Exhibit 10(H)
ASSIGNMENT AND ASSUMPTION AGREEMENT
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THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made
and entered into this 15th day of June, 1997, from THE COSMETIC CENTER, INC., a
Delaware corporation (the "Assignor"), formerly known as Cosmetic & Fragrance
Concepts, Inc., to GPA ASSOCIATES, LLC, a Maryland limited liability company
("Assignee").
RECITALS
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A. Assignor, as tenant, and PROPERTY MARYLAND WAREHOUSE THREE
CORPORATION, a Maryland corporation ("Landlord"), as landlord, entered into
that certain Industrial Lease Agreement dated May 1, 1990, as amended by a
First Amendment to Industrial Lease Agreement dated February 6, 1995 (together
the "Lease"), a copy of which is attached hereto and made a part hereof,
pursuant to which Assignor leased from Landlord certain space located in
Xxxxxx, Xxxxxx County, Maryland, as more particularly described in the Lease
(the "Premises").
B. Assignor desires to transfer and assign all of its right, title and
interest in the Lease to Assignee and Assignee desires to accept and receive
all of such right, title and interest in and to the Lease.
C. Simultaneously with its execution of this Agreement, Assignor has
entered into a Lease Agreement (the "Parcel A-40 Lease") with Parcel A-40
Associates, LLC ("Parcel A-40"). Parcel A-40 and/or its members own or control
all of the interests in Assignee. The execution and delivery of this Agreement
by Assignee is part of the consideration for Assignor's execution and delivery
of the Parcel A-40 Lease.
AGREEMENT
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NOW, THEREFORE, for and in consideration of the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending legally to be
bound, agree as follows:
1. The foregoing Recitals are incorporated by reference herein and
made a part hereof.
2. Assignor represents and warrants to Assignee that (i) a true and
complete copy of the Lease is attached to this Agreement as Exhibit A, (ii) the
Lease constitutes the entire agreement between Assignor and Landlord, (iii)
Assignor is the lawful owner of all of the right, title and interest of the
tenant in and to the Lease, (iv) Assignor has the full power and authority to
execute this Agreement and assign the Lease and upon execution hereof, Assignee
shall have the lawful right to occupy the Premises, (v) the monthly installment
of Basic Annual Rent, Additional Rent with respect to Insurance Costs and Real
Estate Taxes, and Additional Rent with respect to Operating Costs, presently in
effect is Forty-Five Thousand One Hundred Fifty-Eight Dollars and Forty-Two
Cents ($45,158.42), (vi) Assignor has paid to Landlord all rent, additional
rent and other charges due and owing under the Lease through July 31, 1997,
and there are no outstanding invoices for rent, additional rent or other
charges at this time, and (vii) there is no Event of Default by Assignor under
the Lease, nor is there any event or circumstance which would constitute an
Event of Default by Assignor with the giving of notice and/or the passage of
time.
3. (a) Assignor hereby conveys, assigns and transfers to Assignee, its
successors and assigns, effective as of the "Effective Date" (as hereafter
defined), all of the right, title, and interest of Assignor in and to the
Lease. Assignee hereby accepts the conveyance, transfer and assignment of
Assignor's rights under the Lease and assumes and agrees to perform all
obligations of the tenant under the Lease, from and after the Effective Date,
subject to the provisions of paragraphs 4(b) and 4(e) below. The term
"Effective Date" shall mean the later of (i) June 15, 1997 or (ii) the date
rent begins to accrue under the Parcel A-40 Lease.
(b) Assignor covenants and agrees that within fifteen (15) days of
the date Parcel A-40 substantially completes "Land-lord's Office Work", as
defined in the Parcel A-40 Lease, Assignor shall vacate and deliver the
Premises to Assignee, broom clean, in the condition in which the Premises is
required to be when the Premises are delivered to Landlord. Within three (3)
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business days of the date Assignor vacates and delivers the Premises to
Assignee, Assignor and Assignee shall conduct a joint "walk-through" inspection
of the Premises. Assignor shall be responsible, at Assignor's cost and expense,
(i) for the removal of any alteration to, or any restoration of, the Premises
which Assignor is obligated to make as a result of any alteration to the
Premises made by Assignor, and (ii) any other repairs to the Premises required
under the Lease because the condition of the Premises existing on the Effective
Date violates the Assignor's obligations under the Lease with respect to the
condition of the Premises, to the extent that the aggregate cost of any repairs
described in this clause (ii) exceeds Fifteen Thousand Dollars ($15,000.00).
