Exhibit 10.7
LEASE
LEASE made the 30th day of August, 2001, between KOBRUN INVESTMENTS,
III, L.L.C. whose address is ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter called "Landlord"), and WOMEN'S GOLF UNLIMITED with an office
at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter called "Tenant").
W I T N E S S E T H:
- - - - - - - - - -
For and in consideration of the covenants herein contained, and upon
the terms and conditions herein set forth, Landlord and Tenant agree as follows:
1. DESCRIPTION. Landlord hereby leases to Tenant, and Tenant hereby
hires from Landlord the following space: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
consisting of approximately 20,612 sq. ft. plus an additional 7,830 sq. ft.
located in same building, as shown on attached site plan. Total space occupied
to be 28,442 sq. ft. (The Premises).
2. TERM. The Premises are leased for a term of three (3) years
commencing on December 1, 2001 and to end at 12:00 Midnight on November 30,
2004. Tenant may take occupancy commencing December 1, 2001 therefrom and
thereafter for the term of the Lease and shall pay all charges attributable
thereto including but not limited to, basic rent, taxes, and insurance. Tenant
shall have one (1) option for an additional two (2) year term. Increase for the
new term to be based on 100% CPI increase over base year. Base rent figure for
the calculation shall be $6.40 per square foot net.
3. BASIC RENT. The Tenant shall pay to the Landlord during the term of
the Lease total basic annual net rent of one hundred eighty two thousand
twenty-eight dollars and eighty cents ($182,028.80) in equal monthly
installments of fifteen thousand one hundred sixty-nine dollars and seven cents
($15,169.07) per month payable in advance on the first day of each and
every month during the term of the Lease with additional rent to be paid as
hereinafter set forth. Tenant shall also pay any additional charges, on a pro
rated basis, whose sum encompasses the cost of the following: taxes, insurance
on the building, water, sewage, landscaping, snow removal, common maintenance
and repairs, and common area electricity for the term of the lease. The
approximate charge for the cam charges shall be approximately $1.75 per square
foot. Tenant shall pay the basic rent and any additional rent as hereafter
provided, to Landlord at Landlord's above stated address, or at such other place
as Landlord may designate in writing, without demand and without counterclaim,
deduction or set off.
4. USE AND OCCUPANCY. To be used for assembly, warehouse, and
distribution of golf clubs and apparel, and associated components and products.
5. HAZARDOUS SUBSTANCES. Tenant shall not generate, manufacture, store,
handle or dispose at the premises any types and quantities of hazardous
substances including red and yellow label products. Tenant shall be allowed to
store the equivalent of two (2) fifty-five (55) gallon drums of acetone as part
of its occupancy.
6. CARE AND REPAIR OF PREMISES. Tenant shall commit no act of waste and
shall take good care of the Premises and the fixtures and appurtenances therein,
and shall, in the use and occupancy of the Premises, conform to all laws, orders
and regulations of the federal, state and municipal governments or any of the
departments, and the Tenant, which has examined the Premises thoroughly, takes
the Premises AS IS, with the exception of Landlord's work detailed in Addendum
1, and Tenant will be responsible for reasonable repairs, replacements and
upkeep caused by normal wear and tear of building. Structural repairs, including
but not limited to the roof, exterior walls and foundation will be made by
Landlord, unless caused by Tenant's negligence. All improvements made by the
Tenant to the Premises, which are so attached to the
- 2 -
Premises that they cannot be removed without material injury to the Premises,
shall become the property of Landlord. Not later than the last day of the term,
Tenant shall surrender the Premises in as good condition as they were in the
beginning of the term, reasonable wear excepted.
7. ABANDONMENT. Tenant shall not, without first obtaining the written
consent of Landlord, abandon the Premises or allow the Premises to become vacant
or deserted. Tenant acknowledges and agrees that the foregoing covenant on its
part is a material inducement to Landlord to execute the Lease, recognizing that
the continuous occupancy of the lease Premises is material to the economic value
of the Premises.
8. ASSIGNMENT AND SUBLETTING. The Tenant shall have the right to assign
or sublet this Lease in part or in full subject only to the Landlord's consent
as to suitability of a prospective assignee or sub-tenant, which shall not be
unreasonably withheld.
