EXHIBIT 10.7
LEASE
-----
This lease is made and entered into as of the 1st day of September,
2004 by and between U.S. Flue-Cured Tobacco Growers Inc., a North Carolina
Corporation with an office located at 000 Xxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxx
Xxxxxxxx 00000, hereinafter referred to as "Landlord", and Xxxxxxxxx Filters,
Inc, a Delaware Corporation, with an office located at 000 Xxxxxxxxxx Xxx.,
Sleepy Hollow, N.Y. 10591, hereinafter referred to as "Tenant", for and in
consideration of the mutual covenants set out herein and other good and valuable
consideration as follows:
WITNESSETH:
1. PREMISES.
1.1 Office Space. Landlord hereby demises and leases to Tenant and
Tenant hereby takes and hires from Landlord for the term and subject to all of
the conditions hereof, the office space in the area referred to as the "Human
Resources Department" belonging to the Landlord and located at 000 Xxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxxxx (the "Premises"), as more particularly
described in Schedule A hereto, which attachment is hereby incorporated by
reference, together with ingress and egress through the Human Resource
Department entrance only 24 hours a day, 7 days a week. Also included in the
Premises shall be six (6) designated parking spaces in the parking lot adjacent
to the security entrance to the building. Landlord reserves the right to
relocate Tenant to another section of the building during the Term of the Lease
or any subsequent renewal, with an appropriate adjustment to the Base Rent
should the new space be smaller in total square footage. Any such relocation
will be performed in a manner so as not to disrupt Tenant's ordinary course of
business.
1.2 Processing Equipment. Landlord hereby grants to Tenant a
non-exclusive license for the term and subject to all of the conditions herein
for the specific and scheduled use of the processing equipment herein identified
as the Pilot Plant and the Cigarette Making Plant. Tenant's use of this
equipment will be subject to submitting a written request one (1) week in
advance of Tenant's need for such use, and subject to the availability of the
equipment relative to Landlord's operating schedule and Landlord's personnel.
2. TERM AND TERMINATION.
2.1 Term. The term of this Lease shall be six months, beginning on
the Commencement Date (as defined below) and ending six months from the
Commencement Date at midnight (the "Term"), unless sooner terminated as herein
provided. At Tenant's option, Tenant shall have the right to renew this Lease
for one (1) additional Term on the same terms and conditions set forth herein
except that Landlord shall have the right to increase Base Rent for any renewal
term. To exercise such option, Tenant shall give Landlord notice of Tenant's
intention to exercise the option in writing at least thirty (30) days before the
effective termination date of the initial Term.
2.2 Commencement Date. The Commencement Date shall be September 1,
2004.
1
2.3 Tenant's Right to Terminate. At any time during the Term of
this Lease, (i) in the event that the Premises are, or become, in a condition
which substantially interferes with Tenant's ability to use the Premises as
contemplated in Paragraph Six (6) hereof and such condition continues following
the expiration of a fifteen day cure period commencing on the date of notice to
Landlord of such condition, or (ii) in the event that Landlord withdraws
approval for the use by Tenant of any previously approved substance or material,
Tenant shall have the right to terminate the Lease by notice to Landlord
effective 30 days from the date of such notice.
3. RENT.
3.1 Base Rent - Office Space. All rent relative to office space
shall be payable by Tenant on or before the first (1st) day of each and every
month in advance and without previous demand therefore by Landlord and without
setoff or reduction. Tenant shall pay to Landlord a base rent of $1,750.00 per
month beginning September l, 2004 (the "Base Rent").
3.2 Full Service Rent - Office Space. Tenant shall pay to Landlord
a full service rent of $500 per month for services including but not limited to
maintenance, utilities, janitorial, access to common areas and restrooms,
payment of property taxes, use of copiers, phones, faxes, and use of Landlord's
cafeteria. A telephone system with headsets will be provided. It will be
Tenant's responsibility to contract phone service and pay all the respective
telephone charges billed to Tenant by the contracted telephone service company.
