Exhibit 10.17
SUBLEASE AGREEMENT
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THIS AGREEMENT entered into this the sixteenth day of December, 1998 by
and between the Blytheville-Xxxxxxx Regional Airport Authority (hereinafter
called SUBLESSOR) and Floral Distributors, Inc. a Delaware corporation and a
wholly owned subsidiary of USA Floral Products, Inc. (hereinafter called
SUBLESSEE).
WITNESSETH:
WHEREAS, SUBLESSOR entered into an Economic Development Conveyance Lease
Agreement with the Secretary of the Air Force dated September 29, 1997, for the
lease of certain real property located at the Arkansas Aeroplex, (former Xxxxx
Air Force Base), Blytheville, Arkansas, more particularly described in said
Lease Agreement; and,
WHEREAS, SUBLESSEE is in need of facilities for the manufacture,
processing, storage and distribution of flowers, floral supplies and other
consumer products related thereto; and,
WHEREAS, SUBLESSOR has agreed to sublease part of said premises as set
forth hereinafter, which is the subject of the Lease Agreement as aforesaid, to
SUBLESSEE on the same terms and conditions of said Lease Agreement, except as
set forth hereinafter.
NOW, THEREFORE, in consideration of the mutual covenants, considerations,
conditions, and restrictions set forth hereinafter SUBLESSOR and SUBLESSEE
hereby agree as follows:
1. LEASED PREMISES. The premises which is the subject of this Sublease
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shall be Buildings 552, 555, 556, and 560 totaling 80,859 square feet, and
parking located at the Arkansas Aeroplex, ( former Xxxxx Air Force Base), which
is part of the area subject to the Lease Agreement. Exhibit "B" hereto sets
forth the premises and the designated parking area and a copy the floor plan of
said premises is attached hereto as Exhibit "C", both of which are made a part
hereof by reference.
2. USE OF LEASED PREMISES. The leased premises shall be used solely for
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the manufacture, processing, storage and distribution of flowers, floral
supplies and other consumer products related thereto.
3. TERM. This agreement shall commence on January 1, 1999 and terminate
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on December 31, 2003. So long as SUBLESSEE shall not be in default hereunder,
SUBLESSEE shall, upon 6 (six) month's notice prior to the end of the Sublease
term, or any option period, have the right to extend this sublease for four (4)
additional five (5) year periods.
4. RENTAL. SUBLESSEE shall pay monthly rental, in advance, subject to
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adjustments as set forth hereinafter beginning on the Commencement Date of the
sublease, as follows:
Lease Period Monthly Rent Per Square Foot
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1/st/ Lease Year $3,369.13 $.50
2/nd/ Lease Year $4,042.95 $.60
3/rd/ Lease Year $5,053.69 $.75
4/th/ Lease Year $6,536.10 $.97
5/th/ Lease Year $6,536.10 $.97
Notwithstanding the foregoing, the first month's rent will be due upon
execution of the lease by both parties. The rent for the next two months will
be abated and regular monthly rental payments will commence on the first day of
the fourth month.
For the sublease extensions provided for in Section 3 the monthly rent
amounts shall be adjusted on each third year anniversary of the lease (including
throughout the option periods) by the increase, if any, in the Consumer Price
Index ("CPI") for the State of Arkansas for the prior three year period. The
monthly rental shall not be reduced unless mutually agreed to by the parties in
writing.
As an example of the foregoing, if the CPI Index for Arkansas at the
commencement of the lease is 100 and on the third anniversary of the
commencement of the lease is 108, the increase is 8% and the monthly rental for
the fourth year will be increased from $6,536.10 to $7,058.99.
5. CONDITION, MAINTENANCE AND IMPROVEMENTS. SUBLESSEE acknowledges that
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it has inspected the building and rooms which are the subject of this Agreement,
that they are adequate for SUBLESSEE'S purposes, and that SUBLESSOR shall not be
required to make any modifications to the premises. SUBLESSEE is accepting the
premises as is. SUBLESSEE shall be responsible for providing all building and
ground maintenance and repairs, including roof and mechanical maintenance, at no
cost to SUBLESSOR. No alterations to the leased premises shall be made unless
prior approval, in writing, is given by SUBLESSOR. All alterations to the leased
premise shall either remain at the leased premises or be removed by SUBLESSEE at
SUBLESSOR'S request. SUBLESSEE shall be solely responsible for any removal
expense. In the event SUBLESSEE removes said alterations, the leased premises
shall be restored to its condition, reasonable wear and tear excepted at the
time said alterations were made. Notwithstanding the forgoing , any fixtures
and/or chattle affixed to the interior of the structures which may be removed
without causing damage to such structures shall remain the property of the
SUBLESSEE and may be removed at the end of the lease term.
Ground maintenance areas are indicated on Exhibit "C" to this sublease.
SUBLESSOR shall not be required to perform any repairs or maintenance to the
lease premises.
6. JANITORIAL SERVICES. SUBLESSEE shall be required to provide its own
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janitorial services for the premises it is occupying.
