Exhibit 10.2
LEASE ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT is made as of October 13, 1999, by and between FOOD
PRODUCTS CORPORATION, an Arizona corporation ("FPC") and SPARTA FOODS, INC., a
Minnesota corporation ("Buyer").
WHEREAS, FPC is the tenant of certain facilities located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Phoenix, Arizona pursuant
to a certain Lease Agreement dated November 1, 1994 (the "Lease") the right,
title and interest in of which was assigned to FPC pursuant to an Assignment of
Lease dated May 9, 1997.
WHEREAS, FPC and Buyer have entered into an Asset Purchase Agreement
dated September 27, 1999 (the "Asset Purchase Agreement") pursuant to which
Buyer will purchase substantially all of the assets of FPC effective as of the
Closing Date under the Asset Purchase Agreement.
WHEREAS, FPC desires to assign the Lease to Buyer and Buyer desires to
receive an assignment of, and assume FPC's obligations pursuant to, the Lease.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Assignment. FPC hereby sells, assigns and transfers to Buyer all of
FPC's right, title and interest in and to the Lease, effective as of the Closing
Date.
2. Assumption. Buyer hereby assumes and agrees to perform all of the
obligations of FPC pursuant to the Lease, from and after the Closing Date.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first appearing above.
FOOD PRODUCTS, INC. SPARTA FOODS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Secretary Its: Chief Executive Officer
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LEASE AGREEMENT
BETWEEN
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LIMITED PARTNERSHIP
AND
SBL ACQUISITIONS CORP., a Delaware corporation
DATED
NOVEMBER 1, 1994
INDEX
Section
1. PREMISES......................................................1
2. TERM 1
2.1 Original Term...................................1
2.2 Extended Term...................................1
2.3 Acceptance of the Premises......................2
2.4 Zoning, Permits and Access......................2
3. RENT 2
3.1 Rent............................................2
3.2 CPI Rent Adjustment.............................2
3.3 Where Paid......................................3
3.4 Triple Net Lease................................3
3.5 Roof Repair.....................................3
3.6 Impoundments....................................3
3.7 Past-due Obligations............................3
4. FIXTURES......................................................4
5. USE OF PREMISES...............................................4
6. PAYMENT OF TAXES AND INSURANCE................................4
6.1 Payment by Tenant...............................4
6.2 Right to Contest Taxes or Assessments...........5
6.3 Charges and Fees................................5
6.4 Rent Tax, Etc...................................5
7. DAMAGE TO PREMISES............................................5
7.1 Damage and Rebuilding...........................5
7.2 Repairs Greater than $150,000...................5
7.3 Uninsured Damage................................6
7.4 No Surrender....................................6
8. INSURANCE AND INDEMNIFICATION.................................6
8.1 Insurance.......................................6
8.2 Indemnification.................................7
8.3 Notice and Right to Defend......................8
8.4 Certificates of Insurance.......................8
8.5 No Contributing Insurance.......................8
8.6 Exemption from Liability........................8
9. EXERCISE OF EMINENT DOMAIN....................................8
9.1 Taking..........................................8
9.2 Partial Taking..................................9
9.3 Claims by Tenant................................9
10. UTILITIES....................................................9
11. COVENANTS AGAINST LIENS.....................................10
12. ASSIGNMENT AND SUBLETTING...................................10
12.1 Restrictions on Assignment and Subletting......10
12.2 No Release of Tenant...........................10
12.3 No Waiver......................................10
13. NOTICES.....................................................10
14. RIGHT TO GO UPON PREMISES...................................11
15. MAINTENANCE.................................................12
15.1 Maintenance....................................12
15.2 Landlord's Right to Cure.......................12
15.3 Reconveyance to Landlord.......................12
16. DEFAULT.....................................................12
16.1 Events of Default..............................12
16.2 Remedies.......................................13
16.3 Non-exclusion Remedies.........................13
16.4 Landlord Default...............................13
16.5 Landlord's Right to Cure.......................14
17. SIGNS.......................................................14
18. ATTORNEY'S FEES.............................................14
19. SUBORDINATION AND ATTORNMENT................................14
19.1 Subordination..................................14
19.2 Non-Disturbance................................15
20. HOLDING OVER................................................15
21. ESTOPPEL CERTIFICATES.......................................15
22. SUCCESSORS IN INTEREST......................................15
23. RECORDING INDENTURE.........................................16
24. REMEDIES ARE CUMULATIVE.....................................16
25. QUIET POSSESSION............................................16
26. ALTERATIONS AND ADDITIONS...................................16
26.1 Alteration.....................................16
26.2 Plans..........................................16
26.3 Lien...........................................16
26.4 End of Term....................................17
26.5 Government Order...............................17
27. PARTIAL INVALIDITY..........................................17
28. ENVIRONMENTAL MATTERS.......................................17
29. VENUE.......................................................18
30. GENERAL CONDITIONS..........................................18
LEASE AGREEMENT
THIS LEASE AGREEMENT is made as of this 1st day of November, 1994, by
and between, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LIMITED PARTNERSHIP, an Arizona limited
partnership, hereinafter called "Landlord," and SBL ACQUISITION CORP., a
Delaware corporation, hereinafter called "Tenant."
RECITALS:
Landlord is the owner of certain real property in the County of
Maricopa, State of Arizona located at 3121 East Washington, Phoenix, Arizona
(the "Washington Property") more particularly described in Exhibit A attached
hereto and incorporated herein by this reference and located at 3046 ▇. ▇▇▇▇▇▇▇,
Phoenix, Arizona (the "Madison Property") described on Exhibit B attached hereto
and incorporated herein by this reference. The Washington Property and the
Madison Property are collectively referred to as the "Property". Landlord has
constructed certain improvements on both the Madison Property and the Washington
Property (collectively, the "Improvements").
The parties hereto agree as follows:
AGREEMENTS:
1. PREMISES
Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, for the Term, at the Rental and upon all of the conditions set forth
herein, that portion of the Property which consists of 57,212 square feet of
floor space in the Improvements (34,775 square feet of which are located in the
portion of the Improvements located on the Washington Property, and 22,437
square feet of which are located in the portion of the Improvements located on
the Madison Property), together with a non-exclusive right to use the Property
parking lot for parking vehicles of Tenant's employees, customers and licensees
in the ordinary course of Tenant's business (collectively, the "Demised
Premises").
Landlord leases the Demised Premises, and Tenant takes the Demised
Premises, subject to all covenants, conditions and restrictions, easements and
rights-of-way, taxes, assessments and all zoning and building codes.
2. TERM
2.1 Original Term. The original term of this Lease shall commence on
November 1, 1994, and shall end on October 31, 1999.
2.2 Extended Term. Provided that Tenant is not in default beyond any
applicable cure period under the terms of this Lease at the time of giving of
Tenant's notice to extend the term hereof or at the expiration of the then
expiring term, Tenant may extend the original term of this Lease for an extended
term of five (5) years by giving Landlord written notice of its intention so to
do at least one hundred eighty (180) days prior to the expiration of the
original term. Such extended term shall be upon all of the terms and conditions
hereof, except that after the expiration of the extended term, if any, there
shall be no further options to extend. As used in this Lease, "original term"
means the original term hereinabove in this Section 2 specified; "extended term"
means the term of the extension of the original term of this Lease pursuant to
this Section 2, and "term," "Lease term" and "term of this Lease" embrace both
the original term and the extended term.
2.3 Acceptance of the Premises. Tenant acknowledges it has examined the
Property, the Improvements and the Demised Premises prior to its occupancy
thereof and takes the same in an "as is" condition, subject to Landlord's
obligations with respect to roof repair pursuant to Section 3.5 below. Tenant
further acknowledges that Landlord has made no representations or warranties
concerning the Demised Premises and Tenant shall not cancel this Lease, offset
rent, assert a claim for damages or otherwise based on a claim for breach of
express or implied warranty, failure to deliver possession in accordance with
the terms of this Lease, or constructive eviction by Landlord or others.
2.4 Zoning, Permits and Access. Tenant acknowledges that it has
determined to its own satisfaction that the Property is zoned for Tenant's
intended purposes, that Tenant is able to obtain any permit or license necessary
for it to carry on its business on the Demised Premises and that access adequate
for Tenant's intended purposes exists in to and out of the Property.