3.3 Processing Equipment Rent. All rent for processing equipment
shall be payable by Tenant on or before the day preceding the scheduled day of
use. Tenant, in addition to reimbursing Landlord for costs (such costs to
include labor, material, and variable overhead), shall pay to Landlord an
equipment rental fee of $750.00 for use of the Pilot Plant and $750.00 for the
use of the Cigarette Making Plant, for any sample run which requires four (4)
hours or less machine time. Any sample run requiring more then four (4) hours
machine time, but less than eight (8) hours machine time will be billed to
Tenant at $1250.00. The charge for any sample run requiring more than eight (8)
hours machine time will be determined at the time the sample is requested.
4. SECURITY DEPOSIT. Tenant shall deposit $2,250.00 ("Security
Deposit") with Landlord to secure Tenant's performance of its Lease obligations.
If Tenant defaults hereunder, Landlord may, after giving five (5) days advance
notice to Tenant, without prejudice to Landlord's other remedies, apply part or
all of the Security Deposit to cure Tenant's default. If Landlord so uses part
or all of the Security Deposit, then Tenant shall within ten (10) days after
written demand, pay Landlord the amount so used by Landlord, in order to restore
the Security Deposit to its original amount. Any part of the Security Deposit
not used by Landlord as permitted by this paragraph shall be returned to tenant
within fifteen (15) days after this Lease terminates.
5. INSURANCE. Tenant shall at all times during the term hereof at its
sole cost and expense procure and maintain in force and effect commercial
general liability insurance, including contractual liability and personal injury
with combined single limit coverage of not less than $1,000,000.00.
2
6. USE OF PREMISES. The Premises shall be used by Tenant for general
office purposes and for conducting experimental production of tobacco products.
Tenant shall not conduct activities on the Premises additional to or in
expansion of said stated purposes. Tenant shall comply with the terms of this
Lease and with all laws, ordinances and regulations of any lawful authority,
including any and all lawful zoning ordinances now in force or which may
hereafter be adopted, affecting the use of the subject Premises, and shall keep
the Premises in a neat and clean condition. Any failure by Tenant to comply with
the foregoing requirements shall give Landlord the option to terminate this
Lease by written notice to Tenant, without prejudice to any other remedies
Landlord may have for such breach.
7. MAINTENANCE AND ALTERATION OF PREMISES.
7.1 Tenant's Acceptance of Premises. Tenant represents to the
Landlord that it has examined and inspected the Premises and accepts the
Premises. Landlord makes no representation or warranty as to the condition of
said Premises.
7.2 Repairs by Landlord. Landlord shall be responsible for keeping
the foundations, roof, exterior walls, floor, electrical (including heating,
ventilation and air conditioning systems), plumbing, alarm systems, exterior and
interior walls, exterior and interior doors, and structural portions of Premises
in good order and repair; provided, however, that Tenant shall reimburse
Landlord within ten (10) days following Landlord's request to Tenant and proof
of Landlord's repair costs for any repairs occasioned by reason of the acts or
negligence of Tenant, its employees, agents, invitees, licensees, or
contractors. Tenant shall give Landlord written notice of the necessity for any
repairs required to be made by Landlord and Landlord shall have a reasonable
period of time thereafter to make such repairs.
7.3 Maintenance by Tenant. Tenant shall keep clean and in good
order and shall not damage the Premises, ordinary wear and tear only excepted.
7.4 Alterations. Tenant may not, without Landlord's prior written
consent, make structural improvements or alterations upon the Premises or
install fixtures or equipment which require holes to be made in the walls or
floors.
7.5 General Conditions. Any work performed by Tenant or Landlord
shall be done in a good and workmanlike manner. At no time may Tenant do any
work that results in a claim of lien against Landlord which is not discharged
within thirty (30) days, and if requested by Landlord on termination of this
lease or vacation of the Premises by Tenant, Tenant shall restore at Tenant's
sole expense the Premises to the same condition as existed at the commencement
of the Term. Landlord, however, may elect to require Tenant to leave structural
alterations performed by Tenant.
