EXHIBIT 10.1
LEASE
THIS LEASE is made as of August 6, 1999, by and between XXXXXXX X. XXXXXX
AND XXXX XX XXXXXX, husband and wife ("Landlord") and XXXXXX TOOL & MACHINING,
INC., a Minnesota corporation ("Tenant").
RECITALS:
Landlord is the purchaser under a Contract for Deed dated January 23, 1984
of (a) certain real estate located at 0000 Xxxxxxxxxx Xxxxx Xxxxxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, as legally described on Exhibit A (the "Land"); (b)
the approximately thirty eight thousand (38,000) square foot building and all
improvements located on the Land (the "Building"); and (c) the fixtures and
equipment located in the Building (the "Equipment"). The Building and Equipment
are collectively referred to in this Lease as the "Improvements". The Land,
Building and Equipment are collectively referred to in this Lease as the
"Premises".
As of the date of this Lease, one hundred percent (100%) of the capital
stock of Tenant has been purchased from Xxxxxxx X. Xxxxxx by WSI, Inc., a
Minnesota corporation, pursuant to the terms and conditions of that certain
Stock Purchase Agreement dated as of the date of this Lease (the "Stock Purchase
Agreement").
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. PREMISES. Landlord hereby leases the Premises to Tenant and Tenant
hereby leases the Premises from Landlord. Landlord warrants and represents that
they are the owner of the Premises, and that they have the full right and
authority to enter into this Lease, and that there are no leases or other rights
with respect to the Premises which conflict with the terms of this Lease.
Landlord hereby represents and warrants to Tenant, as follows:
1.1. CONDITION. The Premises are structurally sound and are in good
condition and repair (ordinary wear and tear excepted), and all material
mechanical, electrical, heating, air conditioning, sewer, water and
plumbing systems are in proper working order.
1.2. CONDEMNATION. No portion of the Premises is subject to any decree
or order to be sold or is being condemned or otherwise taken by any public
authority, nor has Landlord been notified of any proposed condemnation or
other taking.
1.3. UTILITIES. All utilities required for the current operation of
the improvements on the Premises are installed and operating and Landlord
has not received notice of actual or threatened reduction or limitation on
use of any utility service now supplied to the Premises.
1.4. COMPLIANCE. The zoning, deed restrictions, covenants and
applicable laws and ordinances applying to the Premises permit the
presently existing improvements and the continuation of the business
presently being conducted on the Premises.
1.5. FLOOD PLAIN/LANDFILL. To the best knowledge of Landlord, no
portion of the Premises is located in a flood plain or flood hazard area or
in a designated wetlands area and no portion of the Premises has been used
as a landfill.
1.6. ASSESSMENTS. Landlord has not received notice of actual or
threatened special assessments or reassessments of the Premises.
2. USE OF PREMISES. Tenant may use the Premises for any lawful use.
3. TERM. This Lease shall be for a term ("Term") of approximately twelve
(12) months commencing on August 6, 1999 ("Commencement Date") and terminating
August 1, 2000. Tenant shall have the right, at its option, to renew the Term of
this Lease under the same terms and conditions as provided in this Lease for six
(6) consecutive periods of six (6) months each ("Renewal Term(s)"). To exercise
a renewal option, Tenant must notify Landlord in writing of Tenant's election to
so renew not later than ninety (90) days prior to the end of the Initial Term or
any previously exercised Renewal Term. When used in this Lease, "Term" shall
mean the Initial Term and any exercised Renewal Term.
4. BASE RENT. During the Term of this Lease, Tenant shall pay Landlord as
base rent for the Premises ("Base Rent") an annual amount equal to $120,000.00,
payable in equal monthly installments of $10,000.00, payable in advance, on the
first day of each month.
4.1 DAILY BASE RENT PRORATION. In the event this Lease shall commence
on a date other than the first day of a month, Base Rent for the first
month shall be prorated on a daily basis.