3. RENT
3.1 Rent. Tenant agrees to pay to Landlord rent of One Hundred
Sixty-five Thousand Eight Hundred and Forty-five Dollars ($165,845.00) per annum
(as such annual rent may increase after each year during the term of this Lease
as provided herein) for the Demised Premises during the term hereof. Such rent
is to be paid in equal monthly installments, without demand, in advance on the
first day of each and every calendar month of the term hereof. If the term
commences on a day other than the first day of the month, the fixed rent for the
initial fractional month shall be prorated and paid with the rent paid for the
first full calendar month of the term. Rent is initially calculated at the rate
of $.12 per square foot per month of floor area of the Improvements located on
the Madison Property and $.32 per square foot per month of floor area of the
Improvements located on the Washington Property.
3.2 CPI Rent Adjustment. The rent payable for each year of the term of
this Lease after the initial year including the years applicable to any
extension pursuant to Section 2.2 above, shall be increased based on increases
in the Consumer Price Index as follows:
(a) Procedure for Adjustment. On November 1 of each year, rent for the
succeeding year of the term of this Lease (November 1 through October 31) shall
increase by the same percentage as the percentage increase in the United States
Consumer Price Index - All Items - U.S. City Average, All Urban Consumers (the
base year reference period is 1982-1984 = 100) ("CPI"), as published by the
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Bureau of Labor Statistics of the U.S. Department of Labor, during the preceding
year of the term hereof (or for the immediately preceding 12 months for which
information is then available from the Bureau of Labor Statistics of the U.S.
Department of Labor if such information is not then published). In no event
shall rent decrease because of any CPI calculation.
(b) Comparable Index. In the event of discontinuance of the CPI as
currently reported, the most closely comparable index of price changes as
compiled by the Bureau of Labor Statistics or comparable federal agency shall be
substituted.
3.3 Where Paid. Payments of rental shall be made to Landlord at the
first address specified in Section 13 hereof, or at such other place as Landlord
may from time to time in writing direct.
3.4 Triple Net Lease. It is mutually intended and understood that the
rent is net of all taxes, utilities, insurance, casualty, internal and external
maintenance costs, including but not limited to HVAC, electrical, mechanical and
structural maintenance costs, and other charges, assessments and expenses
attributable to the Demised Premises and shall be paid by Tenant in addition to
the rent. All monetary obligations of Tenant contained herein are additional
rent.
3.5 Roof Repair. In connection with the execution of this Lease, as
soon as is reasonably possible but in no event later than fifteen (15) days
after Tenant has given Landlord notice of completion of Tenant's mechanical
repairs to the Demised Premises, Landlord shall commence the process of
repairing the roof of the Improvements located on the Washington Property, said
repair to put the Washington Property roof into good working order (the "Roof
Repair"). Tenant will reimburse Landlord as additional rent for costs associated
with the Roof Repair by paying to Landlord, each month throughout the term of
this Lease, $400.00, said amount to be paid on or before the first day of each
and every calendar month, said payment to be in addition to any other amounts
payable by Tenant hereunder.
3.6 Impoundments. Landlord may, at its option, require Tenant to
pay to Landlord, in addition to any other payments required under this Lease, a
monthly advance installment, payable at the same time as each monthly
installment of rent, as reasonably estimated by Landlord, for real property
taxes on the Demised Premises, in which event Landlord shall timely pay such
real property taxes. Landlord shall provide Tenant with copies of the most
recent tax bills which are the basis of such additional payment. Such fund shall
be established to insure payment when due of any or all such real property
taxes. If the amounts paid to Landlord by Tenant under the provisions of this
paragraph are insufficient to discharge the obligations of Tenant to pay such
real property taxes as the same become due, Tenant shall pay to Landlord such
additional sums as additional rent. All moneys paid to Landlord under this
paragraph shall be deposited in a separate interest bearing trust account and
such interest shall accrue to the benefit of Tenant and be remitted annually to
the Tenant.
3.7 Past-due Obligations. Any amount due to Landlord not paid when due
shall bear interest at an annual rate of four percent (4%) in excess of the
prime rate of interest as announced by Bank One, Arizona, NA (the "Bank"), as
the same may change from time to time, from the date due until paid. In
addition, Tenant shall pay $50.00 per day as liquidated damages on any amount
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due to Landlord not paid when due which shall accrue from the due date until
paid. Payment of such interest and liquidated damages shall not excuse or cure
any default by Tenant under this Lease.
4. FIXTURES
Tenant at its own expense shall provide, install and maintain all trade
fixtures and equipment reasonably required (and may substitute for and alter the
same) to enable it to conduct its business in the Demised Premises in a good and
businesslike manner. Such fixtures and equipment shall remain the property of
Tenant and Tenant may remove the same or any part thereof at any time prior to
the expiration or earlier termination of this Lease. Tenant shall repair at its
own expense any damage to the Demised Premises caused by the removal of said
fixtures or equipment by the Tenant. Any furniture, fixtures and equipment
remaining after termination of this Lease shall be deemed abandoned by Tenant
and shall become the property of the Landlord.
5. USE OF PREMISES
Tenant shall use the Demised Premises solely for the purpose of storage
and production of food products and such other materials used in food
production, storage of related supplies and uses incidental thereto and with the
prior written consent of Landlord which consent shall not be unreasonably
withheld, such other uses as the parties hereto may agree. Tenant shall conduct
its business on the Demised Premises in a lawful manner and in strict compliance
with all covenants, conditions and restrictions now or hereafter recorded
against the Demised Premises and all governmental laws, rules, regulations and
orders applicable to the business of Tenant conducted in and upon the Demised
Premises. Without limiting the foregoing, Tenant shall use and operate the
Demised Premises in strict accordance with any and all applicable rules and
regulations promulgated by the Occupational Safety and Health Administration and
the Americans with Disabilities Act. Any costs and liabilities associated with
compliance with this Section 5 shall be the sole responsibility of Tenant.
6. PAYMENT OF TAXES AND INSURANCE
6.1 Payment by Tenant. Tenant shall pay before delinquency all
insurance premiums relating to insurance coverage required by this Lease and any
and all taxes and assessments, and other governmental impositions or charges of
every nature, levied or assessed upon the Demised Premises, Tenant's property
located upon the Demised Premises, together with all interest and penalties
thereon. Tenant shall, within ten (10) days of Landlord's written request,
furnish Landlord with written evidence of such payment. Notwithstanding the
foregoing, Landlord, at its option, shall have the right to estimate the amount
of taxes next due and to collect and impound from Tenant on a monthly basis the
amount of Tenant's estimated tax obligation as provided in Section 3.5. All
taxes and assessments for the year in which this Lease commences or terminates
shall be apportioned and adjusted. The term "taxes and assessments" as used
herein shall not include personal income taxes, personal property taxes,
inheritance taxes or franchise taxes levied against Landlord.
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6.2 Right to Contest Taxes or Assessments. Tenant shall have the right
to contest in good faith any tax or assessment levied on or against the Demised
Premises or Property if Tenant fully pays any such tax or assessment before
delinquency and prior to contesting the same. Tenant, with respect to contesting
any tax or assessment, shall indemnify and hold Landlord harmless for any loss
or damage arising therefrom.
6.3 Charges and Fees. Tenant shall be responsible for obtaining all
permits respecting Tenant's use and occupancy of the Demised Premises, and shall
pay all privilege charges, occupancy permit fees, license fees or other charges
or taxes which are imposed on or with respect to the Demised Premises or the use
and occupancy thereof.
6.4 Rent Tax, Etc. Tenant shall pay to Landlord, in addition to and
along with the rentals otherwise payable hereunder, a sum equal to the aggregate
of any rental, occupancy, use or transaction privilege taxes or like taxes now
or hereafter levied or imposed by any federal, state, county, municipal or other
governmental authority, or any subdivision thereof, during the term hereof or
any extension or renewal thereof, against or on account of any and all amounts
payable hereunder by Tenant or the receipt thereof by landlord (excluding
Landlord's income taxes) which shall be paid monthly together with the rent as
provided in Section 3.
