EXHIBIT 10.14
EX-CELL HOME FASHIONS, INC.
AND
ALADDIN MANUFACTURING CORPORATION
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LEASE AGREEMENT
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Dated as of December 3, 1999
Table of Contents
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Page
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ARTICLE I DEFINITIONS...................................................... 1
ARTICLE II DEMISING CLAUSES AND RENTAL PROVISIONS........................... 3
Section 2.1. Demise of Facility........................................... 3
Section 2.2. Duration of Lease Term....................................... 3
Section 2.3. Rent......................................................... 3
ARTICLE III MAINTENANCE, USE, MODIFICATIONS, TAXES AND INSURANCE............. 5
Section 3.1. Maintenance, Use, and Modifications of Facility by Tenant.... 5
Section 3.2. Installation of Tenant-Owned Equipment....................... 8
Section 3.3. Taxes, Assessments and Utility Charges....................... 9
Section 3.4. Insurance Required........................................... 10
Section 3.5. Additional Provisions Respecting Insurance................... 10
Section 3.6. Right of Landlord to Pay Insurance Premiums and Other Charges 13
ARTICLE IV DAMAGE, DESTRUCTION AND CONDEMNATION............................. 13
Section 4.1. Damage or Destruction........................................ 13
Section 4.2. Condemnation................................................. 15
ARTICLE V SPECIAL COVENANTS................................................ 17
Section 5.1. No Warranty of Condition or Suitability Landlord............. 17
Section 5.2. Hold Harmless Provisions..................................... 18
Section 5.3. Landlord's Repairs........................................... 18
Section 5.4. Responsibility for the Sprinkler System...................... 19
Section 5.5. Right to Inspect the Facility and the Equipment.............. 19
Section 5.6. Good Standing in the State................................... 19
Section 5.7. Agreement to Provide Information............................. 19
Section 5.8. Books of Record and Account; Financial Statements............ 19
Section 5.9. Compliance with orders....................................... 20
Section 5.10. Discharge of Liens and Encumbrances.......................... 20
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Table of Contents
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(continued)
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ARTICLE VI ASSIGNMENT AND SUBLEASING; MORTGAGE AND PLEDGE OF INTEREST...... 21
Section 6.1. Assignment and Subleasing.................................... 21
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES................................... 22
Section 7.1. Events of Default Defined.................................... 22
Section 7.2. Remedies on Default.......................................... 24
Section 7.3. Remedies Cumulative.......................................... 25
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses................ 26
ARTICLE VIII RENEWAL OPTION................................................... 26
Section 8.1. Tenant's Renewal Option...................................... 26
ARTICLE IX PURCHASE OPTION.................................................. 27
Section 9.1. Facility Purchase Option..................................... 27
ARTICLE X RIGHT OF FIRST REFUSAL........................................... 30
Section 10.1. Right of First Refusal....................................... 30
ARTICLE XI MISCELLANEOUS.................................................... 32
Section 11.1. Surrender of Facility........................................ 32
Section 11.2. Notices...................................................... 32
Section 11.3. Binding Effect............................................... 33
Section 11.4. Severability................................................. 33
Section 11.5. Amendments, Changes and Modifications........................ 33
Section 11.6. Execution of Counterparts.................................... 33
Section 11.7. Applicable Law............................................... 33
Section 11.8. Table of Contents and Section Headings Not Controlling....... 33
Section 11.9. Estoppel Certificate......................................... 33
Section 11.10. Quiet Enjoyment.............................................. 34
Section 11.11. Security Deposit............................................. 34
Section 11.12. No Additional Waiver Implied By One Waiver................... 35
Section 11.13. Brokerage Agreement.......................................... 35
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THIS LEASE AGREEMENT, dated as of December 3, 1999, by and between EX-
CELL HOME FASHIONS, INC., a corporation organized and existing under the laws of
New York with an address at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("Landlord"), and ALADDIN MANUFACTURING CORPORATION, a corporation organized and
existing under the laws of Delaware with an address at 0000 Xxxxx Xxxxxx Xxxx,
XX, Xxxxx Xxxxxx, XX 00000 ("Tenant"),
W I T N E S S E T H
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WHEREAS, Landlord desires to lease the real property described on
Exhibit A hereto, the existing building and other improvements thereon and the
Equipment (as hereinafter defined), and Tenant desires to hire such real
property, existing building and other improvements thereon and Equipment from
Landlord, upon the terms and conditions set forth in this Lease Agreement;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements of the parties hereto herein contained, the parties
hereto hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
The following words and terms as used in this Lease Agreement shall
have the following meanings:
"Landlord" means Ex-Cell Home Fashions, Inc., a corporation duly
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organized and existing under the laws of New York.
"Landlord's Plant" means Landlord's existing plant located on the Land
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located in Bentonville, Arkansas.
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"Condemnation" means the taking of title to, or the use of, property
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under the exercise of the power of eminent domain by any governmental entity or
other Person acting under governmental authority.
"Equipment" means all machinery, equipment and other personal property
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located at the Facility, except the computer equipment, checking stations, and
all equipment in the office areas.
"Facility" means the Land together with the Landlord's Plant
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(consisting of approximately 134,067 square feet), less the Storage Area.
"Land" means the interest in real estate leased pursuant to this Lease
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Agreement as more particularly described on Exhibit A attached hereto.
"Lease Term" means the duration of the leasehold estate created by
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this Lease Agreement as specified in Section 2.2 hereof.
"Storage Area" means that area of the Plant identified on Exhibit B
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attached hereto and consisting of approximately 3,600 square feet.
"Permitted Encumbrances" means (i) this Lease Agreement, (ii) utility,
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access and other easements and rights of way, restrictions and exceptions that
do not materially impair the utility or the value of the property affected
thereby for the purposes for which it is intended, (iii) mechanics',
materialmen's, warehousemen's, carriers' and other similar liens to the extent
permitted by this Lease Agreement hereof and (iv) liens for taxes at the time
not delinquent.
"Person" means an individual, partnership, corporation, trust or
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unincorporated organization, and a government or agency or political subdivision
thereof.
"Structural Repairs" means any repair that involves the substantial
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repair, renovation or restoration of a structural component of the Facility.
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"Tenant" means Aladdin Manufacturing Corporation, a corporation duly
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organized under the laws of Delaware.
ARTICLE II
DEMISING CLAUSES AND RENTAL PROVISIONS
Section 2.1. Demise of Facility. Landlord hereby demises and leases the
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Facility and the Equipment to Tenant and Tenant hereby hires and leases the
Facility and the Equipment from Landlord upon the terms and conditions of this
Lease Agreement.
Section 2.2. Duration of Lease Term. The Lease Term shall commence on
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December 3, 1999 (the "Term Commencement Date"), and end on December 31, 2002
(the "Expiration Date"), unless sooner terminated in accordance with the
provisions hereof.
Section 2.3. Rent. (a) Tenant shall pay to Landlord rent during the
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Lease Term at the rate of (i) Eighteen Cents per square foot per month or Two
Hundred Eighty-One Thousand Eight Hundred and Eight Dollars and 72/100
($281,808.72) per annum, payable in equal monthly installments of Twenty-Three
Thousand Four Hundred Eighty-Four Dollars and 06/100 ($23,484.06) for the
Facility (the "Fixed Rent"), and (ii) Thirty-six Thousand Dollars ($36,000.00)
per annum, payable in equal monthly installments of Three Thousand Dollars
($3000.00) (the "Equipment Rent"). Both Fixed Rent and Equipment Rent are
payable in advance on the first day of each month during such period.
(b) It is the intention of the parties that this is a gross lease,
without responsibility or cost to Tenant, except as expressly set out in this
Lease Agreement.