8. QUIET ENJOYMENT. Landlord hereby covenants and warrants that it is
seized and possessed of a fee simple absolute interest in and to the Premises
and that subject to the terms and conditions herein set forth, Tenant shall have
and enjoy the Premises during the term hereof, provided that no reasonable
action of Landlord in repairing and restoring the Premises which does not
substantially interfere with Tenant's business for a period of more than ten
(10) days shall be deemed a breach of this covenant or give Tenant any right to
modify this Lease either as to the Term, rent payable or other obligations
performed. Landlord shall not be responsible or liable to Tenant for injury or
damage resulting from acts or omissions of persons other than Landlord, its
3
employees, agents, or representatives, licensees or invitees of for injury or
damage resulting to Tenant or its personal property from bursting, stoppage or
leaking of water, gas, sewer or steam pipes except for such loss or damage which
arise from the willful or negligent conduct of Landlord or for failure to make
repairs in a timely fashion after due notice from Tenant.
9. DESTRUCTION OF PREMISES. If a substantial portion of the Premises
are destroyed by fire or other casualty not resulting from the wrongful or
negligent act of Tenant, and comparable, substitute space is not available,
either Landlord or Tenant may, by written notice given not later than thirty
(30) days after the date of such destruction, terminate this Lease. If there is
partial destruction and Tenant reasonably is required to close its operations
during repairs, rent shall xxxxx while so closed, but if Tenant is able to
continue its operations during repairs, rent shall be adjusted and prorated in a
proportion which the area of unusable space in the Premises bears to the total
space in the Premises or Landlord shall provide additional, comparable space. In
the event that Tenant elects to use part of the Premises, Landlord shall not
incur any liability for any loss to Tenant's personal property during such
partial use. If the damages are such during partial use, that Landlord or Tenant
concludes that restoration cannot be completed within sixty (60) days, Landlord
or Tenant may at its option terminate this Lease. If the Premises are damaged by
cause due to fault or neglect of Tenant, its agents, employees, invitees, or
licensees, Landlord may repair such damage and Tenant shall be liable to
Landlord for the cost of repairs, and there shall be no apportionment or
abatement of rent.
10. CONDEMNATION. If the whole or any part of the Premises is taken by
any governmental agency or corporation vested with the right of exercise of
eminent domain, whether such taking be effected by court action or by settlement
with the agency exercising or threatening to exercise such power, and if the
portion of the Premises so taken renders the remainder of the Premises unfit for
the use thereof by Tenant, the Tenant shall have the option to terminate this
Lease, which option must be exercised within thirty (30 days) of such taking. If
Tenant shall not so elect to terminate, or the taking does not interfere with
its use of the Premises to the extent that Tenant does not have an option to
terminate, there shall be an adjustment of the annual rental reflecting on a pro
rate basis any reduction in Tenant's leased space. All the condemnation award
except for damage to or the taking of Tenant's personal property and Tenant's
relocation award, if any, shall belong to the Landlord.
11. ASSIGNMENT - SUBLEASE. Tenant may not assign this Lease, and may
not sublet further or permit the use by a third party of any part or all of the
Premises without the written consent of the Landlord, save and except for any
assignment for sub-letting by and between Xxxxxxxxx Filters Inc. and its wholly
owned subsidiary, Xxxxxxxxx Tobacco C. which assignment for sub-letting is
permitted.
12. LANDLORD'S ACCESS TO PREMISES. Landlord shall have the right,
either itself or through its authorized agents, to enter the Premises at all
reasonable times in a reasonable manner, to examine the same, to make such
repairs, alterations, or changes as Landlord deems necessary; provided, however,
that Landlord shall give Tenant reasonable notice of any proposed access by
Landlord, obtain Tenant's written consent to any proposed alterations, or
4
changes and ensure no unreasonable disruption of Tenant's business on the
Premises at such time as Landlord makes repairs.