Assignor and Assignee shall use their best efforts to obtain an estoppel
certificate from Landlord that states whether the condition of the Premises is
in accordance with Assignor's obligations under the Lease. In addition, within
three (3) business days of the joint inspection of the Premises, Assignee shall
give Assignor written notice of any condition in the Premises that it has
observed that is in violation of the Assignor's obligations under the Lease.
(c) As soon as practicable following the execution of this
Agreement, Assignor shall give Landlord written notice that it will not extend
the Lease for the five (5) year Extension Term. Assignee shall not take any
action to revoke or contradict such notice.
4. (a) Assignee's liability for the performance of the tenant's
obligations under the Lease accruing from and after the Effective Date shall be
secured by a letter of credit in the amount of One Million Eight Hundred
Sixty-One Thousand One Hundred Sixty-Two Dollars ($1,861,162.00), which shall
be issued by First National Bank of Chicago (the "Bank") to Assignor in
substantially the form attached hereto as Exhibit B and made a part hereof (the
"Letter of Credit"), and which shall have an expiration date which is not
earlier than October 16, 2000. In the event Assignee fails to pay any scheduled
monthly installment of Rent or any other amount owing under the Lease within
four (4) days of written notice from Landlord of such failure (a "Monetary
Default"), or upon the occurrence of any other Event of Default under the
Lease, Assignor shall have the right to draw against the Letter of Credit in
accordance with the terms thereof the amount necessary to cure the Monetary
Default or other Event of
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Default, in which event Assignor shall be obligated to pay the amounts drawn
under the Letter of Credit to Landlord to cure such Monetary Default or other
Event of Default. The Letter of Credit shall require that the following be
delivered to the Bank in connection with any draw against the Letter of Credit:
(i) a sight draft in the amount to be drawn under the Letter of Credit; (ii)
the original Letter of Credit; and (iii) an affidavit executed by an officer of
Assignor on behalf of Assignor that (A) states that there has been a Monetary
Default or other Event of Default under the Lease for which Assignee is
responsible under this Agreement, (B) states the amount that Assignor is
entitled to draw in accordance with this Agreement, (C) states that no
"Suspension Event" (as defined in paragraph 4(b) of this Agreement) has
occurred under the Agreement, and (D) states that a copy of the sight draft and
the affidavit submitted to the Bank has been sent simultaneously to Assignee in
accordance with the provisions of paragraph 8 below. Except as set forth in
paragraph 4(d) below, Assignor shall not be entitled to draw any amounts
pursuant to the Letter of Credit in excess of the amount necessary to cure the
Monetary Default or other Event of Default. The amount necessary to cure a
Monetary Default or other Event of Default shall include the amount of any Rent
or Additional Rent or other sums due to Landlord and the amount Assignor
reasonably estimates it will be required to spend in performing any other
obligations accruing after the Effective Date which Assignee has failed to
perform under the Lease. In the event that a draw made against the Letter of
Credit to cure a Monetary Default or other Event of Default proves to be
insufficient to cure such Monetary Default or other Event of Default, Assignor
may make one or more supplemental draws against the Letter of Credit pursuant
to the terms hereof in order to enable Assignor to use the proceeds of the
Letter of Credit to fully cure such Monetary Default or other Event of Default.