(c) Tenant agrees to make the payments of Fixed Rent and Equipment
Rent, without any further notice, in lawful money of the United States of
America as, at the time of payment, shall be legal tender for the payment of
public and private debts. In the event Tenant shall fail to timely make any
payment required in this Section 2.3, Tenant shall pay the same
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together with interest thereon at the rate equal to the then higher of (i)
fifteen per centum (15%) or (ii) the prime rate as published in The Wall Street
Journal on the date such payments were due plus eight and one-half per centum
(8.5%) per annum, in either case as calculated from the date on which such
payment was due until the date on which such payment is made.
(c) In the event Tenant exercises its option for the Extended Term under
Article 8 of this Lease Agreement, Landlord shall have the right to increase the
base rent for the Extended Term in direct proportion to the three year aggregate
of the annual percentage increase in the level of the Consumer Price Index, All
Items, U.S. City Average, All Urban Consumers (1982-1984=100), published by the
Bureau of Labor Statistics, U.S. Department of Labor (the "B.L.S. Index"), as
published during the preceding three years.
It is understood that the B.L.S. Index is now being published monthly
by the Bureau of Labor Statistics of the U.S. Department of Labor. Should said
Bureau of Labor Statistics change the manner of computing the B.L.S. Index, the
Bureau shall be requested to furnish a conversion factor designed to adjust the
B.L.S. Index to the one previously in use, and adjustment to the new Index shall
be made on the basis of such conversion factor. Should the publication of a
B.L.S. Index be discontinued by said Bureau of Labor Statistics, then such other
index as may be published by such Bureau most nearly approaching said
discontinued B.L.S. Index shall be used in making the adjustments herein
provided. Should said Bureau discontinue the publication of any index
approximating the B.L.S. Index, then such index as may be published by another
United States Governmental Agency as most nearly approximates the B.L.S. Index
shall govern and be substituted as the index to be used, subject to the
application of an appropriate conversion factor to be furnished by the
Governmental Agency publishing the adopted index. If such Governmental Agency
will not furnish such conversion factor, then the
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parties shall agree upon a conversion factor, or a new index, and in the event
an agreement cannot be reached as to such conversion factor or such new index,
then the selection of a new index approximating as nearly as can be the B.L.S.
Index shall be determined by arbitration in accordance with the Rules of the
American Arbitration Association and the index selected in such arbitration
shall be binding upon the parties hereto.
ARTICLE III
MAINTENANCE, USE, MODIFICATIONS, TAXES AND INSURANCE
Section 3.1. Maintenance, Use, and Modifications of Facility by Tenant.
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(a) Tenant agrees that during the Lease Term it will at its own expense (i)
keep the Facility and the Equipment in a safe condition; (ii) make all necessary
nonstructural repairs and replacements to the Facility and the Equipment
(whether ordinary or extraordinary, foreseen or unforeseen), which repairs and
replacements shall be of a quality or class equal to the original work or
construction; and (iii) make all Structural Repairs necessitated by or arising
out of any act, failure to act or negligence of Tenant. Tenant shall use and
operate the Facility and the Equipment for the manufacturing, assembling,
warehousing and wholesale distribution of pillow filling and other pillow
filling products and for other uses reasonably related to the business of
assembling, warehousing and the wholesale distribution of pillow filling and for
no other purpose, unless Landlord consents in writing to other uses. If
Landlord consents to a different use, and such use is lawful, Tenant shall be
responsible for any additional costs associated with such different use,
including, but not limited to insurance costs. Landlord shall deliver the
Facility to Tenant clean and free of debris on the Term Commencement Date and
warrants to Tenant that all aspects of the building to be maintained and
repaired by Tenant shall be in good operating condition and repair as of the
Term Commencement Date.
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(b) In the event that Tenant shall at any time during the term of
this Lease receive a notice, order, or violation to the effect that Tenant's use
and operation of the Facility for the manufacturing, assembling, warehousing and
wholesale distribution of pillow filling and other pillow filling products is
not permitted in the Facility under the provisions of the zoning code of the
Town of Bentonville as existing as of the date of this Lease Agreement (the
"Zoning Code"), then Tenant shall promptly give notice thereof to Landlord.
Following receipt of such notice from Tenant, Landlord shall have a period of
180 days in order to obtain a variance, special exception, or otherwise cure or
dismiss the notice, violation or order. During such 180 day period Landlord
agrees to use good faith efforts to cure or remove such notice, violation or
order and Tenant agrees to cooperate with Landlord (by joining in applications,
supplying information, attending hearings and otherwise as may be necessary).
If Landlord does not notify Tenant within such 180 day period that Landlord has
cured or removed, or has arranged to cure or remove, such notice, violation or
order, then Tenant shall have a right to terminate this Lease by notice to
Landlord within 10 days following the end of such 180 day period, which notice
shall specify a date for such termination which shall be not less than 30 days
following the date of Tenant's notice. In such event, the date set forth in
Tenant's notice shall be substituted for the Expiration Date provided for herein
and the Tenant shall vacate and surrender the Facility on such Expiration Date
in accordance with the terms of this Lease Agreement. Notwithstanding the
foregoing, Tenant shall not have the right to terminate this Lease Agreement
pursuant to this paragraph if the notice, order or violation arises as a result
of Tenant's breach or violation of any law, rule or regulation other than the
Zoning Code. Provided that Landlord has complied with its obligations pursuant
to this paragraph, Tenant's right to terminate this Lease Agreement pursuant to
this paragraph because Tenant's use and operation of the Facility for the
purposes provided for
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in this paragraph is not permitted by the Zoning Code shall be Tenant's sole
remedy and Tenant hereby waives, and releases Landlord with respect to, any and
all other claims for damages, equitable relief or otherwise.
(c) Any structural additions, modifications or improvements to the
Facility or any part thereof made by Tenant must be in accordance with plans and
specifications approved in writing in advance by Landlord, which consent shall
not be unreasonably withheld or delayed. Tenant shall pay to Landlord as
additional rent within 20 days after demand therefor: (i) Landlord's reasonable
expenses incurred as a result of having the plans, specifications, work-in-
progress and as-built plans reviewed by an architect or engineer and (ii)
reasonable attorneys' fees and expenses arising in connection with any such
structural additions, modifications or improvements to the Facility. All such
structural additions, modifications or improvements so made by Tenant shall
become a part of the Facility and shall remain upon and be surrendered with the
Facility at the end of the Lease Term.
(d) Tenant shall use the Equipment in a careful and proper manner and
shall comply with and conform to all national, state, municipal, police and
other laws, ordinances and regulations in anywise relating to the possession,
use or maintenance of the equipment. If at any time during the term hereof
Landlord supplies Tenant with labels, plates or other markings stating that the
equipment is owned by Landlord, Tenant shall affix and keep the same upon a
prominent place on the equipment.
(e) If Tenant fails after ten days notice to proceed with due
diligence to make repairs or replacements which Tenant is required to make
hereunder, the same may be made by Landlord at the expense of Tenant, and the
expenses thereof incurred by Landlord shall be
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collectible as Additional Rent and payable by Tenant within 20 days following
rendition of a xxxx or statement therefor.
(f) All repairs and replacements shall be done in a good and
workmanlike manner and shall at all times comply with laws, rules, ordinances,
orders, codes and regulations of governmental, quasi-governmental and regulatory
authorities, and all requirements of insurance carriers issuing policies
covering the Facility and the Equipment and the Board of Fire Underwriters.
(g) Tenant agrees that it will not, either directly or indirectly,
use any contractors and/or labor and/or materials if the use of such contractors
and/or labor and/or materials would or will create any difficulty with other
contractors and/or labor engaged by Tenant or Landlord or others in the
maintenance and/or operation of any part of the Facility or the Equipment.
Tenant shall, before making any repairs or replacements, at its sole cost and
expense, obtain all permits, approvals and certificates required by any
governmental or quasi-governmental bodies and (upon completion) certificates of
final approval and shall deliver promptly duplicates of all such permits,
approvals and certificates to Landlord, and Tenant agrees to carry, and will
cause Tenant's contractors and sub-contractors to carry such workers'
compensation, builder's risk, general liability, personal and property damage
insurance as Landlord may reasonably require.
