EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is made and entered into
as of the 28th day of December, 2000, by and among 99(cent)Only Stores, a
California corporation ("STOCKHOLDER"), Universal Deals, Inc., a California
corporation ("DEALS"), Universal Odd's-N-End's, Inc., a California corporation
("UNIVERSAL ONE," and with Deals, "BUYERS"), Universal International, Inc., a
Minnesota corporation ("UNIVERSAL"), and Odd's-N-End's, Inc., a Delaware
corporation ("ODD'S-N-END'S," and with Universal, the "COMPANIES," and with
Stockholder, the "SELLERS"), on the following terms and conditions:
R E C I T A L S
WHEREAS, the authorized capital stock of Universal consists of 1,000 shares
of Common Stock, no par value per share, of which 1,000 shares of Common Stock
are issued and outstanding;
WHEREAS, the authorized capital stock of Odd's-N-End's consists of 1,000
shares of Common Stock, $0.10 par value per share, of which 1,000 shares of
common stock are issued and outstanding;
WHEREAS, Stockholder owns, in the aggregate, beneficially and of record,
1,000 shares of Universal Common Stock and 1,000 shares of Odd's-N-End's Common
Stock, which represent 100% of the total issued and outstanding shares of common
stock of Universal and Odd's-N-End's;
WHEREAS, subject to the terms and conditions set forth in this Agreement,
Deals desires to purchase and acquire from Stockholder, and Stockholder desires
to sell and transfer to Deals (the "UNIVERSAL ACQUISITION"), all 1,000 shares of
Universal Common Stock owned by Stockholder, (the "UNIVERSAL SHARES"); and
WHEREAS, subject to the terms and conditions set forth in this Agreement,
Universal ONE desires to purchase and acquire from Stockholder, and Stockholder
desires to sell and transfer to Universal ONE (the "ONE ACQUISITION," and with
the Universal Acquisition, the "ACQUISITION"), all 1,000 shares of Odd's-N-End's
Common Stock owned by Stockholder, (the "ONE SHARES," and with the Universal
Shares, the "SHARES").
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the parties hereby agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 On the terms and subject to the conditions set forth in this
Agreement, at the Closing (as defined below), Stockholder agrees to sell,
transfer and deliver to Buyers, and Buyers agree to purchase and acquire from
Stockholder, the Shares, free and clear of any mortgage, lien, security
interest, charge, hypothecation, pledge, adverse claim, encumbrance or
restriction of any kind or nature whatsoever ("LIEN"). Immediately following the
consummation of the transactions contemplated
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hereby, and effective as of September 30, 2000 (the "EFFECTIVE DATE"), Deals and
Universal ONE will own beneficially and of record 100% of the issued and
outstanding shares of common stock of Universal and Odd's-N-End's, respectively.
1.2 The Shares shall be purchased by Buyers from Stockholder for an
aggregate purchase price of $33,909,445 (the "PURCHASE PRICE"), in cash payable
to Stockholder as follows: (i) $5,000,000, which was delivered to Stockholder
upon the execution of that certain Letter of Intent, dated as of November 8,
2000, as amended; and (ii) $28,909,445 to be paid to Stockholder on the Closing
Date (as defined below) by delivery of cashiers check or by wire transfer.
2. THE CLOSING. The closing (the "Closing") of the purchase and sale of the
Shares shall take place at 10:00 a.m. (Pacific Standard Time) on December 28,
2000, or on such other date or at such other time as the parties hereto agree
but in no event later than December 29, 2000 (the "Closing Date"). The Closing
shall take place at the offices of Sellers' counsel via facsimile, with hard
copy originals of executed closing documents to be exchanged via overnight mail
or other method as agreed to by the parties.
3. DELIVERIES AT THE CLOSING. At the Closing, (i) Stockholder shall deliver
to Buyers the various certificates, instruments and documents referred to in
SECTION 7 below, (ii) Buyers shall deliver to Stockholder the various
instruments and documents referred to in SECTION 8 below, (iii) Stockholder
shall deliver to Buyers stock certificates representing the Shares to be sold
hereunder (or lost certificate affidavits therefore) duly endorsed in blank or
accompanied by duly executed assignment documents, and (iv) Buyers shall pay to
Stockholder that portion of the Purchase Price due at Closing as set forth in
SECTION 1.2 above.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND STOCKHOLDER.
4.1 THE COMPANIES AND STOCKHOLDER. The Companies and Stockholder
jointly and severally represent and warrant to Buyers as follows except as set
forth in the disclosure schedule attached hereto (the "DISCLOSURE SCHEDULE"):
4.1.1 ORGANIZATION, STANDING AND CORPORATE POWER. Universal and
Odd's-N-End's are corporations duly organized, validly existing and in corporate
and tax good standing under the laws of the States of Minnesota and Delaware,
respectively, with all requisite power and authority (corporate and other) to
own its properties and carry on its business as presently conducted. The
Companies are duly qualified to conduct business and are in good standing in
each jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary and
where the failure to be so qualified would be reasonably expected to have a
material adverse effect on the Companies. The Companies have the full power and
authority (corporate and otherwise) to enter into, execute and deliver this
Agreement and the agreements referred to herein to which it is a party and to
consummate the transactions contemplated hereby and thereby.
4.1.2 AUTHORITY AND CAPACITY; AUTHORIZATION OF AGREEMENT. The execution
and delivery of this Agreement and the other agreements referred to herein to
which the Companies are a party and the performance by the Companies of its
obligations and agreements hereunder and thereunder have been duly and validly
authorized and approved by its respective Board of Directors. The Companies have
taken all other actions required on its part by law and its respective
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articles/certificate of incorporation and bylaws in order to consummate the
transactions contemplated hereby.
4.1.3 EXECUTION, DELIVERY AND PERFORMANCE. This Agreement and the other
agreements referred to herein to which the Companies are a party have been duly
executed and delivered by the Companies and constitute the valid and binding
obligations of the Companies and are enforceable against the Companies in
accordance with their respective terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application which may affect the enforcement of creditors rights
generally and by general equitable principles.
4.1.4 CAPITAL STOCK. As of the date hereof, the authorized, issued and
outstanding capital stock of the Universal and Odd's-N-End's consists of
8,691,000 shares and 1,000 shares of common stock, respectively. All outstanding
shares of common stock are duly authorized, validly issued, fully paid and
nonassessable. All 8,691,000 shares of Universal common stock and 1,000 shares
of Odd's-N-End's common stock are held of record and beneficially owned by
Stockholder. There are no outstanding or authorized options, warrants, rights,
contracts, rights of first refusal or first offer, calls, puts, rights to
subscribe, conversion rights, or other agreements or commitments to which the
Companies are a party or which are binding upon the Companies providing for the
issuance, disposition, or acquisition of any of its capital stock or other
securities convertible into or exchangeable for capital stock of the Companies.
There are no outstanding or authorized stock appreciation, phantom stock, or
similar rights with respect to the Companies, there are no contractual or
statutory preemptive rights or similar restrictions with respect to the issuance
or transfer of any Common Stock, and there are no voting trusts, proxies, or any
other agreements, restrictions or understandings with respect to the voting of
the capital stock of the Companies. Immediately following the consummation of
the transactions contemplated hereby, Buyers will own beneficially and of record
100% of the issued and outstanding common stock of the Companies, free and clear
of any Lien.
4.1.5 NO SUBSIDIARIES. The Companies do not have any interest or
investment in any other individual corporation, trust, estate, partnership,
joint venture, association, limited liability company, governmental bureau or
other entity of whatsoever kind or nature.
4.1.6 COMPLIANCE WITH THE LAW AND OTHER INSTRUMENTS, ETC. except as
disclosed on the Disclosure Schedule, the Companies are not in violation of any
term of (a) its respective articles/certificate of incorporation, bylaws or
other organizational documents, (b) to the knowledge of Stockholder, any
applicable law, ordinance, rule or regulation of any federal, state and local
government or agency (collectively, "GOVERNMENTAL AUTHORITY"), or (c) any
applicable order, judgment or decree of any court, arbitrator or Governmental
Authority, in each case the consequences of which violation, whether
individually or in the aggregate, would be reasonably expected to have a
material adverse effect on the Companies. No investigation by any Governmental
Authority asserting or alleging any violation of or noncompliance with any such
laws, ordinances, rules and regulations, judgments and decrees are pending or,
to the knowledge of the Companies, threatened.
4.1.7 EFFECT OF AGREEMENT. The execution and delivery by the Companies
of this Agreement and the agreements referred to herein, the sale by Stockholder
of the Shares to Buyers, the performance by the Companies of their respective
obligations pursuant to the terms of this Agreement and the other agreements
referred to herein, and the consummation of the transactions
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contemplated hereby and thereby, do not and will not, with or without the giving
of notice or lapse of time, or both:
(a) violate or conflict with any term of the respective
articles/certificate of incorporation, bylaws or other organizational documents
of the Companies;
(b) violate any provision of law, statute, rule, regulation or
executive order to which the Companies or any of its assets or properties is
subject;
(c) require on the part of the Companies any filing with, or any
permit, authorization, consent or approval of, any court, arbitrational tribunal
administrative agency or commission or other governmental or regulatory
authority or agency, with the exception of filing with the Federal Trade
Commission and the United States Department of Justice the notification and
documentary material pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended ("HSR Act");
(d) violate any judgment, order, writ or decree of any court or
administrative body applicable to the Companies or any of its assets or
properties;
(e) accelerate or constitute an event entitling the holder of any
indebtedness related to the Companies and assumed hereunder by Buyers to
accelerate the maturity of any such indebtedness or increase the rate of
interest presently in effect with respect to such indebtedness; and
(f) conflict with, result in the breach of, constitute a default under,
constitute an event which with notice or lapse of time, or both, would become a
default under any agreement, contract or other instrument to which the Companies
are a party, or result in the creation of any Lien upon any of the properties or
assets of the Companies.
4.1.8 LITIGATION. Lawsuits are pending and/or have been threatened
against the companies. However, except as may be identified in Exhibit __,
Seller is unaware of any material claim, legal action, suit, arbitration,
investigation, proceeding or hearing, notice of claims or other legal,
administrative or government proceedings before any court or regulatory agency
or other Governmental Authority to which the Companies are a party or to the
knowledge of Stockholder threatened against the Companies (or in which the
Companies is a plaintiff or otherwise a party thereto), and there are no facts
existing which are likely to result in any such claim, action, suit arbitration,
investigation or hearing or other legal, administrative or governmental
proceeding. There is no continuing order, injunction or decree of any court,
arbitrator or Governmental Authority to which the Companies are a party or to
which its assets are subject.
4.1.9 TITLE TO THE ASSETS. To the best of the Seller's actual
knowledge, the Companies have good and marketable title to all assets held or
used by the Companies in connection with the operations and business of the
Companies (the "ASSETS"), free and clear of all mortgages, pledges, liens
(including, without limitation, tax liens), charges, security interests, claims,
conditions, restrictions, encumbrances and obligations, of any kind or nature
whatsoever. It is expressly understood and agreed by the Buyers that the
acquisition by the Sellers of Assets is made on an "as-is, where is" basis,
regardless of the condition of the Assets and whether the Buyers will have had a
reasonable opportunity to inspect and examine the condition the Assets.
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4.1.10 CONSENTS OR WAIVERS. At the Closing, the Companies shall have
delivered to the Buyers any and all consents or waivers of other parties
required by the terms thereof in order to permit the Acquisition to occur and to
permit the continuation of the leases and other contracts, upon the same terms
and conditions as are contained in such leases and other contracts upon
consummation of the transactions contemplated by this Agreement, except where
failure to obtain would not have a material effect on the Companies.
4.1.11 DISCLOSURE. No representation or warranty made by the Companies
and Stockholder in this Agreement or in any writing furnished or to be furnished
pursuant to or in connection with this Agreement knowingly contains or will
contain any untrue statement of a material fact, or omits to state any material
fact required to make the statements herein or therein contained not misleading.
4.2 STOCKHOLDER. Stockholder represents and warrants to Buyers as
follows, except as set forth in the Disclosure Schedule attached hereto:
4.2.1 ORGANIZATION, STANDING AND CORPORATE POWER. Stockholder is a
corporation duly organized, validly existing and in corporate and tax good
standing under the laws of the State of California, with all requisite power and
authority (corporate and other) to own its properties and carry on its business
as presently conducted. Stockholder has the full power and authority (corporate
and otherwise) to enter into, execute and deliver this Agreement and the
agreements referred to herein to which it is a party and to consummate the
transactions contemplated hereby and thereby.
4.2.2 AUTHORITY AND CAPACITY; AUTHORIZATION OF AGREEMENT. The execution
and delivery of this Agreement and the other agreements referred to herein to
which Stockholder is a party and the performance by Stockholder of its
obligations and agreements hereunder and thereunder have been duly and validly
authorized and approved by its Board of Directors. Stockholder has taken all
other actions required on its part by law and its articles of incorporation and
bylaws in order to consummate the transactions contemplated hereby.
4.2.3 EXECUTION, DELIVERY AND PERFORMANCE. This Agreement and the other
agreements referred to herein to which Stockholder is a party have been duly
executed and delivered by Stockholder and constitute the valid and binding
obligations of Stockholder and are enforceable against Stockholder in accordance
with their respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application which may affect the enforcement of creditors rights generally and
by general equitable principles.
4.2.4 EFFECT OF AGREEMENT. The execution and delivery by Stockholder of
this Agreement and the agreements referred to herein, the performance by
Stockholder of its obligations pursuant to the terms of this Agreement and the
other agreements referred to herein, and the consummation of the transactions
contemplated hereby and thereby, do not and will not, with or without the giving
of notice or lapse of time, or both:
(a) violate or conflict with any term of the articles of incorporation,
bylaws or other organizational documents of Stockholder;
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(b) violate any provision of law, statute, rule, regulation or
executive order to which Stockholder or any of its assets or properties is
subject;
(c) require on the part of Stockholder any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency, with the exception of filing with the Federal Trade
Commission and the United States Department of Justice the notification and
documentary material pursuant to the HSR Act; and
(d) violate any judgment, order, writ or decree of any court or
administrative body applicable to Stockholder or any of its assets or
properties.
4.2.5 TITLE TO SHARES. Stockholder owns beneficially and of record, and
has good and marketable title to, the Shares free and clear of any Lien, and
upon delivery to Stockholder of the Purchase Price in exchange for the Shares
owned by Stockholder as provided in this Agreement, Buyers will acquire good and
marketable title thereto, free and clear of any Lien.
5. REPRESENTATIONS AND WARRANTIES OF BUYERS. The Buyers jointly and
severally hereby represent and warrant to the Sellers as follows, except as set
forth in the Disclosure Schedule attached hereto:
5.1 ORGANIZATION, STANDING AND CORPORATE POWER. Buyers are corporations
duly organized, validly existing and in good standing under the laws of the
State of California, with all requisite corporate power and authority to own its
respective properties and carry on its business as presently conducted. Each of
the Buyers has the corporate power to enter into, execute and deliver this
Agreement and the agreements referred to herein and to consummate the
transactions contemplated hereby and thereby.
5.2 AUTHORIZATION OF AGREEMENT. The execution and delivery of this
Agreement and the other agreements referred to herein and the performance by the
Buyers of its obligations and agreements under this Agreement and the other
agreements referred to herein have been duly and validly authorized and approved
by its Board of Directors. Buyers have taken all other actions required on its
part by law and its articles of incorporation in order to consummate the
transactions contemplated hereby.
5.3 EXECUTION, DELIVERY AND PERFORMANCE. This Agreement and the other
agreements referred to herein have been duly executed and delivered by the
Buyers and constitute the valid and binding obligations of the Buyers and are
enforceable against the Buyers in accordance with its respective terms, except
as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application which may affect the
enforcement of creditors rights generally and by general equitable principles.
5.4 EFFECT OF AGREEMENT. The execution and delivery by the Buyers of
this Agreement and the agreements referred to herein, the purchase by the Buyers
of the Shares from the Stockholder, the performance by the Buyers of its
respective obligations pursuant to the terms of this Agreement and the other
agreements referred to herein, and the consummation of the transactions
contemplated hereby and under such other agreements, do not and will not, with
or without the giving of notice or lapse of time, or both:
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(a) violate or conflict with any term of the articles of incorporation
or other organizational documents of Buyers;
(b) violate any provision of law, statute, rule, regulation or
executive order to which Buyers or any of its assets or properties is subject;
and
(c) violate any judgment, order, writ or decree of any court or
administrative body applicable to Buyers or any of its assets or properties.
6. ADDITIONAL COVENANTS.
6.1 EMPLOYEE MATTERS. Stockholder agrees to allow employees of the
Companies to continue to participate in the Stockholder's employee benefit plans
to the extent of the employee's current participation, for up to thirty-one (31)
days following the Closing. Thereafter, employees will be entitled to
participate in employee benefits provided by the Companies, if any.
6.2 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
expressly provided for herein, the Sellers expressly exclude all other
representations and warranties (whether written or oral, express or implied) not
specifically set forth herein. By way of example and without limitation, the
Sellers expressly disclaim any representations and warranties with respect to
each of the Companies' financial statements, inventory, conduct of business,
environmental matters, intellectual property, employment matters, accounts
receivables, accounts payable, tax matters and other operations and matters of
the Companies. In no event shall the Stockholder be liable for incidental,
special, indirect or consequential damages, loss of profits, or other damages,
except as otherwise expressly provided for herein, arising in any way from the
transactions contemplated hereby.
6.3 NO USE OF TRADENAME. Buyers agree not to operate any of its stores
under the tradename "99(cent) Only Stores" or any tradename similar thereto
(including, but not limited to, any tradename including "99"), nor to utilize
any signage (including price signs), print, tv, internet, radio, or other form
of advertising, or other visual or audio indicia which would be reasonably
likely to cause any members of the consuming public (including retail customers,
merchandise suppliers and stockholder investors) to believe that "99" is a part
of any tradename, trademark, servicemark, logo, or slogan used in connection
with the operation of any of the stores or any other "corporate" activity (such
as purchasing). Without limitation on the foregoing, Buyers may not utilize any
letterhead, stationary, marketing materials, etc., that includes "99(cent),"
"99(cent) Store," or "99(cent) Only Stores" for any purposes. The limitations on
"99" and "99(cent)" above shall include the terms when used in numeric form,
spelled out, verbalized and audible, and shall apply to the English language and
any other language, slang, or jargon. In connection with any stores (the initial
stores or subsequent ones) that are transferred to third parties (excluding
lease termination agreements executed only with landlords), any such transfer
shall include the foregoing restrictions. To the extent that any of the stores
utilize any trademarks, servicemarks, tradedress, etc. of the Stockholder
(including, but not limited to, "99(cent) Only Stores" price signs and/or
stickers) as of the Effective Date, such uses shall cease on or before December
31, 2001.
6.4 PERFORMANCE OF CONTRACTS. In the event that and to the extent that
the consent to the assignment to Buyers of any contracts, leases or other
agreements is not obtained pursuant to this Agreement, such contract, lease or
other agreement shall not be assigned hereunder at the Closing and: (i) Sellers
agree to continue to be or to cause their respective affiliates to continue to
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be bound thereunder in accordance with its terms and (ii) Buyers agree, at the
request of Sellers, to perform and discharge fully all of the obligations of
Sellers and their respective affiliates thereunder from and after the Closing
Date, and shall indemnify Sellers for any and all actions, suits, proceedings,
costs, losses, claims, liabilities, fines, penalties (including interest which
may be imposed in connection therewith and court costs and reasonable fees and
disbursements of counsel) attributable to any failure on the part of the Buyers
in connection with such performance. Sellers shall use their good faith efforts,
and Buyers shall cooperate fully with Sellers, to obtain all necessary consents;
provided that Sellers shall not be obligated to pay any consideration therefore
to the third party from whom such consent is requested. If and when any such
consent shall be obtained or such contract, agreement or lease shall otherwise
become assignable, Sellers shall promptly assign all of their rights and
obligations thereunder to Buyers, and Buyers shall assume such rights and
obligations.
