<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended March 31, 1997
or
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition Period From _______________ to ________________.
Commission file number 333-05060C
EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
-----------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1771946
--------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
607 West Travelers Trail
Burnsville, Minnesota 55337
---------------------------------------- -----------
(Address of principal executive offices) (Zip code)
(612) 894-9229
------------------------------------------
Issuer's telephone number
Not Applicable
--------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes /X/ No / /
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: Common Stock, $.01 par
value -- 8,817,500 issued and outstanding as of May 1, 1997. Series A
Convertible Preferred Stock, $.01 par value -- 4,600,000 issued and
outstanding as of May 1, 1997.
Transitional Small Business Disclosure Format (check one): Yes / / No /X/
<PAGE>
EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
QUARTERLY REPORT ON FORM 10-QSB
PART I. FINANCIAL INFORMATION PAGE NO.
--------
Item 1. Financial Statements:
Balance Sheets as of March 31, 1997
(Unaudited) and December 31, 1996 3
Statements of Operations (Unaudited)
for the Three Months Ended
March 31, 1996 and 1997 and Cumulative
for the Period from Inception
(December 22, 1993) to March 31, 1997 4
Statements of Cash Flows (Unaudited)
for the Three Months Ended
March 31, 1996 and 1997 and Cumulative
for the Period from Inception
(December 22, 1993) to March 31, 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9
PART II. OTHER INFORMATION 12
SIGNATURES 14
2
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
(A DEVELOPMENT STAGE COMPANY)
Balance Sheets
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,376,601 $ 4,168,785
Short-term investments 4,044,992 4,044,992
Other current assets 9,119 87,165
------------ -----------
Total current assets 9,430,712 8,300,942
PROPERTY AND EQUIPMENT, net of accumulated depreciation of
$76,250 and $93,296 229,082 253,612
INTELLECTUAL PROPERTY, to be amortized 135,384 156,609
OTHER ASSETS 228,222 313,756
------------ -----------
$ 10,023,400 $ 9,024,919
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 123,236 $ 140,474
Accrued liabilities 198,751 160,876
Note payable 70,086 67,002
------------ -----------
Total current liabilities 392,073 368,352
------------ -----------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY:
Series A Convertible Preferred Stock, 10,000,000 shares authorized,
par value of $.01; 4,600,000 shares issued and outstanding 46,000 46,000
Common Stock, 25,000,000 shares authorized, par value of $.01;
8,805,500 and 8,817,500 shares issued and outstanding 83,246 83,366
Additional paid-in capital 13,637,869 13,652,749
Deficit accumulated during the development stage (4,135,788) (5,125,548)
------------ -----------
Total stockholders' equity 9,631,327 8,656,567
------------ -----------
$ 10,023,400 $ 9,024,919
------------ -----------
------------ -----------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE>
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
(A DEVELOPMENT STAGE COMPANY)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Cumulative for the
March 31 Period From Inception
------------------------- (December 22, 1993) to
1996 1997 March 31, 1997
---------- ---------- -----------------------
<S> <C> <C> <C>
PREOPERATING EXPENSES:
Research and development $ 252,157 $ 477,108 $ 2,560,811
General and administrative 155,322 318,070 1,737,822
Marketing 95,426 283,376 1,116,722
---------- ---------- -----------
Total preoperating expenses 502,905 1,078,554 5,415,355
INTEREST INCOME 18,335 90,482 308,230
INTEREST EXPENSE (561) (1,688) (18,423)
---------- ---------- -----------
NET LOSS $ (485,131) $ (989,760) $(5,125,548)
---------- ---------- -----------
NET LOSS PER COMMON
SHARE $(.06) $(.11) $(.70)
---------- ---------- -----------
---------- ---------- -----------
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING 8,767,258 8,808,300 7,294,863
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Cumulative for the Period
Three Months Ended March 31 From Inception
------------------------------- (December 22, 1993) to
1996 1997 March 31, 1997
------------ ------------ ------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (485,131) $ (989,760) $ (5,125,548)
Adjustments to reconcile net loss to net cash used
in operating activities-
Depreciation 6,750 17,046 93,296
Change in current assets and liabilities:
Other current assets (5,853) (78,046) (87,165)
Accounts payable (10,516) 17,238 140,474
Accrued liabilities (2,045) (37,875) 160,876
------------ ------------ ------------
Net cash used in operating activities (496,795) (1,071,397) (4,818,067)
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchases of short-term investments, net (12,000) - (4,044,992)
Property and equipment additions (39,691) (41,576) (341,898)
Payments made for intellectual property (8,035) (21,225) (156,609)
Change in other assets - (85,534) (313,756)
------------ ------------ ------------
Net cash used in investing activities (59,726) (148,335) (4,857,255)
------------ ------------ ------------
FINANCING ACTIVITIES:
Proceeds from notes payable - - 205,095
Repayment of notes payable (2,331) (3,084) (63,093)
Proceeds from issuance of Series A Convertible
Preferred Stock, net of offering expenses - - 10,314,000
Proceeds from issuance of common stock, net of
offering expenses 62,500 15,000 3,388,105
------------ ------------ ------------
Net cash provided by financing activities 60,169 11,916 13,844,107
------------ ------------ ------------
Net increase (decrease) in cash and cash
equivalents (496,352) (1,207,816) 4,168,785
CASH AND CASH EQUIVALENTS:
Beginning of period 788,419 5,376,601 -
------------ ------------ ------------
End of period $ 292,067 $ 4,168,785 $ 4,168,785
------------ ------------ ------------
------------ ------------ ------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 561 $ 1,687 $ 17,732
Noncash transactions-
Conversion of note payable into common stock - - 75,000
Issuance of common stock for services 62,500 - 125,000
Issuance of common stock in settlement of
construction payable - - 5,010
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
(A DEVELOPMENT STAGE COMPANY)
Notes to Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION:
The accompanying balance sheet of Excelsior Henderson Motorcycle
Manufacturing Company (the Company) as of March 31, 1997 and the statements
of operations for the three months ended March 31, 1996 and 1997, and
cumulative for the period from inception (December 22, 1993) to March 31,
1997 and the statements of cash flows for the three months ended March 31,
1996 and 1997 and cumulative for the period from inception (December 22,
1993) to March 31, 1997, have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at March 31, 1997 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996. The results of operations for the three
months ended March 31, 1997 are not necessarily indicative of the operating
results for the full fiscal year.
2. NET LOSS PER COMMON SHARE:
Net loss per common share for all periods presented is computed using the
weighted average number of common shares outstanding. Shares reserved for
the conversion of Series A Convertible Preferred Stock, warrants or stock
options are not considered because the impact of the incremental shares is
antidilutive.
3. STOCKHOLDERS' EQUITY:
STOCK BASED COMPENSATION
In 1995, the Company implemented a stock option plan (the Plan). Under the
terms of the Plan, the Company is authorized to issue incentive stock options
to employees, directors, advisors and officers. The incentive options allow
the holder to purchase a share of the Company's common stock at fair market
value (as determined by the board of directors) on the date of the grant. For
options granted to holders of more than 10% of the outstanding common stock,
the option price at the date of the grant must be at least equal to 110% of
the fair market value of the stock. One million shares have been reserved
for issuance under the Plan. The stock options expire between a range of
four and ten years from the date of grant and vest at various rates over five
years.
Nonqualified stock options have also been granted to outside service
providers under the Plan and as stand-alone agreements. The stock options
have been granted at fair market value as determined by the board of
directors at the date of the grant. The stock options expire between a range
of four and ten years from the date of grant and vest at various rates over
two years.
6
<PAGE>
Information regarding stock options is as follows:
<TABLE>
<CAPTION>
December 31, 1996 March 31, 1997
------------------------- -----------------------
Weighted Weighted
Average Average
Exercise Exercise
Options Shares Price Shares Price
- -------------------------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Outstanding, beginning of
period 26,500 $ .99 616,400 $1.24
Granted 619,900 1.25 213,000 2.50
Exercised (30,000) 1.25 (12,000) 1.25
Forfeited - - (100,000) 1.25
---------- ------------ ---------- ------------
Outstanding, end of period 616,400 $1.24 717,400 $1.61
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Exercisable, end of period 222,400 $1.22 235,400 $1.22
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Weighted average fair
value of options granted $.72 $1.58
---------- ----------
---------- ----------
</TABLE>
Options outstanding at March 31, 1997 have an exercise price per share
ranging between $0.60 and $2.50, have a weighted average price of $1.61 and a
weighted average remaining contractual life of 8.25 years.
The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1996 and 1997, respectively: risk-free
interest rates of 6.95% and 6.15%; expected lives of 7 and 9 years; and
expected volatility of 40% for both periods.
The Company accounts for the Options under APB Opinion No. 25, under which no
compensation cost has been recognized. Had compensation cost for the Options
been determined consistent with Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation," the Company's net
loss and net loss per common share would have been the following pro forma
amounts:
<TABLE>
<CAPTION>
Cumulative for the Period From
Three Months Inception
Ended (December 22, 1993)
March 31, to March 31,
1997 1997
------------ ------------------------------
<S> <C> <C>
Net loss:
As reported $ 989,760 $5,125,548
Pro forma 1,019,786 5,418,094
Net loss per common share:
As reported $.11 $.70
Pro forma .12 .74
</TABLE>
Pro forma net loss and net loss per common share for the three months ended
March 31, 1996 would have been substantially unchanged from what has been
reported.
7
<PAGE>
4. COMMITMENTS AND CONTINGENCIES:
On April 21, 1997, the Company signed a construction agreement and a lease
agreement with a real estate development company and commenced construction
of a manufacturing and administrative facility with an estimated cost of
$10,500,000, exclusive of equipment costs. The project is being financed
with $2,300,000 of tax increment financing bonds to be issued by the City of
Belle Plaine, Minnesota, $5,750,000 (including a $750,000 deposit) of
mortgaged-backed debt to be arranged by the developer with the balance of
approximately $3,200,000 provided by the Company. To finance repayment of
the tax increment financing bonds, the Company has guaranteed the underlying
real estate tax payments on the property. The Company anticipates recording
the transaction as a capital lease upon completion and acceptance of the
facility.
The lease for the facility has an initial term of 20 years with two
additional 10-year renewal options. Rent for the first 20 years will be
equal to the debt service on the $5,750,000 mortgaged-backed debt, using a
20-year amortization, plus a ten percent premium (escalating during the lease
term to roughly offset inflation). Rent for the 10-year renewal options is
based on the grater of fair market value at the date of renewal or formula
rent, as defined in the lease agreement. The lease contains an option to
purchase the facility at the five-year anniversary for $6,250,000, less any
principal reduction in the $5,000,000 debt and application of the $750,000
deposit.
5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT:
In March 1997, the Financial Accounting Standards Board issued SFAS No. 128
"Earnings per Share," which changes the way companies calculate their
earnings per share (EPS). SFAS No. 128 replaces primary EPS with basic EPS
and fully diluted EPS with diluted EPS. Basic EPS is computed by dividing
reported loss by the weighted average shares outstanding, excluding
potentially dilutive securities while diluted EPS includes the dilutive
securities. The Company is required to adopt SFAS No. 128 in 1997, at which
time, all prior period EPS data is to be restated. Primary EPS, as reported,
is the same as basic and diluted EPS for all periods presented because shares
reserved for the conversion of Series A Convertible Preferred Stock, warrants
or stock options are not considered in the weighted average common shares
outstanding as the impact of the incremental shares is antidilutive.
8
<PAGE>
EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
THE INFORMATION PRESENTED BELOW IN MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS CONTAINS FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF THE SAFE HARBOR PROVISIONS OF SECTION 21E OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH STATEMENTS ARE SUBJECT
TO RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED UNDER "FORWARD-LOOKING
STATEMENTS" BELOW, THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE PROJECTED. BECAUSE ACTUAL RESULTS MAY DIFFER, READERS ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. CERTAIN
FORWARD-LOOKING STATEMENTS ARE INDICATED BY AN ASTERISK.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
Excelsior-Henderson Motorcycle Manufacturing Company (the "Company"),
which is in the development stage, is designing and intends to mass produce
American made, proprietary, premium quality, heavyweight cruiser and touring
motorcycles. * The Company's motorcycles will have names and designs that are
reminiscent of classic American heavyweight motorcycles manufactured earlier
in this century by the Excelsior Supply Company and Henderson Motorcycle
Company. The Company has developed several generations of prototypes of its
initial motorcycle, a heavyweight cruiser named the Excelsior-Henderson Super
X (the "Super X") and anticipates commencing production of the Super X in
late 1998. * The Company anticipates relocating its operations to its
manufacturing and administrative facility, which is currently under
construction, during late 1997. *
RESULTS OF OPERATIONS
GENERAL. The Company is in the development stage and its operations are
subject to all of the risks inherent in the establishment of a new business
enterprise, including the risk that full-scale operations may not occur. The
Company does not anticipate having motorcycle sales until late 1998. * The
Company's deficit accumulated during the development stage was $5.1 million
at March 31, 1997. Historic spending levels are not indicative of
anticipated future spending levels because the Company is entering a period
in which it will increase spending on product research and development,
marketing, and dealer network development and increase staffing and other
general operating expenses. * For these reasons, the Company believes its
expenses, losses, and deficit accumulated during the development stage will
increase significantly before any material product sales are generated. *
THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased to $477,000 for the three months ended March 31, 1997 from $252,000
for the three months ended March 31, 1996. The increases were primarily due
to increased product design and development costs, as well as the costs of
prototype development.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses increased to $318,000 for the three months ended March 31, 1997 from
$155,000 for the three months ended March 31, 1996. The increases were
primarily due to staffing increases and other general operating expenses.
