LEASE AGREEMENT
and
OPTION TO PURCHASE
This Lease Agreement, effective the 1st day of October, 1996, by and
between XXXXXX X. XXXXXXX and XXXX X. XXXXXXX, hereinafter collectively called
"Lessor," and NACO COMPOSITES, INC., a Utah corporation with principal offices
in Logan, Utah, hereinafter called "Lessee."
1. PROPERTY LEASED. Lessor, in consideration of the rents and
agreements to be paid and performed by Lessee, does lease to Lessee those
premises situated at 000 Xxxx 00xx Xxxxxx, Xxxxx, Xxxx, and further described on
Exhibit "A" attached hereto and by this reference incorporated herein.
2. TERM OF LEASE AND RENTAL. The term of this lease shall be for a
period of three (3) years, commencing on the 1st day of October, 1996, and
ending on the last day of September, 1999. Lessee will pay as rental for the
first five (5) months hereof the sum of THREE THOUSAND FIVE HUNDRED DOLLARS
($3,500.00) per month, all rental to be payable monthly in advance in such
amount; and, thereafter, the monthly rental amount may be increased from time to
time pursuant to the mutual agreement of the parties.
3. RIGHT TO RENEW. Lessee shall have the right to renew this lease
agreement at the expiration thereof for an additional period of at least two (2)
years on the same terms and conditions as set forth herein except for the rental
amount which shall be a fair market rental amount to be mutually agreed upon
between the parties. Lessee must give written notice of intention to renew at
least sixty (60) days prior to the end of the term.
4. USE OF PREMISES. The premises shall be used for the purpose of
operating a manufacturing facility for the production of fiberglass products and
related items, and such other products as may be produced or marketed by Lessee,
and for no other purposes without the prior consent of Lessor.
Lessee shall not commit or permit to be committed any waste upon the
premises. Lessee shall not use the premises, or any part thereof, for any
purpose other than the purpose or purposes for which said premises are leased,
and no use in any event shall be made of the premises, nor acts done, which will
increase the hazard of damage to the premises, or injury to those in or about
the premises, or the existing rate of insurance upon the building, nor shall
Lessee sell, keep or use in or about said premises any article which may limit
the coverage afforded by the Utah Standard Form fire insurance policy, or the
sale, presence, or use of which is prohibited by law.
Lessee shall, at Lessee's sole cost and expense, without obligation to
Lessor, observe in the use of the premises all municipal, county, state and
federal regulations, ordinances and statutes now in force, or which may
hereafter be in force, and failure to do so shall be a material breach of this
agreement.
5. POSSESSION. The date of possession of said leased premises by Lessee
pursuant to this lease shall be the 1st day of October, 1996.
6. INSURANCE. Lessee shall maintain fire and casualty insurance on the
real and personal property subject to this lease and shall hold Lessor harmless
from any loss in connection therewith. Lessee further agrees to take out and
keep in force during the life hereof, at Lessee's expense, public liability
insurance to protect against any liability to the public, incident to the use of
or resulting from any occurrence in or about said premises. The liability under
such insurance shall be not less than $300,000.00 combined single limit or the
equivalent on bodily injury and property damage.
7. REPAIR AND MAINTENANCE. Lessee shall be responsible for all routine
maintenance of the property, and Lessor shall be responsible for structural
component maintenance, such as the roof, heating and ventilation, etc.
8. ALTERATIONS. Lessee shall not make or permit to be made any
additions or alterations of the premises or any part thereof without the written
consent of Lessor, and any additions to or alterations of said premises, when
permitted to be made, except movable furniture and trade fixtures, shall become
at once a part of the realty and belong to Lessor and shall not be removed by
Lessee at the end of its occupancy, or otherwise, except upon written consent or
order of Lessor. Any linoleum, rubber tile or other floor covering affixed to
the floors shall become at once a part of the realty and belong to Lessor and
shall not be removed by Lessee at the end of its occupancy, or otherwise, except
upon written consent or order of Lessor.