Section 3.2. Installation of Tenant-Owned Equipment. Tenant from time to
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time may install its own machinery, equipment or other personal property in the
Facility (which may be attached or affixed to the Facility), and such machinery,
equipment or other personal property shall not become, or be deemed to become, a
part of the Facility. Tenant from time to time may remove or permit the removal
of such machinery, equipment and other personal property from
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the Facility, provided that any such removal of such machinery, equipment or
other personal property shall not adversely affect the structural integrity of
the Facility or impair the overall operating efficiency of the Facility and
provided further that if any damage is occasioned to the Facility by such
removal, Tenant agrees to promptly repair such damage at its own expense.
Section 3.3. Taxes, Assessments and Utility Charges. Tenant agrees to pay,
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(i) all taxes and governmental charges of any kind whatsoever which may at any
time be assessed or levied against or with- respect to the Facility and any
machinery, equipment or other property installed or brought by Landlord or
Tenant therein or thereon and the employees of Tenant or Landlord located at or
assigned to the Facility, including without limiting the generality of the
foregoing any sales or use taxes and any taxes levied upon or with respect to
the income or revenues of Tenant from the Facility, (ii) all utility and other
charges, including, without limitation, "service charges", incurred or imposed
for the operation, maintenance, use, occupancy, upkeep and improvement of the
Facility, and (iii) all assessments and charges of any kind whatsoever made by
any governmental body for public improvements.
Taxes and governmental charges shall be deemed to exclude any payments
in lieu of, addition to, or in partial or complete substitution for real estate
related taxes, including, without limitation, (i) taxes, assessments, levies,
impositions or charges (special or otherwise) wholly or partially as a capital
levy or otherwise on the rents received from the Facility, (ii) taxes,
assessments, levies, impositions, or charges (special or otherwise) measured by,
or based in whole or in part upon the Facility and imposed upon the Landlord,
(iii) license fees measured by the rent payable by the tenants in the Facility
to the Landlord, and (iv) such other additional or substitute taxes,
assessments, levies, impositions, or charges (special or otherwise).
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Section 3.4. Insurance Required. At all times throughout the Lease Term,
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Tenant shall maintain insurance, except general facility insurance, against such
risks and for such amounts as are customarily insured against by businesses
operating facilities of like size and type as the Facility in the manner and for
the purposes for which the Facility will be operated by Tenant under this Lease
Agreement, paying, as the same become due and payable, all premiums in respect
thereto, including, but not necessarily limited to:
(a) business interruption insurance or rent insurance, sufficient to
cover unabated rent payments in the event of a casualty.
(b) worker's compensation insurance, disability benefits insurance,
and each other form of insurance which Landlord or Tenant is required by law to
provide, covering loss resulting from injury, sickness, disability or death of
employees of Landlord or Tenant who are located at or assigned to the Facility;
and
(c) insurance protecting Landlord and Tenant against loss or losses
from liabilities imposed by law or assumed in any written contract and arising
from personal injury and death or damage to the property of others caused by any
accident or occurrence with limits of not less than $5,000,000 per accident or
occurrence on account of personal injury, including death resulting therefrom
and damage to the property of others.
(d) Tenant shall keep the Equipment insured against all risks of loss
or damage from every cause whatsoever for not less than the full replacement
value thereof as determined by Landlord and shall carry public liability and
property damage insurance covering the Equipment.
Section 3.5. Additional Provisions Respecting Insurance. (a) All
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insurance required by this Article shall be procured and maintained with
responsible insurance companies which are (i)
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financially-sound and generally-recognized and with a Best's rating of A or
better, (ii) approved by Landlord and (iii) authorized to write such insurance
in the State of Arkansas. The insurance coverage shall be of a type and scope
and in the amounts as shall be acceptable to Landlord. Such insurance may not
be written with deductible amounts in excess of such deductible amounts as
Landlord may have agreed to in advance. All policies evidencing such insurance
shall provide for payment of losses to Landlord and Tenant, as their respective
interests may appear.
(b) All policies of insurance required by this Article, or a
certificate or certificates of the insurers that such insurance is in force and
effect, or other evidence of such insurance satisfactory to Landlord, shall be
deposited with Landlord prior to Tenant's taking possession of the Facility and
the Equipment. Tenant shall deliver to Landlord on or before the first day of
each calendar year thereafter certificates dated not earlier than the
immediately preceding November 1 reciting that there is in full force and effect
with a term covering at least the next succeeding calendar year, insurance in
the amounts and of the types required by this Article. Prior to expiration of
any such policy, Tenant shall furnish Landlord satisfactory evidence that the
policy has been renewed or replaced.
(c) All policies of insurance procured by Tenant shall contain
endorsements providing that (i) such policies may not be materially changed,
amended, reduced, cancelled (including for nonpayment of premium) or allowed to
lapse with respect to the Landlord except after 60 days' prior notice from the
insurance company to each, sent by registered or certified mail, return receipt
requested to the addresses and in the manner then provided in this Lease
Agreement for notices; and (ii) Tenant shall be solely responsible for the
payment of all premiums under such policies and the Landlord shall have no
obligation for the payment thereof notwithstanding that the Landlord is or may
be named as an insured. Any endorsements to any
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such policies shall be so deposited with the Landlord upon issuance thereof and
each renewal or replacement of a policy shall be so deposited with the Landlord
at least 20 days prior to the expiration of such policy.
(d) Tenant shall not take out separate insurance concurrent in form
or contributing in the event of loss with that required (or which may reasonably
be required) pursuant to this Section to be furnished by Tenant unless Landlord
are included therein as an insured, with all losses payable thereunder as
provided in this Section. Tenant shall immediately notify the Landlord of the
taking out of any such separate insurance and shall deliver the policy or
policies as herein provided.
(e) Tenant shall use its best efforts to include in each of its
insurance policies (and, with respect to any equipment in the Facility leased by
Tenant, in the insurance policies covering such equipment carried by Tenant or
the lessors of such equipment) covering loss, damage or destruction by fire or
other insured casualty, a waiver of the insurer's right of subrogation against
the Landlord, or if such waiver should be unobtainable or unenforceable (i) an
express agreement that such policy shall not be invalidated if the insured
waives or has waived before the casualty the right of recovery against any party
responsible for a casualty covered by the policy, or (ii) any other form of
permission for the release of the Landlord.
(f) Tenant agrees to permit any representatives of insurance
companies insuring the Facility or insuring any items required by this Lease
Agreement to inspect the Facility pursuant to Section 5.5 of this Lease
Agreement. Tenant further agrees to comply with any and all recommendations
made by such representatives in connection with inspections of the Facility.
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Section 3.6. Right of Landlord to Pay Insurance Premiums and Other Charges.
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If Tenant fails (i) to maintain any insurance required to be maintained by this
Article or (ii) to make any other payment required to be made by it under this
Lease Agreement, Landlord may pay such premium for such insurance, or make such
other payment. No such payment by Landlord shall affect or impair any rights of
Landlord hereunder arising in consequence of such failure by Tenant. Tenant
shall reimburse the Landlord for any amount so paid by Landlord pursuant to this
Section, together with interest thereon at the rate provided for in Section
2.3(c).
