EXHIBIT 10.7
LEASE
THIS LEASE, made and entered into this 29th day of July, 1998 between St.
Cloud Investments, L.L.P., ("Landlord") and Founders Food & Xxxxxxx Ltd., a
Minnesota Corporation, ("Tenant");
WITNESSETH THAT:
1. PREMISES. Landlord, in consideration of the covenants hereinafter
contained, does hereby demise and lease unto the Tenant, and Tenant does hereby
hire and take from Landlord, all that certain tract or parcel of land and any
buildings or other improvements now or hereafter located thereon, together with
all Landlord's easements for cross access, parking and signage and all easements
and appurtenances in adjoining and adjacent land, highways, roads, streets,
lanes, whether public or private, reasonably required for the installation,
maintenance, operation and service of sewer, water, gas, power and other utility
lines, and for ingress and egress to the leased premises (all of which is
hereinafter called the "Leased Premises"), and outlined in red on the site plan
(the "Site Plan") attached hereto and made a part hereof as Exhibit B and being
situated in the City of St. Cloud (the "City"), County of Xxxxxxx, and State of
Minnesota, legally described on Exhibit A attached hereto and made a part hereof
(hereinafter called the "Development") and subject to the Operating and Easement
Agreement, attached hereto and made a part hereof as Exhibit C.
2. LANDLORD TO MAKE CERTAIN IMPROVEMENT. Landlord agrees at its sole
expense to construct certain improvements (the "Landlord's Improvements") on the
Leased Premises in accordance with the plans and specifications which have been
signed by Landlord and Tenant as constituting the plans, specifications and
addendum's therefore which are referred to in this Lease, a copy of which is
attached hereto and made a part hereof as Exhibit D. Landlord agrees to commence
construction of said improvements within 30 days after the Condition Date, as
described in paragraph 45 of this Lease, and thereafter to proceed with due
diligence to complete said improvements in accordance with said plans and
specifications as soon as reasonably possible, and, in any event, not later than
June 30, 1999. It has been acknowledged by the parties that it is intended that
the building, based upon the plans and specifications for the Landlord's
Improvements, shall contain 7,300 gross leasable square feet main floor, with a
600 square feet mezzanine and a 2,000 square foot basement as determined by
measuring the area of the building from the outside of the outside walls of the
building.
Landlord represents and warrants to Tenant that the Landlord's Improvements
shall be completed in a good and workmanlike manner and that, upon completion of
the Landlord's Improvements, the same shall be free from defect arising out of
faulty materials or improper workmanship for a period of one year. In addition,
in the event that, in connection with the Landlord's Improvements, any
contractors, subcontractors, or suppliers make any warranties with respect to
workmanship or materials which extend beyond the period of the Landlord's
warranty set forth above in this paragraph, Landlord shall assign the same to
Tenant upon the expiration of the one-year Landlord's warranty.
Landlord and Tenant agree that no changes in the Landlord's Improvements
shall be performed (or deemed authorized) unless the same are set forth in a
written change order, which shall contain a description of the change; the
additional cost, or cost savings, as the case may be, relating thereto; and the
identity of party who will bear any additional cost, or benefit from any reduced
cost, as the case may be.
Landlord represents and warrants to Tenant that the Landlord Improvements
when completed, will be served by utility services which are adequate to serve
Tenant's required utilities as described in Tenant's plans and specifications
provided by Tenant and attached hereto as Exhibit D and that all easements, if
any, which are necessary for purposes of providing said utility services to the
Leased Premises have been granted, in recordable form, are perpetual, and are
appurtenant to the land described in Exhibit A.
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Landlord hereby acknowledges that the plans and specifications provided by
Tenant are the sole property of Tenant. Landlord shall not use, nor willingly
permit any person or persons who may have access to the plans and specifications
through Landlord to use the plans and specifications, in whole or in part, for
the design or construction of any building or improvements other than those to
be constructed upon the Leased Premises.
Upon the commencement of the term of this Lease the parties shall, upon the
request of either party, mutually execute an instrument which shall set forth
the date upon which the term of this Lease commenced and the date upon which the
initial term of this Lease shall end.
3. TERM OF LEASE. The term of this Lease shall commence (i) sixty (60) days
after Landlord gives Tenant written notice that Landlord's Improvements have
been substantially completed and are ready for Tenant's pre-commencement
occupancy, as provided for in paragraph 4 below for purposes of Tenant
commencing the Tenant's Work, as hereinafter defined provided, or (ii) the date
upon which the City has issued a certificate of occupancy for the Leased
Premises, whichever date shall first occur, and shall continue until the
expiration of the twentieth lease year thereafter. If the term of this Lease
commences on the first day of a calendar month, the term "lease year" for the
purpose of this Lease shall mean a period of twelve months commencing on the
first day of the term of this Lease or any anniversary thereof. If the term of
this Lease does not commence on the first day of a calendar month, the term
lease year, for all purposes of this Lease shall mean a year commencing on the
first day of the first calendar month after the calendar month in which the term
of this Lease commences and any year which commences on any anniversary thereof.
4. TENANT'S WORK AND PRE-COMMENCEMENT OCCUPANCY. Upon receipt by Tenant
from Landlord of the notice which is provided for in paragraph 3 above of
substantial completion of the Landlord's Improvements Tenant shall be entitled
to occupy the Leased Premises for purposes of making, at Tenant's expense, the
tenant improvements ("the Tenant's Work") in accordance with the plans and
specifications which are referred to in this Lease. Prior to entering into
possession of the Leased Premises for purposes of performing the Tenant's Work,
Tenant shall purchase and maintain such insurance as will protect Landlord and
Tenant from claims under workmen's compensation laws and from claims for damages
because of bodily injury, including death, and from claims for damage to
property which may arise out of, or result from the Tenant's performance of the
Tenant's Work, whether such work be performed by Tenant or those of any
contractor, or subcontractor, or anyone directly or indirectly employed by any
one of them. Said insurance, where applicable, shall be written in the amounts
required pursuant to paragraph 15 hereof and Tenant shall deliver policies of
said insurance, or certificates thereof, to Landlord prior to occupying the
Leased Premises. Landlord's builders risk insurance during construction shall
provide that Tenant be named as an additional insured. Tenant agrees and
acknowledges that Tenant's pre-commencement occupancy of the Leased Premises
shall be non-exclusive and that Landlord and its contractors and agents shall
have the right to also occupy the Leased Premises during the pre-commencement
occupancy period for purposes of completing the Landlord's Work, provided,
however, Landlord's occupancy shall not unreasonably disrupt Tenant's
performance of Tenant's Work.
5. BASE RENT.
(a) During each of the first through the fifth lease years, Tenant
shall pay to Landlord annual base rent in an amount equal to $193,317.98 plus or
minus any interest adjustment as set forth herein under Section 5e. Said annual
base rent shall be payable in equal monthly installments of $16,109.83 in
advance on or before the first day of each calendar month.
(b) During each of the sixth through the tenth lease years, Tenant
shall pay to Landlord annual base rent in an amount equal to $203,105.48 plus or
minus any interest adjustment as set forth herein under Section 5e. Said annual
base rent shall be payable in equal monthly installments of $16,925.46 in
advance on or before the first day of each calendar month.
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(c) During each of the eleventh through the fifteenth lease years,
Tenant shall pay to Landlord annual base rent in an amount equal to $214,361.11
plus or minus any interest adjustment as set forth herein under Section 5e. Said
annual base rent shall be payable in equal monthly installments of $17,863.43 in
advance on or before the first day of each calendar month.
(d) During each of the sixteenth through the twentieth lease years,
Tenant shall pay to Landlord annual base rent in an amount equal to $227,305.08
plus or minus any interest adjustment as set forth herein under Section 5e. Said
annual base rent shall be payable in equal monthly installments of $18,942.09 in
advance on or before the first day of each calendar month.
