Exhibit 99.1
THIRD AMENDMENT TO LEASE
This Third Amendment to Lease is made and entered into as of November 20, 2006, by and between
GOLKAR ENTERPRISES, LTD. (Lessor), and MOTORCAR PARTS OF AMERICA, INC., a New York corporation
(Lessee).
RECITALS:
A. Lessor and Motorcar Parts and Accessories, Inc. (predecessor-in-interest to Lessee) entered into that certain Standard Industrial/Commercial Single-Tenant Lease-Gross dated
September 19, 1995 (the Original Lease) with respect to the premises located at 2931 California
Street, Torrance, California 90503, consisting of approximately 79,708 square feet.
.
B. The Original Lease was amended by an Amendment To Lease dated October 3, 1996 (the First
Amendment), which, among other things, expanded the Premises to include the premises located at
2929 California Street, Torrance, California 90503, consisting of approximately 147,600 square feet
(the premises at 2929 and 2931 California Street are collectively referred to as the Premises).
C. The Original Lease and First Amendment were further amended by a Second Amendment to Lease
dated as March 15, 2002 (the Second Amendment) (the Original Lease, the First Amendment and the
Second Amendment are hereinafter collectively referred to as the Lease).
D. Lessor and Lessee desire to modify the Lease.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. All capitalized terms herein shall have the same meaning as set forth in the Lease except
as specifically provided herein.
2. Modifying Paragraph 1.3 of the Original Lease, Paragraph 3 of the First Amendment and
Paragraph 2 of the Second Amendment, upon the expiration of the current Term on March 31, 2007, the
Lease shall be extended for an additional five (5) years commencing April 1, 2007 and ending on
March 31, 2012.
3. Modifying Paragraph 1.5 and Addendum Paragraph 4 of the Original Lease, Paragraph 4
of the First Amendment and Paragraph 3 of the Second Amendment, commencing April 1, 2007, the Base
Rent shall be $110,700 per month. During the period commencing October 1, 2009 and continuing
through March 31, 2012, the monthly Base Rent of $110,700 will be increased to reflect any change
in the Consumer Price Index between January, 2007 and July, 2009. The increase in the Consumer
Price Index shall be computed based on the Consumer Price Index for All Urban Consumers, Los
Angeles-Riverside-Orange County, All Items, 1982-84=100, issued by the United States Department of
Labor, Bureau of Labor Statistics. If the Index for the month of July, 2009 is greater than the
Index for the month of January, 2007, then the monthly Base Rent will be increased in the same
proportion as the increase. However, such increase shall not be more than a total of six (6)
percent per year (15% in aggregate) nor less than a total of three (3) percent per year (7.5% in
aggregate) during
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said period. In no event shall the monthly Base Rent be decreased as a result of any declines in
said Consumer Price Index.
Should the United States Department of Labor re-adjust the above-described Consumer Price Index to
a different base period than the base period in effect when this Lease is executed, then such
change in the base shall be taken into account and reflected in all adjustments. Should the
official reports of the United States Department of Labor be unavailable for the relevant period at
the time that any adjustment hereunder is to become effective, Lessee shall pay the rental on the
unadjusted basis until the statistical information for the adjustment is available, and within
fifteen (l5) days from written notice by Lessor to Lessee of the adjustment including figures upon
which the adjustment is based, Lessee shall pay to Lessor such sum as represents the difference
between the rent paid and the adjusted amount of the rent due and payable. In addition, at such
time, Lessee shall pay to Lessor an amount sufficient to cause the security deposit hereunder to be
increased to an amount equal to the new monthly base rental. If the described Index shall no
longer be published, another index generally recognized as authoritative shall be substituted by
agreement of the parties. If they are unable to agree within thirty (30) days after demand by
either party, the substitute index shall, on application of either party, be selected by the chief
officer of the San Francisco Regional Office of the Bureau of Labor Statistics or its successor.
If selection by such officer cannot be obtained, the adjustment shall be made by mutual agreement
or by arbitration.
4. No later than April 1, 2007, Lessees present security deposit shall be increased to
$110,700, and such security deposit shall be increased during the term hereof in accordance with
Paragraph 5 of the Original Lease (i.e., so that the security deposit is always equal to one
months rent).
5. Notwithstanding anything to the contrary in the Lease, Lessee shall continue to pay its pro
rata share of common area maintenance costs relating to landscaping, asphalt, repair and
maintenance of the roof (but not replacement of the roof) and common area utilities.
