buildings within the Property) then, if Landlord so elects, Tenant's Expense Share with respect to such items of Property Operating Expenses shall be deemed to be the percentage obtained by dividing the rentable square footage of the Leased Premises by the rentable square footage of the other Buildings within the Property to which such portion of the Property Operating Expenses relate("Tenant's Building Share"). If any portion of the Property Operating Expenses relates solely to the Building and/or the Outside Areas immediately surrounding the Building, then Tenant shall pay one hundred percent (100%) of those Property Operating Expenses.

 

(b)   Landlord's share of the consideration received by Tenant upon certain assignments and sublettings as required by Article 7;

 

(c)   Any legal fees and costs that Tenant is obligated to pay or reimburse to Landlord pursuant to Article 13; and

 

(d)    Any other charges or reimbursements due Landlord from Tenant pursuant to the terms of this Lease.

 

Notwithstanding the foregoing, Landlord may elect by written notice to Tenant to have Tenant pay Real Property Taxes or any portion thereof directly to the applicable taxing authority, in which case Tenant shall make such payments and deliver satisfactory evidence of payment to Landlord no later than ten (10) days before such Real Property Taxes become delinquent. In the event Tenant is responsible to pay taxes directly, Landlord shall have no obligation to make such payments, whether or not Landlord receives evidence of payment from Tenant, and Tenant shall in all cases be responsible for any fines, penalties, interest and damages for late payment.

 

3.3    Year-End Adjustments. If Landlord shall have elected to bill Tenant for the Property Operating Expenses (or any group of such expenses) on an estimated basis in accordance with the provisions of Paragraph 3.2(a)(iii) above, Landlord shall furnish to Tenant within four months following the end of the applicable calendar or fiscal year, as the case may be, a statement setting forth (i) the amount of such expenses paid or incurred during the just ended calendar or fiscal year, as appropriate, and (ii) the amount that Tenant has paid to Landlord for credit against such expenses for such period. If Tenant shall have paid more than its obligation for such expenses for the stated period, Landlord shall, at its election, either (i) credit the amount of such overpayment toward the next ensuing payment or payments of Additional Rent that would otherwise be due or (ii) refund in cash to Tenant the amount of such overpayment. If such year-end statement shall show that Tenant did not pay its obligation for such expenses in full, then Tenant shall pay to Landlord the amount of such underpayment within thirty (30) days from Landlord's billing of same to Tenant. The provisions of this Paragraph shall survive the expiration or sooner termination of this Lease.

 

If requested by Tenant, Landlord shall permit Tenant to audit Landlord's books and records maintained by Landlord with respect to a given calendar year or any portion thereof, within two (2) years of Tenant's receipt of the year end reconciliation for the calendar year in question. In addition, Tenant may only audit the books and records for a particular calendar year one time. Tenant shall give Landlord at least thirty (30) day's prior written notice of its intention to conduct such an audit, which shall be conducted at Landlord's property manager's offices during usual business hours. Tenant agrees not to use an auditor whose fee is based on a percentage of the differences found. The cost of such audit shall be borne by Tenant; provided, however, that in the event the audit reveals that the actual Property Operating Expenses for the calendar year in question are more than five percent (5%) less than the Property Operating Expenses reflected in the corresponding reconciliation statement(s) presented by Landlord which is the subject of the audit, Tenant's reasonable cost of conducting the audit shall be paid by Landlord to Tenant within thirty (30) days following written request from Tenant.

 

  

  

  

 

Exhibit C

 

GUARANTY OF LEASE

 

WHEREAS, GRE IRVINE TECH CENTER ONE LP, a Delaware limited partnership, hereinafter referred to as "Landlord," and PASSIONATE PET, INC., a California corporation, hereinafter referred to as "Tenant," are about to execute a document entitled "Lease," dated June 7.- , 2009 concerning the "Leased Premises" commonly known as 18871 Teller Avenue, Irvine, California, wherein Landlord will lease the Leased Premises to Tenant, and

 

WHEREAS, John Dunn, hereinafter referred to as "Guarantor", has a financial interest in Tenant, and

 

WHEREAS, Landlord would not execute the Lease if Guarantor did not execute and deliver to Landlord this Guaranty of Lease ("Guaranty").

 

NOW THEREFORE, for and in consideration of the execution of the foregoing Lease by Landlord and as a material inducement to Landlord to execute said Lease, Guarantor hereby jointly, severally, unconditionally and irrevocably guaranties up to the amount of the Leasing Costs (defined below) paid by Landlord in connection with the Lease during the first five (5) years of the Lease Term. If there is a default pursuant to the provisions of Paragraph 12.1 of the Lease during the first five (5) years of the Lease Term and Landlord elects to terminate the Lease on account thereof; Guarantor agrees to pay Tenant the Leasing Costs. As used herein, the term "Leasing Costs" means the unamortized portion of the sum of (a) the Tenant Improvement Allowance (to the extent disbursed); and (b) all broker's commissions paid to Lee and Associates, the broker representing both Landlord and Tenant, in connection with the Lease, which shall be amortized over a period of ten (10) years.

 

It is specifically agreed and understood that the terms of the foregoing Lease may be altered, affected, modified or changed by agreement between Landlord and Tenant, or by a course of conduct, and said Lease may be assigned by Landlord or any assignee of Landlord without consent or notice to Guarantor and that this Guaranty shall thereupon and thereafter guaranty repayment of the Leasing Costs if Tenant defaults under the terms of the Lease as so changed, modified, altered or assigned.

 

This Guaranty shall not be released, modified or affected by failure or delay on the part of Landlord to enforce any of the rights or remedies of the Landlord under said Lease, whether pursuant to the terms thereof or at law or in equity.