MARKETING EXPENSES. Marketing expenses increased to $283,000 for the
three months ended March 31, 1997 from $95,000 for the three months ended
March 31, 1996. The increases were primarily due to staffing increases,
increased advertising and promotion costs and expenses associated with the
Company's promotional event at the 1997 Daytona Bike Week.
INTEREST INCOME. Interest income increased to $90,000 for the three
months ended March 31, 1997 from $18,000 for the three months ended March 31,
1996. The increase generally reflects interest earned on increased
9
<PAGE>
average levels of cash, cash equivalents and short-term investments held by
the Company resulting from the proceeds of the sale of the Company's Series A
Convertible Preferred Stock during 1996. Unless the Company raises
additional funds in 1997, interest income is expected to decline as a result
of a decrease in invested funds because of the use of such funds to finance
the Company's development efforts. *
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations since inception have been funded primarily by
proceeds from sales of its capital stock. As of March 31, 1997, the Company
had cash, cash equivalents and short-term investments of $8.2 million and
working capital of $7.9 million.
The Company anticipates raising an additional $30 million from the
offering of its capital stock sometime during 1997 to complete development of
the Super X, establish its motorcycle production line, continue its marketing
efforts, hire and train additional personnel, launch the production and
delivery to dealers of the Super X and cover general operating expenses and
working capital requirements. *
On April 21, 1997, the Company signed a Construction Agreement and a
Lease Agreement with a real estate development company and commenced
construction of its approximately 160,000 square foot manufacturing and
administrative facility, with an estimated cost of $10,500,000, exclusive of
equipment costs. The project is being financed with $2,300,000 of tax
increment financing bonds to be issued by the City of Belle Plaine,
Minnesota, $5,750,000 (including a $750,000 deposit) of mortgaged-backed debt
to be arranged by the developer with the balance of approximately $3,200,000
provided by the Company. To finance repayment of the tax increment financing
bonds, the Company has guaranteed the underlying real estate tax payments on
the property. The Company anticipates recording the transaction as a capital
lease upon completion and acceptance of the facility.
The lease for the facility has an initial term of 20 years with two
additional 10-year renewal options. Rent for the first 20 years will be
equal to the debt service on the $5,575,000 mortgage-backed debt, using a 20
year amortization, plus a 10 percent premium (escalating during the lease
term to roughly offset inflation). Rent for the 10 year renewal options is
based on the greater of fair market value at the date of renewal or formula
rent, as defined in the Lease Agreement. The lease contains an option to
purchase the facility at the five year anniversary for $6,250,000 less any
principal reduction in the $5,000,000 debt and application of the $750,000
deposit.
In addition, the Minnesota Department of Trade and Economic Development,
through the Minnesota Agriculture and Economic Development Board, has
offered, subject to further approvals, to loan approximately $7.0 million for
equipment financing through its Small Business Development Loan Program, with
terms subject to final negotiation.
The Company's business plan calls for additional equipment purchases and
working capital needs prior to commencement of production of the Super X.
The Company believes that its available cash resources, the proceeds from its
anticipated capital stock offering, the proceeds the Company anticipates
receiving from the Minnesota Department of Trade and Economic Development for
equipment financing and commercial asset-backed and working capital
financing, will allow the Company to begin production of the Super X. *
EMPLOYEES
As of May 9, 1997, the Company had 25 full-time employees. The Company
is not subject to any collective bargaining agreement. The Company
anticipates adding supervisory, engineering and manufacturing, marketing and
administrative staff as the Company moves from the development stage to the
production stage. * The timing and extent of the Company's hiring will
depend on the pace of development of the Super X and the construction of the
Company's manufacturing and administrative facility.
10
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements made in this Annual Report on Form 10-QSB, including those
indicated by an asterisk above (some of which are summarized below), are
forward-looking statements within the meaning of the safe harbor provisions
of Section 21E of the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties, and actual results may differ. Factors that
could cause actual results to differ include those identified below.
- - COMPANY INTENDS TO COMMENCE PRODUCTION OF THE SUPER X IN LATE 1998 --
Production of the Super X, and any additional motorcycles the Company may
produce, is dependent upon the successful completion of many items of the
Company's business plan, including obtaining the additional financing
described in "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources", the
construction of the Company's administrative and manufacturing facility,
establishing a motorcycle production line, engaging suppliers to
manufacture components of the Company's products, hiring additional
engineering and production personnel and the ability of the Company's
engineering and production staff to successfully design and mass produce
the prototype Super X. Factors that may affect the successful completion
of such items include the inability to raise the amount of additional
financing needed, delays in the construction of, or other problems with
the Company's administrative and manufacturing facility, problems in
establishing the motorcycle production line, the inability of the Company
to locate competent suppliers or obtain adequate quantities of supplies,
the inability to hire qualified additional personnel and the inability of
the Company's engineering and production staff to design, engineer and
produce the Super X. In addition, production of the Super X will require
certain governmental certifications and approvals, which the Company may
not be able to obtain within the contemplated time period.
- - COMPANY ANTICIPATES RELOCATING TO ITS MANUFACTURING AND ADMINISTRATIVE
FACILITY, WHICH IS CURRENTLY UNDER CONSTRUCTION, DURING LATE 1997 -- The
construction of the Company's administrative and manufacturing facility
by late 1997 is dependent on the completion of the facility financing
described under "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources"
and the ability of the real estate development company to complete the
facility within such time frame. If such financing is delayed or not
received, or if the real estate development company is unable to meet its
construction obligations, the construction of the facility will be
similarly delayed, or may not occur at all.
- - THE COMPANY BELIEVES THAT ITS AVAILABLE CASH RESOURCES, TOGETHER WITH THE
PROCEEDS OF ITS ANTICIPATED CAPITAL STOCK OFFERING, IN ADDITION TO THE
FINAL PROCEEDS THE COMPANY ANTICIPATES RECEIVING FROM THE MINNESOTA
DEPARTMENT OF TRADE AND ECONOMIC DEVELOPMENT FOR EQUIPMENT FINANCING AND
COMMERCIAL ASSET-BACKED AND WORKING CAPITAL FINANCING, WILL ALLOW THE
COMPANY TO BEGIN PRODUCTION OF THE SUPER X. -- The Company has estimated
the amount of additional financing it needs to begin production of the
Super X based on current projections of the Company. In addition, there
can be no assurances that commercial asset-backed and working capital
financing will be available to the Company. If the Company's projections
are incorrect due to unanticipated additional costs of construction and
equipping of the Company's manufacturing and administrative facility,
unanticipated problems in the development of the Super X for production,
increased labor costs, increased costs of motorcycle parts and raw
materials, increased marketing and dealer network development expenses,
increased rates of consumption of available cash resources, or other
unanticipated events, or if the Company is not able to obtain such
commercial asset-backed and working capital financing or the anticipated
Minnesota Department of Trade and Economic Development financing is not
completed, then the Company may need additional equity or debt financing
in excess of $30 million to begin production of the Super X. There can
be no assurance that the Company will be able to obtain such additional
financing, or that, if available, such financing will be on terms
acceptable to the Company or its shareholders. Any need for such
additional financing would delay production of the Super X.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
The following exhibits are filed as part of this Quarterly Report on
Form 10-QSB for the quarterly period ended March 31, 1997:
Exhibit Description
- ------- -----------
3.1 Restated Articles of Incorporation of Company.(1)
3.2 Amended and Restated Certificate of Designation of Series A
Convertible Preferred Stock.(2)
3.3 By-Laws of the Company.(3)
10.1 Lease Agreement between Kraus-Anderson, Incorporated and the
Company dated March 1, 1994.(1)
10.2 First Amendment to Lease between Kraus-Anderson, Incorporated
and the Company dated January 18, 1996.(1)
10.3 Second Amendment to Lease between Kraus-Anderson, Incorporated
and the Company dated December 6, 1996.(2)
10.4 Contract for Private Development by and among City of Belle
Plaine, Minnesota and Belle Plaine Economic Development
Authority Belle Plaine, Minnesota and the Company dated
as of December 31, 1996.(2)
10.5 Assignment, Assumption and Amendment of Development Contract
by and among the City of Belle Plaine, Minnesota, Belle Plaine
Economic Authority, Belle Plaine, Minnesota, the Company, and
Ryan Belle Plaine, LLC dated April 21, 1997
10.6 Lease Agreement between Ryan Belle Plaine, LLC and the
Company dated April 21, 1997
10.7 Construction Agreement by and between Ryan Belle Plaine,
LLC and the Company dated April 21, 1997
- --------------------------------
(1) Incorporated by reference to the like numbered Exhibit to the Company's
Registration Statement on Form SB-2 filed with the Commission on June 17,
1996 (Registration No. 333-05060C).
(2) Incorporated by reference to the like numbered Exhibit to the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1996
(Registration No. 333-05060C).
(3) Incorporated by reference to the like numbered Exhibit to Amendment No. 1
to the Company's Registration Statement on Form SB-2 filed with the
Commission on July 23, 1996 (Registration No. 333-05060C).
12
<PAGE>
10.8 Guaranty by Ryan Companies US, Inc. in favor of the
Company dated April 21, 1997
10.9 Amended and Restated 1995 Stock Option Plan
27.1 Financial Data Schedule
Copies of Exhibits will be furnished upon request and payment of the
Company's reasonable expenses in furnishing the Exhibits.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the quarterly
period ended March 31, 1997.
<PAGE>
EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
DATE: May 14, 1997 By: /s/ Thomas M. Rootness
---------------------------------
Thomas M. Rootness,
Vice President of Finance
and Chief Financial Officer
(Duly authorized officer and
Principal Financial Officer)
14
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C> <C>
3.1 Restated Articles of Incorporation of Company. . . . . . Incorporated by Reference
3.2 Amended and Restated Certificate of Designation
of Series A Convertible Preferred Stock. . . . . . . . . Incorporated by Reference
3.3 By-Laws of the Company . . . . . . . . . . . . . . . . . Incorporated by Reference
10.1 Lease Agreement between Kraus-Anderson,
Incorporated and the Company dated March 1, 1994 . . . . Incorporated by Reference
10.2 First Amendment to Lease between Kraus-Anderson,
Incorporated and the Company dated January 18, 1996. . . Incorporated by Reference
10.3 Second Amendment to Lease between Kraus-Anderson,
Incorporated and the Company dated December 6, 1996. . . Incorporated by Reference
10.4 Contract for Private Development by and among
City of Belle Plaine, Minnesota and Belle Plaine
Economic Development Authority, Belle Plaine,
Minnesota and the Company dated as of December 31,
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . Incorporated by Reference
10.5 Assignment, Assumption and Amendment of Development
Contract by and among the City of Belle Plaine,
Minnesota, Belle Plaine Economic Authority,
Belle Plaine, Minnesota, the Company, and Ryan
Belle Plaine, LLC dated April 21, 1997 . . . . . . . . . Filed Electronically
10.6 Lease Agreement between Ryan Belle Plaine, LLC
and the Company dated April 21, 1997 . . . . . . . . . . Filed Electronically
10.7 Construction Agreement by and between Ryan Belle
Plaine, LLC and the Company dated April 21, 1997 . . . . Filed Electronically
10.8 Guaranty by Ryan Companies US, Inc. in favor of
the Company dated April 21, 1997 . . . . . . . . . . . . Filed Electronically
10.9 Amended and Restated 1995 Stock Option Plan. . . . . . . Filed Electronically
27.1 Financial Data Schedule. . . . . . . . . . . . . . . . . Filed Electronically
</TABLE>
<PAGE>
ASSIGNMENT, ASSUMPTION AND AMENDMENT
OF DEVELOPMENT CONTRACT
THIS AGREEMENT is made and entered into this 21st day of April, 1997, by
and among the CITY OF BELLE PLAINE, MINNESOTA, a Minnesota municipal
corporation (the "City"), the BELLE PLAINE ECONOMIC DEVELOPMENT AUTHORITY,
BELLE PLAINE, MINNESOTA, a Minnesota public body corporate and politic (the
"Authority"), EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY, a
Minnesota corporation (the "Company"), and RYAN BELLE PLAINE, LLC, a
Minnesota limited liability company ("Ryan").
RECITALS
A. The City, the Authority and the Company entered into a Contract for
Private Development dated December 31, 1996 (the "Development Contract"),
pertaining to the development of a motorcycle manufacturing facility on the
property located in the City which is described in Exhibit 1 attached hereto.
The Development Contract was recorded in the office of the Scott County
Recorder as Document No. 385970.
B. The Company wishes to assign the Development Contract to Ryan, which
will construct and own such facility and lease it to the Company.
C. The parties also wish to amend the Development Contract in certain
respects.
D. Capitalized terms which are used but not defined herein have the
meanings ascribed to them in the Development Contract.
