EXHIBIT 10.31
LEASE
1. PARTIES
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This lease agreement ("Lease") dated December 31, 2003, for reference purposes
only, is entered into by and between the ▇▇▇▇▇▇ Family Limited Trust ("Lessor")
and Genius Products, Inc. ("Lessee"), and replaces and supercedes the Lease
agreement dated May 1, 2002, between Lessor and Lessee.
2. BACKGROUND
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2.1 The ▇▇▇▇▇▇ Family Limited Trust currently owns certain real estate with
improvements situated at ▇.▇. ▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
of Cass, State of Iowa ("Premises").
2.2 Lessor desires to continue to lease and to increase the portion of the
Premises leased "as is" to Lessee pursuant and subject to the provisions,
conditions and covenants set forth herein.
3. LEASED PREMISES
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3.1 Lessor agrees to Lease to Lessee and Lessee agrees to rent from Lessor for
the Term (as defined below) of this Lease pursuant and subject to all of
the provisions, conditions and covenants hereinafter set forth, a portion
of the Premises, "as is", consisting of approximately 8,000 square feet.
3.2 All of the leasehold interests conveyed to Lessee by this Lease and
described in this Article are hereinafter referred to as the "Leased
Premises."
4. USE
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4.1 The Leased Premises shall be used and occupied for the storage and
shipping of Lessee's products.
4.2 Lessee agrees to conduct its business in, on, and about the Leased
Premises in compliance with: (i) all applicable covenants, conditions, and
restrictions of record, (ii) pursuant to all applicable laws, ordinances,
codes, rules and regulations of federal, state, and local governmental
agencies, including, but not limited to, those pertaining to zoning,
occupational, health, environmental, disability, safety and fire, (iii) in
accordance with the direction of any public officer(s) pursuant to law or
any other regulatory body having jurisdiction over the Leased Premises or
the business of Lessee; and (iv) in conformance with all applicable
insurance regulations, rules, orders, and requirements.
4.3 Lessee specifically understands that no statement or representation has
been made by Lessor as to the condition or permitted use of the Leased
Premises, zoning requirements, set back restrictions, or encumbrances
affecting same; and, that being fully aware of such, Lessee agrees to
occupy the Leased Premises on an "as is", "whereis", "all faults" basis,
subject to applicable easements, conditions, restrictions, rules, codes,
and regulations, assuming full responsibility for securing all necessary
permits to legally use same for the purpose stated herein.
5. TERM
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5.1 This Lease shall commence on January 1, 2004, and expire on December 31,
2007 ("Term"); thereafter, the Term shall automatically be extended in
one-year increments upon the same provisions, conditions, covenants and
rental until the same is terminated at the end of any given year by either
party hereto providing the other with at least thirty (30) days' prior
written notice thereof.
5.2 "Term" as used herein shall be construed to be any period of time during
which the leasehold estate created by this Lease is in effect including in
addition to the initial Term, any renewal and/or extension thereof by
means of any option(s), holdover(s) with the consent of Lessor or other
provisions hereinafter set forth.
5.3 The termination of this Lease pursuant to this Article in advance of the
date set for the expiration of the Term shall not prevent Lessor or Lessee
from enforcing those rights and interests which may have previously arisen
and/or accrued hereunder to the extent consistent with the provisions,
conditions and covenants of this Lease.
5.4 Upon the termination of this Lease in accordance with this Article, all
rents and any other costs paid by Lessee to Lessor in advance thereof
shall promptly be refunded to Lessee by Lessor.
6. RENT
6.1 Lessee shall pay to Lessor as rent for the Leased Premises fixed monthly
installments of $2,900 per month, subject to Article 6.2 below, with each
installment to be paid in advance without prior notice, demand, abatement,
deduction or set off on or before the first business day of each calendar
month during the Term.
6.2 At the end of each calendar year, Lessor will review the amount of space
in the Premises being used by Lessee. If Lessee is using more than the
8,000 square feet initially leased under the terms of this Lease, Lessor
may increase the amount of the monthly rent due for the remainder of the
Term by providing thirty (30) day's notice to Lessee of the new monthly
rent amount.