(e) Notwithstanding anything contained herein to the contrary, in the
event that, pursuant to the Mortgage Loan, as hereinafter defined, or any
Replacement Mortgage Loan, as hereinafter defined, the interest rate payable by
Landlord, as Mortgagor, is increased or decreased during the term of this Lease
from the interest rate initially payable under the Mortgage Loan, then,
effective with the first monthly installment of annual base rent which is
payable after the effective date of any increase or decrease in the rate of
interest payable pursuant to the Mortgage Loan, or pursuant to the Replacement
Mortgage Loan, as the case may be, the monthly installment of base annual rent
which is payable hereunder shall be increased or decreased by an amount equal to
the amount by which the amount of interest payable, monthly, on the Mortgage
Loan, or on the Replacement Mortgage Loan, as the case may be, exceeds or
decreases the amount of interest which would have been payable monthly on the
Mortgage Loan if the rate of interest had not been increased or decreased over
the rate of interest payable under the Mortgage Loan. The term "Mortgage Loan"
as used herein, shall be deemed to refer to that original Mortgage Loan, which
Landlord, as Mortgagor, shall place against the Leased Premises within ninety
(90) days before or after the date upon which the initial term of this Lease
commences, in the principal amount of One Million Three Hundred Thousand and
no\100 ($1,300,000.00), which is for a 20 year term and provides for
amortization of said mortgage together with interest thereon over a period of
twenty (20) years. The original base interest rate is seven and three-fourths
percent (7.75%). The note secured by the mortgage requires that the interest
rate be recalculated after each five (5) year period at two and one-half (2.5%)
percent above the five year average Treasury rate. The term "Replacement
Mortgage Loan", as used herein, shall be deemed to refer to any mortgage loan
which Landlord, as Mortgagor, places against the Leased Premises during the term
of the Mortgage Loan and which is obtained by Landlord in replacement of the
Mortgage Loan, provided, however, that for purposes of calculating the amount of
increased or decreased interest, if any, which is payable by Tenant as provided
above, the putative principal balance of the Replacement Mortgage Loan shall at
all times be calculated to an amount equal to what the amount of the Mortgage
Loan principal balance would have been, taking into account amortization of
principal as scheduled under the Mortgage Loan, the original principal balance
and provided, however, that the Replacement Mortgage Loan does not provide for
an interest rate, or for adjustments to the interest rate, if any, which are not
then commercially reasonable. Landlord shall give Tenant written notice of
Landlord's intention to obtain a Replacement Mortgage Loan and shall cooperate
with Tenant in attempting to obtain a commitment for a Replacement Mortgage Loan
upon the most favorable terms and conditions then available. The principal
amount of any Replacement Loan shall not exceed eighty percent (80%) of the then
appraised value of the Lease Premises.
The rent shall be paid to Landlord at the address for Landlord set forth in
paragraph 29 below, or to such other party, or at such other place, or both, as
Landlord may from time to time designate by written notice given to Tenant.
6. PERCENTAGE RENT.
(a) In addition to base rent, Tenant, during the term of this Lease,
and any extension thereof, shall pay to Landlord as additional rent, hereinafter
called "Percentage Rent", an amount equal to seven (7%) percent on all gross
sales in excess of Three Million Two Hundred Thousand and no\100 ($3,200,000.00)
Dollars in each lease year made from the Leased Premises in each lease year.
Such Percentage Rent, if any, shall be paid
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within sixty (60) days following the end of each lease year. Such payment will
be accompanied by a statement signed by Tenant and certified under oath by
Tenant to be correct, setting forth the amount of the gross sales made during
said lease year.
(b) The term "gross sales" means the entire amount of the actual sales
price whether wholly or partly for cash or on credit of all merchandise and
services sold and all other receipts by sales, barter, or otherwise, from all
business conducted in or from the Leased Premises, including without limiting
the foregoing, all deposits not refunded to purchasers, all sales to employees
or agents of Tenant, all orders taken in or from the Leased Premises, although
said orders may be received by telephone or mail, or filled elsewhere, or
procured from the Leased Premises by house to house or other canvassing, all
sales by vending machines on the Leased Premises (except sales from telephones)
and sales by any sublessee, licensee, or concessionaire in or from the Leased
Premises, all without credit to Tenant for cash discounts or uncollected or
uncollected credit accounts. There shall be excluded from "gross sales" any sums
collected and paid out for any sales or excise tax based upon the sale or sales
of merchandise and required by law, whether now or hereafter in force, to be
paid by Tenant or collected from its customers, to the extent that such taxes
have been included in the gross sales price. Also excluded from gross sales are
employee and manager food and beverage purchases, customer comps on food,
customer promotions and off-site merchandise sales. The term "gross sales" shall
not include the mere exchange or transfer of merchandise between the stores of
Tenant, if any, where such exchanges or transfers of merchandise are made solely
for the convenient operation of the business of Tenant and not for the purpose
of consummating a sale made, at, in, from or upon the Leased Premises; nor shall
said term include the amount of returns to shippers or manufacturers, nor the
amount of any cash or credit refund made upon any sale where the merchandise
sold or some part thereof, is thereafter returned by the purchaser to and
accepted by Tenant, nor sales of fixtures, nor tips or gratuities paid to
employees of the Tenant either in cash or by credit card or charge account. Each
sale upon installment or credit shall be treated as a sale for the full price in
the month in which such sale shall be made, irrespective of the time when Tenant
shall receive complete or partial payment from its customer. Tenant shall
conduct its business in good faith and in such manner that Landlord will at all
times receive maximum amount of rent from the operation of Tenant's business in
and from the Leased Premises.
(c) Tenant (or if this Lease is assigned or the Leased Premises
sub-let, the Assignee or Sub-Lease of Tenant) will keep books of account, in
accordance with good accounting practice, accurately showing all sales and
income of the business conducted on the demised premises. Such books of account,
for the preceding two (2) year period only will be open and free for inspection
by Landlord or Landlord's authorized agents, at any reasonable time; such books
shall be kept at 0000 Xxxxx Xxxx Xxxx, Xx. Xxxxx Xxxx, Xxxxxxxxx or such other
place as Tenant may from time to time designate, provided such place is within
the St. Cloud or Minneapolis\St. Xxxx metropolitan area.
(d) At its option, Landlord may cause at any reasonable time, upon
forty-eight (48) hours prior written notice to Tenant, a complete audit to be
made of Tenant's sales records relating to the Leased Premises for the period
covered by any statement issued by the Tenant as herein before set forth. If
such audit shall disclose a discrepancy of more than three percent (3%) of gross
sales, Tenant shall promptly pay to Landlord the cost of said audit, at the
customary cost therefor, in addition to the deficiency in rental, which
deficiency shall be payable in any event. Any information obtained by Landlord
as a result of such audit or pursuant to sub-paragraph h shall be held in strict
confidence by Landlord except in any litigation or arbitration proceedings
between the parties and except further, that Landlord may disclose such
information to its mortgagees and to prospective buyers and lenders, provided
Landlord notifies Tenant of disclosures to buyers and lenders.
7. SUBORDINATION OF LEASE TO MORTGAGES; ESTOPPEL CERTIFICATE. This Lease
shall, at the option of Landlord, be subject and subordinate to the lien of any
mortgage now or hereafter placed on the Leased Premises, provided, however,
that, as a condition precedent to said subordination, the holder of the mortgage
to which this Lease is to be subordinated executes and delivers to Tenant an
agreement, sometimes referred to as a "non-disturbance agreement", which shall
provide that, so long as Tenant shall not be in default under this Lease,
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Tenant's possession of the Leased Premises and its rights under this Lease shall
not be disturbed by said Mortgagee, or by any successor in interest to said
Mortgagee, by foreclosure, or otherwise, and that neither said Mortgagee, or any
said successor in interest, shall have any greater rights with respect to this
Lease, or against Tenant, than Landlord has under this Lease.
Either party shall, upon receipt of a request from the other party, execute
and deliver to the other party, or to any third party directed by the other
party, a certificate, in recordable form, certifying that this Lease is in full
force and effect, that there have been no amendments thereto except as
identified therein, and that the other party is not in default under the Lease
except as set forth therein.
8. USE OF LEASED PREMISES. The Leased Premises shall be used by Tenant for
the purpose of operation of a full-service casual dining restaurant with an
on-premise brewery provided said incidental purposes are permitted pursuant to
the then applicable zoning and other land use laws and ordinances. Tenant shall
comply, at Tenants expense, with all applicable requirements of laws, orders,
ordinances and regulations of all governmental authorities in connection with
the use of the Leased Premises and the operation of Tenant's business on the
Leased Premises. Tenant shall notify Landlord of any violations and shall hold
harmless, indemnify and defend Landlord in regards thereto. Landlord represents
to Tenant that, pursuant to the zoning and other ordinances of the City, the
Leased Premises may be used for the purposes set forth above in this paragraph
7.
