Exhibit 10.7
AMB PROPERTY, L.P.
INDUSTRIAL LEASE
by and between
AMB PROPERTY, L.P.
"LANDLORD"
and
THE SINGING MACHINE COMPANY, INC.
"TENANT"
Dated: March 1, 2002
TABLE OF CONTENTS
Page
1. BASIC PROVISIONS 1
1.1 PARTIES I
1.2 PREMISES I
1.3 TERM 1
1.4 BASE RENT 1
1.5 TENANT's SHARE or OPERATING EXPENSES 1
1.6 TENANT'S ESTIMATED MONTHLY RENT PAYMENT 1
1.7 SECURITY DEPOSIT 1
1.8 PERMITTED USE 1
1.9 GUARANTOR I
1.10 ADDENDA
1.11 EXHIBITS 2
1.12 ADDRESS FOR RENT PAYMENTS 2
2. PREMISES AND COMMON AREAS 3
2.1 LETTING 3
2.2 COMMON AREAS - DEFINITION
2.3 COMMON AREAS - TENANT'S RIGHTS 3
2.4 COMMON AREAS - RULES AND REGUALTIONS 3
2.5 COMMON AREA CHANGES 3
3. TERM 3
3.1 TERM 3
3.2 DELAY IN POSSESSION
3.3 COMMENCEMENT DATE CERTIFICATE 4
4. RENT 4
4.1 BASE RENT 4
4.2 OPERATING EXPENSES 4
5. SECURITY DEPOSIT 5
6. USE 5
6.1 PERMITTED USE
6.2 HAZARDOUS SUBSTANCES 5
6.3 TENANT'S COMPLIANCE WITH REQUIREMENTS 6
6.4 INSPECTION; COMPLIANCE WITH LAW 6
7. MAINTENANCE, RE, PAW, TRADE FIXTURES AND ALTERATIONS 7
7.1 TENANT'S OBLIGATIONS 7
7.2 LANDLORD'S OBLIGATIONS
7.3 ALTERATIONS 7
7.4 SURRENDER/RESTORATION
8. INSURANCE; INDEMNITY 7
8.1 PAYMENT of PREMIUMS 7
8.2 TENANTS INSURANCE 7
8 33 LANDLORD'S INSURANCE
8.4 WAIVER of SUBROGATION 8
8.5 INDEMNITY 8
8.6 EXEMPTION OF LANDLORD FROM LIABILITY
9. DAMAGE OR DESTRUCTION .
9.1 TERMINATION RIGHT 9
9.2 DAMAGE CAUSED BY TENANT 9
10.REAL PROPERTY TAXES 9
10.1 PAYMENT OF REAL PROPERTY TAXES 9
10.2 REAL PROPERTY TAX DEFINITION 9
10.3 ADDITIONAL IMPROVEMENTS 10
10.4 JOINT ASSESSMENT 10
10.5 TENANT'S PROPERTY TAXES 10
11. UTILITIES 10
12. ASSIGNMENT AND SUBLETTING 10
12.1 LANDLORD'S CONSENT REQUIRED 10
12.2 RENT ADJUSTMENT 10
13. DEFAULT; REMEDIES 10
13.1 DEFAULT 10
13.2 REMEDIES 11
13.3 LATE CHARGES 12
14. CONDEMNATION 13
15. ESTOPPEL CERTIFICATE AND FINANCIAL STATEMENTS 13
15.1 ESTOPPEL CERTIFICATE 13
15.2 FINANCIAL STATEMENT 13
16. ADDITIONAL COVENANTS AND PROVISIONS 13
16.1 SEVERABILTY 13
16.2 INTEREST ON PAST-DUE OBLIGATION'S 13
16.3 TIME OF ESSENCE 13
16.4 LANDLORD LIABILITY 14
16.5 NO PRIOR OR OTHER AGREEMENTS 14
16.6 NOTICE REQUIREMENTS 14
16.7 DATE of NOTICE 14
16:8 WAIVERS 14
16.9 HOLDOVER 14
16.10 CUMULATIVE REMEDIES 14
16.11 BINDING EFFECT: CHOICE OF LAW 14
16.12 LANDLORD 14
16.13 ATTORNEYS' FEES AND OTHER COSTS 15
16.14 LANDLORD'S ACCESS; SHOWING PREMISES; REPAIRS 15
16.15 SIGNS 15
16.16 TERMINATION; MERGER 15
16.17 QUIET POSSESSION 15
16.18 SUBORDINATION; ATTORNMENT; NON-DISTURBANCE 15
16.19 RULES AND REGULATIONS 16
16.20 SECURITY MEASURES 16
16.21 RESERVATIONS 16
16.22 CONFLICT 16
16.23 OFFER 16
16.24 AMENDMENTS 16
16.25 MULTIPLE PARTIES 16
16.26 AUTHORITY 16
AMB PROPERTY CORPORATION
INDUSTRIAL LEASE
1. Basic Provisions ("Basic Provisions").
1.1 Parties: This Lease ("Lease") dated Februag 6, 2002, is made by and
between AM-13 Property, L.P., a Delaware limited partnership, ("Landlord") and
The Singing Machine Company, Inc., a -Delaware corporation ("Tenant")
(collectively, the "Parties" or individually, a "Party").
1.2 Premises The premises ("Premises"), which are the subject of this
Lease, are located at 000 Xxxx Xxxxxxx Xxxx., Xxxxxxx, XX 00000 in the
industrial center commonly known as the Artesia Industrial Center (the
"Industrial Center"). The Premises are:
[XX] Approximately 79,000 square feet of space as depicted on
Exhibit A. This space is a part of the building ("Building") which is also
identified on Exhibit A.
or
[ ] A11 of the building ("Building") identified on Exhibit A,
consisting of approximately square feet.
If the Premises are all of the Building, there shall, for purposes of this
Lease, be no distinction between the words "Premises" or "Building." Tenant
shall have nonexclusive rights to the Common Areas (as defined in Paragraph 2.2
below) but shall not have any rights to the roof, exterior walls, or utility
raceways of the .Building or to any other buildings in the Industrial Center.
The Industrial Center-consists of the Premises, the Building, the Common Areas,
the land upon which they are located, and all other buildings and improvements
within the boundaries of the Industrial Center.
1.3 Term: Five 5 years and ten (IQ) months ("Term") commencing upon
completion of tenant improvements as set forth in the Tenant Improvement
Addendum ("Commencement Date") and ending at the end of the seventieth (70`x)
month after the Commencement Date ("Expiration Date").
1.4 Base Rent: $33,970.00 per month ("Base Rent"). $33,970.00 is
payable on execution of this Lease for the period which is the fourth month of
the Term. Tenant shall not be required to pay Base Rent for months 1 through 3
of the Term.
1.5 Tenant's Share of Operating Expenses ("Tenant's Share"):
(a) Common Area Operating Expenses 33.1%
(b), Building Operating Expenses 33.1%
1.6 Tenant's Estimated Monthly Rent Payment: Following is the estimated
monthly Rent payment to Landlord pursuant to the provisions of this Lease. This
estimate is made at the inception of the Lease and is subject to adjustment
pursuant to the provisions of this Lease:
(a) Base Rent (Paragraph 4.1) $33,970.00
(b) Operating Expenses (Paragraph 4.2,
excluding Real Property Taxes,
Landlord Insurance, and HVAC) $ 1,574.00
(c) Landlord Insurance (Paragraph 8.3) $ 687.50
(d) Real Property Taxes (Paragraph 10) $ 4,206.92
(e) HVAC $ 75.00
Estimated Monthly Payment $40.513.42
1.7 Security Deposit $33,970.00 ("Security Deposit").
1.8 Permitted Use ("Permitted Use"): manufacture, repair and
distribution karaoke equipment, audio software and electronic audio equipment
and accessories related thereto and for no other purpose.
1.9 Guarantor: None
1.10 Addenda: Attached hereto are, the following Addenda, all of which
constitute a part of this Lease
(a) Addenda: Tenant Improvement Addendum
(b) Addenda: Rent Adjustment Addendum
(c) Addenda: Early Inducement and Recapture Addendum
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(d) Addenda: Existing Tenant Contingency Addendum
1.11 Exhibits: Attached hereto are the following Exhibits, all of which
constitute a part of this Lease:
Exhibit A: Description of Premises.
Exhibit B: Commencement Date Certificate.
Exhibit C: Hazardous Substances Questionnaire
Exhibit D: Move-Out Standards
1.12 Address for Rent Payments: All amounts payable by Tenant to
Landlord shall, until further notice from Landlord, be paid to AMB Property
Corporation at the following address:
AMB Property, L.P.
-----------------------------
X.X. Xxx 00000
-----------------------------
Xxxxxx, XX 00000-0000
-----------------------------
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2. Premises and Common Areas.
2.1 Letting. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the Premises upon all of the terms, covenants, and conditions, set
forth in this Lease. Any statement of square footage set forth in thus Lease or
that may have been used in calculating Base Rent and/or Operating Expenses is an
approximation which Landlord and Tenant agree is reasonable, and the Base Rent
and Tenant's Share based thereon is not subject to revision whether or not the
actual square footage is more or less.
2.2 Common Areas - Definition. "Common Areas" are all areas and
facilities outside the Premises and within the exterior boundary line of the
Industrial Center and interior utility raceways within the Premises that are
provided and designated by the Landlord from time to time for the general
nonexclusive use of Landlord, Tenant, and other tenants of the Industrial Center
and their respective employees, suppliers, slippers, tenants, contractors, and
invitees.
2.3 Common Areas - Tenant's Rights. Landlord hereby grants to Tenant,
for the benefit of Tenant and its employees, suppliers, slippers, contractors,
customers, and invitees, during the term of this Lease, the nonexclusive right
to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved
by Landlord under the terms hereof or under the terns of any rules and
regulations or covenants, conditions, and restrictions governing the use of the
Industrial Center.
2.4 Common Areas - Rules and Regulations. Landlord shall have the
exclusive control arid management of the Common Areas and shall have the right,
from time to time, to establish-, modify, amend, and enforce reasonable Rules
and Regulations with respect thereto in accordance with Paragraph 16.19.
2.5 Common Area Changes. Landlord shall have the right, in Landlord's
sole discretion; from time to time;
(a) To make changes to the Common Areas, including, without
limitation, changes in the locations, size, shape, and number of driveways,
entrances, parking spaces, parking areas, loading and unloading areas, ingress,
egress, direction of traffic, landscaped areas, walkways, and utility raceways,
so long as Tenant's use and enjoyment of the Premises are not materially,
adversely affected for a period of greater than 5 consecutive business days;
(b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises remains
available;
(c) To designate other land outside the boundaries of the
Industrial Center to be a part of the Common Areas, so long as such land can, in
Landlord's sole reasonable judgment, be considered to serve and benefit the
Building and the tenants thereof;
(d) To add additional buildings and improvements to the Common
Areas, provided that the capital costs of such construction (except as set forth
in Section 4.2(a)(viii) of this Lease) are not charged back to Tenant, the
availability of parking for the Premises is not materially, adversely affected
for a period of greater than 5. consecutive business days and reasonable access
to the Premises remains available;
(e) To use the Common Areas while engaged in making additional
improvements, repairs, or alterations to the Industrial Center, or any portion
thereof; and
(f) To do and perform such other acts and make such other
changes in, to, or with respect to the Common Areas and Industrial Center as.
Landlord may, in the exercise of sound business judgment, deem to be
appropriate, so long as the capital costs of same shall not be charged back to
Tenant, and Tenant's use and enjoyment of,the Premises are not materially,
adversely affected for a period of greater than 5 consecutive business days.
3. Term.
3.1 Tenn. The Commencement~Date, Expiration Date, and Tern of this
Lease are as specified in Paragraph 1.3.
