EXHIBIT 10.39
ADDENDUM TO
AIR COMMERCIAL REAL ESTATE ASSOCIATION STANDARD INDUSTRIAL/COMMERICAL
MULTI-TENANT LEASE - GROSS
This Addendum ("Addendum") is hereby made part of the AIR COMMERCIAL REAL ESTATE
ASSOCIATION STANDARD INDUSTRIAL/COMMERICAL MULTI-TENANT LEASE - GROSS dated
January 22, 2009 (the "Form Lease") between 1212 FLOWER REAL ESTATE, LLC, a
California limited liability company ("Lessor") and PEOPLE'S LIBERATION, INC., a
California corporation ("Lessee") for the Premises located in the Project
commonly known as ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇. If any
inconsistency exists between the Form Lease and this Addendum, the terms of this
Addendum shall control. Defined terms in the Form Lease shall have the same
meaning when used herein. The Form Lease and this Addendum shall be referred to
collectively as the "Lease". The parties further agree as follow:
50 PREMISES AS-IS. Notwithstanding anything to the contrary contained in
the Form Lease, Lessee hereby agrees that the Premises shall be taken
"as is," "with all faults," "without any representations or
warranties," and Lessee hereby agrees and warrants that it has
investigated and inspected the condition of the Premises and the
suitability of same for Lessee's purposes, and Lessee does hereby waive
and disclaim any objection to, cause of action based upon, or claim
that its obligations hereunder should be reduced or limited because of
the condition of the Premises or the Project or the suitability of same
for Lessee's purposes. Lessee acknowledges that neither Lessor nor any
agent nor any employee of Lessor has made any representation or
warranty with respect to the Premises or the Project or with respect to
the suitability of either for the conduct of Lessee's business, and
Lessee expressly warrants and represents that Lessee has relied solely
on its own investigation and inspection of the Premises and the Project
in its decision to enter into this Lease and let the Premises in an "As
Is" condition. The taking of possession of the Premises by Lessee shall
conclusively establish that the Premises and the Project were at such
time in satisfactory condition. Lessee hereby waives Sections 1941 and
1942 of the Civil Code of California or any successor provision of law.
51 COMMON AREA OPERATING EXPENSE EXCLUSIONS. Notwithstanding anything to
the contrary set forth in the Form Lease, when calculating Common Area
Operating Expenses, Lessor shall exclude: (a) costs incurred by Lessor
for the repairs of a capital nature to the Project (as determined in
accordance with generally accepting accounting principles) required as
a result of a casualty event; (b) costs of capital improvements and
equipment including, without limitation, alterations which are
considered capital improvements and replacements under generally
accepted accounting principles consistently applied ("Capital Items"),
except for (i) the annual amortization (amortized over the useful life)
of costs, including financing costs, if any incurred by Lessor after
the Commencement Date for any capital improvements installed or paid
for by Lessor and required by any new (or change in) laws, rules or
regulations of any governmental or quasi-governmental authority which
are enacted after the Commencement Date; (ii) the cost of Capital Items
acquired to reduce the Common Area Operating Expenses or as a
labor-saving measure or to affect other economics in the operation or
maintenance of the Property
(amortized at an annual rate reasonably calculated, including interest
of the actual interest rate incurred by Lessor) to equal the amount of
the Common Area Operating Expenses to be saved in each calendar year
throughout the term (as determined at the time Lessor elects to proceed
with a capital improvement or the capital equipment to reduce the
operating expenses); (iii) minor capital improvements, tools or
expenditures; or (iv) capital improvements which reduce expenses which
would otherwise be included in Common Area Operating Expenses; (c)
rentals for personal property (except when needed in connection with
normal repairs and maintenance of permanent systems) which if
purchased, rather than rented, would constitute a capital improvement
(including, without limitation, air conditioning systems and
elevators); (d) depreciation, amortization and interest payments on
Capital Items, except on materials, tools, supplies and vendor-type
equipment purchased by Lessor to enable Lessor to supply services
Lessor might otherwise contract for with a third party where such
depreciation, amortization and interest payments would otherwise have
been included in the charge for such third party's services, not to
exceed in the aggregate the amount charged by such third party, all as
determined in accordance with generally accepted accounting principles,
consistently applied, and when depreciation or amortization is
permitted or required, the item shall be amortized over its reasonably
anticipated useful for life; (e) marketing costs, including leasing
commissions and attorneys' fees incurred in connection with the
development or leasing of the Project, including without limitation,
expenses incurred in relationship to the bankruptcy of any tenant,
subtenant or assignee; and, costs, including permit, license and
inspection costs, incurred with respect to the installation of tenant
or other occupant improvements made for Lessee or other occupants in
the Project or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for tenants or other
occupants of the Project; (f) expenses in connection with services or
