LEASE TERMINATION AGREEMENT
Exhibit
10.26
This
Lease Termination Agreement (the "Agreement") is made by and between Pizzagalli
Properties, LLC, (the "Landlord"), Cloverleaf Properties, Inc., Xxxxxxxx
Holdings, Inc. (“Xxxxxxxx”), and The Middleby Corporation ("Middleby") as of the
date on which Middleby, Blodgett, and the Landlord have executed this Agreement
(the “Effective Date”).
Background
A. The
Landlord and Cloverleaf Properties, Inc. (the “Tenant”), Xxxxxxxx and Middleby’s
subsidiary or affiliate, have previously entered into a certain Lease by and
between Pizzagalli Property Company (predecessor in interest to Landlord) and
Cloverleaf Properties, Inc., dated December 11, 1989, as amended by a First
Amendment, also dated December 11, 1989, and by a Second Amendment, dated April
16, 1993 (as amended, the “Lease”).
B. Pursuant
to the Lease, Cloverleaf Properties, Inc., leased certain land and buildings
premises located at 000 Xxxxxxxx Xxxx and 19 Harbor Road in Shelburne, Vermont
(the “Premises”).
C. Middleby
and Xxxxxxxx wish to terminate the Lease, and have arranged for the sale of the
Premises by the Landlord to Field House, LLC (“Field House”).
D. The
Landlord is willing to terminate the Lease on certain agreed terms and
conditions provided that the termination occurs simultaneously with the sale of
the Premises to Field House in accordance with the terms and conditions of a
certain Purchase and Sale Agreement by and between the Landlord and Field House,
dated November 10, 2004 (the “Field House Agreement”).
Agreement
NOW,
THEREFORE, in consideration of the foregoing background, and the mutual
covenants and promises set forth in this Agreement, the parties hereby agree as
follows.
1. Defined
Terms. Except
as otherwise specifically defined in this Agreement, all capitalized terms shall
have the meanings set forth in the Lease.
2. Agreement
to Terminate. Subject
to the terms and conditions of this Agreement, the Landlord, the Tenant,
Xxxxxxxx, and Middleby agree to terminate the Lease as of the date of the
Closing (as defined below). The termination of the Lease will be effective upon
the execution and delivery at Closing of a Certificate of Lease Termination by
the Landlord and the Tenant, substantially in the form of Exhibit A attached
hereto. Upon the termination of the Lease, the Tenant shall give, grant, and
surrender to the Landlord all of the Tenant’s right, title and interest in and
to the Lease and the Premises,
and the
Landlord hereby agrees to accept such surrender as of the date of
Closing subject
to the requirements of this Agreement.
Upon the
termination of the Lease, the
Tenant shall be released from further liability to the Landlord pursuant to the
Lease, except for: (i) liabilities accruing prior to the effective date of
termination; (ii) obligations and liabilities that shall survive the termination
pursuant to Section 12 below; and (iii) liabilities and obligations pursuant to
this Agreement.
3. Termination
Fee. In
consideration of the Landlord’s termination of the Lease and partial release of
Xxxxxxxx and the Tenant from future liability pursuant to the Lease, Middleby
shall pay a Termination Fee to the Landlord of Three Million, Three Hundred
Seventy Five Thousand Dollars ($3,375,000.00), payable as follows:
a. Six
Hundred Thousand Dollars ($600,000.00) in immediately available funds by wire
transfer or by cashiers or certified check at the Closing; and
b. the
balance of Two Million, Seven Hundred Seventy Five Thousand Dollars
($2,775,000.00) in the form of a promissory note of Middleby to the Landlord
substantially in the form of Exhibit B, attached hereto, executed and delivered
by Middleby at the Closing (the “Note”).
The
Termination Fee shall be reduced by all rental payments made by Middleby or the
Tenant pursuant to the Lease attributable to the portion of the Lease term
subsequent to March 31, 2004. For purposes of this Section 3, “rental payments”
shall include only the basic monthly rental due and payable pursuant to the
Lease, and not other sums paid or payable pursuant to the Lease for other items
such as property taxes, operating costs, insurance, utilities, and comparable
expenses. This reduction in the Termination Fee shall be deducted from the
original principal amount of the Note and shall not reduce the amount of the
cash payment at Closing.