3.2 Delay in Possession. If for any reason Landlord cannot deliver
possession of the Premises to Tenant by the Commencement Date, Landlord shall
not be subject to any liability therefor, nor shall such failure affect the.
validity of this Lease or the obligations of Tenant hereunder, In such case,
Tenant shall not, except as otherwise provided herein, be obligated to pay Rent
or perform any other obligation of Tenant under the terms of this Lease until
Landlord delivers possession of the Premises to Tenant. The term of the Lease
shall commence on the earlier of (a) the date Tenant takes possession of the
Premises or (b) 10 days following notice to Tenant that Landlord is prepared
totender possession of the Premeises to Tenant. If possession of the Premises is
not delivered to Tenant within 60 days after the Commencement Date and such
delay is not due to Tenant's acts, failure to act, or omissions, Tenant may by
notice in writing to
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Landlord within 20 days after the end of said 60-day period cancel this Lease
and the parties shall be dischared from all obligations hereunder. If such
written notice of Tenant is not received by Landlord within said 20-day period,
Tenant's right to cancel this Lease shall terminate.
3.3 Commencement Date Certificate. At the request of of Landlord,
Tenant shall execute and deliver to Landlord a completed certificate
("Commencement Date Certificate") in the form attached hereto as Exhibit B.
4. Rent.
4.1 Base Rent. Tenant shall pay to Landlord Base Rent and ~ other
monetary obligations of Tenant to Landlord under the terms of this Lease (such
other monetary obligations are herein referred to as "Additional Rent") in
lawful money of the United States, without offset or deduction, in advance on or
before the first day of each month. Base Rent and Additional Rent for any period
during the term hereof which is for less than one full month shall be prorated
based upon the actual number of days of the month involved. Payment of Base Rent
and Additional Rent shall be made to Landlord at its address stated herein or to
such other persons or at such other addresses as Landlord may from time to time
designate in writing to Tenant. Base Rent and Additional Rent are collectively
referred to as "Rent." All monetary obligations of Tenant to Landlord under the
terms of this Lease are deemed to be Rent.
4.2 Operating Expenses. Tenant shall pay to Landlord on the first day
of each month during the term hereof, in addition to the Base Rent, Tenant's
Share of all Operating Expenses in accordance with the following provisions:
(a) "Operating Expenses" are all costs incurred by Landlord
relating to the ownership and operation of the Industrial Center, Building, and
Premises including, but not limited to, the following:
(i) The operation, repair, maintenance, and
replacement in neat, clean, good order, and condition of the Common Areas,
including parking areas, loading and unloading areas, trash areas, roadways,
sidewalks, walkways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, drainage systems, lighting facilities, fences and gates,
exterior signs, and tenant directories.
(ii) Water, gas, electricity, telephone, and other
utilities servicing the Common Areas.
(iii) Trash disposal, janitorial services, snow
removal, property management (not to exceed 3% per year of gross revenues of the
Industrial Center), and security services.
(iv) Reasonable reserves set aside for maintenance,
repair, and replacement of the Common Areas and Building, provided that Tenant
shall not be required to make an initial "lump sum" contribution to any reserve
fund.
(v) Real Property Taxes.
(vi) Premiums for the insurance policies maintained
by Landlord under Paragraph 8 hereof,
(vii) Environmental monitoring and insurance
programs.
(viii) Monthly amortization of capital improvements
to the Common Areas and the Building. The monthly amortization of any given
capital improvement shall be the sum of the (a) quotient obtained by dividing
the cost of the capital improvement by Landlord's estimate of the number of
months of useful life of such improvement as determined pursuant to the Internal
Revenue Code plus (b) an amount equal. to the cost of the capital improvement
times 1/12 of the lesser of 12% or the maximum annual interest rate permitted by
law.
(ix) Maintenance of the Building including, but not
limited to, painting, caulking, and repair and replacement of Building
components, including, but not limited to, roof, elevators, and fire detection
and sprinkler systems.
(x) Heating, ventilating, and air conditioning
systems ("HVAC").
(xi) If Tenant fails to maintain the Premises, any
expense incurred by Landlord for such maintenance, but not expenses incurred
with respect to other tenants' premises, or, generally, expenses incurred by
Landlord which do not reasonably benefit the Building or the tenants thereof.
(b) Tenant's Share of Operating Expenses that are not
specifically attributed to the Premises or Building ("Common Area Operating
Expenses") shall be that percentage shown in Paragraph 1.5(a). Tenant's Share of
Operating Expenses that are attributable to the Building ("Building Operating
Expenses") shall be that percentage shown in Paragraph 1.5(b). Landlord
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in its reasonable discretion shall determine which Operating Expenses are Common
Area Operating Expenses, Building Operating Expenses, or expenses, or expenses
to be entirely borne by Tenant.
(c) The inclusion of the improvements, facilities, and
services set forth in Subparagraph 4.2(a) shall not impose any obligation upon
Landlord either to have said improvements or facilities or to provide those
services, so long as Landlord has not levied a charge for same.
(d) Tenant shall pay monthly in advance, on the same day that
the Base Rent is due, Tenant's Share of estimated Operating Expenses and HVAC
maintenance costs in the amount set forth in Paragraph 1.6. Landlord shall
deliver to Tenant within 90 days after the expiration of each .calendar year a
reasonably detailed statement showing Tenant's Share of the actual Operating
Expenses incurred during the preceding year. If Tenant's estimated payments
under thus Paragraph 4(d) during the preceding year exceed Tenant's Share as
indicated on said statement, Tenant shall be credited the amount of such
overpayment against Tenant's Share of Operating Expenses next becoming due. If
Tenant's estimated payments under thus Paragraph 4.2(d) during said preceding
year were less than Tenant's Share as indicated on said statement, Tenant shall
pay to Landlord the amount of the deficiency within 10 days after delivery by
Landlord to Tenant of said statement. No more than one time per year, Landlord
may adjust the amount of the estimated 1 tenant's Share of Operating Expenses
and HVAC maintenance costs to reflect Landlord's estimate of such expenses for
the year.
5. Security Deposit. Tenant shall deposit with Landlord upon Tenant's execution
hereof the Security Deposit set forth in Paragraph 1.7 as security for Tenant's
faithful performance of Tenant's obligations under this Lease. If Tenant fails
to pay Base Rent or Additional Rent or otherwise defaults under this Lease (as
defined in Paragraph 13.1), Landlord may use the Security Deposit for the
payment of any amount due Landlord or to reimburse or compensate Landlord for
any liability, cost, expense, loss, or damage (including attorneys' fees) which
Landlord may suffer or incur by reason thereof. Tenant shall on demand pay
Landlord the amount so used or applied so as to restore the Security Deposit to
the amount set forth in Paragraph 1.7. Landlord shall not be required to keep
all or any part of the Security Deposit separate from its general accounts.
Landlord shall, at the expiration or earlier termination of the term hereof and
within 30 days after Tenant has vacated the Premises, return to Tenant that
portion of the Security Deposit not used or applied by Landlord. No part of the
Security Deposit shall be considered to be held in trust, to bear interest, or
to be prepayment for any monies to be paid by Tenant under this Lease.
6. Use.
6.1 Permitted Use. Tenant shall use and occupy the Premises only for
the Permitted Use set forth in Paragraph 1.8. Tenant shall not commit any
nuisance, permit the emission of any objectionable noise or odor, suffer any
waste, make any use of the Premises which is contrary to any law or ordinance,
or which will invalidate or increase the premiums for any of Landlord's
insurance. Tenant shall not service, maintain, or repair vehicles on the
Premises, Building, or Common Areas. Tenant shall not store foods, pallets,
drums; or any other materials outside the Premises.
6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term, "Hazardous Substance,"
as used in this Lease, shall mean any product, substance, chemical, material, or
waste whose presence, nature, quantity, and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release, or effect, either by
itself or in combination with other materials expected to be on the Premises, is
either: (i) potentially injurious to the public health, safety or welfare, the
environment, or the Premises; (ii) regulated or monitored by any governmental
authority; or (iii) a basis for potential liability of Landlord to any
governmental agency or third party under any applicable statute or common law
theory. Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil, or any products or by products thereof. Tenant
shall not engage in any activity in or about the Premises which constitutes a
Reportable Use (as hereinafter defined) of Hazardous Substances without the
express prior written consent of Landlord and compliance in a timely manner (at
Tenant's sole cost and expense) with all Applicable Requirements (as defined in
Paragraph 6.3) "Reportable Use" shall mean (i) the installation or use of any
above or below ground storage tank, (ii) the generation, possession, storage,
use, transportation, or disposal or a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration, or business plan
is required to be filed with, any governmental authority, and (iii) the presence
in, on, or about the Premise of a Hazardous Substance with respect to which may
any Applicable Requirements require
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that a notice be given to persons entering or occupying the Premises or
neighboring properties. Notwithstanding the foregoing, Tenant may, without
Landlord's prior consent, but upon notice to Landlord and in compliance with all
Applicable Requirements, use any ordinary and customary materials reasonably
required to be used by Tenant in the normal course of the Permitted Use, so long
as such use is not a Reportable Use and does not expose the Premises or
neighboring properties to any meaningful risk of contamination or damage, or
expose Landlord to any liability therefor. In addition, Landlord may (but
without any obligation to do so) condition its consent to any Reportable Use of
any Hazardous Substance by Tenant upon Tenant's ,giving Landlord such additional
assurances as Landlord, in its reasonable discretion, deems necessary to protect
itself, the public, the Premises, and the environment against damage,
contamination, injury, and/or liability therefor, including but not limited to
the installation (and, at Landlord's option, removal on or before Lease'
expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional Security Deposit. Notwithstanding the foregoing, Landlord has
no current and actual knowledge of any Reportable Use in or on the Premises.
Further notwithstanding the foregoing, Tenant shall only be responsible under
this Section for any Hazardous Substance or Reportable Use which has been caused
by Tenant or its employees, contractors, affiliates or agents.
(b) Duty to Inform Landlord. If Tenant knows, or has reasonable cause
to believe, that a Hazardous Substance is located iii, under, or about the
Premises or the Building, Tenant shall immediately give Landlord written notice
thereof, together with a copy of any statement, report, notice, registration,
application, permit, business plan, license, claim, action, or proceeding given
to, or received from, any governmental authority or private party concerning the
presence, spill, release, discharge of, or exposure to such Hazardous Substance.
Tenant shall not cause or permit any Hazardous Substance to be spilled or
released in, on, under, or about the Premises (including, without limitation,
through the plumbing or sanitary sewer system).
(c) Indemnification. Tenant shall indemnify, protect, defend, and hold
Landlord, Landlord's affiliates, Lenders, and the officers, directors,
shareholders, partners, employees, managers, independent contractors, attorneys,
and agents of the foregoing ("Landlord Entities") and the Premises harmless from
and against any and all damages, liabilities, judgments, costs, claims, liens,
expenses, penalties, loss of permits, and attorneys' and consultants' fees
arising out of or involving any Hazardous Substance on or brought onto the
Premises by or for Tenant or by any of Tenant's employees, agents, contractors,
servants, visitors, suppliers, or invitees (such employees, agents, contractors,
servants, visitors, suppliers, and invitees as herein collectively referred to
as "Tenant Entities"). Tenant's obligations under this Paragraph 6.2(c) shall
include, but not be limited to, the effects of any contamination or injury to
person, property, or the environment created or suffered by Tenant, and the cost
of investigation (including consultants' and attorneys' fees and testing),
removal, remediation, restoration and/or abatement thereof, or of 'any
contamination therein involved. Tenant's obligations under this Paragraph 6.2(c)
shall survive the Expiration Date or earlier tennination of this Lease.
6.3 Tenant's Compliance with Requirements. Tenant shall, at Tenant's
sole cost and expense, fully, diligently, and in a timely manner comply with all
"Applicable Requirements," which term is used in this Lease to mean all laws,
rules, regulations, ordinances, directives, covenants, easements,. and
restrictions of record, permits, the requirements of any applicable fire
insurance underwriter or rating bureau, and the recommendations of Landlord's
engineers and/or consultants, relating in any manner to the Premises (including
but not limited to matters pertaining to (a) industrial hygiene, (b)
environmental conditions on, in, under, or about the Premises, including soil
and groundwater conditions, and (c) the use, generation, manufacture; .
production, installation, maintenance, removal, transportation, storage, spill,
or release of any Hazardous Substance), now in effect or which may hereafter
come into effect- Tenant shall, within S days after receipt of Landlord's
written request, provide Landlord with copies of all documents and information
evidencing Tenant's compliance with any Applicable Requirements, and shall
immediately upon receipt notify Landlord in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint, or report pertaining to or involving failure by Tenant or
the Premises to comply with any Applicable Requirements.