9. NET LEASE. It is understood and agreed by the parties hereto that this
Lease shall in all respects constitute a net lease and that, except as otherwise
provided in this Lease, the annual base rent and additional rent shall be
absolutely net to Landlord and that Landlord, except as expressly set forth in
this Lease, shall be under no obligation or liability to furnish or pay for any
of the repairs, maintenance, real estate taxes, installments of special
assessments, utilities, insurance, common area maintenance costs and
administrative fees or for any other expenses which are in any manner incurred
with respect to the Leased Premises or the business conducted thereon, all of
which shall be the sole obligation and liability of the Tenant.
10. REAL ESTATE TAXES AND SPECIAL ASSESSMENTS. Tenant shall pay to the
taxing authorities, before interest or penalty attaches thereto, all real estate
taxes and special assessments with respect to the Leased Premises which are due
and payable during the term of this Lease commencing with 1\365ths of those real
estate taxes and installments of special assessments due and payable in 1999 for
each day in the calendar year following the commencement date of this Lease as
set forth in paragraph 3 "Term of Lease" and concluding with 1\365ths of said
taxes and assessments due and payable in the calendar year in which this lease
terminates for each day in said calendar year prior to the termination of this
Lease. Nothing set forth herein shall require Tenant to pay any installments of
special assessments levied prior to termination of this Lease, but due and
payable after said year of termination. Tenant shall have the right to contest
or review by legal and other proceedings, or in such other manner as Tenant may
deem suitable any assessed valuation, real estate tax or assessment. Landlord
shall, if so requested by Tenant, join in any proceedings (including any cost of
expense sustained by Landlord in connection therewith) shall be borne by Tenant.
Any amount already paid by Tenant and subsequently recovered as a result of such
contest or review shall be for the account of Tenant. Landlord agrees that
Landlord shall obtain the separate assessment, for real estate tax purposes, of
the Leased Premises and represents and warrants to Tenant that the Leased
Premises shall be covered by a real estate tax parcel which shall not include
lands or improvements other than those which are contained within the Leased
Premises. In the event the provisions of any mortgage now or hereafter placed on
the Leased Premises by Landlord shall require that the Mortgagor make monthly
payments to such holder for the purpose of paying real estate taxes and
installments of assessments, then Tenant shall make corresponding monthly
payments to Landlord for such items.
11. OPERATING AND EASEMENT AGREEMENT. During the term of the Lease and any
extensions thereof, Tenant shall, at all times, comply with the terms and
conditions set forth in the Operating and Easement Agreement, attached hereto as
Exhibit C, and shall pay, as additional rent, all common area maintenance costs
and administrative fees assessed to the Leased Premises pursuant to the
Operating and Easement Agreement.
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12. UTILITIES. Tenant shall pay, or cause to be paid, all charges for gas,
electricity, sewer, water, light, heat, power, telephone and other services used
upon, supplied to, the Leased Premises and each and every part thereof during
the term of this Lease.
13. REPAIRS AND MAINTENANCE. Landlord shall, at its expense, keep and
maintain in good order, condition and repair the foundation, exterior walls,
except glass materials used in structural portions, and structural part of the
floor of the Leased Premises. Further, replacement of the roof at the end of its
useful life shall be at Landlord's expense, but on-going repair and maintenance
of the roof shall be at Tenant's expense. However, in the event of any damage to
any of the foregoing caused by any act or negligence of Tenant, its employees,
agents, invites, licenses or contractors, then the Landlord may, at its option,
put or cause the same to be put into condition and state of repair necessary,
and in such case the Tenant, on demand, shall pay the cost thereof. Tenant, at
all times hereunder, and at its cost, shall keep and maintain the Leased
Premises in a neat, clean and orderly condition and in a good state of repair,
including, but not limited to, the outside maintenance of the Leased Premises
and Development, including grounds and parking areas, interior and exterior of
the building, all electrical, mechanical equipment and signage, the landscaping
and the driveway and parking areas including snow removal on the land which
constitutes a portion of the Leased Premises, and shall not commit waste
thereon. Tenant, upon expiration or termination of this Lease, will surrender to
Landlord the building on the Leased Premises in good condition and repair,
except for loss by fire or other casualty, reasonable wear and tear,
depreciation and obsolescence.
14. ALTERATIONS, ADDITIONS, AND IMPROVEMENTS. Tenant shall have the right
to remodel and make any additions, alterations, or improvements to the Leased
Premises up to an aggregate single remodel, addition, alteration or improvement
of $10,000.00 without Landlord's consent. Tenant shall not remodel nor make any
additions, alterations, or improvements to the Leased Premises over $10,000.00
as stated above or which change the exterior architectural structure or
appearance of the building without Landlord's prior written consent, which
consent shall not be unreasonably withheld or delayed. Tenant shall also have
the right to install in the Leased Premises Tenant's equipment, trade-fixtures
and other personal property as Tenant may deem advisable, provided, however, all
of the foregoing will be made without any expense to Landlord and Tenant will
comply with all applicable laws with respect thereto.
It is understood by the parties hereto that for all purposes under this
Lease, Landlord shall own all of the land described on said Exhibit A, the
building, and other improvements, now or hereafter constructed thereon,
including but not limited to, electrical, plumbing, heating, ventilation and air
conditioning systems and equipment installed by Landlord and attached to the
building and all interior and exterior lighting fixtures. Notwithstanding the
foregoing, Tenant shall own all of Tenant's leasehold improvements, the
restaurant equipment and trade fixtures, and all interior and exterior signage,
whether or not any of the foregoing appear to be permanently affixed to the
Leased Premises (hereinafter collectively, "Tenant's Property"). Tenant is
hereby expressly given the right, at any time during the term of this Lease, and
upon the termination of this Lease, to remove the Tenant's Property provided,
however, Tenant will make reasonable repairs to the Leased Premises for any
physical injury caused thereto by such removal, but without any liability for
diminution in value of the Leased Premises for any physical injury caused by the
absence of the Tenant's Property so removed and without any necessity for
replacing the same. In the event Tenant shall fail to remove all of the Tenant's
Property upon the termination of the Lease, then Tenant, at Landlord's election,
shall be deemed to have waived all right to any of Tenant's Property not so
removed, in which event Landlord may retain the same as Landlord's property, or
Tenant, upon written notice from Landlord to Tenant given on or before the
termination of the term of the Lease, shall remove the same from the Leased
Premises and shall make reasonable repairs to the Leased Premises for any
physical injury caused to the Leased Premises by the removal thereof.
15. PUBLIC LIABILITY INSURANCE. Tenant, at all times during the term of
this Lease, and at its expense, shall procure, maintain and keep in force,
general public liability insurance for claims arising from Tenant's use or
occupancy of the Leased Premises for personal injury, death, or property damage,
occurring in or about the Leased Premises, with a single limit of not less than:
Two Million Dollars in respect to each occurrence; a total
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limit of not less than One Million Dollars for injury or death to any person,
$5,000,000.00 for injury or death arising out of any one accident and Five
Hundred Thousand Dollars with respect to damage claims to property arising out
of any one accident. The policy of said insurance shall name Landlord as an
additional insured and copies of said policy, or a certificate thereof, shall be
delivered to Landlord.
16. DRAM SHOP INSURANCE. Tenant shall obtain and keep in full force and
effect throughout the lease term Dram Shop insurance in the minimum amount of
$3,000,000.00. Prior to serving any alcoholic beverages on the Premises, Tenant
shall deliver a certificate of such Dram Shop insurance to Landlord.
17. DAMAGE TO PERSON OR PROPERTY, INDEMNIFICATION. Tenant will indemnify,
defend and save Landlord harmless from any liability to any person on account of
any damage to person or property arising out of any failure of Tenant to perform
and comply, in any respect with any of the requirements and provisions of this
Lease, or arising from Tenant's use or occupancy of the leased Premises.