AGREEMENT
NOW THEREFORE, in consideration of the mutual terms and provisions of
this Agreement, the parties hereby agree as follows:
1. ASSIGNMENT AND ASSUMPTION. The Company hereby assigns and transfers
unto Ryan all of its rights and interests as the Developer under the
Development Contract. Ryan hereby accepts such assignment and assumes and
agrees to keep and perform all of the obligations of the Developer under the
Development Contract to be performed subsequent to the date hereof, except
that Ryan does not assume, and the Company shall remain solely liable for,
the obligations of the Developer under Sections 3.9 and 6.4 of the
Development Contract (the "Company Obligations"). The City and the Authority
hereby consent to such assignment and agree that, except as provided in
Section 2 hereof, only the Company, and not Ryan or its successors or
assigns, shall be liable for the payment and performance of the Company
Obligations. The City and the Authority hereby release the Company from
liability for the performance of the obligations of the Developer under the
Development Contract to be performed subsequent to the date hereof, except
the Company Obligations. If after issuance of a Certificate of Completion for
the Minimum Improvements, the Company assigns its leasehold interest in the
Development Property, the City and the Authority will release the Company
from further liability for the Company Obligations provided that the assignee
agrees to assume the
<PAGE>
same. The City and the Authority acknowledge that they have approved the
leasing of the Development Property to the Company and that nothing in the
Development Contract prohibits or limits the Company's ability to assign,
sublet or transfer its leasehold interest, whether before or after the
issuance of a Certificate of Completion for the Minimum Improvements;
provided that before issuance of the Certificate of Completion, no such
assignment by the Company shall release the Company from the Company
Obligations unless such release is approved by the Authority and the City in
accordance with Section 8.2(b) of the Development Contract.
2. LIMITED TAX INCREMENT GUARANTY BY RYAN. Notwithstanding the
provisions to the contrary contained in Section 1 hereof, if the lease of the
Minimum Improvements by Ryan to the Company is hereafter terminated and the
Minimum Improvements are thereafter leased to a party other than the Company
(whether or not the lessee occupies such property) or are occupied by a party
other than the Company, then Ryan shall become liable for the obligations of
the Developer under Section 6.4 of the Development Contract to the following
extent. If on the date which is 10 days prior to any semi-annual scheduled
payment date for principal or interest on the TIF Bonds the Minimum
Improvements are fully leased to or occupied by a party or parties other than
the Company (including, without limitation, Ryan), then Ryan shall be liable
for and shall pay to the Authority the full amount of any deficiency in Tax
Increment or Additional City and County Taxes necessary to make such
semi-annual principal or interest payment. If the Minimum Improvements are
partially leased to or occupied by a party or parties other than the Company
on any such date, then Ryan shall only be liable for that part of the
deficiency that bears the same ratio to the total amount thereof as the
amount of leased or occupied square feet of space in the Minimum Improvements
bears to the total number of square feet of space therein. For the purposes
of this Section 2, the Minimum Improvements or any portion thereof will be
deemed "occupied" by a party (including, without limitation, Ryan) if the
party uses the Minimum Improvements or portion thereof in connection with
any trade or business, including, without limitation, manufacturing,
warehousing, distribution, office or any commercial use. The obligations of
Ryan under this Section 2 shall run with the land and be binding upon all
future owners of the Development Property. However, Ryan and each future
owner shall only be liable for those obligations hereunder which arise during
their respective periods of ownership. The Authority agrees that the Company
shall have no liability under Section 6.4 of the Development Contract with
respect to the amounts which are payable by Ryan pursuant to this Section 2.
3. AMENDMENTS. The Development Contract shall be and hereby is amended
as follows:
(a) In paragraph 3.2(a), clause (2) is deleted in its entirety, and the
following clause is substituted in place thereof: "(2) The
conditions precedent to issuance of the Taxable TIF Bonds described
in Section 3.7(b) hereof, except for the closing on Developer's
financing, have been satisfied; and". Also, the last sentence of
paragraph 3.2(a) is deleted in its entirety, and the following
sentence is substituted in place thereof: "Provided that all
conditions specified in this Section 3.2(a) have been satisfied, the
closing of the conveyance of the Development Property from the
Authority to the Developer shall occur on such date as Developer may
elect by giving not less than five (5) days' prior written notice to
the Authority, or such other date as the Authority and the Developer
agree upon in writing."
2
<PAGE>
(b) The following paragraph is added to Section 3.5:
"(e) If the Developer requests the City to give the
Commencement Notice described in the Public Improvements
Agreement prior to the closing on its construction financing
for the Minimum Improvements, then it will pay all amounts
which become payable by the City pursuant to the terms of the
Public Improvements Agreement prior to such closing. Within
ten (10) days after such closing, the City will reimburse the
Developer for all amounts so paid."
(c) Paragraphs 3.7(c) and (d) are deleted in their entirety, and in
place thereof is substituted the following:
"(c) The Developer agrees that, upon closing of the conveyance
of the Development Property to Developer, it will pay the
amount owing to Seller under the Purchase Money Note. The net
proceeds of the Taxable TIF Bonds shall be allocated to
reimburse Developer for costs of acquiring the Development
Property in the amount of $590,000 (including $100,000 paid by
the Developer as earnest money under the Letter Agreement and
$490,000 paid by the Developer to satisfy the Purchase Money
Note) and to reimburse the Developer for its Site Improvement
Costs documented in accordance with Section 3.6 hereof,
together with other closing costs paid by Developer under
Section 3.1(c) hereof, in the amount of $1,100,000 for a total
reimbursement of $1,690,000 (the "Reimbursement Amount").
(d) Upon the closing of the sale of the Taxable TIF Bonds, the
Reimbursement Amount shall be placed in escrow with a third
party and disbursed to reimburse the Developer for its costs
in acquiring the Development Property and its documented costs
incurred in constructing the Site Improvements, together with
other closing costs paid by Developer under Section 3.1(c)
hereof; provided, however, that before such escrowed funds are
released the Developer shall first have paid from its separate
equity funds at least $1,450,000 of other costs in
constructing the Minimum Improvements."
3
<PAGE>
(d) Paragraph 3.7(e) is revised to read as follows:
"(e) The City and the Authority warrant and represent
that the TIF Bonds shall have a final stated maturity
of not later than February 1, 2015, and shall mature
and be payable in such manner as shall provide
approximately level debt service thereon for the years
2000 through 2008."
(e) The following sentence is added to Paragraph 3.7(f):
"However, for so long as Excelsior-Henderson Motorcycle
Manufacturing Company is the lessee of the Development
Property, no such financing shall be provided without its
approval."
(f) The following clause is added at the end of Section 5.2: ", or under
any mortgage covering all or any part of the Development Property
which is granted subsequent to the issuance of a Certificate of
Completion for the Minimum Improvements."
(g) The first paragraph of Section 7.3 is modified to read as follows:
"Section 7.3. SUBORDINATION AND MODIFICATION FOR THE BENEFIT
OF MORTGAGEE. In order to facilitate the Developer obtaining
financing for purchase of the Development Property and for
construction according to the Construction Plans, the
Authority agrees to subordinate all of its rights under this
Agreement including, but not limited to Section 9.3 herein, to
the Holder of the Mortgage and any mortgage covering all or
any part of the Development Property that is granted
subsequent to the issuance of a Certificate of Completion for
the Minimum Improvements, provided the Development Property
remains subject to the Assessment Agreement, which shall be
prior to and not subordinate to the Mortgage and any
subsequent mortgage, and further provided that the
subordination of the Authority's rights under this Agreement
shall be subject to such reasonable terms and conditions as
the Authority and Holder of a Mortgage or mortgagee under any
subsequent mortgage mutually agree in writing."
(h) The following sentence is added at the end of Section 9.1:
"Any such notice of default will also be given by the
Authority or City to Excelsior-Henderson Motorcycle
Manufacturing Company, and it shall have the same opportunity
to cure the default as is afforded to the
4
<PAGE>
Developer hereunder before an Event of Default shall exist."
(i) Paragraph 10.6(a) is deleted in its entirety, and in place thereof
is substituted the following:
"(a) in the case of Developer, is addressed to or delivered
personally to the Developer at 700 International Centre, 900
Second Avenue South, Minneapolis, MN 55402; Attn: Timothy M.
Gray; with a copy to Excelsior-Henderson Motorcycle
Manufacturing Company; and"
The following is added as Paragraph 10.6(c):
"(c) in the case of Excelsior-Henderson Motorcycle
Manufacturing Company, is addressed to or delivered
personally to it at 607 West Traveler's Trail, Burnsville,
Minnesota 55337; Attn: Dan Hanlon."
(j) The following sentence is added to the end of Section 10.10:
"So long as the lease of the Development Property to it is
in effect, any amendment must also be executed by
Excelsior-Henderson Motorcycle Manufacturing Company."
(k) The first paragraph of Section 1 of the Limited Warranty Deed which
is attached as Schedule B is modified to read as follows:
"It is understood and agreed that this Deed is subject to
the covenants, conditions, restrictions and provisions of
an agreement entered into between the City of Belle Plaine,
Minnesota (the "City"), Grantor and Excelsior-Henderson
Motorcycle Manufacturing ("Excelsior-Henderson") on the
31st day of December, 1996, and filed in the office of
Scott County Recorder on January 10, 1997 as Document
No. 385970, identified as "Contract for Private
Development," which agreement was assigned by
Excelsior-Henderson to Grantee and modified in certain
respects by that certain Assignment, Assumption and
Amendment of Development Contract entered into by the City,
Grantor, Excelsior-Henderson and Grantee, dated as of
____________, 1997, and filed in the office of the Scott
County Recorder on ______________, 1997 as Document
No. _______, hereafter identified as the "Assignment"
(hereinafter, the term "Agreement" refers to the Contract
for Private Development as
5
<PAGE>
assigned and modified by the Assignment), and that the
Grantee shall not convey this Property, or any part
thereof, except as permitted by the Agreement until a
certificate of completion releasing the Grantee from
certain obligations of said Agreement as to this Property,
or such part thereof then to be conveyed, has been placed
of record. This provision, however, shall in no way prevent
the Grantee from mortgaging this Property in order to
obtain funds for the purchase of the Property hereby
conveyed or for erecting improvements thereon in conformity
with the Agreement, any applicable development program and
applicable provisions of the zoning ordinance of the City
of Belle Plaine, Minnesota, or for the refinancing of the
same."
(l) Paragraph (c) of Section 3 of the Limited Warranty Deed which is
attached as Schedule B is modified to read as follows:
"(c) Comply with the provisions of Sections 5.1, 6.1 and
6.2 of the Agreement relating to insurance coverage, the
timely payment of real property taxes and the
maintenance of taxable status, and the provisions of
Section 2 of the Assignment relating to payment of tax
increment deficiencies."
(m) Notwithstanding anything to the contrary in Section 3.4(c), the
Authority shall cause the Petition for Public Improvements and Waiver of
Special Assessment Appeal to be terminated and discharged of record to
the reasonable satisfaction of the Developer upon the later of the
delivery of the Deed to the Developer or satisfaction of all conditions
precedent to issuance of the Taxable TIF Bonds described in
Section 3.7(b).
Except as so amended, the Development Contract is and shall remain in full
force and effect in accordance with its terms.
4. APPROVALS. The Authority acknowledges that it has approved evidence
of financing sufficient for the construction of the Minimum Improvements as
required by Section 7.1 of the Development Contract, consisting of the
$5,750,000 loan commitment issued by Juran & Moody to Ryan Companies US,
Inc., dated February 10, 1997, and the agreement of the Company to contribute
at least the sum of $1,450,000 to the costs of construction thereof. The
Authority further acknowledges that it has approved the Construction Plans
for the Minimum Improvements, which are described on Exhibit 2 attached hereto.
5. BINDING EFFECT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns.
6. GUARANTY. Upon execution of this Agreement, and as a condition of
the approval thereof by the Authority and the City, Ryan shall cause to be
delivered to the City and Authority a Corporate Guaranty Agreement by Ryan
Companies US, Inc. in substantially the form attached hereto as Exhibit 3.
6
<PAGE>
7. LETTER AGREEMENT. The terms and provisions contained in the letter
agreement dated April 15, 1997, by the Company and Ryan to the Authority and
the City, a copy of which is attached hereto as Exhibit 4, are hereby
incorporated herein and made a part hereof.
-6(a)-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
CITY OF BELLE PLAINE, MINNESOTA
By /s/ GERALD J. MEYER
-------------------------------------
Its Mayor
And /s/ DAVID R. IVERSON
------------------------------------
Its City Administrator
BELLE PLAINE ECONOMIC DEVELOPMENT
AUTHORITY, BELLE PLAINE, MINNESOTA
By /s/ KARL P. KEUP
-------------------------------------
Its President
And /s/ JOANNE M. FOUST
------------------------------------
Its Executive Director
EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
By /s/ THOMAS M. ROOTNESS
-------------------------------------
Its Chief Financial Officer
RYAN BELLE PLAINE, LLC
By /s/ TIMOTHY M. GRAY
-------------------------------------
Its Chief Manager
7
<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 15 day of
April, 1997, by Gerald J. Meyer the Mayor, and David R. Iverson the City
Administrator, of the CITY OF BELLE PLAINE, MINNESOTA, a Minnesota municipal
corporation, on behalf of said municipal corporation.
/s/ PATRICIA A. KRINGS
---------------------------------------
Notary Public
[SEAL]
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 15 day of
April, 1997, by Karl P. Keup the President, and Joanne M. Foust the Executive
Director, of the BELLE PLAINE ECONOMIC DEVELOPMENT AUTHORITY, BELLE PLAINE,
MINNESOTA, a Minnesota public body corporate and politic, on behalf of said
body.
/s/ PATRICIA A. KRINGS
---------------------------------------
Notary Public
[SEAL]
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 21st day of
April, 1997, by Thomas M. Rootness the Chief Financial Officer of
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY, a Minnesota
corporation, on behalf of said corporation.
/s/ SCOTT A. ANDEREGG
---------------------------------------
Notary Public
[SEAL]
8
<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF HENNEPIN )
The foregoing instrument was acknowledged before me this 21st day of
April, 1997, by Timothy M. Gray the Chief Manager of RYAN BELLE PLAINE, LLC,
a Minnesota limited liability company, on behalf of said limited liability
company.