6.4 Inspection Compliance with Law. In addition to Landlord's
environmental monitoring and insurance program, the cost of which is included in
Operating Expenses, Landlord and the holders of any mortgages, deeds of trust,
or ground leases on the Premises ("Lenders") shall have the right to enter the
Premises at any time in the case of an emergency,
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and otherwise at reasonable times, for the purpose of inspecting the condition
of the Premises and for verifying compliance by Tenant with this Lease and all
Applicable Requirements. Landlord shall be entitled to employ experts and/or
consultants in connection therewith to advise Landlord with respect to Tenant's
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance on or from the Premises. The cost and expenses of any such
inspections shall be paid by the party requesting same unless a violation of
Applicable Requirements exists or is imminent, or the inspection is requested or
ordered by a governmental authority and arises from Tenant's use or occupancy of
the Premises, Tenant shall upon request reimburse Landlord or Landlord's Lender,
as the case may be, for the costs and expenses of such inspections.
7. Maintenance, Repairs, Trade Fixtures and Alterations.
7.1 Tenant's Obligations. Subject to the provisions of Paragraph 7.2
(Landlord's Obligations), Paragraph 9 (Damage or Destruction), and Paragraph 1 4
(Condemnation), Tenant shall, at Tenant's sole cost and expense and at all
times, keep the Premises and every part thereof in good order, condition, and
repair (whether or not such portion of the Premises requiring repair, or the
means of repairing the same, are reasonable or readily accessible to Xxxx>>t and
whether or not the need for such repairs occurs as a result of Tenant's use, the
elements, or the age of such portion of the Premises including, without limiting
the generality of the foregoing, all equipment or facilities specifically
serving the Premises, such as plumbing, heating, ventilating, electrical,
lighting facilities, boilers, fired or .unfired pressure vessels, fire hose
connectors if within the Premises, fixtures, interior walls, interior surfaces
of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights,
but excluding any items which are the responsibility of Landlord pursuant to
Paragraph 7.2 below. Tenant's obligations shall include restorations,
replacements, or renewals when necessary to keep the Premises and all
improvements thereon or a part thereof in good order, condition, and state of
repair.
7.2 Landlord's Obligation s. Subject to the provisions of Paragraph 6
(Use), Paragraph 7.1 (Tenant's Obligations), Paragraph 9 (Damage or
Destruction), and Paragraph 14 (Condemnation), Landlord, at its expense and not
subject to the reimbursement requirements of Paragraph 4.2, shall keep in good
order, condition, and repair the roof structure, foundations and exterior walls
of the Building and utility systems within the Industrial Center, including, for
greater certainly, all utility lines, pipes and conduits running under or within
the Building and the Premises. Landlord, subject to reimbursement pursuant to
Paragraph 4.2, shall keep in good order, condition, and repair the air
conditioning systems servicing the Premises, Building roof membrane, and Common
Areas.
7.3 Alterations. Tenant shall not make nor cause to be made any
alterations or installations in, on, under, or about the Premises, except for
non-structural alterations which do not penetrate the roof membrane or structure
that serve to better adapt the Premises for its ,purposes which 'do not exceed
$50,000 per lease year in costs and of which Tenant gives Landlord at least 20
days' prior written notice.
7.4 Surrender/Restoration. Tenant shall surrender the Premises by the
end of the last day of the Lease term or any earlier termination date, clean and
free of debris and in good operating order, condition, and state of repair,
ordinary wear and tear excepted. Without limiting the generality of the above,
Tenant shall remove all personal property, trade fixtures, and floor bolts,
patch all floors, axed cause all lights to be in good operating condition.
Notwithstanding the foregoing, other than those improvements made pursuant to
the Tenant Improvement Addendum to the Lease (which Tenant shall not be required
to remove at the end of the Term or earlier termination), at the time that
Tenant seeks consent From Landlord or gives notice to Landlord of any
improvement to be made by Tenant, Landlord, as a condition to consent to such
improvement (if consent is required) or within 10 days of receipt of written
notice (if no consent is required), may require that Tenant remove such
improvement(s) at Tenant's sole cost and expense at the end of the Term or
earlier termination.
8. Insurance; Indemnity.
8.1 Payment of Premiums. The cost of the premiums for the insurance
policies maintained by Landlord under this Paragraph 8 shall be a Corm-non Area
Operating Expense reimbursable pursuant to Paragraph 4.2 hereof. Premiums for
policy periods commencing prior to, or extending beyond, the term of this Lease
shall be prorated to coincide with the corresponding Commencement Date and
Expiration Date.
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8.2 Tenant's Insurance.
(a) At its sole cost and expense, Tenant shall maintain in
full force and effect during the Term of -the Lease the following insurance
coverages insuring against claims which may arise from or in connection with the
Tenant's operation,and use of the Premises.
(i) Commercial General Liability insurance with
minimum limits of $1,000,000 per occurrence and $3,000,000 general aggregate for
bodily injury, personal injury, and property damage. If required by Landlord,
liquor liability coverage will be included. Such insurance shall be endorsed to
include Landlord and Landlord Entities as additional insureds, shall be primary
and noncontributory with any Landlord insurance, and shall provide severability
of interests between or among insureds.
(ii) Workers' Compensation insurance with statutory
limits and Employers Liability with a $1,000,000 per accident limit for bodily
injury or disease. (iii) To the extent that Tenant owns or leases vehicles which
are using or nonowned, and damage.
(iv) Property insurance against "all risks" at least
as broad as the current ISO Special Form policy, including earthquake and flood,
for loss to any tenant improvements or betterments, floor and wall coverings,
and business personal property on a full insurable replacement cost basis with
no coinsurance clause, and Business Income insurance covering at least six
months of loss of income and continuing expense.
(b) Tenant shall deliver to Landlord certificates o-f all
insurance reflecting evidence of required coverages prior to initial occupancy,
and annually thereafter.
(c) If, in the opinion of Landlord's insurance advisor, the
amount or scope of such coverage is deemed inadequate at any time during the
Term, Tenant shall increase such coverage to such reasonable amounts or scope as
Landlord's advisor deems adequate and is comparable to coverages carried by a
majority of similar size and use tenants in Compton, CA.
(d) All insurance required under Paragraph 8.2 (i) shall be
issued by insurers licensed to do business in the state in which the Premises
are located and which are rated A:VI1 or better by Best's Key Rating Guide and
(ii) shall be endorsed to provide at least 30-days prior notification of
cancellation or material change in coverage to said additional insureds.
8.3 Landlord's Insurance. Landlord shall maintain "all risks" coverage
as broad as the current ISO Special Form policy, including earthquake and flood,
covering the buildings within the Industrial Center, Commercial General
Liability insurance, and such other insurance in such amounts and covering such
other liability or hazards as deemed appropriate by Landlord. The amount and
scope of coverage of Landlord's insurance shall be determined by Landlord from
time to time in its sole discretion and shall be subject to such deductible
amounts as Landlord may elect. Landlord shall have the right to reduce or
terminate any insurance or coverage to limits and amounts carried by a majority
of owners of similar buildings in Compton, California.
8.4 Waiver of Subrogation. To the extent permitted by law and with
permission of their insurance. carriers, Landlord and Tenant each waive any
right to recover against the other on account of any and all claims Landlord or
Tenant may have against the other with respect to property insurance actually
carried, or required to be carried hereunder, to the extent of the proceeds
realized from such insurance coverage.
8.5 Indemnity. Each party shall protect, defend, indemnify, and hold
the other and their respective Entities harmless from and against any and all
loss, claims, liability, or costs (including court costs and attorneys' fees)
incurred by reason of:
(a) any damage to any property (including but not limited to
property of either party's Entities or death, bodily, or personal injury to any
person occurring in or about the Premises, the Building, or the Industrial
Center to the extent that such injury or damage shall be caused by or arise from
any actual or alleged act, neglect, fault, or omission by or of that party or
that party's agents, servants, employees, invitees; contractors, suppliers,
subtenants, or visitors (collectively "Entities");
(b) the conduct or management of any work or anything
whatsoever done by either party on or about the Premises or from transactions of
either party concerning the Premises;
(c) Either party's failure to comply with any and all
governmental laws, ordinances, and regulations applicable to the condition or
use of the Premises, Building or Industrial Center, or the operation or
occupancy thereof; or
(d) any breach or default on the part of either party in the
performance of any covenant or agreement to be performed pursuant to this Lease.
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The provisions of this Paragraph 8.5 shall, with respect to
any claims or liability accruing prior to such termination, survive the
Expiration Date or earlier termination of this Lease.
8.6 Exemption of Landlord from Liability. Except to the extent caused
by the gross negligence or willful misconduct of Landlord, Landlord shall not be
liable for and Tenant waives any claims against Landlord for injury or damage to
the person or the property of Tenant, Tenant Entities, or any other person in or
about the Premises, Building, or Industrial Center from any cause whatsoever,
including, but not limited to, damage or injury which is caused by or results
from (a) fire, steam, electricity, gas, water, or rain, or from the breakage,
leakage, seepage, back up of sewers or drains, obstruction, or other defects of
pipes, fire sprinklers, wires, appliances, plumbing, air conditioning, or
lighting fixtures or (b) from the condition of the Premises, other portions of
the Building, or Industrial Center, Landlord shall not be liable for any damages
arising From any act or neglect of any other tenant of Landlord nor from the
failure by Landlord to enforce the provisions of any other lease in the
Industrial Center. Notwithstanding Landlord's negligence or breach of this
Lease, Landlord shall under no circumstances be liable for injury to Tenant's
business, for any loss of income or profit therefrom, or any indirect,
consequential, or punitive damages.
9. Damage or Destruction.
9.1 Termination Right. Tenant shall give Landlord immediate written
notice of any damage to the Premises. Subject to the provisions of Paragraph
9.2, if the Premises or the Building shall be damaged to such an extent that
there is substantial interference for a period exceeding 90 consecutive days
with the conduct by Tenant of its business at the Premises, or it is determined
that such damage cannot be repaired within 180 days of its occurrence, Tenant,
at any time prior to commencement of repair of the Premises and following 10
days written notice to Landlord, may terminate this Lease effective 30 days
after delivery of such notice to Landlord. Such termination shall not excuse the
performance by Tenant of those covenants which under the terms hereof survive
termination. Rent shall be abated in proportion to the degree of interference
during the period that there is such substantial interference with the conduct
of Tenant's business at the Abatement of rent and Tenant's right of termination
pursuant to this provision shall be Tenant's sole remedy for failure of Landlord
to keep in good order, condition, and repair the foundations and exterior walls
of the Building, Building roof, utility systems outside the Building, the Common
Areas, and RVAC.
9.2 Damage Caused by Tenant. Tenant's termination rights under
Paragraph 9.1 shall not apply if the damage to the Premises or Building is
the'result of any actor omission of Tenant or of any of Tenant's agents,
employees, customers, invitees, or contractors ("Tenant Acts"). Any damage
resulting from a Tenant Act shall be promptly repaired by Tenant. Landlord at
its option may at Tenant's expense repair any damage caused by Tenant Acts.
Tenant shall continue to pay all rent and other sums due hereunder and shall be
liable to Landlord for all damages that Landlord may sustain resulting from a
Tenant Act.
10. Real Property Taxes:
10.1 Payment of Real Property Taxes. Landlord shall pay the Real
Property Taxes due and payable during the term of thus Lease and, except as
otherwise provided in Paragraph 10.3, such payments shall be a Common Area
Operating Expense reimbursable pursuant to Paragraph 4.2.