18. WAIVER OF SUBROGATION. Anything in this Lease to the contrary
notwithstanding, Landlord and Tenant hereby waive and release each other of and
from any and all rights of recovery, claim, action or cause of action, against
each other, their agents, officers and employees for any loss or damage that may
occur to the Leased Premises, improvements to the Development of which the
Leased Premises are a part, or personal property (building contents) within the
Development, by reason of fire or the elements, regardless of cause of origin,
including negligence of Landlord or Tenant and their agents, officers and
employees. Each party to this Lease agrees immediately to give each insurance
company which has issued policies of fire and extended coverage insurance,
written notice of the terms of the mutual waiver as contained in this paragraph,
and to have the insurance policies properly endorsed, if necessary, to prevent
the invalidation of the insurance coverage by reason of the mutual waivers
contained in this paragraph.
Nothing contained in this paragraph above shall preclude Tenant from
obtaining its own insurance on Tenant's Property which shall provide for Tenant
to be the loss payee.
19. FIRE AND CASUALTY DAMAGE. If any of Landlord's Improvements shall be
damaged or destroyed by fire or other casualty, Landlord, within one hundred
twenty (120) days from the date of said damage or destruction, shall make all
alterations and repairs to Landlord's Improvements which are necessary to
restore the Landlord's Improvements to the same condition as existed prior to
the fire or casualty so the Tenant may make the same use thereof as that which
was in effect immediately prior to such fire or other casualty loss, provided,
however, in the event that Landlord's Improvements are damaged to an extent
greater than 50% of the then fair market value thereof and less than two years
then remain during the term of this Lease, Landlord shall have the right to
terminate this Lease upon 30 days' prior written notice to Tenant provided that
this Lease shall not be terminated in the event that Tenant, within said 30-day
period, gives written notice to Landlord that it has exercised its option, if
any, to extend the term of this Lease for the then extended term which is
provided for under paragraph 27 hereof. In the event that the Leased Premises
are rendered untenantable, in whole, or in part, by any said damage or
destruction, all base rent and additional rent shall xxxxx proportionately to
the extent and duration of untenantability. If Landlord's Improvements cannot be
restored and repaired within said one hundred twenty (120) day-period because of
delay caused by strikes, acts of God, insurrection, civil commotion, riots, or
unavoidable casualty, that prohibit, limit or delay such construction, then the
time for completion of such construction shall be extended accordingly,
provided, however, that in any event, if the restorations and repairs of
Landlord's Improvements have not been completed within a period of one hundred
eighty (180) days from the date of such damage or destruction, either party
hereto, by written notice to the other given within 210 days after the date of
said damage or destruction, may terminate this Lease effective with the giving
of said notice.
20. EMINENT DOMAIN. If the whole of the Leased Premises shall be
appropriated or condemned under power of eminent domain (which shall include a
voluntary sale in lieu of taking) or by any competent authority for any public
or quasi-public use or purpose during the term of this Lease, or any renewal
hereof, Tenant reserves
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the right to prosecute its claim for an award for damages based on the value of
Tenant's Property erected or installed on the Leased Premises and any damages
Tenant may sustain for removal, relocation and replacement costs and expenses
caused by said appropriation or taking, provided, however, such claim by Tenant
shall not impair any rights of Landlord for such appropriation and taking of, or
the injury to, the remainder. In said event, this Lease shall terminate when
Tenant can no longer reasonably use the Leased Premises in the manner herein
intended, or when possession thereof shall be required by the appropriating or
condemning authority, or when legal title to the Leased Premises shall vest in
the appropriating or condemning authority, whichever shall first occur, but such
termination of this Lease shall not preclude nor restrict Tenant's right to an
award hereinbefore provided.
In the event that a part of the Leased Premises shall be appropriated or
condemned and the part so taken shall include the building on the Leased
Premises, or any part thereof; or (ii) more than 20% of the parking area, or
result in the loss of any driveway, or curb cut, which provides access to any
adjacent public street or highway, the loss of which would materially interfere
with Tenant's use of the Leased Premises for the purposes for which the same are
then being used by Tenant, then, and in any said event, Tenant, at its sole
option, to be exercised at any time either prior to or within a period of sixty
(60) days after the date when possession of the part of the Leased Premises so
taken shall be required by the appropriating or condemning authority, may elect
to terminate this Lease. In the event, Tenant shall exercise said election to
terminate this Lease, Tenant shall have the right to prosecute its claim for an
award for damages based upon the value of Tenant's Property erected, placed or
installed on or about the Leased Premises, in the same manner and to the same
extent as that hereinbefore reserved by Tenant.
In the event Tenant shall fail to exercise said option to terminate this
Lease, or in the event that a part of the Leased Premises shall be taken or
condemned under circumstances in which Tenant shall have no such option, then in
either said event, Landlord, with reasonable promptness, shall make necessary
repairs to and alterations of Landlord's Improvements for the purpose of
restoring the same to the same condition as existed before the taking so that
Tenant may make the same use thereof as that which was in effect immediately
prior to such taking and to the extent that may have been necessitated by such
appropriation or condemnation. In said event, the annual base rent shall be
reduced, as of the date when possession of the Leased Premises shall be required
by the appropriating or condemning authority, in proportion to the degree of
interference with Tenant's business resulting from such condemnation. In no
event shall the reduction in the annual base rent be greater, annually, than an
amount equal to 10% of the award received by Landlord as a result of such
condemnation.
21. PREMISES INSURANCE. Tenant, at all times during the term of this Lease,
and at its expense shall procure, maintain and keep in force, "all-risk"
coverage and fire, extended coverage, and vandalism and malicious mischief
insurance on the Leased Premises, for the insurable value thereof on a
replacement cost basis, with loss of rents coverage acceptable to Landlord,
which insurance shall in all events be in an amount sufficient to prevent
Landlord or Tenant from becoming a co-insurer of any loss. If the parties cannot
agree as to the insurable value of the Leased Premises, such value shall be
determined by the insurance company or companies issuing such policy or
policies. In the event of any loss covered by such insurance, the proceeds
therefrom shall be payable to Landlord. Certificates of insurance will be
delivered to Landlord and to its Mortgagee, if any. The insurance policy shall
name Landlord, and its Mortgagee, if any, as loss payee and will be issued by a
financially responsible company or companies licensed in the State of Minnesota
and shall provide that such policy or policies will not be canceled without the
insurance company first giving Landlord, and its Mortgagee, if any, written
notice thereof at least ten (10) days before any such cancellation shall become
effective and shall provide that any loss otherwise payable thereunder shall be
payable notwithstanding any act or negligence of Landlord or Tenant which,
absent said agreement, result in forfeiture of all or a part of said insurance
payment. So long as there is a mortgage lien upon Landlord's interest in the
Leased Premises, each insurance policy required above shall contain a standard
mortgage clause in favor of such Mortgagee and shall be in the amount, in
content and form, and with a company reasonably satisfactory to said Mortgagee,
provided, however, that any said Mortgagee shall be required to make any
insurance proceeds available for any repair and restoration of the Leased
Premises which is made pursuant to paragraph 19.
8
Upon Landlord's request, Tenant shall, as additional rent hereunder and at
Tenant's sole cost and expense, maintain such other insurance on the
improvements now or hereafter located on the Premises, in such amounts and
against such insurable hazards as Landlord may from time to time reasonably
request.
22. CASUALTY INSURANCE ON TENANT'S CONTENTS OF IMPROVEMENTS. Tenant shall
insure Tenant's contents of the improvements now and hereafter located on the
Premises, for the benefit of Tenant, against loss or damage by fire or other
casualty, for such amounts as Tenant may deem necessary, including but not
limited to furniture, trade fixtures, equipment, leasehold improvements and
other personal property.
23. MECHANIC'S LIENS. Tenant shall not do or suffer anything to be done
whereby the Leased Premises may be encumbered by any mechanic's or other lien,
and Tenant shall at its own cost and expense, whenever and as often as any
mechanic's lien purporting to be for labor, material or services furnished or to
be furnished to Tenant, shall be filed against the Leased Premises, cause the
same to be canceled and discharged of record within sixty (60) days after the
date of filing thereof, and further shall indemnify and save harmless Landlord
from and against any and all costs, expenses, claims, losses or damages,
resulting therefrom or by reason thereof, provided, however, Tenant shall be
permitted to contest any said lien by depositing with Landlord (or if required
by Landlord's Mortgagee, then with Mortgagee) an amount equal to the amount
required to be deposited to discharge a mechanic's lien pursuant to M.S.A.
Subsection 514.10.