ARTICLE IV
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 4.1. Damage or Destruction. (a) If the Facility shall be damaged
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or destroyed (in whole or in part) at any time during the Lease Term:
(i) Landlord shall have no obligation to Tenant to replace, repair
of restore the Facility, except if caused by Landlord's willful misconduct;
(ii) there shall be no abatement or reduction in the Fixed Rent or
Equipment Rent, except if caused by Landlord's willful misconduct;
(iii) Tenant shall promptly give written notice of such damage or
destruction to Landlord, and
(iv) Tenant shall promptly replace, repair, rebuild or restore the
Facility to substantially the same condition and value as an operating
entity as existed prior to such damage or destruction, in accordance with
plans and specifications approved in writing in advance by Landlord;
provided, however, that if by reason of the extent of such damage or
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destruction the provisions of section 4.1(b) hereof are applicable, Tenant
shall not commence such replacement, repair, rebuilding or restoration
until (i) Landlord notifies Tenant that Landlord does not intend to give
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to Tenant the notice of termination provided for under Section 4.1(b)
hereof or (ii) the time for the Landlord to give the notice of termination
provided for in Section 4.1(b) lapses. Landlord will make available to
Tenant so much of the net proceeds of the insurance maintained under
Article III hereof as is necessary to pay the costs of such replacement,
repair, rebuilding or restoration of the Facility, such proceeds to be made
available only after actual receipt thereof by Landlord and as the work
progresses, subject, however, to customary retainages and submission to
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Landlord of customary documentation to establish the percentage of
completion and the absence of liens.
(v) In the event the net proceeds of such insurance are not
sufficient to pay in full the costs of such replacement, repair, rebuilding
or restoration, Tenant shall nonetheless complete the work thereof and pay
from its own moneys that portion of the costs thereof in excess of such
insurance proceeds.
(vi) All such replacements, repairs, rebuilding or restoration made
pursuant to this Section 4.1, whether or not requiring the expenditure of
Tenant's own money, shall automatically become a part of the Facility and
be subject to this Lease Agreement as if the same were specifically
described herein.
(vii) Any balance of such insurance proceeds remaining after payment
of all the costs of such replacement, repair, rebuilding or restoration
returned to Landlord.
(viii) Tenant shall be entitled to the proceeds of any insurance or
portion thereof made for damage to any property which, at the time of such
damage, is not part of the Facility and is owned by Tenant.
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(b) Notwithstanding the provisions of Section 4.1(a) above, if more
than 30% of the monetary value of the Facility (exclusive of excavations and
foundations) as reasonably determined by Landlord shall be damaged or destroyed
and in Landlord's judgment it is not practicable or desirable to replace,
repair, rebuild or restore the Facility, Landlord shall have the right to
terminate this Lease Agreement and the leasehold estate created hereby by notice
in writing given to Tenant within 30 days after the date of such damage or
destruction, in which case (i) this Lease Agreement and the leasehold estate
created hereby shall terminate as of the date such notice is given; (ii) all
Fixed Rent, additional rent, and other rents, taxes and charges hereunder shall
be prorated and paid to the date of such termination; and (iii) all of the
proceeds of insurance with respect to such damage or destruction shall be paid
to Landlord and Tenant shall have no claim thereto.
(c) Tenant hereby assumes and shall bear the entire risk of loss and
damage to the Equipment from any and every cause whatsoever. No loss or damage
to the equipment or any part thereof shall impair any obligation of lessee under
this Lease Agreement which shall continue in full force and effect, except if
caused by Landlord's willful misconduct.
Section 4.2. Condemnation. (a) If at any time during the Lease Term any
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part of title to, or the use of, the Land shall be taken by Condemnation but
such taking shall not (i) include the Plant or (ii) materially interfere with
the Tenant's use or operation of the Plant, then:
(i) Landlord shall have no obligation to Tenant to restore or
replace the Facility;
(ii) there shall be no abatement or reduction in the Fixed
Rent or Equipment Rent;
(iii) The entire proceeds of any award in Condemnation,
whether the Condemnation be of the whole or any part of the Facility,
shall belong solely to Landlord and Tenant hereby assigns all of its
rights in and to such award to
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Landlord. Landlord will make available to Tenant so much of the net
proceeds of such award as is necessary to pay the costs of such
restoration as may be necessary for the continued use and operation of
the Plant, such proceeds to be made available only after actual
receipt thereof by Landlord and as such restoration progresses,
subject, however, to customary retainages and submission to Landlord
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of customary documentation to establish the percentage of completion
and the absence of liens. Restoration of the Facility shall be in
accordance with plans and specifications approved in writing by
Landlord and on such other terms as shall be approved in writing by
Landlord.
(iv) The restorations to the Facility shall automatically become
part of the Facility and be subject to this Lease Agreement as if the
same were specifically described herein.
(v) Any balance of the proceeds of any Condemnation award
remaining after payment of all costs of such restoration shall be paid
to Landlord.
(b) Notwithstanding the provisions of Section 4.2(a) above, if at any
time during the Lease Term a part of the Plant or the Land beneath the Plant
shall be taken by Condemnation and as a result of such taking by Condemnation,
part of the Plant is no longer useable by Tenant, then, effective as of the date
of vesting of title, the Fixed Rent shall be abated in an amount apportioned
according to the area of the Facility so condemned or taken. If at any time
during the Lease Term a part of the Plant or the Land beneath the Plant shall be
taken by Condemnation and as a result of such taking by Condemnation Tenant's
use or operation of the Plant is materially impaired, then, effective as of the
date of vesting of title (i) this Lease Agreement and the leasehold estate
created hereby shall terminate, (ii) all Fixed Rent, additional
16
rent and other rents, and charges herewith shall be prorated and paid to the
date of termination, and (iii) Landlord shall retain the full amount of any
Condemnation award and Tenant shall have no claim thereto.
(c) In the event the entire Facility shall be taken by Condemnation,
then, effective as of the date of vesting of title (i) this Lease Agreement and
the leasehold estate created hereby shall terminate, (ii) all Fixed Rent,
additional rent and other rents, and charges herewith shall be prorated and paid
to the date of termination, and (iii) Landlord shall retain the full amount of
any Condemnation award and Tenant shall have no claim thereto.
(d) Notwithstanding the provisions of Section 4.2(a) above, if more
than 30% of the monetary value of the Facility (exclusive of excavations and
foundations) shall be taken by Condemnation and in Landlord's reasonable
judgment it is not practicable or desirable to restore the Facility, Landlord
shall have the right to terminate this Lease Agreement and the leasehold estate
created hereby by notice in writing given to Tenant at least 90 days (or such
lesser time as may have been made available by such condemning authorities)
prior to the date possession of the Facility or the part thereof taken by
Condemnation is surrendered to the condemning authorities, in which case (i)
this Lease Agreement and the leasehold estate created hereby shall terminate as
of the date such possession is surrendered to the' condemning authorities; (ii)
all rents and other charges shall be prorated and paid to such date of
termination; and (iii) the entire Condemnation award shall be paid to Landlord
and Tenant shall have no claim thereto.
ARTICLE V
SPECIAL COVENANTS
Section 5.1. No Warranty of Condition or Suitability Landlord. Landlord
------------------------------------------------
makes no warranty, either express or implied, as to the condition, title,
design, operation, merchantability
17
or fitness of the Facility or the Equipment or that they are or will be suitable
for Tenant's purposes or needs.
Section 5.2. Hold Harmless Provisions. Tenant hereby releases Landlord
------------------------
from, agrees that Landlord shall not be liable for, and agrees to indemnify and
hold Landlord harmless from and against, any and all (i) liability for loss or
damage to property or injury to or death of any and all persons that may be
occasioned by any cause whatsoever pertaining to the Facility or the Equipment
or arising by reason of or in connection with the occupation or the, use thereof
or the presence on, in or about the Facility or the Equipment, except if caused
by Landlord's willful misconduct, and (ii) liability arising from or expense
relating to the construction, renovation, equipping, owning and leasing of the
Facility, and all causes of action and attorneys' fees and any other expenses
incurred in defending any suits or actions which may arise as a result of any of
the foregoing, provided that any such losses, damages, liabilities or expenses
of Landlord are not incurred or do not result from the willful wrongdoing of
Landlord. Nothing contained herein shall inure to the benefit of any insurance
company or insurer by way of subrogation or otherwise.