Notwithstanding the foregoing, such common area maintenance costs shall not include (and Lessor
shall be solely responsible for) the following: (i) costs relating to the existing drainage
problems in the parking lot (including costs of repairing existing drainage facilities or adding
new facilities), (ii) that portion of the cost of goods and/or services paid to Lessor affiliates
in excess of market rates, (iii) costs of design, entitlement, site preparation, planning,
marketing, construction, and/or acquisition of new buildings, additional land or any expansion of
or major physical change to the Premises or project, (iv) Lessors general corporate overhead, (v)
all costs of capital improvements, alterations or replacements, (vi) management or supervision fees
of any kind, (vii) except as set forth in the first sentence of this Paragraph 5, the cost of
Lessors obligations under Section 7.2 of the Original Lease and Paragraph 7.1 of the Addendum to
the Original Lease, or (viii) the cost of the Roof Replacement (as defined below). Lessees pro
rata share shall be 63.2% based on the 227,368 square feet of the Premises divided by the 359,911
of the total project of which the Premises are a part (subject to potential reduction as set forth
in Paragraph 8 below). Prior to December 31, 2007, Lessor shall ensure that the asphalt of the
Premises is in good condition and shall make any required repairs to the asphalt and drainage as
set forth in (i) above at Lessors sole cost and expense, except for repairs required due to the
negligence or abuse of Lessee (in which event, Lessee shall be responsible for the cost of such
repairs). Lessee shall be responsible, at Lessees sole cost and expense, to cure to Lessors
reasonable satisfaction: (y) any structural problems that violate building code or are required by
the City Engineer resulting from additional weight that Lessee has heretofore
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added to the roof or structural members of the Premises; and (z) any problems arising from
installations by Lessee that do not conform to roofing industry standards (collectively, Lessees
Required Roof Repair). Prior to August 31, 2007 (subject to force majeure), Lessor, at Lessors
sole cost and expense, shall replace the roof on the upper portion of the 2929 California building,
as set forth on Exhibit A attached hereto. Within one year after Lessee has completed Lessees
Required Roof Repair (subject to force majeure), Lessor shall replace the roof on the lower portion
of the 2929 California building, as set forth on Exhibit A (the work on the upper and lower
portions of the 2929 California building are collectively referred to as the Roof Replacement).
The replacement of the roof on the lower portion of the 2929 California building shall be at
Lessors sole cost and expense except for the additional cost (the Additional Roof Cost)
resulting from Lessees additional installations on the roof (e.g., the cost of cranes necessary to
temporarily remove such installations during the Roof Replacement). The Additional Roof Cost shall
be at Lessees sole cost and expense. Lessor and Lessee shall perform such work in a good and
workmanlike manner and in compliance with all applicable laws and building codes. Lessor shall use
reasonable commercial diligence to minimize interference with Lessees use of the Premises during
such Roof Replacement work and asphalt repair work and shall coordinate the timing of all
construction activities with Lessee. At Lessees request, Lessor, at Lessors sole cost and
expense, shall provide to Lessee sufficient visqueen to cover the entire underside of the roof.
However, Lessee shall be responsible for installing the visqueen if it desires to use it. Lessor
shall have no responsibility for the installation of the visqueen or its effectiveness. Lessee
understands that the asphalt repairs will need to be done in phases and Lessee shall reasonably
cooperate with Lessor in coordinating such work. Lessee further acknowledges that reasonable
commercial diligence does not require that the Roof Replacement work and asphalt repair work be
done after regular working hours.
6. Notwithstanding any other provision to the contrary, for purposes of determining the increases in insurance and Real Property Taxes for which Lessee is responsible, the
Base Premium for purposes of Paragraph 8.1 of the Original Lease shall be the premiums for the
insurance specified in Paragraphs 8.2(b), 8.3(a) and 8.3(b) of the Original Lease for the calendar
year 2007, and the base year for purposes of determining the increase in Real Property Taxes shall
be the 2006-2007 fiscal tax year (the year during which this Amendment is executed). The typed
language at the end of Paragraph 8.3(a) of the Original Lease dealing with additional insurance
required by Lessors lender, is hereby deleted in its entirety. If such insurance is required, the
reasonable cost thereof shall be included as a part of the Base Premium and Lessee shall be
responsible for increases over the Base Premium. In addition, the amount of Lessees liability
insurance in Paragraph 8.2(a) shall be increased to Two Million Dollars ($2,000,000).
7. Except as set forth in Paragraph 5 above, on April 1, 2007, Lessee shall accept the
Premises in their then as-is, where-is condition. Lessor shall provide an allowance of Three
Hundred Thousand Dollars ($300,000) for Approved Tenant Improvements. Approved Tenant
Improvements shall mean: (a) the hard costs of permanent improvements to the Premises,
specifically including paint and carpet, but specifically excluding other wall coverings and
furniture; and (b) for which Lessee has received the prior approval of Lessor, which approval shall
not be unreasonably withheld, conditioned or delayed. Lessor shall pay Lessee the cost of such
Approved Tenant Improvements within thirty (30) days after written request from Lessee, accompanied
by reasonable supporting data and appropriate lien releases; provided, however, that requests for
payment shall be in the minimum amount of Fifty Thousand Dollars ($50,000) except for the final
payment. Upon request of Lessee at the time
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Lessee requests approval for any Approved Tenant Improvements, Lessor shall notify Lessee if Lessor
will require the removal of any such Approved Tenant Improvements upon the expiration or earlier
termination of the Lease in accordance with Paragraph 7.4 of the Original Lease.