10.2 Real Property Tax Definition. As used herein, the term "Real
Property Taxes" is any form of tax or assessment, general, special, ordinary, or
extraordinary, imposed or levied upon (a) the Industrial Center or Building, (b)
any interest of Landlord in the Industrial Centcr or Building, (c) Landlord's
right to rent or other income from the Industrial Center or Building, and/or (d)
Landlord's business of leasing the Premises. Real Property Taxes include (a) any
license fee, commercial rental tax, excise tax, improvement bond or bonds, levy,
or tax; (b) any lax or charge'which replaces or is in addition to any of such
above-described "Real Properly Taxes," and (c) any fees, expenses, or costs
(including attorneys' fees, expert fees, and the like) incurred by Landlord in
protesting or contesting any assessments levied or any tax rate. Real Properly
Taxes for tax years commencing prior to, or extending beyond, the term of this
Lease shall be prorated to coincide with the corresponding Commencement Date and
Expiration Date. Real Property Taxes shall not include any tax levied against
Landlord in respect of income earned by Landlord under this Lease, except to the
extent that such tax is in lieu of Real Property Taxes.
10.3 Additional Improvements. Operating Expenses shall not include Real
Property Taxes attributable to improvements placed upon the Industrial Center by
other tenants or by
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Landlord for the exclusive enjoyment of such other tenants. Tenant shall,
however, pay to Landlord at the time Operating Expenses are payable under
Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed
by reason of improvements placed upon the Premises by Tenant or at Tenant's
request, provided that Tenant shall not be required to contribute to an increase
in Real Property Taxes that results from the actions of any other tenant of the
Industrial Center.
10.4 Joint Assessment. If the Building is not separately assessed, Real
Property Taxes allocated to the Building shall be an equitable proportion of.
the Real Property Taxes for all of the land and improvements included within the
parcel assessed.
10.5 Tenant's Property Taxes. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon Tenant's improvements, fixtures,
furnishings, equipment, and all personal property of Tenant contained in the
Premises or stored within the Industrial Center.
11. Utilities. Tenant shall pay. directly for all utilities and services
supplied to the premises, including but not limited to electricity, telephone,
security, gas, and cleaning of the Premises, together with any taxes thereon.
12. Assignment and Subletting
12.1 Landlord's Consent Required. Tenant shall not assign, transfer,
mortgage, or otherwise transfer or encumber (collectively, "assign") or sublet
all or any part of. Tenant's interest in this Lease or in the Premises without
Landlord's prior written consent, which consent shall not be unreasonably
withheld. Relevant criteria in determining reasonability of consent include, but
are not limited to, credit history of a proposed assignee or sublessee,
references from prior landlords, any change or intensification of use-of the
Premises or the Common Areas, and any limitations imposed by the. Internal
Revenue Code and the Regulations promulgated thereunder relating to Real Estate
Investment Trusts. Assignment or sublet shall not release Tenant from its
obligations hereunder. Tenant shall not (i) sublet, assign, or enter into other
arrangements in which the amounts to be paid by the sublessee or assignee
thereunder would be based, in whole or in part, on the income or profits derived
by the business activities of the sublessee or assignee; (ii) sublet the
Premises or assign this Lease to any person or entity in which Landlord owns an
interest, directly or indirectly (by applying constructive ownership rules set
forth in Section 856(d)(5) , of the Internal Revenue Code (the "Code"); or (iii)
sublet the Premises or assign this Lease hi any other manner which could cause
any portion o f the amounts received by Landlord pursuant to this Lease or any
sublease to fail to qualify as "rents from real property" within the meaning of
Section 856(d) of the Code, or which could cause any other income received by
Landlord to fail to qualify as income described in Section 856(c)(2) of the
Code. The requirements of this Section 12.1 shall apply to any further
subleasing by any subtenant. Notwithstanding the foregoing, in the event of any
assignment or subletting to which Landlord consents, Landlord shall receive
fifty percent (50%), in the event of a sublease, of any rent received by Tenant
above the rent then being paid by Tenant to Landlord less any commissions or
marketing expense paid by Tenant for such sublease. In addition, Landlord shall
receive fifty percent (50%), in the event of an assignment, of any profit
derived by Tenant from such assignment less any commissions or marketing expense
paid by Tenant for such assignment. In the event of. any assignment or
subletting, Tenant (or the proposed assignee or subtenant) shall pay to Landlord
or its authorized managing agent (as directed by Landlord) a fee of $750.00 to
cover Landlord's costs of review, negotiation, preparation or execution of any
documentation regarding such assignment or subletting.
12.2 Rent Adjustment It; as of the effective date of any permitted
assignment or subletting, the then remaining term of thus Lease is less than 1
year, Landlord may, as a condition to its consent: (a) require that the amount
of the Rent payable under this Lease be adjusted to what is then the market
value for property similar to the Premises as then constituted, as determined by
Landlord; or (b) terminate the Lease as of the. date of assignment or
subletting, subject to the performance by Tenant of those covenants whih under
the terms hereof survive termination.
13. Default; Remedies.
13.1 Default. The occurrence of any one of the following events shall
constitute an event of default of the part of Tenant ("Default"):
(a) The abandonment of the Premises by Tenant;
(b) Failure to pay any installment of Base Rent, Additional
Rent, or any other monies due and payable hereunder, said failure continuing for
a period of 7 days after the same is due;
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(c) A general assignment by Tenant or any guarantor for the
benefit of. creditors;
(d) The filing of a voluntary petition of bankruptcy by Tenant
or any guarantor; the filing of a voluntary petition for an arrangement; the
filing of a petition, voluntary or involuntary, for reorganization; or the
filing of an involuntary petition by Tenant's creditors or guarantors Premises
that is not dismissed within 60 days after such event;
(e) Receivership, attachment, of other judicial seizure of the
Premises,or all or substantially all of Tenant's assets on the Premises that is
not dismissed within 60 days after such event;
(f) Failure of Tenant to maintain insurance as required by
Paragraph 8.2; (g) Any breach by Tenant of its covenants under Paragraph 6.2;
(h) Failure in the performance of any of Tenant's covenants,
agreements, or obligations hereunder (except those failures specified as
events-of Default in other Paragraphs of this Paragraph 13.1 which shall be
governed by such other Paragraphs), which failure continues for 10 days after
written notice thereof from Landlord to Tenant; provided that, if Tenant has
exercised reasonable diligence to cure such failure and such failure cannot be
cured within such 10-day period despite reasonable diligence, Tenant shall not
be in default under this subparagraph unless Tenant fails thereafter diligently
and continuously to prosecute the cure to completion;
(i) Any transfer of a substantial portion of the assets of
Tenant, or any incurrence of a material obligation by Tenant, unless such
transfer or obligation is undertaken or incurred in the ordinary course of
Tenant's business, or in good faith for equivalent consideration, or with
Landlord's consent; and
(j) The default of any guarantors of Tenant's obligations
hereunder under any guaranty of this Lease, or the attempted repudiation or
revocation of any such guaranty.
13.2 Remedies. In the event, of any Default by Tenant, Landlord shall
have any or all of the following remedies:
(a) Termination. In the event of any Default by Tenant, then
in addition to any other remedies available to Landlord at law or in equity and
under this Lease, Landlord shall have the immediate option to terminate this
Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. In the event that Landlord shall elect to so terminate
this Lease then Landlord may recover from Tenant:
(1) the worth at the time of award of any unpaid Rent
and any other suns due and payable which have been earned at the time of such
termination; plus
(2) the worth at the time of award of the amount by
which the unpaid Rent and any other sums due and payable which would have been
earned alter termination until the time of award exceeds the amount of such
rental loss Tenant proves could have been reasonably avoided; plus
(3) the worth at the time of award of the amount by
which the unpaid Rent and any other sums due and payable for the balance of the
term of this Lease after the time of award exceeds the amount of such rental
loss that Tenant proves could be reasonably avoided; plus
(4) any other amount necessary to compensate Landlord
for all die detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or which in the ordinary course would be likely to
result therefrom, including, without limitation, any costs or expenses incurred
by Landlord (i) in retaking possession of the Premises; (ii) in maintaining,
repairing, preserving, restoring, replacing, cleaning, the Premises or any
portion thereof, including such acts for reletting to a new lessee or lessees;
(iii) for leasing commissions; or (iv) for any other costs necessary or
appropriate to relet the Premises; plus
(5) such reasonable, attorneys' fees incurred by
Landlord as a result of a Default, and costs in the event suit is filed by
Landlord to enforce such remedy (to the extent awarded by any court or
arbitrator); and plus
(6) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
applicable law. As used in subparagraphs (1) and (2) above, the "worth at the
time of award" is computed by allowing interest at an annual rate equal to
twelve percent (12%) per annum or the maximum rate permitted by law, whichever
is less. As used in subparagraph (3) above, the "worth at the time of award" is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Xxxxxxxxx at the time of award, plus one percent (1%). Tenant waives
redemption or relief from forfeiture under California Code of Civil Procedure
Sections 1174 and 1179, or under any other present or future law, in the event
Tenant is evicted or Landlord takes possession of the Premises by reason of any
Default of Tenant hereunder.
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(b) Continuation of Lease. hi the event of any Default by
Tenant, then in addition to any other remedies available-to Landlord at law or
in equity and under this Lease, Landlprd shall have the remedy described in
California Civil Code Section 1951.4 (Landlord may continue this Lease in effect
after Tenant's Default and abandonment and recover Rent as it becomes due,
provided tenant has the right to sublet or assign, subject only to reasonable
limitations).
(c) Re-entry. In the event of any Default by Tenant, Landlord
shall also have the right, with or without terminating this Lease, in compliance
with applicable law, to re-enter the Premises and remove all persons and
property from the Premises; such property may be removed and stored in a public
warehouse or elsewhere at the cost of and for the account of Tenant.
(d) Reletting. In the event of the abandonment of the Premises
by Tenant or in the event that Landlord shall elect to re-enter or shall take
possession of the Premises pursuant to legal proceeding or pursuant to any
notice provided by law, then if Landlord does not elect to terminate this Lease
as provided in Paragraph a, Landlord may from time to time, without terminating
this Lease, relet the Premises or any part thereof for such term or terms and at
such rental or rentals and upon such other terms and conditions as Landlord in
its sole discretion may deem advisable with the right to make alterations and
repairs to the Premises. In the event that Landlord shall elect to so relet,
then rentals received by Landlord from such reletting shall be applied in the
following order: (1) to reasonable attorneys' fees incurred by Landlord as a
result of a Default and costs in the event suit is filed by Landlord to enforce
such remedies (to the extent awarded by any court or arbitrator); (2) to the
payment of any indebtedness other than Rent due hereunder from Tenant to
Landlord; (3) to the payment of any costs of such reletting; -(4)~to the payment
of the costs of any alterations and repairs to the Premises; (5) to the payment
of Rent due and unpaid hereunder; and (6) the residue, if any, shall be held by
Landlord and applied in payment of future Rent and other sums payable by Tenant
hereunder as the same may become due and payable hereunder. Should that portion
of such rentals received from such reletting during any month, which is applied
to the payment of Rent hereunder, be less than the Rent payable during the month
by Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall also pay to
Landlord, as soon as ascertained, any costs and expenses incurred by Landlord in
such reletting or in making such alterations and- repairs not covered by the
rentals received from such reletting.
(e) Termination. No re-entry or taking of possession. of the
Premises by Landlord pursuant to this Addendurn shall be construed as an
election to terminate this Lease unless a written notice of such intention is
given to Tenant or unless the termination thereof is decreed by a court of
competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any Default by Tenant, Landlord may at any time after such
reletting elect to terminate this Lease for any such Default.
(f) Cumulative Remedies. The remedies herein provided are not
exclusive and Landlord shall have any and all other remedies provided herein or
by law or in equity.
(g) No Surrender. No act or conduct of Landlord, whether
consisting of the acceptance of the keys to the Premises, or otherwise, shall be
deemed to be or constitute an acceptance of the surrender of the Premises by
Tenant prior to the expiration of the Term, and such acceptance by Landlord of
surrender by Tenant shall only flow from and must be evidenced by a written
acknowledgment of acceptance of surrender signed by Landlord. The surrender of
this Lease by Tenant, voluntarily or otherwise, shall not work a merger unless
Landlord elects in writing that such merger take place, but shall operate as an
assignment to Landlord of any and all existing subleases, or Landlord may, at
its option, elect in writing to treat such surrender as a merger , terminating
Tenant's estate under this Lease, and thereupon Landlord may terminate any or
all such subleases by notifying the sublessee of its election so to do within
five (5) days after such surrender.