7. DAMAGE TO PREMISES
7.1 Damage and Rebuilding. In the event that the Demised Premises
should be damaged or destroyed during the term of this Lease, from any cause
whatsoever, Tenant shall, except as hereinafter provided, forthwith and
diligently repair or rebuild the same on the same plans and design as existed
immediately prior to such damage. During the period of restoration or repair,
there shall be no reduction, abatement or termination of the rent or other
charges due under this Lease. Tenant may use the insurance proceeds, if any, for
restoration and repair of the Demised Premises. Tenant shall cooperate with
Landlord in connection with the collection of any insurance monies and, in the
event that Tenant shall fail or neglect so to cooperate or to execute,
acknowledge and deliver any such instrument, Landlord may as the agent or
attorney-in-fact of Tenant execute and deliver any proofs of loss or any other
instruments as may seem appropriate to Landlord for the collection of such
insurance monies, and Tenant hereby irrevocably nominates, constitutes and
appoints Landlord as Tenant's proper and legal attorney-in-fact for such
purposes. All insurance monies, if any, paid on account of such damage or
destruction, less the actual costs, fees and expenses, if any, incurred in
connection with adjustment of the loss, shall be adjusted by and paid to Tenant
if the loss amounts to less than One Hundred Fifty Thousand Dollars ($150,000),
but shall be adjusted by Landlord and Tenant and shall be paid to Landlord as
provided below if the loss amounts to One Hundred Fifty Thousand Dollars
($150,000) or more. If the Demised Premises shall be substantially damaged or
destroyed during the last year of the original term or the extended term, Tenant
may terminate this Lease by giving written notice of such election, in which
event Landlord shall be entitled to receive any insurance monies payable on
account of such damage or destruction.
7.2 Repairs Greater than $150,000. The insurance proceeds which are
payable to Tenant shall be used by Tenant to repair or rebuild the Demised
Premises as provided above. The insurance proceeds which are payable to Landlord
5
shall be held by Landlord to pay for the costs of the restoration. Prior to the
making of any repairs that cost in excess of One Hundred Fifty Thousand Dollars
($150,000), Tenant shall furnish Landlord with an estimate of the cost of such
work prepared by a licensed architect or registered professional engineer, whose
selection shall be subject to prior written approval by Landlord, which approval
shall not be unreasonably withheld or delayed. Upon repair or rebuilding of the
Demised Premises by Tenant, the insurance proceeds held by or on behalf of
Landlord shall be paid from time to time to Tenant in draws for reimbursement
for the work and materials actually incorporated in the Demised Premises, less
five percent (5%) of the installment to be paid, upon the presentment of an
application and certificate for payment (AIA Form G702 or equivalent), a
certificate for payment issued by the architect and lien waivers by Tenant and
all subcontractors, materialmen and suppliers for all work for which Tenant is
seeking payment. If any mechanics' or materialmen's lien is filed against or
upon the Demised Premises, Tenant shall not be entitled to receive any further
draws until such lien is satisfied, bonded or otherwise discharged. The term
"labor and material," as used herein shall include the cost of architectural and
supervisory services, insurance and all other costs which may be involved in the
repair or rebuilding of the Demised Premises. A final payment representing the
five percent (5%) withheld by Landlord, up to the full balance of the insurance
proceeds received by Landlord, shall be paid to Tenant within thirty (30) days
after its lien-free completion of the repair and issuance of a final Certificate
of Occupancy. If the insurance proceeds shall be insufficient for the complete
repair of the Demised Premises in a workmanlike manner, Tenant shall be
responsible for the deficiency. If the amount of such insurance proceeds shall
be in excess of the cost of such repairs, such excess shall be retained by
Tenant.
7.3 Uninsured Damage. If such damage or destruction shall not have been
covered by collectible insurance, or if the insurance proceeds are insufficient
to cover the cost of the restoration, Tenant shall, prior to commencing the
restoration, deposit with Landlord an amount equal to the estimated cost of the
restoration, or the amount of the deficiency, as the case may be, and said sum
shall be disbursed in the same manner as insurance proceeds are required to be
disbursed under Section 7.2 above. If Landlord and Tenant cannot agree upon such
amount within fifteen (15) days following the damage or destruction, such amount
shall be determined by arbitration.
7.4 No Surrender. Except as otherwise provided herein, no destruction
of or damage to the Demised Premises or any part thereof by fire or any other
casualty, irrespective of whether such destruction or damage may occur on or
after the date of the commencement of the term of this Lease, shall permit
Tenant to surrender this Lease or shall relieve Tenant from its liability to pay
the full rent, and other charges payable under this Lease. Lessee waives the
provisions of any statutes which relate to termination of leases when the thing
leased is destroyed and agrees that such event shall be governed by the terms of
this Lease.
8. INSURANCE AND INDEMNIFICATION
8.1 Insurance. During the term hereof, Tenant shall, at its own
expense, carry the following insurance:
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(a) Building Coverage (including the so-called "All Risks
Endorsement") in an amount of 100% of full replacement value of the Improvements
and appurtenances and naming Landlord as an additional named insured, as its
interests may appear.
(b) Umbrella Liability Coverage in the amount of $3,000,000.00
and naming Landlord as an additional named insured, as its interests may appear.
(c) Statutory Workmen's Compensation (including employer's
liability) in the amount required by law.
(d) Commercial General Liability Coverage (including premises
liability, products and completed operations, premises medical, broad form drive
other car auto coverage, personal injury (including employees acting within the
scope of their employment), contractual liability, independent contractor's
coverage and employee benefit (liability)) in the amount of $500,000.00 and
naming Landlord as an additional named insured, as its interests may appear.
(e) Boiler and Machinery Coverage.
(f) Loss of Rents, Business Interruption and Gross Earnings
Coverage in the amount of 100% coverage for a period of 12 months (special form,
subject only to standard exclusions) and naming Landlord as an additional named
insured, as its interests may appear.
All insurance to be obtained hereunder shall be in a company or companies
licensed to do business in the State of Arizona and rated A or better in the
latest Best's Insurance Guide of Property - Casualty Insurance Companies or
highest available rating in the event no insurance carrier in this class will
provide such insurance. All insurance proceeds payable to Tenant and/or Landlord
shall be paid as provided in this Lease, and, if applicable, made available to
Tenant to repair or rebuild the demised premises as provided herein.
8.2 Indemnification. Tenant, with respect to its use and occupancy of
the demised premises, agrees, at the option of Landlord to defend Landlord, its
agents, servants and employees, against any, all and every demand, claim,
assertion of liability, or action arising or alleged to have arisen out of any
act or omission of Tenant, its agents, servants, employees, and occupants of the
Demised Premises, whether such demand, claim, assertion of liability, obligation
of payment or action be for damages, injury to person or property, including the
property of Landlord, or death of any person, made by any person, group or
organization, whether employed by either of the parties hereto, an occupant of
the Demised Premises or otherwise, and agrees to assume legal liability for,
indemnify and hold free and harmless Landlord, and its agents, servants and
employees, from any and all loss, damages, liability, reasonable costs or
expenses (including, but not limited to, reasonable attorneys' fees, reasonable
investigative and discovery costs and court costs) and all other sums which
Landlord, its agents, servants, employees and partners may reasonably pay or
become obligated to pay on account of any, all and every demand, claim,
assertion of liability or action arising or alleged to have arisen out of any
act or omission of Tenant, its agents, servants, employees, or occupants of the
Demised Premises, whether such claim, demand, assertion of liability or action
be for damages, injury to person or property, including the property of
7
Landlord, or death of any person, made by any person, group or organization,
whether employed by either of the parties hereto, an occupant of the Demised
Premises or otherwise.
8.3 Notice and Right to Defend. Landlord agrees that, upon receipt of a
claim in respect of which indemnity may be sought under Section 8.2 above,
Landlord shall give written notice within 10 days of such claim (the "Notice of
Claim") to Tenant. No indemnification under Section 8.2 shall be available to
Landlord if it fails to give the required Notice of Claim within 10 days if
Tenant was unaware of the claim and was prejudiced by failure to receive the
Notice of Claim in a timely manner. Tenant shall be entitled at its own expense
to participate in the defense of any claim or action against Landlord. Tenant
shall have the right to assume the entire defense of such claim provided that
(i) Tenant gives written notice of its desire to defend such claim (the "Notice
of Defense") to Landlord within 15 days after Tenant's receipt of the Notice of
Claim; (ii) Tenant's defense of such claim shall be without cost to Landlord or
prejudice to Landlord's rights under Section 8.2; (iii) counsel chosen by Tenant
to defend such claims shall be reasonably acceptable to Landlord; (iv) Tenant
shall bear all costs and expenses in connection with the defense of such claim;
and (v) Landlord shall have the right, at Landlord's expense, to have Landlord's
counsel participate in the defense of such claim.
8.4 Certificates of Insurance. Tenant agrees to deliver to Landlord
certificates of insurance evidencing the existence in force of the policies of
insurance hereinabove provided for. Each of such certificates shall provide that
such insurance shall not be canceled or amended in any manner unless twenty (20)
days' prior written notice of such cancellation or amendment is given to
Landlord.
8.5 No Contributing Insurance. Tenant shall not carry separate
insurance that is concurrent in coverage and contributing in the event of a loss
to insurance to be carried under this Section, if the effect of such separate
insurance would reduce the amount of insurance proceeds available to the parties
hereto.