7. CONDITIONS TO OBLIGATIONS OF BUYERS. Unless waived, in whole or in part,
in writing by each of the Buyers, the obligations of Buyers to effect the
transactions contemplated hereby and in the other agreements referred to herein
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND STOCKHOLDER TO
BE TRUE. The representations and warranties of the Companies and Stockholder
contained in this Agreement shall be true and correct in all material respects
on the Effective Date and the Closing Date with the same force and effect as
though made on and as of the Effective Date and the Closing Date, except for
representations and warranties made as of a specific date which shall be true
and correct as of such date. Each of the Companies and Stockholder shall have
performed, in all material respects, all of their respective obligations and
complied, in all material respects, with all of their respective covenants
required by this Agreement and the other agreements referred to herein to be
performed or complied with by it on or prior to the Closing Date.
7.2 NO PROCEEDINGS. No action, suit or proceeding before any court or
any Governmental Authority pertaining to the transactions contemplated by this
Agreement or any other agreement referred to herein or to their consummation
shall have been instituted or threatened on or prior to the Closing Date.
7.3 HSR. Any applicable waiting period under the HSR Act shall have
expired or have been terminated with respect to the Acquisition contemplated
hereby.
7.4 CONSENTS. The Companies shall have obtained and delivered to the
Buyers all written consents of the other party to all contracts which by their
terms or otherwise require their consent of such party to the Acquisition.
7.5 DELIVERY OF SHARE CERTIFICATES AND CORPORATE DOCUMENTS. The
Stockholder shall have delivered to Buyers all stock certificates representing
the Shares being transferred pursuant to this Agreement, all minute books of the
Companies and all corporate documents related to the operations and business of
the Companies.
7.6 CONTEMPORANEOUS TRANSACTIONS. Stockholder shall have entered into
each of the Services Agreements attached hereto as EXHIBITS A1 AND A2 (the
"Services Agreements") and the Lease Agreement attached hereto as EXHIBIT B (the
"Lease Agreement").
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8. CONDITIONS TO OBLIGATIONS OF THE SELLERS. Unless waived, in whole or in
part, in writing by the Sellers, the obligations of the Sellers to effect the
consummation of the transactions contemplated by this Agreement shall be subject
to the fulfillment prior to or at the Closing of each of the following
conditions:
8.1 REPRESENTATIONS AND WARRANTIES OF BUYERS TO BE TRUE. The
representations and warranties of Buyers contained in this Agreement shall be
true and correct in all material respects on the Closing Date with the same
force and effect as though made on and as of the Closing Date, except for
representations and warranties made as of a specific date which shall be true
and correct as of such date. Buyers shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement and the other agreements referred to herein
to be performed or complied with by it prior to the Closing Date.
8.2 NO PROCEEDINGS. No action, suit or proceeding before any court or
any Governmental Authority pertaining to the transactions contemplated by this
Agreement or any other agreement referred to herein or to their consummation
shall have been instituted or threatened on or prior to the Closing Date.
8.3 HSR. Any applicable waiting period under the HSR Act shall have
expired or have been terminated with respect to the Acquisition contemplated
hereby.
8.4 DELIVERY OF PURCHASE PRICE. Buyers shall have delivered to
Stockholder the Purchase Price, due and payable at the Closing as set forth in
SECTION 2 above, by wire transfer.
8.5 CONTEMPORANEOUS TRANSACTIONS. The Companies shall have entered into
each of the Services Agreements and the Lease Agreement.
8.6 CLOSING OF THE ACQUISITIONS. The closing of each the Universal
Acquisition and the ONE Acquisition is conditioned upon the closing of the
other.
9. POST-CLOSING COVENANTS.
9.1 FURTHER ASSURANCES. Each of the parties to this Agreement agrees to
execute such further documents or instruments and to take such other actions as
are necessary to carry out the transactions contemplated by this Agreement and
the other agreements referred to herein (including the execution and delivery of
such further instruments and documents) as any other party reasonably may
request.
9.2 SECTION 338(H)(10) ELECTION. Buyers and Sellers agree that a
Section 338(h)(10) election (the "SECTION 338(H)(10) ELECTION") shall be made
with respect to the Acquisition. As soon as reasonably practicable following the
Closing, Buyers, at Buyers' sole expense, shall prepare and deliver to
Stockholder a Department of the Treasury Form 8023 (or successor form and/or any
applicable comparable state or local forms specified by Buyers), which,
Stockholder agrees to execute and return to Buyers within seven calendar days of
receipt of such filings. Buyers and Stockholder agree to work together in good
faith to make the appropriate filings for the Section 338(h)(10) Election. To
the extent that Buyers, on the one hand, and Stockholder, on the other hand, are
unable to agree on the content of the filings, the Buyers and Stockholder agree
to file any applicable extensions and to submit the dispute to arbitration
pursuant to the procedures set forth in SECTION 12.11.
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10. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY.
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as provided
herein, all of the representations and warranties and indemnification
obligations of the parties herein and in any document or instrument delivered in
connection with this Agreement shall survive the Closing, and shall be binding
upon the parties to this Agreement, their successors and assigns for a period of
eighteen (18) months following the Closing. No party will be liable for
indemnification pursuant to this SECTION 10 with respect to any breach of any
representation or warranty, covenant or obligation, unless such party is
provided with notice of a claim for indemnification with respect to such breach
before expiration of the applicable survival period described above in this
SECTION 10.1.
10.2 INDEMNIFICATION BY STOCKHOLDER. Stockholder hereby covenants and
agrees with Buyers that the Stockholder shall indemnify Buyers (a "BUYER
INDEMNIFIED PARTY") and hold Buyers harmless from, against and in respect of any
and all costs, losses, claims, liabilities, fines, penalties (including interest
which may be imposed in connection therewith and court costs and reasonable fees
and disbursements of counsel) ("DAMAGES") incurred by Buyers resulting from the
breach of, or any inaccuracy in any of the representations, warranties,
covenants or agreements made by Stockholder in this Agreement or with the
conduct of the Companies' business or ownership of the Companies up to and
including the Effective Date.
10.3 INDEMNIFICATION BY BUYERS. Buyers hereby covenant and agree with
Stockholder that Buyers shall indemnify Stockholder ("SELLERS INDEMNIFIED
PARTY"), and hold them harmless from, against and in respect of any and all
Damages incurred by it in connection with any breach of, or any inaccuracy in
any of the representations, warranties, covenants or agreements made by Buyers
in this Agreement or in connection with the conduct of the Companies' business
or ownership of the Companies after the Closing Date.
10.4 INDEMNIFICATION PROCEDURE.
(a) Any party seeking indemnification (the "INDEMNIFIED PARTY") from
any other party (the "INDEMNIFYING PARTY") with respect to any claim, demand,
action, proceeding or other matter pursuant to this SECTION 10 (the "CLAIM")
shall promptly give written notice to the Indemnifying Party of the existence of
the Claim, setting forth in reasonable detail the facts and circumstances
pertaining thereto and the basis for the Indemnified Party's right to
indemnification, provided that the failure to give such prompt notice shall not
waive or otherwise affect the rights of any Indemnified Party except to the
extent that the rights of the Indemnified Party shall have been damaged thereby.
(b) If any third party shall notify any Indemnified Party with respect
to any matter which may give rise to a Claim for indemnification against the
Indemnifying Party under this Agreement, then the Indemnified Party shall
promptly give written notice thereof to each Indemnifying Party; PROVIDED,
HOWEVER, that no delay on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from any Liability or
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is damaged by such failure to give notice. At any time, the
Indemnifying Party may, at its expense, assume the defense of any such matter.
In the event that any Indemnifying Party notifies the Indemnified Party that it
is assuming the defense thereof:
<PAGE>
(i) the Indemnifying Party will defend the Indemnified Party against
the matter with counsel of its choice;
(ii) the Indemnified Party may retain separate co-counsel at its sole
cost and expense; and
(iii) the Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the matter without the
written consent of the Indemnifying Party (not to be withheld unreasonably).
(c) Until an Indemnifying Party notifies the Indemnified Party that the
Indemnifying Party is assuming the defense thereof, then the Indemnified Party
may defend against the matter in any manner it reasonably may deem appropriate,
without prejudice to any of its rights hereunder.
10.5 COOPERATION. The Indemnified Party and the Indemnifying Party
shall cooperate fully with each other with respect to third party claims, and
shall keep each other fully advised with respect thereto (including supplying
copies of all relevant documentation promptly as it becomes available).
10.6 ADJUSTMENT TO INDEMNIFICATION PAYMENTS; INSURANCE. Any payment
made by an Indemnifying Party to an Indemnified Party pursuant to this SECTION
10 in respect of any Claim (i) shall be net of any insurance proceeds available
to the Indemnified Party in respect of such claim and (ii) shall be reduced by
an amount equal to any tax benefits attributable to such claim. The Indemnified
Party shall use its reasonable efforts to make insurance claims relating to any
claim for which it is seeking indemnification pursuant to this SECTION 10.
10.7 WAIVER OF CERTAIN DAMAGES. No Indemnified Party shall be entitled
to recover from an Indemnifying Party punitive, special, exemplary and
consequential damages arising in connection with or with respect to the
indemnification provisions hereof.
10.8 MITIGATION OBLIGATION. Each Person entitled to indemnification
hereunder shall take reasonable steps to mitigate all losses, costs, expenses
and damages after becoming aware of any event that could reasonably be expected
to give rise to any losses, costs, expenses and damages that are indemnifiable
or recoverable hereunder or in connection herewith.
11. TERMINATION.
11.1 TERMINATION OF AGREEMENT. Certain of the parties may terminate
this Agreement as provided below:
(a) Buyers and the Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) Buyers may terminate this Agreement by giving written notice to
each of the Sellers at any time prior to the Closing in the event any of the
Sellers are in breach of any material representation, warranty, or covenant
contained in this Agreement in any material respect, and the Sellers may
terminate this Agreement by giving written notice to Buyers at any time prior to
the
<PAGE>
Closing in the event any of the Buyers are in breach of any material
representation, warranty or covenant contained in this Agreement in any material
respect;
(c) Buyers may terminate this Agreement by giving written notice to
each of the Sellers at any time prior to the Closing if the Acquisition shall
not have occurred on or before January 31, 2001 by reason of the unwaived
failure of any condition precedent under SECTION 7 hereof (unless the failure
results from Buyers' breaching of any representation, warranty, or covenant
contained in this Agreement); and
(d) The Sellers may terminate this Agreement by giving written notice
to each of the Buyers at any time prior to the Closing if the Acquisition shall
not have occurred on or before January 31, 2001 by reason of the unwaived
failure of any condition precedent under SECTION 8 hereof (unless the failure
results from the Sellers' breaching of any representation, warranty, or covenant
contained in this Agreement).
11.2 EFFECT OF TERMINATION. If any party terminates this Agreement
pursuant to SECTION 11.1, this Agreement shall be of no further force or effect
and no party shall have any Liability to any other party hereunder; PROVIDED,
HOWEVER, that (i) SECTION 12.9 (Expenses) and SECTION 12.12 (Attorney's Fees)
hereof shall survive any such termination and continue in full force and effect
and (ii) nothing herein shall relieve any party hereto from any Liability
resulting from any breach of this Agreement prior to such termination.
12. MISCELLANEOUS.
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. No party may assign any of its rights, or delegate any of its duties or
obligations (by operation of law or otherwise), under this Agreement without the
prior written consent of the other parties, and any such purported assignment or
delegation shall be void AB INITIO.
12.2 NOTICES. All notices, demands and other communications
(collectively, "NOTICES") given or made pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given if sent by registered or
certified mail, return receipt requested, postage and fees prepaid, by overnight
service with a nationally recognized "next day" delivery company, by facsimile
transmission, or otherwise actually delivered to the addresses set forth below
for Buyers, the Companies and Stockholder. Any Notice shall be deemed duly given
when received by the addressee thereof, provided that any Notice sent by
registered or certified mail shall be deemed to have been duly given two
business days after the date of deposit in the United States mails, unless
sooner received. Any of the parties to this Agreement may from time to time
change its address for receiving Notices by giving written notice thereof in the
manner set forth above.
If to Buyers, to:
Universal Deals, Inc.
4000 Union Pacific Avenue
City of Commerce, California 90023
Attention: President
Facsimile:
<PAGE>
Universal Odd's-N-End's, Inc.
4000 Union Pacific Avenue
City of Commerce, California 90023
Attention: President
Facsimile:
If to the Companies, to:
Universal International, Inc.
4000 Union Pacific Avenue
City of Commerce, California 90023
Attention: President
Facsimile:
Odd's-N-End's, Inc.
4000 Union Pacific Avenue
City of Commerce, California 90023
Attention: President
Facsimile:
If to Stockholder, to:
99(cent) Only Stores
4000 Union Pacific Avenue
City of Commerce, California 90023
Attention: President
Facsimile:
with a copy (which shall not constitute notice), to:
Troop Steuber Pasich Reddick & Tobey, LLP
2029 Century Park East, 24th Floor
Los Angeles, California 90067
Attention: C. N. Franklin Reddick, Esq.
Facsimile: (310) 728-2204
12.3 AMENDMENT; WAIVER. No provision of this Agreement may be waived
unless in writing signed by all of the parties to this Agreement, and the waiver
of any one provision of this Agreement shall not be deemed to be a waiver of any
other provision. This Agreement may be amended only by a written agreement
executed by all of the parties to this Agreement.
12.4 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
BOTH AS TO VALIDITY AND PERFORMANCE AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO THE CHOICE TO THE CHOICE OF LAW
PRINCIPLES THEREOF.
<PAGE>
12.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
12.6 NO FINDERS. The parties each agree to indemnify and hold harmless
the other against any expense incurred by reason of any consulting, brokerage
commission or finder's fee alleged to be payable to any Person in connection
with the transactions contemplated hereby because of any act, omission or
statement of the indemnifying party or any dealings by the indemnifying party
with any consultant, broker or finder.
12.7 HEADINGS. The section and subsection headings contained in this
Agreement are included for convenience only and form no part of the agreement
between the parties.
12.8 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
12.9 EXPENSES. Buyers shall pay their costs and expenses, including
without limitation, the fees and expenses of their counsel and financial
advisors. The Stockholder shall pay the costs and expenses, including without
limitation, the fees and expenses of the legal, accounting and financial
advisors of the Companies and Stockholder.
12.10 ENTIRE AGREEMENT. This Agreement, including the other agreements
and schedules to be entered into in connection with the transactions
contemplated by this Agreement, constitutes and embodies the entire
understanding and agreement of the parties hereto relating to the subject matter
hereof and there are no other agreements or understandings, written or oral, in
effect between the parties relating to such subject matter except as expressly
referred to herein.
12.11 DISPUTE RESOLUTION. Any dispute or claim arising hereunder shall
be settled by arbitration. Any party may commence arbitration by sending a
written notice of arbitration to the other party. The notice will state the
dispute with particularity. The arbitration hearing shall be commenced thirty
(30) days following the date of delivery of notice of arbitration by one party
to the other, by the American Arbitration Association ("AAA") as arbitrator. The
arbitration shall be conducted in Los Angeles, California in accordance with the
commercial arbitration rules promulgated by AAA, and each party shall retain the
right to cross-examine the opposing party's witnesses, either through legal
counsel, expert witnesses or both. The decision of the arbitrator shall be
final, binding and conclusive on all parties (without any right of appeal
therefrom) and shall not be subject to judicial review. Judgment on the award
rendered by the arbitrator may be entered in any court of competent
jurisdiction.
12.12 ATTORNEYS' FEES. In the event of any action or suit based upon or
arising out of any alleged breach of any party of any representation, warranty,
covenant or agreement contained in this Agreement, the prevailing party will be
entitled to recover reasonable attorneys' fees and other costs of such action or
suit from the other party.
<PAGE>
12.13 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto.
[Signatures to Follow on Next Page]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by their respective
duly authorized officers as of the date first set forth above.
BUYERS
UNIVERSAL DEALS, INC.
/S/ DAVID GOLD
------------------------------
By: David Gold
Its: President
UNIVERSAL ODD'S-N-END'S, INC.
/S/ DAVID GOLD
------------------------------
By: David Gold
Its: President
STOCKHOLDER
99(CENT) ONLY STORES, INC.
/S/ ERIC SCHIFFER
-------------------------------
By: Eric Schiffer
Its: President
COMPANIES
UNIVERSAL INTERNATIONAL, INC.
/S/ ERIC SCHIFFER
-------------------------------
By: Eric Schiffer
Its: President
<PAGE>
ODD'S-N-END'S, INC.
/S/ ERIC SCHIFFER
-------------------------------
By: Eric Schiffer
Its: President
<PAGE>
DISCLOSURE SCHEDULE
4.1.8
(see attached schedule)
<PAGE>
UNIVERSAL INTERNATIONAL, INC.
DISCLOSURE
PENDING/THREATENED LITIGATION
PENDING LITIGATION:
1. B.J. Transport, inc. v Universal International
Case No. 000613032 State of Minnesota, County of Hennipin Plaintiff's claim
is for unpaid freight bills incurred from 9/99 through 2/2000 in the amount
of $7,265.41
2. Krystal Gibson v. Only Deals, Inc., Universal International, and
99(cent)Only Stores Case No. EM 00-13525 State of Minnesota, County of
Hennepin (Fourth Judicial District) Case to compel release to Plaintiff of
her personnel records. This matter is in the process of being settled for
$2,500. However, the Plaintiff has an underlying claim for sexual
harassment. The complaint has not yet been filed.
3. Itasca Business Credit (Roblyn Transport) v. Only Deals
State of Minnesota, County of Hennepin, District Court, Fourth Judicial
District (no case number assigned as yet) Plaintiff is suing to recover
$212,824.59 in unpaid invoices.
4. Lee Kalanquin
A request for personnel records was received by Only Deals from this
individual on November 13, 2000. She was terminated on March 16, 1998 for
theft. The reason for this recent request has not been stated.
5. Kratt v. Only Deals, Kranz Family Trust II, and North Capitol Management
State of Minnesota, County of Becker This is a premises liability case. The
plaintiff's demand is presently unknown. On 9/12/00 Only Deals was
voluntarily dismissed without prejudice from the case. Only Deals is
represented by Fireman's Fund attorney Lance B. Nyberg in this matter.
6. Pardee V. Universal International, Inc.
Supreme Court of the state of New York, County of Niagara, Index No. 104733
Plaintiff's demand in this premises liability case is $1,000,000. On
7/23/99, Plaintiff executed a "Release of All Claims", accepted a check in
the amount of $225, and negotiated that check on 10/12/99 (the scope of the
release and its relation to the new action will be investigated and the
carder and counsel contacted). She subsequently filed this lawsuit.
Defendant is represented by Fireman's Fund attorney Thomas Bender on this
matter.
7. Tharaldson v. Only Deals
State of Minnesota, County of Becker, District Court, Seventh judicial
District (Court file Number not yet assigned). This is a suit for unpaid
earned wages of $3,500, statutory penalties in the amount of $750, and such
other relief as may be granted.
8. Monica Ward v. Only Deals
United States District Court, District of Minnesota, Court file No. 0:00 -
CV - 00463 This is a race discrimination case and also a wage and hour
claim (unpaid over-time pay).
9. Only Deals V. Randall Redd d/b/a Panjos Company
Cause No. 45,782 in the Probate and County Court of Galveston County,
Texas. This is a wrongful lockout case filed by Only Deals. Defendant filed
a counterclaim in the amount of $74,000 for breach of lease, damage to
premises, conversion of fixtures, and failure to pay certain taxes.
THREATENED LITIGATION:
1. Metro Sales, Inc. (Universal International, Inc.)
Unpaid account in the amount of $1,452.60 (account #00332)
2. Consumers Utilities Service Corporation (Universal International, Inc.)
Claim of monies due in the amount of $5,740.80 ("commission" based upon
savings generated for customer on utility bills).