6.3 All payments to Lessor accruing hereunder shall be made payable to the
▇▇▇▇▇▇ Limited Family Trust and shall be forwarded to the address
hereinafter set forth for Lessor or at such other place as Lessor may
designate from time to time by giving prior written notice to Lessee.
6.4 If the Term should commence on other than the first day of a month or
terminate an other than the last day of a month, then the fixed rental
installment for that Term shall be apportioned on a thirty (30) day
calendar month per diem basis.
6.5 Lessee agrees that certain costs and/or expenses which are the obligation
of Lessee hereunder and which accrue during the Term, but cannot be
determined until after the end thereof, shall survive the expiration of
the Term of this Lease.
6.6 Lessee recognizes that its failure to timely pay any monies and/or charges
when due hereunder may cause Lessor to incur unanticipated costs such as
processing, accounting, and late charges that may be imposed on Lessor
under its mortgage or deed of trust, the exact amount of which is
impractical and extremely difficult to ascertain, therefore, if Lessor
does not receive any payment of monies and/or charges within five (5) days
after same becomes due Lessee agrees to pay Lessor a late charge equal to
five percent (5%) of the overdue amount, such late charge representing a
fair and reasonable estimate of the costs Lessor will incur by reason of
the late payment.
7. SECURITY DEPOSIT
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No security deposit will be required under this Lease.
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8. UTILITIES
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8.1 Lessor shall pay for all utilities (except telephone) consumed on the
Leased Premises during the Term.
8.2 Lessee shall install and pay for its own telephone system to service the
Leased Premises.
9. TAXES
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9.1 Lessor shall be responsible for the payment of all real estate taxes and
general and/or special assessments imposed, levied, or charged against the
Leased Premises during the Term and any extensions thereof.
9.2 Lessee shall pay for all taxes levied or assessed against any equipment,
inventory, or other personal properly used by the Lessee, as well as for
all local business taxes, licenses fees, and other charges or assessments
related to or attributable to the use and occupancy of the Leased Premises
by the Lessee.
10. INSURANCE; INDEMNIFICATION
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10.1.1 Lessor shall purchase and maintain casualty insurance upon all of the
improvements which form a part of the Leased Premises, exclusive of
trade fixtures and other equipment of Lessee and any improvements or
alterations made by Lessee.
10.1.2 Lessee agrees to comply with all insurance regulations in order that
Lessor may obtain the lowest risk rating available and consistent with
the use set forth herein for the Leased Premises.
10.1.3 If the premiums presently payable by Lessor for said insurance coverage
should be increased due to the use of the Leased Premises by Lessee as
a result of any act or omission of Lessee, or for any other reason
attributable to the occupancy of Lessee, then Lessee shall promptly
reimburse Lessor for the amount of the increase upon written notice
thereof.
10.2.1 Lessee agrees to, pay, protect, defend, indemnify and hold Lessor
harmless and free from and against any and all costs, liabilities,
penalties, fines, losses, damages, and expenses (including, by way of
illustration rather than limitation, attorneys' fees, legal expenses,
and court costs) arising from any claim, demand, judgment, action, or
other cause or causes of any kind, nature, or manner whatsoever
attributable to or connected with (i) the failure of Lessee to perform
any provision, condition, covenant, or agreement pursuant to this
Lease, or (ii) any negligence or activity conducted, permitted, or
suffered by Lessee, its employees, agents, contractors, subcontractors,
guests, or visitors in, on, about, or related to the Leased Premises
during the Term, unless in any instance such is attributable to the
sole negligence of Lessor, its employees, agents, guests or visitors.
10.2.2 Lessee shall secure broad form comprehensive general liability
insurance, including contractual liability, naming Lessor as additional
insured, in an amount of not less than $1,000,000.00 combined limits
for any injuries, deaths, or property damage sustained as a result of
any one accident or occurrence arising from their or their respective
employees, agents, guests, invitees, contractors, or subcontractors
activities in, on, or about the Leased Premises.