5. REAL ESTATE TAXES. Real estate taxes and installments of special
assessments payable with respect to the Premises shall be paid by Tenant as and
when due and payable; provided, however, taxes payable in the year in which this
Lease terminates shall be prorated to the date of such termination so that
Tenant shall only be responsible for the taxes that relate to its occupancy of
the Premises. Any over-payment of taxes by the Tenant shall be reimbursed by
Landlord or shall reduce the final payment of Base Rent.
6. UTILITIES. Tenant shall pay for all utilities rendered or
furnished to the Premises during the Term of this Lease, which payments shall be
made directly to the provider of said utility service.
7. MAINTENANCE, REPAIRS AND REPLACEMENTS.
7.1 TENANT'S OBLIGATIONS. Tenant shall, at Tenant's sole cost and
expense, maintain on a day-to-day basis all exterior and interior
non-structural portions of the Premises and all equipment in or on the
Premises, specifically including without limitation, electrical, plumbing,
and HVAC systems, as well as maintain the parking area, which includes snow
removal and lawn maintenance.
7.2 LANDLORD'S OBLIGATIONS. Except as provided in Section 7.1,
Landlord shall, at Landlord's sole cost and expense, repair and replace, as
and when necessary, all exterior and interior portions of the Premises and
all equipment in or on the Premises owned by Landlord, and shall maintain,
repair and replace all structural parts of the Premises, including without
limitation, walls, footings, floors, ceilings and roofs and electrical,
plumbing, and HVAC systems, as well as repair and replacement of the
parking area.
8. ENVIRONMENTAL AGREEMENTS. Tenant hereby warrants and covenants with
Landlord that Tenant's use and occupancy of the Premises shall comply with any
and all local, state and federal laws, ordinances, rules, regulations and
requirements regarding the environmental condition of the Premises, provided,
however, Tenant shall not be responsible for such compliance (and Landlord shall
be responsible for such compliance) regarding the environmental condition of the
Premises prior to the commencement of the Term of this Lease.
9. INDEMNIFICATION. Tenant hereby agrees to pay and protect, indemnify and
hold Landlord harmless from and against any and all liabilities, damages, costs,
expenses (including attorneys' fees and expenses), causes of action, suits,
claims, demands or judgment, made or otherwise claimed by any person or entity
arising from Tenant's use or occupancy of the Premises, except where the same
result from the negligent or intentional acts or omissions of Landlord, or their
heirs, successors, assigns, agents, contractors, or invitees. Landlord hereby
agrees to pay and protect, indemnify and hold Tenant harmless from and against
any and all liabilities, damages, costs, expenses (including attorneys' fees and
expenses), causes of action, suits, claims, demands or judgment, made or
otherwise claimed by any person or entity arising from Landlord's entry onto the
Premises, except where the same result from the negligent or intentional acts or
omissions of Tenant, or its employees, officers, directors, agents, contractors,
or invitees.
10. ALTERATIONS. Tenant shall not make any alterations or additions to the
Premises or affix any signs to the Premises without first obtaining Landlord's
written consent, which consent shall not be unreasonably withheld or delayed.
Tenant shall not permit any laborer's, mechanic's, or materialmen's liens to
attach to the Premises by reason of any such alterations or
additions performed by or at the request of Tenant, provided, however, Tenant
shall have the right to contest any mechanic's lien or other lien which attaches
to the Premises, provided that Tenant provides Landlord with reasonable security
for the same.
11. CASUALTY INSURANCE. Tenant shall, at Tenant's sole cost and expense,
keep the Building and Improvements now or hereafter located on the Premises
insured against fire and such other hazards and risks customarily covered by the
standard form of extended coverage endorsement and the risks of vandalism,
malicious mischief and sprinkler leakage in an amount not less then the full
replacement cost of the Building and Improvements. The policy required by the
foregoing sentence shall name Landlord as an additional insured and loss payee.
Tenant shall, at Tenant's sole cost and expense, insure all Tenant's personal
property in the same manner. Tenant shall provide Landlord with evidence of such
insurance on an annual basis.