3. United Portfolio Management, Inc. (Universal International, Inc.)
Claim of an outstanding balance of $1,037.52 due under the terms of General
Electric Capital Corporation Lease No. 6503726007 for a facsimile machine.
4. Mechanics Lien - Lien Claimant CMA P.A.
Improvements made between 1/20/00 and 5/31/00 to warehouse at 905 Yankee
Doodle Road, Eagan, Minnesota. Lien amount: $22,470.47
<PAGE>
EXHIBIT A 1
SERVICES AGREEMENT - UNIVERSAL INTERNATIONAL, INC.
<PAGE>
EXECUTION COPY
SERVICES AGREEMENT
This Services Agreement (this "Agreement") is dated as of December 28,
2000, by and between 99(cent) Only Stores, a California corporation (the
"Company"), and Universal International, Inc., a Minnesota corporation
("Universal").
R E C I T A L S
WHEREAS, the Company, Universal, Universal Deals, Inc., a California
corporation ("Deals"), Odd's-N-End's, Inc., a California corporation
("Odd's-N-End's"), and Universal Odd's-N-End's, Inc., a California corporation
("Universal ONE"), are parties to that certain Stock Purchase Agreement dated as
of December 28, 2000 (the "Purchase Agreement"), pursuant to which Deals and
Universal ONE will purchase (the "Purchase") 100% of the capital stock of
Universal and Odd's-N-End's, respectively, from the Company; and
WHEREAS, the Purchase Agreement contemplates that in connection with the
closing of the Purchase, the Company and Universal will enter into this Services
Agreement pursuant to which the Company will provide Universal with certain
administrative and other services for a limited period of time.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, including the schedules hereto,
capitalized terms shall have the meanings assigned them in the Purchase
Agreement.
2. COMPUTER SUPPORT SERVICES. The Company will provide (either directly or
through arrangements with third parties) to Universal computer support services
listed on SCHEDULE 2 (the "COMPUTER SUPPORT SERVICES") from the close of
business on September 30, 2000 (the "EFFECTIVE DATE") until the termination of
such services in accordance with Sections 15, 16 and 17 hereof. The Computer
Support Services shall be of a type and at a service level substantially
equivalent to that provided to Universal immediately prior to the Effective
Date.
3. ACCOUNTING SERVICES. The Company shall provide to Universal accounting
services listed on SCHEDULE 3 (the "ACCOUNTING SERVICES") from the Effective
Date until the termination of such services in accordance with Sections 15, 16
and 17 hereof. The Accounting Services to be provided by the Company shall be of
a type and service level substantially equivalent to that provided to Universal
by the Company immediately prior to the Effective Date.
4. LEGAL SERVICES. The Company will provide Universal with legal services listed
on SCHEDULE 4 (the "LEGAL SERVICES") from the Effective Date until the
termination of such services in accordance with Sections 15, 16 and 17. The
Legal Services shall be provided on an as needed basis consistent with past
practice and procedure and be of a type and at a service level substantially
equivalent to that provided historically by the Company to Universal. Provided
that if the Company determines, in its sole and absolute discretion, that any
Legal Services requested by Universal will conflict with, or cause a potential
conflict with, the interests of the Company, the Company may decline to perform
such Legal Services and such decision shall have no effect on the amount of fees
to be paid by Universal pursuant to Section 12. The Company agrees to use
commercially reasonable best efforts to inform
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<PAGE>
Universal of any potential conflicts or connections with related parties that
arise in connection with the Company rendering Legal Services requested by
Universal pursuant to this Agreement.
5. ADVERTISING SERVICES. The Company will provide Universal with advertising
support listed on SCHEDULE 5 (the "ADVERTISING SERVICES") from the Effective
Date until the termination of such services in accordance Sections 15, 16 and 17
hereof. The Advertising Services provided by the Company shall be of a type and
at a service level substantially equivalent that provided to Universal by the
Company immediately prior to the Effective Date.
6. REAL ESTATE MANAGEMENT SERVICES. The Company will provide Universal with real
estate management services listed on SCHEDULE 6 (the "REAL ESTATE MANAGEMENT
SERVICES") from the Effective Date until the termination of such services in
accordance with Sections 15, 16 and 17 hereof. The Real Estate Management
Services provided by the Company shall be of a type and at a service level
substantially equivalent to that provided to Universal by the Company
immediately prior to the Effective Date.
7. FINANCE SERVICES. The Company will provide Universal with finance services
listed on SCHEDULE 7 (the "FINANCE SERVICES") from the Effective Date until the
termination of such services in accordance with Sections 15, 16 and 17 hereof.
The Finance Services provided by the Company shall be of a type and at a service
level substantially equivalent to that provided to Universal by the Company
immediately prior to the Effective Date. Further, the Company shall provide
Universal with a $200,000 line of credit subject to and pursuant to certain
terms and conditions to be determined by the Company.
8. HUMAN RESOURCES SERVICES. The Company will provide Universal with human
resources services listed on SCHEDULE 8 (the "HUMAN RESOURCES SERVICES") from
the Effective Date until the termination of such services in accordance with
Sections 15, 16 and 17 hereof. The Human Resources Services provided by the
Company shall be of a type and at a service level substantially equivalent to
that provided to Universal by the Company immediately prior to the Effective
Date.
9. BUYING SERVICES. The Company will provide Universal with buying services
listed on SCHEDULE 9 (the "BUYING SERVICES") from the Effective Date until the
termination of such services in accordance with Sections 15, 16 and 17 hereof.
The Buying Services provided by the Company shall be of a type and at a service
level substantially equivalent to that provided to Universal by the Company
immediately prior to the Effective Date. Universal shall in consideration of the
Buying Services provided by the Company hereunder, pay to the Company the
purchase cost of the merchandise delivered plus a 10% fee thereon. Further,
Universal shall reimburse the Company for all out-of-pocket freight and shipping
costs. The consideration for the Buying Services shall hereinafter be referred
to as the "Buying Fee."
10. RISK MANAGEMENT SERVICES. The Company will provide Universal with risk
management services listed on SCHEDULE 10 (the "RISK MANAGEMENT SERVICES") from
the Effective Date until the termination of such services in accordance with
Sections 15, 16 and 17 hereof. The Risk Management Services provided by the
Company shall be of a type and at a service level substantially equivalent to
that provided to Universal by the Company immediately prior to the Effective
Date.
11. OTHER SERVICES. The Company may from time-to-time agree to provide
additional services to Universal on mutually agreed upon terms and conditions.
12. CONSIDERATION. Universal shall in consideration of the Computer Support
Services, Accounting Services, Legal Services, Advertising Services, Real Estate
Management Services, Finance Services, Human Resources Services, and Risk
Management Services (each a "SERVICE" and collectively and with the Buying
Services, the "SERVICES") provided by the Company hereunder, pay the Company a
management fee ("MANAGEMENT FEE") of 6%? Universal's monthly sales revenue as
calculated at the
Page 2
<PAGE>
end of each calendar month ("SALES REVENUE"). Further, Universal shall reimburse
the Company for all out-of-pocket expenses (including any travel costs)
relating-to the Services provided by the Company ("REIMBURSED EXPENSES"). All
Buying Fees, Management Fees, and Reimbursed Expenses owed by Universal to the
Company are due within ten (10) days of the end of each month. In the event that
Universal's sales revenue falls under $3,000,000 in any month, the Management
Fee will be equitably adjusted at the discretion of the Company for such month.
13. SERVICE STANDARDS. The Services shall be provided by personnel of the
Company applying substantially the same standard of care as if they were
providing such services to the Company. To the extent the provision of Services
(as defined below) hereunder is to be subcontracted or outsourced to any person
or entity by the Company, the Company shall apply substantially the same
standard of care in selecting such person as if they were selecting the person
or entity for themselves.
14. UNIVERSAL SOLELY RESPONSIBLE. Notwithstanding anything to the contrary
contained herein, the parties hereto acknowledge and agree that all times during
the term of this Agreement Universal shall be solely responsible for determining
the basic operating policies of Universal governing personnel, programming and
finances and for the management and supervision of personnel implementing such
basic operating policies. Such policies shall not cause or require any employee
of the Company to materially violate any of the Company's policies or
philosophies.
15. SERVICE TERM. This Agreement is effective as of the Company's close of
business on September 30, 2000. Unless otherwise terminated earlier in
accordance with Section 16 below, this Agreement shall be effective through
December 31, 2001 ("TERM").
16. TERMINATION.
(a) The obligations of the Company under this Agreement, including
any obligation to provide any Services hereunder, shall terminate upon the
occurrence of any of the following events:
(i) Universal becomes insolvent or commences a voluntary
proceeding under the present or any future federal bankruptcy code or any
similar federal or state law or statute, Universal consents to or fails to file
an answer to the filing of a bankruptcy proceeding against Universal or seeks or
consents to the appointment of a custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency for itself or for any substantial part of
its assets or property, or Universal makes a general assignment for the benefit
of creditors, or takes of any corporate action in furtherance of any of the
foregoing;
(ii) Universal breaches any term of this Agreement, including the
failure to make any payment required under this Agreement when due, and such
breach continues for a period of ten (10) business days after the Company
provides written notification thereof; and
(b) The obligations of Universal under this Agreement, except the
indemnification obligations contained in Section 19, shall terminate upon the
occurrence of any of the following event:
(i) The Company becomes insolvent or commences a voluntary
proceeding under the present or any future federal bankruptcy code or any
similar federal or state law or statute, the Company consents to or fails to
file an answer to the filing of a bankruptcy proceeding against the Company or
seeks or consents to the appointment of a custodian, receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency for itself or for any
substantial part of its assets or property, or the Company makes a general
assignment for the benefit of creditors, or takes of any corporate action in
furtherance of any of the foregoing.
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<PAGE>
(c) The parties may agree to mutually terminate this Agreement
effective in a writing signed by both the Company and Universal.
(d) Universal or the Company may terminate this Agreement
effective at the middle or end of any month with thirty (30) days prior written
notice to the other party.
17. CHANGE IN THE LEVEL OR PRICE OF SERVICES. Except as otherwise provided for
herein, the parties acknowledge that the Company may at any time and from time
to time increase or decrease the level and scope of all or some of the Services
(each an "Affected Service") provided by the Company during the term of this
Agreement, which changes could affect the pricing of the Affected Service
provided hereunder. The Company agrees to provide Universal sixty (60) days
prior written notice of any such anticipated change in the level and scope of
any Affected Service, the date such change is to go into effect (which date
shall not be less than sixty (60) days after the provision of written notice),
the reasons for the change and the adjusted amount, if any, that Universal will
be required to pay to continue to receive the Affected Service. Universal shall
have thirty (30) days from receipt of the written notice to notify the Company
in writing of Universal's decision whether to (a) terminate the use of the
Affected Service, such termination to be effective on the date the change in
Affected Service is to go into effect, or (b) pay the adjusted amount as set
forth in the written notice. Failure of Universal to respond in writing within
the thirty (30) day period shall constitute Universal's agreement to accept the
change in Affected Service and to pay the adjusted amount.
18.. EMPLOYEES USE OF SHARED FACILITIES. The parties acknowledge that certain
employees of the Company, in the performance of the Company's obligations under
this Agreement, will be working within facilities owned or leased by Universal.
Accordingly, Universal agrees to take all action necessary to maintain the
property for which it is responsible in a good, clean and safe working
condition. Subject to the terms of any lease between the Company and Universal,
to the extent the employees of the Company are injured while on the premises for
which Universal is responsible, the indemnification provisions in Section 19
below shall apply.
19. INDEMNIFICATION. (a) Each party shall defend, indemnify and hold harmless
the other, its Affiliates and their respective officers, directors, employees
and agents and their respective successors and assigns (collectively,
"REPRESENTATIVES") from and against any and all claims, (including, without
limitation, those based on contract or tort), losses, liabilities, damages and
expenses incurred during the Term of this Agreement (including, without
limitation, reasonable attorneys' fees) (collectively, "DAMAGES"), arising out
of or in connection with a claim, suit or proceeding brought by a third party
upon (i) bodily injury (including death) or damage to tangible personal property
arising from the negligent or intentional acts or omissions of the indemnifying
party or its subcontractors, or Representatives of any of them, (ii) assertions
under worker's compensation or similar laws made by persons furnished by the
indemnifying party, or (iii) violations of labor and employment laws, health and
safety laws, wage and hour laws, discrimination, harassment, wrongful
termination or breach of contract. In the event that the indemnified party's
concurrent negligent or intentional acts or omissions contributed to cause the
damage for which a claim of indemnity is being asserted against the indemnifying
party hereunder, the damages shall be allocated between the indemnified party
and the indemnifying party in such proportion as appropriately reflects the
relative fault of the two parties or their subcontractors or their
Representatives and the liability of the indemnifying party shall be
proportionately reduced.
(b) If any party (the "INDEMNITEE") receives notice of any claim,
assertion or other commencement of any action or proceeding or becomes aware of
any matter with respect to which the other party is obligated to provide
indemnification (the "INDEMNIFYING PARTY") pursuant to Section 19(a), the
Indemnitee shall promptly give the Indemnifying Party written notice thereof.
Failure to give such notice shall not affect a party's right to be indemnified
hereunder; provided, however, that the Indemnifying Party's liability hereunder
shall be limited to that which would have existed had prompt
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<PAGE>
notice been given, and the Indemnitee shall be solely responsible for, and shall
indemnify the Indemnifying Party from, such increased liability, if any, as
shall have been occasioned by its failure to provide the Indemnifying Party with
prompt notice. The Indemnifying Party shall defend, at such Indemnifying Party's
own expense and by such Indemnifying Party's own counsel approved by Indemnitee,
such approval not to be unreasonably withheld, any such matter involving the
asserted liability of the Indemnitee. In such event, the Indemnitee, the
Indemnifying Party and the Indemnifying Party's counsel shall cooperate in the
compromise of, or defense against, any such asserted liability. The Indemnitee
may participate in the defense of such asserted liability at its own expense;
provided, however, that if the Indemnitee elects not to participate in such
defense, the Indemnifying Party shall keep the Indemnitee fully appraised,
within reason, at all times as to the status of the defense or any settlement
negotiations with respect thereto. If the Indemnifying Party does not notify the
Indemnitee within thirty (30) days, as required hereunder, or within such
shorter response period as is required to avoid prejudice to the ability to
defend against such claim, assertion, action or proceeding, after receipt of
Indemnitee's notice of an action or proceeding that the Indemnifying Party
intends to assume the defense of such claim, action, assertion or proceeding,
then the Indemnitee may defend such claim, action, assertion or proceeding at
the indemnifying Party's sole expense. In the event the insurance company
provides a defense to any such claim, action, assertion or proceeding, the
Indemnifying Party may use such defense if so decided upon by the Indemnifying
Party. The Indemnifying Party shall have the right to compromise any action or
suit provided that it shall not effect a settlement of any action or claim with
the prior written consent of the Indemnitee, which consent shall not be
unreasonably withheld, and shall include an unconditional release of the
Indemnitee for any claim, action, assertion or proceeding. Indemnitee shall not
be required to consent in the event that Indemnitee is also a defendant or
potential defendant to such action or claim. If the Indemnifying Party is
defending any claim, the Indemnitee shall make available to the Indemnifying
Party any books, records or other documents within its control that are
reasonably necessary or appropriate for such defense
(c) The amount of any recovery by an Indemnitee pursuant to this
Section 19 shall be net of any insurance benefits actually received by such
Indemnitee.
(d) The Company shall not indemnify Universal for any claim, suit or
proceeding arising from the gross negligence or willful misconduct of Universal.
Universal may seek indemnification, as provided hereunder, only if the claim,
suit or proceeding is based on the gross negligence or willful misconduct of the
Company.
20. FORCE MAJEURE. The Company shall not be liable for any failure of, or delay
in the performance of, any Services, as applicable, for the period that such
failure or delay is due to acts of God, public enemy, civil unrest, strikes or
general labor disputes, computer hardware or software failures or any other
cause beyond the provider's reasonable control.
21. NO JOINT VENTURE. Nothing in this Agreement shall be construed to constitute
the parties hereto to be partners or joint venturers with, or agents for, one
another with respect to the provision of Services hereunder. Neither party shall
have any authority to obligate or bind the other in any manner whatsoever. The
Company shall be an independent contractor, free to exercise its discretion and
independent judgment consistent with the terms of this Agreement as to the
method and means of performance of Services.
22. ASSIGNMENT. This Agreement may not be assigned by either party, except
either party may assign this Agreement to an Affiliate of such party with the
prior written consent of the other party (which consent may not be unreasonably
withheld), provided such assignment shall not result in an
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increase in costs or a diminution in service to the non-assigning party. In
addition, the Company may subcontract the provision of any Service hereunder
without the prior written consent of Universal, provided that the Company will
endeavor to give Universal written notice of the decision to subcontract as
early as is reasonably possible.
23. THIRD PARTIES. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person, other than the parties hereto
and their respective permitted successors and assigns, any rights or remedies
under or by reason of this Agreement.
24. JURISDICTION. Each party hereby consents to the exclusive jurisdiction of
the state and federal courts sitting in California in any action on a claim
arising out of, under or in connection with this Agreement or the transactions
contemplated by this Agreement. Each party further agrees that personal
jurisdiction over it may be effected by service of process by registered or
certified mail addressed as provided in Section 25 of this Agreement, and that
when so made shall be as if served upon it personally within the State of
California.
25. NOTICES. Any notice to be given or to be served upon any party hereto in
connection with this Agreement must be in writing (which may include facsimile)
and shall be deemed to have been given (a) if personally delivered, on the date
received or refused, when delivered to the address specified by the party to
receive the notice, (b) if sent by facsimile, once such notice or other
communication is transmitted to the facsimile number specified below, and the
appropriate written facsimile confirmation is received, provided that such
notice or other communication is promptly thereafter mailed by United States
mail, postage prepaid, or (c) if sent by a reputable prepaid overnight delivery
service under circumstances by which such service guarantees next business day
delivery (i.e., Federal Express), the date received or refused. Such notices
shall be given to a party and to its respective counsel at the addresses
specified below. Any party may, at any time by giving five (5) days' prior
written notice to the other parties, designate any other address in substitution
of the foregoing address to which such notice shall be given.
If to Universal:
Universal International, Inc.
4000 Union Pacific
City of Commerce, California 90023
Attention: Dave Gold
Facsimile: 323-881-9992
If to the Company:
99(cent) Only Stores
4000 Union Pacific Avenue
City of Commerce, California 90023
Attention: Andy Farina
Facsimile: (323) 881-9992
With a copy to (which shall not constitute notice):
Akin, Gump, Strauss, Hauer & Feld, LLP
2029 Century Park East
Los Angeles, California 90067
Attention: Linda Giunta Michaelson
Facsimile: (310) 728-33l6
26. GOVERNING LAW. THIS AGREEMENT AND ALL MATTERS OR ISSUES RELATED HERETO OR
ARISING HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE
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STATE OF CALIFORNIA, WITHOUT REGARD TO THE APPLICATION OF PRINCIPLES OF
CONFLICTS OF LAWS.
27. DISPUTE RESOLUTION. Any dispute or claim arising hereunder shall be settled
by arbitration. Any party may commence arbitration by sending a written notice
of arbitration to the other party. The notice will state the dispute with
particularity. The arbitration hearing shall be commenced thirty (30) days
following the date of delivery of notice of arbitration by one party to the
other, by the American Arbitration Association ("AAA") as arbitrator. The
arbitration shall be conducted in Los Angeles, California in accordance with the
commercial arbitration rules promulgated by AAA, and each party shall retain the
right to cross-examine the opposing party's witnesses, either through legal
counsel, expert witness or both. The decision of the arbitrator shall be final,
binding and conclusive on all parties (without any right of appeal therefrom)
and shall not be subject to judicial review. Judgment on the award rendered by
the arbitrator may be entered in any court of competent jurisdiction.