other benefits which are not provided to Lessee or for which Lessee is
charged directly but which are not provided to another tenant or
occupant of the Project; (g) premiums for earthquake insurance unless
such premiums are included in the Base Year calculation of Common Area
Operating Expenses; (h) ground lease rentals, interest, principal,
points and fees on debts or amortization on any mortgage or mortgages
or any other debt instrument encumbering the Project; (i) Lessor's
general corporate overhead and general and administrative expenses and
accountant's fees (as distinguished from the costs of operating the
Project) except as it specifically relates to the Project; (j) any
compensation paid to clerks, attendants, or other persons in commercial
concessions (e.g., retail or restaurant operations) operated by Lessor,
except in the parking garage; (k) legal fees and related legal costs
(including in connection therewith all attorneys' fees and costs of
settlement, judgments and damages awarded against Lessor and payments
in lieu thereof) together with any damages awarded against Lessor
arising from late payments made by Lessor or violations of law; (l)
amounts charged to Lessee or any other tenant in the Project with
respect to all items and services for which Lessee or any other tenant
in the Project reimburses Lessor or is obligated to reimburse Lessor
(other than through the Lessee's proportionate share of Common Area
Operating Expenses) or which Lessor provides selectively to one or more
tenants without reimbursement without benefit to Lessee; (m)
advertising and promotional expenditures, and costs of signs in or on
the Project; (n) services provided, taxes attributable to, and cost
incurred in connection with
the operation of any retail and restaurant operations in the Project,
if any, except to the extent the square footage of such operations are
included in the rentable square footage of the Project and do not
exceed the services, utility and tax costs which would have been
incurred had the retail and/or restaurant space been used for general
office purposes; (o) costs incurred as a result of the failure by the
original owner of the Project to comply with laws enacted on or before
the date the temporary certificate of occupancy (or similar permit) for
the shell and core of the Project was validly issued; (p) costs of
complying with laws, codes, regulations or ordinances relating to
Hazardous Substances in building materials or otherwise in the Project,
or Hazardous Substances in the soil or groundwater under the Project,
which exist in violation of applicable Applicable Requirements on the
Commencement Date; (q) costs incurred with upgrading the Project to
comply with the current interpretation of disability, life, fire and
safety codes, ordinances, statutes, or other laws in effect prior to
the Commencement Date; or (r) costs arising from Lessor's charitable or
political contributions.
52 ASSIGNMENT AND SUBLETTING. Lessee shall have no power to, either
voluntarily, involuntarily, by operation of law or otherwise, sell,
assign, transfer or hypothecate this Lease, or sublet the Premises or
any part thereof, or permit the Premises or any part thereof to be used
or occupied by anyone other than Lessee or Lessee's employees without
the prior written consent of Lessor which shall not be unreasonably
delayed, conditioned or withheld. If Lessee is a corporation,
unincorporated association, partnership or limited liability company,
the sale, assignment, transfer or hypothecation of any class of stock
or other ownership interest in such corporation, association,
partnership or limited liability company in excess of forty-nine
percent (49%) in the aggregate shall be deemed an assignment within the
meaning and provisions of this Lease. Lessee may transfer its interest
pursuant to this Lease only upon the following express conditions,
which conditions are agreed by Lessor and Lessee to be reasonable:
(a) That the proposed transferee shall be subject to the prior
written consent of Lessor, which consent will not be
unreasonably delayed, conditioned or withheld but, without
limiting the generality of the foregoing, it shall be
reasonable for Lessor to deny such consent if:
(i) The use to be made of the Premises by the proposed
transferee is (a) not generally consistent with the
character and nature of all other tenancies in the
Project, or (b) a use which conflicts with any
so-called "exclusive" then in favor of, or for any
use which is the same as that stated in any
percentage rent lease to, another tenant of the
Project or any other buildings which are in the same
complex as the Project, or (c) a use which would be
prohibited by any other portion of this Lease
(including, but not limited to, any Rules and
Regulations then in effect);
(ii) The financial responsibility of the proposed
transferee relative to Lessee is not reasonably
satisfactory to Lessor or in any event not at least
equal to those which were possessed by Lessee as of
the date of execution of this Lease;
(iii) The proposed transferee is either a governmental
agency or instrumentality thereof; or
(iv) Either the proposed transferee or any person or
entity which directly or indirectly controls, is
controlled by or is under common control with the
proposed transferee (A) occupies space in the Project
at the time of the request for consent, or (B) is
negotiating with Lessor or has negotiated with Lessor
during the six (6) month period immediately preceding
the date of the proposed transfer, to lease space in
the Project.