(h) Notice Provisions Tenant agrees that any notice given by
Landlord pursuant to Paragraph 13.1 of the Lease shall satisfy the requirements
for notice wider California Code of Civil Procedure Section 1161, and Landlord
shall not be required to give any additional notice in order to he entitled to
commence an unlawful detainer proceeding.
13.3 Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of Rent and other sums due hereunder will cause Landlord to
incur costs not contemplated by this 'Lease, the exact amount of which will be
extremely difficult to ascertain. Such costs include, but are not limited to,
processing and accounting charges. Accordingly, if Landlord's designee within 4
days after such, amount shall be due, then, without any requirement for notice
to Tenant, Tenant shall pay to Landlord a late charge equal to 5% of such
overdue amount. The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Landlord will incur by reason of late
payment by Tenant. Acceptance of such late charge by Landlord shall in no event
constitute a waiver of Tenant's Default with respect to such
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overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder. Notwithstanding the foregoing, on the first two
occasions during the Term in which Tenant would otherwise be subject to payment
of a late charge, no late charge shall accrue until after Landlord has given
Tenant five (5) days' written notice thereof and Tenant has failed to pay the
amount due within that period. In addition, should Landlord be tunable to
negotiate any payment made by Tenant on the first attempt by Landlord and
without any notice to Tenant, Tenant shall pay to Landlord a fee of $50.00 per
item which the parties hereby agree represents a fair and reasonable estimate of
the costs Landlord will incur by reason of Landlord's inability to negotiate
such item(s).
14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of exercise of said power (all
of which are herein called "condemnation"), thus Lease shall terminate as to the
part so taken as of the date the condemning authority takes title or possession,
whichever first occurs. If more than 10% of the floor area of the Premises, or
more than 25% of the portion of the Common Areas designated for Tenant's
parking, is taken by condemnation, Tenant may, at Tenant's option, to be
exercised in writing within 10 days after Landlord shall have given Tenant
written notice of such taking or in the absence of such notice, within 10 days
after the condemning authority shall have taken possession), terminate this
Lease as of the date the condemning authority takes such possession, If Tenant
does not terminate this Lease in accordance with the foregoing, this Lease shall
remain in full force and effect as to the.portion of the Premises remaining,
except that the Base Rent shall be reduced in the same proportion as the
rentable floor area of the Premises taken bears to the total rentable floor area
of the Premises. No reduction of Base Rent shall occur if the condemnation does
not apply to any portion of the Premises- Any award for the taking of all or any
part of the Premises under the power of eminent domain or any payment made under
threat of the exercise of such power shall be the property of Landlord;
provided, however, that Tenant shall be entitled to any compensation, separately
awarded to Tenant, for Tenant's relocation expenses and/or loss of Tenant's
trade fixtures. In the event that this Lease is not terminated by reason of such
condemnation, Landlord shall to the extent of its net severance damages in the
condemnation matter, repair any damage to the Premises caused by such
condemnation authority. Tenant shall be responsible for the payment of any
amount in excess of such net severance damages required to complete such repair.
15. Estoppel Certificate and Financial Statements.
15.1 Estoppel Certificate. Each party (herein referred to as
"Responding Party") shall within 10 days after written notice from the other
Party (the "Requesting Party") execute, acknowledge, and deliver, without charge
therefor to the Requesting Xxxxx, and to the extent it can truthfully do so, ari
estoppcl certificate in a form reasonably acceptable to Requesting Party, or any
of Requesting Party's lenders or any prospective purchasers of the Premises or
the Industrial Center as the case may be, plus such additional information,
confirmation and statements as be reasonably requested by the Requesting Party.
Should Responding Party fail to deliver an executed and acknowledged estoppel
certificate to Requesting Party as prescribed herein, Responding Party hereby
authorizes Requesting Party to act as its attorney-in-fact in executing such
estoppel certificate.
15.2 Financial Statement. If Landlord desires to finance, refinance, or
sell the Building, Industrial Center, or any part thereof, Tenant and all
Guarantors shall deliver to any potential lender or purchaser designated by
Landlord such financial statements of Tenant and such Guarantors as may be
reasonably required by such lender or purchaser, including but not limited to
Tenant's financial statements for the past 3 years. All such financial
statements shall be received by Landlord and such lender or purchaser in
confidence and shall be used only for the purposes herein set forth.
Notwithstanding the foregoing, Tenant shall not be required to provide financial
statements pursuant to this Section as long as Tenant's stock is publicly traded
on the American or New York Stock Exchange or NASDAQ.
16. Additional Covenants and Provisions.
16.1 Severability. The invalidity of any provision of thus Lease, as
determined by a court of competent jurisdiction, shall not affect the validity
of any other provision hereof.
16.2 Interest on Past-Due Obligations. Any monetary payment due
Landlord hereunder not received by Landlord within 10 days following the date
following the date on which it was due shall bear interest from the date at 12%
per annum, but not exceeding the maximum rate allowed by law in addition to the
late charge provided for in Paragraph 13.3.
16.3 Time of Essence. Time is of the essence with respect to the
performance of all obligations to be preformed or observed by the Parties under
this Lease.
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16.4 Landlord Liability. Tenant, its successors, and assigns shall not
assert nor seek to enforce any claim for breach of this Lease against any of
Landlord's assets other than Landlord's interest in the Industrial Center.
Tenant agrees to look solely to such interest for the satisfaction of any
liability or claim against Landlord under thus Lease. In no event whatsoever
shall, Landlord (which term shall include, without limitation, any general or
limited partner, trustees, beneficiaries, officers, directors, or stockholders
of Landlord) ever be personally liable for any such liability.
16.5 No Prior or Other Agreements. This Lease contains all agreements
between the Parties with respect to any matter mentioned herein, and supersedes
all prior or contemporaneous oral or written agreements or understandings.
16.6 Notice Requirements. All notices'required or permitted by this
Lease shall be in writing and may be delivered in person (by hand, messenger, or
courier service) or may be sent by regular, certified, or registered mail or
U.S. Postal Service Express Mail, with postage prepaid, or by facsimile
transmission during normal business hours, and shall be deemed sufficiently
given if served in a manner specified in this Paragraph 16.6. The addresses
noted adjacent to a Party's signature on this Lease shall be that Party's
address for delivery or mailing of notice purposes. Either Party may by written
notice to the other specify a different address for notice purposes, except that
upon Tenant's taking possessing of the premises, the Premises shall constitute
Tenant's address for the purpose of mailing or delivering notices to Tenant. A
copy of all notices required or permitted to be given to Landlord hereunder
shall be concurrently transmitted to such party or parties at such addresses as
Landlord may from time to time hereafter designate by written notice to Tenant.
16.7 Date of Notice. Any notice sent by registered or certified mail,
return receipt requested, shall be deemed given on the date of delivery shown on
the receipt card, of if no delivery date is shown, the postmark thereon. If sent
by regular mail, the notice shall be deemed given 48 hours after the, same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or an overnight courier that guarantees next day ,
delivery shall be deemed given 24 hours after delivery of the same to the United
States Postal Service or courier. If any notice is transmitted by facsimile
transmission or similar means, the same shall be deemed served or delivered upon
telephone or facsimile confirmation of receipt of the transmission thereof,
provided a copy is also delivered via hand or overnight delivery or certified
mail. If notice is received on a Saturday, Sunday, or legal holiday, it shall be
deemed received on the next business day.
16.8 Waivers. No waiver by Landlord of a Default by Tenant .shall be
deemed a waiver of any other term, covenant, or condition hereof, or of any
subsequent Default by Tenant of the same or any other tern, covenant, or
condition hereof In addition the acceptance by Landlord of any rent or other
payment after it is due, whether or not a notice of default has been served or
any action has been filed by Landlord, thereon, shall not be deemed a waiver of
Landlord's rights to proceed on any notice of default or action which has been
filed against Tenant based upon Tenant's breach of the Lease.
16.9 Holdover. Tenant has no right to retain possession of the Premises
or any partthereof beyond the expiration or earlier termination of this Lease.
If Tenant holds over with the consent of Landlord: (a) the Base Rent payable
shall be increased to 150% of the Base Rent applicable during the month
immediately preceding such expiration or earlier termination; (b) Tenant's right
to possession shall terminate on 30 days notice from Landlord; and (c) all other
terms and conditions of this Lease shall 'continue to apply. Nothing contained
herein shall be construed as a consent by Landlord to any holding over by
Tenant. Tenant shall indemnify, defend, and hold Landlord harmless -f-rom and
against any and all claims, demands, actions, losses, damages, obligations,
costs, and expenses, including, without limitation, attorneys' fees incurred or
suffered by Landlord by reason of Tenant's failure to surrender the Premises on
the expiration or earlier termination of this Lease in accordance with the
provisions of this Lease.
16.10 Cumulative Remedies, No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies in law or in equity.
16.11 Binding affect: Choice of Law. Thus Lease shall be binding upon
the Parties, their personal representatives, successors, and assigns, and be
governed by the laws of the State in which the Premises are located. Any
litigation between the Parties hereto concerning this Lease shall be initiated
in the country in which the Premises are located.
16.12 Landlord. The covenant and obligations contained in this Lease on
the part of the Landlord are binding on Landlord, its successors, and assigns
only during their respective period or ownership of an interest in the Building.
In the event of any transfer or transfers of such title
-14-
to the Building, and to the extent such transferee expressly agrees to assume
the obligations of Landlord hereunder, Landlord (and, iii the case of any
subsequent transfers or conveyances, the then grantor) shall be concurrently
freed and relieved from and after the date of such transfer or conveyance,
without any further instrument or agreement, of all liability with respect to
the performance of any covenants or obligations on the part of Landlord
contained in this Lease thereafter to be performed. Landlord shall use
commercially reasonable efforts to have any such Transferee provide Tenant with
an acknowledgment that it has received and is holding Tenant's Security Deposit.
16.13 Attorneys' Fees and Other Costs. If any party brings an action or
proceeding to enforce the terms hereof or declare rights hereunder, the
Prevailing Party (as hereafter defined) in any such proceeding shall be entitled
to reasonable attorneys' fees. The tenn "Prevailing Party" shall include,
without, limitation, a Party who substantially obtains or defeats the relief
sought. Landlord shall be entitled to reasonable attorneys' fees, costs, and
expenses incurred in the preparation and service, of notices of Default and
consultations in conriection therewith, whether or not a legal action is
subsequently commenced in connection with such Default or resulting breach.
Tenant shall reimburse Landlord on demand for all reasonable legal, engineering,
and other professional services expenses incurred by Landlord in connection with
all requests by Tenant or any lender of Tenant for consent, waiver or approval
of any kind.
16.14 Landlord's Access; Showing Premises; Repairs, Landlord and
Landlord's agents shall have the right to enter the Premises at any time, in the
case of an emergency, and otherwise at reasonable times upon reasonable notice
for the purpose of showing the same to prospective purchasers, lenders, or
tenants, and making such alterations, repairs, improvements, or additions to the
Premises or to the'Building, as Landlord may reasonably deem necessary. Landlord
may at any time place on or about the Premises or Building any ordinary "For
Sale" signs, and Landlord may at any time during the last 180 days of the term
hereof place on or about the Premises any ordinary "For Lease" signs. All such
activities of Landlord shall be without abatement of rent or liability to
Tenant.
16.15 Signs. Tenant shall not place any signs at or upon the exterior
of the Premises or the Building, except that Tenant may, with Landlord's prior
written consent, install (but not on the roof) such signs as are reasonably
required to advertise Tenant's own business so long as such signs are in a
location designated by Landlord and comply with sign ordinances and the signage
criteria established for the Industrial Center by Landlord.
16.16 Termination; Merger. Unless specifically stated otherwise in
writing by Landlord, the voluntary or other surrender of thus Lease by Tenant,
the mutual termination or cancellation hereof, or a termination hereof by
Landlord for Default by Tenant, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, Landlord shall, in the event
of any such surrender, termination, or cancellation; have the option to continue
any one or all of any existing subtenancies. Landlord's failure within 10 days
following any such event to make a written election to the contrary by written
notice to the holder of any 'such lesser interest shall constitute Landlord's
election to leave such event constitute the termination of such interest.