/s/ DIANA SIEBENALER
---------------------------------------
Notary Public
[SEAL]
THIS INSTRUMENT WAS DRAFTED BY:
Dennis Buratti, Esq.
Ryan Companies US, Inc.
700 International Centre
900 Second Avenue South
Minneapolis, MN 55402-3387
9
<PAGE>
RYAN BELLE PLAINE, LLC
Landlord
and
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
Tenant
---------------------
SINGLE TENANT LEASE AGREEMENT
---------------------
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION PAGE
- ------- ----
1. LEASED PROPERTY, FIXED TERM........................................ 1
2. BASIC RENT......................................................... 1
2.1. BASIC RENT......................................................... 1
2.2. BASIC RENT NET; MANNER OF PAYMENT.................................. 2
3. ADDITIONAL RENT.................................................... 2
4. NET LEASE; NO COUNTERCLAIM, ABATEMENT, ETC......................... 2
5. USE OF PROPERTY.................................................... 2
6. MAINTENANCE AND REPAIRS............................................ 2
7. ALTERATIONS AND ADDITIONS, ETC..................................... 3
8. TENANT'S EQUIPMENT................................................. 3
9. UTILITY SERVICES................................................... 4
10. NO CLAIMS AGAINST LANDLORD, ETC.................................... 4
11. INDEMNIFICATION BY TENANT.......................................... 4
12. INSPECTION, ETC.................................................... 5
13. PAYMENT OF TAXES, ETC.............................................. 5
14. COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS...... 5
15. LIENS, EASEMENTS, ETC.............................................. 6
16. PERMITTED CONTESTS................................................. 6
17. INSURANCE.......................................................... 6
17.1. RISKS TO BE INSURED................................................ 6
17.2. POLICY PROVISIONS.................................................. 7
17.3. DELIVERY OF INSURANCE CERTIFICATES................................. 7
17.4. WAIVER OF INSURABLE CLAIMS......................................... 8
i
<PAGE>
18. HAZARDOUS MATERIALS................................................ 8
19. DAMAGE TO OR DESTRUCTION OF PROPERTY............................... 8
19.1. TENANT TO GIVE NOTICE.............................................. 8
19.2. RESTORATION........................................................ 8
19.3. TOTAL DESTRUCTION.................................................. 9
19.4. APPLICATION OF INSURANCE PROCEEDS.................................. 9
19.5. RENT ABATEMENT..................................................... 10
20. TAKING OF PROPERTY................................................. 10
20.1. TENANT TO GIVE NOTICE; ASSIGNMENT OF AWARDS, ETC................... 10
20.2. PARTIAL TAKING..................................................... 10
20.3. TOTAL TAKING....................................................... 11
20.4. APPLICATION OF AWARDS, ETC......................................... 11
21. CERTIFICATE AS TO NO EVENT OF DEFAULT, ETC.; FINANCIAL
STATEMENTS, ETC.................................................. 12
21.1. CERTIFICATE OF TENANT AS TO NO EVENT OF DEFAULT, ETC............... 12
21.2. CERTIFICATE OF LANDLORD............................................ 12
21.3. FINANCIAL STATEMENTS............................................... 12
22. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS, ETC............... 13
23. ASSIGNMENTS, SUBLEASES, MORTGAGES, ETC............................. 13
23.1. ASSIGNMENTS, SUBLEASES, ETC. BY TENANT............................. 13
23.2. ASSIGNMENTS, MORTGAGES, ETC. BY LANDLORD........................... 14
24. EVENTS OF DEFAULT; TERMINATION..................................... 14
25. REPOSSESSION, ETC.................................................. 15
26. SURVIVAL OF TENANT'S OBLIGATIONS; DAMAGES.......................... 15
26.1. TERMINATION OF LEASE NOT TO RELIEVE TENANT OF OBLIGATIONS.......... 15
26.2. CURRENT DAMAGES.................................................... 16
26.3. FINAL DAMAGES...................................................... 16
ii
<PAGE>
27. TENANT'S WAIVER OF STATUTORY RIGHTS................................ 16
28. NO WAIVER.......................................................... 16
29. REMEDIES CUMULATIVE................................................ 17
30. MODIFICATION, ACCEPTANCE OF SURRENDER.............................. 17
31. END OF LEASE TERM.................................................. 17
32. NOTICES, ETC....................................................... 17
33. SHORT FORM OR MEMORANDUM........................................... 18
34. QUIET ENJOYMENT.................................................... 18
35. MISCELLANEOUS...................................................... 19
36. DEFINITIONS........................................................ 19
37. ADDITIONAL PROVISIONS.............................................. 21
Exhibit A: Description of Property
Exhibit B: Basic Rent
Exhibit C: Additional Provisions
iii
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease"), dated as of April 21, 1997, between
RYAN BELLE PLAINE, LLC, a Minnesota limited liability company (hereinafter
referred to as "Landlord"), and EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING
COMPANY, a Minnesota corporation (hereinafter referred to as "Tenant").
WITNESSETH THAT:
In consideration of the mutual agreements contained in this Lease,
Landlord and Tenant agree with each other as follows:
1. LEASED PROPERTY; FIXED TERM. Upon and subject to the conditions and
limitations set forth below, Landlord leases to Tenant, and Tenant leases and
rents from Landlord, the land described in Exhibit A attached hereto and made
a part hereof, together with the approximately 170,000 square foot
manufacturing facility and related improvements (the "Improvements") to be
constructed thereon by Landlord (collectively, the "Property"), subject to
the Permitted Exceptions. The Improvements shall be designed and constructed
by Landlord in accordance with the provisions set forth in the Construction
Agreement.
TO HAVE AND TO HOLD the Property for a term (the "Fixed Term")
commencing on the date (the "Commencement Date") on which Substantial
Completion (as such term is defined in the Construction Agreement) is
achieved and expiring at midnight of the last day of the month during which
the date which is twenty (20) years subsequent to the Commencement Date
occurs, unless this Lease shall sooner terminate as provided herein. The term
of this Lease may be extended pursuant to paragraph 1 of Exhibit C attached
hereto. Landlord and Tenant shall promptly after Substantial Completion of
the Improvements execute a supplement to this Lease which specifies the
first and last days of the Fixed Term. Upon Tenant's entry upon the Property
for the purpose of installing any of Tenant's Equipment, all of the terms and
conditions of this Lease shall become effective upon such entry, save and
except (i) Sections 3, 5 and 6 of Exhibit C attached hereto, which shall
become effective on the date of mutual execution and delivery of this Lease,
and (ii) Sections 2, 4, 6, 9, 13, 19 and 20 hereof, which shall become
effective on the Commencement Date.
2. BASIC RENT.
2.1. BASIC RENT. Net basic rental ("Basic Rent") shall be payable
during the Fixed Term in the amounts specified on Exhibit B hereto, and at
that rate prorated for any portion of a calendar month at the beginning of
the Fixed Term. The monthly Basic Rent shall be paid to Landlord in advance
on the Commencement Date and on the first day of each month thereafter during
the term hereof. In the event of an early termination of this Lease for any
cause other than an Event of Default, any Basic Rent paid in advance shall be
prorated as of the date of such
<PAGE>
termination with the portion properly allocated to the period following
termination refunded to Tenant upon such termination.
2.2. BASIC RENT NET; MANNER OF PAYMENT. The Basic Rent and all
other sums payable to Landlord hereunder shall be payable in such currency of
the United States of America as at time of payment shall be legal tender for
the payment of public and private debts and shall be paid to Landlord at
Landlord's address set forth in Section 32 hereof or to such other person or
address as Landlord from time to time may designate. The Basic Rent shall be
net to Landlord so that this Lease shall yield to Landlord the full amount of
the installments of Basic Rent throughout the term of this Lease, without
deduction or setoff except as expressly provided in this Lease.
3. ADDITIONAL RENT. Tenant will also pay, from time to time as provided
in this Lease or on demand of Landlord, as additional rent (the "Additional
Rent") (a) all other amounts, liabilities and obligations that Tenant herein
assumes or agrees to pay, and (b) interest at the rate of fifteen per cent
(15%) per annum on such of the foregoing amounts, liabilities and obligations
as are payable by Tenant that are not paid when due and that Landlord shall
have paid on behalf of Tenant, from the date of payment thereof by Landlord
until paid by Tenant and on all overdue installments of Basic Rent and other
sums payable under this Lease, from the due date thereof until payment.
4. NET LEASE; NO COUNTERCLAIM, ABATEMENT, ETC. This Lease is a net
lease, and the Basic Rent, Additional Rent and all other sums payable
hereunder shall be paid without setoff or deduction, except as expressly
provided in this Lease. Except as otherwise expressly provided in this Lease,
Tenant shall at all times remain bound by this Lease and shall at all times
remain obligated to pay the stated rentals required by this Lease. Except as
specifically set forth herein to the contrary, Tenant shall in no event have
any right to terminate this Lease.
5. USE OF PROPERTY Tenant may use the Property for any lawful purpose
that is permitted by the terms of the recorded Declaration of Covenants,
Conditions and Restrictions which is applicable to the Property, and will not
do or permit any act or thing that is contrary to any Legal Requirement or
Insurance Requirement, or constitutes waste of the Property or any part
thereof.
6. MAINTENANCE AND REPAIRS. Tenant at its expense will keep the Property
in good and clean order and condition, subject to ordinary wear and tear, and
will promptly, at its own expense, make all necessary or appropriate repairs,
replacements and renewals thereof, whether interior or exterior, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and
renewals shall be at least equal in quality, utility and class to the
original condition of the Property. Tenant waives any right created by any
law now or hereafter in force to make repairs to the Property at Landlord's
expense. Landlord shall have no obligation to repair, rebuild or maintain the
Property; provided, however, that Landlord shall promptly make all repairs
and replacements covered under its warranties in the Construction Agreement
and of which it is notified by Tenant during the initial
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year of the Fixed Term. Such one year limitation, however, shall not affect
the liability of Ryan Belle Plaine, LLC for any breach of its warranties
which liability extends beyond such period.
7. ALTERATIONS AND ADDITIONS, ETC. Tenant at its expense may make
alteration of and additions to the Improvements or any part thereof;
provided, however, that any such alteration or addition (a) shall comply with
the recorded Declaration of Covenants, Conditions and Restrictions applicable
to the Property, (b) shall not materially affect the structural or mechanical
elements of the Improvements and shall not change the general character of
the Improvements located on the Property, (c) shall be effected with due
diligence, in a good and workmanlike manner and in compliance with all Legal
Requirements, Insurance Requirements and the provisions of Section 14 hereof,
(d) shall be fully paid for by Tenant upon its construction or installation
on the Property, and (e), in the case of alterations or additions costing
more than $500,000, shall be approved in writing by Landlord and Mortgagee,
but which approval shall not be unreasonably withheld. All alterations of and
additions to the Improvements shall immediately become the property of
Landlord and shall constitute a part of the Property. In no event shall any
installation, removal, alteration or modification of any of Tenant's
Equipment be deemed to be alterations of or additions to the Improvements.
Landlord shall not make any alterations of or additions to the Improvements,
or any part thereof, without Tenant's consent.
Tenant shall keep the Property free from any mechanics', materialmans',
contractors' or other liens arising from, or any claims for damages growing
out of, any work performed, materials furnished or obligations incurred by or
on behalf of Tenant, other than the work to be performed by Landlord
pursuant to the Construction Agreement. Provided, however, that Tenant shall
have the right to contest any such lien, in which event such lien shall not
be considered a default under this Lease until the existence of the lien has
been finally adjudicated and all appeal periods have expired. Tenant shall
indemnify and hold harmless Landlord from any against any such lien, or claim
or action thereon, reimburse Landlord promptly upon demand therefor by
Landlord for costs of suit and reasonable attorneys' fees incurred by
Landlord in connection with any such lien, claim or action, and, upon written
request of Landlord, provide Landlord with a bond in an amount and under
circumstances necessary to prevent foreclosure of such lien.
8. TENANT'S EQUIPMENT. All Tenant's Equipment shall be the sole property
of Tenant and neither Landlord nor Mortgagee shall have any interest
whatsoever therein. Tenant shall have the right from time to time in its sole
and absolute discretion to install, remove, alter, modify, purchase, lease
and/or finance any or all of Tenant's Equipment. Upon Tenant's request,
Landlord shall execute waivers, consents and other agreements as Tenant shall
reasonably request to facilitate such installation, removal, alteration,
modification, purchase, leasing and/or financing, provided that they do not
materially and adversely affect Landlord's rights hereunder. Landlord hereby
waives and disclaims any statutory or other lien or rights it may have or
hereafter have with respect to Tenant's Equipment, except as provided in
Minn. Stat. Section 566.17. Tenant will immediately repair at its expense all
damage to the Property caused by any removal of Tenant's Equipment therefrom.
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9. UTILITY SERVICES. Except for charges incurred in connection with the
work to be performed by Landlord pursuant to the Construction Agreement,
Tenant will pay or cause to be paid all charges of any nature for utilities,
communications and other services rendered at the Property.
10. NO CLAIMS AGAINST LANDLORD, ETC. Except with respect to the
Construction Agreement, nothing contained in this Lease shall constitute any
consent or request by Landlord or any Mortgagee, express or implied, for the
performance of any labor or services or the furnishing of any materials or
other property in respect of the Property or any part thereof, nor as giving
Tenant any right, power or authority to contract for or permit the
performance of any labor or services or the furnishing of any materials or
other property in such fashion as would permit the making of any claim
against Landlord or any Mortgagee in respect thereof.