9. TAXES, ASSESSMENTS, UTILITIES AND HAZARDS INSURANCE. This Lease
shall be a triple-net lease. Accordingly, the Tenant agrees to be ultimately
responsible for payment of its pro rata portion of insurance coverage as
provided in this Lease, real estate taxes and any other impositions by
governmental authority assessed and allocated to the building and lands
described within this Lease, including assessment for capital improvements made
by such governmental authority. Tenant's pro rata portion for capital
improvements shall also be based on the total cost of said capital improvements
divided by the anticipated useful life in accordance with generally accepted
accounting principles, and allocated based on remaining time left on lease. In
addition, the Tenant shall pay for all utilities services whatsoever in
connection with the Demised Premises. Landlord, upon payment of all real estate
taxes, shall give Tenant proof of such payment, and Tenant shall reimburse
Landlord for payment of such real estate taxes not later than ten (10) days
after receipt of proof of payment by Landlord. In the event the tax structure of
- 3 -
this State shall change concerning the assessment and payment of taxes on real
estate, it is the intent of the parties hereto that all realty taxes whatsoever
chargeable or taxes in substitution for real estate taxes, as applicable to the
Demised Premises, shall be paid by the Landlord and reimbursed to Landlord by
Tenant.
It is expressly understood and agreed that the Landlord shall carry
fire insurance with full extended coverage in broad form wherein Landlord is
named as the primary insured in an amount equivalent to the appraised value of
the Premises (as determined by a MAI approval commissioned at Landlord's sole
cost), exclusive of foundation (without depreciation), inclusive of broad form
boiler and machinery coverage, including air-conditioning system, together with
coverage for sprinkler damage to the building or its improvements. Landlord
shall use best efforts to try to obtain reasonable rates. Tenant shall be billed
for its pro-rata share on a monthly basis as part of the rent. In addition,
Landlord, at Tenant's sole cost, shall obtain rent insurance to cover payment of
rent after a casualty has partially or wholly destroyed the Premises, as well as
adequate public liability insurance wherein the Landlord is named as a party
insured in the minimum amount of One Million Dollars ($1,000,000.00) per claim
together with excess coverage limits of not less than One Million Dollars
($1,000,000.00) per incident and property damage of One Million Dollars
(1,000,000.00).
Landlord reserves the right, every year, to review and to upgrade the
coverage hereinabove referred to in order to establish the then actual full
appraised value of insurable improvements (as determined by MAI appraisal
provided by Landlord) and to require Tenant to increase any other insurance
coverage as may be required to provide reasonable insurance coverage. Landlord
may, at its sole discretion, require the Tenant to obtain such other insurance
(including flood insurance pursuant to any federally-recognized program) as it
may deem
- 4 -
reasonably necessary to provide adequate coverage for all reasonably insurable
risks attributable to the use, ownership and operation of the Tenant's leased
Premises.
Notwithstanding the foregoing, Landlord shall not be responsible for
obtaining insurance coverage of any contents in the Premises.
Landlord and Tenant hereby release the other from any and all liability
or responsibility (to the other or anyone claiming through or under them by way
of subrogation or otherwise) under fire and extended coverage and supplementary
contract casualties if such fire, casualty or damage shall have been caused by
the fault or negligence of the other party, or anyone for whom such party may be
responsible; provided, however that this release shall be applicable and in
force and effect only with respect to loss or damage occurring during such time
as the releasor's policies shall contain a clause or endorsement to the effect
that any such release shall not adversely affect or impair said policies or
prejudice the right of the releasor to recover thereunder. Each of Landlord and
Tenant agrees that its policies will include such a clause or endorsement at the
sole cost of Tenant.
Tenant covenants and agrees that it will indemnify, defend and save
harmless the Landlord against and from all liabilities, obligations, damages,
penalties, claims, costs, charges and expenses, including, without limitation,
reasonable attorney's fees, which may be imposed upon or incurred by Tenant by
reason of any of the following occurring during the term of this Lease:
(i) Any matter, cause or thing arising out of the use and
occupancy of the leased Premises or any part thereof caused by
the negligence or willful acts of the Tenant, or any of its
agents, contractors, servants, employees, licensees or
invitees;
(ii) Any failure on the part of Tenant to perform or comply with
any of the covenants, agreements, terms or conditions
contained in this Lease on its part to be performed or
complied with.
- 5 -
Landlord shall promptly notify Tenant in a timely manner in writing of
any such claim asserted against it and shall promptly send to Tenant copies of
all papers or legal process served upon it in connection with any action or
proceeding brought against Landlord by reason of any such claim, in order that
Tenant shall interpose a timely defense to such action.