8. Subject to Paragraph 39 of the Lease, if this Lease has not been cancelled or terminated
prior to March 31, 2008, and if Lessee is at the time of exercise and through March 31, 2008, in
possession of the Premises and is not at the time of exercise and through March 31, 2008 in default
of any of the terms, covenants or conditions of this Lease beyond the applicable notice and cure
period (it being understood that if Lessee is in default at such time and the cure period has not
run, Lessee must cure the default within the cure period), Lessee is hereby granted an option (the
First Contraction Option) to cancel the Lease effective as of March 31, 2008 for the 79,708
square foot portion of the Premises (and not for any smaller portion) commonly known as 2931
California Street that is at the most westerly portion of the Building as shown on Exhibit A
attached hereto (the Contraction Space). In order to exercise the First Contraction Option,
Lessee shall deliver written notice to Lessor on or before September 30, 2007. Subject to
Paragraph 39 of the Lease, if Lessee has not exercised the First Contraction Option, and if this
Lease has not been cancelled or terminated prior to March 31, 2009, and if Lessee is at the time of
exercise and through March 31, 2009, in possession of the Premises and is not at the time of
exercise and through March 31, 2009 in default of any of the terms, covenants or conditions of this
Lease, Lessee is hereby granted an option (the Second Contraction Option) to cancel the Lease
effective as of March 31, 2009 for the Contraction Space. In order to exercise the Second
Contraction Option, Lessee shall deliver written notice to Lessor on or before September 30, 2008.
If Lessee exercises either the First or Second Contraction Options, then, as a condition to the
effectiveness of such Options: (a) Lessee shall surrender the Contraction Space to Lessor in the
condition set forth in the Lease including Paragraph 7.4 thereof; (b) Lessee shall pay to Lessor on
the effective date of the termination of the Lease with respect to the Contraction Space, the
unamortized cost of any brokerage commission paid to Equis Corporation as set forth in Paragraph 10
below (amortized on a straight line basis without interest); (c) Lessees parking shall be reduced
by a pro rata amount, with such relinquished spaces being on the west side of the Building; (d)
the electrical transformer and related electrical facilities (including the panel) located at the
rear of the Contraction Space shall be used only for the Contraction Space (provided that Lessee
makes no representations regarding such electrical facilities or their sufficiency for use in the
Contraction Space), and Lessee shall be responsible for the cost of redistributing power to the
remaining portion of the Premises (Lessee acknowledges that the remaining power source will be
insufficient to provide power for its remaining space); (e) Lessee acknowledges that the indemnity
provisions of the Lease shall continue to apply with respect to the Contraction Space for events
occurring prior to relinquishment of the Contraction Space; and (f) the pro rata share of the
Premises shall be reduced to 41.0% based on the 147,600 square feet of the Premises divided by the
359,911 of the total project of which the Premises are a part. If Lessee exercises either the
First Contraction Option or Second Contraction Option, then on the effective date of the
termination of the Lease with respect to the Contraction Space, Lessor shall return a pro rata
portion of the Security Deposit. Lessor shall be responsible for constructing, at Lessees sole
cost and expense, a demising wall that separates the Contraction Space from the remainder of the
Premises.
9. Addendum 49 of the Original Lease, Paragraph 10 of the First Amendment and Paragraph
8 of the Second Amendment are hereby deleted in their entirety. In lieu thereof, subject to
Paragraph 39 of the Lease, if this Lease has not been cancelled or terminated prior to
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Notwithstanding any other provision to the contrary, for purposes of determining the increases in
insurance and Real Property Taxes for which Lessee is responsible during the period from April 1,
2012 until March 31, 2017, the Base Premium for purposes of Paragraph 8.1 of the Original Lease
shall be the premiums for the insurance specified in Paragraphs 8.2(b), 8.3(a) and 8.3(b) of the
Original Lease for the calendar year 2012, and the base year for purposes of determining the
increase in Real Property Taxes shall be the 2011-2012 fiscal tax year. During the period
commencing October 1, 2014 and continuing through March 31, 2017, the monthly Base Rent for the
month of September, 2014 will be increased to reflect any change in the Consumer Price Index
between January, 2012 and July, 2014. The increase in the Consumer Price Index shall be computed
based on the Consumer Price Index for All Urban Consumers, Los Angeles-Riverside-Orange County,
All Items, 1982-84=100, issued by the United States Department of Labor, Bureau of Labor
Statistics. If the Index for the month of July, 2014 is greater than the Index for the month of
January, 2012, then the monthly Base Rent will be increased in the same proportion as the increase.