11. INDEMNIFICATION BY TENANT. Tenant will (to the full extent permitted
by applicable law) protect, indemnify and save harmless Landlord, any
officer, director or shareholder of any of Landlord and Mortgagee (each an
"Indemnified Party") from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) imposed upon or incurred
by or asserted against any Indemnified Party or against the Property or any
interest of such Indemnified Party therein by reason of the occurrence or
existence of any of the following during the term of this Lease, unless
arising out of the work performed by Landlord pursuant to the Construction
Agreement are caused solely by the willful acts, omissions or misconduct or
the negligence of such Indemnified Party: (a) any accident, injury to or
death of any person or persons or loss of or damage to property occurring on
or about the Property or any part thereof or the adjoining sidewalks, curbs,
streets or ways, (b) any use, non-use or condition of the Property or any
part thereof, or of the adjoining sidewalks, curbs, streets or ways,
including, without limitation, claims or penalties arising from violation of
any Legal Requirement or Insurance Requirement, any claim as to which the
applicable insurance is inadequate, and any release of hazardous materials on
the Property occurring while Tenant is in possession, unless caused by
Landlord or persons acting under Landlord, (c) any failure on the part of
Tenant to perform or comply with any of the terms of this Lease, (d) any
negligent or tortuous act on the part of Tenant or any of its agents,
contractors, servants, employees, licensees or invitees, or (e) any negligent
or tortious act on the part of any assignee or sublessee of Tenant, or of any
agents, contractors, servants, employees, licensees or invitees of any
assignee or sublessee of Tenant. Any Indemnified Party seeking
indemnification hereunder shall give notice to Tenant of the existence of any
claim giving rise to the need for such indemnification within thirty (30)
Business Days after the date on which such Indemnified Party shall have
obtained actual knowledge of such claim; provided, however, that no
Indemnified Party shall have any such obligation with respect to any claim
whose existence is actually known to Tenant. In case any action, suit or
proceeding is brought against any Indemnified Party by reason of any
occurrence referred to above, Tenant, upon the request of such Indemnified
Party, will at Tenant's expense resist and defend such action, suit or
proceeding or cause the same to be resisted and defended by counsel
designated by Tenant and reasonably acceptable to such Indemnified Party.
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12. INSPECTION, ETC. Landlord and its authorized representatives may
enter the Property at all reasonable times (provided that no such entry shall
be made without reasonable advance notice to Tenant or shall unreasonably
interfere with the conduct of Tenant's business) for the purpose of (a)
inspecting the same, (b) exhibiting the Property for the purpose of sale or
mortgage or other financing, (c) at any time within twelve (12) months prior
to the expiration of the term of this Lease, exhibiting the Property for the
purpose of leasing same, and (d) at any time after Tenant shall have
abandoned the Property and an Event of Default shall have occurred, displaying
thereon advertisements for sale or letting. A representative of Tenant shall
have the right to accompany Landlord during any such entry. Landlord shall
not have any duty to make any such inspection and shall not incur any
liability or obligation for not making any such inspection. No such entry
shall constitute an eviction of Tenant.
13. PAYMENT OF TAXES, ETC. Subject to the provisions of Section 16
hereof, Tenant will pay directly to the taxing authority, promptly as and
when the same shall become due and payable, all taxes (including, without
limitation, real estate taxes, personal or other property taxes and all
sales, value added, use and similar taxes), assessments (including, without
limitation, all assessments for public improvements or benefits, whether or
not commenced or completed prior to the date hereof and whether or not to be
completed within the term hereof), water, sewer or other rents, rates and
charges, excises, review, license fees, permit fees, or any future inspection
fees and other authorization fees which may be created or imposed and other
charges, in each case whether general or special, ordinary of extraordinary,
or foreseen or unforeseen, of every character that may be assessed, levied,
confirmed or imposed on or in respect of the Property or any rent therefrom
and which become payable during the years included in whole or in part, in
the term of this Lease (all of the foregoing being hereinafter collectively
referred to as "Taxes"). Notwithstanding the foregoing or any other provision
of this Lease, Tenant shall not be required to pay any income, profits or
revenue tax upon the net income of Landlord, nor any franchise, excise,
corporate, estate, inheritance, succession, capital levy or transfer tax of
Landlord, nor any interest, additions to tax or penalties in respect thereof,
unless such tax is imposed solely with respect to the rent payable by Tenant
hereunder. In the event that any bills, statements or other notices or
correspondence regarding Taxes are sent to Landlord, Landlord shall promptly
furnish the same to Tenant. Tenant will furnish to Landlord, upon request,
official receipts or other proof reasonably satisfactory to Landlord
evidencing payment of any Taxes in accordance with the requirements of this
Section 13. Taxes payable in the years during which the term of this Lease
commences and terminates shall be prorated based upon the Commencement Date
and termination date.
14. COMPLIANCE WITH LEGAL AND INSURANCE REQUIREMENTS, INSTRUMENTS.
Subject to the provisions of Section 16 hereof, Tenant at its expense will
promptly (a) comply with all Legal Requirements and Insurance Requirements,
and (b) procure, maintain and comply with all permits, licenses and other
authorizations required for any use of the Property. Upon Tenant's
request, Landlord shall join in the application for such permits, licenses and
authorizations whenever such action is necessary.
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15. LIENS, EASEMENTS, ETC. Tenant will not directly or indirectly create
or permit to be created or to remain, and will discharge, any mortgage, lien,
or encumbrance with respect to the Property or any part thereof or Tenant's
interest therein, or the Basic Rent, Additional Rent or any other sum payable
under this Lease; provided, however, that the foregoing shall not prohibit liens
or encumbrances on any of Tenant's Equipment.
16. PERMITTED CONTESTS. Tenant at its expense may contest by appropriate
legal proceedings conducted in good faith and with due diligence, the amount
or validity or application, in whole or in part, of any Taxes or lien
therefor or any Legal Requirement or Insurance Requirement or the application
of any instrument of record affecting the Property or any part thereof or any
claims of mechanics, materialmen, suppliers or vendors or lien affecting the
Property, and, if permitted by law, may withhold payment of the same pending
such contest; provided that (a) such proceedings shall suspend the collection
thereof from Landlord and the Property, (b) neither the Property nor any part
thereof or interest therein (or any sums payable hereunder) would be in any
danger of being sold, forfeited or lost, nor would the use or occupancy of
the Property (or any part thereof) be adversely affected, (c) Landlord shall
not be in any danger of any civil or criminal liability by reason thereof and
neither the Property nor any part thereof or interest therein (or any sums
payable hereunder) would be subject to the imposition of any further lien as
a result of such failure, and (d) Tenant shall have either (i) paid the
disputed amount under protest, or (ii) furnished to Landlord such security as
Landlord may deem reasonably necessary to insure the ultimate payment of the
contested amount, if any, and to prevent the forfeiture of any sums payable
to Landlord or any Mortgagee hereunder. Tenant shall give prompt written
notice to Landlord of the commencement of any contest referred to in the
preceding sentence, providing a reasonably detailed description thereof, and
Landlord shall, at Tenant's expense, cooperate with Tenant with respect to
any such contest. Tenant agrees that each such contest shall be promptly
prosecuted to final conclusion, and Tenant shall indemnify and save Landlord
and any Mortgagee harmless from and against any and all losses, judgments,
decrees and costs (including, without limitation, reasonable attorneys' fees
and expenses) incurred in connection therewith. Tenant agrees that it will,
promptly after final determination of each such contest, fully pay and
discharge the amounts, if any, which shall finally be levied, assessed,
charged or imposed or determined to be payable, together with all penalties,
fines, interest, costs and expenses incurred in connection therewith, and
perform all acts the performance of which shall be finally ordered or decreed
as a result thereof.
17. INSURANCE.
17.1. RISKS TO BE INSURED. Tenant, at its expense, will maintain
with insurers authorized to issue insurance in the State of Minnesota and
having an A.M. Best rating of "A" or better or otherwise approved by Landlord
and any Mortgagee (a) insurance with respect to the Improvements against loss
or damage by fire, lightning and other risks from time to time included under
"all-risk" policies and against loss or damage by sprinkler leakage, water
damage, collapse, vandalism and malicious mischief, in amounts not less than
100% of the actual replacement cost of the Improvements, exclusive of
excavations, footings and foundation below the lowest floor level
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(initially determined as of the date on which such insurance is originally
issued, and subsequently re-determined based upon the actual replacement cost
of the Improvements when from time to time reasonably requested by Landlord,
but in no event more frequently than annually), which insurance shall also
include at least twelve (12) months rental loss coverage, (b) comprehensive
general liability insurance against claims arising out of or connected with
the possession, use, leasing, operation or condition of the Property in such
amounts as are usually carried by persons operating similar properties in the
same general locality but in any event with a combined single limit of not
less than $5,000,000 for all claims with respect to property damage and
personal injury and death in any one occurrence, (c) explosion insurance in
respect of any steam and pressure boilers and similar apparatus located on
the Property in amounts not less than those required by subdivision (a)
above, and (d) such other insurance against such risks and in such amounts as
Landlord shall reasonably request and which shall be customarily carried by
the operators of similar properties in the same general locality in which the
Property is located. In addition, during any period of repair, alteration or
addition to the Property, Tenant shall obtain and keep in effect Builder's
Risk insurance for the anticipated cost thereof written on a completed value
basis. The insurance required under this Section 17.1 may be subject to a
deductible in an amount not exceeding $10,000.00 and may be effected under a
blanket policy or policies covering the Property and other property and
assets not constituting part of the Property; provided, however, that any
such policy shall specify the portion of the total coverage of such policy or
policies that is allocated to the Property and shall, in all other respects,
comply with the requirements of this Section 17.
17.2. POLICY PROVISIONS. All insurance maintained by Tenant pursuant
to Section 17.1 hereof shall (a) name Landlord (individually and as a
fiduciary), Tenant and any Mortgagee as insured parties, as their interests
may appear, (b) provide that all property insurance proceeds for losses of
less than $50,000 shall be adjusted by and be payable to Tenant to be used by
Tenant, to the extent necessary, for Restoration, (c) provide that all
property insurance proceeds for losses of $50,000 or more shall be adjusted
by Landlord and Tenant jointly and shall be payable to any Mortgagee by means
of a standard mortgagee loss payable endorsement (or to Landlord, if there is
no Mortgagee), to be held in trust for the benefit of Tenant for application
to Restoration pursuant to the terms of this Lease, (d) provide that if all
or any part of such policy is canceled, terminated or expires, the insurer
will forthwith give notice thereof to each named insured party and loss payee
and that no cancellation, reduction in amount or material change in coverage
thereof shall be effective until at least 10 days after delivery to each
named insured party and loss payee of written notice thereof, and (e) be
reasonably satisfactory in all other material respects to Landlord and any
Mortgagee. Proceeds of any insurance carried by Tenant on Tenant's Equipment
or any other property of Tenant shall be payable directly to Tenant and
Tenant shall have the exclusive right to adjust and settle losses with
respect thereto.
17.3. DELIVERY OF INSURANCE CERTIFICATES. Tenant will deliver to
Landlord and any Mortgagee original certificates of insurance for all
insurance policies and any amendments or supplements thereto with respect to
the Property that Tenant is required to maintain pursuant to this Section 17,
evidencing the payment of all premiums then due thereon, and not later than
30 days
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prior to the expiration of any policy, a certificate of the insurer
evidencing the replacement or renewal thereof.
17.4. WAIVER OF INSURABLE CLAIMS. Notwithstanding anything contained
herein to the contrary, (i) Tenant releases Landlord and Landlord's agents
and employees from any liability for loss or damage to Tenant's Equipment and
other property, whether or not the loss or damage resulted from negligence,
and (ii) Landlord releases Tenant and Tenant's agents and employees from any
liability for loss or damage to the Improvements to the extent covered by the
proceeds of insurance required to be maintained by Tenant pursuant to Section
17.1(a) or (c) hereof, whether or not the loss or damage resulted from
negligence.
18. HAZARDOUS MATERIALS. Neither Tenant nor any person acting under
Tenant (provided that in no event shall Landlord or its agents be deemed to
be acting under Tenant) shall (either with or without negligence) cause or
permit the escape, disposal or release of any biologically or chemically
active or other hazardous substances or materials on or about the Property.
Tenant shall not allow the storage or use of such substances or material on
or about the Property in any manner not in compliance with Legal Requirements
or with the highest standards prevailing in the industry for the storage and
use of such substances or materials, nor allow to be brought into the
Property any such materials or substances except to use in the ordinary
course of Tenant's business. Without limitation, hazardous substances and
materials shall include those described in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act, as amended,
42 U.S.C. Section 6901 et seq., any applicable state or local laws and the
regulations adopted under these acts. If any governmental agency shall ever
require testing to ascertain whether or not there has been any release of
hazardous materials, then the reasonable costs thereof shall be reimbursed by
Tenant to Landlord upon demand as additional charges if such requirement
applies to the Property. In addition, Tenant shall execute affidavits,
certificates and the like from time to time at Landlord's request concerning
Tenant's best knowledge and belief regarding the presence of hazardous
substances or materials on the Property. In all events, Tenant shall
indemnify Landlord in the manner provided in Section 11 of this Lease from
any release of hazardous materials on the Property occurring while Tenant is
in possession, unless caused by Landlord or persons acting under Landlord.
The within covenants shall survive the expiration or earlier termination of
the Lease Term.
19. DAMAGE TO OR DESTRUCTION OF PROPERTY.
19.1. TENANT TO GIVE NOTICE. In case of any damage to or destruction
of the Improvements located on the Property (or any part of such
Improvements), the Restoration of which is reasonably estimated to cost more
than $50,000.00, Tenant will promptly give notice thereof to Landlord,
generally describing the nature and extent of such damage or destruction and
setting forth Tenant's best estimate of the cost of Restoration.