8.6 Exemption from Liability. Except for the intentional or negligent
acts or omissions of Landlord, Landlord shall not be liable for (i) injury to
Tenant's business or any loss of income therefrom or for damage to the
furniture, fixtures and equipment, or other property of Tenant, Tenant's
employees, occupants of the Demised Premises, invitees, customers, or any other
person in or about the Demised Premises, (ii) injury to the person of Tenant,
Tenant's employees, agents, contractors, or occupants of the Demised Premises,
whether such damage or injury is caused by or results from fire, steam,
electricity, gas, water or rain, or from the breakage, leakage, obstruction or
other defects of pipes, sprinklers, wires, appliances, plumbing, air
conditioning or lighting fixtures, or from any other cause, whether the said
damage or injury results from conditions arising upon the Demised Premises, or
from other sources or places, and regardless of whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant.
9. EXERCISE OF EMINENT DOMAIN
9.1 Taking. An appropriation or taking under the power of eminent
domain of all, or a portion, of the Demised Premises, or the sale by private
8
sale of all or a portion of the Demised Premises in lieu thereof, are sometimes
hereinafter called a "taking." If fifty percent (50%) or more of the
Improvements constituting a portion of the Demised Premises shall be taken, this
Lease shall terminate and expire as of the date of taking of actual physical
possession of the Improvements constituting a portion of the Demised Premises by
the condemnor or purchaser, and the parties hereto shall thereupon be released
from any and all further liability hereunder. Tenant shall have no right, title
or interest in or to any amounts received by Landlord in connection with any
taking. Nothing in this Section 9 shall be construed as a waiver by Landlord or
Tenant of any rights vested in it by law to recover damages from a condemnor for
the taking of its right, title, or interest in the Property.
9.2 Partial Taking. In the event of the taking of less than fifty
percent (50%) of the Improvements or the Demised Premises, then, if in Tenant's
reasonable judgment such taking renders the Demised Premises wholly unsuitable
for the operation of its business, Tenant may terminate this Lease upon written
notice to Landlord, and the parties hereto shall thereupon be released from any
and all further liability hereunder. In the event that the Tenant does not elect
to terminate this Lease as provided in this Section 9.2, Landlord shall as soon
as is reasonably possible, to the extent condemnation award proceeds are
available, make all repairs and alterations to the Improvements constituting a
portion of the Demised Premises necessitated by such taking or sale, and Tenant
shall repair, alter, remove or replace its fixtures in the Improvements
constituting a portion of the Demised Premises necessitated by such taking or
sale. In such event, Tenant shall continue to utilize the Demised Premises for
the operation of its business to the extent that it may be practicable to do so
from the standpoint of good business. If Tenant continues doing business in the
Demised Premises prior to the completion of repair and restoration work by
Landlord, the rent payable by Tenant shall be equitably abated in the proportion
that the unusable part of the Demised Premises bears to the whole thereof. Rent
payable after the time Tenant resumes business in the Demised Premises as
diminished by any taking or sale shall be equitably reduced in the proportion
which the area taken or sold bears to the total area of the Demised Premises.
9.3 Claims by Tenant. Tenant shall have the right to claim and recover
such compensation as may be separately awarded or recoverable by Tenant in
Tenant's own right on account of damage to Tenant's business or leasehold
interest by reason of a complete or partial taking and for or on account of any
cost or loss which Tenant might incur in removing Tenant's merchandise, personal
property, trade fixtures, leasehold improvements and equipment.
10. UTILITIES
Tenant shall pay during the term hereof all electric, water, sewer,
gas, telephone and other public utility charges in connection with its occupancy
and use of the Demised Premises, including all costs of operating and
maintaining all equipment therein, all business licenses and similar permit
fees. Any such costs paid by Landlord on behalf of Tenant shall be reimbursed to
Landlord within ten (10) days of presentation to Tenant of a statement showing
in reasonable detail the amounts paid by Landlord. Landlord shall not be liable
to Tenant for damages because of an interruption in utility services, and Tenant
shall not be entitled to claim a constructive eviction due to such interruption.
9
11. COVENANTS AGAINST LIENS
Tenant covenants and agrees that it shall not, during the term hereof,
suffer or permit any lien to be attached to or upon the Demised Premises or any
part thereof by reason of any act or omission on the part of Tenant, and hereby
agrees to save and hold harmless Landlord from or against any such lien or claim
of lien. In the event that any such lien does so attach, and is not released
within thirty (30) days after notice to Tenant thereof, or if Tenant has not
indemnified Landlord against such lien within said thirty (30) day period,
Landlord, in its sole discretion, may pay and discharge the same and relieve the
Demised Premises therefrom, and Tenant agrees to repay and reimburse Landlord
upon demand for the amount so paid by Landlord. Notwithstanding anything to the
contrary contained herein, Tenant shall be entitled to grant security interests
in and to Tenant's personal property and equipment located in the Demised
Premises, upon an instrument previously approved by Landlord, such approval
shall not be unreasonably withheld or delayed.
12. ASSIGNMENT AND SUBLETTING
12.1 Restrictions on Assignment and Subletting. Tenant shall not assign
this lease or sublease all or any part of the Demised Premises, including any
assignment by operation of law, merger or reorganization, nor permit other
persons to occupy or conduct business in said Demised Premises or any part
thereof, nor grant any license, management contract or franchise for all or any
part of the Demised Premises without the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. Any assignment by
operation of law, attachment or assignment for the benefit of creditors shall,
at Landlord's option, be inoperative. Notwithstanding anything to the contrary
contained in this Section 12.1 Tenant may assign this Lease as collateral
security or grant a leasehold mortgage to Tenant's lenders upon an instrument
previously approved by Landlord, such approval shall not be unreasonably
withheld or delayed.
12.2 No Release of Tenant. Regardless of Landlord's consent, no
assignment or subletting shall release Tenant of its obligations hereunder or
alter the primary liability of Tenant to pay the rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of rent by
Landlord from a subtenant shall not be deemed to be a waiver by Landlord of any
provision hereof.
12.3 No Waiver. If Landlord at any time consents in writing to any
assignment or sublease pursuant to paragraph 12.1, Tenant and any such assignee
or subtenant shall not make any further assignment or sublease contrary to the
provisions of paragraph 12.1. The consent of Landlord to any assignment or
sublease shall not be a waiver of Tenant's or a subtenant's duty to obtain
Landlord's prior written consent for a subsequent assignment or sublease.
13. NOTICES
Any notices required to be given hereunder, or which either party
hereto may desire to give to the other, shall be in writing. Such notice may be
given by mailing the same by United States mail, registered or certified, return
receipt requested, postage prepaid, addressed as follows:
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If to Landlord: ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Limited Partnership
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
With a required copy to:
▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Tenant: SBL Acquisitions Corp.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
With a required copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Signature Brands Limited
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
or to such other address as the respective parties may from time to time
designate by notice given in the manner provided in this Section, and shall be
deemed complete upon delivery if personally delivered or 7 days after mailing if
mailed.
14. RIGHT TO GO UPON PREMISES
Landlord hereby reserves the right for itself or its duly authorized
agents and representatives at all reasonable times during business hours of
Tenant during the term hereof upon prior notice to Tenant (except in the event
of an emergency no prior notice shall be required) to enter upon the Demised
Premises for the purpose of inspecting the same and of showing the same to any
prospective purchaser or encumbrancer.
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15. MAINTENANCE
15.1 Maintenance. Subject to Section 3.5 above, Tenant shall, at its
own expense, maintain the entire Demised Premises in good order, condition and
repair, including, without limiting the generality of the foregoing, the roof
and its supporting members, roof covering, foundations, interior and exterior
walls, floor coverings, structural aspects of the floor, heating, ventilation,
air conditioning systems ("HVAC systems"), plumbing, sewage lines, electrical
and lighting facilities, fixtures, ceilings, windows, doors, plate glass, and
all landscaping, driveways, sidewalks, parking areas, fences and signs located
on the Demised Premises.
15.2 Landlord's Right to Cure. If Tenant fails to maintain the Demised
Premises pursuant to paragraph 15.1, Landlord may, at its option, enter upon the
Demised Premises after ten (10) days' written notice (except in an emergency, in
which event no notice is necessary), perform such obligations on Tenant's behalf
and put the Demised Premises in good order, condition and repair, and the cost
thereof, together with interest thereon, from the date of expenditure until
paid, at an annual rate of four percent (4%) in excess of the Bank's prime rate
of interest, as the same may change from time to time, shall be due and payable
as additional rent with Tenant's next monthly rental payment.