However, such increase shall not be more than a total of six (6) percent per year (15% in
aggregate) nor less than a total of three (3) percent per year (7.5% in aggregate) during said
period. In no event shall the monthly Base Rent be decreased as a result of any declines in said
Consumer Price Index.
Should the United States Department of Labor re-adjust the above-described Consumer Price Index to
a different base period than the base period in effect when this Lease is executed, then such
change in the base shall be taken into account and reflected in all adjustments. Should the
official reports of the United States Department of Labor be unavailable for the relevant period at
the time that any adjustment hereunder is to become effective, Lessee shall pay the rental on the
unadjusted basis until the statistical information for the adjustment is available, and within
fifteen (l5) days from written notice by Lessor to Lessee of the adjustment including figures upon
which the adjustment is based, Lessee shall pay to Lessor such sum as represents the difference
between the rent paid and the adjusted amount of the rent due and payable. In addition, at such
time, Lessee shall pay to Lessor an amount sufficient to cause the security deposit hereunder to be
increased to an amount equal to the new monthly base rental. If the described Index shall no
longer be published, another index generally recognized as authoritative shall be substituted by
agreement of the parties. If they are unable to agree within thirty (30) days after demand by
either party, the substitute index shall, on application of either party, be selected by the chief
officer of the San Francisco Regional Office of the Bureau of Labor Statistics or its successor.
If selection by such officer cannot be obtained, the adjustment shall be made by mutual agreement
or by arbitration.
If Lessee has exercised either the First or Second Contraction Option, the foregoing option to
extend shall, at Lessees sole option, be applicable only to the 2929 California Street premises
defined in Recital B or it shall also apply to the Contraction Space if it is then available, and
subject to the rights of any then existing tenant of the Contraction Space.
10. Notwithstanding 1.10 of the Lease, the parties acknowledge that no Brokers were used in
connection with this Lease extension by Lessor, and that Mark Berman of Equis Corporation has
represented Lessee. Each party shall indemnify and hold harmless the other party, from and against
any and all claims or demands with respect to any brokerage fees, finders fees, agents
commissions or other compensation asserted by any other person or entity in connection with this
Lease extension on behalf of the indemnifying party. Lessor shall pay to Equis Corporation on
April 1, 2007, a commission equal to three percent (3%) of the Base Rent
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due pursuant to Paragraph 3 of this Third Amendment (without taking into account the rent
increase commencing October 1, 2009) for its services in connection with the negotiation of this
extension. Lessor agrees that while the commission is payable on April 1, 2007, it is earned as
of the date hereof. Except as provided in the immediately preceding sentence, neither Lessee nor
Lessor shall have any liability to any broker for this extension or upon exercise of the option set
forth in Paragraph 9 above.
11. Except as expressly set forth herein, all other terms and conditions of the
Lease shall remain unaffected by this Amendment, and are hereby ratified and affirmed.
12. Lessor represents and warrants to Lessee that Lessor has obtained all
necessary consents to enter into this Third Amendment, including, without limitation, the consent
of Lessors lender(s), if any.
13. So long as Lessee remains a publicly traded company, Paragraphs 12.1(b) and (c) of the
Original Lease are hereby deleted and of no further force and effect. In addition, notwithstanding
the provisions of paragraph 12.1(b) and (c) of the Original Lease, Lessee may assign or sublet the
Premises, or any portion thereof, without Lessors consent (but with notice to Lessor), to any (i)
entity which controls, is controlled by or is under common control with Lessee; or (ii) any entity
that acquires all or substantially all of the assets or stock of Lessee; or (iii) the resulting
entity of a merger or consolidation of Lessee: provided in each such event that said assignee
assumes, in full, the obligations of Lessee under the Lease. Any such assignment shall not, in any
way, affect or limit the liability of Lessee under the terms of the Lease even if after such
assignment or subletting the terms of the Lease are materially changed or altered without the
consent of Lessee, the consent of whom shall not be necessary.
In witness whereof, the parties have executed this Third Amendment to Lease as of the date
first above written.
MOTORCAR PARTS OF AMERICA, INC.,
A NEW YORK CORPORATION
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By:
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/s/ SELWYN H. JOFFE
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Selwyn H. Joffe, President
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By:
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MICHAEL M. UMANSKY
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Michael M. Umansky, Secretary
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Lessee
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(Signatures continued on next page)
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