EXHIBIT 10.H1
SUBLEASE AGREEMENT
SILVERTON
THIS SUBLEASE AGREEMENT entered into this ____ day of
_____________, 1994, by and between UNITED GROCERS, INC., an Oregon
corporation, hereinafter designated as Sublessor, and Xxxxx X. and Xxxxxxx X.
Xxxx and Xxxxxxx X. Xxxxxxx and Xxxxxx Xxxxxxx Xxxxxx and Xxxxxxx Holdings,
Inc., an Oregon Corporation, hereinafter jointly and severally designated as
Sublessee;
W I T N E S S E T H
WHEREAS, the Sublessor has entered into a Lease dated
_____________, 19____, with Pay Less Drug Stores Northwest, Inc., a Maryland
corporation, for a supermarket located in Silverton, Oregon (more particularly
described in exhibit "A" attached to said lease), commencing on the date set
forth in the attached Exhibit "A," a copy of which is hereby incorporated by
reference, as fully as if its terms and conditions were herein set forth.
WHEREAS, Sublessees desire to sublet said premises for a period of
20 years, commencing on date set forth in paragraph 3 of Exhibit "A," and
Sublessor is willing to so sublet in accordance with the terms and conditions
hereinafter set forth; now, therefore,
IT IS HEREBY AGREED as follows:
(1) Sublessor hereby sublets unto Sublessees those premises
described in said Exhibit "A," for the term of 20 years.
1.1 The Sublessees, so long as they are not in default
hereunder and further provided that no event or condition exists that, with
the passage of time or giving of notice would constitute default, shall be
granted the right to exercise the renewal options contained in Exhibit "A," as
set forth in paragraph 5 of said Exhibit.
(2) Sublessees covenant and agree to pay for the whole of said
term the rental hereinafter provided, together with all affirmative covenants
including, without limitation, those pertaining to minimum rent, Common Area
Charges (CAM), percentage of gross sales, taxes, assessments, insurance and
all of the covenants and obligations to be performed by Lessee, as set forth
in said Exhibit "A," and to make such payments and provide such performance
when due by the terms of the lease and amendments thereto.
(3) Sublessees shall, upon execution hereof, pay any and all
rental or security deposits and all other sums except minimum rent, as
required pursuant to the terms and conditions of said Exhibits "A", and shall
pay rent to Sublessor, in accordance with the "Sublease Rent Schedule"
attached hereto. All such rental payments to Sublessor shall be made without
offset, adjustment or deduction of any kind.
(4) Sublessees shall be bound by the same responsibilities,
rights, privileges and duties as Sublessor, as enumerated in Exhibit "A" and
covenants and agrees to fully indemnify and hold Sublessor harmless from any
and all responsibility and/or liability which Sublessor may incur by virtue of
said Exhibit "A," and/or Sublessees' occupancy of the premises. Furthermore,
Sublessees shall be bound by any subsequent amendment, revision, supplement or
addition to the prime lease between Sublessor and the prime Lessor, and to
keep the Sublessor indemnified against all actions, claims and demands
whatsoever in respect to said exhibit "A," and Sublessees use of the demised
premises.
4.1 Assignment and Subletting. Sublessees acknowledge that
provisions for extension options and assignment and subletting in the Lease
are applicable to the prime Lessor and Sublessor only. Sublessees will not
assign this Sublease or sublet the premises without the prior written consent
of Sublessor which may be granted or withheld in its absolute discretion. A
direct or indirect transfer of ownership and control of a majority of the
voting stock of a corporate Sublessees, by whatever demands, shall be deemed
an assignment of this Sublease for the purposes of this paragraph.
4.2 Covenants, Representations and Warranties.
(a) Membership in United Grocers, Inc. Upon execution and
during the term hereof, Sublessees agree to maintain or cause to be maintained
the membership of the store in good standing in United Grocers, in accordance
with the Bylaws of United Grocers, as long as this Sublease remains in effect.