10.3 All insurance protection to be provided by Lessee in compliance with this
Article shall meet the following requirements:
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10.3(a) Coverage shall be provided at all times during the Term under standard
comprehensive form policies issued by insurers of recognized
responsibility authorized to do business in the State or Commonwealth
in which the Leased Premises are situated;
10.3(b) Each policy shall be issued and/or carried in the name of Lessor and
Lessee as their interest may appear;
10.3(c) No policy shall be cancelable or be subject to modification except upon
ten (10) days' prior written notice to Lessor and, if for any reason
whatsoever any such policy is cancelled or modified to the detriment of
Lessor, then Lessor may obtain such coverage as is required to carry
hereunder and charge Lessee for the cost thereof; and
10.3(d) Lessee shall furnish Lessor with certificates evidencing the existence
of all insurance coverages required under this Article.
11. REPAIRS/MAINTENANCE
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11.1 Lessee acknowledges that it currently possesses the Leased Premises under
the terms of the prior Lease agreement between Lessee and Lessor and will
continue possession of the Leased Premises in accordance with the
provisions of this Lease.
11.2 Lessee agrees to reimburse Lessor within thirty (30) days after receipt
of an invoice from Lessor (substantiated by appropriate copies of work
orders and statements of the involved contractors) for all costs incurred
for said repairs, replacements, and maintenance performed on the Leased
Premises by Lessor to the extent that such costs were not insured or
under warranty whenever the condition was a consequence of the willful
misconduct or negligence of lessee, its agents, employees, or invitees.
11.3 Lessee also agrees not to cause or allow any waste or damage to be
committed upon the Leased Premises, to remove all trash therefrom, and to
keep same free of obstructions, debris, ice and snow.
12. ALTERATIONS/IMPROVEMENTS
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12.1 Any improvements to be made by Lessee to the Leased Premises shall be at
its expense, subject to the additional prior written consent of Lessor,
which shall not be unreasonably withheld.
12.2 Upon the expiration of this Lease without default by Lessee, Lessee shall
remove all of its personal property and equipment from the Leased
Premises and repair any damage, injury or defacement to the Leased
Premises occasioned thereby; however, all permanent improvements made to
the Leased Premises by or for Lessee, such as lighting, partitions, or
modifications of heating and air conditioning systems, shall be deemed a
part thereof and shall be surrendered therewith by Lessee except for
those which Lessor shall require Lessee to remove by giving prior written
notice thereof. Lessee shall permit Lessor, its agents, or employees to
enter the Leased Premises at all reasonable times in order to inspect
same or to make such repairs, additions and alterations thereto as may be
necessary for the safety, preservation, or improvement thereof.
12.3 Lessor may also show the Leased Premises to prospective tenants or
purchasers at reasonable hours.
12.4 Lessee agrees not to install any signs on the Leased Premises without the
prior consent of Lessor.
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13. SUBLETTING/ASSIGNING
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Lessee shall not voluntarily or by operation of law assign, sublet, license,
transfer, mortgage or otherwise encumber all or any part of the Leased Premises
and/or this Lease to a thirty party.
14. DESTRUCTION
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14.1 Lessee shall give Lessor prompt written notice of any damage to the
Leased Premises caused by any means whatsoever.
14.2 In the event that all or any portion of the Leased Premises are taken by
condemnation or damaged by the elements, fire, or any other casualty,
then Lessor or Lessee may terminate this Lease by giving the other prior
reasonable written notice thereof, but until such notice is given, all of
the provisions, conditions and covenants of this Lease shall continue to
be of full force and effect.