9. MECHANIC'S LIENS. It is expressly agreed that if any work that is
performed by Lessee or Lessee's agents, employees or representatives, either
prior to or subsequent to the possession by Lessee of the above described
premises, shall give rise to any lien against the leased premises, Lessee shall
indemnify Lessor against and save Lessor harmless from any and all mechanic's
liens or claims of liens and all attorney fees, costs and expenses which may
accrue, grow out of, or be incurred by reason of said work performed by Lessee
or Lessee's agents, employees or representatives.
10. UTILITIES. Lessee shall pay for all gas, heat, light, power, water,
rubbish removal, telephone service, and all other services supplied to said
premises.
11. INSPECTION AND ENTRY BY OWNER. Lessee shall permit Lessor and
Lessor's agents to enter into and upon the premises at all reasonable times for
the purpose of inspecting the same, or for the purpose of making reasonable
repairs, alterations or additions to any portion of said premises which Lessor
may see fit to make, including installation of pipes, conduits, etc. to service
adjacent property, without any reduction or rebate of rent to Lessee for loss of
occupancy or quiet enjoyment of the premises thereby occasioned, and Lessee
shall permit Lessor at any time after thirty (30) days prior to expiration of
the leasehold term to place upon the premises "for rent," "for lease," or other
signs.
12. BANKRUPTCY OR INSOLVENCY. Should the Lessee become bankrupt or
insolvent, either voluntarily or involuntarily, or a receiver be appointed to
take charge of Lessee's assets, or general assignment be made for the benefit of
creditors, the same shall constitute a breach of the terms of this lease and the
Lessor may declare the lease terminated, and the Lessee shall have no right,
title or interest in the property, and the Lessor may keep as damages any
advanced rental.
13. DEFAULT. Lessee shall pay rent to Lessor at such place as may be
assigned from time to time by Lessor, at the time provided as aforesaid. In the
event of failure of Lessee so to do, or in the event of a breach of any other
condition or agreement by Lessee, it shall be lawful for Lessor, after giving to
Lessee a fifteen (15) day written notice of default, and after failure by Lessee
within said fifteen (15) days to remedy or cure said default, and after the
lapse of said fifteen (15) days, to reenter and take possession of the said
premises and to remove all persons and property therefrom and to repossess said
premises. Any such reentry or repossession or any notice served in connection
therewith shall not operate to release Lessee from any obligations for rental or
otherwise under this lease, and shall be in addition to any available remedies
and time set forth for notices given pursuant to the Utah unlawful detainer
statutes.
If Lessee shall be in default in performance of any condition or
agreement, or shall abandon or vacate the premises, Lessor shall have the right,
after giving the required written notice of default, and after failure by Lessee
to timely remedy or cure said default, to relet the said premises, or any
portion thereof, for such rent and upon such terms as Lessor may see fit. Lessee
shall pay the expenses of such reletting, including any and all real estate
broker's commissions.
All remedies herein given Lessor shall be cumulative and in addition to
other legal and equitable rights which Lessor may have, and if Lessor institutes
legal action to collect the total or balance of the rent hereby reserved, the
filing of such action prior to the expiration of the full leasehold term shall
not be deemed premature as a matter of law irrespective of whether Lessor has
retaken possession and relet the premises for his own account or for the account
of Lessee.
14. ATTORNEY FEES. Should either party employ an attorney in connection
with the violation of the terms of this lease, or for the preparation and
serving of notice or other matters, and whether suit is filed or not, the party
so employing an attorney and the prevailing party shall be entitled to
reasonable costs and attorney fees in addition to all other amounts as provided
for in this lease.