10. EXTERIOR MAINTENANCE. Not Applicable.
11. EMINENT DOMAIN. If Tenant's use of the Premises is materially
affected due to the taking by eminent domain of the Premises or any part thereof
or any estate therein, then this Lease shall terminate on the date when title
vests pursuant to such taking. The rent, and any additional rent, shall be
apportioned as of said termination date, and any prepaid rent paid for any
period beyond said date shall be repaid to Tenant. Tenant shall not be entitled
to any part of the award for such taking or any payment in lieu thereof, but
Tenant may file a separate claim for any taking of fixtures and improvements
owned by Tenant which have not become the Landlord's property, and for moving
expenses, provided same shall in no way affect or diminish Landlord's award. In
the event of a partial taking which does not effect a termination of this Lease
but does deprive Tenant of the use of a portion of the Demised Premises, there
shall either be an abatement or an equitable reduction of the basis rent and
additional rent, depending upon the period for which and the extent to which the
Premises so taken are not reasonably usable for the purpose for which they are
leased hereunder.
12. LANDLORD'S REMEDIES ON DEFAULT. If Tenant defaults in the payment
of basic rent, or any additional rent, or defaults in the performance of any of
the other covenants and conditions hereof, Landlord may give Tenant notice of
such default, and if Tenant does not cure the default in payment of any basic
rent within five (5) days or cure any other non-monetary default within thirty
(30) days after giving of such notice (or if such
- 6 -
other default is of such nature that it cannot be completely cured within such
period, if Tenant does not commence such curing within such thirty (30) days and
thereafter proceeds with reasonable diligence and in good faith to cure such
default), then Landlord may terminate this Lease on not less than ten (10) days
notice to Tenant, on the date specified in said notice, Tenant's right to
possession of the Demised Premises shall cease, and Tenant shall then quit and
surrender the Premises to the Landlord, but Tenant shall remain liable as
hereafter provided. If this Lease shall have been so terminated by Landlord
pursuant to this Paragraph, Landlord may at any time thereafter resume
possession of the Premises by any lawful means and remove Tenant or other
occupants and their effects.
13. DEFICIENCY. In any case where Landlord has recovered possession of
the Premises by reason of Tenant's default, Landlord may, at Landlord's option,
occupy the Premises or cause the Premises to be altered, divided, consolidated
with other adjoining premises or otherwise changed or prepared for reletting,
any may relet the Premises or any part thereof as agent of Tenant or otherwise
for a term or terms to expire prior to, at the same time as, or subsequent to
the original expiration date of this Lease, at Landlord's option, and receive
the rent therefor. Rent so received shall be applied first to the payment of
such expenses as Landlord may have incurred in connection with the recovery of
possession, altering, dividing, consolidating with other adjourning premises or
otherwise changing or preparing for reletting, and the reletting, including
brokerage and reasonable attorney's fees, and then to the payment of damages in
amounts equal to the rent hereunder and to the costs and expense of performance
of the other covenants for Tenant as herein provided. Landlord agrees, in any
such case, whether or not Landlord has relet, to pay to Landlord damages equal
to the basic and additional rent and other sums herein agreed to be paid by
Tenant, less the net proceeds of the reletting, if any, as ascertained from time
to time, and the same shall be payable by Tenant on the date rent is
- 7 -
payable as above specified. Tenant shall not be entitled to any surplus accruing
as a result of any such reletting. In reletting the Premises as aforesaid,
Landlord may grant rent concessions, and Tenant shall not be credited therewith.
No such reletting shall constitute a surrender and acceptance or be deemed
evidence thereof. If Landlord elects, pursuant hereto, actually to occupy and
use the Premises or any part thereof during any part of the balance of the term
as originally fixed or such extended, there shall be allowed against Tenant's
obligation for rent or damages as herein defined, during the period of
Landlord's occupancy, the reasonable value of such occupancy, not to exceed, in
any event, the basic and additional rent herein reserved, and such occupancy
shall not be construed as a release of Tenant's liability hereunder.
Landlord's remedies hereunder are in addition to any remedy allowed by
law.
14. RIGHT TO CURE TENANT'S BREACH. If Tenant breaches any covenant or
condition of this Lease, Landlord may, on reasonable notice to Tenant (except
that no notice need be given in case of emergency), cure such breach at the
expense of Tenant, and the reasonable amount of all expenses, including
attorney's fees, incurred by Landlord in so doing (whether paid by Landlord or
not) shall be deemed "additional rent" payable on demand.
15. MECHANIC'S LIENS. Tenant shall, within ten (10) days after notice
from Landlord, discharge or satisfy by bond or otherwise any mechanic's liens
for materials or labor claimed to have been furnished to the Premises on
Tenant's behalf.
16. RIGHT TO INSPECT AND REPAIR. Landlord may enter the Premises but
shall not be obligated to so do (except as required by any specific provision of
this Lease) at any reasonable time on reasonable notice to Tenant (except that
no notice need be given in case of emergency) for the purpose of inspection or
the making of such repairs, replacements or additions in, to, on or about the
Premises as Landlord deems necessary or desirable. Tenant shall have no claims
or
- 8 -
causes of action against Landlord by reason thereof. In no event shall Tenant
have any claim against Landlord for interruption to Tenant's business, however
occurring.