15.3 Reconveyance to Landlord. At the end of the lease term or sooner
termination of this Lease, whether by operation of law, or for failure to comply
with the provisions hereof, or otherwise, Tenant shall deliver up the Demised
Premises in the same order, condition and repair as when received by Tenant,
depreciation caused by ordinary wear and tear excepted.
16. DEFAULT
16.1 Events of Default. The occurrence of any of the following events
shall be deemed to constitute an event of default on the part of Tenant
hereunder:
(a) In the event that a voluntary petition shall be filed by
Tenant, under the United States or Canadian federal bankruptcy law or under the
law of any state in the United States or province in Canada, to be adjudicated a
bankrupt or for any arrangement or other debtor's relief; or any such petition
shall be filed against Tenant by any other party and not dismissed within sixty
(60) days after the filing thereof; or a permanent receiver, trustee or
liquidator shall be appointed for Tenant, or any of the property of Tenant, and
such receiver, trustee or liquidator is not discharged within sixty (60) days
after the date of his appointment;
(b) In the event Tenant shall default in the payment of any
monetary obligations required to be paid by Tenant hereunder and such default
shall continue for more than five (5) days;
(c) In the event Tenant shall default in the performance of
any other covenant or agreement herein (other than the payment of a monetary
obligation) and such default shall continue for twenty (20) days after written
notice thereof from Landlord to Tenant, or if such default is not of the type
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which could reasonably be cured within twenty (20) days, if Tenant has not
commenced to cure such default within said twenty (20) day period and does not
thereafter diligently prosecute the curing of such default to completion;
(d) Except as provided in this Lease, if Tenant creates,
incurs, assumes or suffers to exist any mortgage, pledge, lien, charge,
encumbrance, or security interest upon or in any of the Demised Premises; and
(e) Any default by Signature Brands Limited, a Canadian
corporation ("Guarantor") under that certain Guaranty Agreement dated November
1, 1994, executed by Guarantor in favor of Landlord attached hereto as Exhibit
C.
16.2 Remedies. In the event of the occurrence of any event of default
specified above in Section 16.1 hereof, Landlord may, so long as such default
continues:
(a) Terminate Tenant's right to possession and reenter the
Demised Premises, or any part thereof, and expel or remove therefrom Tenant and
any other persons occupying the same, using such force as may be necessary to do
so. Such reentry shall not limit Tenant's obligations to pay any amounts due
hereunder. Such reentry shall not act as an acceptance by the Landlord of
Tenant's surrender of the Demised Premises or as a termination of the Lease,
except if so agreed by Landlord in writing;
(b) Maintain Tenant's right to possession in which case this
Lease shall continue in effect whether or not Tenant shall have abandoned the
Demised Premises;
(c) Terminate this Lease and Tenant's right to possession;
(d) In all events Landlord shall be entitled to recover from
Tenant all damages incurred by Landlord by reason of Tenant's default including,
but not limited to, the cost of recovering possession of the Demised Premises,
expense of reletting (including renovation of the Demised Premises reasonably
necessary in connection with reletting the Demised Premises), reasonable
attorneys' fees and costs, real estate commissions, repairs, advertising, costs
of care, costs of removing and storing Tenant's property, the worth at the time
of the award by the court having jurisdiction of the amount by which unpaid rent
for the balance of the term exceeds the amount of such rental loss for the same
time period that Tenant proves could be reasonably avoided; and
(e) Pursue any other rights or remedies available at law or
equity.
16.3 Non-exclusion Remedies. The remedies of Landlord provided by this
Section 16 are nonexclusive. No surrender of the Demised Premises by Tenant
shall be effective unless such surrender is accepted in writing by the Landlord.
16.4 Landlord Default. Should Landlord default in the performance of
any covenant or agreement herein, and such default continues for thirty (30)
days after receipt by Landlord of written notice thereof from Tenant, or if the
default of Landlord is of a type which is not reasonably possible to cure within
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thirty (30) days, if Landlord has not commenced to cure said default within said
thirty (30) day period and does not thereafter diligently prosecute the curing
of said default to completion, Tenant may take such action reasonably necessary
to cure such default, and Tenant shall be reimbursed by Landlord upon demand by
Tenant for the reasonable costs actually incurred by Tenant in so performing or
curing.
16.5 Landlord's Right to Cure. If Tenant fails to perform any covenant
or agreement set forth herein or in any way defaults under or breaches any
provision or term of this Lease and such failure, default or breach continues
for five (5) days after written notice thereof, then in addition to any other
right or remedy hereunder or under the laws of this State, Landlord may, but
shall not be obligated to, perform such covenant or agreement or cure such
default or breach and do all necessary work and make all necessary payments in
connection therewith, including without limitation, attorneys' fees and
disbursements, for the account, and at the expense of, Tenant. The amount of all
cost and expense incurred or paid by Landlord in so performing or curing shall
be paid by Tenant to Landlord upon demand, together with interest at the annual
rate of four percent (4%) in excess of the Bank's prime rate of interest, as the
same may change from time to time.
17. SIGNS
All of Tenant's signs visible from the exterior of the Demised Premises
shall require the prior written consent of Landlord, which consent shall not be
unreasonably withheld or delayed. Tenant shall not install, erect or maintain
any sign in violation of any applicable law, ordinance or use permit of any
governmental authority. Tenant may remove any such sign at any time during the
term of this Lease, and shall remove the same upon the expiration thereof or
sooner termination of this Lease, and Tenant at its own expense shall repair any
damage caused by the removal thereof by the Tenant.
18. ATTORNEY'S FEES
If either party hereto incurs attorney's fees and related expenses in
enforcing any provision of this Lease, the prevailing party shall be entitled to
its reasonable attorneys' fees, expenses and costs, whether or not suit is
brought.
19. SUBORDINATION AND ATTORNMENT
19.1 Subordination. Provided Tenant receives the non-disturbance
agreements referred to in Section 19.2, Tenant agrees that: (a) this Lease is,
and all of Tenant's rights hereunder are and shall always be, subject and
subordinate to (1) any mortgages, deeds of trust or security instruments
(sometimes hereinafter "Mortgage"), which now exist or may hereafter be placed
upon the Demised Premises or any part thereof and to all advances made or to be
made thereunder and to the interest thereon and all renewals, replacements,
modifications, consolidations or extensions thereof, (2) all ground or
underlying Leases or subleases, including without limitation, sale-leaseback or
lease-leaseback leases (sometimes hereinafter "Underlying Leases"), to which
Landlord is or may become a party as tenant or subtenant thereunder, (3) the
14
right of any mortgagee under a mortgage to unilaterally subordinate the mortgage
to this Lease by a written instrument recorded in the records of Maricopa
County, Arizona Recorder's Office and specifically causing such subordination to
occur; and (b) if the holder of any such Mortgage, or if the purchaser at any
foreclosure sale or at any sale under a power of sale contained in any Mortgage,
or the lessor under any Underlying Lease, at its sole option so requests, Tenant
will attorn to and recognize such mortgagee, purchaser or lessor as Landlord
under this Lease, subject to all of the terms of this Lease; and (c) the
aforesaid provision shall be self-operative and no further instrument or
document shall be necessary unless required by such mortgagee, purchaser or
lessor. Tenant, upon written request, shall execute and deliver to Landlord,
without charge, and in form satisfactory to Tenant and Landlord, all instruments
and documents that may be requested to acknowledge such subordination.
19.2 Non-Disturbance. Notwithstanding such subordination, Tenant's
right to quiet possession of the Demised Premises shall not be disturbed so long
as Tenant is not in default beyond any applicable grace period and pays the rent
and observes and performs all of the terms and conditions of this Lease, unless
this Lease otherwise is terminated pursuant to its terms. Landlord shall obtain
from each holder of a Mortgage and from each lessor of an Underlying Lease a
non-disturbance agreement in such form that protects Tenant's rights of
non-disturbance as set forth in the preceding sentence.
20. HOLDING OVER
If Tenant continues to occupy the Demised Premises after the expiration
of the term of this Lease and Landlord accepts rent thereafter, a monthly
tenancy terminable by either party on one month's notice shall be created, which
shall be upon the same rental, terms and conditions as those herein specified,
except that rent payable hereunder shall be increased to 125% of the rent
payable hereunder for the last full calendar month of the Lease term or
applicable renewal, and Tenant shall not have the option to extend the term
hereof. Nothing contained herein shall be deemed the consent of Landlord to any
such holding over.