13. DEFAULT.
13.1 Events of Default. The occurrence of any of the following
shall be an event of default hereunder:
13.1.1 Should Tenant default in paying any installment of
the rental hereunder and such default continues for five (5) days after written
notice of such default from Landlord; or,
13.1.2 Should Tenant default in paying any other sum
covenanted to be paid by Tenant hereunder and fail to pay the same within ten
(10) days after written notice from Landlord; or,
13.1.3 Should Tenant default in performing any of the other
terms, provisions or covenants of this Lease and fail, within twenty (20) days
after written notice from Landlord, to cure such default, or as to any default
not curable within such twenty (20) day period should Tenant fail to institute
appropriate action to cure such default within such twenty (20) day period and
thereafter prosecute such action with due diligence and continuity; or,
13.1.4 Should Tenant file or have filed against it any
petition or action for relief under any creditor's law, including bankruptcy,
reorganization, or similar actions, either in state or federal court, and should
Tenant fail, within one hundred and twenty (120) days after written notice of
such petition or action for relief, to succeed in having dismissed such petition
or action for relief.
13.2 Remedies upon Event of Default. Upon the occurrence of any
event of default, then Landlord may, at its option and at any time thereafter,
do any of the following:
13.2.1 Terminate this lease by notice to Tenant, whereupon
this Lease shall end, and Tenant shall be liable for and shall pay to Landlord
the present value of all rental and other indebtedness which would otherwise
have become due and payable during the remaining portion of the term of this
Lease (had such terms not been terminated by Landlord) using a 5% discount
factor.
13.2.2 As Tenant's agent, without terminating this Lease,
enter upon and use its best efforts to rent the Premises at the best price
obtainable by reasonable effort, without advertisement, and by private
negotiations, for any term Landlord deems proper. Tenant shall remain liable to
Landlord for the deficiency, if any, between the rental and other sums payable
by Tenant hereunder and the rent, if any, obtained by Landlord on reletting,
after deducting any attorneys fees, commissions or other expenses paid or
incurred by Landlord with respect to such reletting.
5
14. REPRESENTATIVES. Landlord's representative shall be
Name: Xxx Xxxxxxx
Tel: 000-000-0000
Fax: 000-000-0000
or designee, who shall act for Landlord in any and all matters relative to this
Lease, and Tenant's representative, shall be
Name: Learned J. Hand
Tel: 000-000-0000
Fax:
or his designee, who shall act for Tenant in any and all matters relative to
this Lease and bearing on the performance of it obligations hereunder.
15. NOTICE. Any notice which Landlord or Tenant is required or desires
to give to the other shall be given in writing and either delivered at the
office of the designated representative for that party, or sent by telefax and
certified mail, return receipt requested to:
If to Landlord: If to Tenant:
USFCTG Xxxxxxxxx Filters
000 Xxxxx Xxxxxxxxx 000 Xxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000 Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Mr. Xxx Xxxxxxx Attention: Mr. Jeremiah Hand
Telefax: 000-000-0000 Telefax: 000-000-0000
with a copy to: with a copy to:
Flue-Cured Tobacco Cooperative Diversified Business Consulting, LLC
Stabilization Corporation 00 Xxxxxxxxx Xxxx
Attention: Xxxxxx Xxxx Xxxxxx, Xxxxx Xxxxxxxx 00000
0000 Xxxxxxxxx Xxxxx Attention: Xx. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000 Telephone: 000-000-0000
Telefax: 000-000-0000
Any notice hereunder shall be deemed to have been given at the time the hand
delivery is so made, or the date on which the telefax is sent, as evidenced by
confirmed telefax receipt.