12. LIABILITY INSURANCE. Tenant shall, at Tenant's sole cost and expense,
procure and maintain a Commercial General Liability Insurance policy, which
policy shall include without limitation, coverage for bodily injury, property
damage, personal injury, advertising injury, contractual liability (applying to
this Lease), independent contractors, and products-completed operations
liability, which policy shall (a) name Landlord as an Additional Insured and (b)
have a total combined liability policy limit of at least $3,000,000 applying to
liabilities for bodily injury, personal injury and property damage. Tenant shall
provide Landlord with evidence of such insurance on an annual basis.
13. FIRE OR OTHER CASUALTY.
13.1 REPAIR. If the Premises should be substantially destroyed (which,
as used herein, means destruction or damage which would cost in excess of
$200,000 to repair or rebuild) by fire or other casualty, Landlord may, at
its option, terminate this Lease by giving written notice thereof to the
Tenant within thirty (30) days after such casualty. In such event, the Base
Rent shall be apportioned to and shall cease as of the date of such
casualty and any prepaid Base Rent shall be refunded. In the event Landlord
does not exercise this option or if the Premises are not substantially
destroyed (as defined above), Landlord agrees, with reasonable dispatch, at
its own cost and expense and with the benefit of any insurance proceeds, to
restore the Premises to substantially the same condition as that existing
as of the commencement of this Lease. In such case, all Base Rent paid in
advance shall be apportioned as of the date of the destruction or damage,
and any Base Rent, additional rent or other charges thereafter accruing
shall be equitably and proportionately suspended and adjusted according to
the nature, extent and duration of the destruction or damage, pending
completion of repairs, except that in the event the destruction or damage
is so extensive as to make it unfeasible to conduct Tenant's business on
the Premises, Base Rent, additional rent and other charges hereunder shall
be completely abated until Tenant resumes the conduct of its business on
the Premises or the repairs are completed, whichever event first occurs.
13.2 TERMINATION. Notwithstanding the provisions of Section 13.1 of
this Lease, in the event the Premises are completely destroyed or damaged
to an extent which requires repair or rebuilding which repair or rebuilding
cannot be completed within forty-five (45) days from the date such repair
or rebuilding is commenced, either Landlord or Tenant may terminate this
Lease upon giving written notice thereof to the other at any time within
thirty (30) days after the date of such destruction, and if the Lease be so
terminated, all Base Rent, additional rent and other charges payable
hereunder shall cease as of the date of destruction and any prepaid Base
Rent shall be refunded.
14. ACCESS BY LANDLORD. Landlord shall have reasonable access to the
Premises during business hours for the purposes of examining the same, or to
make any needed repairs, or alterations of the Premises which Landlord may see
fit to make, but the making of any inspections, repairs or alterations shall not
unreasonably interfere with the operation of Tenant's business.
15. RIGHTS TO CURE DEFAULTS. In the event either party hereto fails,
refuses or neglects to perform an obligation imposed on it pursuant to the terms
of this Lease, the other party may, after reasonable notice to the party in
default, cure such default. In the event the default is by Tenant, the cost of
curing such default shall be paid as additional rent due Landlord hereunder,
together with interest on the amount paid by Landlord at the rate of eight
percent (8%) per annum ("Default Interest"). In the event the default is by
Landlord, the cost of curing such default, together with Default Interest shall
be immediately payable to Tenant by Landlord and failure to so pay the same
shall be a further default by Landlord pursuant to the terms of this Lease.
Tenant may set off the cost of curing the default against future installments of
rent due hereunder.
16. DEFAULT IN MONETARY PAYMENT. If Tenant shall default in the payment of
Base Rent or any part thereof or in the payment of additional rent or any part
thereof or in the payment of any other monetary obligation or indebtedness owing
by Tenant hereunder to Landlord, and Tenant fails to cure such default within
ten (10) days, Landlord shall have the right to terminate this Lease without
further notice to Tenant, as well as such other rights and remedies provided in
this Lease or as the law permits.