21. ESTOPPEL CERTIFICATES
Each party hereto shall, at any time during the term of this Lease,
within thirty (30) days after written notice from the other, execute and deliver
to the other a statement in writing certifying that this Lease is unmodified and
in full force and effect, or if modified, stating the nature of such
modification. Such party's statement shall include other details reasonably
requested by the other party hereto such as the date to which rent and other
charges are paid, such party's knowledge concerning any uncured defaults with
respect to the other party's hereto obligations under this Lease and the nature
of such defaults if they are claimed. Any such statement may be relied upon
conclusively by any prospective purchaser or encumbrancer of the Property.
22. SUCCESSORS IN INTEREST
Each and all of the covenants, agreements, obligations, conditions and
provisions of this Lease shall inure to the benefit of and shall bind the
successors and assigns of the respective parties hereto. If Landlord sells the
Property (or conveys its interest in the Property) (a) Landlord shall thereupon
15
be released and discharged from any and all further obligations at or after the
sale as landlord under this Lease, except for such obligations, if any, as
pertain to any portion of the Property as to which Landlord does not convey its
interest concurrently with its conveyance of the Property or which relate to
events or conditions occurring prior to the date of such transfer; and (b) the
transferee shall assume all of the obligations of Landlord hereunder from and
after the date of such transfer.
23. RECORDING INDENTURE
It is agreed that no indenture of this Lease shall be recorded. Tenant
may record a memorandum of this Lease.
24. REMEDIES ARE CUMULATIVE
Remedies conferred by this Lease upon the respective parties are not
intended to be exclusive, but are cumulative and in addition to remedies
otherwise afforded by the law.
25. QUIET POSSESSION
Landlord covenants that Tenant shall have quiet and peaceful possession
thereof as against any adverse claim of any party so long as Tenant is not in
default beyond any applicable cure period under the terms, covenants and
conditions hereof.
26. ALTERATIONS AND ADDITIONS
26.1 Alteration. Tenant shall not make any structural alterations,
improvements or additions in, on or about the Demised Premises without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed. Landlord may require Tenant to provide Landlord, at
Tenant's own expense, a lien and completion bond in an amount equal to the
estimated cost of such improvements, to insure Landlord against any liability
for mechanics' and materialmen's liens and to insure completion of the work.
Should Tenant make any alterations, improvements or additions without the prior
written approval of Landlord, Landlord may require that Tenant remove any or all
of the same.
26.2 Plans. Any alterations, improvements or additions in, on or about
the Demised Premises that Tenant shall desire to make shall be presented to
Landlord in written form, together with detailed plans and specifications of
Tenant's proposed work. If Landlord shall give its written consent, which
consent shall not be unreasonably withheld or delayed, the consent shall be
deemed conditioned upon Tenant acquiring all permits from all governmental
agencies having jurisdiction over the Demised Premises or Tenant's use and
occupancy thereof, the furnishing of a copy thereof to Landlord prior to the
commencement of the work and the compliance by Tenant of all conditions of said
permit.
26.3 Lien. Tenant shall pay when due all claims for labor or materials
furnished or alleged to have been furnished to or for Tenant at or for use in
the Demised Premises, which claims are or may be secured by any mechanics' or
materialmen's lien against the Demised Premises or any interest therein. Tenant
16
shall give Landlord not less than twenty (20) days' notice prior to the
commencement of any work in the premises, and Landlord shall have the right to
post notices of nonresponsibility in or on the Demised Premises as provided by
law.
26.4 End of Term. Except as otherwise set forth in Section 4 hereof,
all alterations, improvements and additions which may be made on the Demised
Premises, shall become the property of Landlord and remain upon and be
surrendered with the Demised Premises at the expiration of the lease term.
26.5 Government Order. Any alterations, improvements or additions in,
on or about the Demised Premises (collectively "Alterations"), that may be
necessary or required by reason of any law, rule, regulation or order, now
existing, promulgated by a governmental authority having jurisdiction over the
Demised Premises or Tenant's use and occupancy thereof, including but not
limited to those required pursuant to the Americans with Disability Act, shall
be at the sole cost and expense of Tenant, and Tenant shall make the same in an
expeditious fashion. In addition, Tenant, at Tenant's sole cost and expense,
shall make any Alterations which are legally required pursuant to any law, rule,
regulation or order, or amendment to the same, promulgated by a governmental
authority, after the date hereof, having jurisdiction over the Demised Premises
or Tenant's use or occupancy thereof, but only to the extent that such
Alterations are required by such law, rule, regulation or order based upon
Tenant's use of the Demised Premises or as a result of structural alterations,
improvements or additions undertaken by Tenant pursuant to Section 26.1 above.
27. PARTIAL INVALIDITY
If any term, covenant or condition of this Lease or the application
thereof to any party or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Lease or the application of such term,
covenant or condition to parties or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and every
other term, covenant or condition of this Lease shall be valid and be enforced
to the fullest extent permitted by law.
28. ENVIRONMENTAL MATTERS
Tenant hereby warrants and covenants that at no time shall it allow any
Hazardous Material, as hereafter defined, to be used or stored upon the Demised
Premises.
As used herein, "Hazardous Material" means and includes, without
limitation: (i) "hazardous substances", or "toxic substances" as those terms are
defined by the Comprehensive Environmental Response, Compensation, and Liability
Act ("CERCLA"), 42 U.S.C. ss. 96001 et seq.; the Arizona Environmental Quality
Act, A.R.S. ▇▇.▇▇. 49-101 et seq.; or the Hazardous Materials Transportation
Act, 49 U.S.C. ss. 1802, all as amended and hereafter amended; (ii) "hazardous
wastes", as that term is defined by the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. ss. 6902 et seq., as amended and hereafter amended; (iii)
any pollutant or contaminant or hazardous, dangerous or toxic chemicals,
materials, or substances within the meaning of any other applicable federal,
17
state or local law, regulation, ordinance, or requirement (including consent
decrees and administrative orders) relating to or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous waste
substance or material, all as amended or hereafter amended; (iv) petroleum
products, including, but not limited to, crude oil or any fraction thereof which
is liquid at standard conditions of temperature and pressure (60 degrees
Fahrenheit and 14.7 pounds per square inch absolute) and substances containing
hydrocarbons (other than petroleum products which are normally contained in
motor vehicles, to the extent that said petroleum products are not released from
said motor vehicles); (v) any radioactive material, including any source,
special nuclear or by-product material as defined as 42 U.S.C. ss. 2001 et seq.,
as amended or hereafter amended (collectively, the "Statutes"); (vi) asbestos in
any form or condition; and (vii) polychlorinated biphenyls ("PCB") or substances
or compounds containing PCBs.
Tenant hereby agrees, unconditionally, absolutely and irrevocably to
indemnify, defend and hold Landlord, its successors and assigns, partners and
employees from and against any loss, liability, cost, injury, expense or damage
of any and every kind whatsoever (including but not limited to court costs and
attorneys' fees and expenses) which at any time or from time to time, during the
Term of this Lease or Tenant's possession of the Demised Premises, may be
suffered or incurred in connection with any inquiry, charge, claim, cause of
action, demand or lien made or arising directly or indirectly or in connection
with, with respect to, or as a direct or indirect result of the presence on or
under, or the escape, seepage, leakage, spillage, discharge, invasion or release
from or onto the Demised Premises of any Hazardous Material, unless such
condition is caused by Landlord, its partners, agents, servants or employees.
The provisions of this Section 28 shall survive the termination of this Lease.
The indemnification set forth herein shall be subject to the notice and right to
defend provisions as set forth in Section 8.3 above.
29. VENUE
Tenant agrees that all actions or proceedings arising directly,
indirectly or otherwise in connection with, out of, related to or from this
Lease shall be litigated, at Landlord's sole discretion and election, only in
courts having a situs within the County of Maricopa, State of Arizona. Tenant
hereby consents and submits to the jurisdiction of any local, state or federal
court located within said county and state. Tenant hereby irrevocably appoints
and designates ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, whose address is ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, as its duly authorized agent for service of legal
process and agrees that service of such process upon such party shall constitute
personal service of process upon Tenant. In the event service is undeliverable
because such agent moves, Tenant shall, within ten (10) days after Landlord's
request, appoint a substitute agent (in Phoenix, Arizona) on its behalf and
within such period notify Landlord of such appointment. If such substitute agent
is not timely appointed, Landlord shall, in its sole discretion, have the right
to designate a substitute agent upon five (5) days notice to Tenant. Tenant
hereby waives any right it may have to transfer or change the venue of any
litigation brought against it by Landlord on this Lease in accordance with this
paragraph.