Section 5.3. Landlord's Repairs. (a) Landlord agrees that, during the
------------------
Lease Term, it will make all necessary Structural Repairs to the Facility;
provided, however, that Tenant shall be responsible for those Structural Repairs
-------- -------
caused by or arising out of any act, failure to act or negligence of Tenant.
(b) Landlord shall be responsible for the repairs necessary to
maintain: (i) the leak-free condition of the roof of the Plant for the Lease
Term; provided, however, that Tenant shall be responsible for those repairs
-------- -------
caused by or arising out of any act, failure to act or negligence of Tenant.
18
Section 5.4. Responsibility for the Sprinkler System. Tenant agrees that
---------------------------------------
during the Lease Term it will at its own expense make all necessary repairs and
replacements to the sprinkler system (the "Sprinkler System"), in a timely
manner, and Tenant will provide Landlord with notice of such repairs and
replacements. Tenant further agrees that it will, throughout the Lease Term,
comply with all statutes, rules, regulations, permits, licenses, and
requirements of all federal, state, county, municipal and other governments,
which now or at any time hereafter may be applicable to the Sprinkler System.
Section 5.5. Right to Inspect the Facility and the Equipment. Landlord and
-----------------------------------------------
its respective duly authorized agents, including, but not limited to insurers,
shall have the right at all reasonable times to inspect the Facility.
Section 5.6. Good Standing in the State. Throughout the Lease Term, Tenant
--------------------------
shall continue to maintain its corporate existence and be in good standing in
the State of Arkansas.
Section 5.7. Agreement to Provide Information. Tenant agrees, on each
--------------------------------
anniversary of the Lease Commencement Date and whenever requested by Landlord,
to provide and certify or cause to be provided and certified financial
statements and such additional information concerning Tenant, its finances, its
banking relationships and other topics as Landlord from time to time reasonably
considers necessary or appropriate, including, without limitation, such
information as reasonably may be necessary to enable them or either of them to
make any reports required by law or governmental regulation. Tenant shall advise
Landlord of any change in Tenant's principal banking relationships.
Section 5.8. Books of Record and Account; Financial Statements. Tenant
-------------------------------------------------
agrees to maintain proper accounts, records and books in which full and correct
entries shall be made, in accordance with generally accepted accounting
principles, of all business and affairs of Tenant. Within 120 days after the
close of each fiscal year of Tenant during the Lease Term, Tenant shall
19
furnish to Landlord a copy of Tenant's certified annual financial statements for
its immediately preceding fiscal year, audited by a firm of independent public
accountants of recognized standing, selected by Tenant.
Section 5.9. Compliance with orders. Ordinances, Etc. Tenant agrees
----------------------------------------
that it will, throughout the Lease Term, comply with all statutes, codes, laws,
acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements of all federal,
state, county, municipal and other governments, departments, commissions,
boards, companies or associations insuring the premises, courts, authorities,
officials and officers, foreseen or unforeseen, ordinary or extraordinary, which
now or at any time hereafter may be applicable to the Facility or any part
thereof or the Equipment, or to any use, manner of use or condition of the
Facility or any part thereof or the Equipment, including, without limiting the
generality of the foregoing, all Arkansas State and Occupational Safety and
Health Act ("OSHA") regulations governing the pillow filling in plants.
Section 5.10. Discharge of Liens and Encumbrances. Tenant shall not
-----------------------------------
permit or create or suffer to be permitted or created any lien, except for
Permitted Encumbrances, upon the Facility or any part thereof or the Equipment
by reason of any labor, services or materials rendered or supplied or claimed to
be rendered or supplied with respect to the Facility or any part thereof or the
Equipment. If any such lien is filed against the Facility or the Equipment
(other than liens arising from acts or omissions of Landlord or judgments
against Landlord), Tenant shall discharge the same within thirty days of such
filing and at its own expense. If Tenant fails to discharge any such lien within
thirty days of filing, Landlord may discharge the same at the expense of Tenant
and Tenant shall pay as additional rent the expenses thereof incurred by
Landlord with interest thereon as herein provided.
20
ARTICLE VI
ASSIGNMENT AND SUBLEASING; MORTGAGE
AND PLEDGE OF INTEREST
Section 6.1. Assignment and Subleasing. Tenant shall not assign this
--------------------------
Lease Agreement in whole or in part nor sublease the Facility or the Equipment
in part without the prior written consents of the Landlord, which consent shall
not be unreasonably withheld or delayed. In addition, Tenant may sublease the
Facility to one of its subsidiaries or divisions without Landlord's permission,
provided, however, Tenant shall provide Landlord with prior written notice of
-------- -------
such sublease. Prior to requesting the approval of Landlord to an assignment or
subletting of the Facility, as hereinafter provided, Tenant shall advise
Landlord of (i) the name and address of the proposed subtenant or assignee; (ii)
the terms, conditions and consideration of the proposed subletting or
assignment; (iii) the nature and character of the business of the proposed
subtenant or assignee and of its proposed use of the Facility; and (iv) current
financial information and any other information as Landlord may reasonably
request with respect to the proposed subtenant or assignee. Tenant shall pay to
Landlord as additional rent, within twenty day after notice and demand therefor,
Landlord's reasonable attorneys' fee incurred as a result of having any proposal
reviewed or consent documented. In the case of an assignment, Landlord may
withhold its consent if the nature and character or the financial condition of
the proposed assignee is not equal to or better than that of Tenant. In the
event Tenant proposes to sublease more than 75% of the Facility for all or
substantially all of the duration of the Lease Term, Landlord may withhold its
consent and require that such transaction be structured as an assignment:
(1) No assignment or sublease shall relieve Tenant from primary
liability for any of its obligations hereunder;
21
(2) The assignee or sublessee shall assume the obligations of Tenant
hereunder to the extent of the interest assigned or subleased;
(3) Tenant shall, within ten days after the delivery thereof, furnish
or cause to be furnished to the Landlord a true and complete copy of each such
assignment or sublease, as the case may be, and the instrument of assumption;
and
(4) Tenant shall pay to Landlord as additional rent, as and when paid
by any subtenant to Tenant, one-half of any rents, additional charges or other
consideration payable under the sublease to Tenant by the subtenant which is in
excess of the Fixed Rent accruing during the term of the sublease in respect of
the subleased space (at the rate per square foot payable by Tenant hereunder)
pursuant to the terms hereof.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default Defined. (a) The following shall be
-------------------------
"Events of Default" under this Lease Agreement and the term "Event of Default"
or "Default" shall mean, whenever they are used in this Lease Agreement, any one
or more of the following events:
(1) The failure by Tenant to pay the Fixed Rent and Equipment Rent
within five days of the date when due;
(2) The failure by Tenant to pay any additional rent within ten days
after notice and demand by Landlord to Tenant;
(3) The failure by Tenant to observe or perform any covenant,
condition or agreement hereunder on its part to be observed or performed (except
obligations referred to in
22
Sections 7.1(a) (1) and (2) above) for a period of thirty days after written
notice, specifying such failure and requesting that it be remedied, given to
Tenant by Landlord;
(4) The filing by Tenant of a voluntary petition in bankruptcy, or
the failure by Tenant within sixty days to lift any execution, garnishment or
attachment of such consequence as will impair its ability to carry on its
operations at the Facility, or the commission by Tenant of any act of
bankruptcy, or the adjudication of Tenant as a bankrupt, or the assignment of
assets by Tenant for the benefit of its creditors, or the entry by Tenant into
an agreement of composition with its creditors, or the approval by a court of
competent jurisdiction of a petition applicable to Tenant in any proceeding for
its reorganization instituted under the provisions of any state or federal
bankruptcy or similar law, or appointment by order, judgment or decree of a
court of competent jurisdiction of a receiver of the whole or a substantial
portion of the properties of Tenant (unless such receiver is removed or
discharged within sixty days of the date of his qualification).