24. DEFAULT OF TENANT. If Tenant shall fail to pay any installment of rent
on the day when the same shall become due and payable hereunder and shall
continue in default for a period of ten (10) days after Landlord gives written
notice thereof, or if Tenant shall fail to keep and perform any of the other
terms, covenants, and conditions of this Lease on its part to be performed and
shall continue in default for a period of thirty (30) days after Landlord gives
notice to Tenant of said default, then in said event, and as often as any said
event shall occur, Landlord may, at Landlord's option, cure said default at
Tenant's sole cost and expense, in which event any cost incurred by Landlord in
curing said default shall become immediately due and payable from Tenant,
together with interest thereon at the rate of 12% per annum, or Landlord may
terminate this Lease and enter into the Leased Premises, or any part thereof,
either with or without process of law, and expel Tenant, or any person occupying
the Leased Premises, and use such force as may be necessary so to do, and
repossess and enjoy the Leased Premises as in Landlord's former estate, but
Tenant shall remain fully liable hereunder for all rents and other sums to be
paid and all covenants to be performed by Tenant during the remaining balance of
the term of this Lease but subject to reduction in accordance with the next
sentence. Landlord shall use all reasonable diligence to relet the Leased
Premises, and in said event, Landlord, shall apply the rent received from any
new tenant thereof on any balance due under this Lease, and Tenant shall be
responsible for no more than the remaining balance that may then be due
hereunder.
Notwithstanding anything contained in this paragraph to the contrary, if
any default shall occur, other than in the payment of money, which cannot with
due diligence be cured within a period of thirty (30) days, and Tenant, prior to
the expiration of thirty (30) days from and after the giving of notices as
aforesaid, shall commence to eliminate the cause of said default, shall proceed
diligently and with reasonable dispatch to take all steps and do all work
required to cure said default, and shall thereafter cure said default, then
Landlord shall grant Tenant a reasonable extension of time within which to cure
said default.
25. BANKRUPTCY AND INSOLVENCY. If Tenant's leasehold estate created hereby
shall be taken in execution, or by other process of law, or if any receiver or
trustee shall be appointed for the business and property of Tenant, but only if
such execution or other process, receivership, or trusteeship shall not be
discharged or ordered removed within sixty (60) days after date Tenant shall
receive actual notice thereof, or if Tenant shall be adjudicated a bankrupt, or
if Tenant shall make a general assignment of its leasehold estate created hereby
for the benefit of creditors, then in any such event, Landlord may terminate
this Lease by giving notice thereof to Tenant; and Tenant shall surrender the
Leased Premises to Landlord but shall remain fully liable hereunder for all
unpaid
9
rents and covenants to be performed by Tenant during the then remaining balance
of the term of this Lease or renewal thereof.
26. RIGHT TO ENCUMBER PERSONAL PROPERTY. Tenant, shall have the exclusive
right, without Landlord's consent, to place liens upon, or give security
interest in any and all of the Tenant's Property. Any said lien or security
interest shall vest in the lien holder, or secured party, a prior lien or any
security interest in the Tenant's Property. Landlord shall execute any
instruments that the lien holders or secured parties may request or require from
Landlord, acknowledging; (a) the right of Tenant to erect or install the
Tenant's Property, and that same shall not be deemed to be, nor become, part of
the Leased Premises, (b) the right of said lien holder or secured party to
maintain a lien thereon or security interest therein superior to any claim and
interest of Landlord, and (c) the right of said lien holder or secured party to
remove any and all said Tenant's Property in the event of default in the
instrument creating the lien or security interest, subject to making reasonable
repairs to the Leased Premises for any physical injury caused thereto by such
removal, but without any liability for diminution in value of the Leased
Premises caused by the absence of the Tenant's Property so removed and without
any necessity for replacing the same. If Landlord, within ten (10) days after
submission of said instruments, shall fail to execute and deliver same, Tenant
shall have the right and authority to execute and deliver same in the name of
Landlord, with the same force and effect as if a regular power of attorney had
this day been executed by landlord in favor of Tenant but only for these
purposes.
27. OPTION TO EXTEND TERM. Tenant is hereby granted the option to extend
the term of this Lease for two five-year periods, which shall commence on the
first day after the end of the initial term of this Lease and on the first day
after the end of the first option term. Tenant's first option shall only be
exercised by Tenant delivering written notice thereof to Landlord not less than
180 days prior to the expiration of the initial term. Tenant's second option
shall only be exercised by Tenant delivering written notice to Landlord not less
than 180 days prior to the expiration of the first option term. Upon such
exercise, this Lease shall be deemed to be extended without the execution of any
further Lease or other instrument. The terms and conditions during the extended
term shall be the same as the terms and conditions during the initial term of
this Lease, except that the annual base rent payable during each lease year
during the first extended term shall be $242,190.65 plus or minus any interest
adjustment as set forth herein under Section 5e and during the second option
term shall be $259,309.05 plus or minus any interest adjustment as set forth
herein under Section 5e and shall be payable in equal monthly installments in
advance on or before the first day of each calendar month during the extended
term and except that there shall be no option to extend the term of this Lease
which is not expressly provided for in this paragraph.
28. DEFAULT OF LANDLORD AND TENANT'S REMEDIES. If Landlord defaults in the
performance of any of the terms, covenants, or conditions of this Lease which
are to be performed by Landlord and shall continue in default for a period of
thirty (30) days after Tenant gives notice to Landlord of said default, then in
said event, and as often as any said event shall occur, Tenant may, at Tenant's
option, cure said default at Landlord's sole cost and expense. Landlord shall
commence to cure said default promptly after receipt of said notice and,
thereafter, diligently proceed to cure said default provided, however, that in
the event the default is of such a nature as to reasonably require more than
thirty (30) days in which to cure the default, then Landlord shall be permitted
such additional time as is reasonably required to cure said default. If Landlord
fails to cure any said default within the time period set forth above for curing
the same, Tenant shall have the right to cure said default. If Tenant cures said
default, Landlord shall, upon demand, reimburse Tenant for the cost of curing
said default, together with interest at the rate of 12% per annum on any sums
paid by Tenant to cure said default, however, Tenant shall not have the right to
set-off against annual base rent which is provided for under this Lease, the
cost of curing said default.
29. NOTICES. All notices from either of the parties hereto to the other
shall be in writing and shall be considered to have been duly given or served if
sent by first class certified mail, return receipt requested, postage prepaid,
to the party at their address set forth below, or to such other address as such
party may hereafter designate by written notice to the other party.
10
If to Landlord: St. Cloud Investments, L.L.P.
Attn: Xxxxx Xxxxx
X.X. Xxx 0000
Xx. Xxxxx, XX 00000
If to Tenant: Founders Food & Xxxxxxx Ltd.
Attn: Xxxxxx X. Xxxxxxxxx
0000 Xxxxx Xxxx Xxxx
Xx. Xxxxx Xxxx, XX 00000
30. ASSIGNMENT OR SUBLETTING. Except as provided below, Tenant shall not
have the right to assign this Lease, or its rights hereunder, or to sublet all
or any part of the Leased Premises without first obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
Notwithstanding anything contained herein to the contrary, however, Tenant,
without Landlord's consent, may sublease the Leased Premises to a franchisee of
Tenant; and (ii) may assign this Lease to any party who, by reason of merger,
consolidation, or sale, acquires all, or substantially all of the assets of
Tenant. No said subleasing or assignment, however, shall relieve or discharge
Tenant from the performance of the terms, covenants, and conditions imposed upon
Tenant under this Lease nor shall relieve or discharge any guarantor of Tenant's
performance of the terms, covenants, and conditions imposed upon Tenant under
this Lease.
31. EFFECT OF WAIVER. The failure of Landlord or Tenant to insist in any
one or more instances upon the strict performance of any of the terms,
covenants, conditions, and agreements of this Lease, or to exercise any option
herein conferred, shall not be considered as waiving or relinquishing for the
future any said terms, covenants, or conditions, agreements or options, but the
same shall continue and shall remain in full force and effect; no such waiver
being effective unless the same is in writing and subscribed by the party to be
charged. The receipt of any rent or any part thereof, whether the rent be that
specifically reserved or that which may become payable under any of the
covenants herein contained, and whether the same be received from Tenant or from
any one claiming under or though it or otherwise shall not be deemed to operate
as a waiver of the rights of Landlord to enforce the payment of annual base
rent, additional rent, or charges of any kind previously due or which may
thereafter become due, or the right to terminate this Lease and to recover
possession of the Leased Premises by summary proceedings, or otherwise, as
Landlord may deem proper, or to exercise any of the rights or remedies reserved
to Landlord hereunder or which Landlord may have at law, in equity, or
otherwise.