30. GENERAL CONDITIONS
Time is of the essence of this Lease. All amounts payable by Tenant
hereunder shall be deemed additional rental for the purposes of this Lease. This
Lease has been executed and delivered in the State of Arizona, and shall be
18
governed and construed in accordance with Arizona law without regard to
conflicts of law principles. No waiver of any breach of the covenants,
agreements, obligations and conditions of this Lease to be kept or performed by
either party hereto shall be effective unless in writing and signed by the
waiving party, and no such waiver by either party shall be construed to be a
waiver of any succeeding breach of the same or any other covenant, agreement,
obligation, condition or provision hereof. The use herein of any gender or
number shall not be deemed to make inapplicable the provision should the gender
or number be inappropriate to the party referenced. Landlord and Tenant have
negotiated this Lease, have had the opportunity to be advised respecting the
provisions contained herein and have had the right to approve each and every
provision hereof; therefore, this Lease shall not be construed against either
Landlord or Tenant as a result of the preparation of this Lease by or on behalf
of either party. Landlord shall in no event be construed, held or considered in
any way or for any purpose to be a partner, associate or joint venturer of
Tenant or of any party associated with Tenant in the conduct of its business by
virtue of the terms and provisions of this Lease or Landlord's execution hereof.
This Lease is the entire agreement between the parties, and it supersedes and
replaces all prior agreements and understandings, whether written or oral.
IN WITNESS WHEREOF, upon the day and year first hereinabove written,
the respective parties hereto have executed this Lease Agreement, consisting of:
Sections 1 through 30 and Exhibits A, B and C, personally or by officers or
agents thereunto duly authorized.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LIMITED
PARTNERSHIP, an Arizona limited
partnership
Fed. Taxpayer I.D. # ▇▇-▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its General Partner
[Landlord]
SBL ACQUISITIONS CORP., a Delaware
corporation
Fed. Taxpayer I.D. # ▇▇-▇▇▇▇▇▇▇
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Its President
[Tenant]
19
State of Arizona
County of Maricopa
The foregoing instrument was acknowledged before me this 14th day of
November, 1994, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as general partner of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Limited Partnership, an Arizona limited partnership, on behalf of the
partnership.
(Seal and Expiration Date)
/s/ Illegible
Notary Public
State of Arizona
County of Maricopa
The foregoing instrument was acknowledged before me this 8th day of
November, 1994, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., the President, of SBL Acquisitions
Corp., a Delaware corporation, on behalf of the corporation.
(Seal and Expiration Date)
/s/ Illegible
Notary Public
20
EXHIBIT A
The North half of Lot 6, according to plat of the East half of the
Northeast quarter of Section 11, Township 1 North, Range 3 East of the Gila and
Salt River Base and Meridian, according to Book 1 of Maps, page 45, records of
Maricopa County, Arizona.
EXHIBIT B
PARCEL I
The West one-fourth of the South 264 feet of Lot 6 of the Subdivision
of the East half of the Northeast quarter of Section 11, Township 1
North, Range 3 East of the Gila and Salt River Base and Meridian,
according to Book 1 of Maps, page 45, records of Maricopa County
Recorder, Arizona;
EXCEPT that portion, if any, lying within the North 66 feet of the
South half of said Lot 6.
PARCEL II
The South 132 feet of the East half of the East half of the West half
of Lot 6, according to the plat of the East half of the Northeast
quarter of Section 11, Township 1 North, Range 3 East of the Gila and
Salt River Base and Meridian, in Book 1 of Maps, page 45, records of
Maricopa County Recorder, Arizona.
PARCEL III
That portion of Lot 6, as shown on plat of the East half of the
Northeast quarter of Section 11, Township 1 North, Range 3 East of the
Gila and Salt River Base and Meridian, according to the plat of record
in the office of the Maricopa County Recorder in Book 1 of Maps, page
45, described as follows:
BEGINNING at the Northwest corner of the South half of said
Lot 6;
thence Easterly along the North line of the South half of
said Lot 6 123.86 feet;
thence Southerly on a straight line to a point on a line 66
feet Southerly of and parallel with said North line of the
South half of said Lot 6, said point being 123.90 feet
Easterly along said parallel line from the West boundary
line of Lot 6;
thence Westerly along said parallel line 123.90 feet to its
intersection with the West boundary line of Lot 6;
thence Northerly along said West boundary line of Lot 6,
a distance of 66 feet to the point of beginning.
PARCEL IV
The West half of the East half of the West half of the South half of
Lot 6, as shown on plat of the East half of the Northeast quarter of
Section 11, Township 1 North, Range 3 East of the Gila and Salt River
Base and Meridian, according to the plat of record in the office of the
Maricopa County Recorder in Book 1 of Maps, page 45;
Except the North 66 feet thereof.
Together with all easements, improvements and appurtenances
appertaining thereto.
2
EXHIBIT C
LEASE GUARANTY
1. FOR VALUE RECEIVED, and in consideration for, and as an inducement
to Landlord, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LIMITED PARTNERSHIP, an Arizona limited
partnership, to enter into that certain Lease Agreement dated November 1, 1994,
by and between Landlord and SBL ACQUISITIONS CORP., a Delaware corporation,
Tenant (the "Lease") incorporated herein by this reference, the undersigned,
SIGNATURE BRANDS LIMITED, a Canadian corporation (hereinafter "Guarantor"),
hereby absolutely and unconditionally guarantees the full performance and
observance of all the covenants, duties and obligations (including, without
limitation, the obligation to pay all rent and other sums and to perform under
all indemnitees, environmental or otherwise) therein provided to be performed
and observed by Tenant, Tenant's successors and assigns (the phrase "successors
and assigns" not altering any of the provisions of said Lease Contract relating
to assignment or subletting); and Guarantor hereby makes itself fully liable for
such performance.
2. Guarantor expressly agrees that the validity of this Lease Guaranty
and its obligations hereunder shall in no wise be terminated, affected or
impaired by reason of the assertion by Landlord against Tenant of any of the
rights or remedies reserved to Landlord by said Lease. Guarantor further
covenants and agrees that this Lease Guaranty and the full liability of
Guarantor hereunder shall remain and continue in full force and effect
notwithstanding the occurrence of any one or more of the following types of
transactions (whether or not Guarantor shall have received any notice of or
consented to any such transaction): (i) any renewal, extension, modification or
amendment of said Lease; (ii) any assignment or transfer by Landlord; (iii) any
assignment or transfer or subletting by Tenant; (iv) any dissolution of Tenant;
or (v) the fact that Tenant may be a party to any merger, consolidation or
reorganization; provided however, if Tenant is a disappearing party in any such
merger, consolidation or reorganization, then Guarantor shall thereupon
automatically become primarily liable for the performance of all the covenants,
duties and obligations (including, without limitation, the obligation to pay all
rent and other sums and to perform under all indemnitees, environmental or
otherwise) of Tenant under said Lease Agreement.
3. Failure of Landlord to insist upon strict performance or observance
of any of the terms, provisions or covenants of said Lease or to exercise of any
right therein contained shall not be construed as a waiver or relinquishment for
the future of any such term, provision, covenant or right, but the same shall
continue and remain in full force and effect. Receipt by Landlord of rent (or
any other monetary sum or acceptance of performance of any obligation of Tenant
under said Lease) with knowledge of the breach of any provision of said Lease
shall not be deemed a waiver of such breach. Waiver by Landlord of any right of
Landlord against Tenant under said Lease shall not constitute a waiver as
against Guarantor or in any other way inure to the benefit of Guarantor (unless
Landlord agrees in writing that the liability of Guarantor under this Lease
Guaranty is thereby affected).
4. Guarantor further agrees to indemnify and hold harmless Landlord
from all loss, damage, cost and expense (including, without limitation, costs of
court and reasonable attorneys' fees incurred by Landlord) in the event of any
default by Tenant under such Lease.
5. Guarantor further agrees that in any right of action which shall
accrue to Landlord under said Lease, Landlord may, at its option, proceed
against Tenant alone (without having made any prior demand upon Guarantor or
having commenced any action against Guarantor or having obtained or having
attempted to satisfy any judgment against Guarantor) or may proceed against
Guarantor and Tenant, jointly or severally, or may proceed against Guarantor
alone (without having made any prior demand upon Tenant or having commenced any
action against Tenant or having obtained or having attempted to satisfy any
judgment against Tenant). With the exception only of the defense of prior
payment or prior performance by Tenant (of the obligation which Guarantor is
called upon to pay or perform) or the defense that Landlord's claim against
Guarantor hereunder is barred by the applicable statute of limitations, all
defenses of the law of guaranty, indemnification and suretyship, including
without limitation, substantive defenses and procedural defenses, are hereby
waived and released by Guarantor. Except as provided in the preceding sentence,
under no circumstances shall the liability of Guarantor under this Lease
Guaranty be terminated either with respect to any period of time when the
liability of Tenant under said Lease continues or with respect to any
circumstances as to which the liability of Tenant has not been fully discharged
by payment or performance.