28. ATTORNEYS' FEES. In the event of any action or suit based upon or arising
out of any alleged breach of any party of this Agreement, the prevailing party
will be entitled to recover reasonable attorneys' fees and other costs of such
action or suit from the other party.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
UNIVERSAL INTERNATIONAL, INC.
By: /S/ DAVID GOLD
--------------------------------
Name: Dave Gold
Title: President
99(cent)ONLY STORES
By: /S/ ERIC SCHIFFER
--------------------------------
Name: Eric Schiffer
Title: President
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SCHEDULE 2
COMPUTER SUPPORT SERVICES
Computer Support Services for the day to day operation of Universal and its
stores of the type and level provided by the Company to Universal from September
1, 2000 through September 30, 2000, to generally include among other things the
following functions, which are to be performed on a part time basis by three (3)
help desk personnel, Manny Chavez, Robert Adams, and Marvin Fischer (or
reasonably equivalent substitutes for such individuals):
o Provide for daily systems administration including system
administration and management of maintenance of operating
functionality of all of the company's business applications as well as
voice and data transmission. Administer the retail P.O.S. (point of
sale) systems; provide 24-hour help desk service, the availability of
which may be on an "on call" basis, and oversee maintenance of both
software and hardware.
o Provide operating support for the inventory management systems; this
includes store ordering, purchase order systems, inventory control,
picking systems and performance reports.
o Provide or procure software modifications where required and to remedy
any software "bugs" for which no reasonable "work around" is
available.
o Maintain vendor support for all software and hardware.
o All out of pocket costs and expenses (including any travel costs) are
to be paid by Universal, with the exception of (i) labor and benefits
for the above-listed staff and (ii) ordinary office and administrative
overhead for such staff.
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SCHEDULE 3
ACCOUNTING SERVICES
Accounting Services for the day to day operation of Universal and its
stores of the type and level provided by the Company to Universal from September
1, 2000 through September 30, 2000, to generally include among other things the
following:
o All treasury functions including collection of cash, bank deposit
reconciliation, sales audit, filing of all sales, income, property and
other business tax & license returns, responding to all taxing
authority inquiries, audits and statutory filings.
o Prepare all biweekly payrolls and all coincidental tax and government
filings as required.
o Maintain general ledger and prepare all management reports and other
reports necessary for governmental filings.
o Maintain all sub ledgers for property, inventory and other pertinent
items on a store basis level.
o Reconcile all bank accounts.
o All out of pocket costs and expenses (including any travel costs) are
to be paid by Universal, with the exception of (i) labor and benefits
for the staff providing the Accounting Services and (ii) ordinary
office and administrative overhead for such staff.
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SCHEDULE 4
LEGAL SERVICES
Legal Services will be provided on an as needed basis within the context of
the daily operating activities of Universal and would include but not be limited
to the following:
o Labor issues
o Third party liability outside the scope of insured limits.
o Contract management & contractual issues resolution.
o Supplier disputes.
o Lease negotiations, with the exception of transactions involving the
selling, assigning, or terminating leases.
o Product liability issues where applicable
o Universal will pay all out of pocket for costs and expenses (including
any travel costs) associated with the use of outside counsel.
o In no event shall the Company be required under this Agreement to
litigate or negotiate any material contract. Such activities shall be
the responsibility of Universal's outside counsel.
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SCHEDULE 5 ADVERTISING SERVICES
Advertising Services of the type and level provided by the Company to
Universal from September 1, 2000 through September 30, 2000, to generally
include among other things the following:
o Establish conceptual approach and corresponding spending plan.
o Execute periodic plan - select items to be advertised along with
corresponding media and individual city location. Arrange procurement
of advertising production and media space.
o Plan logistics for key events and movement of advertised product to
individual retail locations.
o Provide guidance on production layout, conceptual content and pricing.
o Measure relative performance of the ads against expectations and
revise as necessary.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Universal (advertising, printing, freight, distribution,
etc.), with the exception of (i) labor and benefits for the Company's
staff providing the Advertising Services and (ii) ordinary office and
administrative overhead for such staff.
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SCHEDULE 6
REAL ESTATE MANAGEMENT SERVICES
Real Estate Management Services of the type and level provided by the
Company to Universal from September 1, 2000 through September 30, 2000, to
include among other things, all day to day property management functions of the
stores, including the physical facility issues, lease compliance issues, and the
following:
o Maintain compliance with all lease provisions for all stores to the
extent typically performed from a corporate office level. Correspond
with landlord on all changes, renewals, common area maintenance
billings and percentage rent notification.
o Maintain up to date lease summary data as well as notification period
data.
o Negotiate lease renewals or terminations (not in connection with
substantial liquidation of stores on a piecemeal basis).
o Arrange for maintenance or construction, after notice is provided to
the Company, where necessary.
o Assist and advise in resolution of issues with utility services and
HVAC.
o Manage periodic refurbishment of stores.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Universal (including consultants, brokers, lawyers, etc.),
with the exception of (i) labor and benefits for the Company's staff
providing the Real Estate Management Services and (ii) ordinary office
and administrative overhead for such staff.
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SCHEDULE 7
FINANCE SERVICES
Finance Services for the day to day operation (not in sale or liquidation
situations) of Universal and its stores of the type and level provided by the
Company to Universal from September 1, 2000 through September 30, 2000, to
generally include among other things the following:
o Provide interim trade credit subject to limits provided in this
agreement.
o Preparation of all monthly financial reporting for statutory
requirements, management requirements and regulatory bodies.
o Provide all treasury functions including cash mobilization, bank
reconciliation, and tax filings with federal, state and local
governmental bodies.
o Maintain all banking contacts.
o Assist in audits by regulatory agencies, sales tax, 401k, annual
reports, etc.
o Maintain and negotiate all insurance coverage for Universal.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Universal (including financial consultants, lawyers, etc.),
with the exception of (i) labor and benefits for the Company's staff
providing the Finance Services and (ii) ordinary office and
administrative overhead for such staff.
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SCHEDULE 8
HUMAN RESOURCES SERVICES
Human Resource Services for the day to day operation of Universal and its
stores of the type and level provided by the Company to Universal from September
1, 2000 through September 30, 2000, to include all of the recruitment, hiring,
conflict resolution, discipline, benefits, maintenance of personnel files and
salary administration, and the following:
o Insure each employee is adequately documented in the files upon
hiring.
o Establish and monitor pay rates
o Review performance and maintain individual employee files and records.
o Manage & administer benefit programs including health, 401k, workers
comp, COBRA, etc.
o All out of pocket costs and expenses (including any-travel costs) to
be paid by Universal (including consultants, etc.), with the exception
of (i) labor and benefits for the Company's staff providing the Human
Resource Services and (ii) ordinary office and administrative overhead
for such staff.
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SCHEDULE 9
BUYING SERVICES
Buying Services for the day to day operation of the stores of the type and
level provided by the Company to Universal from September 1, 2000 through
September 30, 2000, to generally include all procurement and supply chain
management and the following:
o Source all product including close-outs and re-orderable items.
o Develop buying plan.
o Write purchase orders and follow up for delivery.
o Manage corporate inventory levels.
o Select merchandise and manage divide outs as well as shipments from
the Company's corporate warehouse.
o Review product pricing and retail performance of inventory.
o Plan seasonal needs for stores and coordinate logistics with suppliers
and stores.
o The Company shall retain the right not to sell to and/or purchase for
Universal certain products. Such election not to sell to and/or
purchase for Universal certain products shall be made at the sole
discretion of the Company on similar criteria used by the Company
immediately prior to the Effective Date.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Universal, with the exception of (i) labor and benefits for
the Company's staff providing the Buying Services and (ii) ordinary
office and administrative overhead for such staff.
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SCHEDULE 10
RISK MANAGEMENT SERVICES
Risk Management Services for the day to day operation (not including
substantial liquidation) of the stores of the type and level provided by the
Company to Universal from September 1, 2000 through September 30, 2000, to
generally include among other things the maintenance of all insurance programs
and management of on inventory, cash and other employee & customer defalcations,
and the following:
o Procurement and management of all business liability insurance
functions.
o Claims resolution.
o Administer insurance audits.
o All premiums are paid by Universal.
o All out of pocket costs and expenses (including any travel costs) to
be paid by, with-the exception of (i) labor and benefits for the
Company's staff providing the Risk Management Services and (ii)
ordinary office and administrative overhead for such staff.
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EXHIBIT A2
SERVICES AGREEMENT - ODD'S-N-END'S, INC.
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EXECUTION COPY
SERVICES AGREEMENT
This Services Agreement (this "Agreement") is dated as of December 28,
2000, by and between 99(cent)Only Stores, a California corporation (the
"Company"), and Odd's-N-End's, Inc., a Delaware corporation ("Odd's-N-End's").
R E C I T A L S
WHEREAS, the Company, Universal International, Inc., a Minnesota
corporation ("Universal"), Universal Deals, Inc., a California corporation
("Deals"), Odd's-N-End's, and Universal Odd's-N-End's, Inc., a California
corporation ("Universal ONE"), are parties to that certain Stock Purchase
Agreement dated as of December 28, 2000 (the "Purchase Agreement"), pursuant to
which Deals and Universal Odd's-N-End's will purchase (the "Purchase") 100% of
the capital stock of Universal and Odd's-N-End's, respectively, from the
Company; and
WHEREAS, the Purchase Agreement contemplates that in connection with the
closing of the Purchase, the Company and Odd's-N-End's will enter into this
Services Agreement pursuant to which the Company will provide Universal with
certain administrative and other services for a limited period of time.
NOW, THEREFORE, in consideration of the foregoing premises and for other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, including the schedules hereto,
capitalized terms shall have the meanings assigned them in the Purchase
Agreement.
2. COMPUTER SUPPORT SERVICES. The Company will provide (either directly or
through arrangements with third parties) to Odd's-N-End's computer support
services listed on SCHEDULE 2 (the "COMPUTER SUPPORT SERVICES") from the close
of business on September 30, 2000 (the "EFFECTIVE DATE") until the termination
of such services in accordance with Sections 15, 16 and 17 hereof. The Computer
Support Services shall be of a type and at a service level substantially
equivalent to that provided to Odd's-N-End's immediately prior to the Effective
Date.
3. ACCOUNTING SERVICES. The Company shall provide to Odd's-N-End's accounting
services listed on SCHEDULE 3 (the "ACCOUNTING SERVICES") from the Effective
Date until the termination of such services in accordance with Sections 15, 16
and 17 hereof. The Accounting Services to be provided by the Company shall be of
a type and service level substantially equivalent to that provided to
Odd's-N-End's by the Company immediately prior to the Effective Date.
4. LEGAL SERVICES. The Company will provide Odd's-N-End's with legal services
listed on SCHEDULE 4 (the "LEGAL SERVICES") from the Effective Date until the
termination of such services in accordance with Sections 15, 16 and 17. The
Legal Services shall be provided on an as needed basis consistent with past
practice and procedure and be of a type and at a service level substantially
equivalent to that provided historically by the Company to Odd's-N-End's.
Provided that if the Company determines, in its sole and absolute discretion,
that any Legal Services requested by Odd's-N-End's will conflict with, or cause
a potential conflict with, the interests of the Company, the Company may decline
to perform such Legal Services and such decision shall have no effect on the
amount of fees to be paid by Odd's-N-End's pursuant to Section 12. The Company
agrees to use commercially reasonable best efforts to inform Odd's-N-End's of
any potential conflicts or connections with related parties that arise in
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connection with the Company rendering Legal Services requested by Odd's-N-End's
pursuant to this Agreement.
5. ADVERTISING SERVICES. The Company will provide Odd's-N-End's with advertising
support listed on SCHEDULE 5 (the "ADVERTISING SERVICES") from the Effective
Date until the termination of such services in accordance Sections 15, 16 and 17
hereof. The Advertising Services provided by the Company shall be of a type and
at a service level substantially equivalent to that provided to Odd's-N-End's by
the Company immediately prior to the Effective Date.
6. REAL ESTATE MANAGEMENT SERVICES. The Company will provide Odd's-N-End's with
real estate management services listed on SCHEDULE 6 (the "REAL ESTATE
MANAGEMENT SERVICES") from the Effective Date until the termination of such
services in accordance with Sections 15, 16 and 17 hereof. The Real Estate
Management Services provided by the Company shall be of a type and at a service
level substantially equivalent to that provided to Odd's-N-End's by the Company
immediately prior to the Effective Date.
7. FINANCE SERVICES. The Company will provide Odd's-N-End's with finance
services listed on SCHEDULE 7 (the "FINANCE SERVICES") from the Effective Date
until the termination of such services in accordance with Sections 15, 16 and 17
hereof. The Finance Services provided by the Company shall be of a type and at a
service level substantially equivalent to that provided to Odd's-N-End's by the
Company immediately prior to the Effective Date. Further, the Company shall
provide Odd's-N-End's with a $200,000 line of credit subject to and pursuant to
certain terms and conditions to be determined by the Company.
8. HUMAN RESOURCES SERVICES. The Company will provide Odd's-N-End's with human
resources services listed on SCHEDULE 8 (the "HUMAN RESOURCES SERVICES") from
the Effective Date until the termination of such services in accordance with
Sections 15, 16 and 17 hereof. The Human Resources Services provided by the
Company shall be of a type and at a service level substantially equivalent to
that provided to Odd's-N-End's by the Company immediately prior to the Effective
Date.
9. BUYING SERVICES. The Company will provide Odd's-N-End's with buying services
listed on SCHEDULE 9 (the "BUYING SERVICES") from the Effective Date until the
termination of such services in accordance with Sections 15, 16 and 17 hereof.
The Buying Services provided by the Company shall be of a type and at a service
level substantially equivalent to that provided to Odd's-N-End's by the Company
immediately prior to the Effective Date. Odd's-N-End's shall in consideration of
the Buying Services provided by the Company hereunder, pay to the Company the
purchase cost of the merchandise delivered plus a 10% fee thereon. Further,
Odd's-N-End's shall reimburse the Company for all out-of-pocket freight and
shipping costs. The consideration for the Buying Services shall hereinafter be
referred to as the "Buying Fee."
10. RISK MANAGEMENT SERVICES. The Company will provide Odd's-N-End's with risk
management services listed on SCHEDULE 10 (the "RISK MANAGEMENT SERVICES") from
the Effective Date until the termination of such services in accordance with
Sections 15, 16 and 17 hereof. The Risk Management Services provided by the
Company shall be of a type and at a service level substantially equivalent to
that provided to Odd's-N-End's by the Company immediately prior to the Effective
Date.
11. OTHER SERVICES. The Company may from time-to-time agree to provide
additional services to Odd's-N-End's on mutually agreed upon terms and
conditions.
12. CONSIDERATION. Odd's-N-End's shall in consideration of the Computer Support
Services, Accounting Services, Legal Services, Advertising Services, Real Estate
Management Services, Finance Services, Human Resources Services, and Risk
Management Services (each a "SERVICE" and collectively and with the Buying
Services, the "SERVICES") provided by the Company hereunder, pay the Company a
management fee ("MANAGEMENT FEE") of 6% of Odd's-N-End's monthly sales revenue
as calculated
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at the end of each calendar month ("SALES REVENUE"). Further, Odd's-N-End's
shall reimburse the Company for all out-of-pocket expenses (including any travel
costs) relating to the Services provided by the Company ("REIMBURSED EXPENSES").
All Buying Fees, Management Fees, and Reimbursed Expenses owed by Odd's-N-End's
to the Company are due within ten (10) days of the end of each month. In the
event that Odd's-N-End's sales revenue falls under $3,000,000 in any month, the
Management Fee will be equitably adjusted at the discretion of the Company for
such month.
13. SERVICE STANDARDS. The Services shall be provided by personnel of the
Company applying substantially the same standard of care as if they were
providing such services to the Company. To the extent the provision of Services
(as defined below) hereunder is to be subcontracted or outsourced to any person
or entity by the Company, the Company shall apply substantially the same
standard of care in selecting such person as if they were selecting the person
or entity for themselves.
14. ODD'S-N-END'S SOLELY RESPONSIBLE. Notwithstanding anything to the contrary
contained herein, the parties hereto acknowledge and agree that all times during
the term of this Agreement Odd's-N-End's shall be solely responsible for
determining the basic operating policies of Odd's-N-End's governing personnel,
programming and finances and for the management and supervision of personnel
implementing such basic operating policies. Such policies shall not cause or
require any employee of the Company to materially violate any of the Company's
policies or philosophies.
15. SERVICE TERM. This Agreement is effective as of the Company's close of
business on September 30, 2000. Unless otherwise terminated earlier in
accordance with Section 16 below, this Agreement shall be effective through
December 31, 2001 ("Term").
16. TERMINATION.
(a) The obligations of the Company under this Agreement, including
any obligation to provide any Services hereunder, shall terminate upon the
occurrence of any of the following events:
(i) Odd's-N-End's becomes insolvent or commences a voluntary
proceeding under the present or any future federal bankruptcy code or any
similar federal or state law or statute, Odd's-N-End's consents to or fails to
file an answer to the filing of a bankruptcy proceeding against Odd's-N-End's or
seeks or consents to the appointment of a custodian, receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency for itself or for any
substantial part of its assets or property, or Odd's-N-End's makes a general
assignment for the benefit of creditors, or takes of any corporate action in
furtherance of any of the foregoing;
(ii) Odd's-N-End's breaches any term of this Agreement, including
the failure to make any payment required under this Agreement when due, and such
breach continues for a period of ten (10) business days after the Company
provides written notification thereof; and
(b) The obligations of Odd's-N-End's under this Agreement, except the
indemnification obligations contained in Section 19, shall terminate upon the
occurrence of any of the following event:
(i) The Company becomes insolvent or commences a voluntary
proceeding under the present or any future federal bankruptcy code or any
similar federal or state law or statute, the Company consents to or fails to
file an answer to the filing of a bankruptcy proceeding against the Company or
seeks or consents to the appointment of a custodian, receiver, liquidator,
trustee, or assignee in bankruptcy or insolvency for itself or for any
substantial part of its assets or property, or the Company makes a general
assignment for the benefit of creditors, or takes of any corporate action in
furtherance of any of the foregoing.
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(c) The parties may agree to mutually terminate this Agreement
effective in a writing signed by both the Company and Odd's-N-End's.
(d) Odd's-N-End's or the Company may terminate this Agreement
effective at the middle or end of any month with thirty (30) days prior written
notice to the other party.
17. CHANGE IN THE LEVEL OR PRICE OF SERVICES. Except as otherwise provided for
herein, the parties acknowledge that the Company may at any time and from time
to time increase or decrease the level and scope of all or some of the Services
(each an "AFFECTED SERVICE") provided by the Company during the term of this
Agreement, which changes could affect the pricing of the Affected Service
provided hereunder. The Company agrees to provide Odd's-N-End's sixty (60) days
prior written notice of any such anticipated change in the level and scope of
any Affected Service, the date such change is to go into effect (which date
shall not be less than sixty (60) days after the provision of written notice),
the reasons for the change and the adjusted amount, if any, that Odd's-N-End's
will be required to pay to continue to receive the Affected Service.
Odd's-N-End's shall have thirty (30) days from receipt of the written notice to
notify the Company in writing of Odd's-N-End's decision whether to (a) terminate
the use of the Affected Service, such termination to be effective on the date
the change in Affected Service is to go into effect, or (b) pay the adjusted
amount as set forth in the written notice. Failure of Odd's-N-End's to respond
in writing within the thirty (30) day period shall constitute Odd's-N-End's
agreement to accept the change in Affected Service and to pay the adjusted
amount.
18. EMPLOYEES USE OF SHARED FACILITIES. The parties acknowledge that certain
employees of the Company, in the performance of the Company's obligations under
this Agreement, will be working within facilities owned or leased by
Odd's-N-End's. Accordingly, Odd's-N-End's agrees to take all action necessary to
maintain the property for which it is responsible in a good, clean and safe
working condition. Subject to the terms of any lease between the Company and
Odd's-N-End's, to the extent the employees of the Company are injured while on
the premises for which Odd's-N-End's is responsible, the indemnification
provisions in Section 19 below shall apply.
