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EXHIBIT 10.18
ADDENDUM TO LEASE
FOR PREMISES COMMONLY KNOWN AND DESIGNATED AS:
XXXXXXX #0, 0, XXX 0, XXXXXX XXXXX OF THE NORTH BUILDING
000 XXXXXXXXX XXXXXX,
XXXXXXXXX XXXXX, XXXXXXXXXX
This Addendum to Lease executed on September __, 1998, by and between
XXXXXXX XXXXXX, as Landlord, and SKECHERS USA, INC., as Tenant, is an integral
part of said Lease as if full set forth therein.
A. OPTION TO EXTEND LEASE TERM.
So long as Tenant has fully performed all the obligations on its part to
be performed, Landlord hereby grants to Tenant two (2) consecutive options to
extend this lease for five (5) years each, on the same terms and conditions as
are contained herein except as to increases in real estate taxes as hereinafter
provided. It is contemplated that Tenant's occupancy shall be continuous;
therefore, in the event Tenant fails to exercise any of the options granted
herein, the remaining options shall immediately expire and be of no further
force or effect. The parties specifically acknowledge that the Lease rent
terms provide for annual increases of 3%. Such increases shall continue to be
applied annually during each and every option exercised hereunder.
Tenant shall exercise each such option by delivering written notice to
Landlord at least six (6) months, but not more than twelve (12) months, prior
to the end of each five (5) year term. TIME IS OF THE ESSENCE in regard to the
delivery of the notice. In the event Tenant fails to deliver written notice as
herein provided, the options granted herein shall expire and be of no further
force or effect.
B. RENT.
Tenant shall pay to Landlord rent, free from all claims, demands or
set-offs against Landlord of any kind or character whatsoever, except as
otherwise expressly provided to the contrary, in advance, in the amount of
$167,945.82, payable $3,375 on execution of this lease and thereafter on the
first day of each month as follows:
November 1, 1998 to September 30, 1999 $2250.00 per month
October 1, 1999 to September 30, 2000 $2317.50 per month
October 1, 2000 to September 30, 2001 $2387.00 per month
October 1, 2001 to September 30, 2002 $2458.61 per month
October 1, 2002 to September 30, 2003 $2532.37 per month
October 1, 2003 to June 30, 2004 $2608.34 per month
LATE PAYMENTS: In the event that Tenant shall fail to pay to Landlord
within 5 days of the date when due, any payment owing to Landlord pursuant to
the terms of this lease, Tenant shall pay Landlord a late charge in the amount
of ten percent (10%) of the rent payment then due in addition to said rent.
SQUARE FOOTAGE DISCLAIMER: The parties hereto hereby acknowledge that
during the negotiations for this Lease, the parties discussed the rent as a
function of an amount per square feet of rentable space. Prior to the execution
of this Lease, Tenant has had the opportunity to inspect the space and satisfy
itself as to the size and suitability of the space for its intended purposes.
The parties hereto hereby agree the above dollar figures of rent shall be due
and payable regardless of the actual square feet in the demised premises and
Tenant acknowledges that Landlord makes no representation or warranty as to the
actual size of the premises. Any discussions concerning a rental per square
foot of space is superceded by this provision.
C. USE.
The sole permitted use of the premises shall be commercial office and
related activities.
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D. REAL ESTATE TAXES-OPTION PERIODS.
Upon the exercise of the options hereinabove provided for,
Tenant agrees to pay during the term of each such option period, or periods, as
the case may be, its pro rata share of any increase in real estate taxes and
assessments levied or imposed against the real property of which the demised
premises are a part over an above the taxes imposed on said real property
during the fifth year of the original term of this Lease (the base year). The
parties hereto acknowledge and agree that Tenant occupies approximately 12.5%
of the building and agree that for purposes of this provision that Tenant shall
pay 12.5% of any such increase. Landlord shall provide Tenant with a copy of
the tax xxxx for the sixth year (the base year) of the initial term along with
a copy of the tax xxxx for each year during any option period that Tenant
continues in possession under this Lease. Tenant shall pay to Landlord one half
of its pro rata share (12.5%) of such increase on or before December 10 of each
year and the remaining on half of its pro rata share (12.5%) on or before April
10 of each year.
