EXHIBIT 10.26
LEASE AMENDMENT AND EXTENSION AGREEMENT
This Lease Amendment and Extension Agreement ("Agreement") is entered into
by and between St. Xxxx Knits, Inc., a California corporation as Tenant and GM
Properties, a California general partnership as Landlord under that certain
Industrial Real Estate Lease dated June 1, 1986, as amended ("Lease") between
Landlord and Tenant.
R E C I T A L S
A. Landlord and Tenant previously amended the Lease on April 1, 1997 to
provide for the construction of additional facilities to be used by Tenant and
now desire to amend the Lease to reflect the total square footage of the
property subject to Lease.
B. Landlord and Tenant have expressed a desire to extend the term of and
modify the provisions of the Lease to provide Tenant the right to occupy the
Property for an additional five (5) year term and to grant to Tenant the option
to renew such extended term for an additional five (5) year term.
C. Landlord and Tenant desire to enter into this Lease Amendment and Extension
Agreement to set forth the terms and conditions under which Tenant shall
continue to occupy the Property.
In consideration of the foregoing recitals and the covenants and conditions
hereinafter contained, the parties agree as follows:
1. LEASE TERM. The term of this Agreement shall be a period of five (5) years,
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commencing June 1, 2001 and ending May 31, 2006. Tenant shall have the
right to extend the Term for one additional five (5) year period in
accordance with the provisions of Section 3 below.
2. PROPERTY. Section 1.04 of the Lease is hereby modified to reflect a total
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of 88,096 square feet of Property subject to the Lease. All rental and
other computations under the Lease shall be based on 88,096 square feet.
3. BASE RENT. Base Rent during the extension Term shall be $66,072.00 per
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month for the first twelve months ($0.75 per square foot per month). Base
Rent shall be increased annually on the 1st day of June of each year
thereafter by an amount equal to 4% of the Base Rent due in May of each
year.
4. OPTION TO RENEW.
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2. Landlord hereby grants to Tenant one (1) option (the "Option") to
extend the Lease Term for an additional term of five (5) years (the
"Extension"), on the
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same terms and conditions as set forth in the Lease, but at an
increased rent as set forth below. The Option shall be exercised only
by written notice delivered to Landlord at least one hundred eighty
(180) days before the expiration of the Lease Term. If Tenant fails to
deliver Landlord written notice of exercise of an Option within the
prescribed time period, such Option shall lapse, and there shall be no
further right to extend the Lease Term. The Option shall be
exercisable by Tenant on the express conditions that (a) at the time
of the exercise, and at all times prior to the commencement of such
Extension, Tenant shall not be in default under any of the provisions
of the Lease and (b) Tenant has not been ten (10) or more days late in
the payment of rent more than a total of three (3) times during the
Lease Term.
b. The Option is personal to the Tenant named in this Lease. If Tenant
subleases any portion of the Property or assigns or otherwise
transfers any interest under the Lease to any entity prior to the
exercise of the Option (whether with or without Landlord's consent),
such Option shall lapse. If Tenant subleases any portion of the
Property or assigns or otherwise transfers any interest of Tenant
under the Lease to any entity after the exercise of an Option but
prior to the commencement of the Extension (whether with or without
Landlord's consent), such Option shall lapse and the Lease Term shall
expire as if such Option were not exercised. If Tenant subleases any
portion of the Property or assigns or otherwise transfers any interest
of Tenant under the Lease in accordance with this Lease after the
exercise of the Option and after the commencement of the Extension
related to such Option, then the term of the Lease shall expire upon
the expiration of the Extension during which such sublease or transfer
occurred.
c. The Base Rent during the Extension period shall be equal to the fair
market rental of the Property during the Extension period determined
as set forth below but in no event less than the Base Rent paid in the
last month of the then expiring Term.
i. Fair Rental Value Adjustment.
(1) Not later than one hundred (100) days prior to the
commencement of the Extension term, Landlord and Tenant
shall meet in an effort to negotiate, in good faith, the
fair rental value of the Property as of the date of the
commencement of such Extension period. If Landlord and
Tenant have not agreed upon the fair rental value of the
Property at least ninety (90) days prior to the commencement
of the Extension period, the fair rental value shall be
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determined by appraisal, by one or more appraisers or
brokers (herein called "Appraiser(s)"), as provided below.
If appraiser(s) are used, such appraiser(s) shall have at
least five (5) years' experience in the appraisal of
commercial/industrial real property in the area in which the
Property is located and shall be members of professional
organizations such as MAI or equivalent. If broker(s) are
used, such broker(s) shall have at least five (5) years'
experience in the sales and leasing of commercial/industrial
real property in the area in which the Property is located
and shall be members of professional organizations such as
the Society of Industrial and Office Realtors or equivalent.
(2) If Landlord and Tenant are not able to agree upon the fair
rental value of the property within the prescribed time
period, then Landlord and Tenant shall attempt to agree in
good faith upon a single appraiser not later than seventy-
five (75) days prior to the commencement of the Extension
period. If Landlord and Tenant are unable to agree upon a
single Appraiser within such time period, then Landlord and
Tenant shall each appoint one Appraiser not later than
sixty-five (65) days prior to the commencement of the
Extension period. Within ten (10) days thereafter, the two
(2) appointed Appraisers shall appoint a third (3rd)
Appraiser. If either Landlord or Tenant fails to appoint its
Appraiser within the prescribed time period, the single
Appraiser appointed shall determine the fair rental value of
the Property. If both parties fail to appoint Appraisers
within the prescribed time periods, then the first Appraiser
thereafter selected by a party shall determine the fair
rental value of the Property. Each party shall bear the cost
of its own Appraiser and the parties shall share equally the
cost of the single or third Appraiser, if applicable.
(3) For the purpose of such appraisal, the term "fair market
value" shall mean the price that a ready and willing tenant
would pay, as of the commencement of the Extension period,
as monthly rent to a ready and willing landlord of property
comparable to the Property if such property were exposed for
lease on the open market for a reasonable period of time and
taking into account all of the purposes for which such
property may be used. If a single Appraiser is chosen then
such Appraiser shall determine the fair rental value of the
Property. Otherwise, the
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fair rental value of the Property shall be the arithmetic
average of the two (2) of the three (3) appraisals which are
closest in amount, and the third appraisal shall be
disregarded. In no event, however, shall the Base Rent be
reduced by reason of such computation. Landlord and Tenant
shall instruct the Appraiser(s) to complete the
determination of the fair rental value not later than thirty
(30) days prior to the commencement of the Extension period.
If the fair rental value is not determined prior to the
commencement of the Extension period, then Tenant shall
continue to pay to Landlord the Base Rent applicable to the
Property immediately prior to such Extension, until the fair
rental value is determined. When the fair rental value of
the Property is determined, Landlord shall deliver notice
thereof to Tenant, and Tenant shall pay to Landlord, within
ten (10) days after receipt of such notice, the difference
between the Base Rent actually paid by Tenant to Landlord
and the new Base Rent determined hereunder.
5. FULL FORCE AND EFFECT. Except as modified in the manner set forth in this
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Agreement, the Lease shall remain in full force and effect during the
extension Term provided herein.
6. FURTHER ASSURANCES. Each party agrees to perform any further acts and to
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execute and deliver any further documents which may be reasonably necessary
to carry out the provisions of this Agreement.
Executed this 20 day of November, 2000 to be effective May 31, 2001.
Tenant:
St. Xxxx Knits, Inc., a California corporation
By: /s/ Xxx XxXxxxx
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Landlord:
GM Properties, a California general partnership
By: /s/ Xxx Xxxx
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Xxx Xxxx, Managing General Partner
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