Exhibit 10.13(1)
STANDARD SUBLEASE
1. Parties. This Sublease, dated, for reference purposes only, November
13, 1998, is made by and between Diamond Entertainment Corporation, Inc., a
California Corporation ("Sublessor") and Vigor Sports Inc., a California
Corporation ("Sublessee").
2. Premises. Sublessor hereby subleases to Sublessee and Sublessee hereby
subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real property, including all
improvements therein, and commonly known by the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ located in the County of Los Angeles, State of California
and generally described as (describe briefly the nature of the property)
approximately 22,080 square feet, part of a larger 50,416 square foot building
(Exhibit "A") ("Premises").
3. Term.
3.1 Term. The term of this Sublease shall be for twenty-seven (27)
commencing on January 1, 1999 and ending on March 31, 2001 unless sooner
terminated pursuant to any provision hereof.
3.2 Delay in Commencement. Sublessor agrees to use its best
commercially reasonable efforts to deliver possession of the Premises by the
commencement date. If, despite said efforts, Sublessor is unable to deliver
possession as agreed, Sublessor shall not be subject to any liability therefor,
nor shall such failure effect the validity of this Sublease. Sublessee shall
not, however, be obligated to pay Rent or perform its other obligations until it
receives possession of the Premises. If possession is not delivered within sixty
days after the commencement date, Sublessee may, at its option, by notice in
writing within ten days after the end of such sixty day period, cancel this
Sublease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Sublessor within said ten
day period, Sublessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Sublessee when required and Sublessee
does not terminate this Sublease, as aforesaid, any period of rent abatement
that Sublessee would otherwise have enjoyed shall run from the date of delivery
of possession and continue for a period equal to what Sublessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by the
acts or omissions of Sublessee. If possession is not delivered within 120 days
after the commencement date, this Sublease shall automatically terminate unless
the Parties agree, in writing, to the contrary.
4. Rent.
4.1 Base Rent. Sublessee shall pay to Sublessor as Base Rent for the
Premises equal monthly payments of $9,494.40 in advance, on the first day of
each month of the term hereof. Sublessee shall pay Sublessor upon the execution
hereof $9,494.00 as Base
Rent for March 1-31, 1999. Base Rent for any period during the term hereof which
is for less than one month shall be a pro rata portion of the monthly
installment.
4.2 Rent Defined. All monetary obligations of Sublessee to Sublessor
under the terms of this Sublease (except for the Security Deposit) are deemed to
be rent ("Rent"). Rent shall be payable in lawful money of the United States to
Sublessor at the address stated herein or to such other persons or at such other
places as Sublessor may designate in writing.
5. Security Deposit. Sublessee shall deposit with Sublessor upon execution
hereof $10,000.00 as security for Sublessee's faithful performance of
Sublessee's obligations hereunder. If Sublessee fails to pay Rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any Rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or any portion
of said deposit, Sublessee shall within ten days after written demand therefore
forward to Sublessor an amount sufficient to restore said Deposit to the full
amount provided for herein and Sublessee's failure to do so shall be a material
breach of this Sublease. Sublessor shall not be required to keep said Deposit
separate from its general accounts. If Sublessee performs all of Sublessee's
obligations hereunder, said Deposit, or so much thereof as has not therefore
been applied by Sublessor, shall be returned, without payment of interest to
Sublessee (or at Sublessor's option, to the last assignee, if any, of
Sublessee's interest hereunder) at the expiration of the term hereof, and after
Sublessee has vacated the Premises. No trust relationship is created herein
between Sublessor and Sublessee with respect to said Security Deposit.
6. Use.
6.1 Agreed Use. The Premises shall be used and occupied only for
general office and the importing and wholesale of bicycle and motorcycle helmets
and related uses and for no other purpose.