(b) Purchases from Sublessor. Sublessees agree that
throughout the term of the Sublease and any extensions or renewals thereof,
except as hereinafter provided, Sublessees will purchase from Sublessor not
less than fifty-eight percent (58%) of its retail sales of all goods and
merchandise required by it for resale on the premises to the extent that
Sublessor shall now or hereafter be able to supply such goods and merchandise
to the Sublessees, and Sublessor will supply all of Sublessees' requirements
at such prices and on such terms as are reasonably comparable to those offered
by Sublessor to other purchasers from Sublessor carrying on businesses similar
to that of the Sublessees in the Silverton or Salem areas of the state of
Oregon. If, at any time, the Sublessees contend that Sublessor is not able to
supply particular goods or merchandise customarily stocked by retail
supermarkets in the Salem - Silverton area, or that terms offered by Sublessor
are not reasonably comparable to those offered by Sublessor to other
purchasers described above, the Sublessees shall so advise Sublessor in
writing, specifying such contention with particularity. If, within 30 days
after receipt of such notice, Sublessor does not offer to supply goods or
merchandise so specified or does not advise Sublessees that the terms and
conditions offered are reasonably comparable to those offered to such other
purchasers, Sublessees shall be free to secure such specified goods and
merchandise from any source which it desires. If Sublessor demonstrates that
it is offering reasonably comparable terms, and Sublessees nonetheless
purchase from another source, such purchase or purchases shall not be an
exception from the 58% requirement specified above. If the above percentage
requirements are not complied with, it shall constitute a default hereunder.
In the event of a breach of this purchase covenant, Sublessor may terminate
this sublease and, in addition to the remedies hereinafter offered Sublessor,
Sublessee agrees to pay Sublessor, as liquidated damages, and not as a penalty
or forfeiture, a sum computed as follows:
1. The average weekly purchases from the date of the
agreement to the date of the breach shall be determined;
2. the average weekly purchases so determined shall
then be multiplied by the number of weeks from the date of the
breach to the end of the term of the purchase agreement; and
3. The computed sum shall be multiplied by two and
one-quarter percent (2-1/4%) to determine the liquidated damages
due and owing Sublessor by reason of Sublessee's default. Said sum
shall become immediately due and owing within 15 days from date of
written notice of the liquidated damages.
(c) Sublessees covenant that as long as this Sublease
remains in effect, and for an additional period of six (6) months thereafter,
Sublessees shall not directly or indirectly sell or permit the sale of the
store and the owners of Sublessees shall not directly or indirectly sell
controlling interests in Sublessees (whether in one or a series of related
transactions) without first offering to sell said store or controlling
interest, as the case may be, to Sublessor upon the same terms and conditions
as the Sublessees or their owners, as the case may be, are prepared to accept
from a third party. Prior to such sale by the Sublessees or their owners, the
Sublessees shall first notify Sublessor of the desire to sell the store or
controlling interest in the Sublessees and of all the terms and conditions of
such sale and shall provide to Sublessor all documents, instruments,
agreements, offers, acceptances, appraisals, inventories, equipment lists,
leases, financial statements and such other material and information as
Sublessor may reasonably request to aid in its decision to exercise or decline
its right to purchase as hereinafter provided. Within 30 days following
receipt of such notice of desire to sell and all materials and information
reasonably requested by Sublessor, Sublessor shall advise Sublessees whether
Sublessor elects to purchase or declines to purchase the store or such
controlling interest upon the offered terms and conditions. If Sublessor
shall elect to purchase, Sublessor shall purchase and the Sublessees or their
owners shall sell, such retain grocery business or such controlling interest,
as the case may be, all on the terms set forth in the offer. If Sublessor
declines the purchase, the Sublessees or their owners shall be free to sell
the store or controlling interest, as the case may be, upon (and only upon)
the terms and conditions offered as aforesaid to Sublessor; provided that such
sale is consummated within 120 days following the date Sublessor declined the
purchase, and if such sale is not consummated in accordance with the offered
terms and conditions within said 120-day period, the provisions of this
paragraph shall apply again and no subsequent sale of any portion of the
offered store or controlling interest may be effected without again offering
the same to Sublessor as provided herein. Sublessor may waive its rights
under this section provided such waiver is in writing. The foregoing
provisions shall not apply to transfers of assets or interests by sale, gift
or as a result of death to the lawful issue of Sublessees, or transfers of
assets to a corporation or partnership or transfers of a controlling interest
to a trust as long as such corporation, partnership or trust is controlled by
the transferor; provided such transferee agrees that it holds such assets or
controlling interest subject to the restrictions contained in this paragraph.