16.17 Quiet Possession. Upon payment by Tenant of the Base Rent and
Additional Rent for the Premises and the performance of all of the covenants,
conditions,* and provisions on Tenant's part to be observed and performed tinder
this Lease, Tenant shall have quiet possession of the Premises for the entire
term hereof, subject to all of the provisions of this Lease.
16.18 Subordination; Attornment; Non-Disturbance.
(a) Subordination. This Lease shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or mortgage
(collectively, "Mortgage") now or hereafter placed by Landlord upon the real
property of which the Premises are a part, to any and all advances made on the
security thereof, and to all renewals, modifications, consolidations,
replacements, and extensions thereof Tenant agrees that any person holding any
Mortgage shall have, no duty, liability, or obligation to perform' any of the
obligations of Landlord under this Lease. In the event of Landlord's default
with respect to any such obligation, Tenant will give any Lender, whose name and
address have previously been furnished in writing to Tenant, notice of a default
by Landlord. Tenant may not exercise any remedies for default by Landlord unless
and until Landlord and the Lender shall have received written notice of such
default and a reasonable time (not less than 30 days) shall thereafter have
elapsed without the default having been cured. If any Lender shall elect to have
this Lease superior to the lien of its Mortgage and shall give written notice
thereof to Tenant, this Lease shall be deemed prior to
-15-
such Mortgage. The provisions of a Mortgage relating to the disposition of
condemnation and insurance proceeds shall prevail over any contrary provisions
contained in this Lease.
(b) Attornment. Subject to the nondisturbance provisions of
subparagraph (c) of this Paragraph 16.18, Tenant agrees to attorn to a Lender or
any other party who acquires ownership of the Premises by reason of a
foreclosure of a Mortgage. In the event of such foreclosure, such new owner
shall not: (i) be liable for any act or omission of any prior landlord or with
respect to events occurring prior to acquisition of ownership, (ii) be subject
to any offsets or defenses which Tenant might have against any prior Landlord,
or (iii) be liable for security deposits (except to the extent such security
deposits have been actually received) or be bound by prepayment of more than one
month's rent.
(c) Non-Disturbance. With respect to a Mortgage entered into
by Landlord before or after the execution of this Lease, Tenant's subordination
of this Lease shall be subject to receiving assurance (a "nondisturbance
agreement") from the Mortgage holder that Tenant's possession and this Lease
will not be disturbed so long as Tenant is not in default and attorns to the
record owner of the Premises in form acceptable to such Mortgage holder.
(d) Self- Executing. The agreements contained in this
Paragraph 16.18 shall be effective without the execution of any further
documents; provided, however, that upon written request from Landlord or a
Lender in connection With a sale, financing, or refinancing,of Premises, or at
Tenant's request at the time of such sale, financing or refinancing, Tenant and
Landlord shall execute such further writings as may be reasonably required to
separately document any such subordination or nonsubordfitation, attornmeut,
and/or nondisturbance agreement, as is provided for herein. Landlord is hereby
irrevocably vested with full power to subordinate this Lease to a Mortgage,
provided that the provisions of subparagraph (c) are observed.
16.19 Rules and Regulations. Tenant agrees that it will abide by, and
to cause its employees, suppliers, shippers, customers, tenants, contractors,
and invitees to abide by, all reasonable rules and regulations ("Rules and
Regulations") which Landlord may make from time to time for the management,
safety, care, and cleanliness of the Common Areas, the parking and unloading of
vehicles, and the preservation of good order, as well as for the convenience of
other occupants, or tenants of the Building and the Industrial Center and their
invitees. Landlord shall not be responsible to Tenant for the noncompliance with
said Rules and Regulations by other tenants of the Industrial Center, but
nevertheless agrees to enforce the Rules and Regulations against all the tenants
of the Industrial Center equally.
16.20 Security Measures. Tenant acknowledges that the rental payable to
Landlord hereunder does not include the cost of guard service or other security
measures. Landlord has no obligations to provide same. Tenant assumes all
responsibility for the protection of the Premises:, Tenant, its agents, and
invitees and their property from the acts of third parties.
16.21 Reservations. Landlord reserves the right to grant such easements
that Landlord deems necessary and to cause the recordation of parcel maps, so
long as such easements and maps do not unreasonably interfere with the use of
the Premises by Tenant. Tenant agrees to sign any documents reasonably requested
by Landlord to effectuate any such easements or maps.
16.22 Conflict, Any conflict between the printed provisions of this
Lease and the typewritten or handwritten provisions shall be controlled by the
typewritten or handwritten provisions.
16.23 Offer. Preparation of this Lease by either Landlord Or Tenant or
Landlord's agent or Tenant's agent and submission of same to Tenant or Landlord
shall not be deemed an offer to lease. This Lease is not intended to be binding
until executed and delivered by all parties hereto.
16.24 Amendments. This Lease may be modified only in writing, signed by
the parties in interest at the time of the modification.
16.25 Multiple Parties. Except as otherwise expressly provided herein,
if more than one person or entity is named herein as Tenant, the obligations of
such persons shall be the joint and several responsibility of all persons or
entities named herein as such Tenant.
16.26 Authority. Each person signing on behalf of Landlord or Tenant
warrants and represents that she or the is authorized to execute and deliver
this Lease and to make it a binding obligation of Landlord or Tenant.
-16-
[SIGNATURES ON FOLLOWING PAGE]
-17-
The parties hereto have executed this Lease at the place and on the
dates specified below their respective signatures.
Landlord: Tenant:
AMB Properly, L.P. The Singing Machine Company, Inc.,
a Delaware limited partnership a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation
By: /s/ Xxxxxx X. Xxxxx, By: /s/ Xxxx Xxxxxx
---------------------------- --------------------------------
Xxxxxx X. Xxxxx, Xxxx Xxxxxx, President & C.O.O.
Telephone: (000) 0000000 Tel zone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Executed at: San Francisco, California Executed at: Coconut Creek, Florida
on: 3/22/02 on: March 13, 2002
---------------------------- --------------------------------
XXXXXXX XXXXXXX
Xxxx 0, Xxx 1 0000 Xxxxx Xxxx, Xxxx, X-0
Xxx Xxxxxxxxx, XX 00000 Xxxxxxx Xxxxx, Xxxxxxx 00000
Tax 1D: 00-0000000
-18-
GLOSSARY
The following terms in the'Lease are defined in the paragraphs opposite the
terms.
TERM DEFINED IN PARAGRAPH
-------------------------
Additional Rent 4.1
Applicable Requirements 6.3
Assign 12.1
Base Rent 1.4
Basic Provisions 1
Building 1.2
Building Operating Expenses 4.2(b)
Code 12.1(a)
Commencement Date 1.3
Commencement Date Certificate 3.3
Common Areas 2.2
Common Area Operating Expenses 4.2(b)
Condemnation 14
Default 13.1
Expiration Date 1.3
PTVAC 4.2(a)(x)
Hazardous Substance 6.2
Indemnity 8.5
Industrial Center 1.2
Landlord 1.1
Landlord Entities 6.2(e)
Lease 1.1
Lenders 6.4
Mortgage 16.18
Operating Experises 4.2
Party/Parties 1.1
Permitted Use 1.8
Premises 1.2
Prevailing Party 16.13
Real Property Taxes 10.2
Rent 4.1
Reportable Use 6.2
Requesting Party 15
Responding Party 15
Rules and Regulations 2.4, 16.19
Security Deposit 1.7, 5
Taxes 10.2
Tenant 1.1
Tenant Acts 9.2
Tenant's Entity 6.2(c)
Tenant's Share 1.5
Term 1.3
-19-
AMB PROPERTY, L.P.,
A DELAWARE LIMITED PARTNERSHIP
INDUSTRIAL LEASE
Tenant Improvement Addendum
This Tenant Improvement Addendum is a part of the Lease dated March 1, 2002, by
and between AMB PROPERTY, L.P. ("Landlord") and Singing Machine Company, Inc.
("Tenant") for the premises commonly known as 000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxxxx, XX 00000.
Subject to, the provisions hereinafter set forth, Tenant may construct at its
sole cost and expense the improvements ("Alterations") described on Exhibit 1,
if attached hereto, or which Tenant has otherwise obtained Landlord's prior
written consent. Prior to commencement of construction, Tenant shall obtain and
deliver to Landlord -any building permit required by applicable law and a copy
of the executed construction contract(s). Tenant shall reimburse Landlord widen
10 days after the rendition of a xxxx for all of Landlord's actual out-of-pocket
costs incurred in connection with the Alterations, including, without
limitation, all management, engineering, outside consulting, and construction
fees incurred by or ors behalf of Landlord for the review and, approval of
Tenant's plans and specifications and for the monitoring of construction of the
Alterations. Tenant shall require its contractor to 'Maintain insurance in the
amounts and in the forms reasonably acceptable to Landlord. The Alterations
shall be constructed by licensed contractors approved by Landlord and in
accordance with rules, such as hours of construction, imposed by Landlord. The
Alterations shall be completed lien free, in accordance with the plans and
specifications approved by Landlord, in a good, workmanlike, and prompt manner,
with new materials of first-class quality and comply with all applicable local,
state, and federal regulations. The competed Alterations shall be the property
of Landlord and shall, subject to the provisions of the next sentence, be
surrendered with the Premises upon the expiration or sooner termination of this
Lease. However, prior to the expiration or, sooner termination of this Lease,
Tenant shall, at Tenant's sole cost and expense, remove the Alterations which
are designated by Landlord to be removed and following such removal, repair and
restore the Premises in a good and workmanlike manner to their original
condition, reasonable wear and tear excepted.
Prior to commencing construction of the Alterations, Tenant shall obtain from
its contractors and deliver to Landlord a waiver and release of any and all
claims against Landlord and liens against the Premises to which such contractor
might at any time be entitled and to provide such payment and performance bonds
as Landlord may require. The delivery of the waiver and release of claims and
liens and such bonds shall be a condition precedent to Tenant's ability to begin
its construction work at the Premises.
Tenant shall pay when due all claims for labor or materials furnished or alleged
to have been furnished to or for Tenant at or for use on the Premises. Tenant
shall give Landlord not less than 10 days' notice prior to the commencement of
any work in, on, or about the Premises, and Landlord shall have the right to
post notices of non-responsibility in or on the ' Premises as provided by law.
Tenant agrees to indemnify, protect, and defend Landlord and hold Landlord
harmless against any loss, liability, or damage resulting from construction of
the Alterations.
Notwithstanding the foregoing provisions, Landlord at its sole cost and expense,
not to exceed $79,000.00 ("TI Allowance") shall complete the following
improvements to all applicable building codes ("Initial Improvements"):
1. Demolition of portions of the Premises as depicted on Schedule 1
attached hereto.
2. Painting and carpeting of remaining ground floor office area as
depicted on Schedule 1.
3. Demolition of warehouse office area as depicted on Schedule 1.
4. Repair of parking lot and yard areas.
The scope of work with respect to the Initial Improvements is more particularly
set forth in that certain letter dated February 4, 2002 prepared by Xxxx Xxxxxx
& Sons, Inc., the general contractor responsible for the installation of the
Initial Improvements, which letter is attached
hereto as Schedule 2 (the "Work Letter"). It is understood and agreed that the
TI Allowance shall be sufficient to pay in full the Initial Improvements set
forth in the Work Letter. To the extent the cost of the Initial Improvements
exceeds the TI Allowance, Landlord shall be responsible to pay such excess
without contribution from Tenant. To the extent the eost,of the Initial
Improvements is less than $79,000, such savings shall accrue to Landlord.
AMB PROPERTY, L.P.,
A DELAWARE LIMITED PARTNERSHIP
INDUSTRIAL LEASE
RENT ADJUSTMENT ADDENDUM
This Rent Adjustment Addendum is a part of the Lease dated March 1, 2002, by and
between AMB PROPERTY, L.P. ("Landlord") and The Singing Machine Company, Inc.