4. Letter
of Credit. At the
Closing, Middleby shall cause to be delivered to the Landlord a letter of credit
in the original principal amount of Two Million, One Hundred Twenty Five
Thousand Dollars ($2,125,000.00)], substantially in the form of Exhibit C,
attached hereto, issued by Bank of America, N.A. (the “Letter of Credit”). The
amount of the Letter of Credit may be reduced from time to time by Middleby
(with the written consent of the Landlord, which consent shall not be
unreasonably withheld or delayed) to reflect the reductions in the Note balance
resulting from scheduled and unscheduled payments on the Note by Middleby. The
Letter of Credit shall be for a term of not less than one (1) year, shall allow
for automatic one year extensions of the term and shall contain an agreement by
Bank of America, N.A., to notify the Landlord at least forty-five (45) days
prior to any election by it not to extend the term of the Letter of Credit. If
the term of the Letter of Credit expires prior to the date forty-five (45) days
after the maturity date of the Note, Middleby shall provide a replacement Letter
of Credit not less than fifteen (15) days prior to the expiration of the then
current Letter of Credit. In the event of the occurrence and continuation of any
event of default by Middleby under the Note, or if the Letter of Credit is not
renewed at least fifteen (15) days prior to any date of termination, the
Landlord shall have the right, if any such event of default is continuing, to
immediately draw on the Letter of Credit for the outstanding principal balance,
any accrued interest, and any other amounts due pursuant to the Note; provided,
however, that Landlord shall not have the right to draw on the Letter of Credit
during the first year of the term of the Note, except for a default based on
Middleby’s failure to provide a replacement Letter of Credit. Landlord shall
have the right to draw on the Letter of Credit for an event of default that has
occurred and is continuing during the first year of the term of the Note
provided that (i) the draw occurs after the first year of the term of the Note
and (ii) such event of default is continuing at the time of such
draw.
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5. Closing. The
Closing of the termination of the Lease (the "Closing") shall take place at 3:00
p.m. on November 10, 2004, at the offices of the Landlord in South Burlington,
Vermont, unless the parties agree to an earlier date and time. It is the
intention of the parties that the Closing shall occur simultaneously with the
closing on the sale of the Premises to Field House pursuant to the Field House
Agreement, as described in Section 7(c) below.
6. Conditions
to Middleby's Obligations.
Middleby's obligations pursuant to this Agreement are contingent upon the
fulfillment of each of the following conditions:
a. The
Landlord shall have satisfied, performed, and complied in all material respects
with the terms, covenants, and conditions required by this Agreement to be
performed and complied with by the Landlord on or before the Closing
date.
b. The
Landlord shall have provided to Middleby at or prior to the Closing evidence
reasonably satisfactory to Middleby that the person executing the documents
necessary to implement the lease termination provided for in this Agreement on
behalf of the Landlord has the authority to execute and deliver the transfer
documents and thereby bind the Landlord.
7. Conditions
to the Landlord's Obligations. The
Landlord's obligation to terminate the Lease pursuant to this Agreement is
contingent upon the fulfillment of each of the following
conditions:
a. Middleby,
Blodgett, and the Tenant shall have satisfied, performed, and complied in all
material respects with the terms, covenants, and conditions required by this
Agreement to be performed and complied with by Middleby, Blodgett, and the
Tenant on or before the Closing date.
b. Middleby,
Blodgett, and the Tenant shall have provided to the Landlord at or prior to the
Closing a corporate resolution, certified by Middleby's, Blodgett’s, or the
Tenant’s corporate secretary and in form and substance satisfactory to the
Landlord, authorizing a named individual or officer to execute on behalf of
Middleby, Blodgett, and the Tenant all documents necessary to implement the
transfer provided for in this Agreement.
c. Prior to
or simultaneously with the Closing, the Landlord shall have closed on the sale
of the Premises substantially in accordance with the terms and conditions of the
Field House Agreement.
d. On the
date of the Closing, there shall be no default by the Tenant under the Lease,
and there shall be no event or condition that with the giving of notice or the
passing of time would constitute a default by the Tenant under the
Lease.