(d) Sublessees represent and warrant that there are no
brokers, finders or other persons entitled to any fee, commission or other
compensation in connection with this Sublease, and agree to hold Sublessor
harmless from any claims for such fees, commissions and/or compensation.
(e) Sublessees hereby represent and warrant to Sublessor
that the financial statements, appraisals and other documents submitted to
Sublessor in connection herewith or pursuant hereto are and shall be true,
correct, complete and accurate in every respect and said financial statements
fairly and accurately present the assets, liabilities, financial condition and
results of operations reflected herein.
(5) Security Agreement.
5.1 Grant, Collateral and Obligations. Sublessees and
Sublessor agree that this Sublease shall constitute a security agreement
within the meaning of the Oregon Uniform Commercial Code (hereinafter referred
to as the "Code) with respect to:
(a) required cash deposits (as defined in the Bylaws
of Sublessor) presently or hereafter held by or deposited with Sublessor by
Sublessees;
(b) any and all patronage rebates and rebate notes
representing patronage rebates (as defined in the Bylaws of Sublessor) earned
or hereafter earned by reason of patronage of Sublessor by Sublessees;
(c) subject to liens securing purchase money
financing therefor as described in Exhibit "X," all trade, store and other
fixtures and all leasehold improvements and all equipment and other personal
property of Sublessees used or useful in the operation of the store in or on
the premises, whether now owned or hereafter acquired including, without
limitation, the property described in Exhibit "Y", attached hereto, if any;
and
(d) all replacements of substitutions for, and
additions to the foregoing, and the proceeds thereof (all of said personal
property and the replacements, substitutions and additions thereto and the
proceeds thereof being sometimes hereinafter collectively referred to as the
"Collateral"), and that a security interest in and to the Collateral is hereby
granted to the Sublessor, and the Collateral and all of the Sublessees' right,
title and interest therein are hereby assigned to the Sublessor, all to secure
all presently existing or hereafter incurred direct, indirect, absolute or
contingent indebtedness, liabilities and other obligations of Sublessees to
Sublessor (referred to as "the Obligations" herein) including, but not limited
to, the payment of all rent and other sums and the performance of all other
obligations of Sublessees under this Sublease, all renewals and extensions
thereof, the price of goods, services and merchandise purchased by Sublessees
from Sublessor from time to time, and all costs of collection, legal expenses
and attorneys' fees paid or incurred by Sublessor in enforcing any rights in
respect to the Obligations or in connection with assembling, collecting,
selling or otherwise dealing with or realizing upon the Collateral.
5.2 Security Agreement Warranties. In addition to and
without limiting the force or effect of any other covenants, representations
and warranties of Sublessees contained in this Sublease, Sublessees hereby
covenant, represent and warrant to and with Sublessor as follows:
(a) Sublessees are the owners of the Collateral free
and clear of liens, security interests and encumbrances of every kind and
description, except liens, security interests an encumbrances securing
indebtedness to Sublessor and liens described on Exhibit "X," hereto to which
Secured Party has consented ("Permitted Liens").
(b) Sublessees will not sell, dispose of, encumber or
permit any other security interest, lien or encumbrance to attach to the
Collateral except the security interest of Sublessor and the Permitted Liens.
(c) All tangible Collateral shall be kept as
Sublessees' place(s) of business located on the premises, and Sublessees shall
not permit the same to be removed therefrom without the prior written consent
of Sublessor.