17. HOLDOVER TENANCY. If Tenant holds possession of the premises after
the term of this Lease, Tenant shall become a tenant from month to month under
the provisions herein provided, but at a monthly rental of One Hundred Fifty
Percent (150%) of the rent for the last month of the term of any renewal term,
payable in advance on the first day of each month, and such tenancy shall
continue until terminated by Landlord, or until Tenant shall have given to
Landlord a written notice at least thirty (30) days prior to the intended date
of termination, of intent to terminate such tenancy.
18. RIGHT TO SHOW PREMISES. Landlord may show the Premises to
prospective purchasers and mortgagees; and during the six (6) months prior to
termination of this Lease, to prospective tenants, during business hours on
reasonable notice to Tenant.
19. LATE CHARGE. Tenant shall pay a "Late Charge" of Two Percent (2%)
of any installment of rent or additional rent paid more than five (5) days after
the due date thereof, to cover the extra expense involved in handling delinquent
payments.
20. NO OTHER REPRESENTATIONS. No representations or promises shall be
binding on the parties hereto except those representations and promises
contained herein or in some future writing signed by the party making such
representation(s) or promise(s).
21. QUIET ENJOYMENT. Landlord covenants that if, and so long as Tenant
pays the rent and any additional rent as herein provided and performs the
covenants hereof, Landlord shall do nothing to affect Tenant's right to
peaceably and quietly have, hold and enjoy the Premises for the term herein
mentioned, subject to the provisions of this Lease.
- 9 -
22. PARAGRAPH HEADINGS. The paragraph headings in this Land position of
its provisions are intended for convenience only and shall not be taken into
consideration in any construction or interpretation of this Lease or any of its
provisions.
23. APPLICABILITY TO HEIRS AND ASSIGNS. The provisions of this Lease
shall apply to, bind and inure to the benefit of Landlord and Tenant, and their
respective heirs, successors, legal representatives and assigns.
24. LANDLORD'S LIABILITY FOR LOSS OF PROPERTY. Landlord shall not be
liable for any loss of property from any cause whatsoever, including, but not
limited to, water damage, theft or burglary from the Demised Premises, and
Tenant covenants and agrees to make no claim for any such loss at any time
unless such loss shall be the result of the negligence or willful conduct of
Landlord.
25. NOTICES. Any notice by either party to the other shall be in
writing and shall be deemed to have been duly given only if delivered personally
or sent by registered mail or certified mail in a postpaid envelope addressed:
if to Tenant, at the above described Building; if to Landlord, at Landlord's
address as set forth above; to either at such other addresses as Landlord or
Tenant, respectively, may designate in writing. Notice shall be deemed to have
been duly given, if delivered personally, on delivery thereof, and if mailed,
upon the tenth day after the mailing thereof, except if notice shall be given
for a lesser period as otherwise in this Lease provided.
26. SECURITY. Existing security deposit of nineteen thousand five
hundred dollars ($19,500.00), shall remain as security for the full and faithful
performance by the Tenant of all of the terms and conditions upon the performed,
which said sum shall be returned to the Tenant after the time fixed as the
expiration of the term herein, provided the Tenant has fully and
- 10 -
faithfully
carried out all of the terms, covenants and conditions on the Tenant's part to
be performed. In the event of a BONA FIDE sale, subject to this Lease, the
Landlord shall have the right to transfer the security to the vendee for the
benefit of the Tenant and the Landlord shall be considered released by the
Tenant from all liability for the return of such security; and the Tenant agrees
to look to the new Landlord solely for the return of the said security, and it
is agreed that this shall apply to every transfer or assignment made of the
security to a new Landlord.
27. SECURITY NOT TO BE ENCUMBERED. That the security deposited under
this Lease shall not be mortgaged, assigned or encumbered by the Tenant without
the written consent of the Landlord.
28. SUBORDINATION. In the event Landlord shall desire to finance or
refinance the Premises through an institutional lender, Tenant agrees that its
interest in the Premises shall be subordinated to such lender. In connection
therewith, Tenant agrees to execute any documents reasonably necessary to
subordinate its interest in the Premises.
29. CERTIFICATE OF OCCUPANCY. In the event the Township of Fairfield
shall require a new Certificate of Occupancy to be issued due to a change of
Tenant, Tenant agrees that it will, at its sole cost and expense, obtain such
new Certificate of Occupancy, including, but not limited to, any modifications
to the Premises required by the Township of Fairfield to obtain such new
Certificate of Occupancy. Landlord will be responsible for correcting any
existing faults that are not a direct result of Tenant's occupancy. The Lease is
subject to Tenant obtaining such Certificate of Occupancy.