8. Possession. At the
Closing, the Tenant shall deliver possession of the Premises to the Landlord in
accordance with the terms and conditions of the Lease.
9. Access. The
Tenant shall allow the Landlord and Field House, and their respective employees,
agents, and consultants, to enter upon the Premises at all reasonable times upon
reasonable advance notice to the Tenant for the purposes of viewing the Premises
prior to the Closing. In addition, if any tests, inspections, or other
activities that must be performed on the Premises or require access to the
Premises are demanded by any permit authority, said authority, and their agents
or designees, shall be allowed to enter upon the Premises at all reasonable
times upon reasonable advance notice. Field House shall return the Premises to
the condition it was in prior to any testing or inspection and shall indemnify
and hold the Landlord and the Tenant harmless from and against any and all
liability arising from its entry upon the Premises in connection with said
testing or inspection.
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10. Closing
Adjustments. All
property taxes, water, fire, school, sewer, or other municipal charges or
assessments, fuel, rent, association dues, and interest on assumed mortgages
that are the responsibility of the Tenant under the Lease, if applicable, shall
be apportioned as of date of Closing from the beginning of the current tax or
billing period for each taxing or billing entity. Should any tax, charge, or
rate be undetermined on the date of the Closing, the last determined tax,
charge, or rate shall be used for the purpose of apportionment. Because
Middleby, or Middleby’s subsidiary or affiliate the Tenant, is currently
responsible for all property taxes and operating costs with respect to the
Premises pursuant to the Lease, adjustments of property taxes, fuel, and the
like shall be made directly between Middleby and Field House at the Closing. All
such apportionments shall be final as of the date of the Closing.
11. Broker. The
Landlord and Middleby acknowledge that Xxxxxxxxx Real Estate has facilitated all
or portions of this transaction on behalf of Middleby pursuant to an agreement
between Middleby and Xxxxxxxxx. Middleby shall be solely responsible for any
commission, fee, or other compensation due to Xxxxxxxxx Real Estate in
connection with the termination of the Lease pursuant to this Agreement or the
sale of Premises to Field House pursuant to the Field House Agreement. Middleby
shall defend, indemnify, and hold the Landlord harmless against and from any
loss or damage, including attorneys' fees, arising out of any claims for real
estate commissions, fees, or broker compensation by Xxxxxxxxx Real Estate or any
other party claiming by or through Middleby or the Tenant.
12. Survival.
Notwithstanding the termination of the Lease pursuant to this Agreement and
notwithstanding any provisions to the contrary contained in the Lease, including
Section 9.9 thereof, the terms, conditions, and obligations of the Tenant
contained in Sections 4.7.5, 4.7.6, and 4.8 of Lease only shall survive the
termination of the Lease, provided, however, that the indemnification
obligations of the Tenant thereunder shall in no event relate to liability
resulting from actions or events that occur after the termination of this Lease
pursuant to this Agreement. Notwithstanding anything to the contrary contained
in Section 20 below, Xxxxxxxx shall assume the obligations of the Tenant under
the Lease that survive the termination of the Lease pursuant to this Section 12
and the Tenant and Xxxxxxxx shall be jointly and severally liable to the
Landlord for the performance of the obligations of the Tenant under the Lease
that survive the termination of the Lease pursuant to this Section 12.
13. Effect. This
Agreement contains the entire agreement by and between the parties regarding the
purchase and sale of the Premises and supersedes any and all prior agreements,
written or oral, relating to the purchase or sale of the Premises. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Vermont.
14. Modification
and Amendment. No
modification, amendment, or deletion affecting this Agreement shall be effective
unless in writing and signed by all parties.
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15. Notice. Any
notice required to be given by the terms of this Agreement shall be deemed duly
served when deposited in the U.S. mails, certified or registered mail, return
receipt requested, postage prepaid, or sent by nationally recognized overnight
courier, and properly addressed to the parties at the addresses shown
below:
If to
Landlord: Pizzagalli
Properties, LLC
Attn:
Xxxxx Xxxxxxxxxx
00 Xxx
Xxxxx, X.X. Xxx 0000
Xxxxx
Xxxxxxxxxx, XX 00000-0000
Telephone
No.: (000) 000-0000
Telecopier
No.: (000) 000-0000
with a
Copy
to: Xxxxxx X.