19.2. RESTORATION. In case of any damage to or destruction of the
Improvements located on the Property (or any part of such Improvement), other
than a Total Destruction, Tenant,
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whether or not the insurance proceeds, if any, on account of such damage or
destruction shall be sufficient for the purpose, at its expense will promptly
commence and expeditiously complete (subject to Unavoidable Delays)
REstoration of such Improvements, provided all net insurance proceeds on
account of such damage or destruction shall be made available to Tenant for
such purpose.
19.3. TOTAL DESTRUCTION. In case of the damage or destruction during the
last two years of the term of this Lease of such a substantial part of the
Improvements located on the Property that Restoration of such Improvements
will cost in excess of $250,000.00 (any such damage or destruction being
hereinafter referred to as a "Total Destruction"), Tenant may, by notice to
Landlord given within 60 days after the date of such damage or destruction,
terminate this Lease. In the event of such termination of this Lease by the
Tenant as a result of such Total Destruction, the obligation of the Tenant to
pay Basic Rent and all other obligations of the Tenant hereunder shall be
prorated as of the date of termination. The Tenant agrees that all insurance
proceeds with respect to the Property and the Improvements shall be
automatically assigned and paid over solely to the Landlord and the Tenant
shall have no right, title or interest in the same.
19.4. APPLICATION OF INSURANCE PROCEEDS. Landlord and Tenant hereby agree
that all insurance proceeds which Tenant or Landlord may receive or become
entitled to by reason of the Improvements being damaged or destroyed by fire
or other casualty shall be applied to Restoration in accordance with this
Section 19.4. Any compensation or insurance payment of more than $50,000
shall be paid to and held in trust for the benefit of Tenant and applied to
the cost of Restoration in accordance with this Lease by Mortgagee or, if
there is no Mortgagee or if Mortgagee does not require that it hold such
compensation, by Landlord; provided, however, that any such compensation or
insurance payment which is not in excess of $50,000 shall be paid directly to
Tenant (if no Event of Default then exists hereunder) and shall be expended
by Tenant in connection with the Restoration of the Property (with the
balance of such proceeds, if any, being retained by Tenant upon the
completion of such Restoration).
Provided no Event of Default shall exist hereunder, the net insurance
proceeds (after payment of all expenses incurred in collecting the same), if
any, on account of such damage or destruction, and collected by Landlord
and/or Tenant (except rent-loss and rental value insurance, which proceeds
shall be Landlord's sole property) shall be made available to Tenant as the
Restoration work progresses (subject to periodic delivery to Landlord of
appropriate architect's or contractor's certifications as to the cost of the
required work remaining until full completion, and title company
certifications as to the absence of any liens, or encumbrances relating to
such work) for use in making payments when due for Restoration, and pursuant
to such additional reasonable controls as Landlord or Mortgagee shall
require. If such insurance money shall be insufficient to pay the entire cost
of Restoration, Tenant agrees to pay the deficiency. At any time after the
completion of such work, the balance of the insurance money not theretofore
used pursuant to the foregoing provisions of this section shall be paid to
Tenant.
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19.5. RENT ABATEMENT. In the event such destruction or damage shall
make it impossible or unfeasible for Tenant to conduct business from all or
any substantial portion of the Property, all Basic Rent paid in advance shall
be apportioned as of the date of the destruction or damage and the Basic Rent
thereafter accruing shall be equitably and proportionately suspended and
adjusted according to the nature, extent and duration of the destruction or
damage, pending completion of Restoration, except that in the event the
destruction or damage is so extensive as to make it unfeasible for Tenant to
conduct its business on the Property, Basic Rent shall be completely abated
until Tenant resumes the conduct of its business of the Property or 10 days
after the repairs are complete, whichever event first occurs. Such
adjustment, suspension or abatement of Basic Rent shall not extend beyond the
period of coverage or reduce the amount otherwise payable by Tenant under
this Lease by more than the amount of rent-loss and rental value insurance
then in effect pursuant to Section 17.1 hereof or otherwise provided by
Tenant, it being the intention that Landlord shall continue to receive full
rental payments from Tenant or the insurer throughout the period of
Restoration.
20. TAKING OF PROPERTY.
20.1. TENANT TO GIVE NOTICE: ASSIGNMENT OF AWARDS, ETC. In case of a
Taking, or the commencement of any proceedings or negotiations that might
result in a Taking, in respect of which the Restoration of the Property is
reasonably estimated to cost more than $10,000, Tenant will promptly give
notice thereof to Landlord, generally describing the nature and extent of
such Taking or the nature of such proceedings or negotiations and the nature
and extent of the Taking that might result therefrom. Tenant hereby
irrevocably assigns, transfers and sets over to Landlord all rights of Tenant
to any award or payment on account of any Taking of Tenant's leasehold.
Landlord and Tenant agree to reasonably cooperate in the joint filing and
prosecution of all claims for all awards and payments payable to either of
them on a Taking. All such awards and payments shall be applied in accordance
with this Section 20. Tenant shall be exclusively entitled to file and
prosecute all claims for amounts payable in connection with a taking of all
or any portion of the Tenant's Equipment.
20.2. PARTIAL TAKING. In the case of a Taking other than a Total Taking,
(a) this Lease shall remain in effect as to the portion of the Property
remaining immediately after such Taking, without any abatement or reduction
of Basic Rent, Additional Rent or any other sum payable hereunder, and
without change or reduction in the amount of insurance required pursuant to
Section 17 hereof, and (b) Tenant, provided all net awards on account of such
Taking are made available to it for Restoration, whether or not the awards or
payments, if any, on account of such Taking shall be sufficient for the
purpose, at its expense will promptly commence and expeditiously complete
(subject to Unavoidable Delays) Restoration of the Property, except for any
reduction in area of the Property caused by such Taking; provided, however,
that in case of Taking for temporary use ("temporary use" being defined for
all purposes herein as any taking for less than nine consecutive months)
Tenant shall not be required to effect any Restoration until such Taking is
terminated.
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20.3. TOTAL TAKING. In case of the Taking of the Property in its
entirety (or all of the Improvements located thereon) or the Taking (other
than for temporary use) of such a substantial part of the Property (or the
Improvements located thereon) that, in the good faith judgment of the Board
of Directors of Tenant, the portion of the Property (or the Improvements
located thereon) remaining after such Taking is (and after Restoration would
be) unsuitable for use by Tenant in the operation of its business (a "Total
Taking"), this Lease shall terminate as of the date of such Taking. In the
event of the termination of this Lease as a result of any such Total Taking,
any award or payments received or payable as a result of any such Taking of
the Improvements and/or the Property shall be paid first to the Mortgagee to
the extent necessary to satisfy and discharge the Mortgage, next to Tenant in
a total amount for all Takings of up to $3,000,000, next to payment of the
Termination Payment under the Development Contract (as hereinafter defined),
unless Landlord procures the release of Tenant from all liability under
Section 6.4 thereof, and the entire remaining balance to Landlord. Tenant
shall also be entitled to any separate award for the loss of Tenant's
Equipment or moving, relocation and other statutory benefits.
20.4. APPLICATION OF AWARDS, ETC. All awards and payments received by
or payable to Landlord on account of a Taking (less the actual costs, fees
and expenses incurred in connection with the collection thereof, for which
the Person incurring the same shall be reimbursed from such award or payment,
together with any interest or other income earned on such awards from the
investment thereof and any other interest paid on such awards prior to
disbursement hereunder) shall be paid to and held in trust and applied in
accordance with this Lease by Mortgagee, or, if there is no Mortgagee or if
Mortgagee does not require that it hold such award, by Landlord, and shall be
applied or dealt with as follows:
(a) All such awards and payments actually received on account of a
Taking (other than a Total Taking) shall be applied as follows:
(i) Subject to subparagraph (ii) below, such awards and payments
shall be applied to pay the cost of the Restoration of the Property, such
application to be effected substantially in the same manner and subject to
the same conditions as provided in Section 19.4 hereof with respect to
insurance proceeds; provided, however, that in case the total amount of such
awards and payments shall not exceed $50,000, such awards and payments shall
be paid over to Tenant, if no Event of Default then exists hereunder, upon
Tenant's request and without compliance with any of such conditions.
(ii) In case of a Taking for a temporary use, such awards and
payments shall be paid to Tenant and there shall be no abatement in Tenant's
obligation to pay Basic Rent and Additional Rent hereunder during the period
of such temporary use; provided, however, that if any portion of such awards
and payments is made by reason of any damage to or destruction of the
Property (or the Improvements thereon) during such Taking for temporary use,
such portion shall be held and applied as provided in subparagraph (i) above
after such Taking is terminated.
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(iii) The balance, if any, of such awards and payments not
required to be held or applied in accordance with subparagraphs (i) and (ii)
above, shall be paid to Mortgagee following completion of the Restoration, or
to Landlord if there is no Mortgage (in either which event the purchase price
payable by Tenant pursuant to the option to purchase contained in Section 2
of Exhibit C hereto shall also be reduced by such amount paid to Mortgagee or
Landlord, as the case may be).
(b) All such awards and payments received by or payable to Landlord on
account of a Total Taking with respect to the Property (or the Improvements
thereon) during the Fixed Term shall be paid over as provided in Section 20.3
hereof.
21. CERTIFICATE AS TO NO EVENT OF DEFAULT, ETC.; FINANCIAL STATEMENTS,
ETC.
21.1. CERTIFICATE OF TENANT AS TO NO EVENT OF DEFAULT, ETC. Tenant
will deliver to Landlord within 10 days following Landlord's request therefor
(but in no event more often than three times in any twelve-month period), (a)
a Certificate of Tenant stating (i) that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that this Lease is in
full force and effect, as modified, and stating the modifications), (ii) the
date to which the Basic Rent has been paid and that all Additional Rent
payable on or before the date of such Certificate has been paid, and (iii)
that no Event of Default exists hereunder, or, if any such Event of Default
exists, specifying the nature and period of existence thereof and what action
Tenant is taking or has taken with respect thereto, and (b) such information
with respect to Tenant and the Property or any part thereof as from time to
time may reasonably be requested.
21.2. CERTIFICATE OF LANDLORD. Within 10 days following Tenant's
request therefor, but in no event more often than three times in any
twelve-month period, Landlord will deliver to Tenant a Certificate of
Landlord stating (a) that this Lease is unmodified and in full force an
effect (or, if there have been modifications, that this Lease is in full
force and effect, as modified, and stating the modifications), (b) the date
to which Basic Rent has been paid hereunder, (c) whether or not an Event of
Default has been declared by Landlord hereunder and whether or not to
Landlord's knowledge there exist any circumstances which with the giving of
notice or lapse of time, or both, would constitute an Event of Default, it
being agreed that (and any such Certificate shall state that) no rights or
remedies of Landlord hereunder or otherwise resulting from any condition,
event or circumstance that would entitle Landlord to declare an Event of
Default (and with respect to which condition, event or circumstance no Event
of Default has been declared on or before the date of such Certificate) shall
be waived, impaired or diminished in any respect by reason of any such
Certificate or any statement made therein, and (d) such information with
respect to the Property and this Lease as may be reasonably requested. No
failure of Landlord to deliver any such Certificate shall release, discharge
or otherwise affect any of Tenant's or Landlord's rights or obligations
hereunder.
21.3. FINANCIAL STATEMENTS. Tenant will deliver to Landlord and
Mortgagee, within 120 days after the close of each fiscal year of Tenant, a
copy of (i) the consolidated balance sheet of
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Tenant as of the end of such fiscal year, (ii) consolidated statements of
income and shareholders' equity for Tenant with respect to such fiscal year,
and (iii) consolidated statements of changes in financial position for Tenant
with respect to such fiscal year, setting forth in each case in comparative
form the corresponding figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved (except for
any changes required by the Financial Accounting Standards Board and other
changes consistent with generally accepted accounting principles) and either
audited, if Tenant obtains audited statements, or certified as true and
correct by Tenant.
22. RIGHT OF LANDLORD TO PERFORM TENANT'S COVENANTS, ETC. If an Event of
Default shall occur as a result of Tenant's failure to make any payment or
perform any act required to be made or performed by it hereunder, or if
Tenant shall fail to provide certificates of insurance as required pursuant
to Section 17.3 hereof, Landlord, upon notice to Tenant (except in cases of
emergency that threaten bodily injury or material property damage), but
without waiving or releasing any obligation or default, may make such payment
or perform such act for the account and at the expense of Tenant, and may
enter upon the Property and the Improvements or any part thereof as may be
reasonably necessary for such purpose and take all such action thereon as, in
the reasonable opinion of Landlord, may be necessary or appropriate therefor.
No such entry shall constitute an eviction of Tenant. All reasonable payments
so made by landlord and all reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) incurred in connection
therewith or in connection with the performance by Landlord of any such act
shall constitute Additional Rent hereunder.