E. AIR CONDITIONING REPAIR AND MAINTENANCE.
Landlord has provided an air conditioner that services Offices 1, 2, 3,
4 and 5 on the second floor of the north building. Tenant hereby agrees that it
will pay any and all costs related to the repair and maintenance of said air
conditioner. Further, the parties hereby the air conditioner servicing Offices
1 through 5 is on Landlord's house meter and the gas servicing said Offices is
not separately metered. The parties hereby agree that a reasonable estimate of
the monthly electrical and gas costs for Office #3, 4, and 5 is $175.00. Tenant
hereby pay to Landlord $175.00 per month as reimbursement for such costs. Each
year during the term of this Lease, such monthly amount shall be increased by
3% to reflect the anticipated general increase in costs. In the event
electrical costs are increased substantially for any reason that makes the
above sum unrealistic, as increased annually, the parties agree such sum shall
be increased in an amount that reflects such substantial increase in such
costs. Tenant may, at its discretion, elect to install separate meters for the
gas and electric, at its sole and exclusive expense, and pay the utility costs
for Offices 3, 4, and 5 directly. Tenant acknowledges that concurrent with the
installation of the electrical meter, it would also have to install a separate
air conditioner in order to isolate the expenses to said Offices #3, 4, and 5.
Air Conditioning to Offices #3, 4 and 5 shall be provided between the
hours of 7:30 A.M. and 5:30 P.M. Monday through Friday or each week.
F. SECURITY DEPOSIT
Tenant shall pay Landlord on execution of this Lease the sum of
$4,500.00 as a security deposit in accordance with the provisions of Paragraph
19 of the Lease.
G. PARKING
Landlord hereby grants to Tenant the exclusive use of one (1) parking,
the location of which will be designated by Landlord.
H. RULES AND REGULATIONS
The Rules and regulations attached hereto are hereby incorporated by
this reference as if fully set forth herein and shall be an integral part of
this Lease.
I. ASSIGNMENT
Notwithstanding the provisions of Paragraph 11 of the Lease, no consent
from Landlord shall be required for the assignment of this Lease under the
following circumstances, each of which shall be considered a Permitted
Assignment:
(1) the transfer of stock of Tenant to members of the
immediate family of a shareholder of Tenant, to a living
trust for estate-planning purposes,or by will or
intestacy; or,
(2) Tenant sells or offers for sale its voting stock to the
public in accordance with the qualifications or
registration requirements of the State of California and
the Security Act of 1933, as amended.
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H. TENANT'S RIGHT TO TERMINATE IN THE EVENT OF DESTRUCTION OF THE
PREMISES
Notwithstanding the provisions of Paragraph 16. DESTRUCTION OF PREMISES
of the Lease, in the event Landlord cannot complete the repairs and return
possession to Tenant within a period of six (6) months, Tenant shall have the
option of terminating this Lease. Notice of such election to terminate shall
be given by Tenant to Landlord within ten (10) days of Tenant's receipt of
written notice from Landlord that the repair period is projected to exceed six
(6) months. In the event Tenant fails to so notify Landlord in writing, this
right to terminate shall expire.
I. MUTUAL INDEMNIFICATION
Tenant Agrees to defend, with counsel reasonably satisfactory to
Landlord, indemnify and hold harmless, Landlord, its agents, employees,
officers, directors, shareholders, partners, members and representatives
(collectively "Landlord") from and against any and all loss, cost, action
liability, damage or expense, including but not limited to, penalties, fines,
attorneys' fees or costs (collectively "claims"), to any person, property or
entity resulting from the following: (i) the negligence or wilful misconduct of
Tenant, its agents, employees or contractors; (ii) Tenant's default or breach
of any of the terms and conditions of this Lease; and (iii) any occurrences
within the Premises, not resulting from the negligence or wilful misconduct of
Landlord, its agents, employees or contractors.
Landlord agrees to defend, with counsel reasonably satisfactory to
Tenant, indemnify and hold harmless, Tenant, its agents, employees, officers,
directors, shareholders, partners, members and representatives (collectively
"Tenant") from and against any and all loss, cost, action, liability, damage or
expense, including but not limited to, penalties, fines, attorneys' fees or
costs (collectively "claims"), to any person, property or entity resulting from
the following: (i) the negligence or wilful misconduct of Landlord, its agents,
employees or contracts; (ii) Landlord's default or breach of any of the terms
and conditions of this Lease; and (iii) any occurrences within the Premises,
not resulting from the negligence or wilful misconduct of Tenant, its agents,
employees or contractors.