6.2 Compliance. Sublessor warrants that the improvements on the
Premises comply with all applicable covenants or restrictions of record and
applicable building codes, regulations and ordinances ("Applicable
Requirements") in effect on the commencement date. Said warranty does not apply
to the use to which Sublessee will put the Premises or to any alterations or
utility installations made or to be made by Sublessee. NOTE: Sublessee is
responsible for determining whether or not the zoning is appropriate for its
intended use, and acknowledges that past uses of the Premises may no longer be
allowed. If the Premises do not comply with said warranty, Sublessor shall,
except as otherwise provided, promptly after receipt of written notice from
Sublessee setting forth with specificity the nature and extent of such
non-compliance, rectify the same at Sublessor's expense. If Sublessee does not
give Sublessor written notice of a non-compliance with this warranty within six
months following the commencement date, correction of that non-compliance shall
be the obligation of Sublessee at its sole cost and expense. If the Applicable
Requirements are hereafter changed so as to
require during the term of this Sublease the construction of an addition to or
an alteration of the Building, the remediation of any Hazardous Substance, or
the reinforcement or other physical modification of the Building ("Capital
Expenditure"), Sublessor and Sublessee shall allocate the cost of such work as
follows:
(a) If such Capital Expenditures are required as a result of the
specific and unique uses of the Premises by Sublessee as compared with uses by
tenants in general, Sublessee shall be fully responsible for the cost thereof
provided, however, that if such Capital Expenditure is required during the last
two years of this Sublease and the cost thereof exceeds six months' Base Rent,
Sublessee may instead terminate this Sublease unless Sublessor notifies
Sublessee in writing, within ten days after receipt of Sublessee's termination
notice that Sublessor has elected to pay the difference between the actual cost
thereof and the amount equal to six months' Base Rent. If the Parties elect
termination, Sublessee shall immediately cease the use of the Premises which
requires such Capital Expenditure and deliver to Sublessor written notice
specifying a termination date at least ninety days thereafter. Such termination
date shall, however, in no event be earlier then the last day that Sublessee
could legally utilize the Premises without commencing such Capital Expenditure.
(b) if such Capital Expenditure is not the result of the specific and
unique use of the Premises by Sublessee (such as governmentally mandated seismic
modifications, then Sublessor shall pay for said Capital Expenditure and the
cost thereof shall be prorated between the Sublessor and Sublessee and Sublessee
shall only be obligated to pay, each month during the remainder of the term of
this Sublease, on the date on which Rent is due, an amount equal to the product
of multiplying the cost of such Capital Expenditure by a fraction, the numerator
of which is one, and the denominator of which is the number of months of the
useful life of such Capital Expenditure as such useful life is specified
pursuant to Federal Income tax regulations or guidelines for depreciation
thereof (including interest on the unamortized balance as is then commercially
reasonable in the judgment of Sublessor's accountant), with Sublessee reserving
the right to prepay its obligation at any time. Provided, however, that if such
Capital Expenditure is required during the last two years of this Sublease or if
Sublessor reasonably determines that it is not economically feasible to pay its
share thereof, Sublessor shall have the option to terminate this Sublease upon
ninety days prior written notice to Sublessee unless Sublessee notifies
Sublessor, in writing, within ten days after receipt of Sublessor's termination
notice that Sublessee will pay for such Capital Expenditure. If Sublessor does
not elect to terminate, and fails to tender its share of any such Capital
Expenditure, Sublessee may advance such funds and deduct same, with interest,
from Rent until Sublessor's share of such costs have been fully paid. If
Sublessee is unable to finance Sublessor's share, or if the balance of the Rent
due and payable for the remainder of this Sublease is not sufficient to fully
reimburse Sublessee on an offset basis, Sublessee shall have the right to
terminate this Sublease upon ten days written notice to Sublessor.
(c) Notwithstanding the above, the provisions concerning Capital
Expenditures are intended to apply only to non-voluntary, unexpected, and new
Applicable Requirements. If the Capital Expenditures are instead triggered by
Sublessee as a result of an actual or proposed change in use, change in
intensity of use, or modification to the Premises
then, and in that event, Sublessee shall be fully responsible for the cost
thereof, and Sublessee shall not have any right to terminate this Sublease.
6.3 Acceptance of Premises and Lessee. Sublessee acknowledges that:
(a) it has been advised by Brokers to satisfy itself with respect to
the condition of the Premises (including but not limited to the electrical, HVAC
and fire sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Sublessee's intended use,
(b) Sublessee has made such investigation as it deems necessary with
reference to such matters and assumes all responsibility therefor as the same
relate to its occupancy of the Premises, and
(c) neither Sublessor, Sublessor's agents, nor any Broker has made any
oral or written representations or warranties with respect to said matters other
than as set forth in this Sublease.
In addition, Sublessor acknowledges that:
(a) Broker has made no representations, promises or warranties
concerning Sublessee's ability to honor the Sublease or suitability to occupy
the Premises, and
(b) It is Sublessor's sole responsibility to investigate the financial
capability and/or suitability of all proposed tenants.