15. DEFAULT; REMEDIES OF LESSOR
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15.1 The occurrence of any of the following circumstances shall constitute a
material default and breach of this Lease by Lessee:
15.1(a) Failure to pay any rental installments or other sums of money required
of Lessee as and when due hereunder;
15.1(b) Failure to perform or observe any provision, condition or covenant of
Lessee (other than the payment of money) as set forth in this Lease for
a period of ten (10) days following receipt of written notice thereof
setting forth the factual circumstances of the alleged default;
provided, however, that if the nature of the particular default is such
that it cannot be reasonably cured within the said period, then, only
upon failure of Lessee to have commenced its cure within the said
period and to thereafter continue in a commercially diligent manner
towards the correction thereof;
15.1(c) Any general assignment of the assets of Lessee for the benefit of
creditors;
15.1(d) The filing by or against Lessee of a petition to be adjudged a
bankrupt;
15.1(e) The filing by Lessee of a petition for reorganization, arrangement, or
other relief under any law relating to bankruptcy or the taking
advantage of any insolvency law; or
15.1(f) Appointment of a receiver or trustee to take possession of
substantially all of the assets of Lessee situated on the Leased
Premises.
15.2 Upon the occurrence of any of the circumstances of default as set forth
in this Article and for so long as the same shall continue to exist,
Lessor may hold and/or declare Lessee in breach of this Lease by giving
written notice thereof, whereupon Lessor shall have the option to pursue
any one or more of the remedies hereinafter set forth in addition and
without prejudice to those rights of recovery which may be available
through other actions or procedures at law or in equity, with such
remedies to include the following:
15.2(a) Terminate this Lease at any time; and/or
15.2(b) Perform the obligations of Lessee and treat all sums and costs incurred
as a result thereof, together with accrued interest thereon at the
maximum rate permitted by law, as additional rent hereunder.
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15.3 The liability and/or responsibility of Lessee for the payment of rent and
the performance of and compliance with other provisions, conditions and
covenants contained in this Lease shall not be waived, released,
discharged, or terminated by service of any notice or demand upon Lessee,
the institution of legal proceedings, or any other legal act by Lessor
resulting in the termination of the right of possession of Lessee to the
Leased Premises unless specifically stipulated in writing to the contrary
by Lessor or decreed by a court of competent jurisdiction.
16. LEGAL FEES AND EXPENSES
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If it shall be necessary for either party hereto to hire and/or obtain legal
counsel, pursue any legal remedy, or incur any other expense in order to enforce
the other to comply with and/or perform any of the provisions, conditions and
covenants of this Lease, then the prevailing party shall be reimbursed by the
other for the entire reasonable and customary cost thereof, such obligation
being deemed to have accrued on the date of the commencement of any action and
to be enforceable whether or not the action is prosecuted to judgment.
17. NOTICES
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17.1.1 Lessee agrees to immediately forward to Lessor copies of any and all
notices received by Lessee with respect to the Leased Premises or this
Lease; furthermore, copies of any legal documents, claims or notices of
intention to institute legal proceedings by any person, firm or
corporation which may involve the Leased Premises or concerning any
incident that occurred thereon shall be forwarded promptly to Lessor.
17.1.2 Lessor agrees to immediately forward to Lessee copies of any and all
notices received from third parties with respect to the Leased Premises
or this Lease.
17.2 All notices, demands, or communications required to be given under this
Lease shall be in writing and served by one of the following methods: (i)
personal delivery; (ii) transmitting a facsimile to the number
hereinafter listed; (iii) delivery by nationally recognized overnight
courier which routinely issues dated delivery receipts; or (iv) delivery
by the United States Postal Service registered or certified mail with
return receipt requested and postage prepaid, and such shall conclusively
be deemed dated, given, and/or received as of the (i) date of the receipt
acknowledging personal delivery (ii) date that the facsimile is
acknowledged received by return facsimile of the cover page of the
incoming facsimile signed by the addressee; (iii) date of receipt or the
date of first attempted delivery as noted by the overnight courier, or
(iv) date of receipt or the date of first attempted delivery as noted by
the United States Postal Service on the return receipt card.
ACCEPTED BY:
LESSOR LESSEE
The ▇▇▇▇▇▇ Family Limited Trust Genius Products, Inc.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1/4/04 By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director ▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, DIRECTOR
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
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