Notwithstanding the foregoing, however, because Landlord is required to
maintain property insurance on the Building, and because of the existence of
waivers of subrogation set forth in this Lease, Landlord hereby agrees to
defend, indemnify and hold Tenant harmless on any Claims to the extent such
claim is covered by such insurance, even if resulting from the negligent acts,
omissions or misconduct of Tenant or those of its agents, employees or
contractors. Similarly, since Tenant must carry insurance to cover its personal
property within the premises, and because of the waivers of subrogation set
forth n this Lease, Tenant hereby agrees to defend, indemnify and hold Landlord
harmless from any claims to the extent any such claim is covered by such
insurance, even if resulting from the negligent acts, omissions or misconduct of
Landlord or those of its agents, employees or contractors. The provisions of
this section shall survive the expiration or sooner termination of the Lease
with respect to any occurrences, claims or liabilities occurring prior to such
expiration or termination.
LANDLORD TENANT
XXXXXXX XXXXXX SKECHERS USA, INC.,
a California corporation
/s/ XXXXXXX X. XXXXXX by: /s/ XXXXX XXXXXXXX
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Date: September 10, 1998 by: Xxxxx Xxxxxxxx, CFO
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Date: September 14, 1998
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RULES AND REGULATIONS
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No sign, placard, picture, advertisement, name or notice shall be
inscribed, displayed or printed or affixed on or to any part of the outside or
inside of any building without the written consent of Landlord first had and
obtained, and Landlord shall have the right to remove any such sign, placard,
picture, advertisement, name or notice without notice to and at the expense of
Tenant.
All signs or lettering on doors or buildings shall conform to uniform
specifications and standards established by Landlord and shall be printed,
painted and affixed by Landlord, and billed to Tenant.
Tenant shall not place anything or allow anything to be placed near the
glass of any window, door, partition or wall which may appear unsightly from
outside said premises; provided, however, that Landlord is to furnish and
install a building standard window drapery at all exterior windows.
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Tenant shall not obtain for use upon the premises ice, drinking water,
towel and other similar services or accept barbering or bootblacking services on
the premises, except from persons authorized by Landlord and at the hours and
under regulations fixed by Landlord.
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The bulletin board or directory of the building, if any, will be provided
exclusively for the display of the name and location of Tenant only, and
Landlord reserves the right to exclude any other names therefrom.
4
The sidewalks, halls, passages, entrances, and stairways shall not be
obstructed or used by Tenant for any purpose other than for ingress and egress.
The halls, passages, exits, entrances, stairways, balconies and roofs are not
for the use of the general public and Landlord shall in all cases retain the
right to control and prevent access thereto by all persons whose presence in the
judgment of Landlord shall be prejudicial to the safety, character, reputation
and interests of the premises and tenants, provided that nothing herein
contained shall be construed to prevent such access to persons with whom Tenant
normally deals in the ordinary course of Tenant's business unless such persons
are engaged in illegal activities. Neither Tenant nor employees or invitees of
Tenant shall go upon the roof of any building.
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Tenant shall not alter any lock nor install any new or additional locks or
any bolts on any doors of said premises.
6
The toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed and no foreign
substance of any kind whatsoever shall be thrown therein. The expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by Tenant.
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Tenant shall not overload the floor of said premises or xxxx, drive nails
(normal decorating excepted), screw or drill into the partitions, woodwork or
plaster or in any way deface said premises.
8
No equipment of any kind shall be brought into any building without the
consent of Landlord, and any moving of furniture, freight and equipment into or
out of any building shall be done at such time and in such manner as Landlord
shall designate. Landlord shall have the right to prescribe the weight, size and
position of all safes and other heavy equipment brought into any building and
also the times and manner of moving the same in and out of the building. Safes
or other heavy objects shall, if considered necessary by Landlord, stand on wood
strips of such thickness as is necessary to properly distribute the weight.
Landlord will not be responsible for loss of or damage to any such safe or
property from any cause and all damage done to the building by moving or
maintaining any such safe or other property shall be repaired at the expense of
Tenant.
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Cleaning of carpet and windows shall be the responsibility of Tenant and
shall be paid by Tenant.
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Tenant shall not use, keep or permit to be used or kept, any foul or
noxious gas or substance in said premises, or permit or suffer said premises to
be occupied or used in a manner offensive or objectionable to Landlord or other
occupants of any building by reason of noise, odors and/or vibrations, or
interfere in any way with the other tenants or those having business therein,
nor shall any animals or birds be brought in or kept in or about said premises.