19. INDEMNIFICATION. (a) Each party shall defend, indemnify and hold harmless
the other, its Affiliates and their respective officers, directors, employees
and agents and their respective successors and assigns (collectively,
"Representatives") from and against any and all claims, (including, without
limitation, those based on contract or tort), losses, liabilities, damages and
expenses incurred during the Term of this Agreement (including, without
limitation, reasonable attorneys' fees) (collectively, "DAMAGES"), arising out
of or in connection with a claim, suit or proceeding brought by a third party
upon (i) bodily injury (including death) or damage to tangible personal property
arising from the negligent or intentional acts or omissions of the indemnifying
party or its subcontractors, or Representatives of any of them, (ii) assertions
under worker's compensation or similar laws made by persons furnished by the
indemnifying party, or (iii) violations of labor and employment laws, health and
safety laws, wage and hour laws, discrimination, harassment, wrongful
termination or breach of contract. In the event that the indemnified party's
concurrent negligent or intentional acts or omissions contributed to cause the
damage for which a claim of indemnity is being asserted against the indemnifying
party hereunder, the damages shall be allocated between the indemnified party
and the indemnifying party in such proportion as appropriately reflects the
relative fault of the two parties or their subcontractors or their
Representatives and the liability of the indemnifying party shall be
proportionately reduced.
(b) If any party (the "INDEMNITEE") receives notice of any claim,
assertion or other commencement of any action or proceeding or becomes aware of
any matter with respect to which the other party is obligated to provide
indemnification (the "INDEMNIFYING PARTY") pursuant to Section 19(a), the
Indemnitee shall promptly give the Indemnifying Party written notice thereof.
Failure to give
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such notice shall not affect a party's right to be indemnified hereunder;
provided, however, that the Indemnifying Party's liability hereunder shall be
limited to that which would have existed had prompt notice been given, and the
Indemnitee shall be solely responsible for, and shall indemnify the Indemnifying
Party from, such increased liability, if any, as shall have been occasioned by
its failure to provide the Indemnifying Party with prompt notice. The
Indemnifying Party shall defend, at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel approved by Indemnitee, such approval not
to be unreasonably withheld, any such matter involving the asserted liability of
the Indemnitee. In such event, the Indemnitee, the Indemnifying Party and the
Indemnifying Party's counsel shall cooperate in the compromise of, or defense
against, any such asserted liability. The Indemnitee may participate in the
defense of such asserted liability at its own expense; provided, however, that
if the Indemnitee elects not to participate in such defense, the Indemnifying
Party shall keep the Indemnitee fully appraised, within reason, at all times as
to the status of the defense or any settlement negotiations with respect
thereto. If the Indemnifying Party does not notify the Indemnitee within thirty
(30) days, as required hereunder, or within such shorter response period as is
required to avoid prejudice to the ability to defend against such claim,
assertion, action or proceeding, after receipt of Indemnitee's notice of an
action or proceeding that the Indemnifying Party event the insurance company
provides a defense to any such claim, action, assertion or proceeding, the
Indemnifying Party may use such defense if so decided upon by the Indemnifying
Party. The Indemnifying Party shall have the right to compromise any action or
suit provided that it shall not effect a settlement of any action or claim with
the prior written consent of the Indemnitee, which consent shall not be
unreasonably withheld, and shall include an unconditional release of the
Indemnitee for any claim, action, assertion or proceeding. Indemnitee shall not
be required to consent in the event that Indemnitee is also a defendant or
potential defendant to such action or claim. If the Indemnifying Party is
defending any claim, the Indemnitee shall make available to the Indemnifying
Party any books, records or other documents within its control that are
reasonably necessary or appropriate for such defense.
(c) The amount of any recovery by an Indemnitee pursuant to this
Section 19 shall be net of any insurance benefits actually received by such
Indemnitee.
(d) The Company shall not indemnify Universal for any claim, suit or
proceeding arising from the gross negligence or willful misconduct of Universal.
Universal may seek indemnification, as provided hereunder, only if the claim,
suit or proceeding is based on the gross negligence or willful misconduct of the
Company.
20. FORCE MAJEURE. The Company shall not be liable for any failure of, or delay
in the performance of, any Services, as applicable, for the period that such
failure or delay is due to acts of God, public enemy, civil unrest, strikes or
general labor disputes, computer hardware or software failures or any other
cause beyond the provider's reasonable control.
21. NO JOINT VENTURE. Nothing in this Agreement shall be construed to constitute
the parties hereto to be partners or joint venturers with, or agents for, one
another with respect to the provision of Services hereunder. Neither party shall
have any authority to obligate or bind the other in any manner whatsoever. The
Company shall be an independent contractor, free to exercise its discretion and
independent judgment consistent with the terms of this Agreement as to the
method and means of performance of Services.
22. ASSIGNMENT. This Agreement may not be assigned by either party, except
either party may assign this Agreement to an Affiliate of such party with the
prior written consent of the other party (which consent may not be unreasonably
withheld), provided such assignment shall not result in an
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increase in costs or a diminution in service to the non-assigning party. In
addition, the Company may subcontract the provision of any Service hereunder
without the prior written consent of Universal, provided that the Company will
endeavor to give Universal written notice of the decision to subcontract as
early as is reasonably possible.
23. THIRD PARTIES. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person, other than the parties hereto
and their respective permitted successors and assigns, any rights or remedies
under or by reason of this Agreement.
24. JURISDICTION. Each party hereby consents to the exclusive jurisdiction of
the state and federal courts sitting in California in any action on a claim
arising out of, under or in connection with this Agreement or the transactions
contemplated by this Agreement. Each party further agrees that personal
jurisdiction over it may be effected by service of process by registered or
certified mail addressed as provided in Section 25 of this Agreement, and that
when so made shall be as if served upon it personally within the State of
California.
25. NOTICES. Any notice to be given or to be served upon any party hereto in
connection with this Agreement must be in writing (which may include facsimile)
and shall be deemed to have been given (a) if personally delivered, on the date
received or refused, when delivered to the address specified by the party to
receive the notice, (b) if sent by facsimile, once such notice or other
communication is transmitted to the facsimile number specified below, and the
appropriate written facsimile confirmation is received, provided that such
notice or other communication is promptly thereafter mailed by United States
mail, postage prepaid, or (c) if sent by a reputable prepaid overnight delivery
service under circumstances by which such service guarantees next business day
delivery (i.e., Federal Express), the date received or refused. Such notices
shall be given to a party and to its respective counsel at the addresses
specified below. Any party may, at any time by giving five (5) days' prior
written notice to the other parties, designate any other address in substitution
of the foregoing address to which such notice shall be given.
If to Universal:
Universal International, Inc.
4000 Union Pacific
City of Commerce, California 90023
Attention: Dave Gold
Facsimile: 323-881-9992
If to the Company:
99(cent) Only Stores
4000 Union Pacific Avenue
City of Commerce, California 90023
Attention: Andy Farina
Facsimile: (323) 881-9992
With a copy to (which shall not constitute notice):
Akin, Gump, Strauss, Hauer & Feld, LLP
2029 Century Park East
Los Angeles, California 90067
Attention: Linda Giunta Michaelson
Facsimile: (310) 728-33l6
26. GOVERNING LAW. THIS AGREEMENT AND ALL MATTERS OR ISSUES RELATED HERETO OR
ARISING HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE
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STATE OF CALIFORNIA, WITHOUT REGARD TO THE APPLICATION OF PRINCIPLES OF
CONFLICTS OF LAWS.
27. DISPUTE RESOLUTION. Any dispute or claim arising hereunder shall be settled
by arbitration. Any party may commence arbitration by sending a written notice
of arbitration to the other party. The notice will state the dispute with
particularity. The arbitration hearing shall be commenced thirty (30) days
following the date of delivery of notice of arbitration by one party to the
other, by the American Arbitration Association ("AAA") as arbitrator. The
arbitration shall be conducted in Los Angeles, California in accordance with the
commercial arbitration rules promulgated by AAA, and each party shall retain the
right to cross-examine the opposing party's witnesses, either through legal
counsel, expert witness or both. The decision of the arbitrator shall be final,
binding and conclusive on all parties (without any right of appeal therefrom)
and shall not be subject to judicial review. Judgment on the award rendered by
the arbitrator may be entered in any court of competent jurisdiction.
28. ATTORNEYS' FEES. In the event of any action or suit based upon or arising
out of any alleged breach of any party of this Agreement, the prevailing party
will be entitled to recover reasonable attorneys' fees and other costs of such
action or suit from the other party.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ODD'S-N-END'S, INC.
By: /S/ DAVID GOLD
-------------------------------
Name: Dave Gold
Title: President
99(cent)ONLY STORES
By: /S/ ERIC SCHIFFER
-------------------------------
Name: Eric Schiffer
Title: President
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SCHEDULE 2
COMPUTER SUPPORT SERVICES
Computer Support Services for the day to day operation of Odd's-N-End's and
its stores of the type and level provided by the Company to Odd's-N-End's from
September 1, 2000 through September 30, 2000, to generally include among other
things the following functions, which are to be performed on a part time basis
by three (3) help desk personnel, Manny Chavez, Robert Adams, and Marvin Fischer
(or reasonably equivalent substitutes for such individuals):
o Provide for daily systems administration including system
administration and management of maintenance of operating
functionality of all of the company's business applications as well as
voice and data transmission.
o Administer the retail P.O.S. (point of sale) systems; provide 24-hour
help desk service, the availability of which may be on an "on call"
basis, and oversee maintenance of both software and hardware.
o Provide operating support for the inventory management systems; this
includes store ordering, purchase order systems, inventory control,
picking systems and performance reports.
o Provide or procure software modifications where required and to remedy
any software "bugs" for which no reasonable "work around" is
available.
o Maintain vendor support for all software and hardware.
o All out of pocket costs and expenses (including any travel costs) are
to be paid by Odd's-N-End's, with the exception of (i) labor and
benefits for the above-listed staff and (ii) ordinary office and
administrative overhead for such staff.
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SCHEDULE 3
ACCOUNTING SERVICES
Accounting Services for the day to day operation of Odd's-N-End's and its
stores of the type and level provided by the Company to Odd's-N-End's from
September 1, 2000 through September 30, 2000, to generally include among other
things the following:
o All treasury functions including collection of cash, bank deposit
reconciliation, sales audit, filing of all sales, income, property and
other business tax & license returns, responding to all taxing
authority inquiries, audits and statutory filings.
o Prepare all biweekly payrolls and all coincidental tax and government
filings as required.
o Maintain general ledger and prepare all management reports and other
reports necessary for governmental filings.
o Maintain all sub ledgers for property, inventory and other pertinent
items on a store basis level.
o Reconcile all bank accounts.
o All out of pocket costs and expenses (including any travel costs) are
to be paid by Odd's-N-End's, with the exception of (i) labor and
benefits for the staff providing the Accounting Services and (ii)
ordinary office and administrative overhead for such staff.
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SCHEDULE 4
LEGAL SERVICES
Legal Services will be provided on an as needed basis within the context of
the daily operating activities of Odd's-N-End's and would include but not be
limited to the following:
o Labor issues
o Third party liability outside the scope of insured limits. o Contract
management & contractual issues resolution. o Supplier disputes.
o Lease negotiations, with the exception of transactions involving the
selling, assigning, or terminating leases.
o Product liability issues where applicable
o Odd's-N-End's will pay all out of pocket for costs and expenses
(including any travel costs) associated with the use of outside
counsel.
o In no event shall the Company be required under this Agreement to
litigate or negotiate any material contract. Such activities shall be
the responsibility of Odd's-N-End's outside counsel.
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SCHEDULE 5
ADVERTISING SERVICES
Advertising Services of the type and level provided by the Company to
Odd's-N-End's from September 1, 2000 through September 30, 2000, to generally
include among other things the following:
o Establish conceptual approach and corresponding spending plan.
o Execute periodic plan - select items to be advertised along with
corresponding media and individual city location. Arrange procurement
of advertising production and media space.
o Plan logistics for key events and movement of advertised product to
individual retail locations.
o Provide guidance on production layout, conceptual content and pricing.
o Measure relative performance of the ads against expectations and
revise as necessary.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Odd's-N-End's (advertising, printing, freight,
distribution, etc.), with the exception of (i) labor and benefits for
the Company's staff providing the Advertising Services and (ii)
ordinary office and administrative overhead for such staff.
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SCHEDULE 6
REAL ESTATE MANAGEMENT SERVICES
Real Estate Management Services of the type and level provided by the
Company to Odd's-N-End's from September l, 2000 through September 30, 2000, to
include among other things, all day to day property management functions of the
stores, including the physical facility issues, lease compliance issues, and the
following:
o Maintain compliance with all lease provisions for all stores to the
extent typically performed from a corporate office level. Correspond
with landlord on all changes, renewals, common area maintenance
billings and percentage rent notification.
o Maintain up to date lease summary data as well as notification period
data. Negotiate lease renewals or terminations (not in connection with
substantial liquidation of stores on a piecemeal basis).
o Arrange for maintenance or construction, after notice is provided to
the Company, where necessary.
o Assist and advise in resolution of issues with utility services and
HVAC.
o Manage periodic refurbishment of stores.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Odd's-N-End's (including consultants, brokers, lawyers,
etc.), with the exception of (i) labor and benefits for the Company's
staff providing the Real Estate Management Services and (ii) ordinary
office and administrative overhead for such staff.
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SCHEDULE 7
FINANCE SERVICES
Finance Services for the day to day operation (not in sale or liquidation
situations) of Odd's-N-End's and its stores of the type and level provided by
the Company to Odd's-N-End's from September 1, 2000 through September 30, 2000,
to generally include among other things the following:
o Provide interim trade credit subject to limits provided in this
agreement.
o Preparation of all monthly financial reporting for statutory
requirements, management requirements and regulatory bodies.
o Provide all treasury functions including cash mobilization, bank
reconciliation, and tax filings with federal, state and local
governmental bodies.
o Maintain all banking contacts.
o Assist in audits by regulatory agencies, sales tax, 401k, annual
reports, etc.
o Maintain and negotiate all insurance coverage for Odd's-N-End's.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Odd's-N-End's (including financial consultants, lawyers,
etc.), with the exception of (i) labor and benefits for the Company's
staff providing the Finance Services and (ii) ordinary office and
administrative overhead for such staff.
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SCHEDULE 8
HUMAN RESOURCES SERVICES
Human Resource Services for the day to day operation of Odd's-N-End's and
its stores of the type and level provided by the Company to Odd's-N-End's from
September 1, 2000 through September 30, 2000, to include all of the recruitment,
hiring, conflict resolution, discipline, benefits, maintenance of personnel
files and salary administration, and the following:
o Insure each employee is adequately documented in the files upon
hiring.
o Establish and monitor pay rates
o Review performance and maintain individual employee files and records.
o Manage & administer benefit programs including health, 401k, workers
comp, COBRA, etc.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Odd's-N-End's (including consultants, etc.), with the
exception of (i) labor and benefits for the Company's staff providing
the Human Resource Services and (ii) ordinary office and
administrative overhead for such staff.
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SCHEDULE 9
BUYING SERVICES
Buying Services for the day to day operation of the stores of the type and
level provided by the Company to Odd's-N-End's from September 1, 2000 through
September 30, 2000, to generally include all procurement and supply chain
management and the following:
o Source all product including close-outs and re-orderable items.
o Develop buying plan.
o Write purchase orders and follow up for delivery.
o Manage corporate inventory levels.
o Select merchandise and manage divide outs as well as shipments from
the Company's corporate warehouse.
o Review product pricing and retail performance of inventory.
o Plan seasonal needs for stores and coordinate logistics with suppliers
and stores.
o The Company shall retain the right not to sell to and/or purchase for
Odd's-N-End's certain products. Such election not to sell to and/or
purchase for Odd's-N-End's certain products shall be made at the sole
discretion of the Company on similar criteria used by the Company
immediately prior to the Effective Date.
o All out of pocket costs and expenses (including any travel costs) to
be paid by Odd's-N-End's, with the exception of (i) labor and benefits
for the Company's staff providing the Buying Services and (ii)
ordinary office and administrative overhead for such staff.
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SCHEDULE 10
RISK MANAGEMENT SERVICES
Risk Management Services for the day to day operation (not including
substantial liquidation) of the stores of the type and level provided by the
Company to Odd's-N-End's from September 1, 2000 through September 30, 2000, to
generally include among other things the maintenance of all insurance programs
and management of on inventory, cash and other employee & customer defalcations,
and the following:
o Procurement and management of all business liability insurance
functions.
o Claims resolution.
o Administer insurance audits.
o All premiums are paid by Odd's-N-End's.
o All out of pocket costs and expenses (including any travel costs) to
be paid by, with the exception of (i) labor and benefits for the
Company's staff providing the Risk Management Services and (ii)
ordinary office and administrative overhead for such staff.
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EXHIBIT B
LEASE AGREEMENT
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STANDARD INDUSTRIAL LEASE - NET
AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION
1. PARTIES: This Lease, dated for reference purposes only, OCTOBER 1, 2000, is
made by and between 99(CENT)ONLY STORES, A CALIFORNIA CORPORATION (herein called
"Lessor") and UNIVERSAL INTERNATIONAL, A MINNESOTA CORPORATION (herein called
"Lessee").
2. PREMISES: Lessor hereby leases to Lessee and Lessee leases from Lessor for
the term, at the rental, and upon all of the conditions set forth herein, that
certain real property situated in the County of ENOKA State of MINNESOTA,
commonly known as 905 YANKEE DOODLE ROAD, EAGAN, MINNESOTA and described as An
existing warehouse facility of approximately 358,000 SF of ground floor building
area (also includes the existing mezzanine area) and the applicable parcel(s) of
land owned by Lessor. The Premises also includes all personal property located
on or within the Premises and/or the land (the "Included Pers. Prop."). The
Included Pers. Prop. includes Lessor's forklifts/jacks & chargers, pallet racks,
phone system, conveyor system & mezzanine. Lessee shall maintain all Included
Pers. Prop. in the existing condition and repair and shall surrender all
Included Pers. Prop. to Lessor at the end of the Lease Term or any earlier
termination. Said real property including the land and all improvements therein,
is herein called "the Premises."
3. TERM.
3.1 TERM. The term of this Lease shall be for approximately five (5) years
and four (4) months commencing on October 1, 2000 and ending on January 31, 2006
unless extended or sooner terminated pursuant to any provision hereof.
3.2 DELAY IN POSSESSION. Notwithstanding said commencement date, if for any
reason Lessor cannot deliver possession of the Premises to Lessee on said date,
Lessor shall not be subject to any liability therfor, nor shall such failure
affect the validity of this Lease or the obligations of Lessee hereunder or
extend the term hereof, but in such case, Lessee shall not be obligated to pay
rent until possession of the Premises is tendered to Lessee; provided, however,
that if Lessor shall not have delivered possession of the Premises within sixty
(60) days from said commencement date, Lessee may, at Lessee's option, by notice
in writing to Lessor within ten (10) days thereafter, cancel this Lease, in
which event the parties shall be discharged from all obligations hereunder;
provided further, however, that if such written notice of Lessee is not received
by Lessor within said ten (10) day period, Lessee's right to cancel this Lease
hereunder shall terminate and be of no further force or effect.
3.3 EARLY POSSESSION: If Lessee occupies the Premises prior to said
commencement date, such occupancy shall be subject to all provisions hereof,
such occupancy shall not advance the termination date, and Lessee shall pay rent
for such period at the initial monthly rates set forth below.
4. RENT: Lessee shall pay to Lessor as rent for the Premises, monthly payments
of $120,000.00, in advance, on the 1st day of each month of the term hereof.