(b) Notwithstanding the provisions of Section 7.1(a), if by reason of
force majeure either party hereto shall be unable in whole or in part to carry
out its obligations under this Lease Agreement and if such party shall give
notice and full particulars of such force majeure in writing to the other party
within a reasonable time after the occurrence of the event or cause relied upon,
the obligations under this Lease Agreement of the party giving such notice, so
far as they are affected by such force majeure, shall be suspended during the
continuance of the inability, which shall include a reasonable time for the
removal of the effect thereof. The suspension of such obligations for such
period pursuant to this subsection (b) shall not be deemed an event of default
under this Section 7.1. Notwithstanding anything to the contrary in this
subsection (b), an event of force majeure shall not excuse, delay or in any way
diminish the
23
obligations of Tenant to pay the Fixed Rent and Equipment Rent when due or to
provide the indemnity required by Section 5.2 hereof. The term "force majeure"
as used herein shall include, without limitation, acts of God, strikes, lockouts
or other industrial disturbances, acts of public enemies, orders of the State or
any of their departments, agencies, governmental subdivisions, or officials, or
any civil or military authority, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fire, hurricanes, storms, floods, washouts,
disturbances, explosions, breakage or accident to machinery, transmission pipes
or canals, partial or entire failure of utilities, or any other cause or event
not reasonably within the control of the party claiming such inability. It is
agreed that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the party having
difficulty, and the party having difficulty shall not be required to settle any
strike, lockout and other industrial disturbances by acceding to the demands of
the opposing party or parties.
Section 7.2. Remedies on Default. (a) Whenever any Event of Default
-------------------
shall have occurred and be continuing, Landlord may take any one or more of the
following steps:
(1) Declare, by written notice to Tenant, to be immediately due and
payable, whereupon the same shall become immediately due and payable to the
extent permitted by law all unpaid installments of Fixed Rent or Equipment Rent.
(2) Re-enter and take possession of the Facility (without terminating
this Lease Agreement and without being liable for any prosecution or damages
therefor) and sublease the Facility for the account of Tenant, holding Tenant
liable for the amount, if any, by which the aggregate of the Fixed Rent payable
by Tenant hereunder exceeds the aggregate of the rents and other amounts
received from the sublessee under such sublease.
24
(3) Terminate the Lease Term and this Lease Agreement and, without
being liable for any prosecution or damages therefor, exclude Tenant from
possession of the Facility and use its best efforts to lease the Facility to
another Person for the account of Tenant, holding Tenant liable for the amount,
if any, by which the aggregate of the Fixed Rent payable by Tenant hereunder
exceeds the aggregate of the rents and other amounts received from such other
Person under the new lease.
(4) Take any other action at law or in equity which may appear to
Landlord necessary or desirable to collect the payments then due or thereafter
to become due hereunder, to secure possession of the Facility, and to enforce
the obligations, agreements or covenants of Tenant under this Lease Agreement.
(b) In the event the Facility is subleased or leased to another
Person pursuant to Section 7.2 (a) (2) or (3) hereof, Landlord may (but shall be
under no obligation to) make such repairs or alterations in or to the Facility
and the Equipment as it may deem necessary or desirable for the implementation
of such sublease or lease and Tenant shall be liable and agrees to pay the costs
of such repairs or alterations and the expenses incidental to the effecting of
such sublease or lease, together with interest thereon at the rate herein
provided, notwithstanding that this Lease Agreement may have been terminated
pursuant to Section 7.2(a)(3) hereof.
Section 7.3. Remedies Cumulative. No remedy herein conferred upon or
-------------------
reserved to Landlord is intended to be exclusive of any other available remedy,
but each and every such remedy shall be cumulative and in addition to every
other remedy given under this Lease Agreement or now or hereafter existing at
law or in equity. No delay or omission to exercise any right or power accruing
upon any default shall impair any such right or power or shall be construed to
be a waiver thereof, but any such right and power may be exercised from time to
25
time and as often as may be deemed expedient. In order to entitle Landlord to
exercise any remedy reserved to it in this Article, it shall not be necessary to
give any notice, other than such notice as may be herein expressly required in
this Lease Agreement.
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses. In the
----------------------------------------------
event Tenant should default under any of the provisions of this Lease Agreement
and Landlord should employ attorneys or incur other expenses for the collection
of amounts payable hereunder or the enforcement of performance or observance of
any obligations or agreements on the part of Tenant herein contained, Tenant
shall, on demand therefor, pay to Landlord the reasonable fees of such attorneys
and such other expenses so incurred.
ARTICLE VIII
RENEWAL OPTION
Section 8.1. Tenant's Renewal Option. Tenant shall have the option, to
-----------------------
be exercised as hereinafter provided, to extend the term of this Lease Agreement
for succeeding periods of one year (each, an "Extended Term") upon the following
terms and conditions:
(A) That at the time of the exercise of such option and the
commencement of the Extended Term, Tenant shall not be in default in the
performance of any of the terms, covenants or conditions herein contained.
(B) That at the time of the exercise of such option and the
commencement of the Extended Term, the Tenant named herein or any permitted
assignee of Tenant shall be in actual occupancy of the entire Facility.
(C) Except as provided herein, that the extension shall be upon
terms, covenants and conditions as mutually agreed between the parties.
(E) Tenant shall exercise its right to extend the term of this lease
by notifying Landlord of Tenant's election to exercise such option not later
than six months prior to the
26
Expiration Date or the end of any Renewal Term. Upon the giving of such notice,
this Lease Agreement shall be deemed extended for the specified period, subject
to the provisions of this Article, without execution of any further instrument.
In the event that Tenant exercises the option provided for in this Article, then
the term "Lease Term" as used herein shall be deemed to include the Extended
Term.
(F) Time shall be of the essence with respect to the exercise by
Tenant of the option set forth in this Article.
ARTICLE IX
PURCHASE OPTION
Section 9.1. Facility Purchase Option. (a) Provided that Tenant
-------------------------
shall (i) not be in default in the performance of any of the terms, covenants or
conditions herein contained on the date the option shall be exercised and on the
date title shall be transferred pursuant to this Article, and (ii) that Tenant
herein named, or any permitted assignee of Tenant shall be in occupancy of the
entire Facility the date the option shall be exercised and on the date title
shall be transferred pursuant to this Section, Tenant shall have the option to
purchase the Facility upon terms and subject to the conditions and at the
purchase price hereinafter set forth. Tenant shall exercise the option provided
for by first giving Landlord notice of its election to so exercise the option
(the "First Notice"). In the event Tenant gives such First Notice, then the
purchase price shall be determined as provided in paragraph (c) below. Once the
purchase price has been finally determined, then Tenant shall within 60 days of
such determination notify Landlord that Tenant is proceeding with the purchase
(the "Second Notice") and in such Second Notice set a date for closing which is
at least 30 days but not more than 45 days following the date of such Second
Notice. In the event that Tenant fails to give the Second Notice on a timely
basis, then (i) Tenant shall pay to Landlord within 10 days following Landlord's
demand therefor Landlord's
27
appraisal costs and additional costs incurred in determining the purchase price
all costs and (which payment by Tenant to Landlord shall constitute additional
rent) and (ii) this Lease Agreement, including but not limited to Tenant's
rights pursuant to this Article, shall remain in full force and effect.