("Tenant") for the premises commonly known as 000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxxxx, XX 00000.
Monthly Base Rent for the each of the periods designated in thus. Addendum
("Adjustment Periods") shall be the amount calculated in accordance with the
alternative selected below ("Rent Adjustment Alternative"), but in no event
shall the monthly Base Rent for an Adjustment Period be less than the highest
monthly rent payable during the term preceding the Adjustment Period.
1. Adjustment Periods:
Month 3.1 of the Term to Month 60 of the Term ("Period One")
Month 61 of the Term to End of the Term ("Period Two")
2. Rent Adjustment Alternatives
[ ] Fixed rent adjustment ("Fixed Rent Adjustment")
[XX] Cost of living adjustment ("CPI Adjustment")
Monthly Base Rent shall be calculated using the following
CPl index ("Index"):
[ ] Urban Wage Earners and Clerical Workers
[X] All Urban Consumers
[ ]
-----------------------------
The Comparison Month is:
[X] the first month of the term of thus Lease; or
[ ]
-----------------------------
[ ] Market rent ("Market Rent Adjustment")
3. Calculation of Rent Adjustment
a. Cost of Living Adjustment. The CPI Adjustment shall be based upon
the Consumer Price Index of the Bureau of Labor Statistics of the United States
Department of Labor (1982 - 1984 =100) for Los Angeles-Riverside-Orange County
using the Index selected in Paragraph 2. If the selected Rent Adjustment
Alternative is the CPI Adjustment, the monthly Base Rent payable during each
Adjustment Period shall be the product obtained by multiplying the highest
monthly Base Rent payable by Tenant during the term immediately preceding by a
fraction the numerator of which shall be the Index for the month that is three
(3) months prior to the first month of the Adjustment Period and the denominator
of which shall be the Index for the month that is three (3) months prior to the
Comparison Month selected above. Notwithstanding the foregoing, the CPI
Adjustment shall not be less than 3% nor more than 6% more, on a cumulative and
compounded per annum basis, then the Comparison Month or the prior Adjustment
Period, as the case may be.
b. Market Rent Adjustment. Four months prior to the commencement of
each Adjustment Period, if the selected Rent Adjustment Alternative is the
Market Rent Adjustment, the Parties shall negotiate in good faith to determine
the Base Rent for the Adjustment Period. If agreement cannot be reached within
thirty days, Landlord and Tenant shall each, no later than 90 days prior to the
commencement of the Adjustment Period, make a reasonable
determination of the fair market rental for the Premises for the Adjustment
Period and submit such determination, in writing, to arbitration in accordance
with the following provisions:
(1) No later than 90 days prior to the commencement of the.
Adjustment Period, Landlord and Tenant shall each select an industrial leasing
broker to act as an arbitrator. The two arbitrators so appointed shall, no later
than 75 days prior to the commencement of the Adjustment Period, select a third
mutually acceptable industrial leasing broker to act as a third arbitrator.
(2) The three arbitrators, acting by a majority, shall no
later than 75 days prior to the commencement of the Adjustment Period, determine
the actual fair market rental for the Premises for the Adjustment Period. The
decision of a majority of the arbitrators shall be binding on the Parties. The
fair market rental determination of Landlord or Tenant which is closest to the
fair market rental as determined by the arbitrators shall be the Base Rent for
the Adjustment Period.
(3) If either of the Patties fails. to appoint an arbitrator
within the period required by this Addendum, the arbitrator timely appointed
shall determine the Base Rent for the Adjustment Period.
(4) The entire cost of such arbitration shall be paid by the
party whose fair market rental submission is not selected.
4. NOTICE: Notice of Rent Adjustments shall be made as specified in paragraph
16.6 of the Lease.
AMB PROPERTY, L.P.,
A DELAWARE LIMITED PARTNERSHIP
INDUSTRIAL LEASE
Early Possession and Inducement Recapture Addendum
This Early Possession and Inducement Recapture Addendum is a part of the Lease
dated March 1, 2002, by and between AMl3 PROPERTY, L.P. ("Landlord") and The
Singing Machine Company, Ins. ("Tenant") for the premises commonly known as 000
Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxx, XX 00000.
1. Early Possession. Tenant may occupy the Premises upon delivery of the
Premises to Tenant by Landlord ("Early Possession Date"), even though the Early
Possession Date is prior to the Commencement Date of the Lease ("Early
Possession"). The obligation to pay Base Rent shall be abated for the Early
Possession Period. All ether terms of this Lease, however, including, but not
limited to, the obligations to pay Tenant's Share of Operating Expenses and to
carry the insurance required by Xxxxxxxxx 0, xxx00 xx in effect during the Early
Possession period. Such Early Possession shall not change the Expiration Date of
the Original Term. If possession is not tendered to Tenant on the Early
Possession Date, the Early Possession period shall run from the date of delivery
of possession and continue for a period equal to the period during which the
Tenant would have otherwise enjoyed, under the terms hereof, possession of the
Premises with abated Base Rent, but minus any days of delay caused by the acts,
failure to act, or omissions of Tenant.
2. Inducement Recapture in Event of Breach. Any agreement by Landlord for
possession of the Premises without the payment or reduced payment of rent or
other charges or for the giving or paying by Landlord to or for Tenant of any
cash or other bonus, inducement, or consideration for Tenant's entering into
this Lease, all of which concessions are hereinafter referred to as "Inducement
Provisions," are conditioned upon Tenant's full and faithful performance of all
of the terms, covenants; and conditions of this Lease to be performed or
observed by Tenant during the term of this Lease. Upon the occurrence of n
Default by Tenant, any rent, other charge, bonus, inducement, or consideration
abased, given, or paid by Landlord under such an inducement Provision shall be
immediately due and payable by Tenant to Landlord and recoverable by Landlord as
additional rent due under this Lease, notwithstanding any subsequent cure by
Tenant. Notwithstanding the foregoing, the Inducement Recapture shall be limited
to the one month of rent abatement which Tenant is receiving.
AMB PROPERTY, L.P.,
A DELAWARE LIMITED PARTNERSHIP
INDUSTRIAL LEASE
Existing Tenant Contingency Addendum
This Existing Tenant Contingency Addendum is a part of the Lease dated March 1,
2002, by and between AMB PROPERTY, L.P. ("Landlord") and The Singing Machine
Company, Inc. ("Tenant") for the premises commonly known as 000 Xxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxx, XX 00000.
Landlord and Tenant acknowledge and 'agree that this Lease is contingent upon
Landlord's recovery of possession of the Premises from the existing tenant
("Existing Tenant") and the Existing Tenant's reimbursement to Landlord of
$67,940.00, an amount equal to two (2) month's Base Rent under the Lease
("Abated Rent Reimbursement"). Should Landlord not be able to recover possession
of the Premises from Existing Tenant or should Existing Tenant not pay Landlord
the Abated Rent Reimbursement, this Lease shall be null and void, and any
Security Deposit paid by Tenant to Landlord shall immediately be returned to
Tenant without set-off or deduction. Landlord shall confirm Existing Tenant's
compliance with this Addendum no later than 10 days after execution of the Lease
by both parties thereto.
[GRAPHIC OMITTED]
[EXHIBIT "A"]
[MAP OF BUILDING]
COMMENCEMENT DATE MEMORANDUM
----------------------------
LANDLORD: AME PROPERTY, L.P.
TENANT: Singing Machine Company, Inc.
LEASE DATE: March 1, 2002
PREMISES: 000 Xxxx Xxx xxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Tenant hereby accepts the Premises as being in the condition required
under the Lease.
The Commencement Date of the Lease is ----------------------
The Expiration Date of the Lease is ----------------------
Landlord: Tenant:
AND Property, L.P. The Singing Machine Company, Inc.
a Delaware limited partnership a Delaware corporation
By: AMB Property Corporation,
a Maryland corporation
By: By:
---------------------------- ----------------------------
Its: Its:
--------------------------- ---------------------------
Executed at: Executed at:
------------------------ ------------------------
on: on:
---------------------------- ----------------------------
EXHIBIT B
TENANT MOVE-IN AND LEASE RENEWAL ENVIRONMENTAL QUE STIONNAIRE
FOR
COMMERCIAL AND INDUSTRIAL PROPERTIES
Property Name: Artesia Industrial Center.
Property Address: 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxxxx, XX 00000
Addendunm to the Lease Dated March 1, 2002
Between
The Singing; Machine Company, Inc,
("Tenant")
and
AMB Property, L.P.
("Landlord")
Instructions: The following questionnaire, is to be completed by the Tenant
Representative with knowledge of the planned/existing operations for the
specified building/location. A copy of the completed form-must be attached to
all mew leases and renewals, and forwarded to the Owner's Risk Management
Department.
1.0 PLANNED USEZOPERATIONS
--------------------------
1-1. Describe planned use (new Lease) nor existing operations (lease
renewal), and include brief description of manufacturing~prvcesses
employed.
2.0 HAZARDOUS MATERIALS
-----------------------
2-1. Are hazardous materials used or stored? If so, continue with the next
question. If not, go to Section 3.0.
2-2 Are any of the following materials handled on the property? (A material
is handled if it is used, generated, processed, produced, packaged,
treated, stored, emitted, discharged, or disposed.) If so, complete
this section. If this question is not applicable, skip this section and
go on to Section 5.0.
o Explosives o Fuels o Oils
o Solvents o Oxidizer o Organics/Inorganics
o Acids o Bases o Pesticides
o Gases o PCBs o Radioactive Materials
o Other (please specify)
2-3. For the following groups of chemicals, please check the type(s),
use(s), and quantity of each chemical used or stored on the site.
Attach either a chemical inventory or list the chemicals in each
category.
Solvents Gases
Type:______________________ Type:_____________________
Use:_______________________ Use: _____________________
Quantity:__________________ Quantity;_________________
Inorganic Acids
Type:______________________ Type:_____________________
Use:_______________________ Use: _____________________
Quantity:__________________ Quantity;_________________
Fuels Explosives
Type:______________________ Type:_____________________
Use:_______________________ Use: _____________________
Quantity:__________________ Quantity;_________________
Oils Bases
Type:______________________ Type:_____________________
Use:_______________________ Use: _____________________
Quantity:__________________ Quantity;_________________
Oxidizers Pesticides
Type:______________________ Type:_____________________
Use:_______________________ Use: _____________________
Quantity:__________________ Quantity;_________________
Organic Radioactive Materials
Type:______________________ Type:_____________________
Use:_______________________ Use: _____________________
Quantity:__________________ Quantity;_________________
Other
Type:______________________
Use:_______________________
Quantity:__________________
2-4. List and quantify the marerials idea ltified above.
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MATERIAL PHYSICAL STATE CONTAINER SIZE NUMBER OF
CONTAINERS
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2-5. Describe the storage area locations) for these materials.
3.0 HAZARDOUS WASTES
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3-1. Are hazardous wastes generated? I~so; continue with the next question.
If not, skip this section and go to,section 4.0. !
3-2. Are any of the following wastes generated, handled, or disposed of
(where applicable) on the property?
o Hazardous wastes o Industrial Wastewater
o Waste oils o PCBs
o Air emissions o Sludges
o Other (please specify)
3-3. Identify *and describe those wastes generated, handled or disposed of
(disposition). Specify any wastes known to be regulated under the
Resource Conselvarion and Recovery Act (RCRA) as "listed characteristic
or statutory" wastes- Include rotal amounts generated monthly. Please
include !name, location, and permit number (e.g. EPA ID No.) for
transporter and disposal facility,!if applicable). Attach separate
pages as necessary.
3-4. List and quantify, the materials identified in Question 3-2 of this
section.
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WASTE SOURCE APPROXIMATE WASTE DISPOSITION
GENERATED MONTHLY CHARACTERIZATION
QUANTITY
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3-5. Are pollution controls or monitoring employed in the process to prevent
or minimize the release of wastes into the environment? If so, please
describe.
4.0 USTS/ASTS
4-1. Are underground storage tanks (USTs), aboveground storage tanks (ASTs),
or associated pipelines present on site (lease renewals) or required
for planned operations (new tenants)? If not, continue with section
5.0: If yes, please describe capacity, contents, age, design and
construction of USTs o; ASTs
4-2. Is the UST/AST registered and permitted with the appropriate regulatory
agencies? Please provide a copy of the required pen-nits.