Lessee shall pay Lessor upon the execution hereof $120,000,000 as rent for
October 2000. On each October 1st the Rent shall increase by 3% of the Rent
immediately before such date. Rent for any period during the term hereof which
is for less than one month shall be a pro rata portion of the monthly
installment. Rent shall be payable in lawful money of the United States to
Lessor at the address stated herein or to such other persons or at such other
places as Lessor may designate in writing.
<PAGE>
5. SECURITY DEPOSIT: Lessee shall deposit with Lessor upon execution hereof
$NONE as security for Lessee's faithful performance of Lessee's obligations
hereunder. If Lessee fails to pay rent or other charges due hereunder, or
otherwise defaults with respect to any provision of this Lease, Lessor may use,
apply or retain all or any portion of said deposit for the payment of any rent
or other charge in default or for the payment of any other sum to which Lessor
may become obligated by reason of Lessee's default, or to compensate Lessor for
any loss or damage which Lessor may suffer thereby. If Lessor so uses or applies
all or any portion of said deposit, Lessee shall within ten (10) days after
written demand therefor deposit cash with Lessor in an amount sufficient to
restore said deposit to the full amount hereinabove stated and Lessee's failure
to do so shall be a material breach of this Lease. If the monthly rent, shall
from time to time, increase during the term of this Lease, Lessee shall
thereupon deposit with Lessor additional security deposit so that the amount of
security deposit held by Lessor shall at all times bear the same proportion to
current rent as the original security deposit bears to the original monthly rent
set forth in paragraph 4 hereof. Lessor shall not be required to keep said
deposit separate from its general accounts. If Lessee performs all of Lessee's
obligations hereunder, said deposit, or so much thereof as has not theretofore
been applied by Lessor, shall be returned, without payment of interest or other
increment for its use, to Lessee (or, at Lessor's option, to the last assignee,
if any, of Lessee's interest hereunder) at the expiration of the term hereof,
and after Lessee ahs vacated the Premises. No trust relationship is created
herein between Lessor and Lessee with respect to said Security Deposit.
6. USE.
6.1 USE. The premises shall be used and occupied only for The operation of a
warehouse facility and corporate headquarters for a retail general merchandise
chain or any uses incidental and reasonably consistent therewith and for no
other purpose.
6.2 COMPLIANCE WITH THE LAW.
(a) Lessor makes absolutely no warranties or representations to Lessee that
the Premises, in its state existing on the date that the Lease term commences,
does not violate any covenants or restrictions of record, or any applicable
building code, regulation or ordinance in effect on such Lease term commencement
date.
(b) Except as provided in paragraph 6.2(a), Lessee shall, at Lessee's
expense, comply promptly with all applicable statutes, ordinances, rules,
regulations, orders, covenants and restrictions of record, and requirements in
effect during the term or any part of the term hereof, regulating the use by
Lessee of the Premises. Lessee shall not use nor permit the use of the Premises
in any manner that will tend to create waste or a nuisance or, if there shall be
more than one tenant in the building containing the Premises, shall tend to
disturb such other tenants.
6.3 CONDITION OF THE PREMISES.
(a) Lessor shall deliver the Premises to Lessee in their existing "as is"
condition with all faults (known and unknown).
(b) Except as otherwise provided in this Lease, Lessee hereby accepts the
Premises in their condition existing as of the Lease commencement date or the
date that Lessee takes possession of the Premises, whichever is earlier, subject
to all applicable zoning, municipal, county and state laws, ordinances and
regulations governing and regulating the use of the Premises, and any covenants
or restrictions of record, and accepts this Lease subject thereto and to all
matters disclosed thereby and by any exhibits attached hereto. Lessee
acknowledges that neither
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Lessor nor Lessor's agent has made any representation or warranty as to the
present or future suitability of the Premises for the conduct of Lessee's
business.
7. MAINTENANCE; REPAIRS; UTILITY INSTALLATIONS.
7.1 LESSEE'S OBLIGATIONS. Lessee shall keep in good order, condition and
repair the Premises and every part thereof, structural and non structural,
(whether or not such portion of the Premises requiring repair, or the means of
repairing the same are reasonably or readily accessible to Lessee, and whether
or not the need for such repairs occurs as a result of Lessee's use, any prior
use, the elements or the age of such portion of the Premises) including, without
limiting the generality of the foregoing, all plumbing, heating, air
conditioning, (Lessee shall procure and maintain, at Lessee's expense, an air
conditioning system maintenance contract) ventilating, electrical, lighting
facilities and equipment within the Premises, fixtures, walls (interior and
exterior), foundations, ceilings, roofs (interior and exterior), floors,
windows, doors, plate glass and skylights located within the Premises, and all
landscaping, driveways, parking lots, fences and signs located on the Premises
and sidewalks and parkways adjacent to the Premises.
7.2 SURRENDER. On the last day of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same condition
as when received, ordinary wear and tear excepted, clean and free of debris.
Lessee shall repair any damage to the Premises occasioned by the installation or
removal of Lessee's trade fixtures, furnishings and equipment. Notwithstanding
anything to the contrary otherwise stated in this Lease, Lessee shall leave the
air lines, power panels, electrical distribution systems, lighting fixtures,
space heaters, air conditioning, plumbing and fencing on the premises in good
operating condition.
7.3 LESSOR'S RIGHTS. If Lessee fails to perform Lessee's obligations under
this Paragraph 7, or under any other paragraph of this Lease, Lessor may at its
option (but shall not be required to) enter upon the Premises after ten (10)
days' prior written notice to Lessee (except in the case of an emergency, in
which case no notice shall be required), perform such obligations on Lessee's
behalf and put the same in good order, condition and repair, and the cost
thereof together with interest thereon at the maximum rate then allowable by law
shall become due and payable as additional rental to Lessor together with
Lessee's next rental installment.
7.4 LESSOR'S OBLIGATIONS. Except for the obligations of Lessor under
Paragraph 9 (relating to destruction of the Premises) and under Paragraph 14
(relating to condemnation of the Premises), it is intended by the parties hereto
that Lessor have no obligation, in any manner whatsoever, to repair and maintain
the Premises nor the building located thereon nor the equipment therein, whether
structural or no structural, all of which obligations are intended to be that of
the Lessee under Paragraph 7.1 hereof. Lessee expressly waives the benefit of
any statute now or hereinafter in effect which would otherwise afford Lessee the
right to make repairs at Lessor's expense or to terminate this Lease because of
Lessor's failure to keep the premises in good order, condition and repair.
7.5 ALTERATIONS AND ADDITIONS.
(a) Lessee shall not, without Lessor's prior written consent make any
alterations, improvements, additions, or Utility Installations in, on or about
the Premises, except for nonstructural alterations not exceeding $25,000.00 in
cumulative costs during any calendar year of the term of this Lease. In any
event, whether or not in excess of such cumulative cost, Lessee shall make no
change or alteration to the exterior of the Premises nor the exterior of the
building(s) on the Premises without Lessor's prior written consent. As used in
this Paragraph 7.5 the term "Utility Installation" shall mean carpeting, window
coverings, air lines, power panels, electrical distribution systems, lighting
fixtures, space heaters, air conditioning, plumbing, and fencing. Lessor may
require
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that Lessee remove any or all of said alterations, improvements, additions or
Utility Installations at the expiration of the term, and restore the Premises to
their prior condition. Lessor may require Lessee to provide Lessor at Lessee's
sole cost and expense, a lien and completion bond in an amount equal to one and
one-half times the estimated cost of such improvements, to insure Lessor against
any liability for mechanic's and materialmen's liens and to insure completion of
the work. Should Lessee make any alterations, improvements, additions or Utility
Installations without the prior approval of Lessor, Lessor may require that
Lessee remove any or all of the same.
(b) Any alterations, improvements, additions or Utility Installations in, or
about the Premises that Lessee shall desire to make and which requires the
consent of the Lessor shall be presented to Lessor in written form, with
proposed detailed plans. If Lessor shall give its consent, the consent shall be
deemed conditioned upon Lessee acquiring a permit to do so from appropriate
governmental agencies, the furnishing of a copy thereof to Lessor prior to the
commencement of the work and the compliance by Lessee of all conditions of said
permit in a prompt and expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or materials furnished
or alleged to have been furnished to or for Lessee at or for use in the
Premises, which claims are or may be secured by any mechanics' or materialmen's
lien against the Premises or any interest therein. Lessee shall give Lessor not
less than ten (10) days' notice prior to the commencement of any work in the
Premises, and Lessor shall have the right to post notices of non-responsibility
in or on the Premises as provided by law. If Lessee shall, in good faith,
contest the validity of any such lien, claim or demand, then Lessee shall, at
its sole expense defend itself and Lessor against the same and shall pay and
satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof against the Lessor or the Premises, upon the condition that
if Lessor shall require, Lessee shall furnish to Lessor a surety bond
satisfactory to Lessor in an amount equal to such contested lien claim or demand
indemnifying Lessor against liability for the same and holding the Premises free
from the effect of such lien or claim. In addition, Lessor may require Lessee to
pay Lessor's attorneys fees and costs in participating in such action if Lessor
shall decide it is to its best interest to do so.
(d) Unless Lessor requires their removal, as set forth in Paragraph 7.5(a),
all alterations, improvements, additions and Utility Installations (whether or
not such Utility Installations constitute trade fixtures of Lessee), which may
be made on the Premises, shall become the property of Lessor and remain upon and
be surrendered with the Premises at the expiration of the term. Notwithstanding
the provisions of this Paragraph 7.5(d), Lessee's machinery and equipment, other
than that which is affixed to the Premises so that it cannot be removed without
material damage to the Premises, shall remain the property of Lessee and may be
removed by Lessee subject to the provisions of Paragraph 7.2.
8. INSURANCE INDEMNITY.
8.1 INSURING PARTY. As used in this Paragraph 8, the term "insuring party"
shall mean the party who has the obligation to obtain the Property Insurance
required hereunder. The insuring party shall be designated in Paragraph 46
hereof. In the event Lessor is the insuring party, Lessor shall also maintain
the liability insurance described in paragraph 8.2 hereof, in addition to, and
not in lieu of, the insurance required to be maintained by Lessee under said
paragraph 8.2, but Lessor shall not be required to name Lessee as an additional
insured on such policy. Whether the insuring party is the Lessor or the Lessee,
Lessee shall, as additional rent for the Premises, pay the cost of all insurance
required hereunder. If Lessor is the insuring party Lessee shall, within ten
(10) days following demand by Lessor, reimburse Lessor for the cost of the
insurance so obtained.
8.2 LIABILITY INSURANCE. Lessee shall, at Lessee's expense obtain and keep
in force during the term of this Lease a policy of Combined Single Limit, Bodily
Injury and Property Damage
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insurance insuring Lessor and Lessee against any liability arising out of the
ownership, use, occupancy or maintenance of the Premises and all areas
appurtenant thereto. Such insurance shall be a combined single limit policy in
an amount not less than $2,000,000.00 per occurrence. The policy shall insure
performance by Lessee of the indemnity provisions of this Paragraph 8. The
limits of said insurance shall not, however, limit the liability of Lessee
hereunder.
8.3 PROPERTY INSURANCE.
(a) The insuring party shall obtain and keep in force during the term of
this Lease a policy or policies of insurance covering loss or damage to the
Premises, in the amount of the full replacement value thereof, as the same may
exist from time to time, which replacement value is now $11,000,000.00, but in
no event less than the total amount required by lenders having liens on the
Premises, against all perils included within the classification of fire,
extended coverage, vandalism, malicious mischief, flood (in the event same is
required by a lender having a lien on the Premises), and special extended perils
("all risk" as such term is used in the insurance industry). Said insurance
shall provide for payment of loss thereunder to Lessor or to the holders of
mortgages or deeds of trust on the Premises. The insuring party shall, in
addition, obtain and keep in force during the term of this Lease a policy of
rental value insurance covering a period of one year, with loss payable to
Lessor, which insurance shall also cover all real estate taxes and insurance
costs for said period. A stipulated value or agreed amount endorsement deleting
the coinsurance provision of the policy shall be procured with said insurance as
well as an automatic increase in insurance endorsement causing the increase in
annual property insurance coverage by 2% per quarter. If the insuring party
shall fail to procure and maintain said insurance the other party may, but shall
not be required to, procure and maintain the same, but at the expense of Lessee.
If such insurance coverage has a deductible clause, the deductible amount shall
not exceed $1,000 per occurrence, and Lessee shall be liable for such deductible
amount.
(b) If the Premises are part of a larger building, or if the Premises are
part of a group of building owned by Lessor which are adjacent to the Premises,
then Lessee shall pay for any increase in the property insurance of such other
building or buildings if said increase is caused by Lessee's acts, omissions,
use or occupancy of the Premises.
(c) If the Lessor is the insuring party the Lessor will not insure Lessee's
fixtures, equipment or tenant improvements unless the tenant improvements have
become a part of the Premises under paragraph 7, hereof. But if Lessee is the
insuring party the Lessee shall insure its fixtures, equipment and tenant
improvements.
8.4 INSURANCE POLICIES. Insurance required hereunder shall be in companies
holding a "General Policyholders Rating" of at least B plus, or such other
rating as may be required by a lender having a lien on the Premises, as set
forth in the most current issue of "Best's Insurance Guide." The insuring party
shall deliver to the other party copies of policies of such insurance or
certificates evidencing the existence and amounts of such insurance with loss
payable clauses as required by this paragraph 8. No such policy shall be
cancelable or subject to reduction of coverage or other modification except
after thirty (30) days' prior written notice to Lessor. If Lessee is the
insuring party Lessee shall, at least thirty (30) days prior to the expiration
of such policies, furnish Lessor with renewals or "binders" thereof, or Lessor
may order such insurance and charge the cost thereof to Lessee, which amount
shall be payable by Lessee upon demand. Lessee shall not do or permit to be done
anything which shall invalidate the insurance policies referred to in Paragraph
8.3. If Lessee does or permits to be done anything which shall increase the cost
of the insurance policies referred to in Paragraph 8.3, then Lessee shall
forthwith upon Lessor's demand reimburse Lessor for any additional premiums
attributable to any act or omission or operation of Lessee causing such increase
in the cost of insurance. If Lessor is the insuring party, and if the insurance
policies maintained hereunder cover other improvements in addition to the
Premises, Lessor shall deliver to Lessee a written statement
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setting forth the amount of any such insurance cost increase and showing in
reasonable detail the manner in which it has been computed.
8.5 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release and relieve
the other, and waive their entire right of recovery against the other for loss
or damage arising out of or incident to the perils insured against under
paragraph 8.3, which perils occur in, on or about the Premises, whether due to
the negligence of Lessor or Lessee or their agents, employees, contractors
and/or invitees. Lessee and Lessor shall, upon obtaining the policies of
insurance required hereunder, give notice to the insurance carrier or carriers
that the foregoing mutual waiver of subrogation is contained in this Lease.
8.6 INDEMNITY. Lessee shall indemnify and hold harmless Lessor from and
against any and all claims arising from Lessee's use of the Premises, or from
the conduct of Lessee's business or from any activity, work or things done,
permitted or suffered by Lessee in or about the Premises or elsewhere and shall
further indemnify and hold harmless Lessor from and against any and all claims
arising from any breach or default in the performance of any obligation on
Lessee's part to be performed under the terms of this Lease, or arising from any
negligence of the Lessee, or any of Lessee's agents, contractors, or employees,
and from and against all costs, attorney's fees, expenses and liabilities
incurred in the defense of any such claim or any action or proceeding brought
thereon; and in case any action or proceeding be brought against Lessor by
reason of any such claim, Lessee upon notice from Lessor shall defend the same
at Lessee's expense by counsel satisfactory to Lessor. Lessee, as a material
part of the consideration to Lessor, hereby assumes all risk of damage to
property or injury to persons, in, upon or about the Premises arising from any
cause and Lessee hereby waives all claims in respect thereof against Lessor.
8.7 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that Lessor
shall not be liable for injury to Lessee's business or any loss of income
therefrom or for damage to the goods, wares, merchandise or other property of
Lessee, Lessee's employees, invitees, customers, or any other person in or about
the Premises, nor shall Lessor be liable for injury to the person of Lessee,
Lessee's employees, agents or contractors, whether such damage or injury is
caused by or results from fire, steam, electricity, gas, water or rain, or from
the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures, or from any other
cause, whether the said damage or injury results from conditions arising upon
the Premises or upon other portions of the building of which the Premises are a
part, or from other sources or places and regardless of whether the cause of
such damage or injury or the means of repairing the same in inaccessible to
Lessee. Lessor shall not be liable for any damages arising from any act or
neglect of any other tenant, if any, of the building in which the Premises are
located.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "PREMISES PARTIAL DAMAGE" shall mean damage or destruction to the
Premises to the extent that the cost of repair is less than 50% of the then
replacement cost of the Premises. "Premises Building Partial Damage" shall
herein mean damage or destruction to the building of which the Premises are a
part to the extent that the cost of repair is less than 50% of the then
replacement cost of such building as a whole.
(b) "PREMISES TOTAL DESTRUCTION" shall herein mean damage or destruction to
the Premises to the extent that the cost of repair is 50% or more of the then
replacement cost of the Premises. "Premises Building Total Destruction" shall
herein mean damage or destruction to the building of which the Premises are a
part to the extent that the cost of repair is 50% or more of the then
replacement cost of such building as a whole.
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(c) "INSURED LOSS" shall herein mean damage or destruction which was caused
by an event required to be covered by the insurance described in paragraph 8.
9.2 PARTIAL DAMAGE - INSURED LOSS. Subject to the provisions of paragraphs
9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage
which is an Insured Loss and which falls into the classification of Premises
Partial Damage or Premises Building Partial Damage, then Lessor shall, at
Lessor's expense, repair such damage, but not Lessee's fixtures, equipment or
tenant improvements unless the same have become a part of the Premises pursuant
to Paragraph 7.5 hereof as soon as reasonably possible and this Lease shall
continue in full force and effect. Notwithstanding the above, if the Lessee is
the insuring party, and if the insurance proceeds received by Lessor are not
sufficient to effect such repair, Lessor shall give notice to Lessee of the
amount required in addition to the insurance proceeds to effect such repair.
Lessee shall contribute the required amount to Lessor within ten days after
Lessee has received notice from Lessor of the shortage in the insurance. When
Lessee shall contribute such amount to Lessor, Lessor shall make such repairs as
soon as reasonably possible and this Lease shall continue in full force and
effect. Lessee shall in no event have any right to reimbursement for any such
amounts so contributed.
9.3 PARTIAL DAMAGE - UNINSURED LOSS. Subject to the provisions of Paragraphs
9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage
which is not an Insured Loss and which falls into the classification of Premises
Partial Damage or Premises Building Partial Damage, unless caused by a negligent
or willful act of Lessee (in which event Lessee shall make the repairs at
Lessee's expense), Lessor may at Lessor's option either (i) repair such damage
as soon as reasonably possible at Lessor's expense, in which event this Lease
shall continue in full force and effect, or (ii) give written notice to Lessee
within thirty (30) days after the date of the occurrence of such damage of
Lessor's intention to cancel and terminate this Lease, as of the date of the
occurrence of such damage. In the event Lessor elects to give such notice of
Lessor's intention to cancel and terminate this Lease, Lessee shall have the
right within ten (10) days after the receipt of such notice to give written
notice to Lessor of Lessee's intention to repair such damage at Lessee's
expense, without reimbursement from Lessor, in which event this Lease shall
continue in full force and effect, and Lessee shall proceed to make such repairs
as soon as reasonably possible. If Lessee does not give such notice within such
10-day period this Lease shall be canceled and terminated as of the date of the
occurrence of such damage.
9.4 TOTAL DESTRUCTION. If at any time during the term of this Lease there is
damage, whether or not an Insured Loss, (including destruction required by an
authorized public authority), which falls into the classification of Premises
Total Destruction or Premises Building Total Destruction, this Lease shall
automatically terminate as of the date of such total destruction.