7. ENVIRONMENTAL INDEMNIFICATION. The SUBLESSEE shall save, indemnify,
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and hold harmless the SUBLESSOR from any costs, expenses, liabilities, fines,
or penalties resulting from discharges, emissions, spills, storage, disposal,
or any other action that is attributable and/or identifiable to SUBLESSEE and
that occurs subsequent to SUBLESSEE'S possession of the leased premises, giving
rise to SUBLESSOR liability, civil or criminal, or responsibility under federal,
state or local environmental laws. This provision shall survive the expiration
or termination of this Sublease. The SUBLESSOR shall, save, indemnify and hold
harmless the SUBLESSEE from any costs, expenses, liabilities, fines, or
penalties resulting from discharges, emissions, spills, storage, disposal, or
any other action that is attributable and/or identifiable to SUBLESSOR
regardless of when it occurred or occurs, giving rise to SUBLESSEE liability,
civil or criminal, or responsibility under federal, state or local environmental
laws. This provision shall survive the expiration or termination of this
Sublease.
8. INCORPORATION OF LEASE AGREEMENT. SUBLESSOR and SUBLESSEE agree and
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understand that the Lease Agreement, previously entered into between SUBLESSOR
and the Secretary of the Air Force which is attached hereto as Exhibit "A" is
hereby incorporated in this Agreement and made a part hereof as though set forth
herein word for word.
9. RIGHTS OF TERMINATION. The failure to comply with any provisions of
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this Lease, where such failure to comply continues for thirty (30) days after
delivery of written notice thereof by the
SUBLESSOR to the SUBLESSEE, shall constitute a default, breach and termination
of this Sublease by the SUBLESSEE. In that event, or if the premises shall be
abandoned, deserted, or vacated, the SUBLESSOR, its agents or successors, shall
be authorized to re-enter, repossess the premises, and to evict SUBLESSEE and
any other occupant. In the event SUBLESSOR is required to evict SUBLESSEE or any
other occupant, SUBLESSOR shall be entitled to receive all of its costs, lost
rental and any other damages provided by law, in connection with said eviction
including reasonable attorney fees.
10. INSURANCE. SUBLESSEE shall be responsible for providing property and
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casualty insurance for its property and equipment, whether owned or leased by
SUBLESSEE, and located on the Arkansas Aeroplex, (former Xxxxx Air Force Base).
During the effective term of this Agreement, and any renewal term, the
SUBLESSEE, at its expense, shall maintain a public liability insurance policy in
the amount of at least Five Hundred Thousand Dollars ($500,000.00) with respect
to bodily injury and property damage. All policies or certificates of insurance
issued by the respective insurers for public liability and all-risks property
insurance will name the SUBLESSOR and the federal government as additional
insureds; shall provide that any losses shall be notwithstanding any act or
failure to act or negligence of the SUBLESSOR or the government or any other
person; and shall provide that no cancellation, reduction in amount, or material
change in coverage thereof shall be effective until at least five (5) days after
receipt by the SUBLESSOR of written notice thereof. SUBLESSEE agrees to provide
SUBLESSOR certificates and cover notes verifying said coverage on or before the
effective date of this agreement.
11. UTILITIES. SUBLESSEE shall be responsible for installing, water,
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electrical and gas utility meters, at its own expense, and for arranging utility
services with local utility providers.
12. NOTICES. Any notice to be given pursuant to this Agreement shall be
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in writing and shall
be addressed, if to the SUBLESSOR, to: Executive Director, Blytheville-Xxxxxxx
Regional Airport Authority, X.X. Xxx 000, Xxxxxxxxxxx, Xxxxxxxx 00000-0000; and
if to the SUBLESSEE, to: USA Floral Products, Inc., 0000 Xxxxxx Xxxxxxxxx
Xxxxxx, X.X., Xxxxxxxxxx, X.X., Attention: President, Distribution Division, or
as may from time to time be directed by the parties in writing. Notice shall be
deemed to have been duly given if and when enclosed in a properly sealed
envelope, correctly addressed, and sent certified mail, return receipt
requested.
13. APPROVALS. Any approvals required hereunder will be granted
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expeditiously so long as the request is not inconsistent with this sublease or
the Lease Agreement.
14. ENTRY AND ACCESS. SUBLESSEE agrees and understands that the premises
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which are subject to this Agreement are owned by the United States Government
and are subject to certain regulations in regard to entry and access. SUBLESSEE
agrees that all travel by employees, contractors, subcontractors, and invitees
will use the most direct routes to and from the premises being leased pursuant
to this Agreement. It is understood that access to and use of the airfield by
SUBLESSEE'S suppliers is essential to SUBLESSEE'S use of the premises.