23. ASSIGNMENTS, SUBLEASES, MORTGAGES, ETC.
23.1. ASSIGNMENTS, SUBLEASES, ETC. BY TENANT. If no Event of Default
shall have occurred and be continuing Tenant may, after obtaining the written
consent of Landlord and Mortgagee, at any time, sublet the Property or any
part thereof, and may assign its interest in this Lease; provided, however,
that (a) Tenant shall deliver to Landlord a fully executed counterpart of
each such sublease or assignment promptly after execution thereof, and (b) no
assignment, whether by operation of law, consolidation, merger, a sale of
stock or otherwise, shall be effective prior to the execution by the assignee
and delivery to Landlord of an instrument, reasonably satisfactory in form
and substance to Landlord, assuming all of the obligations of Tenant under
this Lease. Such consent shall not be unreasonably withheld and the basis for
withholding consent shall be limited to the creditworthiness of the proposed
assignee or that the nature of its business is either ultra-hazardous or will
result in more hazardous substances and materials being located on the
Property that are used by Tenant thereon. Notwithstanding anything contained
herein to the contrary, Tenant may, without the consent of Landlord but
subject to the conditions contained in clauses (a) and (b) hereof, at any
time assign or otherwise transfer this Lease to: any parent, subsidiary or
affiliate corporation or entity of Tenant; any corporation resulting from the
consolidation or merger of Tenant into or with any other entity; or any
person, firm, entity or corporation acquiring all or substantially all of
Tenant's assets. As used herein, the expression "affiliate corporation or
entity" means a person or business entity, corporate or otherwise, that
directly or indirectly through one or
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more intermediaries, controls or is controlled by or is under control with
Tenant. The word "control" means the right and power, direct or indirect, to
direct or cause the direction of the management and policies of a business
entity, corporation or otherwise. No assignment or sublease made as permitted
by this Section 23.1 shall affect or reduce any obligations of Tenant or any
rights of Landlord hereunder, and all obligations of the Tenant originally
named hereunder shall continue in full force and effect as the obligations of
a principal and not of a guarantor or surety, to the same extent as though no
assignment or subletting had been made.
23.2. ASSIGNMENTS, MORTGAGES, ETC, BY LANDLORD. Subsequent to the
Commencement Date, and provided that the transfer shall be permitted by the
terms of any Mortgage, the interest of Landlord in this Lease and in and to
the Property may, at any time and from time to time, be sold, conveyed,
assigned or otherwise transferred, and upon any sale or conveyance of the
Property as an entirety or any assignment or other transfer (other than for
the purpose of securing indebtedness) by any party lessor of its interest in
this Lease and in and to the Property, such party lessor shall be completely
relieved of and from any and all obligations not theretofore accrued under
this Lease or otherwise with respect to the Property, and such party lessor
shall have no further obligations whatsoever to any party lessee, except to
the extent that any such obligation accrued prior to the date of such sale,
conveyance, assignment or transfer, and Tenant shall thereupon look only to
the then owner of Landlord's estate in the Property for the performance of
any obligations of Landlord hereunder. Landlord shall obtain the Initial
Mortgage and subsequent to the 60th full month of the Fixed Term, but not
before, may also from time to time further mortgage or assign, by way of
pledge or otherwise, any or all of the rights, in whole or in part, of
Landlord under this Lease to any Person as security for the indebtedness or
other obligations of Landlord; provided that, except as otherwise
specifically provided herein, any such mortgage shall be fully subject and
subordinate to each every term, covenant and condition of this Lease. From
and after any such mortgage or assignment and to the extent provided in the
instrument effecting such mortgage or assignment, (a) such Mortgagee may
enforce any and all of the terms of this Lease to the extent so assigned as
though such Mortgage had been a party hereto, (b) no such assignment shall
constitute an assumption of any such obligations on the part of such
Mortgagee, and (c) a copy of all notices, demands, consents, approvals and
other instruments given by Tenant hereunder shall also be delivered to such
Mortgagee, if such Mortgagee shall have provided Tenant with written notice
of its address for such purposes.
24. EVENTS OF DEFAULT: TERMINATION. If any one or more of the following
events ("Events of Default") shall occur (whatever the reason therefor, and
whether voluntary or involuntary or by operation of law or pursuant to or in
compliance with any judgment, decree or order of any court of any rule or
regulation of any administrative or governmental body):
(a) if Tenant shall fail to pay any installment of Basic Rent or
Additional Rent, or other sum required to be paid by Tenant hereunder on the
date the same becomes due and payable and such failure continues for more
than five (5) Business Days after notice thereof by Landlord to Tenant; or
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(b) if Tenant shall fail to perform or comply with any term of this
Lease (other than those referred to in clause (a) above) or any term of any
instrument related hereto pursuant to which Tenant undertakes obligations or
makes agreements for the benefit of Landlord and, in any such case, such
failure shall continue for more than 45 days after notice thereof by Landlord
to Tenant; provided, however, that in the case of any such failure that is
susceptible of being cured but that cannot with diligence be cured within
such 45-day period, if Tenant shall promptly commence to cure the same and
shall thereafter prosecute the curing thereof with diligence, the period
within which such failure may be cured shall be extended for such further
period as shall be necessary for the curing thereof with diligence; or
(c) if any material representation or warranty made by Tenant
herein, in any document or certificate furnished by Tenant or any Mortgagee
in connection herewith or therewith or pursuant hereto or thereto, or any
material representation or warranty made by Tenant in any assignment or
reassignment by Landlord of this Lease shall be incorrect in any material
respect as of the date when made; or
(d) if the Property or the Improvements shall be left vacant and
without maintenance and security for thirty (30) days after notice thereof by
Landlord to Tenant;
then, and in any such event, Landlord may at any time thereafter, during the
continuance of any such Event of Default, give a written termination notice
to Tenant specifying a date (not less than five days from the date on which
such notice is given) on which this Lease shall terminate, and, on such date,
subject to the provisions of Section 26 hereof relating to the survival of
Tenant's obligations hereunder, the term of this Lease shall terminate by
limitation and all rights of Tenant under this Lease shall cease. All
reasonable costs and expenses incurred by or on behalf of Landlord
(including, without limitation, reasonable attorneys' fees and expenses)
occasioned by any default by Tenant under this Lease shall constitute
Additional Rent hereunder.
25. REPOSSESSION, ETC. If an Event of Default shall have occurred and be
continuing, Landlord, whether or not the term of this Lease shall have been
terminated pursuant to Section 24 hereof, may enter upon and repossess the
Property or any part thereof by legal process, summary proceedings, ejectment
or otherwise, and may remove Tenant and all other persons and any and all
property therefrom. Landlord shall be under no liability for or by reason of
any such entry, repossession or removal. Landlord shall act reasonably to
mitigate damages, but the burden shall be upon Tenant to establish that
Landlord failed to do so.
26. SURVIVAL OF TENANT'S OBLIGATIONS: DAMAGES
26.1. TERMINATION OF LEASE NOT TO RELIEVE TENANT OF OBLIGATIONS. No
termination of the term of this Lease pursuant to Section 24 hereof, by
expiration or by operation of law or otherwise, and no repossession of the
Property or any part thereof pursuant to Section 25 hereof or otherwise, and
no reletting of the Property, shall relieve Tenant of its liabilities and
obligations hereunder, all of which shall survive such expiration,
termination, repossession or reletting.
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26.2. CURRENT DAMAGES. In the event of any such termination,
repossession or reletting, Tenant will pay to Landlord the Basic Rent and all
Additional Rent and other sums required to be paid by Tenant up to the time
of such termination, repossession or reletting, and thereafter Tenant, until
the end of what would have been the term of this Lease in the absence of such
termination or repossession, and, whether or not the Property or any part
thereof shall have been relet, shall be liable to Landlord for and shall pay
to Landlord, as liquidated and agreed current damages for Tenant's default,
(a) the Basic Rent and all Additional Rent and other sums that would be
payable under this Lease by Tenant in the absence of such termination or
repossession, plus (b) all reasonable expenses directly or indirectly
incurred by Landlord in connection with such termination and repossession and
any reletting effected by Landlord (including, without limitation, to the
extent reasonable, all repossession costs, brokerage commissions, legal
expenses and attorney's fees, and any tax increment deficiency payments paid
by Landlord to the Belle Plaine Economic Development Authority pursuant to
the Development Agreement (identified below), less (c) the proceeds, if any,
of such reletting. Tenant will pay such current damages monthly on the days
on which the Basic Rent would have been payable under this Lease in the
absence of such termination, repossession or reletting, and Landlord shall be
entitled to recover the same from Tenant on each such day.
26.3. FINAL DAMAGES. At any time after any such termination or
repossession, whether or not Landlord shall have collected any current
damages as aforesaid, Landlord shall be entitled to recover from Tenant and
Tenant will pay to Landlord on demand, as and for liquidated and agreed final
damages beyond the date of such demand, (a) an amount equal to the excess of
(i) all past due Basic Rent and Additional Rent plus the present value of all
Basic Rent and Additional Rent that would be payable under this Lease from
the date of such demand (or, if it be earlier, the date to which Tenant shall
have satisfied in full its obligations under Section 26.2 hereof to pay
current damages) for what would be the unexpired term of this Lease in the
absence of such termination or repossession, over (ii) the present value of
the fair market rental for the Property for what would be the unexpired term
of this Lease, which present value shall in each case be determined by the
application of a discount factor equal to the 5-year Constant Maturity
Treasury Rate (as such term is defined in Exhibit B attached hereto) on the
date of such demand.
27. TENANT'S WAIVER OF STATUTORY RIGHTS. In the event of any termination
of the term of this Lease pursuant to Section 24 hereof or any repossession
of the Property or any part thereof pursuant to Section 25 hereof, Tenant, so
far as permitted by law, waives (a) any right to a trial by jury in any
proceeding or any matter in any way connected with this Lease, and (b) any
right of redemption, re-entry or repossession.
28. NO WAIVER. No failure by either party to insist upon the strict
performance of any term hereof or to exercise any right, power or remedy
consequent upon a breach thereof, and no acceptance of full or partial rent
during the continuance of any such breach, shall constitute a waiver of any
such breach or of any such term. No waiver of any breach shall affect or
alter this Lease, which shall continue in full force and effect, or the
rights of either party with respect to any
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other then existing or subsequent breach. No foreclosure, sale or other
proceedings under any mortgage or other security arrangement with respect to
the Property shall discharge or otherwise affect the obligations of Tenant
hereunder.
29. REMEDIES CUMULATIVE. Each right, power and remedy of either party
provided for in this Lease or now or hereafter existing at law or in equity
or by statute or otherwise shall be cumulative and concurrent and shall be in
addition to every other right, power or remedy provided for in this Lease or
now or hereafter existing at law or in equity or by statute or otherwise, and
the exercise or attempted exercise by either party of any one or more of the
rights, powers or remedies provided for in this Lease or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude
the simultaneous or later exercise by either party of any or all such other
rights, powers or remedies.
30. MODIFICATION, ACCEPTANCE OF SURRENDER. No modification, termination
or surrender to Landlord of this Lease and no surrender of the Property or
any part thereof or of any interest therein shall be valid or effective
unless agreed to and accepted in writing by Landlord, and no act by any
representative or agent of either party, and no act by either party, other
than such a written agreement and acceptance by either party, shall
constitute an agreement thereto or acceptance thereof.
31. END OF LEASE TERM. Upon the expiration or earlier termination of
this Lease, Tenant, at its expense, shall quit and surrender to Landlord the
Property in good order and condition, ordinary wear and tear, and, if this
Lease is terminated by Tenant pursuant to Section 19.3 hereof, damage by
casualty excepted, and, if requested by Landlord, shall remove, at Tenant's
expense, all of Tenant's Equipment therefrom and shall repair, at Tenant's
expense, all damage caused by such removal.
32. NOTICES, ETC. All notices, offers, acceptances, rejections, consents
and other communications hereunder shall be in writing and shall be deemed to
have been given when delivered or mailed by first class registered or
certified mail, postage prepaid, or sent by a nationally recognized overnight
courier service, addressed as follows:
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If to Landlord:
Ryan Companies US, Inc.
700 International Centre
900 Second Avenue South
Minneapolis, Minnesota 55402
Attention: Legal Department
or at such other address as Landlord shall have furnished to Tenant in
writing; and
If to Tenant:
Excelsior-Henderson Motorcycle
Manufacturing Company
607 West Travelers Trail
Burnsville, Minnesota 55337
Attention: Dan Hanlon
or at such other address as Tenant shall have furnished to Landlord in
writing. Mailed notices shall be deemed given when mailed in the manner
aforesaid, provided that a notice of default to Tenant shall be deemed given
two (2) Business Days after the date when so mailed.
33. SHORT FORM OR MEMORANDUM. Landlord and Tenant shall execute and
deliver a short form or memorandum of this Lease, satisfactory in form and
substance to Landlord and Tenant, for recording in the proper office or
offices in the county in which the Property is located.
34. QUIET ENJOYMENT. So long as Tenant shall pay the Basic Rent and
Additional Rent and any other sums payable hereunder as the same become due
and shall fully comply with all of the terms of this Lease and fully perform
its obligations hereunder, Tenant (and any subtenant of Tenant permitted
pursuant to the terms of this Lease) shall peaceably and quietly have, hold
and enjoy the Property for the term hereof, subject, however, to all the
terms of this Lease. Except as expressly provided in this Lease, no failure
by Landlord to comply with the foregoing covenants shall give Tenant any
right to cancel or terminate this Lease or to abate, reduce or make a
deduction from or offset against the Basic Rent or any Additional Rent or any
other sum payable under this Lease, or to fail to perform any other
obligation of Tenant hereunder. Notwithstanding anything contained in this
Lease to the contrary, it is specifically understood and agreed that neither
Landlord nor any member, officer, director or shareholder of Landlord, or any
officer, director or shareholder of Tenant or any Mortgagee, shall have any
personal liability in respect of any of the terms, covenants, conditions or
provisions of this Lease.