32. HOLDOVER. In the event that Tenant shall remain in the Leased Premises
after the expiration or sooner termination of the term of this Lease without
having executed a new written lease with Landlord, said holding over shall not
constitute a renewal or extension of this Lease. Landlord may, at its option,
elect to treat Tenant as one who has not removed at the end of its term, and
thereupon be entitled to all the remedies against Tenant provided by law in that
situation, or Landlord may elect, at its option, to treat said holding over as a
tenancy from month to month only at a rent equal to 150% of the base rent
payable by Tenant for the immediately preceding month.
33. SURRENDER. Tenant shall on the last day of the term of this Lease, or
sooner termination thereof, peaceably surrender and deliver up the Leased
Premises into the possession of Landlord, its successors or assigns, in same
condition the Leased Premises were in on the date of commencement of the term of
this Lease, except for loss by fire or other casualty, reasonable wear and tear,
depreciation, and obsolescence.
34. RIGHT OF ENTRY; "FOR SALE" AND "TO LET" SIGNS. Landlord may, during the
term of this Lease, and at all reasonable times, enter the Leased Premises for
the purpose of examining and inspecting same, and, may, at any time within one
hundred and eighty (180) days next preceding the expiration of the term of this
Lease show the Leased Premises to others for the purpose of rental or sale, and
may, within ninety (90) days next preceding
11
the expiration of the term of this Lease, affix to any suitable parts of the
Leased Premises a notice for lease or sale thereof.
35. ENTIRE AGREEMENT. This Lease contains the entire agreement between the
parties as to the Leased Premises and shall not be modified in any manner except
by an instrument in writing executed by the parties or their respective
successors in interest.
36. SIGNS. Tenant agrees it will not erect or cause to be erected any
signs, notices, or advertisements upon the Leased Premises or affix any such
thereto, unless the same shall be erected and affixed according to law. Tenant
shall not erect any sign that by reason of its weight or size might damage the
Leased Premises, nor shall Tenant paint any sign, notices or advertising on the
exterior walls of the building or buildings without Landlords' written consent.
Signs placed on the Leased Premises by Tenant shall be removed by it upon the
expiration of this Lease or any sooner termination thereof, unless Landlord and
Tenant agree otherwise, and upon removal of any said signs Tenant shall repair,
at Tenant's expense, any damage to the Leased Premises caused by the removal of
the signs.
37. SEVERABILITY. If it shall be found that any part of this Lease is
illegal or unenforceable said part or parts of this Lease shall be of no force
and effect and this Lease shall be treated as if such part or parts had not been
inserted.
38. PARAGRAPH HEADINGS. The paragraph headings are inserted only as a
matter of convenience and for reference and in no way define, limit, or describe
the scope or intent of this Lease nor in any way affect this Lease. Words of any
gender in this Lease shall be held to include any other gender and words in the
singular number shall be held to include the plural when the sense requires.
39. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms
and conditions of this Lease shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, representatives, successors or
assigns.
40. QUIET ENJOYMENT. Landlord warrants to Tenant that, upon paying the
annual base rent, additional rent and other sums of money and charges as herein
provided and, upon performing all of the convents, conditions and agreements
aforesaid, on Tenant's part to be paid, observed, and performed, Tenant shall
and may peaceably and quietly have, hold and enjoy the Leased Premises for the
term aforesaid, and Landlord shall defend, and hold harmless, Tenant from any
claims asserted by any third party which could have as an effect the breach of
Landlord's warranty of quiet enjoyment.
41. RECORDING. Upon the request of either party hereto, the other party
shall join in the execution of a memorandum lease for the purpose of
recordation. Said memorandum lease shall describe the parties, the Leased
Premises, the term of the Lease, and Tenant's option to purchase the Leased
Premises, and shall incorporate this Lease by reference.
42. EVIDENCE OF TITLE. Landlord warrants that, prior to the commencement of
construction of the Landlord's Work, Landlord will have fee simple title to the
lands described on Exhibit A, free and clear of all liens and encumbrances and
of any defects other than drainage and utility easements, other easements, which
do not materially interfere with Tenant's use and enjoyment of the Leased
Premises and except for any lien of any mortgage the holder of which has
executed a non-disturbance agreement as required in paragraph 6 above. In
addition, Landlord warrants that all necessary easements providing access to the
Leased premises from the public roadways shown on Landlord's development plan
for the Leased Premises have been acquired by Landlord pursuant to recorded
instruments, are perpetual, and are appurtenant to the land described in Exhibit
A attached hereto. Landlord shall furnish a title insurance commitment to Tenant
as evidence of good title prior to Tenant's pre-commencement occupancy period.
12
43. PHRASE "TERM OF THIS LEASE". The phrase "term of this Lease" as used in
this Lease shall mean and refer to the initial term of this Lease as well as the
extended terms provided for in paragraph 27 in the event that Tenant exercises
its option to said extended terms.
44. HAZARDOUS SUBSTANCES.
(a) Landlord warrants and represents to Tenant that, to the best of
Landlord's knowledge, there is not present on the Leased Premises any hazardous
substance or hazardous wastes, as hereinafter defined (hereinafter,
collectively, "Hazardous Substances"). As used in this paragraph, the term
"Hazardous Substances" shall mean those substances and waste which are defined
as hazardous in The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601 et seq., including, but not
limited to, those substances listed in the United States Department of
Transportation Hazardous Materials Table (49 CFR 172.101). Landlord further
warrants that no hazardous substances, as defined in this paragraph, will be
utilized in the construction of the Development and Leased Premises, except to
the extent permitted by law, rule or regulation, without any deposit, materials,
residue or waste remaining in the Development or Leased Premises at the
completion of construction.
(b) Tenant agrees that, except as permitted by law, it shall not
knowingly cause or permit any Hazardous Substance to be used, placed, generated,
handled, possessed, or stored within the Leased Premises.
(c) In the event that Landlord discovers or is informed that a
Hazardous Substance existed in the Leased Premises as of the date of the
commencement of the term of this Lease and if the same constitutes a hazard to
the health or safety of Tenant or its employees or invitees, or if the existence
of the substance is contrary to the federal, state, or local law, Landlord shall
promptly notify Tenant in writing of such discovery or information, and shall
thereafter promptly notify Tenant in writing of such discovery or information,
and shall thereafter promptly take all such acts as may be required by law to
prevent danger or harm to the employees and invitees of Tenant. If Tenant
discovers or is informed that a Hazardous Substance exists in the Leased
Premises which Tenant believes to be contrary to federal, state, or local law,
Tenant shall promptly notify Landlord in writing of such discovery or
information.
(d) In the event that, and for so long as, all or a part of the Leased
Premises is, according to federal, state, or local authorities, untenantable
because there exists a danger or harm to the employees or invitees of Tenant by
reasons of Hazardous Substances which unlawfully existed in the Leased Premises
as of the date of the commencement of the term of this Lease, rent, from the
time of written notice from such authorities that the Lease Premises are
untenantable until the dangerous or harmful condition is corrected, shall be
apportioned on a per diem basis according to the fair rental value of (without
regard to said untenantability) the part of the Leased Premises which is
unusable by Tenant compared to the fair rental value of the entire Leased
Premises. If such condition is so extensive that the condition cannot be
corrected by Landlord within a period of four months, either party shall have
the right to cancel this Lease by notice to the other given at any time within
30 days after the date of determination by federal, state, or local authorities
that the Leased Premises are untenantable. If this Lease is not so terminated,
Landlord will promptly correct the condition, at Landlord's expense.
(e) Each party hereto shall indemnify, defend, and hold the other and
its agent, employees, successors and assigns, free and harmless from any claims,
damages, losses or liabilities arising from or in connection with any breach of
the warranties, representations, or covenants set forth in this paragraph 44,
whether such claims, damages, losses, or liabilities arise during or after the
term of this Lease, except for claims, damages, losses, or liabilities arising
from Hazardous Substances brought into the Leased Premises by the other party or
its employees or invitees. The foregoing agreement is intended to constitute an
indemnity agreement within the meaning of Section 9607(e)(1) of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. 9607(e)(1), but nothing in such Section or Act shall be deemed to vitiate
or limit, either directly or indirectly, the obligations of either party
hereunder.