6. All of the covenants, duties and obligations of Guarantor under this
Lease Guaranty shall be performed in the State of Arizona; and all matters
relating to this Lease Guaranty and the covenants, duties and obligations of
Guarantor under this Lease Guaranty shall be governed by the laws of the State
of Arizona, without regard to conflicts of law principles.
7. Guarantor agrees that all actions or proceedings arising directly,
indirectly or otherwise in connection with, out of, related to or from this
Lease Guaranty shall be litigated, at Landlord's sole discretion and election,
only in courts having a situs within the County of Maricopa, State of Arizona.
Guarantor hereby consents and submits to the jurisdiction of any local, state or
federal court located within said county and state. Guarantor hereby irrevocably
appoints and designates ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, whose address is c/o Jennings, ▇▇▇▇▇▇▇
& Salmon, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, as its duly authorized
agent for service of legal process and agrees that service of such process upon
such party shall constitute personal service of process upon Guarantor. In the
event service is undeliverable because such agent moves, Guarantor shall, within
ten (10) days after Landlord's request, appoint a substitute agent (in Phoenix,
Arizona) on its behalf and within such period notify Landlord of such
appointment. if such substitute agent is not timely appointed, Landlord shall,
in its sole discretion, have the right to designate a substitute agent upon five
(5) days notice to Guarantor. Guarantor hereby waives any right it may have to
transfer or change the venue of any litigation brought against it by Landlord on
this Lease Guaranty in accordance with this paragraph.
8. Guarantor specifically waives any notice of acceptance of this Lease
Guaranty by Landlord, and furthermore, Guarantor hereby waives the benefits of
A.R.S., Section 12-1641 et seq., as may be amended.
2
9. If any obligation of Tenant under said Lease is secured, in whole or
in part, by collateral of any type Landlord may, from time to time, at its
discretion and with or without valuable consideration, allow substitution or
withdrawal of all or any part of such collateral or subordinate or waive any of
its lien rights with respect to all or any part of such collateral or release
all or any part of such collateral, without notice to or consent of Guarantor
and without in any wise impairing, diminishing or releasing the liability of
Guarantor under this Lease Guaranty. Under no circumstances shall Landlord be
required to first resort to any collateral for any obligation of Tenant as any
nature of prerequisite or precondition to invoking or enforcing the liability of
Guarantor under this Lease Guaranty.
10. Guarantor acknowledges and represents to Landlord that Tenant
executed said Lease and Guarantor executed this Lease Guaranty prior to the time
that Landlord executed said Lease; and Guarantor acknowledges and agrees that
the execution and delivery of this Lease Guaranty by Guarantor to Landlord has
served as a material inducement to Landlord to itself execute and deliver said
Lease; and Guarantor further acknowledges and agrees that but for the execution
and delivery of this Lease Guaranty by Guarantor, Landlord would not have
executed and delivered said Lease.
11. Guarantor acknowledges and agrees that this Lease Guaranty may
reasonably be expected to benefit, directly or indirectly, Guarantor. Guarantor
warrants and represents that the execution and delivery of this Lease Guaranty
by the undersigned officer acting for Guarantor has been duly authorized by
Guarantor and that this Lease Guaranty may reasonably be expected to benefit,
directly or indirectly, Guarantor. Guarantor further acknowledges and agrees
that the making of this Lease Guaranty did not result from any fraud on the
Guarantor. Guarantor further warrants and represents (and acknowledges that
Landlord has relied upon such warranty and representation in entering into said
Lease) that the execution and delivery of this Lease Guaranty is not in
contravention of Guarantor's Articles of Incorporation or Charter or By-Laws or
in contravention of any contractual or other legal limitation (statutory or
otherwise) binding on Guarantor; and that execution and delivery of this Lease
Guaranty has been properly authorized.
12. Guarantor agrees that in the event that Tenant shall become
insolvent or shall be adjudicated a bankrupt, or shall file a petition for
reorganization, arrangement or other relief under any present or future
provisions of United States federal or state law or Canadian Federal or
provincial law applicable to insolvency, or if a petition for
bankruptcy/reorganization be filed by creditors of said Tenant, or if Tenant
shall seek a judicial readjustment of the rights of its creditors under any
present or future United States Federal or state law or Canadian Federal or
provincial law or if a receiver of all or part of its property and assets is
appointed by any United States state or Federal court or Canadian Federal or
Provincial court, no such proceeding or action taken therein shall modify,
diminish or in any way affect the liability of Guarantor under this Lease
Guaranty and the liability of Guarantor with respect to such Lease shall be of
the same scope as if Guarantor had itself executed said Lease as the named
tenant thereunder and no "rejection" and/or "termination" of such Lease in any
of the proceedings referred to in this paragraph shall be effective to release
and/or terminate the continuing liability of Guarantor to Landlord under this
Lease Guaranty with respect to such Lease for the remainder of the lease term
stated therein unaffected by any such "rejection" and/or "termination" in said
proceedings.
3
13. In the event of the dissolution of Guarantor while this Lease
Guaranty is in force, and without regard to whether Tenant shall be in default
under said Lease, no distribution or disposition of the assets of Guarantor
shall be made without first making provision acceptable to Landlord for the
payment or satisfaction of Guarantor's obligations (and contingent obligations)
hereunder.
14. All rights of Guarantor against Tenant arising by way of
subrogation on account of Guarantor's having performed some covenant, duty or
obligation of Tenant under said Lease shall be subject and subordinate to all of
the rights of Landlord against Tenant with respect to such Lease; and Guarantor
shall not exercise any such right of Guarantor against Tenant until all of the
covenants, duties and obligations of Tenant under such Lease shall have been
fully performed.
15. If enforcement of the rights of Landlord under this Lease Guaranty
is placed in the hands of an attorney on account of any default of Guarantor
under this Lease Guaranty, Landlord shall, in addition to the other rights of
Landlord hereunder, be permitted to recover Landlord's attorney's fees from
Guarantor.
16. The stated rights of Landlord under this Lease Guaranty shall be
understood as not excluding any other legal or equitable rights of Landlord
against Guarantor not expressly set forth herein, but shall be understood as
being cumulative to all such other legal and equitable rights of Landlord not
expressly stated herein.
17. Should any portion of this Lease Guaranty ever be held legally
invalid or unenforceable, the balance of this Lease Guaranty shall not thereby
be affected, but shall remain in full force and effect in accordance with its
terms and provisions.
18. Notwithstanding anything to the contrary contained hereinabove, the
obligations of Guarantor as stated in this Lease Guaranty shall be limited to
those obligations of Tenant which accrue during the term provided, however,
Guarantor's obligation applicable to indemnitees, environmental and otherwise,
as stated in this Lease Guaranty shall survive the termination of the Lease.
19. All terms and provisions hereof shall inure to the benefit of the
assigns and successors of Landlord and shall be binding upon the successors and
assigns of Guarantor.
4
LEASE AMENDMENT AGREEMENT
THIS LEASE AMENDMENT AGREEMENT (the "Agreement") is entered into
effective October 13, 1999 by and between ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LIMITED PARTNERSHIP,
an Arizona limited partnership ("Landlord"), and Sparta Foods, Inc., a Minnesota
corporation ("Tenant").
WHEREAS, Landlord is a party to a certain Lease Agreement dated
November 1, 1994 with respect to certain facilities located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the
"Lease");
WHEREAS, all right, title and interest in the Lease was assigned to
Tenant on even date herewith which assignment was consented to by Landlord;
WHEREAS, Landlord and Tenant desire to amend the Lease pursuant to the
terms of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledge, the parties hereby agree as follows:
1. Extension of Lease Term. Landlord and Tenant agree that Section 2.1
of the Lease is hereby amended in its entirety to read as follows: "The original
term of this Lease shall commence on November 1, 1994, and shall end on October
31, 2004."
2. Other Lease Provisions. All other provisions of the Lease not
specifically amended by this Agreement shall remain in full force and effect.
3. Entire Agreement. The Lease, as amended by this Agreement,
constitutes the entire agreement of the parties as to the subject matter hereof.
This Agreement shall not be modified, amended, rescinded, canceled or waived, in
whole or in part, except by written amendment signed by an officer of each
party.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement as
of the date first appearing above.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LIMITED PARTNERSHIP
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, General Partner
SPARTA FOODS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Executive Officer