17. DEFAULT BY TENANT OTHER THAN NONPAYMENT OF RENT. If Tenant shall be in
default in performing any of the terms and provisions of this Lease other than
the provision relating to the payment of Base Rent, additional rent or other
charges, Landlord shall give Tenant written notice of such default, and if
Tenant shall fail to cure such default within thirty (30) days after the date of
receipt of such notice (or shall fail in that time to commence to cure a default
whose cure would require more than thirty (30) days and diligently prosecute
such cure to a reasonably prompt conclusion ), then and in such event Landlord
shall have the option of (a) curing such default on behalf of and for the
account of Tenant, in which case the sum so expended by Landlord plus Default
Interest shall be deemed to be additional rent and on demand shall be paid by
the Tenant on the day when rent shall next become payable, or (b) terminating
this Lease by serving written notice thereof on Tenant, as well as such other
rights and remedies as this Lease and the law permits.
18. REMEDIES OF LANDLORD. In the event Tenant defaults pursuant to this
Lease, and such default is not cured as therein provided, then and in such event
Landlord may, without further notice or demand:
18.1 ENTRY ON PREMISES. Enter into and upon said Premises or any part
thereof, in the name of Tenant, and take absolute possession of the same
fully and absolutely without such re-entry working a forfeiture of the
rents to be paid or the covenants to be performed by Tenant for the
remaining term of this Lease, and Landlord may lease or sublet the
Premises, or any part thereof, on such terms and conditions and for such
rents and for such terms as Landlord may reasonably elect, and after
crediting the rent actually collected by Landlord from such reletting on
all rentals stipulated to be paid under this Lease by Tenant from time to
time, collect from Tenant any balance remaining due from time to time on
the rent reserved under this Lease. Notwithstanding anything in this Lease
to the contrary, Landlord shall use reasonable effort to mitigate its
damages in the event of default by Tenant.
18.2 TERMINATION OF LEASE. Declare this Lease forfeited and void, and
thereafter re-enter and take full possession of the Premises as the owner
thereof, free from any right or claim of Tenant or any person or persons
claiming through or under the Tenant.
The rights, options, powers and remedies of Landlord under this Lease shall be
cumulative and in addition to any other rights given to Landlord by law.
19. CONDEMNATION. If the entire Premises shall be condemned, or sold under
threat of condemnation, then this Lease shall terminate as of the date title
shall vest in the condemnor, and any prepayment of rent by Tenant shall be
refunded on a pro rata basis, and the parties hereto shall be released from any
further obligations hereunder. If a substantial part of the Premises or a
portion thereof which impairs Tenant's use of the Premises for the business then
conducted on the Premises shall be condemned or sold under threat of
condemnation, either Landlord or Tenant may terminate this Lease upon not less
than thirty (30) days notice in writing to the other party of its intention to
do so, and upon the dates set forth in said notice, this Lease shall terminate
in the same manner and with the same effect as if the date were fixed herein for
the expiration of the Term.
19.1 REPAIR OF PREMISES. In the event that a part of the Premises is
condemned or sold under threat of condemnation and this Lease is not
terminated by Tenant or Landlord as provided in this Section 19, then
Landlord shall at Landlord's sole cost and expense, but only to the extent
of the condemnation proceeds received by Landlord, make all necessary
repairs or alterations so as to constitute the remaining Premises a
complete architectural unit and the Base Rent and other charges to be paid
by Tenant pursuant to
this Lease shall be adjusted so that Tenant shall be required for the remainder
of the Term, to pay for only the actual square footage of the Premises remaining
after the condemnation.
19.2 CONDEMNATION PROCEEDS. All condemnation proceeds or damages
awarded for a taking under the power of eminent domain of all or any part
of the Premises shall belong to and be the property of Landlord, provided,
however, the parties specifically agree that Tenant shall be entitled to
any award, to the extent Tenant is eligible, made for relocation of
Tenant's business and depreciation or damage to and cost of removal of
Tenant's personal property and trade fixtures.