13
(f) Prior to Tenant's pre-commencement occupancy, Landlord shall
furnish to Tenant a phase I environmental assessment together with a reliance
letter in favor of Tenant.
45. CONTINGENCY. This Lease is contingent upon Landlord's fulfillment of
the conditions described below on or before sixty (60) days after the date of
this Lease Agreement (the "Condition Date"), provided, however, that any time
during such sixty (60) day period, provided Landlord is diligently pursuing the
fulfillment of the condition described below, Landlord may give written notice
to Tenant to extend the Condition Date for an additional 30 days following
expiration of the original 60 day period.
(a) Financing. Landlord shall have received, on or before the
Condition Date, a commitment for permanent financing for the construction of the
Development in a total amount and at an interest rate and subject to other terms
and conditions acceptable to Landlord and to be determined in Landlord's sole
discretion.
(b) Landlord shall have obtained from the City of St. Cloud,
Minnesota, and such other government entities with jurisdiction over the
property that Landlord elects to contact, if any, all necessary or desirable
approvals, architectural reviews, licenses, building permits, environmental
authorizations, waivers of set back requirements, and any other permits,
approvals, licenses or authorizations required for the intended construction of
Landlord's Improvements.
(c) Landlord shall have obtained from Xxxxxx Xxxx Company, developer
of the shopping center of which the Premises are a part, a lease and purchase
agreement for the site and site development which, in Landlord's sole
discretion, are acceptable to Landlord.
Landlord may waive any or all of the foregoing conditions, by written
notice, delivered to Tenant on or before the Condition Date. If the conditions
are not met by the Condition Date, and Landlord does not waive the conditions,
then this Lease Agreement shall be null and void, and Landlord and Tenant shall
thereafter be released from any liability or obligation hereunder.
46. ANNUAL REPORTING. Tenant shall provide to landlord an annual financial
statement within ninety (90) days following the calendar year-end. Such
statement shall include income/expense and balance sheet. Guarantors shall also
provide landlord with annual personal financial statements within ninety (90)
days following the calendar year-end. Tenant and Guarantors hereby authorize
landlord to share said financial information with any lender on the subject
property.
The parties hereto have executed this agreement as of the day and year first
above written.
St. Cloud Investments, L.L.P.
By: /s/ Xxxxx X. Xxxxx
--------------------------
Its: Managing Partner
--------------------------
-Landlord-
Founders Food & Xxxxxxx Ltd.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------
Its: President
--------------------------
-Tenant-
00
XXXXX XX XXXXXXXXX )
)
COUNTY OF XXXXXXX )
The foregoing instrument was acknowledged before me this 29th day of July,
1998 by Xxxxx X. Xxxxx, the Managing Partner, of St. Cloud Investments, L.L.P.,
on behalf of the partnership.
/s/ Xxxxxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxxxxx X. Xxxxxxx,
Notary Public, Xxxxxxx County
January 31, 2000. My commission expires:
STATE OF MINNESOTA )
)
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 29th day of July,
1998 by Xxxxxx X. Xxxxxxxxx, the President, of Founders Food & Xxxxxxx Ltd., a
Minnesota Corporation, on behalf of the corporation.
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx,
Notary Public, Xxxxxx County
January 31, 2000. My commission expires:
15
ADDENDUM
TO
LEASE
This lease addendum, dated December 9, 1998, is attached to and made a part of
the Lease Agreement dated July 29, 1998 by and between St. Cloud Investments,
L.L.P., ("Landlord") and Founders Food & Xxxxxxx Ltd., a Minnesota Corporation,
("Tenant");
Landlord and Tenant agree that said lease shall be amended as follows:
1. LANDLORD TO MAKE CERTAIN IMPROVEMENTS. Landlord agrees at its sole
expense to construct certain improvements (the "Landlord's Improvements") on the
Leased Premises in accordance with the plans and specifications which have been
signed by Landlord and Tenant as constituting the plans, specifications and
addendum's therefore which are referred to in this Lease, a copy of which is
attached hereto and made a part hereof as Exhibit D. Landlord agrees to commence
construction of said improvements within 30 days after the Condition Date, as
described in paragraph 45 of this Lease, and thereafter to proceed with due
diligence to complete said improvements in accordance with said plans and
specifications as soon as reasonably possible, and, in any event, not later than
June 30, 1999. It has been acknowledged by the parties that it is intended that
the building, based upon the plans and specifications for the Landlord's
Improvements, shall contain approximately 10,000 gross leasable square feet
including the area in the mezzanine and basement as determined by measuring the
area of the building from the outside of the outside walls of the building.
Landlord represents and warrants to Tenant that the Landlord's Improvements
shall be completed in a good and workmanlike manner and that, upon completion of
the Landlord's Improvements, the same shall be free from defect arising out of
faulty materials or improper workmanship for a period of one year. In addition,
in the event that, in connection with the Landlord's Improvements, any
contractors, subcontractors, or suppliers make any warranties with respect to
workmanship or materials which extend beyond the period of the Landlord's
warranty set forth above in this paragraph, Landlord shall assign the same to
Tenant upon the expiration of the one-year Landlord's warranty.
Landlord and Tenant agree that no changes in the Landlord's Improvements
shall be performed (or deemed authorized) unless the same are set forth in a
written change order, which shall contain a description of the change; the
additional cost, or cost savings, as the case may be, relating thereto; and the
identity of party who will bear any additional cost, or benefit from any reduced
cost, as the case may be.
Landlord represents and warrants to Tenant that the Landlord Improvements
when completed, will be served by utility services which are adequate to serve
Tenant's required utilities as described in Tenant's plans and specifications
provided by Tenant and attached hereto as Exhibit D and that all easements, if
any, which are necessary for purposes of providing said utility services to the
Leased Premises have been granted, in recordable form, are perpetual, and are
appurtenant to the land described in Exhibit A.
Landlord hereby acknowledges that the plans and specifications provided by
Tenant are the sole property of Tenant. Landlord shall not use, nor willingly
permit any person or persons who may have access to the plans and specifications
through Landlord to use the plans and specifications, in whole or in part, for
the design or construction of any building or improvements other than those to
be constructed upon the Leased Premises.
Upon the commencement of the term of this Lease the parties shall, upon the
request of either party, mutually execute an instrument which shall set forth
the date upon which the term of this Lease commenced and the date upon which the
initial term of this Lease shall end.
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2. BASE RENT.
(a) During each of the first through the fifth lease years, Tenant
shall pay to Landlord annual base rent in an amount equal to $217,946.43 plus
or minus any interest adjustment as set forth herein under Section 5e. Said
annual base rent shall be payable in equal monthly installments of $18,162.20
in advance on or before the first day of each calendar month.
(b) During each of the sixth through the tenth lease years, Tenant
shall pay to Landlord annual base rent in an amount equal to $227,733.93 plus
or minus any interest adjustment as set forth herein under Section 5e. Said
annual base rent shall be payable in equal monthly installments of $18,977.83
in advance on or before the first day of each calendar month.
(c) During each of the eleventh through the fifteenth lease years,
Tenant shall pay to Landlord annual base rent in an amount equal to
$238,989.56 plus or minus any interest adjustment as set forth herein under
Section 5e. Said annual base rent shall be payable in equal monthly
installments of $19,915.80 in advance on or before the first day of each
calendar month.
(d) During each of the sixteenth through the twentieth lease years,
Tenant shall pay to Landlord annual base rent in an amount equal to
$251,933.53 plus or minus any interest adjustment as set forth herein under
Section 5e. Said annual base rent shall be payable in equal monthly
installments of $20,994.46 in advance on or before the first day of each
calendar month.