7. Master Lease
7.1 Sublessor is the lessee of the Premises by virtue of a lease,
hereinafter the "Master Lease", a copy of which is attached hereto marked
Exhibit 1, wherein ▇▇▇▇▇▇▇▇▇ Associates is the lessor, hereinafter the "Master
Lessor".
7.2 This Sublease is and shall be at all times subject and subordinate
to the Master Lease.
7.3 The terms, conditions and respective obligations of Sublessor and
Sublessee to each other under this Sublease shall be the terms and conditions of
the Master Lease except for those provisions of the Master Lease which are
directly contradicted by this Sublease in which event the terms of this Sublease
document shall control over the Master Lease. Therefore, for the purposes of
this Sublease, wherever in the Master Lease the word "Lessor" is used it shall
be deemed to mean the Sublessor herein and wherever in the Master Lease the word
"Lessee" is used it shall be deemed to mean the Sublessee herein.
7.4 During the term of this Sublease and for all periods subsequent for
obligations which have arisen prior to the termination of this Sublease,
Sublessee does hereby
expressly assume and agree to perform and comply with, for the benefit of
Sublessor and Master Lessor, each and every obligation of Sublessor under the
Master Lease except for the following paragraphs which are excluded therefrom:
7.5 The obligations that Sublessee has assumed under Paragraph 7.4
hereof are hereinafter referred to as the "Sublessee's Assumed Obligations". The
obligations that Sublessee has not assumed under Paragraph 7.4 hereof are
hereinafter referred to as the "Sublessor's Remaining Obligations".
7.6 Sublessee shall hold Sublessor free and harmless from all
liability, judgments, costs, damages, claims or demands, including reasonable
attorneys fees, arising out of Sublessee's failure to comply with or perform
Sublessee's Assumed Obligations.
7.7 Sublessor agrees to maintain the Master Lease during the entire
term of this Sublease, subject, however, to any earlier termination of the
Master Lease without the fault of the Sublessor, and to comply with or perform
Sublessor's Remaining Obligations and to hold Sublessee free and harmless from
all liability, judgments, costs, damages, claims or demands arising out of
Sublessor's failure to comply with or perform Sublessor's Remaining Obligations.
7.8 Sublessor represents to Sublessee that the Master Lease is in full
force and effect and that no default exists on the part of any Party to the
Master Lease.
8. Assignment of Sublease and Default.
8.1 Sublessor hereby assigns and transfers to Master Lessor the
Sublessor's interest in this Sublease, subject however to the provisions of
Paragraph 6.2 hereof.
8.2 Master Lessor, by executing this document, agrees that until a
Default shall occur in the performance of Sublessor's Obligations under the
Master Lease, that Sublessor may receive, collect and enjoy the Rent accruing
under this Sublease. However, if Sublessor shall Default in the performance of
its obligations to Master Lessor then Master Lessor may, at its option, receive
and collect, directly from Sublessee, all Rent owing and to be owed under this
Sublease. Master Lessor shall not, by reason of this assignment of the Sublease
nor by reason of the collection of the Rent from the Sublessee, be deemed liable
to Sublessee for any failure of the Sublessor to perform and comply with
Sublessor's Remaining Obligations.
8.3 Sublessor hereby irrevocably authorizes and directs Sublessee upon
receipt of any written notice from the Master Lessor stating that a Default
exists in the performance of Sublessor's obligations under the Master Lease, to
pay to Master Lessor the Rent due and to become due under the Sublease.
Sublessor agrees that Sublessee shall have the right to rely upon any such
statement and request from Master Lessor, and that Sublessee shall pay such Rent
to Master Lessor without any obligation or right to inquire as to whether such
Default exists and notwithstanding any notice from or claim from Sublessor to
the
contrary and Sublessor shall have no right or claim against Sublessee for any
such Rent so paid by Sublessee.
8.4 No changes or modifications shall be made to this Sublease without
the consent of Master Lessor.
9. Consent of Master Lessor.
9.1 In the event that the Master Lease requires that Sublessor obtain
the consent of Master Lessor to any subletting by Sublessor then, this Sublease
shall not be effective unless, within ten days of the date hereof, Master Lessor
signs this Sublease thereby giving its consent to this Subletting.
9.2 In the event that the obligations of the Sublessor under the Master
Lease have been guaranteed by third parties then neither this Sublease, nor the
Master Lessor's consent, shall be effective unless, within 10 days of the date
hereof, said guarantors sign this Sublease thereby giving their consent to this
Sublease.
9.3 In the event that Master Lessor does give such consent then:
(a) Such consent shall not release Sublessor of its obligations or
alter the primary liability of Sublessor to pay the Rent and perform and comply
with all of the obligations of Sublessor to be performed under the Master Lease.