(d) Sublessees shall keep the tangible Collateral at
all times insured against risks of loss or damage by fire (including so-called
extended coverage), theft and such other casualties as Sublessor may
reasonably require, all in such amounts, under such forms of policies, upon
such terms, for such periods and written by such companies or underwriters as
Sublessor may approve. All such policies of insurance shall name Sublessor as
loss payee thereon as its interest may appear and shall provide for at least
30 days' prior written notice of modification or cancellation to Sublessor.
Sublessees shall furnish Sublessor with certificates of such insurance or
other evidence satisfactory to Sublessor as to compliance with the provisions
of this paragraph. Sublessor may act as attorney-in-fact for Sublessees in
making, adjusting and settling claims under and canceling such insurance and
endorsing Sublessees' name on any drafts drawn by insurers of the Collateral.
(e) Sublessees will keep the Collateral in good order
and repair, shall not waste or destroy the Collateral or any part thereof, and
shall not use the Collateral in violation of any statute, ordinance or policy
of insurance thereon. Sublessor may examine and inspect the Collateral at any
reasonable time or times, wherever located.
(f) Sublessees will pay promptly when due all taxes
and assessments upon the Collateral or for its use or operation or upon this
Sublease or upon any instruments evidencing the Obligations.
(g) Sublessees will pay promptly when due all
indebtedness secured by any lien or other security interest in the Collateral,
whether superior or junior to the security interest established hereby.
5.3 Additional Remedies. Upon any default hereunder and at
any time thereafter (such default not having previously been cured), Sublessor
at its option may declare all Obligations immediately due and payable and
shall have the remedies of a secured party under the Uniform Commercial Code
of Oregon (the "Code"), including without limitation the right to take
immediate and exclusive possession of the Collateral.
5.4 Financing Statements. Sublessees will at their own
cost and expense, upon demand, furnish to Sublessor such financing statements
and other documents in form satisfactory to Sublessor and will do all such
acts and things as Sublessor may at any time or from time to time request or
as may be necessary or appropriate to establish and maintain a perfected
security interest in the Collateral.
5.5 Attorneys' Fees. In the event of the institution of
any suit or action to terminate this Sublease, or to enforce the terms or
provisions hereto, Sublessees shall and do hereby agree to pay, in addition to
the costs and disbursements provided by statute, reasonably attorneys' fees in
such proceedings or on any appeal from any judgment or decree entered therein.
(6) Default. The following shall constitute a default under this
Sublease:
6.1 Any failure by Sublessees to pay, when due, rent or any
other amount due under the Lease or to perform any other obligation of
Sublessor under the Lease or any other default under the Lease which continues
for up to one-half of the cure period as defined in the lease, provided with
respect thereto in the Lease;
6.2 Any failure by Sublessees to pay when due rent or any
other amount due under this Sublease or to perform when due any other
obligation of Sublessees hereunder;
6.3 If any warranty, representation or statement made or
furnished to Sublessor by or on behalf of the Sublessees is false in any
material respect when made or furnished;
6.4 Any failure by Sublessees to pay when due and/or
satisfy any other present or hereinafter incurred indebtedness or obligation
of Sublessees to Sublessor, including but not limited to those arising from
Sublessees' purchases of goods and services from Sublessor any other loans or
leases Sublessees may have or enter into with Sublessor, and Sublessees'
obligations under the Bylaws of Sublessor and its application for membership
in Sublessor;
6.5 If Sublessees vacate or abandon the premises or allow
the premises to remain vacant or unoccupied;
6.6 If Sublessees make an assignment for the benefit of
creditors, of if, with or without Sublessees' acquiescence, a petition in
bankruptcy is filed against Sublessees, or Sublessees are adjudicated a
bankrupt or insolvent, or a trustee, receiver or liquidator is appointed for
all or part of Sublessees' assets, or a petition or answer is filed by or
against Sublessees seeking or acquiescing in any reorganization, liquidation
or similar relief under any federal, state or local law relating to
bankruptcy, insolvency or other relief for debtors; and
6.7 If Sublessees sell or otherwise dispose of all or any
substantial portion of the assets of Sublessees located at or associated with
the store, other than inventory sold at retail in the ordinary course of
business.