(b) Whether or not Lessor consents to any such transfer, Lessee
shall pay to Lessor Lessor's then standard processing fee and
reasonable attorneys' fees incurred in connection with the
proposed transfer in an amount not to exceed the aggregate sum
of $2,500.00;
(c) That the proposed transferee shall execute an agreement
pursuant to which it shall agree to perform faithfully and be
bound by all of the terms, covenants, conditions, provisions
and agreements of this Lease applicable to that portion of the
Premises so transferred; and
(d) That an executed duplicate original of said assignment and
assumption agreement or other transfer on a form reasonably
approved by Lessor, shall be delivered to Lessor within five
(5) days after the execution thereof, and that such transfer
shall not be binding upon Lessor until the delivery thereof to
Lessor and the execution and delivery of Lessor's consent
thereto. It shall be a condition to Lessor's consent to any
subleasing, assignment or other transfer of part or all of
Lessee's interest in the Premises (hereinafter referred to as
a "Transfer") that (i) upon Lessor's consent to any Transfer,
Lessee shall pay and continue to pay fifty percent (50%) of
any "Transfer Premium" (defined below), received by Lessee
from the transferee; (ii) any sublessee of part or all of
Lessee's interest in the Premises shall agree that in the
event Lessor gives such sublessee notice that Lessee is in
default under this Lease, such sublessee shall thereafter make
all sublease or other payments directly to Lessor, which will
be received by Lessor without any liability whether to honor
the sublease or otherwise (except to credit such payments
against sums due under this Lease), and any sublessee shall
agree to attorn to Lessor or its successors and assigns at
their request should this Lease be terminated for any reason,
except that in no event shall Lessor or its successors or
assigns be obligated to accept such attornment; (iii) any such
Transfer and consent shall be effected on forms supplied by
Lessor and/or its legal counsel; (iv) Lessor may require that
Lessee not then be in default hereunder in any respect; and
(v) Lessee or the proposed subtenant or assignee
(collectively, "Transferee") shall agree to pay Lessor, upon
demand, as additional rent, a sum equal to the additional
costs, if any, incurred by Lessor for maintenance and repair
as a result of any change in the nature of occupancy caused by
such subletting or assignment. "Transfer Premium" shall mean
all rent, additional rent or other consideration payable by a
Transferee in connection with a
Transfer in excess of the Rent payable by Lessee under this
Lease during the term of the Transfer and if such Transfer is
less than all of the Premises, the Transfer Premium shall be
calculated on a rentable square foot basis. "Transfer Premium"
shall also include, but not be limited to, key money, bonus
money or other cash consideration paid by a transferee to
Lessee in connection with such Transfer, and any payment in
excess of fair market value for services rendered by Lessee,
to the Transferee and any payment in excess of fair market
value for assets, fixtures, inventory, equipment, or furniture
transferred by Lessee to the Transferee in connection with
such Transfer. Any sale assignment, hypothecation, transfer or
subletting of this Lease which is not in compliance with the
provisions of this Section 52 shall be void and shall, at the
option of Lessor, terminate this Lease. In no event shall the
consent by Lessor to an assignment or subletting be construed
as relieving Lessee, any assignee, or sublessee from obtaining
the express written consent of Lessor to any further
assignment or subletting, or as releasing Lessee from any
liability or obligation hereunder whether or not then accrued
and Lessee shall continue to be fully liable therefor. No
collection or acceptance of rent by Lessor from any person
other than Lessee shall be deemed a waiver of any provision of
this Section 52 or the acceptance of any assignee or subtenant
hereunder, or a release of Lessee (or of any successor of
Lessee or any subtenant). Notwithstanding anything to the
contrary in this Lease, if Lessee or any proposed Transferee
claims that Lessor has unreasonably withheld or delayed its
consent under this Article 52 or otherwise has breached or
acted unreasonably under this Section 52, their sole remedies
shall be a declaratory judgment and an injunction for the
relief sought without any monetary damages, and Lessee hereby
waives all other remedies, including, without limitation, any
right at law or equity to terminate this Lease, on its own
behalf and, to the extent permitted under all applicable laws,
on behalf of the proposed Transferee. Notwithstanding anything
to the contrary contained in this Section 52 , Lessor agrees
that it shall grant its approval of a Transfer by Lessee
resulting from a stock offering to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or an
affiliate, so long as Lessee reasonably demonstrates to Lessor
that: (x) the financial condition of the proposed transferee
relative to Lessee is at least equal to the financial
condition of Lessee as of the date of execution of this Lease;
and (y) Lessee retains control of the entity comprising
"Lessee".