(b) The purchase price shall be the fair market value of the
Facility, excluding any leasehold improvements made by Tenant, determined as
follows:
(i) Within 20 days following the giving of the First Notice,
Landlord and Tenant shall each designate an appraiser who shall be an
M.A.I. in good standing having at least 10 years of experience in
appraising buildings in Xxxxxx County, Arkansas. The two appraisers so
chosen shall meet within 10 days after the second appraiser is appointed
and if, within 20 days after the second appraiser is appointed, the two
appraisers shall not agree upon a determination of the fair market value of
the Facility by 10% or less, then the Purchase Price shall be the amount
exactly in between the appraisers' determinations. If the two appraisers
shall not agree upon a determination of the fair market value of the
Facility by greater than 10%, they shall together appoint a third
appraiser. If said two appraisers cannot agree upon the appointment of a
third appraiser within 10 days after the expiration of such 20 day period,
then either party, on behalf of both, and on notice to the other may
request such appointment by the American Arbitration Association (or any
successor organization, or if no successor organization exists, a
comparable organization) in accordance with its then prevailing rules. If
the American Arbitration Association shall fail to appoint said third
appraiser within 10 days after such request is made, then either party may
apply, on notice to the
28
other, to the state court in Xxxxxx County, Arkansas (or any other court
having jurisdiction and exercising functions similar to those now exercised
by the foregoing court) for the appointment of such third appraiser. Each
party shall pay the fees and expenses of the appraiser selected by it. The
fees and expenses of the third appraiser and all other expenses (not
including the attorney's fees, witness fees and similar expenses of the
parties which shall be borne separately by each of the parties) of the
arbitration shall be borne equally by the parties hereto. Such appraisers
shall, by majority thereof, appraise the Facility in order to determine the
fair market value thereof in accordance with generally accepted appraisal
methods as promulgated and endorsed by the American Institute of
Appraisers. It is the intention of the foregoing provisions that a final
determination as to the purchase price should be reached within 90 days
following the giving of the First Notice.
(ii) If the Tenant exercises its option to purchase the Facility
within two years of the Term Commencement Date, Fifty Percent (50%) of all Fixed
Rent paid at the time of the exercise of such option shall be credited towards
such purchase price.
(c) If Tenant shall have elected to purchase the Facility by delivery of
the Second Notice to Landlord, the parties hereto shall enter into a contract of
sale in substantially the same form as the standard form of commercial contract
of sale accepted in the State of Arkansas. Such contract of sale shall be dated
the date that a final determination of the purchase price is made and shall
provide for a closing sixty days after such date (subject to such reasonable
extensions as the parties shall reasonably determine to be necessary).
29
(d) In the event that (i) Tenant elects to purchase the Facility by
delivery of the Second Notice to Landlord; and (ii) the title to the Facility
fails to be transferred due to or arising out of any act, failure to act or
negligence of Tenant, then this Lease Agreement and all of its terms shall
remain in full force and effect for the then remaining balance of the Lease
Term.
Section 9.2 Equipment Purchase Option. Provided that Tenant shall (i) not
-------------------------
be in default in the performance of any of the terms, covenants or conditions
herein contained on the date the option shall be exercised and on the date title
shall be transferred pursuant to this Article, and (ii) that Tenant herein
named, or any permitted assignee of Tenant shall be in occupancy of the entire
Facility the date the option shall be exercised and on the date title shall be
transferred pursuant to this Section, Tenant shall have the option to purchase
the Equipment during the Lease Term for Seventy-Five Thousand Dollars
($75,000.00) (the "Purchase Option"). If the Purchase Option is exercised within
twelve months of the Term Commencement Date. One Hundred Percent (100%) of all
Equipment Rent paid at the time of the exercise of such option shall be credited
towards such purchase price.
ARTICLE X
RIGHT OF FIRST REFUSAL
Section 10.1. Right of First Refusal. Notwithstanding anything
----------------------
contained in Section 9.1 of this Lease Agreement, Landlord can sell, transfer,
or otherwise dispose of the Facility if Landlord complies with the requirements
set forth in this Section 10.1. Landlord shall not, during the Lease Term, sell,
transfer, or otherwise dispose of the Facility unless Landlord first shall have
received a bona fide offer for the purchase of the Facility and shall have
notified Tenant in writing of the names of the party or parties making the
offer, the price and the terms and conditions thereof. Tenant shall have the
prior right, at its option, for a period of 30 days following receipt by Tenant
of Landlord's notice of the offer, by notice to the Landlord of its
30
intention to do so, to purchase the Facility, at the same price and upon the
same terms and conditions as are contained in such offer. In the event that
Tenant exercises its option to purchase, Tenant shall be obligated to pay the
purchase price or accept title to the premises in accordance with the provisions
of the offer and to close the transfer of title on the date provided for in such
offer, but in no event before the sixtieth day following the date of the giving
of such notice of exercise. If Tenant fails to exercise its right to purchase
the Facility, and for any reason Landlord shall not thereafter sell or convey
the Facility, to the party or parties making the offer at a price not less than
that contained in the offer and upon substantially the same terms and conditions
contained therein, the foregoing restriction against Landlord's sale or other
disposition of the Facility set forth in this Section shall continue in full
force and effect and Tenant's prior right to purchase shall apply with respect
to any new offer relating to the Facility received by Landlord, all as more
particularly provided above. If Tenant fails to exercise its right to purchase
the Facility, and Landlord thereafter sells or conveys the Facility to the party
or parties making the offer, this Lease Agreement will terminate and Tenant
shall have six months to vacate the Facility. The provisions of this Section
shall not apply to transfers of ownership interests in Landlord or to a transfer
to an entity within the corporate family or other entity to which substantially
all of Landlord's assets are transferred, or to any other change in the
beneficial ownership of Landlord. In the event that Tenant elects to purchase
the Facility pursuant to this Section and the title to the Facility fails to be
transferred due to or arising out of any act, failure to act or negligence of
Tenant, then in addition to any other rights or claims Landlord will have at
law, equity or otherwise, such failure will be considered an Event of Default
under this Lease Agreement.
31
ARTICLE XI
MISCELLANEOUS
Section 11.1. Surrender of Facility. At the termination of the Lease
---------------------
Term Tenant shall surrender possession of the Facility peacefully and promptly
to Landlord in good repair and good order.
Section 11.2. Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if hand delivered or if sent by
registered or certified mail, return receipt requested, when deposited in the
mails, by first class postage prepaid, addressed as follows:
To Landlord: Ex-Cell Home Fashions, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, President
with a copy to: Ex-Cell Home Fashions, Inc.
X.X. Xxx 0000
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxx,
V.P. of Manufacturing & Distribution
with a copy to: Glenoit Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Sears, Chief Financial Officer
with a copy to: Winston & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
To Tenant: Aladdin Manufacturing Corporation
c/o Mohawk Rug & Textiles Division
X.X. Xxx 000
0000 Xxxxx Xxxxxx Xxxx, XX
Xxxxx Xxxxxx, XX 00000
with a copy to: Mohawk Industries, Inc.
000 Xxxxx Xxxxxxxxxx Xxxx.
X.X. Xxx 00000
00
Xxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxx, General Counsel
Landlord and Tenant may, by notice given hereunder, designate any further or
different addresses to which subsequent notices and other communications shall
be sent.
Section 11.3. Binding Effect. This Lease Agreement shall inure to the
--------------
benefit of and shall be binding upon Landlord, Tenant and their respective
successors and permitted assigns.
Section 11.4. Severability. In the event any provision of this Lease
------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 11.5. Amendments, Changes and Modifications. This Lease Agreement
-------------------------------------
may not be amended, changed, modified or altered except by a writing executed by
the parties.
Section 11.6. Execution of Counterparts. This Lease Agreement may be
-------------------------
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 11.7. Applicable Law. This Lease Agreement shall be governed by
--------------
the laws of the State of Arkansas.
Section 11.8. Table of Contents and Section Headings Not Controlling.
------------------------------------------------------
The Table of Contents and the headings of the several sections in this Lease
Agreement have been prepared for convenience of reference only and shall not
control, affect the meaning or be taken as an interpretation of any provision of
this Lease Agreement.
Section 11.9. Estoppel Certificate. Tenant agrees at any time and from
--------------------
time to time to execute and deliver to the Landlord a statement (i) certifying
that this Lease Agreement is unmodified and in full force and effect (or, if
there have been modifications, that the same is in full force and effect as
modified and reciting such modifications) and whether any options
33
granted to Tenant pursuant to the provisions of this Lease Agreement have been
exercised, (ii) certifying the dates to which the Fixed Rent and Additional Rent
have been paid and the amounts thereof, and (iii) stating whether or not, to the
best knowledge of Tenant, the Landlord is in default in performance of any of
its obligations under the Lease Agreement, and, if so, specifying each such
default of which Tenant may have knowledge, it being intended that any such
statement delivered pursuant hereto may be relied upon by others with whom the
Landlord may be dealing.