(7) Remedies. In the event of any default under this Sublease:
7.1 Sublessor shall have the right, at its election then or
at any time thereafter, upon notice to Sublessees, to terminate this Sublease
or to terminate Sublessees' rights of possession in the premises without
terminating this Sublease;
7.2 Sublessor shall have the immediate right, whether or
not the Sublease shall have been terminated pursuant to paragraph 7.1, to re-
enter and repossess the premises or any part thereof by force, summary
proceedings, ejectment or any other legal or equitable process, all without
any liability on Sublessor's part for such entry, repossession or removal;
7.3 Sublessor may (but shall be under no obligation to),
whether or not this Sublease shall have been terminated pursuant to paragraph
7.1, resublet the premises, or any part thereof, in the name of Sublessees,
Sublessor or otherwise, without notice to Sublessees, for such term or terms
and for such uses as Sublessor, in its absolute discretion, may determine and
may collect and receive rents payable by reason of such resubletting (without
any liability for any failure to collect such rents);
7.4 Sublessor may (but shall be under no obligation to)
procure any insurance, pay any rentals, taxes or liens, make any repairs, pay
any sums required to be paid, and to do and perform such other acts as may be
required of Sublessees hereunder, and any payments so made shall bear interest
at the rate of 12 percent per annum from the time of such payment until
repaid; and
7.5 Sublessor may exercise any and all other rights and
remedies afforded to the prime Lessor upon default under the Lease and any and
all other rights and remedies Sublessor may have as provided herein, pursuant
to the laws of the State of Oregon. In addition to the other remedies
provided above, Sublessor shall be entitled to current damages and final
damages as provided in paragraph (8) below, and, to the extent permitted by
applicable law, to injunctive relief in case of the violation, or attempted or
threatened violation, of any of the provisions of this Sublease, or to a
decree compelling performance of this Sublease.
7.6 No expiration or termination of this Sublease,
repossession of the premises or any part thereof, or resubletting of the
premises or any part thereof, whether pursuant to the above paragraph or by
operation of law or otherwise, shall relieve Sublessees of their liabilities
and obligations under this Sublease, all of which shall survive such
expiration, termination, repossession or resubletting.
(8) Damages.
8.1 Current Damages. In the event of any expiration or
termination of this Sublease or repossession of the premises or any part
thereof by reason of the occurrence of an event of default, Sublessees will
pay to Sublessor the rent and other sums required to be paid by Sublessees for
the period to and including the date of such expiration, termination or
repossession; and, thereafter, until the end of what would have been the term
in the absence of such expiration, termination or repossession, and whether or
not the premises or any part thereof shall have been resublet, Sublessees
shall be liable to Sublessor for, and shall pay to Sublessor, as liquidated
and agreed current damages the rent and other sums which would be payable
under this Sublease by Sublessees in the absence of such expiration,
termination or repossession, less the net proceeds, if any, of any
resubletting effected for the account of Sublessees, after deducting from such
proceeds all of Sublessor's expenses reasonably incurred in connection with
such resubletting (including, without limitation, all repossession costs,
brokerage commissions, legal expenses, attorney's fees, employee expenses,
alteration costs and expenses of preparation for such resubletting).
Sublessees will pay such current damages on the days on which rent would have
been payable under this Sublease in the absence of such expiration,
termination or repossession, and Sublessor shall be entitled to recover the
same from Sublessees on each such day.