(b) The acceptance of Rent by Master Lessor from Sublessee or
anyone else liable under the Master Lease shall not be deemed a waiver by Master
Lessor of any provisions of the Master Lease.
(c) The consent to this Sublease shall not constitute a consent to
any subsequent subletting or assignment.
(d) In the event of any Default of Sublessor under the Master
Lease, Master Lessor may proceed directly against Sublessor, any guarantors or
anyone else liable under the Master Lease or this Sublease without first
exhausting Master Lessor's remedies against any other person or entity liable
thereon to Master Lessor.
(e) Master Lessor may consent to subsequent sublettings and
assignments of the Master Lease or this Sublease or any amendments or
modifications thereto without notifying Sublessor or anyone else liable under
the Master Lease and without obtaining their consent and such action shall not
relieve such persons from liability.
(f) In the event that Sublessor shall Default in its obligations
under the Master Lease, then Master Lessor, at its option and without being
obligated to do so, may require Sublessee to attorn to Master Lessor in which
event Master Lessor shall undertake the obligations of Sublessor under this
Sublease from the time of the exercise of said option to
termination of this Sublease but Master Lessor shall not be liable for any
prepaid Rent nor any Security Deposit paid by Sublessee, nor shall Master Lessor
be liable for any other Defaults of the Sublessor under the Sublease.
9.4 The signatures of the Master Lessor and any Guarantors of Sublessor
at the end of this document shall constitute their consent to the terms of this
Sublease.
9.5 Master Lessor acknowledges that, to the best of Master Lessor's
knowledge, no Default presently exists under the Master Lease of obligations to
be performed by Sublessor and that the Master Lease is in full force and effect.
9.6 In the event that Sublessor Defaults under its obligations to be
performed under the Master Lease by Sublessor, Master Lessor agrees to deliver
to Sublessee a copy of any such notice of default. Sublessee shall have the
right to cure any Default of Sublessor described in any notice of default within
ten days after service of such notice of default on Sublessee. If such Default
is cured by Sublessee then Sublessee shall have the right of reimbursement and
offset from and against Sublessor.
10. Brokers Fee.
10.1 Upon execution hereof by all parties, Sublessor shall pay to ▇▇▇ &
ASSOCIATES - COMMERCE, INC. a licensed real estate broker, ("Broker"), a fee as
set forth in a separate agreement between Sublessor and Broker, or in the event
there is no such separate agreement, the sum of $ PER SEPARATE AGREEMENT for
brokerage services rendered by Broker to Sublessor in this transaction.
10.2 Sublessor agrees that if Sublessee exercises any option or right
of first refusal as granted by Sublessor herein, or any option or right
substantially similar thereto, either to extend the term of this Sublease, to
renew this Sublease, to purchase the Premises, or to lease or purchase adjacent
property which Sublessor may own or in which Sublessor has an interest, then
Sublessor shall pay to Broker a fee in accordance with the schedule of Broker in
effect at the time of the execution of this Sublease. Notwithstanding the
foregoing, Sublessor's obligation under this Paragraph 10.2 is limited to a
transaction in which Sublessor is acting as a Sublessor, lessor or seller.
10.3 Master Lessor agrees that if Sublessee shall exercise any option
or right of first refusal granted to Sublessee by Master Lessor in connection
with this Sublease, or any option or right substantially similar thereto, either
to extend or renew the Master Lease, to purchase the Premises or any part
thereof, or to lease or purchase adjacent property which Master Lessor may own
or in which Master Lessor has an interest, or if Broker is the procuring cause
of any other lease or sale entered into between Sublessee and Master Lessor
pertaining to the Premises, any part thereof, or any adjacent property which
Master Lessor owns or in which it has an interest, then as to any of said
transactions, Master Lessor shall pay to Broker a fee, in cash, in accordance
with the schedule of Broker in effect at the time of the execution of this
Sublease.
10.4 Any fee due from Sublessor or Master Lessor hereunder shall be due
and payable under the exercise of any option to extend or renew, upon the
execution of any new lease, or, in the event of a purchase, at the close of
escrow.
10.5 Any transferee of Sublessor's interest in this Sublease, or of
Master Lessor's interest in the Master Lease, by accepting an assignment
thereof, shall be deemed to have assumed the respective obligations of Sublessor
or Master Lessor under this Paragraph 10. Broker shall be deemed to be a
third-party beneficiary of this Paragraph 10.