(b) Notwithstanding anything to the contrary contained in this
Agreement, Assignee shall be excused, in whole or in part, from performing the
obligations of tenant accruing under the Lease after the Effective Date, and
Assignor's right to draw against the Letter of Credit shall be suspended or
reduced, at such time as any of the following events has occurred and is
continuing (the "Suspension Events"):
(i) during any period in which there is an Event
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of Default under the Lease that is the result of a bankruptcy or insolvency of
Assignor, an assignment for the benefit of creditors by Assignor, or an
attachment, execution or judicial seizure of Assignor's assets as described in
paragraphs (C), (D) or (E) of Article 20 of the Lease, Assignee shall be
excused from performing any obligation of tenant under the Lease that accrues
during such period, and Assignor shall be precluded from making any draw
against the Letter of Credit during such period, unless at the time there is
also an Event of Default under the Lease for which Assignee is responsible
pursuant to the terms of this Agreement;
(ii) during any period in which there is an Event of Default
under the Lease that results from, or arises out of, a breach by Assignor of
its obligations under the Lease accruing on or before the Effective Date,
Assignee shall not be obligated to make any payment or perform any obligation
of tenant under the Lease that accrues during such period, and Assignor shall
not have any right to draw against the Letter of Credit during such period,
unless and until Assignor fully cures such breach;
(iii) during any period in which Assignor fails to have vacated
the Premises and delivered possession of the Premises as required by paragraph
3(b) above, Assignee shall not be obligated to make any payment or perform any
obligation of tenant under the Lease that accrues during such period, and
Assignor shall not have any right to draw against the Letter of Credit during
such period, unless and until Assignor fully cures such breach; and
(iv) at any time that Parcel A-40 has any direct or indirect
interest in the Parcel A-40 Lease or the Parcel A-40 property and there is an
uncured Event of Default under the Parcel A-40 Lease, the amount which Assignee
shall be obligated to pay under the Lease, whether for rent or in the
performance of any other obligations of tenant accruing after the Effective
Date, shall be reduced dollar for dollar by the amount of any Rent (including
Additional Rent) which Assignor owes Parcel A-40 under the Parcel A-40 Lease,
and the amount which Parcel A-40 reasonably estimates it will be required to
spend in performing any other obligations which Assignor has failed to perform
under the Parcel A-40 Lease, unless and until Assignor fully cures such breach;
provided that in no event shall such reduction excuse
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Assignee from making payments to Landlord during such period in an amount equal
to the amount of any rent paid to Assignee by any subtenant or assignee of
Assignee during such period.
(c) The maximum amount drawable under the Letter of Credit shall be
reduced, dollar for dollar, by the amount of rent actually paid by Assignee to
Landlord pursuant to the Lease, provided that at no time shall the amount
available to be drawn under the Letter of Credit be reduced below One Hundred
Thousand Dollars ($100,000.00). Upon the Bank's receipt of reasonably
satisfactory evidence that Assignee has paid such rent to Landlord (including,
without limitation, copies of cancelled checks), the Bank shall have the right
to issue amendments to the Letter of Credit confirming the amount which remains
drawable thereunder. In the event that Assignor is released by Landlord from
any further obligations under the Lease, the Letter of Credit shall be returned
to Assignee and Assignee shall have the right to cause the Letter of Credit to
be cancelled.
(d) If, at the time of any Monetary Default or any other Event of
Default under the Lease, Assignee is bankrupt or insolvent, as described in
paragraph (C) of Article 20 of the Lease, and Assignee has rejected the Lease
in connection with such bankruptcy or insolvency proceedings, the amount which
Assignor shall be entitled to draw under the Letter of Credit shall be the
remaining balance then available to be drawn under the Letter of Credit;
provided that if Assignor is not required to use the full amount drawn under
the Letter of Credit to discharge Assignor's obligations under the Lease, any
remaining balance shall be paid to Assignee promptly upon Assignor's release
from, or satisfaction of, its obligations under the Lease. It is understood and
agreed that if Assignee rejects the Lease in connection with such bankruptcy or
insolvency proceedings, the Assignor's obligations under the Lease could exceed
the Assignee's obligations under the Lease, in which event Assignor shall be
entitled to retain all amounts necessary to discharge Assignor's obligations
under the Lease.