(e) Notwithstanding anything contained herein to the contrary, in
the event that, pursuant to the Mortgage Loan, as hereinafter defined, or any
Replacement Mortgage Loan, as hereinafter defined, the interest rate payable
by Landlord, as Mortgagor, is increased or decreased during the term of this
Lease from the interest rate initially payable under the Mortgage Loan, then,
effective with the first monthly installment of annual base rent which is
payable after the effective date of any increase or decrease in the rate of
interest payable pursuant to the Mortgage Loan, or pursuant to the
Replacement Mortgage Loan, as the case may be, the monthly installment of
base annual rent which is payable hereunder shall be increased or decreased
by an amount equal to the amount by which the amount of interest payable,
monthly, on the Mortgage Loan, or on the Replacement Mortgage Loan, as the
case may be, exceeds or decreases the amount of interest which would have
been payable monthly on the Mortgage Loan if the rate of interest had not
been increased or decreased over the rate of interest payable under the
Mortgage Loan. The term "Mortgage Loan" as used herein, shall be deemed to
refer to that original Mortgage Loan, which Landlord, as Mortgagor, shall
place against the Leased Premises within ninety (90) days before or after the
date upon which the initial term of this Lease commences, in the principal
amount of One Million Five Hundred Fifty Thousand and no\100 ($1,550,000.00),
which is for a 20 year term and provides for amortization of said mortgage
together with interest thereon over a period of twenty (20) years. The
original base interest rate is seven and three-fourths percent (7.75%). The
note secured by the mortgage requires that the interest rate be recalculated
after each five (5) year period at two and one-half (2.5%) percent above the
five year average Treasury rate. The term "Replacement Mortgage Loan", as
used herein, shall be deemed to refer to any mortgage loan which Landlord, as
Mortgagor, places against the Leased Premises during the term of the Mortgage
Loan and which is obtained by Landlord in replacement of the Mortgage Loan,
provided, however, that for purposes of calculating the amount of increased
or decreased interest, if any, which is payable by Tenant as provided above,
the putative principal balance of the Replacement Mortgage Loan shall at all
times be calculated to an amount equal to what the amount of the Mortgage
Loan principal balance would have been, taking into account amortization of
principal as scheduled under the Mortgage Loan, the original principal
balance and provided, however, that the Replacement Mortgage Loan does not
provide for an interest rate, or for adjustments to the interest rate, if
any, which are not then commercially reasonable. Landlord shall give Tenant
written notice of Landlord's intention to obtain a Replacement Mortgage Loan
and shall cooperate with Tenant in attempting to obtain a commitment for a
Replacement Mortgage Loan upon the most favorable terms and conditions then
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available. The principal amount of any Replacement Loan shall not exceed eighty
percent (80%) of the then appraised value of the Lease Premises.
The rent shall be paid to Landlord at the address for Landlord set forth in
paragraph 29 below, or to such other party, or at such other place, or both, as
Landlord may from time to time designate by written notice given to Tenant.
3. OPTION TO EXTEND TERM. Tenant is hereby granted the option to extend
the term of this Lease for two five-year periods, which shall commence on the
first day after the end of the initial term of this Lease and on the first day
after the end of the first option term. Tenant's first option shall only be
exercised by Tenant delivering written notice thereof to Landlord not less than
180 days prior to the expiration of the initial term. Tenant's second option
shall only be exercised by Tenant delivering written notice to Landlord not less
than 180 days prior to the expiration of the first option term. Upon such
exercise, this Lease shall be deemed to be extended without the execution of any
further Lease or other instrument. The terms and conditions during the extended
term shall be the same as the terms and conditions during the initial term of
this Lease, except that the annual base rent payable during each lease year
during the first extended term shall be $266,819.10 plus or minus any interest
adjustment as set forth herein under Section 5e and during the second option
term shall be $283,937.50 plus or minus any interest adjustment as set forth
herein under Section 5e and shall be payable in equal monthly installments in
advance on or before the first day of each calendar month during the extended
term and except that there shall be no option to extend the term of this Lease
which is not expressly provided for in this paragraph.
All other terms and conditions of the original Lease Agreement shall remain
unchanged and shall be in full force and effect.
IN WITNESS WHEREOF, Landlord and Tenant have executed this addendum to the Lease
as of December 9, 1998.
Landlord:
By: XXXXX X. XXXXX Witness: /s/ L. Xxxxxxx Xxxxx
----------------------------- ----------------------------
Its: Managing Partner
----------------------------
Tenant:
By: /s/ Xxxxxx X. Xxxxxxxxx Witness: /s/ Xxxxxxx X. Xxxxxxx
---------------------------- ----------------------------
Its: President
----------------------------
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GUARANTY
In consideration of and as an inducement to St. Cloud Investments, L.L.P.,
a Minnesota Limited Liability Partnership, whose address is X.X. Xxx 0000, Xx.
Xxxxx, Xxxxxxxxx (hereinafter referred to as "Landlord"), entering into that
certain Lease with Founders Food and Xxxxxxx Ltd., a Minnesota Corporation,
(hereinafter referred to as "Tenant"), dated July 29, 1998, for the construction
and lease of rental sales premises located at (see attached legal description)
0000 Xxxxxx Xxxxxx Xxxxx, Xx. Xxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxxxx the
undersigned Xxxxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxxx, address as stated below
(hereinafter referred to as "Guarantor"), jointly and severally hereby
unconditionally guarantee to Landlord prompt payment and performance in full by
Tenant of Tenant's obligations under this Lease, including payment of rentals as
contained in said Lease, and payment of all damages and expenses that may arise
in consequence of any default by Tenant, its successors and assigns under said
Lease, (collectively "Tenant obligations") and all attorneys' fees and all costs
and other expenses incurred by Landlord in enforcement of this Guaranty.
This Guaranty shall be enforceable against the Guarantor without the
necessity for any suit or legal proceedings on Landlord's part as against
Tenant, its successors and assigns. The validity of this Guaranty and the
obligations of the Guarantor shall in no way be terminated, affected, or
impaired by reason of the assertion or the failure to assert any of the rights
or remedies reserved to Landlord pursuant to the provisions of said Lease. The
liability of the undersigned, under this guarantee of Lease, shall be primary in
that in any right of action which shall accrue to Landlord under the Lease, the
Landlord may, at it's option, proceed against the undersigned without being
commenced any action, or having obtained any judgment against the Tenant.
This Guaranty shall remain in full force and effect, without regard to, and
shall not be released, discharged, or in any way affected by:
(a) any amendment, modification of, or supplement to the Lease, or any
assignment or transfer thereof;
(b) any exercise or non-exercise of any right, power, remedy or privilege under
or in respect of the Lease or this Guaranty, or any waiver, consent, extension,
renewal, modification, or any change in any of the terms, covenants, conditions,
or provisions of the Lease or any other assignment of or transfer thereof;
(c) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
composition, liquidation of the liability or obligation of Tenant under the
Lease or its estate in bankruptcy, or of any remedy for the enforcement thereof
resulting from the operation of any present or future provision of the National
Bankruptcy Act or other statute, or from the decision of any Court; or
(d) any transfer by Tenant or any assignment of its interest under the Lease;
whether or not Guarantor shall have notice of knowledge of any of the foregoing.
This Guaranty is a continuing Guaranty and may be enforced against the
undersigned from time to time as and whenever there may be a default of any of
the obligations guaranteed. All remedies afforded by reason of this Guaranty are
separate and cumulative remedies and no one of such remedies shall be deemed to
be an exclusion of any of the other remedies.
This Collateral Guaranty shall inure to the benefit of Landlord, its
successors and assigns and shall bind the undersigned, and each of them their
successors and assigns.
The Guarantor further agrees that upon execution of this Lease and during
the Lease term to provide Landlord with reasonably detailed annual financial
statements of Guarantor prepared, but not certified, by the
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Guarantor's Certified Public Accountant. The Guarantor certifies that the
financial statements, to the best of their knowledge, will be true and correct.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as the free act and
deed, effective as of this 29th day of July, 1998.
GUARANTOR:
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxxx
000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxx Xxxxxx, XX 00000
/s/ Xxxxxxx X. Xxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
STATE OF MINNESOTA )
)
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 29th day of July,
1998 by Xxxxxx X. Xxxxxxxxx.
/s/ Xxxx X. Xxxxxxxxx
------------------------
Xxxx X. Xxxxxxxxx
Notary Public
STATE OF MINNESOTA )
)
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 29th day of July,
1998 by Xxxxxxx X. Xxxxxxx.
/s/ Xxxxxxxx X. Xxxxx
-------------------------
Xxxxxxxx X. Xxxxx
Notary Public
20