20. SUBORDINATION. This Lease and all payments required hereunder shall be
subject and subordinate to any mortgages, trust deeds or ground leases now or
hereafter placed upon the Premises, and to any advances made thereunder, and to
the interest thereon, and all renewals, replacements and extensions thereof.
Upon written request by Landlord, Tenant shall execute and deliver a written
agreement subordinating this Lease to any mortgage(s) encumbering the Premises,
provided, however, any subordination shall be upon the express condition that
the validity of this Lease shall be recognized by the mortgagee(s), and that,
notwithstanding any default by the mortgagor with respect to a mortgage or any
foreclosure of a mortgage, Tenant's possession and right of use under this Lease
in and to the Premises shall not be disturbed by such mortgagee(s) unless and
until Tenant shall breach any of the provisions hereof and this Lease or
Tenant's right to possession hereunder shall have been terminated in accordance
with the provisions of this Lease.
21. SURRENDER OF PREMISES. Tenant shall, at the expiration or earlier
termination of this Lease, surrender the Premises to Landlord in as good
condition and repair as at the time Tenant took possession, except for (a)
damage from normal wear and tear and (b) damage from an insured casualty.
Notwithstanding the foregoing, Tenant may remove its trade fixtures and personal
property from the Premises at the expiration or earlier termination of this
Lease, whether or not the same are affixed to the Premises, provided Tenant
repairs any damage caused by such removal.
22. MEMORANDUM OF LEASE. This Lease shall not be recorded, but at the
request of either party a memorandum of lease of even date herewith describing
the Premises and stating the Term, shall be prepared and executed by the parties
and may be recorded by either party.
23. ASSIGNMENT. Neither Landlord nor Tenant shall assign this Lease or
sublet the Premises without the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, Landlord or Tenant may, without the consent of another party, assign
this Lease to an entity which is owned or controlled by it. For purposes of this
Section 23, "control" shall mean more than a fifty percent (50%) ownership
interest.
24. RELATIONSHIP OF PARTIES. It is understood and agreed that the
relationship of the parties hereto is strictly that of Landlord and Tenant and
that Landlord has no ownership in Tenant's enterprise, and that this Lease shall
not be construed as a joint venture or partnership. Landlord is not and shall
not be deemed to be an agent or representative of Tenant.
25. NOTICE. Whenever in this Lease it shall be required or permitted that
notice or demand be given or served upon either party to this Lease, such notice
or demand shall be given in writing and forwarded by certified mail addressed as
follows:
To Landlord: Xxxxxxx X. Xxxxxx and Xxxx Xx Xxxxxx
000 Xxxxx Xxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
To Tenant: Xxxxxx Tool & Machining, Inc.
c/o WSI Industries, Inc.
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Such addresses may be changed from time to time by either party upon serving
notice of such change as above provided.
26. WAIVER. No terms or conditions of this Lease shall be in any manner
altered, waived or abandoned except by written instrument signed by the party to
be bound thereby. No assent, express or implied by Landlord or any breach by
Tenant of any of the terms or conditions of this Lease shall be deemed taken to
be a waiver of any succeeding breach of said terms and conditions.
27. QUIET ENJOYMENT. Landlord covenants and agrees that they have good and
marketable title to the Premises, and that if Tenant shall perform all the
covenants and agreements herein stipulated to be performed on Tenant's part,
Tenant may quietly have, hold and enjoy the Premises during the term hereof and
any renewal thereof, subject to the terms of this Lease.
IN AGREEMENT, the parties have executed this Lease as of the day and year
first above written.
LANDLORD: TENANT:
XXXXXX TOOL & MACHINING, INC.
/s/ Xxxxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxxx Its: President
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/s/ Xxxx Xx Xxxxxx
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Xxxx Xx Xxxxxx