(e) If, during any period in which a Suspension Event is continuing
and Assignor's right to draw against the Letter of Credit is suspended or
reduced, Assignor makes any payment of Rent or Additional Rent or other sums
required of tenant under the Lease or incurs any reasonable expenses in
performing the
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tenant's obligations under the Lease (collectively the "Suspension Period
Payments"), which but for the application of paragraph 4(b) would have been
Assignee's obligation under this Agreement, then at such time (if any) as
Assignor cures all breaches and as a result the conditions set forth in
paragraph 4(b) have been removed, Assignor shall have the right to give
Assignee written notice specifying (i) that it has cured all breaches and
removed such conditions and (ii) the amount of such Suspension Period Payments,
and Assignee shall reimburse Assignor within five (5) days of its receipt of
such notice for the amount of any Suspension Period Payments. If there is a
dispute between Assignor and Assignee with respect to whether or not a
Suspension Event occurred, and a court of appropriate jurisdiction determines
that no Suspension Event occurred, Assignee shall pay Assignor interest on the
amount of any Suspension Period Payments from time to time outstanding, at the
annual rate equal to two hundred (200) basis points over The Wall Street
Journal corporate prime rate, as published daily in its money rates section, or
its substantial equivalent, such rate to be adjusted as and when the corporate
prime rate changes. If Assignee fails to reimburse Assignor for a Suspension
Period Payment pursuant to this paragraph 4(e), including any interest that may
be due thereon, Assignor shall give Assignee written notice of such failure,
and if Assignee does not make the required payment within five (5) days of such
written notice, such failure shall be deemed a Monetary Default under this
Agreement and Assignor may draw against the Letter of Credit the amount of the
required payment.
5. Assignor hereby indemnifies and agrees to defend and hold Assignee
harmless from and against any loss, cost, damage or expense (including
reasonable attorney's fees) whatsoever resulting from or arising out of any
actual or alleged breach by Assignor of its obligations under the Lease,
accruing during the period ending on the Effective Date.
6. Assignee hereby indemnifies and agrees to defend and hold Assignor
harmless from and against any loss, damage or expense (including reasonable
attorneys' fees) whatsoever resulting from or arising out of any actual or
alleged breach by Assignee of its obligations under the Lease, accruing during
the period subsequent to the Effective Date.
7. The assumption by Assignee of the Lease shall not in
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any way limit or impair the liability of any of the parties to this Agreement
for breach of any representations, warranties, covenants or indemnities
contained in the Lease.
8. Any payments made by Assignor to a lender pursuant to the terms of
a subordination or non-disturbance agreement in connection with the Parcel A-40
Lease shall be deemed to be payments made to Parcel A-40, and Assignor shall
not be deemed to be in default under the Parcel A-40 Lease with respect
thereto.
9. All notices or demands between Assignor and Assignee required or
permitted by law or any provisions of this Agreement shall be given in writing,
shall be sent by messenger or overnight delivery service, at the address or
addresses listed below or at such other or additional address or addresses as
either party may hereafter designate in writing:
ASSIGNOR:
The Cosmetic Center, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Vice President, Real Estate
ASSIGNEE:
GPA Associates, LLC
c/o Penrose Property Company
0000 Xxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
with a copy to:
Penguin Group, L.P.
000 Xxxx Xxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxx Xxxxxxx, Esquire
10. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Maryland.
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11. This Agreement is binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, administrators, legal
or personal representatives, successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Assignment
and Assumption Agreement as of the day and year first above written.
ASSIGNOR:
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ATTEST: THE COSMETIC CENTER, INC., a
Delaware corporation
/s/ Xxxxxx X. X'Xxxxx By: /s/ Xxxxxx Xxxxxx
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[Corporate Seal] President and Chief Executive
Officer
ASSIGNEE:
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WITNESS: GPA ASSOCIATES, LLC,
a Maryland limited liability
company
By: Parcel A-40 Associates, LLC
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By: Parcel A-40 Management
Associates
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By: Xxxxxxx Land Consultant
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By: /s/ Xxxx X. Xxxxx
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Authorized Person
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