16. INDEMNIFICATION.
16.1 Tenant's Indemnification. Tenant does hereby agree to
indemnify, defend and hold harmless Landlord, and any employee or agent of
Landlord from all losses, claims, damages, injuries, liabilities, litigation and
other expenses (including reasonable attorneys fees and other disbursements and
costs) which may arise or be claimed against Landlord and be in favor of any
6
persons or other entities for (i) any injuries or occupancy of the Premises by
Tenant (ii) any acts, omissions, negligence or fault of Tenant, its agents,
contractors, employees, licensees, visitors, customers, patrons or invitees
(iii) Tenant's failure to comply with any laws, statues, ordinances, codes or
regulations (including without limitation laws relating to the use, storage
and/or disposal of chemicals), or (iv) any default by Tenant in the observance
or performance of any obligations set forth in the Lease. Landlord shall not be
liable to Tenant for any damages, losses or injuries to the persons or property
of Tenant, except to the extent attributable to conduct or actions of the
Landlord or its agents. In the event that Landlord shall be made a party to any
litigation commenced against Tenant or otherwise regarding Tenant's use or
occupancy of the Premises, Tenant shall indemnify, protect and hold Landlord
harmless and shall pay all costs, expenses and attorney's fees, disbursements
and costs incurred or paid by Landlord in connection with such litigation and
any appeal thereof. Tenant agrees that all personal property of Tenant and/or
its employees, servants, agents or licensees shall be the sole responsibility of
Tenant and Landlord shall not be liable for theft or damage of or to any such
personal property, except to the extent attributable to conduct or actions of
the Landlord or its agents. Tenant shall not rely on Landlord nor hold Landlord
responsible for the provision of security or maintenance of insurance of any
kind. The provisions of this Paragraph shall survive the expiration or
termination of this Lease.
16.2 Landlord's Indemnification. Landlord does hereby agree to
indemnify, defend and hold harmless Tenant and any employee or agent of Tenant
against all liability (other than liabilities which are solely or partially the
fault of the Tenant) arising from the gross negligence or intentional wrongful
acts of Landlord.
17. HOLDING OVER. Tenant shall not hold over possession of the Premises
after the expiration or sooner termination of the Term without the express
written consent of Landlord. Tenant shall indemnify Landlord for, and hold
Landlord harmless from and against, any and all liabilities arising out of or in
connection with any delay by Tenant in surrendering and vacating the Premises,
including, without limitations, any claims made by any succeeding tenant based
on any delay and any liabilities arising out of or in connection with these
claims. If possession of the Premises is not surrendered to the Landlord on the
expiration or sooner termination of the Term, in addition to any other rights
and remedies of Landlord hereunder or at law or in equity, for the time during
which Tenant holds over in the Premises, Tenant shall pay Landlord as Base Rent
a sum equal to two (2) times the then current Base Rent in addition to all other
rent payable under this Lease. If any tenancy is created by Tenant's holding
over, the tenancy shall be on all of the terms and conditions of this Lease,
except that rent shall be increased as set forth above and the tenancy shall be
a month-to-month tenancy. Nothing in this Paragraph 17 shall be deemed to permit
Tenant to retain possession of the Premises after the expiration or sooner
termination of the Lease Term.
18. MISCELLANEOUS.
18.1 Severability. The invalidity of any portion of this Lease
shall not have any effect on the balance hereof.
18.2 Binding Effect. This Lease shall be binding upon the
respective parties hereto, their successors and permitted assigns.
7
18.3 Entire Agreement/Modifications. This Lease supersedes and
cancels all prior negotiations and agreements, written or oral, between the
parties concerning the Premises. Any changes to this Lease shall be in writing
signed by both parties.
18.4 Grammatical Construction. The singular shall include the
plural and the masculine shall include the feminine as the context shall so
require.
18.5 Consent. Wherever this Lease requires the consent of either
party to any action, such consent shall not be unreasonably withheld or delayed.
18.6 Waiver. The waiver by either party of any breach of any term,
covenant or condition herein contained shall not be deemed to be a waiver of
subsequent breach of the same or any other term, covenant or condition herein
contained.
18.7 Governing Law. This Lease shall be governed by, and construed
and enforced in accordance with, the laws of the State of North Carolina.
LANDLORD:
U.S. Flue-Cured Tobacco Growers Inc.
By:
Name:
Title:
TENANT:
/s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
Title: CEO
8