53 CROSS DEFAULT. Lessor and Lessee acknowledge and agree that the
concurrent delivery by Lessee to Lessor of a fully-executed Standard
Office Lease for the lease of premises at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ by
Lessee (the "Concurrent Agreement") is a material consideration for
Lessor's execution of this Lease and that Lessor would not execute and
deliver this Lease but for such Concurrent Agreement. Accordingly,
concurrently with the execution and delivery of this Lease by Lessee,
Lessee shall deliver to Lessor the duly executed Concurrent Agreement.
If Lessee fails to deliver to Lessor the executed Concurrent Agreement,
concurrently with the delivery of this Lease, Lessor may terminate this
Lease by written notice to Lessee given at any time thereafter. In such
event, this Lease shall terminate upon Lessee's receipt of Lessor's
notice, Lessee shall bear both parties' expenses and fees incurred in
the negotiations and preparation of this Lease
and the Concurrent Agreement and in complying herewith through the date
of termination (including, without limitation, Lessor's legal fees) and
Lessor shall have no further obligation to Lessee or any related party
under this Lease or under the Concurrent Agreement. Any breach or
default of Lessee, as tenant, under the Concurrent Agreement shall be
deemed a default of Lessee under this Lease and any breach or default
of Lessee under this Lease shall be deemed a default of Lessee, as
tenant, under the Concurrent Agreement.
54 OPTION TO EXTEND.
(a) If, at the end of the Term of this Lease, (A) Lessee is not in
default of any of the terms, conditions or covenants of this
Lease, beyond any applicable delivered notice and subsequent
cure period, and (B) Lessee has not assigned or sublet the
Premises in violation of Section 52, then Lessee shall have
the option to extend the Lease Term for one (1) additional
period totaling two (2) years and one (1) month, expiring on
March 31, 2012 (hereinafter referred to as the "Option
Period") upon the same terms and conditions contained in this
Lease with the following exceptions:
(i) The Base Rent for the Option Period shall be as set
forth in Section 54(c), below;
(ii) There shall be no further extensions of the Lease
Term following the expiration of the Option Period
unless granted by Lessor in writing, in Lessor's sole
discretion; and
(iii) Lessee will not be granted any rental concessions,
rental abatement or finish-out allowances during any
Option Period.
(b) If Lessee desires to exercise its option to extend the Lease
Term (subject to Lessee's compliance with the standards set
forth herein), Lessee will notify Lessor in writing of
Lessee's intention to do so no later than nine (9) months and
no more than twelve (12) months prior to the expiration date
of the then current Lease Term. After proper and timely
exercise of the extension option by Lessee, all references in
this Lease to "Lease Term" or "Term" shall be considered to
mean the Lease Term as extended, and all references in this
Lease to the Expiration Date or to the end of the Lease Term
shall be considered to mean the termination or end of the
Option Period.
(c) The Base Rent for the Option Period shall be as follows:
LEASE PERIOD MONTHLY BASE RENT
------------ -----------------
3/1/2010 - 2/28/2011 $5,400.00
3/1/2011 - 3/31/2012 $5,760.00
(d) Lessee's exercise of the option to extend shall, if Lessor so
elects in its absolute discretion, be ineffective in the event
that a Default by Lessee remains uncured at the time of
exercise or at the commencement of the Option Period. Lessee's
option to extend the Term described in this Section 54 is
personal to Lessee and may not be exercised by or on behalf of
any assignee or subtenant.
(e) LESSOR'S TERMINATION RIGHT. In the event that Lessee has
properly and timely exercised its option to extend the Term as
described in this Section 54, Lessor shall at any time during
the Option Period have the right to terminate the Lease if
Lessor has received governmental approvals for the
redevelopment of the Project. Such termination shall be
effective sixty (60) days after Lessor has delivered written
notice of its election to terminate to Lessee, and so long as
Lessee is not in default under this Lease, Basic Rental for
the final thirty (30) days of the reduced Term shall be
abated.
LESSOR:
1212 FLOWER REAL ESTATE, LLC,
a Delaware limited liability company
By: Petit Real Estate Limited Partnership,
a Delaware limited partnership,
its sole member
By: Kor Trio, LLC,
a Delaware limited liability
company, its general partner
By:________________________
________________________
[Printed Name and Title]
LESSEE:
PEOPLE'S LIBERATION, INC.,
a California corporation
By:________________________
________________________
[Printed Name and Title]
By:________________________
________________________
[Printed Name and Title]
[PREMISES]
[GRAPHIC OMITTED]