9.5 DAMAGE NEAR END OF TERM.
(a) If at any time during the last six months of the term of this Lease
there is damage, whether or not an Insured Loss, which falls within the
classification of Premises Partial Damage, Lessor may at Lessor's option cancel
and terminate this Lease as of the date of occurrence of such damage by giving
written notice to Lessee of Lessor's election to do so within 30 days after the
date of occurrence of such damage.
(b) Notwithstanding paragraph 9.5(a), in the event that Lessee has an option
to extend or renew this Lease, and the time within which said option may be
exercised has not yet expired, Lessee shall exercise such option, if it is to be
exercised at all, no later than 20 days after the occurrence of an Insured Loss
falling within the classification of Premises Partial Damage during the last six
months of the term of this Lease. If Lessee duly exercises such option during
said 20 day period, Lessor shall, at Lessor's expense, repair such damage as
soon as reasonably possible and this Lease shall continue in full force and
effect. If Lessee fails to exercise such option during said 20 day period, then
Lessor may at Lessor's option terminate and cancel this Lease as of the
expiration of
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said 20 day period by giving written notice to Lessee of Lessor's election to do
so within 10 days after the expiration of said 20 day period, notwithstanding
any term or provision in the grant of option to the contrary.
9.6 Abatement of Rent; Lessee's Remedies.
(a) In the event of damage described in paragraphs 9.2 or 9.3, and Lessor or
Lessee repairs or restores the Premises pursuant to the provisions of this
Paragraph 9, the rent payable hereunder for the period during which such damage,
repair or restoration continues shall be abated in proportion to the degree to
which Lessee's use of the Premises is impaired. Except for abatement of rent, if
any, Lessee shall have no claim against Lessor for any damage suffered by reason
of any such damage, destruction, repair or restoration. (b) If Lessor shall be
obligated to repair or restore the Premises under the provisions of this
Paragraph 9 and shall not commence such repair or restoration within 90 days
after such obligation shall accrue, Lessee may at Lessee's option cancel and
terminate this Lease by giving Lessor written notice of Lessee's election to do
so at any time prior to the commencement of such repair or restoration. In such
event this Lease shall terminate as of the date of such notice.
9.7 TERMINATION - ADVANCE PAYMENTS. Upon termination of this Lease pursuant
to this Paragraph 9, an equitable adjustment shall be made concerning advance
rent and any advance payments made by Lessee to Lessor. Lessor shall, in
addition, return to Lessee so much of Lessee's security deposit as has not
theretofore been applied by Lessor.
9.8 WAIVER. Lessor and Lessee waive the provisions of any statutes which
relate to termination of leases when leased property is destroyed and agree that
such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES
10.1 PAYMENT OF TAXES. Less shall pay the real property tax, as defined in
paragraph 10.2, applicable to the Premises during the term of this Lease. All
such payments shall be made at least ten (10) days prior to the delinquency date
of such payment. Lessee shall promptly furnish Lessor with satisfactory evidence
that such taxes have been paid. If any such taxes paid by Lessee shall cover any
period of time prior to or after the expiration of the term hereof, Lessee's
share of such taxes shall be equitably prorated to cover only the period of time
within the tax fiscal year during which this Lease shall be in effect, and
Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to
pay any such taxes, Lessor shall have the right to pay the same, in which case
Lessee shall repay such amount to Lessor with Lessee's next rent installment
together with interest at the maximum rate then allowable by law.
10.2 DEFINITION OF "REAL PROPERTY TAX." As used herein, the term "real
property tax" shall include any form of real estate or assessment, general,
special, ordinary or extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance, personal income
or estate taxes) imposed upon the Premises by any authority having the direct or
indirect power to tax, including any city, state or federal government, or any
school, agricultural, sanitary, fire, street, drainage or other improvement
district thereof, as against any legal or equitable interest of Lessor in the
Premises or in the real property of which the Premises are a part, as against
Lessor's right to rent or other income therefrom, and as against Lessor's
business of leasing the Premises. The term "real property tax" shall also
include any tax, fee, levy, assessment or charge (i) in substitution of,
partially or totally, any tax, fee, levy, assessment or charge hereinabove
included within the definition of "real property tax," or (ii) the nature of
which was hereinbefore included within the definition of "real property tax," or
(iii) which is imposed for a service or right not charged prior to
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June 1, 1978, or, if previously charged, has been increased since June 1, 1978,
or (iv) which is imposed as a result of a transfer, either partial or total, of
Lessor's interest in the Premises or which is added to a tax or charge
hereinbefore included within the definition of real property tax by reason of
such transfer, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.
10.3 JOINT ASSESSMENT. If the Premises are not separately assessed, Lessee's
liability shall be an equitable portion of the real property taxes for all of
the land and improvements included within the tax parcel assessed, such
proportion to be determined by Lessor from the respective valuations assigned in
the assessor's work sheets or such other information as may be reasonably
available. Lessor's reasonable determination thereof, in good faith, shall be
conclusive.
10.4 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed against and
levied upon trade fixtures, furnishings, equipment and all personal property of
Lessee contained in the Premises or elsewhere. When possible, Lessee shall cause
its said trade fixtures, furnishings, equipment and all other personal property
to be assessed and billed separately from the real property of Lessor.
(b) If any of Lessee's said property shall be assessed with Lessor's real
property, Lessee shall pay Lessor the taxes attributable to Lessee's property
within 10 days after receipt of a written statement setting forth the taxes
applicable to Lessee's property.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone, trash disposal and other utilities and services supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to Lessee, Lessee shall pay a reasonable proportion to be
determined by Lessor of all charges jointly metered with other premises.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by operation
of law assign, transfer, mortgage, sublet or otherwise transfer or encumber all
or any part of Lessee's interest in this Lease or in the Premises, without
Lessor's prior written consent, which Lessor shall not unreasonably withhold.
Lessor shall respond to Lessee's request for consent hereunder in a timely
manner and any attempted assignment, transfer, mortgage, encumbrance or
subletting without such consent shall be void, and shall constitute a breach of
this Lease.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph 12.1
hereof, Lessee may assign or sublet the Premises, or any portion thereof,
without Lessor's consent, to any corporation which controls, is controlled by or
is under common control with Lessee, or to any corporation resulting from the
merger or consolidation with Lessee, or to any person or entity which acquires
all the assets of Lessee as a going concern of the business that is being
conducted on the Premises, provided that said assignee assumes, in full, the
obligations of Lessee under this Lease. Any such assignment shall not, in any
way, affect or limit the liability of Lessee under the terms of this Lease even
if after such assignment or subletting the terms of this Lease are materially
changed or altered without the consent of Lessee, the consent of whom shall not
be necessary.
12.3 NO RELEASE OF LESSEE. Regardless of Lessor's consent, no subletting or
assignment shall release Lessee of Lessee's obligation or alter the primary
liability of Lessee to pay the rent and to perform all other obligations to be
performed by Lessee hereunder. The acceptance of rent by Lessor from any other
person shall not be deemed to be a waiver by Lessor of any provision hereof.
Consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or
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subletting. In the event of default by any assignee of Lessee or any successor
of Lessee, in the performance of any of the terms hereof, Lessor may proceed
directly against Lessee without the necessity of exhausting remedies against
said assignee. Lessor may consent to subsequent assignments or subletting of
this Lease or amendments or modifications to this Lease with assignees of Lessee
without notifying Lessee, or any successor of Lessee, and without obtaining its
or their consent thereto and such action shall not relieve Lessee of liability
under this Lease.
12.4 ATTORNEY'S FEES. In the event Lessee shall assign or sublet the
Premises or request the consent of Lessor to any assignment or subletting or if
Lessee shall request the consent of Lessor for any act Lessee proposes to do
then Lessee shall pay Lessor's reasonable attorneys fees incurred in connection
therewith, such attorneys fees not to exceed $350.00 for each such request.
13. DEFAULTS; REMEDIES.
13.1 DEFAULTS. The occurrence of any one or more of the following events
shall constitute a material default and breach of this Lease by Lessee.
(a) The vacating or abandonment of the Premises by Lessee.
(b) The failure by Lessee to make any payment of rent or any other payment
required to be made by Lessee hereunder, as and when due, where such failure
shall continue for a period of three days after written notice thereof from
Lessor to Lessee. In the event that Lessor serves Lessee with a Notice to Pay
Rent or Quit pursuant to applicable Unlawful Detainer statutes such Notice to
Pay Rent or Quit shall also constitute the notice required by this subparagraph.
(c) The failure by Lessee to observe or perform any of the covenants,
conditions or provisions of this Lease to be observed or performed by Lessee,
other than described in paragraph (b) above, where such failure shall continue
for a period of 30 days after written notice thereof from Lessor to Lessee;
provided, however, that if the nature of Lessee's default is such that more than
30 days are reasonably required for its cure, then Lessee shall not be deemed to
be in default if Lessee commenced such cure within said 30-day period and
thereafter diligently prosecutes such cure to completion.
(d) (i) The making by Lessee of any general arrangement for the benefit of
creditors: (ii) Lessee becomes a "debtor" as defined in 11 U.S.C. ss.101 or any
successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within 60 days); (iii) the appointment of a
trustee or receiver to take possession of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where possession
is not restored to Lessee within 30 days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Lessee's assets located at the
Premises or Lessee's interest in this Lease, where such seizure is not
discharged within 30 days. Provided, however, in the event that any provision of
this paragraph 13.1(d) is contrary to any applicable law, such provision shall
be of no force or effect.
(e) The discovery by Lessor that any financial statement given to Lessor by
Lessee, any assignee of Lessee, any subtenant of Lessee, any successor in
interest of Lessee or any guarantor of Lessee's obligation hereunder, and any of
them, was materially false.
13.2 REMEDIES. In the event of any such material default or breach by
Lessee, Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor may
have by reason of such default or breach:
(a) Terminate Lessee's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Lessee shall immediately
surrender
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possession of the Premises to Lessor. In such event Lessor shall be entitled to
recover from Lessee all damages incurred by Lessor by reason of Lessee's default
including, but not limited to, the cost of recovering possession of the
Premises; expenses of reletting, including necessary renovation and alteration
of the Premises, reasonable attorney's fees, and any real estate commission
actually paid; the worth at the time of award by the court having jurisdiction
thereof of the amount by which the unpaid rent for the balance of the term after
the time of such award exceeds the amount of such rental loss for the same
period that Lessee proves could be reasonably avoided; that portion of the
leasing commission paid by Lessor pursuant to Paragraph 15 applicable to the
unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this Lease shall
continue in effect whether or not Lessee shall have abandoned the Premises. In
such event Lessor shall be entitled to enforce all of Lessor's rights and
remedies under this Lease, including the right to recover the rent as it becomes
due hereunder.
(c) Pursue any other remedy now or hereafter available to Lessor under the
laws or judicial decisions of the state wherein the Premises are located. Unpaid
installments of rent and other unpaid monetary obligations of Lessee under the
terms of this Lease shall bear interest from the date due at the maximum rate
then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless Lessor fails
to perform obligations required of Lessor within a reasonable time, but in no
event later than thirty (30) days after written notice by Lessee to Lessor and
to the holder of any first mortgage or deed of trust covering the Premises whose
name and address shall have theretofore been furnished to Lessee in writing,
specifying wherein Lessor has failed to perform such obligation; provided,
however, that if the nature of Lessor's obligation is such that more than thirty
(30) days are required for performance then Lessor shall not be in default if
Lessor commences performance within such 30-day period and thereafter diligently
prosecutes the same to completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by Lessee to
Lessor of rent and other sums due hereunder will cause Lessor to incur costs not
contemplated by this Lease, the exact amount of which will be extremely
difficult to ascertain. Such costs include, but are not limited to, processing
and accounting charges, and late charges which may be imposed on Lessor by the
terms of any mortgage or trust deed covering the Premises. Accordingly, if any
installment of rent or any other sum due from Lessee shall not be received by
Lessor or Lessor's designee within ten (10) days after such amount shall be due,
then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a
late charge equal to 6% of such overdue amount. The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs Lessor
will incur by reason of late payment by Lessee. Acceptance of such late charge
by Lessor shall in no event constitute a waiver of Lessee's default with respect
to such overdue amount, nor prevent Lessor from exercising any of the other
rights and remedies granted hereunder. In the event that a late charge is
payable hereunder, whether or not collected, for three (3) consecutive
installments of rent, then rent shall automatically become due and payable
quarterly in advance, rather than monthly, notwithstanding paragraph 4 or any
other provision of this Lease to the contrary.
13.5 IMPOUNDS. In the event that a late charge is payable hereunder, whether
or not collected, for three (3) installments of rent or any other monetary
obligation of Lessee under the terms of this Lease, Lessee shall pay to Lessor,
if Lessor shall so request, in addition to any other payments required under
this Lease, a monthly advance installment, payable at the same time as the
monthly rent, as estimated by Lessor, for real property tax and insurance
expenses on the Premises which are payable by Lessee under the terms of this
Lease. Such fund shall be established to insure payment when due, before
delinquency, of any or all such real property taxes and insurance premiums. If
the amounts paid to Lessor by Lessee under the provisions of this paragraph are
insufficient to discharge the obligations of Lessee to pay such real property
taxes and insurance premiums as the same become due, Lessee shall pay to Lessor,
upon Lessor's demand, such additional sums necessary to pay
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such obligations. All the obligations of Lessee to perform under this Lease,
then any balance remaining from funds paid to Lessor under the provisions of
this paragraph may, at the option of Lessor, be applied to the payment of any
monetary default of Lessee in lieu of being applied to the payment of real
property tax and insurance premiums.
14. CONDEMNATION. If the Premises or any portion thereof are taken under the
power of eminent domain, or sold under the threat of the exercise of said power
(all of which are hereinafter called "condemnation"), this Lease shall terminate
as to the part so taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the floor area of the
building on the Premises, or more than 25% of the land area of the Premises
which is not occupied by any building, is taken by condemnation, Lessee may, at
Lessee's option, to be exercised in writing only within ten (10) days after
Lessor shall have given Lessee written notice of such taking (or in the absence
of such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning authority
takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the
portion of the building situated on the Premises. No reduction of rent shall
occur if the only area taken is that which does have a building located thereon.
Any award for the taking of all or any part of the Premises under the power of
eminent domain or any payment made under threat of the exercise of such power
shall be the property of Lessor, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Lessee shall be entitled
to any award for loss of or damage to Lessee's trade fixtures and removable
personal property. In the event that this Lease is not terminated by reason of
such condemnation, Lessor shall to the extent of severance damages received by
Lessor in connection with such condemnation, repair any damage to the Premises
caused by such condemnation except to the extent that Lessee has been reimbursed
therefore by the condemning authority. Lessee shall pay any amount in excess of
such severance damages required to complete such repair.
15. BROKER'S FEE.
(a) Upon execution of this Lease by both parties, Lessor shall pay a N/A
Licensed real estate broker(s), a fee as set forth in a separate agreement
between Lessor and said broker(s), or in the event there is no separate
agreement between Lessor and said broker(s), the sum of $ N/A , for brokerage
services rendered by said broker(s) to Lessor in this transaction.
(b) Lessor further agrees that if Lessee exercises any Option as defined in
paragraph 39.1 of this Lease, which is granted to Lessee under this Lease or any
subsequently granted option which is substantially similar to an Option granted
to Lessee under this Lease, or if Lessee acquires any rights to the Premises or
other premises described in this Lease which are substantially similar to what
Lessee would have acquired had an Option herein granted to Lessee been
exercised, or if Lessee remains in possession of the Premises after the
expiration of the term of this Lease after having failed to exercise an Option,
or if said broker(s) are the procuring cause of any other lease or sale entered
into between the parties pertaining to the Premises and/or any adjacent property
in which Lessor has an interest, then as to any of said transactions, Lessor
shall pay said broker(s) a fee in accordance with the schedule of said broker(s)
in effect at the time of execution of this Lease.
(c) Lessor agrees to pay said fee not only on behalf of Lessor but also on
behalf of any person, corporation, association, or other entity having an
ownership interest in said real property or any part thereof, when such fee is
due hereunder. Any transferee of Lessor's
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interest in this Lease, whether such transfer is by agreement or by operation of
law, shall be deemed to have assumed Lessor's obligation under this Paragraph
15. Said broker shall be a third party beneficiary of the provisions of this
Paragraph 15.
16. ESTOPPEL CERTIFICATE.
(a) Lessee shall at any time upon not less than ten (10) days' prior written
notice from Lessor execute, acknowledge and deliver to the Lessor a statement in
writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not, to Lessee's knowledge, any uncured defaults on
the part of Lessor hereunder, or specifying such defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
or encumbrancer of the Premises.
(b) At Lessor's option, Lessee's failure to deliver such statement within
such time shall be a material breach of this Lease or shall be conclusive upon
Lessee (i) that this Lease is in full force and effect, without modification
except as may be represented by Lessor, (ii) that there are no uncured defaults
in Lessor's performance, and (iii) that not more than one month's rent has been
paid in advance or such failure may be considered by Lessor as a default by
Lessee under this Lease.
(c) If Lessor desires to finance, refinance, or sell the Premises, or any
part thereof, Lessee hereby agrees to deliver to any lender or purchaser
designated by Lessor such financial statements of Lessee as may be reasonably
required by such lender or purchaser. Such statements shall include the past
three years' financial statements of Lessee. All such financial statements shall
be received by Lessor and such lender or purchaser in confidence and shall be
used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean only the
owner or owners at the time in question of the fee title or a lessee's interest
in a ground lease of the Premises, and except as expressly provided in Paragraph
15, in the event of any transfer of such title or interest, Lessor herein named
(and in case of any subsequent transfers then the grantor) shall be relieved
from and after the date of such transfer of all liability as respects Lessor's
obligations thereafter to be performed, provided that any funds in the hands of
Lessor or the then grantor at the time of such transfer, in which Lessee has an
interest, shall be delivered to the grantee. The obligations contained in this
Lease to be performed by Lessor shall, subject as aforesaid, be binding on
Lessor's successors and assigns, only during their respective periods of
ownership.
18. SEVERABILITY. The invalidity of any provision of this Lease as determined by
a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein provided, any
amount due to Lessor not paid when due shall bear interest at the maximum rate
then allowable by law from the date due. Payment of such interest shall not
excuse or cure any default by Lessee under this Lease, provided, however, that
interest shall not be payable on late charges incurred by Lessee nor on any
amounts upon which late charges are paid by Lessee.
20. TIME OF ESSENCE. Time is of the essence.
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21. ADDITIONAL RENT. Any monetary obligations of Lessee to Lessor under the
terms of this Lease shall be deemed to be rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease contains all
agreements of the parties with respect to any matter mentioned herein. No prior
agreement or understanding pertaining to any such matter shall be effective.
This Lease may be modified in writing only, signed by the parties in interest at
the time of the modification. Except as otherwise stated in this Lease, Lessee
hereby acknowledges that neither the real estate broker listed on Paragraph 15
hereof nor any cooperating broker on this transaction nor the Lessor or any
employee or agents of any of said persons has made any oral or written
warranties or representations to Lessee relative to the condition or use by
Lessee of said Premises and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use and
adaptability of the Premises and the compliance thereof with all applicable laws
and regulations in effect during the term of this Lease except as otherwise
specifically stated in this Lease.
23. NOTICES. Any notice required or permitted to be given hereunder shall be in
writing and may be given by personal delivery or by certified mail, and if given
personally or by mail, shall be deemed sufficiently given if addressed to Lessee
or to Lessor at the address noted below the signature of the respective parties,
as the case may be. Either party may by notice to the other specify a different
address for notice purposes. A copy of all notices required or permitted to be
given to Lessor hereunder shall be concurrently transmitted to such party or
parties at such addresses as Lessor may from time to time hereafter designate by
notice to Lessee.
24. WAIVERS. No waiver by Lessor or any provision hereof shall be deemed a
waiver of any other provision hereof or of any subsequent breach by Lessee of
the same or any other provision. The acceptance of rent hereunder by Lessor
shall not be a waiver of any preceding breach by Lessee of any provision hereof,
other than the failure of Lessee to pay the particular rent so accepted,
regardless of Lessor's knowledge of such preceding breach at the time of
acceptance of such rent.