4-3. Indicate if any of the following leak prevention measures have been
provided for the USTs/ASTs and their associated piping. Additionally,
please indicate the number of tanks that are provided with the
indicated measure. Please provide copies of written test results and
monitoring documentation.
Integrity testing Inventory reconciliation
Leak detection system Overfill spill protection
Secondary containment Other (please describe)
Cathodic protection
4-4. If this Questionnaire is being completed for a lease renewal, and if
any of the USTs/ASTs have leaked, please state the substance released,
the media(s) impacted (e.g., soil, water, asphalt, etc.), the actions
taken, and all remedial responses to the incident.
4-5. If this Questionnaire is being completed for a lease renewal, have
USTs/ASTs been removed from the property? If so, please provide any
official closure letters or reports and supporting documentation (e.g.,
analytical test results, remediation report results, etc.).
4-6. Far Lease renewals, are there any above or below ground pipelines on
site used to transfer chemicals or wastes? For new tenants, are
installations of this type required for the planned operations? If so,
please describe.
4-7. If present or planned, have the chemical transfer pipelines been
inspected or tested for leaks? If not please indicate the results and
provide a copy of the inspection or test results.
5.0 ASBESTOS CONTAINING BUILDING MATERIALS
--------------------------------------
5-1. Please be advised that this property participates in an Asbestos
Operations and Maintenance Program, and that an asbestos survey may
have been performed at the
Property. If provided, please review ,the information that identifies
the locations of known asbestos containing material or presumed
asbestos containing material. All personnel and appropriate
subcontractors should be notified of the presence of these materials,
and informed not to disturb these materials. Any activity that involves
the disturbance or removal of these materials must be done by an
appropriately trained individual/contractor.
6.0 REGULATORY
----------
6-1. For Lease Renewals, are there any past, current, or pending regulatory
actions by federal, state, or local environmental agencies alleging
noncompliance with regulations? If so, please describe.
6-2. For lease renewals, are there any past, current, or pending lawsuits or
administrative proceedings for alleged environmental damages involving
the property, you, or any owner or tenant of the property? If so,
please describe.
6-3. Does the operation have or require a National Pollutant Discharge
Elimination System (NPDFS) or equivalent permit? If so, please provide
a copy of this permit.
6-4. For Lease renewals, have there been any complaints from the surrounding
community regarding facility operations? If so, please describe. Have
there been any worker complaints or regulatory investigations regarding
hazardous material exposure at the facility? If so, please describe
status, and any corrective actions taken.
6-5. Has a Hazardous Materials Business Plan been developed for the site? If
so, please provide a copy.
CERTIFICATION
-------------
I am familiar with the real property described in this questionnaire.
By signing below, I represent and warrant that the answers to the above
questions are complete and accurate to the best of my knowledge. I also
understand the Owner will rely on the completeness and accuracy of my answers in
assessing any environmental liability risks associated with the property.
Signature:
Name:
Title:
Date:
Telephone:
Exhibit "D"
MOVE OUT STANDARDS
This Move Out Standards Exhibit is dated for the reference purposes as of the
same date as the Lease, and is made between AMB Property, L.P., a Delaware
limited partnership, ("Landlord's and The Singing Machine Company, Inc., a
Delaware corporation ("Tenant") to be a part of that certain Standard Industrial
Lease ("Lease"' concerning the premises located at 000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxxxxx, XX 00000 ("Premises"). Landlord and Tenant agree that the Lease is
hereby modified and supplemented as follows:
At the expiration or earlier termination of the Lease and in addition to any
other provisions of the Lease regarding surrender of the Premises, Tenant shall
surrender the Premises in the same condition as they were upon delivery of
possession'thereto under the Lease, reasonable wear and tear excepted, and shall
deliver all keys to-Landlord. Before surrendering the Premises, Tenant shall
remove all of its personal property and trade fixtures and such alterations or
addition's to the Premises made by Tenant as may be specified for removal by
Landlord. If Tenant fails to remove its personal property, fixtures or
Alterations or additions upon the expiration or earlier termination of the
Lease, the same shall be deemed abandoned and shall become the property of the
Landlord. Notwithstanding the foregoing, Tenant shall be liable to Landlord for
all costs and damages incurred by Landlord in removing, storing or selling such
property, fixtures, alterations or additions and in restoring the Premises to
the condition required pursuant to the Lease.
Notwithstanding anything to the contrary in the Lease, Tenant shall surrender
the Premises, at the time of the expiration or earlier termination of the Lease,
in a condition that shall includes, but is not limited to, the following:
1. Lights: Office and warehouse lights will be fully
operational with all bulbs functioning.
2. Dock Levelers & Roll Up Doors: Should be in good working condition.
3. Intentionally Deleted
4. Warehouse Floor Free of stains created by Tenant or its
Entities and broom swept with no racking
bolts and other protrusions left in floor.
Cracks created by Tenant or its Entities
should be repaired with an epoxy or polymer.
5. Tenant-Installed Equipment Removed and space turned to original
Wiring: condition when originally leased. (Remove
air lines, junction boxes, conduit, etc.) .
6. Walls: Sheetrock (drywall) damage should be patched
and fire taped so that there are no holes in
either office or warehouse.
7. Roof: Any tenant-installed equipment must be
removed and roof penetrations properly
repaired by licensed roofing contractor.
Active leaks caused by Tenant installed
equipment or by any other negligent act or
omission of Tenant with regard to the roof
structure or membrane must be fixed and
latest landlord maintenance and repairs
recommendation must have been followed.
8. Signs: All exterior signs must be removed and holes
patched and paint touched-up as necessary.
All window signs should likewise be removed.
9. Heating & Air Conditioning A written report from a licensed HVAC
System: contractor within the last three months
stating that all evaporative coolers and/or
heaters within the warehouse are operational
and safe and that office HVAC system is also
in good and safe operating condition.
10. Overall Cleanliness: Vacuum carpet, and remove any and all debris
from office and, warehouse. Remove all
pallets and debris from exterior of
premises.
11. Upon Completion: Contact Landlord's property manager to
coordinate date of turning off power,
turning in keys, and obtaining final
Landlord inspection of premises which, in
turn, 'wiill,facilitate refund of security
deposit.
XXXX XXXXXX & SONS, INC.
GENERAL CONTRACTORS LICENSE #435700
0000 XXXXXXXX XXXX. 000-000-0000
XXXXXXXXX, XX 00000 000-000-0000 FAX
XXXXXXX-XXXXX PROPERTIES FEB. 4, 2002
0000 000XX XX. (XXXXX 000)
XXXXXXX, XX.
ATTN: XXXXX XXXXXXX
RE: 000 X. XXXXXXX (PRELIMINARY BUDGET)
as per space plan delivered to OMA office of 1/31/02
SCOPE OF WORK TOTAL
1 DRYWALL $3,800.00
A. CONSTRUCT 5 L/FT. OF WALL AT 1ST FLOOR AREA NEAR
LOBBY
B. REQUIRED PATCHING AFTER DEMOLITION
C. PATCH EXISTING WALLS PRIOR TO PAINTING
D. FILL IN (2) DOORS LEADING TO OFFICE NEAR DEMO
E. CREATE HALLWAY AT REAR NORTHWEST CORNER OF BUILDING
WHERE RESTROOMS ARE LOCATED
2 INSULATION $23.00
A. R-11 INSULATION @ NEW WALL
3 DOOR AND FRAMES
A. RELOCATE (1) EXISTING DOOR AND FRAME TO NEW WALL
B. RE-SWING (1) DOOR IN OFFICE RESTROOM
4 ACOUSTICAL CEILINGS $2,100.00
A. REPLACE DAMAGED OR STAINED TILES IN REMAINING OFFICE
AREA
B. CREATE T-BAR SOFFIT AT AREA IN OPEN OFFICE WHERE
CEILING IS TO BE DEMOLISHED
5 FIRE PROTECTION $3,500.00
A. ALLOWANCE FOR REQUIRED DEMOLITION AND RELOCATION OF
SPRINKLER HEADS TO NEW OFFICE LAYOUT
6 PAINTING $4,494.00
A. PAINTING OF ALL REMAINING OFFICE WALLS AT 1ST
FLOOR AREA
B. PAINTING OF OFFICE RESTROOMS AND WAREHOUSE
RESTROOMS AT NORTHWEST CORNER OF SPACE
7 CARPET BASE AND RESILIENT FLOORING $306.00
A. INSTALL NEW 6" TOPSET BASE IN OFFICE RESTROOMS
SEE EXCLUSIONS
8 ELECTRICAL $5,050.00
A. REQUIRED DEMOLITION
B. REWORK ELECTRICAL TO REMAINING OFFICE AREAS
C. DEMO ELECTRIC TO SHIPPING OFFICE
D. RELAMP EXISTING OFFICE AREA
E. REPLACE AND REPAIR EXTERI0R LIGHTING
F. REHAB WAREHOUSE LIGHTING AS REQUIRED
9 HVAC $3,260.00
A. CAP PLENUMS FROM THREE OFFICE AREA UNITS AND
ONE WAREHOUSE UNIT
B. RE-WORK EXISTING DUCT TO SERVE ONLY DESIGNATED
OCCUPIED AREAS
C. RELOCATE T-STATS FROM WALLS WHICH ARE TO BE REMOVED
D. REPLACE (2) EXHAUST FANS IN WAREHOUSE RESTROOMS
10 PLUMBING $2,485.00
A. REHAB EXISTING FIXTURES AS NEEDED IN BOTH OFFICE
AND WAREHOUSE RESTROOMS
11 DEMOLITION $12,848.00
A. DEMO WAREHOUSE OFFICE APPROX. 800 SQ. FT.
B. DEMO TWO STORY MEZZANINE ADDITION (APPROX. 3,248 SQ. FT.)
C. DEMO 210 L/FT. OF PARTITION WALL
D. DEMO 1,300 SQ. FT. OF T-BAR CEILING
E. DEMO 2,800 SQ. FT. OF VCT
F. REMOVAL OF ALL DEMOLISHED MATERIAL
12 ALLOWANCE TO RE-WORK BOTTOM RUN OF STAIRS AFTER $538.00
COMPLETION OF DEMO
13 ALLOWANCE FOR MISC. ROUGH CARPENTRY AFTER DEMOLITION $3,000.00
IS COMPLETE
14 JANITORIAL $3,024.00
A. STRIP AND WAX VCT FLOORING
B. SHAMPOO CARPET
C. COMPLETE JANITORIAL
15 REMOVE GLUE FROM AREA OF DEMOLITION AND SEAL FLOOR $4,482.00
16 ALLOWANCE TO CREATE OPENINGS IN EXISTING WALL AT MAIN
OFFICE
17 ALLOWANCE TO REPAIR FOIL INSULATION @ WAREHOUSE $1,110.00
AREA WHERE DEMOLITION OCCURS AND EXISTING WAREHOUSE
AREA
note: cost does not include foil over remaining office area ----------
SUBTOTAL $55,315.00
GENERAL CONDITIONS $2,765.75
PROFIT/OVERHEAD $4,546.46
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TOTAL $62,727.21
EXCLUSIONS:
1 PLAN CHECK PERMIT AND ARCHITECTURAL FEES
2 REMOVAL OF HAZARDOUS WASTE
3 FIRE SAFETY SYSTEMS
4 FIRE EXTINGUISHERS
5 NEW CARPET AND VCT FLOORING
6 ALL REHAB WORK AT REMAINING 2ND FLOOR OFFICE EXCEPT
FOR SHAMPOOING OF CARPET
7 PAINTING OF WAREHOUSE WALLS
8 NEW T-BAR, ELECTRICAL AND HVAC AT NORTHWEST WAREHOUSE OFFICE
9 SEALING OF WAREHOUSE FLOOR
RESPECTFULLY SUBMITTED,
XXXX XXXXXX & SONS, INC.
/s/ XXX XXXXXX
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XXX XXXXXX
VICE PRESIDENT