 

No notice of default need be given to Guarantor, it being specifically agreed and understood that the guaranty of the undersigned is a continuing guaranty for the first five (5) years of the Lease Term under which Landlord may proceed forthwith and immediately against Tenant or against Guarantor following any breach or default by Tenant.

 

Landlord shall have the right to proceed against Guarantor hereunder following any breach or default by Tenant without first proceeding against Tenant and without previous notice to or demand upon either Tenant or Guarantor.

 

Landlord shall have the right, but not the obligation; at its option, to name Guarantor, in its capacity as a guarantor, as a party defendant in any unlawful detainer action Landlord may choose to file, but only to the extent necessary to bring an action against Guarantor for the amounts due under this Guaranty.

 

Guarantor hereby waives (a) notice of acceptance of this Guaranty, (b) demand of payment, presentation and protest, (c) all right to assert or plead any statute of limitations as to or relating to this Guaranty and the Lease, (d) any right to require the Landlord to proceed against the Tenant or any other Guarantor or any other person or entity liable to Landlord, (e) any right to require Landlord to apply to any default any security deposit or other security it may hold under the Lease, (f) any right to require Landlord to proceed under any other remedy Landlord may have before proceeding against Guarantor, and (g) any right of subrogation.

  

  

  

  

Guarantor does hereby subordinate all existing or future indebtedness of Tenant to Guarantor to the obligations owed to Landlord under the Lease and this Guaranty.

 

Any married person who signs this Guaranty expressly agrees that recourse may be had aEainst his or her separate property for all of their obligations hereunder.

 

The obligations of Tenant under the Lease to execute and deliver estoppel statements and financial statements, as therein provided, %ball be deemed to also require the Guarantor hereunder to do and provide the same relative to Guarantor.

 

The term "Landlord" whenever hereinabove used refers to and means the Landlord in the foregoing Lease specifically named and also any assignee of said Landlord and any successor to the interest of said Landlord or of any assignee in such Lease or any part thereof, whether by assignment or otherwise. So long as the Landlord's interest in or to the Leased Premises or the rents, issues and profits therefrom, or in, to or under said Lease, are subject to any mortgage or deed of trust or assignment for security, no acquisition by Guarantor of the Landlord's interest in the Leased Premises or under said Lease shall affect the continuing obligation of Guarantor under this Guaranty which shall nevertheless continue in full force and effect for the benefit of the mortgagee, beneficiary, trustee or assignee under such mortgage, deed of trust or assignment, of any purchase at sale by judicial foreclosure or under private power of sale, and of the successors and assigns of any such mortgagee, beneficiary, trustee, assignee or purchaser.

 

The term "Tenant" whenever hereinabove used refers to and means the Tenant in the foregoing Lease specifically named and also any assignee or sublessee of said Lease and also any successor to the interest of said Lease, assignee or sublessee of such Lease or any part thereof whether by assignment, sublease or otherwise.

    

In the event any action be brought by said Landlord against Guarantor hereunder to enforce the obligation of Guarantor hereunder, the unsuccessful party in such action shall pay to the prevailing party therein a reasonable attorneys fee which shall be fixed by the court.

   

	 	GUARANTOR:
	 	 
	 	/s/ John Dunn
	 	JOHN DUNN

   

  

  

  

 

Exhibit D

 

SPACE PLAN

 

 

 

To Be Attached

Following Landlord's Approval

   

  

  

  

 

MEMORANDUM OF LEASE TERMS

   

	
To:          Passionate Pet, Inc.

18871 Toiler Avenue

Irvine, CA 92612

	Date: January 7, 2010

 

Re: Lease (the "Lease") dated June 2, 2009, between GRE IRVINE TECH CENTER ONE LP, a Delaware limited liability company, Landlord, and PASSIONATE PET, INC. Tenant, concerning 18871 Teller Avenue, Irvine, CA 92612 (the "Leased Premises").

 

Gentlemen:

 

In accordance with the Lease, we wish to advise and/or confirm as follows:

 

1.   That the Leased Premises have been accepted herewith by the Tenant as being substantially complete in accordance with the subject Lease and that there is no deficiency in construction.

 

2.   That the Tenant has possession of the Leased Premises and acknowledges that under the provisions of the Lease the Term of said Lease shall commence as of October 26, 2009for a term of ten (10) years ending on October 25, 2019.

 

3.   That in accordance with the Lease, CAM commenced to accrue on October 26, 2009,

 

4.   If the Commencement Date of the Lease is other than the first day of the month, the first billing will contain a pro rata adjustment. Each billing thereafter shall be for the full amount of the monthly installment as provided for in Lease.

 

5.   Rent is due and payable in advance on the first day of each and every month following the free rent period during the Term of Lease. Your rent checks should be made payable to GRE Irvine Tech Center One LP at File 51128, Los Angeles, CA 90074-1128.

 

6.   The number of Rentable Square Feet within The Leased Premises is 23,598 square feet.

 

7.   The number of Rentable Square Feet within Irvine Tech Center One LP is 138,222 square feet.

 

8.   Tenant's Percentage, as adjusted based upon the number of Rentable Square Feet within the Leased Premises, is 17.39%.

 

Dated   1/20                       , 2010, at __________________.

 

  

  

  

 

AGREED AND ACCEPTED:

   

	TENANT:	Passionate Pet, Inc.
	 	a California corporation
	 	 
	 	By: /s/ 
	 	Its: President
	 	Date: 1/20/10
	 	 
	 	 
	 	By:
	 	Its:
	 	Date:
	 	 
	 	 
	
LANDLORD:

	GRE Irvine Tech Center One LP
	 	a Delaware limited partnership
	 	 
	 	
By:

	 	Its:
	 	Date: 1/25/10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00182-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00182-of-00352.parquet"}]]