15. ASSIGNMENT AND SUBLEASE. Lessee shall not assign this lease, or any
interest therein, and shall not lease or sublet the premises, or any part
thereof, or any right of privilege appurtenant thereof, or mortgage or
hypothecate the leasehold, without the prior written consent of Lessor, which
consent shall not be unreasonably withheld. A consent to one assignment,
subletting or hypothecation shall not be construed as a consent to any
subsequent assignment, subletting or hypothecation. Unless such written consent
has been had and obtained, any assignment or transfer of this lease, or of any
interest therein, or any subletting, either by voluntary or involuntary act of
Lessee or by operation of law, or otherwise, may be deemed a breach of lease by
Lessee at Lessor's election and any such purported assignment, transfer or
subletting without such consent may be deemed by Lessor to be null and void.
Lessor's consent to any such assignment, transfer or subletting shall relieve
Lessee from any obligation under this lease.
16. DESTRUCTION OF PREMISES. In the event of a partial destruction of
the said premises during the said term, from any cause, Lessor shall forthwith
repair the same, provided such repair can be made within ninety (90) days under
the laws and regulations of state, federal, county or municipal authorities, but
such partial destruction shall in no way annul or void this lease, except that
Lessee shall be entitled to a proportionate deduction of rent while such repairs
are being made unless the Lessee was the cause of the destruction. Such
proportionate deduction of rent to be based upon the extent to which the making
of such repairs shall interfere with the business carried on by Lessee in the
said premises, but in no event shall it be more than the monthly rental. If such
repairs cannot be made in ninety (90) days, Lessor may, at his option, make same
within a reasonable time, this lease continuing in full force and effect and the
rent to be proportionately rebated as aforesaid in this paragraph. In the event
that Lessor does not so elect to make such repairs which cannot be made under
such laws and regulations, this lease may be terminated at the option of either
party. In the event that the building is destroyed in which the demised premises
may be situated to the extent of not less than 33 1/3 percent of the replacement
costs thereof, Lessor may elect to terminate this lease, whether the demised
premises be injured or not. A total destruction of the building in which the
said premises may be situated shall terminate this lease.
17. CONDEMNATION. If the whole or any part of the premises shall be
taken by any public authority under the power of eminent domain, then the terms
of this lease shall cease as to the part so taken from the day possession of
that part shall be required for any public purpose, and rent shall be paid up to
that day, and on or before that day Lessee shall elect, in writing, either to
cancel this lease or to continue in possession of the remainder of the premises
under the terms herein provided, except that rent shall be reduced in proportion
to the amount of the premises taken. All damages awarded for such taking shall
belong to and be the property of Lessor, whether such damages be awarded as
compensation for diminution in value to the leasehold or to the fee of the
premises. Lessee hereby irrevocably assigns to Lessor any right to compensation
or damages to which Lessee may become entitled by reason of the condemnation of
all or a part of the demised premises.
18. DAMAGE LIABILITY. Lessee assumes all risks of injury or damage to
all persons and property, excluding injuries or damage caused by preexisting
structural defects or Lessor's negligent conduct, including, but not limited to,
all property of Lessee and Lessor in or about the premises, and Lessee shall
hold Lessor harmless for any such damage or injury; except that Lessee shall not
be liable to Lessor for damage or injury to Lessor's property caused by
earthquakes, other acts of God, or Lessor's negligent conduct.
It is further understood and agreed that the provision herein in
connection with the Lessor being insured against liability shall in no way be
construed as creating liability upon its part or admission of liability upon its
part, but is merely for the protection of Lessor.
19. OUTSIDE STORAGE. There shall be no storage of any kind of material
on the outside of the buildings herein described, except as incident to the
normal operation of Lessee's business.
20. TERMINATION. On the last day of the term, or sooner termination,
the Lessee shall peaceably and quietly leave and yield the premises to Lessor,
with fixtures and appurtenances in good condition and repair, reasonable wear
and tear excepted. Lessee shall leave the premises and appurtenances free and
clear of rubbish and clean; and in the event Lessee fails to do so, Lessor may
charge Lessee for the reasonable cost incurred by Lessor in having the same
done. In the event that Lessee shall exercise its purchase option hereunder,
however, this paragraph shall not apply with respect to the termination of the
lease as a result of such purchase.