Section 11.10. Quiet Enjoyment. The Landlord covenants and agrees with
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Tenant that upon Tenant paying the Fixed and, Additional Rent and observing and
performing all the terms, covenants and conditions, on Tenant's part to be
observed and performed, Tenant may peaceably and quietly enjoy the Facility.
Section 11.11. Security Deposit. Tenant has deposited with Landlord a sum
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equal to one monthly installment of Fixed Rent, as security for the full and
punctual performance by Tenant of all of the terms of this Lease Agreement.
Landlord agrees to pay to Tenant, promptly following each anniversary of the
Term Commencement Date, interest on such security deposit at the rate of four
percent per annum. In the event Tenant defaults in the performance of any of the
terms of this Lease Agreement, Landlord may apply the whole or any part of the
security so deposited to the extent required for the payment of (i) any rent or
(ii) any sum which Landlord may expend or may be required to expend by reason of
Tenant's default including, without limitation, any damages or deficiency in the
reletting of the Facility, whether accruing before or after summary proceedings
or other re-entry by Landlord. Upon each such application, Tenant shall, on
demand, pay to Landlord the sum so applied which shall be added to the security
deposit so that the same shall be restored to the amount first set forth above.
if Tenant shall fully
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and punctually comply with all of the terms of this Lease Agreement, the amount
of the security deposit, without interest, shall be returned to Tenant after the
termination of this Lease Agreement and delivery of exclusive possession of the
Facility, Landlord shall have the right to transfer the security to the vendee
or lessee and Landlord shall ipso facto be released by Tenant from all liability
for the return of such security; and Tenant agrees to look solely to the new
landlord for the return of said security and it is agreed that the provisions
hereof shall apply to every transfer or assignment made of the security to a new
landlord. Tenant shall not assign or encumber or attempt to assign or encumber
the monies deposited herein as security and neither Landlord nor its successors
or assigns shall be bound by any such assignment, encumbrance, or attempted
assignment or encumbrance.
Section 11.12. No Additional Waiver Implied By One Waiver. In the event
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any agreement contained herein should be breached by Tenant and thereafter
waived by Landlord, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder.
Section 11.13. Brokerage Agreement. Tenant represents and warrants to
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Landlord that no broker brought about this lease transaction, and that neither
Tenant nor its respective employees or agents had any conversations or other'
contract with any in regard to this lease transaction. Tenant acknowledges that
Landlord is entering into this lease in reliance upon the foregoing warranty and
representation. Tenant agrees to cooperate with Landlord and to provide
testimony in any action, or proceeding brought against Landlord based upon a
claim by a broker for a commission or other such payment in connection with this
lease transaction.
Section 11.14 Excluded Equipment. The pillow closing sewing machines
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will be included in this Lease Agreement as Equipment for a period of one month
following the Term
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Commencement Date, at which time such pillow closing sewing machines shall no
longer be included as Equipment hereunder and shall, at Landlord's sole cost and
expense, be disassembled, properly packaged and shipped to Landlord at Ex-Cell
Home Fashions, Inc., X.X. Xxx 0000, Xxxxxxxxx, XX 00000, Attention: Xxxxx
Xxxxxxxx, V.P. of Manufacturing & Distribution.
Section 11.15 Storage Area. Landlord may, at its option, vacate the
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Storage Area currently excludes from the Initial Space (as hereinafter defined)
leased under the Lease Agreement, and lease such Storage Area to Tenant at an
annual rental rate per rentable square foot equal to the then payable fixed
annual base under this Lease Agreement and otherwise on the same terms and as
are set forth in this Lease Agreement.
(a) Landlord shall give Tenant a notice (the "Storage Area Notice")
not less than thirty days prior to the date Tenant would be required to accept
possession of same hereunder. The Storage Area Notice shall (i) indicate the
date on which the Storage Area shall become available and (ii) specify
Landlord's determination of the rent for the Storage Area. Tenant shall lease
the Storage Area at the fixed annual rent specified in the Storage Area Notice,
subject to adjustment as hereinafter provided, for a term commencing on the
"Storage Area Term Commencement Date" (as hereinafter defined) and continuing
for the balance of the Term on the terms and conditions hereinafter specified.
(b) This Lease Agreement shall automatically be amended to include
the Storage Area effective as of the Storage Area Term Commencement Date upon
the terms and conditions herein specified:
(i) Landlord hereby leases to Tenant and Tenant hereby rents
from Landlord the Storage Area on the terms and conditions hereinafter set forth
for a term (the
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"Storage Area Term") commencing on the date set forth in such Storage Area
Notice as the date the Storage Area was to become available, (the "Storage Area
Term Commencement Date") and ending on the expiration date of the term for the
space initially leased by Tenant hereunder (the "Initial Space")
(ii) The fixed annual base rent payable under this lease as the
same may have been increased from time to time pursuant to the terms of this
lease shall be further increased by an amount equal to rentable space feet of
the Storage Area multiplied by the fixed annual rent per rentable square foot
for such Storage Area specified in the Storage Area Notice.
(iii) Tenant will accept said Storage Area in its "as is"
condition on the Storage Area Term Commencement Date.
(c) Except as otherwise specifically provided in this Article, from
and after the Storage Area Term Commencement Date, all references in the lease
to the demised premises shall be deemed to apply to the Storage Area as well as
to the Initial Space and all of the terms, provisions and conditions of this
lease shall apply to the Storage Area with the same force and effect as if it
were leased to Tenant initially together with the Initial Space.
(d) Should the Storage Area Term Commencement Date for the Storage
Area fall on any day other than the first day of a month, then the fixed annual
rent attributable to the Storage Area shall be prorated on a per diem basis, and
Tenant agrees to pay the amount thereof for such partial month on the Storage
Area Term Commencement Date.
(e) In no event shall the fixed annual rent payable with respect to
the Storage Area on a per square foot basis determined as herein provided be
less than the fixed annual rent per square foot than being paid under this lease
for the Initial Space.
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(f) From and after the first day of the Storage Area Term, all
references in the lease to the demised premises shall be deemed to apply to the
Storage Area and Initial Space.
(g) Except as expressly permitted by this lease, Tenant shall not be
permitted to sublet or assign all or any part of the Storage Area.
(h) Except as otherwise specifically provided in this Article, all of
the terms, provisions and conditions of the lease shall apply to the Storage
Area with the same force and effect as if it were leased to Tenant initially
together with the Initial Space demised hereunder.
(i) The termination, cancellation or surrender of this lease as to
the entire demised premises shall terminate any rights of Tenant pursuant to
this Article.
Section 11.16 Personal Property. The Equipment is, and shall at all
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times be and remain, personal property notwithstanding that the Equipment or any
part thereof may now be, or hereafter become, in any matter affixed or attached
to, or imbedded in, or permanently resting upon, real property or any building
thereon, or attached in any manner to what is permanent as by means of cement,
plaster nails, bolts, screws or otherwise.
Section 11.17 Ownership. The Equipment is, and shall at all times be
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an remain, the sole and exclusive property of Landlord; and Tenant shall have no
right, title or interest therein or thereto except as expressly set forth in
this Lease Agreement.
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease
Agreement to be executed in their respective corporate names and their
respective corporate seals to be hereunto affixed and attested by their duly
authorized officers, all as of the date first above written.
EX-CELL HOME FASHIONS, INC.
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: President
ALADDIN MANUFACTURING CORPORATION
By: /s/ Xxxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxxx X. Xxxxxxx
Title: Asst Secretary
General Council
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EXHIBIT A
Description of Land
SURVEY FOR BEAR BRAND
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