15. RESPONSIBILITY OF THE PARTIES. It is specifically agreed and
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understood that all obligations of SUBLESSOR pursuant to the Lease Agreement
between SUBLESSOR and the Secretary of the Air Force, (Exhibit "A") are
incorporated herein by reference, and shall be assumed by SUBLESSEE to the
extent of the area subleased. SUBLESSEE shall stand in the place and stead of
SUBLESSOR as to all terms of said Lease Agreement as if SUBLESSEE had originally
been a party to said Agreement. In addition, SUBLESSEE shall be responsible for
maintaining the leased premises in as good condition as at the beginning of this
Agreement, less reasonable wear and tear.
16. PARKING. SUBLESSEE agrees to use only the area included in the leased
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premises as
set forth herein above, and designated on Exhibit C, for parking and agrees to
remove any vehicle which shall park in any unauthorized area. Notwithstanding
the foregoing, SUBLESSOR and SUBLESSEE may mutually agree in the future for the
use of additional parking space.
17. SIGNAGE. Any signs which are to be placed by SUBLESSEE must be
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approved by SUBLESSOR in advance. Upon termination of this Agreement, SUBLESSEE
shall be required to remove all signs and to make any repairs for damage caused
as a result of their removal.
18. RIGHT OF FIRST REFUSAL. USA Floral Products Inc. is granted a Right-
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of-First-Refusal for Buildings 105 and 203 to lease or purchase for the purpose
of future expansion. SUBLESSOR shall pay a rate of $1.50 per square foot for
Building 105 and shall pay $1.80 for building 203. If SUBLESSOR chooses to lease
either building prior to SUBLESSOR receiving an offer from a third
party this Right-of-First-Refusal Lease shall be made according to the same
terms and conditions of this Agreement. In the event SUBLESSOR receives an offer
from a third party for the lease or purchase of the property described on
Exhibit "D" during the term of this sublease, SUBLESSOR shall notify SUBLESSEE
of the offer including number of jobs created and rental to be paid and
SUBLESSEE shall have thirty days from receipt of the offer to meet said offer.
If the event SUBLESSEE fails to exercise this right of first refusal it shall be
null and void after the thirty days as set forth above.
19. RIGHT TO UNIMPROVED LAND SUBLESSEE shall have the right to lease a
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twenty (20) acre parcel of land for construction of a facility adjacent to the
runway as described in Exhibit "D" ("Unimproved Land") as long as SUBLESSEE has
this lease in effect with SUBLESSOR. Such Unimproved Land shall be leased for a
one time cost of one thousand dollars ($1,000) per acre to be paid
at commencement of construction and one hundred dollars ($100) per acre per year
for the years remaining on the lease between LESSOR and SUBLESSOR pursuant to
Section 8 of this Agreement. Upon transfer of land by deed to SUBLESSOR the
lease payments will continue until the lease is terminated according to Section
8 of this Agreement. In the event SUBLESSEE fails to exercise this First-Right-
of Refusal it shall be null and void after thirty days as set forth above.
20. LANDING FEES AND FUEL CHARGES At no time during the term of this
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Agreement shall SUBLESSOR charge an air landing fee for any traffic related to
SUBLESSEE's business unless said aircraft does not exceed one thousand gallons
and in that event, said aircraft will be assessed a charge of $1.15 per one
thousand gallons of maximum gross take-off weight. SUBLESSEE shall receive not
less than 25% of the difference between the price SUBLESSOR pays for fuel and
the price SUBLESSOR charges for fuel, to traffic related to SUBLESSEE's
business.
21. INDEMNITY. SUBLESSEE agrees to defend, indemnify, and hold harmless
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SUBLESSOR against any claim, expense, loss, or liability as a result of any
breach of the terms, covenants, or conditions of this Agreement, or as a result
of the carelessness, negligence, or improper conduct of any of the SUBLESSEE'S
agents, servants, employees, visitors, or licensees.
22. ASSIGNMENT. This Agreement shall not be assigned by SUBLESSEE without
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the prior written consent of SUBLESSOR, which consent shall not be unreasonably
withheld.
23. AUTHORIZATION. SUBLESSOR and SUBLESSEE hereby covenant that they have
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authority to enter into this Agreement by proper corporate resolution or
otherwise, and that the individuals executing this Agreement are authorized to
execute the same and to bind the respective parties.
24. APPLICABLE LAW. SUBLESSOR and SUBLESSEE agree that this Agreement
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shall be governed by the laws of the State of Arkansas.
25. BINDING EFFECT. This Agreement shall be binding upon and inure to the
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benefit of the parties hereto and their successors and assigns.
26. ENTIRE AGREEMENT. This document forms the entire agreement between
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the parties, and any other arrangements or representations, written or oral, are
hereby rescinded and replaced by this Agreement.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
17th day of December, 1998.
BLYTHEVILLE-XXXXXXX REGIONAL AIRPORT
AUTHORITY
BY: /s/ Xxxx Xxxxx
_______________________________
Title: Chairman Blytheville-Xxxxxxx
Regional Airport Authority
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FLORAL DISTRIBUTORS, INC.
BY: /s/ Xxxxxxxxxxx X. Xxxxxx
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Title: Vice President
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