21. WAIVER. Waiver by Lessor of any breach of any condition or
agreement of this lease by Lessee shall not be deemed to be a waiver of any
subsequent breach of the same or any other condition or agreement by Lessee.
22. SUCCESSOR. The condition and agreements herein contained shall
apply to and bind the heirs, personal representatives, and successors in
interest of the parties hereto.
23. TAXES.
(a) Payment of Taxes. Lessee shall pay all real property taxes
applicable to the premises during the term of this lease.
(b) Definition of Real Property Tax. As used herein, the term
"real property tax" shall include any form of assessment, levy, penalty, or tax
(other than inheritance or estate taxes) imposed by any authority having the
direct or indirect power to tax, including any city, county, state or federal
government, or any school, agricultural, lighting, drainage or other improvement
district thereof, as against any legal or equitable interest of Lessor in the
premises or on the real property of which the premises are a part, or as against
Lessor's right to rent or other income.
(c) Personal Property Taxes. Lessee shall pay prior to
delinquency all taxes assessed against and levied upon trade fixtures,
furnishings, equipment and all other personal property of Lessee, and all
personal property leased to Lessee hereunder, whether such property is contained
in the premises or elsewhere. When possible, Lessee shall cause said trade
fixtures, furnishings, equipment and all other personal property to be assessed
and billed separately from the real property of Lessor.
24. HOLDING OVER. Holding over after the expiration of the term or any
extension thereof with the consent of Lessor shall be a tenancy from month to
month at a minimum monthly rental of the then prevailing rent.
25. SERVING OF NOTICE. All notices as provided for in this lease or by
law shall be in writing and shall be served either personally or by mail, and
shall be made upon the parties at the following address unless a party serves
written notice upon the other party of a change of address:
Lessor: Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxxxx
X.X. Xxx 000
Xxxx, Xxxx 00000
Lessee: NACO COMPOSITES, INC.
000 Xxxx 0000 Xxxxx
Xxxxx, Xxxx 00000
26. TOTAL AGREEMENT. It is understood and agreed between Lessor and
Lessee that this written lease agreement is the total agreement between Lessor
and Lessee and that there are no other agreements, oral or otherwise.
27. DEFINITIONS. As used herein, the term "Lessor" shall include all
lessors, whether one or more; the term "Lessee" shall include all lessees,
whether one or more; the masculine gender shall be deemed to include the
feminine and vice versa.
28. PURCHASE OPTION. During the first year of the term of this lease
agreement, in the event Lessors are unable to obtain financing for any necessary
expansion of the improvements on the leased premises, Lessors, as the sole
owners of the leased premises, hereby grant and convey to Lessee, or its
assigns, a Purchase Option in the leased premises, entitling Lessee to purchase
said property for the sum of THREE HUNDRED TWENTY-FIVE THOUSAND DOLLARS
($325,000.00), this sum being based on the appraisal dated the 1st day of
October, 1995, in exchange for which Lessors shall convey to Lessee by warranty
deed marketable title to the property, free and clear of all liens, adverse
claims and encumbrances. However, in the event that Lessee shall exercise said
option at any time, said purchase price shall be adjusted to reflect inflation,
as measured by the appropriate consumer price index, from the date of the
appraisal dated the 1st day of October, 1995 to the date of the exercise of the
purchase option which shall not be predicated on Lessor's ability to finance
expansion. Lessee may exercise the option by giving Lessor written notice
thereof not less than sixty (60) days prior to the desired date of closing for
such purchase.
IN WITNESS WHEREOF, the parties have hereunto executed this document
through agents properly authorized as of the day and year first above written.
LESSOR: LESSEE:
XXXXXX X. XXXXXXX NACO COMPOSITES, INC.
______________________________ By:___________________________
Title:
XXXX X. XXXXXXX
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