25. RECORDING. Either Lessor or Lessee shall, upon request of the other,
execute, acknowledge and deliver to the other a "short form" memorandum of this
Lease for recording purposes.
26. HOLDING OVER. If Lessee, with Lessor's consent, remains in possession of the
Premises or any part thereof after the expiration of the term hereof, such
occupancy shall be a tenancy from month to month upon all the provisions of this
Lease pertaining to the obligations of Lessee, but all options and rights of
first refusal, if any, granted under the terms of this Lease shall be deemed
terminated and be of no further effect during said month to month tenancy.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. COVENANTS AND CONDITIONS. Each provision of this Lease performable by Lessee
shall be deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof restricting
assignment or subletting by Lessee and subject to the provisions of Paragraph
17, this Lease shall bind
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the parties, their personal representatives, successors and assigns. This Lease
shall be governed by the laws of the State wherein the Premises are located.
30. SUBORDINATION.
(a) This Lease, at Lessor's option, shall be subordinate to any ground
lease, mortgage, deed of trust, or other hypothecation or security now or
hereafter placed upon the real property of which the Premises are a part and to
any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of this
Lease, unless this Lease is otherwise terminated pursuant to its terms. If any
mortgagee, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice thereof to Lessee, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease or the date of
recording thereof.
(b) Lessee agrees to execute any documents required to effectuate an
attornment, a subordination or to make this Lease prior to the lien of any
mortgage, deed of trust or ground lease, as the case may be. Lessee's failure to
execute such documents within 10 days after written demand shall constitute a
material default by Lessee hereunder, or, at Lessor's option, Lessor shall
execute such documents on behalf of Lessee as Lessee's attorney-in-fact. Lessee
does hereby make, constitute and irrevocably appoint Lessor as Lessee's
attorney-in-fact and in Lessee's name, place and stead, to execute such
documents in accordance with this paragraph 30(b).
31. ATTORNEY'S FEES. If either party or the broker named herein brings an action
to enforce the terms hereof or declare rights hereunder, the prevailing party in
any such action, on trial or appeal, shall be entitled to his reasonable
attorney's fees to be paid by the losing party as fixed by the court. The
provisions of this paragraph shall inure to the benefit of the broker named
herein who seeks to enforce a right hereunder.
32. LESSOR'S ACCESS. Lessor and Lessor's agents shall have the right to enter
the Premises at reasonable times for the purpose inspecting the same, showing
the same to prospective purchasers, lenders, or lessees, and making such
alterations, repairs, improvements or additions to the Premises or to the
building of which they are a part as Lessor may deem necessary or desirable.
Lessor may at any time place on or about the Premises an ordinary "For Sale"
signs and Lessor may at any time during the last 120 days of the term hereof
place on the Premises any ordinary "For Lease" signs, all without rebate of rent
or liability to Lessee.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted, either
voluntarily or involuntarily, any auction upon the Premises without first having
obtained Lessor's prior written consent. Notwithstanding anything to the
contrary in this Lease, Lessor shall not be obligated to exercise any standard
of reasonableness in determining whether to grant such consent.
34. SIGNS. Lessee shall not place any sign upon the Premises without Lessor's
prior written consent except that Lessee shall have the right, without the prior
permission of Lessor to place ordinary and usual for rent or sublet signs
thereon.
35. MERGER. The voluntary or other surrender of this Lease by Lessee, the mutual
cancellation thereof, or a termination hereof by Lessor, shall not work a
merger, and shall, at the
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option of Lessor, terminate all or any existing subtenancies or may, at the
option of Lessor, operate as an assignment to Lessor of any or all of such
subtenancies.
36. CONSENTS. Except for paragraph 33 hereof, wherever in this Lease the consent
of one party is required to an act of the other party such consent shall not be
unreasonably withheld.
37. GUARANTOR. In the event that there is a guarantor of this Lease, said
guarantor shall have the same obligations as Lessee under this Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises and observing
and performing all of the covenants, conditions and provisions on Lessee's part
to be observed and performed hereunder, Lessee shall have quiet possession of
the Premises for the entire term hereof subject to all of the provisions of this
Lease. The individuals executing this Lease on behalf of Lessor represent and
warrant to Lessee that they are fully authorized and legally capable of
executing this Lease on behalf of Lessor and that such execution is binding upon
all parties holding an ownership interest in the Premises.
39. OPTIONS.
39.1 DEFINITION. As used in this paragraph the word "Options" has the
following meaning: (1) the right or option to extend the term of this Lease or
to renew this Lease or to extend or renew any lease that Lessee has on other
property of Lessor; (2) the option or right of first refusal to lease the
Premises or right of first offer to lease the Premises or the right of first
refusal to lease other property of Lessor or the right of first offer to lease
other property of Lessor; (3) the right or option to purchase the Premises, or
the right of first refusal to purchase the Premises, or the right of first offer
to purchase the Premises or the right or option to purchase other property of
Lessor, or the right of first refusal to purchase other property of Lessor or
the right of first offer to purchase other property of Lessor.
39.2 OPTIONS PERSONAL. Each Option granted to Lessee in this Lease are
personal to Lessee and may not be exercised or be assigned, voluntarily or
involuntarily, by or to any person or entity other than Lessee, provided,
however, the Option may be exercised by or assigned to any Lessee Affiliate as
defined in paragraph 12.2 of this Lease. The Options herein granted to Lessee
are not assignable separate and apart from this Lease.
39.3 MULTIPLE OPTIONS. In the event that Lessee has any multiple options to
extend or renew this Lease a later Option cannot be exercised unless the prior
option to extend or renew this Lease has been so exercised.
39.4 EFFECT OF DEFAULT ON OPTIONS.
(a) Lessee shall have no right to exercise an Option, notwithstanding any
provision in the grant of Option to the contrary, (i) during the time commencing
from the date Lessor gives to Lessee a notice of default pursuant to paragraph
13.1(b) or 13.1(c) and continuing until the default alleged in said notice of
default is cured, (ii) during the period of time commencing on the day after a
monetary obligation to Lessor is due from Lessee and unpaid (without any
necessity for notice thereof to Lessee) continuing until the obligation is paid,
or (iii) at any time after an event of default described in paragraphs 13.1(a),
13.1(d), or 13.1(e) (without any necessity of Lessor to give notice of such
default to Lessee), or (iv) in the event that Lessor has given to Lessee three
or more notices of such defaults under paragraph 13.1(b),where a late charge has
become payable under paragraph 13.4 for each of such defaults, or paragraph
13.1(c), whether or not the defaults are cured, during the 12 month period to
the time that Lessee intends to exercise the subject Option.
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(b) The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee's inability to exercise an Option
because of the provisions of Paragraph 39.4(a).
(c) All rights of Lessee under the provisions of an Option shall terminate
and be of no further force or effect, notwithstanding Lessee's due and timely
exercise of the Option, if, after such exercise and during the term of this
Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a
period of 30 days after such obligation becomes due (without any necessity of
Lessor to give notice thereof to Lessee), or (ii) Lessee fails to commence to
cure a default specified in paragraph 13.1(c) within 30 days after the date that
Lessor gives notice to Lessee of such default and/or Lessee fails thereafter to
diligently prosecute said cure to completion, or (iii) Lessee commits a default
described in paragraph 13.1(a), 13.1(d) or 13.1(e) (without any necessity of
Lessor to give notice of such default to Lessee), or (iv) Lessor give to Lessee
three or more notices of default under paragraph 13.1(b), where a late charge
becomes payable under paragraph 13.4 for each such default, or paragraph
13.19c), whether or not the defaults are cured.
40. MULTIPLE TENANT BUILDING. In the event that the Premises are part of a
larger building or group of buildings then Lessee agrees that it will abide by,
keep and observe all reasonable rules and regulations which Lessor may make from
time to time for the management, safety, care, and cleanliness of the building
and grounds, the parking of vehicles and the preservation of good order therein
as well as for the convenience of other occupants and tenants of the building.
The violations of any such rules and regulations shall be deemed a material
breach of this Lease by Lessee.
41. SECURITY MEASURES. Lessee hereby acknowledges that the rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
Lessee assumes all responsibility for the protection of Lessee, its agents and
invitees from acts of third parties.
42. EASEMENTS. Lessor reserves to itself the right, from time to time, to grant
such easements, rights and dedications that Lessor deems necessary or desirable,
and to cause the recordation of Parcel Maps and restrictions, so long as such
easements, rights, dedications, Maps and restrictions do not unreasonably
interfere with the use of the Premises by Lessee. Lessee shall sign any of the
aforementioned documents upon request of Lessor and failure to do so shall
constitute a material breach of this Lease.
43. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one party to the other under the provisions
hereof, the party against whom the obligation to pay the money is asserted shall
have the right to make payment "under protest" and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay under the provisions of this
Lease.
44. AUTHORITY. If Lessee is a corporation, trust, or general or limited
partnership, each individual executing this Lease on behalf of such entity
represents and warrants that he or she is duly authorized to execute and deliver
this Lease on behalf of said entity. If Lessee is a corporation, trust or
partnership, Lessee shall, within thirty (30) days after execution of this
Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.
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45. CONFLICT. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.
46. INSURING PARTY. The insuring party under this lease shall be the Lessor.
47. ADDENDUM. Attached hereto is an addendum or addenda containing paragraphs 48
through 55 which constitutes a part of this Lease.
LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN AND, BY THE EXECUTION OF THIS LEASE, SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.
IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO
YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE
BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE
BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING
THERETO, THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL
COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.
The parties hereto have executed this Lease at the place and on the dates
specified adjacent to their respective signatures.
Executed at Commerce, CA
on October 1, 2000
By: /S/ JEFF GOLD
--------------------------------
Address: Jeff Gold, Senior Vice President
4000 East Union pacific Avenue
Commerce, CA 90023 By: /S/ ANDY FARINA
ATTN: Vice President Real Estate --------------------------------
Andy Farina, CFO
"LESSOR" (Corporate seal)
Executed at Commerce, CA
on October 1, 2000
By: /S/ DAVID GOLD
--------------------------------
Address: David Gold, President
c/o 99(cent)Only Stores
4000 East Union Pacific Avenue By: /S/ SHERRY GOLD
Commerce, CA 90023 --------------------------------
ATTN: President Sherry Gold, Authorized
Representative
"LESSEE" (Corporate seal)
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Addendum To Lease
This Addendum to Lease ("Addendum") dated October 1, 2000 is made with reference
(and is incorporated therein) to that certain Standard Industrial Lease
("Lease") dated October 1, 2000 by and between 99(cent) Only Stores ("Lessor")
and Universal International ("Lessee") with respect to those certain premises
commonly known as 905 Yankee Doodle Road, Eagan, Minnesota ("Premises"). The
term "Lease Body" shall refer to pages 1-6 of the Lease. In the event of any
conflict between the terms of the Lease Body of the Lease and the terms of this
Addendum, this Addendum shall control as to and to the extent of such conflict.
Any capitalized terms used herein this Addendum and not otherwise defined in
this Addendum shall have the same meaning as in the Lease Body, the term
"Addendum" shall refer to this Addendum, and the term "Lease" shall refer to the
entire Lease (initially, the Lease Body and the Addendum).
48. Subject to the provisions of paragraph 39, Lessee shall have the Option
to terminate this Lease effective any time on or before June 30, 2002, provided
that a) Lessee gives Lessor written notice of such election (specifying the
effective date of such termination) at least ninety (90) days in advance of the
effective date of termination (but in no event may such notice be given after
December 31, 2001) and b) Lessee has not elected any of its Options under
paragraph 49, 50, or 51 below.
49. Subject to the provisions of paragraph 39, Lessee shall have the Option
to extend the term of this Lease for a single period of five (5) years (ending
January 31, 2011), provided that a) Lessee gives Lessor written notice of such
election at least one (1) year in advance of the end of the term of the Lease
before such election and b) Lessee has not elected any of its Options under
paragraphs 48, 50, or 51 hereof.
50. Subject to the provisions of paragraph 39, Lessee shall have the Option
to purchase the Premises (including Lessor's parcel(s) of land applicable
thereto and the Included Pers. Prop.) with a recording date of on or before
December 31, 2001 for an all cash net (net of any closing costs) purchase price
of ten million dollars ($10,000,000), provided that a) Lessee notifies Lessor of
such election no later than October 31, 2001, b) Lessor has not (at the time of
Lessee's notice of election) notified Lessee of Lessor's receipt of any
acceptable third party offer to purchase such Premises as described in paragraph
51 below, c) such purchase is reasonably necessary (in Lessee's reasonable
opinion) for the original Lessee's (or a party who is acquiring at least ten
(10) such stores from the original Lessee for the purposes of continuing to
operate substantially all of such stores) warehousing and distribution for a
chain of retail discount general merchandise stores commonly known as
Odd's-N-End's and/or Only Deals and d) Lessee has not elected any of its Options
under paragraphs 48, 50, or 51 hereof. Lessee shall notify Lessor of its
election to so purchase the Premises by delivering the American Industrial Real
Estate Association's "Standard Offer, Agreement and Escrow Instructions for
Purchase of Real Estate" (8 legal sized pages, form "OFA-3-2/98") incorporated
herein by reference, fully initialed, signed, unmodified, with the provided
blanks completed consistent herewith and otherwise for their intended purposes,
and with the following:
(a) Title Company & Escrow to be Commonwealth Land Title Company, or stating
Buyer's preference, but specifying "or otherwise reasonably acceptable to
Seller".
(b) 1.1 Expected Closing date to be no later than October 31, 2001 and no
more than sixty (60) days after the date that Lessee delivers the offer to
Lessor.
(c) 2.3 to include the Included Pers. Prop.
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(d) 3.1 to be $10,000,000.00.
(e) 3.1c & d to be stricken.
(f) 4.1 to be $100,000.00.
(g) 5, 6 & 7 to be stricken.
(h) 8.5, Buyer to pay all closing costs.
(i) 9.1 a, b, c, d, e, g, h, i, j, l, q to be stricken.
(j) 11.1 No tax pro-ration, as Buyer is responsible for property taxes
before and after close of escrow.
(k) 11.3 Any unpaid Rent or other charges under the Lease shall be charged
to Lessee/Buyer through escrow.
(l) 12.1 b, c, d, j, to be stricken.
(m) 12.1, all of Seller's representations and warranties (except a & k)
shall be limited to the actual knowledge of the individual designed by the
Seller to be the generally most knowledgeable about the Premises as a whole
(without duty of inquiry) and such representations shall have no effect where
Lessee did not reasonably act in reliance thereupon or which Lessee had
knowledge of or reasonable suspicion of facts to the contrary.
(n) 17.1, the purchase agreement (including the closing of escrow and/or the
recording of the deed) does (do) not terminate any of Lessee's obligations under
the Lease accruing prior to the date of recording.
(o) 21, $100,000, to be initialed.
(p) 22, to be initialed.
(q) 26, none.
51. Subject to the provisions of paragraph 39, Lessee shall have the Option
to elect to purchase the Premises for a period of ten (10) business days
following notice from Lessor to Lessee that Lessor has received an acceptable
"offer" (whether a binding offer or a credible non-binding letter of intent) to
purchase the Premises (which notice shall identify the purchase price, closing
timeframe, and allocation of closing costs of such offer) from Lessor for the
same purchase price, closing timeframe, and closing costs of such offer,
provided that a) Lessee gives Lessor written notice of such election no later
than five (5) business days following receipt of such notice from Lessor and d)
Lessee has not elected any of its Options under paragraphs 48, 50, or 51 hereof.
The contract and procedures for any such purchase shall be as provided in
paragraph 50 above, except that the purchase price, closing date, and closing
costs shall be established by this paragraph 51. Lessor shall have no obligation
to notify Lessee of any such acceptable offer (and may freely sell the Premises)
when: a) Lessee would not have this Option pursuant to paragraph 39 of the
Lease, b) the offer is received after October 31, 2001, and/or c) the sale is to
a party owned and/or controlled by a Lessor Affiliate of the then-current Lessor
(however such sale would not invalidate this paragraph 51 with respect to future
sales/offers). A Lessor Affiliate includes any party that is directly or
indirectly owned or controlled (to a majority extent) by Lessor, which owns
and/or controls directly or indirectly a majority of Lessor,
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which directly or indirectly has (to a majority extent) common ownership of
control with Lessor, and/or any entity which acquires substantially all of
Lessor's real estate holdings or assets.
52. This Lease is what is commonly referred to as a "NNN" or "Triple Net"
lease and Lessee is responsible for the maintenance, repairs, and code required
upgrades/alterations of all of the Premises, including, but not limited to, the
buildings, fixtures improvements, parking areas, lights, utility connections,
code compliance, etc. Lessor shall have no obligations in connection therewith,
except as provided in Section 9 (Damage or Destruction) or Section 14
(Condemnation.)
53. Lessee has been the occupant of the Premises for many months. Lessee
knows as much about the Premises as does Lessor. To the broadest possible extent
that this sentence can be interpreted, Lessor makes absolutely no
representations or warranties with respect to the Premises or the Lease.
54. As used herein, the term "HAZMAT" shall mean any substance or condition
(liquid, solid, vapor, radiation, or otherwise) that is classified as hazardous,
dangerous, poisonous, carcinogenic, etc. and shall generally include all
substances which would be included in a broad definition of hazardous materials
by a large institutional lender. Lessee shall not bring any HAZMAT (or allow any
other party to do so) onto, under, above, or within the Premises, except those
which are a) incidental to Lessee's permitted use of the Premises, b) typical in
connection with Lessee's permitted use (packaged for retail sale and/or
reasonably used in the maintenance and/or operation of the Premises), c) are in
strict compliance with all laws, rules, regulations of governmental and
quasi-governmental entities and insurance companies and underwriting boards, and
d) do not violate any other provision of this Lease. Lessee shall not install
(or allow any other party to do so) any underground storage tanks on, in or
about the Premises. No above-ground storage tanks shall be installed without
Lessor's prior written consent. Lessee shall indemnify and hold Lessor harmless
from any violations of the provisions of this paragraph 54. In connection with
any suspected violations of this paragraph 54 or otherwise in connection with
HAZMAT, Lessor shall have the right to enter upon the Premises to conduct tests
and/or investigations with HAZMAT, Lessor shall have the right to enter upon the
Premises to conduct tests and/or investigations (which Lessee shall cooperate
with) at Lessee's expense (when due to Lessee's violation of this paragraph 54).
Neither Lessee nor Lessor shall be responsible to each other for the abatement
of any HAZMAT present prior to Lessee's occupancy of the Premises or for any
damages caused thereby to each other or to any third party, unless such damages
are caused by Lessee's failure to act in a commercially reasonable manner with
respect to the use, maintenance and operation of the Premises. If Lessor elects
to abate any HAZMAT, Lessee shall reasonably cooperate therewith and shall get
no Rent abatement in connection therewith.
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55. If Lessee has any early termination rights under Paragraph 48 hereof at
the time of any Premises Partial Damage, such damage shall subject the Lease to
termination under Paragraph 9.5(a), unless Lessee notifies Lessor (within ten
(10) days after such Premises Partial Damage) of Lessee's election to thereafter
permanently waive its rights under paragraph 48 hereof. If Lessee does so elect
to waive its rights under paragraph 48, then the rights and obligations in
connection with such Premises Partial Damage shall be governed by the otherwise
applicable provisions of Section 9, except that Lessor's time period to elect to
cancel and terminate the Lease under Paragraph 9.3 shall be extended from thirty
(30) days to forty (40) days.
Lessor: Lessee:
/S/ JEFF GOLD /S/ DAVID GOLD
-------------------------- -----------------------------
Jeff Gold David Gold
/S/ ANDY FARINA /S/ SHERRY GOLD
-------------------------- -----------------------------
Andy Farina Sherry Gold
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