8.2 Final Damages. At any time after any such expiration
or termination of this Sublease or repossession of the premises or any part
thereof by reason of the occurrence of an event of default, whether or not
Sublessor shall have collected any current damages pursuant to paragraph 8.1,
Sublessor shall be entitled to recover from Sublessees, and Sublessees will
pay to Sublessor on demand, as and for liquidated and agreed final damages for
Sublessees' default and in lieu of all current damages beyond the date of such
demand (it being agreed that it would be impracticable or extremely difficult
to fix the actual damages), an amount equal to the excess, if any, of (a) the
rent and other sums which would be payable under this Sublease from the date
of such demand (or, if it be earlier, the date to which Sublessees shall have
satisfied in full their obligations under paragraph 8.1 to pay current
damages) for what would be the then unexpired term in the absence of such
expiration, termination or repossession, discounted to present value at an
assumed interest rate of seven percent (7%) per annum, over (b) the then net
rental value of the premises discounted to present value at an assumed
interest rate of seven percent (7%) per annum for the same period. Rental
value shall be established by reference to the terms and conditions upon which
Sublessor resublets the premises if such resubletting is accomplished within a
reasonable period of time after such expiration, termination or repossession,
and otherwise established on the basis of Sublessor's estimates and
assumptions of fact regarding market and other relevant circumstances, which
shall govern unless shown to be erroneous. If any statute or rule of law
shall validly limit the amount of such liquidated final damages to less than
the amount above agreed upon, Sublessor shall be entitled to the maximum
amount allowable under such statute or rule of law.
(9) Rights Cumulative, Nonwaiver. No right or remedy herein
conferred upon or reserved to Sublessor is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder or now or
hereafter existing at law or in equity or by statute. The failure of
Sublessor to insist at any time upon the strict performance of any covenant or
agreement or to exercise any option, right, power or remedy contained in this
Sublease shall not be construed as a waiver or relinquishment thereof for the
future. No waiver by Sublessor of any provision of this Sublease shall be
deemed to have been made whether due in the receipt of rent or otherwise,
unless expressed in writing and signed by Sublessor.
(10) Notices. Any notice or demand required or permitted to be
given under this Sublease shall be deemed to have been properly given when,
and only when, the same is in writing and has been deposited in the United
States Mail, with postage prepaid, to be forwarded by registered or certified
mail and addressed to the party to be notified at the address appearing below
its signature. Such addresses may be changed from time to time by serving of
notice as above provided.
(11) Right of Refusal: If, during the term of this sublease, or
any extension hereof, Sublessee or any successor to Sublessee shall receive a
bona fide offer to purchase the business being operated under this sublease,
i. e., goodwill, fixtures and/or equipment and inventory or the property of
which the premises are a part, which offer is acceptable to Sublessee,
Sublessor shall have the right to purchase the business (or the property) upon
the same terms and conditions. Sublessee agrees to immediately, upon receipt
of such offer, to give Sublessor written notice of the terms and conditions
thereof, and the Sublessor shall have the right, for thirty (30) days after
receipt of such notice, to exercise its option to purchase under the identical
terms and conditions of such offer. Sublessor's exercise of its option shall
be given in writing, within said thirty-day period.
(12) Additional Provisions.
12.1
12.2
IN WITNESS WHEREOF, the parties have executed the foregoing
Sublease Agreement the day and year first above written.
SUBLESSOR United Grocer, Inc., SUBLESSEES
an Oregon Corporation
0000 XX Xxxx Xxxx /s/ Xxxxxx X. Xxxx
XX Xxx 00000
Xxxxxxxx, Xxxxxx 00000
By: /s/ Xxxx X. Xxxxx
Xxxxxxx Holdings, Inc.,
by: [illegible]
-RENT SCHEDULE-
SUBLEASE
__________________
SILVERTON
BUILDING SIZE: 35,470 SQ FT
=================================================================
YEAR RENT/MO RENT/YEAR RENT/PSF-YR
_________________________________________________________________
1 - 3 21,914 262,964 7.41
4 - 5 21,711 260,529 7.35
6 - 7 23,339 280,068 7.90
8 - 10 23,121 277,451 7.82
10 - 15 24,855 298,260 8.41
15 - 20 26,719 320,629 9.04
RENTAL AMOUNTS FOR OPTION PERIODS SHALL BE 106% OF RATES
SPECIFIED OR DETERMINED UNDER PROVISIONS OF EXHIBIT "A"
________________________________________________________________
PER CENT RENT
Sublessee shall pay percentage rental in the same amounts and at the same
times as required under Section 4.B. Percentage Rental, of Exhibit A
_________________________________________________________________
EXHIBIT "X"
1. Met Life Capital
EXHIBIT "Y"
All present and hereinafter acquired inventory, equipment, fixtures and
capital stock of United Grocers, Inc.