30. COMPLIANCE WITH THE LAW.
A. Landlord warrants to Tenant that the Premises, in its state existing
on the Lease commencement date, will not violate any provisions of any
applicable building code, regulation
- 11 -
or ordinance so as to materially adversely affect use of the Premises by Tenant.
In the event this warranty has been violated, then Landlord shall, after written
notice from Tenant, promptly at Landlord's sole cost and expense, rectify any
such violation. In the event Tenant does not give to Landlord written notice of
the violation of this warranty within six (6) months from the Lease commencement
date (unless the violation was not known and could not reasonably have been
ascertained by Tenant), the correction of same shall be the obligation of the
Tenant at Tenant's sole cost. The warranty contained in this Paragraph 30A shall
be of no force or effect if Tenant caused such violation.
B. Except as provided in Paragraph 30A, Tenant shall, at Tenant's
expense, comply promptly with all statutes, ordinances, rules, regulations,
orders and requirements in effect during the term or any part of the term
hereof, applicable to the Premises.
C. Without limiting the generality of the provisions of Paragraph 30A
or any other provisions of this Lease, Tenant, at its sole cost and expense,
shall comply with, and observe and perform all of the obligations of Landlord
and/or Tenant under the New Jersey Environmental Cleanup Responsibility Act,
N.J.S.A. 13:lK-6 ET. SEQ. and the rules, regulations, requirements, orders and
directives issued thereunder (collectively "ISRA"), insofar as the same may
pertain to the use, or the manner of use, of the Premises or any appurtenance
thereto by Tenant or any other person during the term or during any other period
when Tenant or any person claiming under Tenant may be permitted to enter upon
the Facility, the Premises or any appurtenance thereto, and, among other things,
Tenant shall:
(i) Not permit or allow the Premises or the parking lot to be used
in a manner so as to be considered an "industrial
establishment" as such term is in ISRA without the prior
written consent of Landlord;
- 12 -
(ii) At all times during the term keep Landlord advised of the
"Standard Industrial Classification" (as such term is used in
ISRA) of Tenant and each other person using the Premises;
(iii) File as and when required by ISRA all forms, notices,
affidavits, certifications, plans, declarations, reports and
other information as may be necessary or desirable to comply
with ISRA.
(iv) Make or cause to be made all such soil, water and other tests
as may be necessary or desirable to comply with ISRA;
(v) Furnish Landlord with a copy of each of the items referred
to in the preceding clauses, and with copies of all
correspondence pertaining to the ISRA, as and when available;
and
(vi) Give Landlord prompt notice if, as and when Tenant becomes
aware of any use, spill, discharge or other event at the
Facility or the Premises concerning a hazardous substance or
waste to which ISRA may pertain and in the event of any spill,
discharge or contamination take the necessary action to
provide the required environmental cleanup.
The provisions of this paragraph shall survive the expiration or
termination of this Lease.
Nothing herein shall hold tenant responsible for discharge of hazardous
substances or waste prior to tenant's occupancy of the premises.
- 13 -
IN WITNESS WHEREOF, Landlord and Tenant have hereunto set their hands
and seals the date and year first above written.
WITNESSES: LANDLORD:
KOBRUN INVESTMENTS III, L.L.C.
/s/ [Illegible] Kobola GT (ASCP)
----------------------------------
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ (L.S.)
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, MANAGING MEMBER
TENANT:
WOMEN'S GOLF UNLIMITED
/s/ [Illegible]
----------------------------------
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (L.S.)
---------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, PRESIDENT
- 14 -
ADDENDUM 1
LANDLORD'S WORK
1. Replace carpet in new 1,500 sq. ft office area.
2. Paint walls in new 1,500 sq. ft. office area.
3. Replace carpet in existing accounting area (three rooms).
4. Removal of two walls in new 1,500 sq. ft. office area, to
be mutually agreed to by both Tenant and Landlord.
Note: New carpet to be of a quality and grade that is mutually
agreed to by both Tenant and Landlord.
WITNESSES: LANDLORD:
KOBRUN INVESTMENTS III, L.L.C.
/s/ [Illegible] Kobola G.T. (ASCP)
----------------------------------
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ (L.S.)
---------------------------------- ---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, MANAGING MEMBER
TENANT:
WOMEN'S GOLF LIMITED
----------------------------------
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (L.S.)
---------------------------------- ---------------------------------
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇,
PRESIDENT