11. Attorney's Fees. If any party or the Broker named herein brings an
action to enforce the terms hereof or to declare rights hereunder, the
prevailing party in any such action, on trial and appeal, shall be entitled to
his reasonable attorney's fees to be paid by the losing party as fixed by the
Court.
12. Additional Provisions. (If there are no additional provisions, draw
a line from this point to the next printed word after the space left here. If
there are additional provisions place the same here. (See attached Guaranty of
Lease)
Addendum to Standard Sublease
For the Premises Located at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Dated November 25, 1998
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13. Rental Abatement: Sublessee shall receive January 1-31,
1999 and February 1-28, 1999 free of any
rent.
14. Rental Adjustments: March 1-31, 1999 - February 28, 2000
$9,494.40 per month March 1, 2000 - March
31, 2001 $9,936.00 per month
15. Dual Agency: Sublessor and Sublessee acknowledge that
▇▇▇ & Associates, Inc. ("Broker")
represents both Sublessee and Sublessor
in this transaction.
16. Tenant Improvements: Sublessor shall provide tenant
improvement allowance of TEN THOUSAND
DOLLARS ($10,000.00). Sublessee shall
provide invoices for the work completed
and Sublessor will reimburse Sublessee.
Reimbursement to Sublessee shall occur
within thirty (30) days of receipt of
invoices for tenant improvements. Any
remainder amount of the tenant
improvement allowance shall be credited
to Sublessee's base rent for May 1999.
17. Notices: The address to forward notices and rental
payments is 16200 A ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, attn: ▇▇▇▇▇ ▇▇.
18. Early Occupancy: Sublessee will be allowed early occupancy
of the Premises once the sublease
agreement has been fully executed and the
Premises has been vacated by the
Sublessor. This early occupancy period
shall occur no later than December 10,
1998. This early occupancy is necessary
in order for the Sublessee to complete
all Tenant Improvements and prepare the
building for Sublessee's full occupancy.
19. Landlord Improvements: Sublessor will repair or replace all
loading
and access doors on the Premises.
Sublessor shall deliver the premises with
loading & access doors in good working
condition upon sublease commencement.
Sublessee should notify sublessor within
30 days of sublease commencement of any
repair necessary to the doors. Sublessor
shall repair and/or replace any missing
or damaged ceiling tiles in the existing
office area.
20. Modular Warehouse Office: Sublessor will leave the modular office
located in the warehouse in its existing
location and Sublease will be permitted
use of it throughout the Sublease term.
Sublessor reserves the right to remove
this office space from the Premises at
the expiration of the Sublease agreement
and at their sole cost and expense.
21. Addendum No. 1.6(b): In reference to the Memorandum dated
November 25, 1998 regarding 16818
▇▇▇▇▇▇▇▇▇, Cerritos (see Exhibit B),
Sublessee shall not be responsible for
the approximately $2,500.00 charge every
six months. Any such charges related to
addendum number 1.6(b) in the Master
Lease shall be paid by Sublessor.
22. Restoration of Lobby
Office: Should the Master Lessor require the
Sublessor to reinstate the office and or
office lobby to its former state during
any of the sublease period (per the
Addendum agreement in the Master Lease),
Sublessor shall take full responsibility
of the reinstatement and not involve the
Sublessee in any way.
Initial:
ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY REAL ESTATE BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS SUBLEASE OR THE
TRANSACTION TO WHICH IT RELATES, THE PARTIES ARE URGED TO:
1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS SUBLEASE.
2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PROPERTY, THE STRUCTURAL
INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, AND THE SUITAILITY
OF THE PREMISES FOR SUBLESSEE'S INTENDED USE.
WARNING: IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA,
CERTAIN PROVISIONS OF THE SUBLEASE MAY NEED TO BE REVISED TO COMPLY WITH THE
LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.
Executed at: DIAMOND ENTERTAINMENT CORPORATION, INC.
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A CALIFORNIA CORPORATION
on: By: /s/ ▇▇▇▇▇ ▇▇
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Address: By:
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"Sublessor" (Corporate Seal)
Executed at: VIGOR SPORTS INC. VIGOR SPORTS INC., A CALIFORNIA CORP.
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On: November 25, 1998 By: /s/
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Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇. By:
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ "Sublessee" (Corporate Seal)
Executed at: ▇▇▇▇▇▇▇▇▇ ASSOCIATES
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on: By:
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Address: By:
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"Master Lessor" (Corporate Seal)