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Tenant shall not use, keep or permit to be used any of the areas within the
office complex in any manner which shall cause litter and/or defacing of the
buildings, other improvements or landscaping. Tenant agrees that as far as is
practical and reasonable, to require its employees and invitees to conform to
the rules and regulations set out herein and any additional rules and
regulations which are hereafter adopted.
12
All pedestrian traffic within the office complex shall be limited to paved
streets and sidewalks and areas specifically designated or approved by Landlord
for such uses, e.g., lunch areas, etc.
13
Said premises shall not be used for the storage of merchandise, for washing
clothes, for lodging or cooking in conjunction therewith, or for any improper,
objectionable or immoral purposes.
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Tenant shall not use or keep in said premises or the building any kerosene,
gasoline or inflammable or combustible fluid or material, or use any method of
heating or airconditioning other than that supplied or approved in writing by
Landlord.
15
Landlord will direct electricians as to where and how telephone and
telegraph wires are to be introduced. No boring or cutting for wires will be
allowed without the consent of Landlord. The location of telephones, call boxes
and other office equipment affixed to said premises shall be subject to the
approval of Landlord. Landlord reserves the right to enter upon said premises
for the purpose of installing additional electrical wiring and/or other
utilities for benefit of Tenant or adjoining tenants.
16
Tenant, upon termination of the tenancy, shall deliver to Landlord the keys
to offices and rooms which shall have been furnished Tenant or which Tenant
shall have had made, and in the event of loss of any keys so furnished, Tenant
shall pay Landlord therefor.
17
Tenant shall not lay linoleum, tile, carpet or other similar floor covering
so that the same shall be affixed to the floor of said premises in any manner
except as approved by Landlord. The expense of repairing any damage resulting
from a violation of this rule or removal of any floor covering shall be borne by
Tenant.
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If deemed necessary by Landlord, access on Saturdays, Sundays and legal
holidays, and on other days between the hours of 6:00 p.m. and 8:00 a.m. the
following day, to the office complex, or to the halls, corridors, or stairways
in any of the buildings, or to said premises may be refused unless the person
seeking access is known to the person or employee in charge, has a pass, or is
properly identified. Landlord shall in no case be liable for damages for any
error with regard to the admission to or exclusion from the office complex of
any person. In case of invasion, mob, riot, public excitement, or other
commotion, Landlord reserves the right to prevent access to the office complex
during the continuance of the same by closing the doors or otherwise, for the
safety of the tenants and protection of property.
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Tenant shall see that the doors of said premises are closed and securely
locked before leaving the building. Tenant must observe strict care and
caution to assure that all water faucets or water apparatus are entirely shut
off before Tenant or Tenant's employees leave said premises, and that all
electrical switches shall likewise be shut off to prevent waste or damage.
20
Landlord reserves the right to exclude or expel from the office park
complex any person who, in the judgment of Landlord, is intoxicated or under the
influence of liquor or drugs, or who shall in any manner do any act in violation
of any of the rules and regulations.
21
No vending machine or machines of any description shall be installed,
maintained or operated upon said premises without the written consent of
Landlord.
22
Landlord shall have the right, exercisable without notice and without
liability to Tenant, to change the name and the street address of the building
of which said premises are a part.
23
The parking areas within the office complex shall be used solely for
passenger type vehicles during normal office hours and the parking of trucks,
trailers, recreational vehicles and campers is specifically prohibited. No
vehicle of any type shall be stored within the parking areas at any time. In the
event that a vehicle is disabled, it shall be removed within 48 hours. There
shall be no "For Sale" or other advertising signs on or about any parked
vehicle. All vehicles shall be parked in the designated parking areas in
conformance with all signs and other markings.
24
Tenant shall not place any improvements or movable objects including
antennaes, outdoor furniture, etc. in the parking areas, landscaped area or
other areas outside of said premises, or on the roof of said premises.
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"Office complex" refers to the entire office building development of
Landlord.
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Landlord reserves the right to make such other rules and regulations as in
its judgment may be for the safety, care and cleanliness of said premises and
the office complex for the preservation of good order therein. Tenant agrees to
abide by all such rules and regulations hereinabove stated and any additional
rules and regulations which are adopted.
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