Xxxx, Esq.
Xxxxx,
Xxxxx & XxXxxxxx, P.C.
000
Xxxxxxx Xxxxxx
X.X. Xxx
000
Xxxxxxxxxx,
XX 00000-0000
Telephone
No.: (000) 000-0000
Telecopier
No.: (000) 000-0000
If to
Middleby,
The
Middleby Corporation
Xxxxxxxx,
or
Tenant:
Attn:
Xxxxxxx XxxxXxxxxx
0000
Xxxxxxxxxxx Xxxxx
Xxxxx, XX
00000
Telephone
No.: (___) ________
Telecopier
No.: (___) ________
with a
copy
to:
Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx
Attn:
Xxxxxx (Fin) X. Xxxx, Esq.
Facsimile
No. (000) 000-0000
or to
such other person, address or number as the party entitled to such notice or
communication shall have specified by notice to the other party given in
accordance with the provisions of this Section. Any such notice or other
communication shall be deemed given: (i) if mailed, when deposited in the mail,
properly addressed and with postage prepaid; or (ii) if sent by overnight
service, next-day after sending.
16. Further
Assurances. Following
the execution of this Agreement, Middleby, Blodgett, the Tenant, and the
Landlord shall cooperate fully with each other and take any and all actions and
sign any and all documents as are reasonably necessary to facilitate the
transactions contemplated by this Agreement.
17. No
Amendment of Lease. This
Agreement is not intended as an amendment or modification of the Lease, which
shall remain in full force and effect in accordance with its terms until the
Certificate of Termination is executed and delivered at the
Closing.
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18.
Exhibits. The
following Exhibits are hereby incorporated herein by reference:
Exhibit A
- Form of Certificate of Lease Termination
Exhibit B
- Form of Promissory Note
Exhibit C
- Form of Letter of Credit.
19. Counterpart
Copies. This
Agreement may be executed in two or more counterpart copies, each of which shall
be deemed to be an original and all of which counterparts shall have the same
force and effect as if the parties hereto had executed a single copy of this
Agreement.
20. Guaranties. The
Guaranty of Lease of Xxxxxxxx Holdings, Inc. ("BHI") and the Guaranty of Lease
of X.X. Xxxxxxxx Corporation (together with BHI, the "Guarantors" and each a
"Guarantor") (each such guaranty, a "Guaranty", and collectively the
"Guaranties") shall each be deemed terminated as of the effective date of
termination of the Lease pursuant to this Agreement. As of such termination
date, Landlord hereby releases and discharges the Guarantors and their
respective successors, assigns, affiliates, shareholders and any other entities
that are controlled by, under the control of such Guarantor, from all manner of
actions, causes of action, suits, debts, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, controversies, agreements, promises,
variances, trespasses, damages, judgments, claims and demands whatsoever, in law
or in equity which Landlord ever had, now has or hereafter can, shall or may
have against such Guarantor or its successors or assigns for, upon or by reason
of any matter, cause or thing whatsoever relating to or arising out of the
Guaranties, this Agreement, or the Premises. Nothing in this Section 20 shall be
deemed to affect the assumption of certain obligations by Xxxxxxxx pursuant to
Section 12 above.
[Signature
Pages to Follow]
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IN
WITNESS WHEREOF, the parties hereto have caused this Lease Termination Agreement
to be executed by their respective duly authorized agents as of the dates set
forth opposite their signatures below.
Pizzagalli
Properties, LLC
November
10, 2004 By:
/s/
Xxxxx
Xxxxxxxxxx
Date Xxxxx
Xxxxxxxxxx, President
The Middleby
Corporation
November
10, 2004 By:
/s/
Xxxxxxx X.
XxxxXxxxxx
Date Vice
President
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Cloverleaf
Properties, Inc.
November
10, 2004 By:
/s/
Xxxxxxx X. XxxxXxxxxx
Date Vice
President
Xxxxxxxx Holdings,
Inc.
November
10, 2004 By:
/s/
Xxxxxxx X. XxxxXxxxxx
Date Vice
President