Landlord shall fully and timely pay, perform and comply with all of the
terms, covenants and conditions of the Contract for Private Development dated
December 31, 1996, between the
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City of Belle Plaine (the "City"), the Belle Plaine Economic Development
Authority (the "Authority") and Tenant, as amended by and assigned to
Landlord pursuant to that certain Assignment, Assumption and Amendment of
Development Contract dated as of even date herewith (collectively, the
"Development Contract"), and the Limited Warranty Deed from the Authority to
Landlord of even date herewith, which are to be paid, complied with or
performed up to and including the time of issuance of the Certificate of
Completion pursuant to the Development Contract; provided, however, in no
event shall Landlord be obligated to perform any of the Company Obligations
(as defined in the Development Contract). In the event Landlord shall fail to
do so and such failure continues for ten (10) days after written notice
thereof by Tenant to Landlord and Mortgagee, and provided such failure is not
the result of a default by Tenant hereunder, Tenant shall have the right, but
not the obligation, to pay and perform such terms, covenants and conditions,
and deduct from the Base Rent and Additional Rent thereafter due under this
Lease any sums reasonably expended by Tenant in taking such action, together
with interest thereon at the rate of 15% per annum from the date of
expenditure.
35. MISCELLANEOUS. All rights, powers and remedies provided herein may
be exercised only to the extent that the exercise thereof does not violate
any applicable provision of law, and are intended to be limited to the extent
necessary so that they will not render this Lease invalid, illegal or
unenforceable under the provisions of any applicable law. If any term of this
Lease or any application thereof shall be invalid or unenforceable, the
remainder of this Lease and any other application of such term shall not be
affected thereby. This Lease may be changed, waived, discharged or terminated
only by an instrument in writing, signed by each of the parties hereto.
Subject to Section 23 hereof, this Lease shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and permitted
assigns of the parties hereto. This Lease shall be construed and enforced in
accordance with and governed by the laws of the State of Minnesota. The
headings in this Lease are for the purposes of reference only and shall not
limit or otherwise affect the meaning hereof. This Lease may be executed in
several counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument. In any case under this
Lease which requires consent or approval, except as otherwise provided
herein, such consent or approval shall not be unreasonably withheld,
conditioned or delayed. This Lease shall not automatically terminate or merge
by reason of the subsequent common ownership of the interests of Landlord and
Tenant hereunder.
36. DEFINITIONS. As used in this Lease, the following terms shall have
the following respective meanings, applicable both to the singular and plural
forms of the terms so defined:
ADDITIONAL RENT: the meaning specified in Section 3 hereof.
BASIC RENT: the meaning specified in Section 2 hereof.
BUSINESS DAY: any day other than a day (including, without limitation,
Saturday and Sunday) on which banking institutions in the State of Minnesota
are authorized by law to close.
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CERTIFICATE: with respect to any corporation, a certificate of such
corporation signed by the President or a Vice President and by the Treasurer,
Comptroller, Assistant Treasurer or Assistant Comptroller of such
corporation.
CONSTRUCTION AGREEMENT: that certain Construction Agreement of even date
herewith between Landlord and Tenant pertaining to the construction of the
Improvements.
EVENT OF DEFAULT: the meaning specified in Section 24 hereof.
FIXED TERM: the meaning specified in Section 1 hereof.
IMPROVEMENTS: the approximately 170,000 square foot motorcycle
manufacturing facility and related improvements to be designed and
constructed by Landlord pursuant to the Construction Agreement on the land
described on Exhibit A attached hereto. The Improvements shall specifically
exclude all Tenant's Equipment, which shall remain the sole and exclusive
property of Tenant.
INDEMNIFIED PARTY: the meaning specified in Section 11 hereof.
INSURANCE REQUIREMENTS: all terms of any insurance policy covering
Tenant or covering or applicable to the Property or any part thereof, all
requirements of the issuer of any such policy, and all orders, rules,
regulations and other requirements of the national Board of First
Underwriters (or any other body exercising similar functions) applicable to
or affecting the Property or any part thereof or any use or condition of the
Property or any part thereof.
LEASE: collectively, this Single Tenant Lease Agreement and Exhibit A,
Exhibit B and Exhibit C attached hereto, the terms and conditions of which
are hereby incorporated into this Lease by reference.
LEGAL REQUIREMENTS: all laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements of all governments, departments,
commissions, boards, courts, authorities (including, without limitations,
environmental protection, planning and zoning authorities), agencies (and
other governmental or quasi-governmental units, whether Federal, state,
count, district, municipal, city or other), and any officials and officers
thereof, foreseen or unforeseen, ordinary or extraordinary, which now or at
any time hereafter may be applicable to Tenant with respect to the Property
or to the Property or any part thereof (including any which may apply to the
repair, use or maintenance of the Property or any part thereof).
MORTGAGE: the Initial Mortgage (as such term is defined in Section 5 of
Exhibit C hereto) and any other mortgage or other similar instrument from
time to time providing for the assignment as security of Landlord's interest
in the Property or this Lease by the holder thereof, of which Tenant is
notified and which is permitted under Section 23.2 hereof.
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MORTGAGEE: the mortgagee under any Mortgage.
PERMITTED EXCEPTIONS: The encumbrances to title set forth on Exhibit A
hereto.
PERSON: a corporation, an association, a partnership, an organization, a
trust, an individual, a government or political subdivision thereof or a
governmental agency.
PROPERTY: collectively, the land described on Exhibit A attached hereto
and the Improvements.
RESTORATION: in case of damage to or destruction of the Improvements, the
restoration, replacement or rebuilding of the Improvements as nearly as
possible to their condition and character immediately prior to such damage,
destruction or Taking, with such alterations and additions as may be made at
Tenant's election pursuant to and subject to the conditions of Section 7
hereof, together with any temporary repairs and property protection which may
be required pending completion of such work.
TAKING: a temporary or permanent taking by a government or political
subdivision thereof or by a governmental agency during the term hereof of all
or part of the Property, or any interest therein or right accruing thereto,
as the result of or in lieu of or in anticipation of the exercise of the
right of condemnation or eminent domain, or a change of grade affecting the
Property or any part thereof. Such a taking shall be deemed to have occurred
on the date on which Tenant shall be legally required to relinquish
possession of the Property.
TAXES: the meaning specified in Section 13 hereof.
TENANT'S EQUIPMENT: all equipment, fixtures, interior improvements and
other property, real and personal, attached and unattached from time to time
installed upon or located at the land described on Exhibit A attached hereto
and owned or leased by Tenant, other than the Improvements.
TOTAL DESTRUCTION: the meaning specified in Section 19.3 hereof.
TOTAL TAKING: the meaning specified in Section 20.3 hereof.
UNAVOIDABLE DELAYS: delays due to acts of God, inclement weather,
Landlord defaults, contractor defaults, governmental restrictions, enemy
actions, civil commotion, firs, unavoidable casualty, strikes, shortages of
supplies or other causes beyond the control of Tenant, but lack of funds
shall not be deemed a cause beyond the control of Tenant.
37. ADDITIONAL PROVISIONS. The additional provisions contained in Exhibit
C attached hereto are hereby incorporated herein by reference and made a part
of this Lease.
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IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed as of the date first set forth above.
Landlord: RYAN BELLE PLAINE, LLC
By /s/ [illegible]
-------------------------------------
Its Chief Manager
Tenant: EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY
By /s/ [illegible]
-------------------------------------
Its Chief Financial Officer
-----------------------------------
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EXHIBIT A
Description of Property
Lot 1, Block 1, and Lot 3, Block 2, Excelsior-Henderson Industrial Park
Subdivision, according to the recorded plat thereof, Scott County, Minnesota.
SUBJECT TO (THE "PERMITTED EXCEPTIONS"):
1. Easements as shown on said plat.
2. Declaration of Covenants, Conditions and Restrictions by C.L.C.
Development, Inc. dated December 31, 1996, recorded as Document No.
385963.
3. Contract for Private Development among the City of Belle Plaine,
Minnesota, the Belle Plaine Economic Development Authority and Tenant
dated December 31, 1996, recorded as Document No. 385970.
4. Assessment Agreement between the Belle Plaine Economic Development
Authority and Landlord of even date herewith.
5. Terms and conditions of Final Certificate dated May 25, 1962, filed April
2, 1963 in Book 32 of Misc., pages 409-36.
6. Public Improvements Agreement between CLC Development, Inc. and the City
of Belle Plaine dated December 31, 1996, recorded as Document No. 385965.
7. Assignment, Assumption and Amendment of Development Contract among the
City of Belle Plaine, the Belle Plaine Economic Development Authority,
Landlord and Tenant of even date herewith.
8. Covenants, conditions and restrictions contained in Limited Warranty Deed
from the Belle Plaine Economic Development Authority to Landlord of even
date herewith.
<PAGE>
EXHIBIT B
Basic Rent
1. The monthly Basic Rent payable by Tenant during the initial two (2) years
of the Fixed Term, plus any partial month at the beginning of the Fixed
Term, shall be the sum of $58,958.
2. The monthly Basic Rent payable by Tenant during the next three (3) years
of the Fixed Term shall be 110% of the amount necessary to fully amortize
the principal sum of $5,750,000, together with interest thereon at a rate
per annum equal to 3% in excess of the 3-year Constant Maturity Treasury
Rate at the commencement of such 3-year period (but not less than 8% or
greater than 12% per annum), in equal monthly installments over a term of
20 years.
3. The monthly Basic Rent payable by Tenant during the next five (5) years
of the Fixed Term shall be the product of (a) 115%, times (b) 110% of the
amount necessary to fully amortize the principal sum of $5,750,000,
together with interest thereon at a rate per annum equal to 3% in excess
of the 5-year Constant Maturity Treasury Rate at the commencement of such
5-year period (but not less than 8% or greater than 12% per annum), in
equal monthly installments over a term of 20 years.
4. The monthly Basic Rent payable by Tenant during the next five (5) years
of the Fixed Term shall be the product of (a) 132.25%, times (b) 110% of
the amount necessary to fully amortize the principal sum of $5,750,000,
together with interest thereon at the rate per annum equal to 3% in
excess of the 5-year Constant Maturity Treasury Rate at the commencement
of such 5-year period (but not less than 8% or greater than 12% per
annum), in equal monthly installments over a term of 20 years.
5. The monthly Basic Rent payable by Tenant during the last five (5) years
of the Fixed Term shall be the product of (a) 152%, times, (b) 110% of the
amount necessary to fully amortize the principal sum of $5,750,000,
together with interest thereon at a rate per annum equal to 3% in excess
of the 5-year Constant Maturity Treasury Rate at the commencement of such
5-year period (but not less than 8% or greater than 12% per annum), in
equal monthly installments over a term of 20 years.
For purposes hereof, the term "Constant Maturity Treasury Rate" shall
mean the average yield on United States Government Treasury Securities
with constant maturities of 3 years or 5 years, as applicable, as most
recently published in Federal Reserve Statistical Release No. H.15(519),
or an equivalent successor publication as reasonably determined by
Landlord, rounded up to the nearest one-eighth of one percent (0.125%).
In the event that such average yield shall cease to be published on at
least a monthly basis or is otherwise not readily available, Landlord may
select a substitute index which, in its reasonable discretion, is
<PAGE>
equivalent to the 3-year or 5-year Constant Maturity Treasury Rate, as
the case may be. For so long as the Initial Mortgage is in effect, the
Constant Maturity Treasury Rate shall be the same as determined in
connection therewith.
2
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EXHIBIT C
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Additional Provisions
1. OPTIONS TO EXTEND. Tenant shall have the option to extend the term
of this Lease for two (2) additional terms of ten (10) years each
(collectively, the "Extended Terms", and individually, an "Extended Term").
Tenant shall exercise its option by giving written notice thereof to Landlord
not later than one (1) year prior to the expiration of the Fixed Term or the
first Extended Term, as the case may be, time being of the essence. If Tenant
fails to exercise its option to extend the term of this Lease for the first
Extended Term, all of Tenant's rights to further extend the term hereof shall
expire.
Each Extended Term shall be upon the same terms and conditions as
provided in this Lease for the Fixed Term, except that the monthly Basic Rent
payable during the first Extended Term shall be the greater of (i) the
Prevailing Market Rent as of the date which is one (1) year prior to the
expiration of the Fixed Term, or (ii) the monthly Basic Rent payable by
Tenant during the last five (5) years of the Fixed Term; and the monthly
Basic Rent payable during the second Extended Term shall be the greater of
(i) the Prevailing Market Rent as of the date which is one (1) year prior to
the expiration of the first Extended Term, or (ii) the monthly Basic Rent
payable by Tenant during the first Extended Term. The "Prevailing Market
Rent" is the amount that a willing tenant would pay and a willing landlord
would accept, in arms-length, bona fide negotiations, for monthly Basic Rent
if the Property were leased to a single tenant pursuant to the terms of this
Lease for a term of ten (10) years. If the parties have not agreed upon the
Prevailing Market Rent at least ten (10) months prior to the expiration of
the Fixed Term or the first Extended Term, as the case may be, then it shall
be determined by the following appraisal process. Either Landlord or Tenant
(the "First Party") may initiate a determination for the Prevailing Market
Rent by giving written notice to the other (the "Second Party") of the name
of a real estate appraiser who has at least five (5) years of experience as
an appraiser of industrial property in the Twin Cities metropolitan area.
Within ten (10) days after receipt of such notice, the Second Party shall give
written notice to the First Party of the name of a real estate appraiser who
meets the same criteria. If the second Party fails to name such an appraiser
within such 10-day period, then the Prevailing Market Rent shall be the
amount determined by the appraiser named by the First Party. If the Second
Party does name such an appraiser, then within fifteen (15) days the two
appraisers shall together appoint a third appraiser who meets the same
criteria and within an additional fifteen (15) days the three appraisers shall
jointly determine the Prevailing Market Rent. If the three appraisers cannot
agree upon the Prevailing Market Rent, then the determination of the
appraiser whose determination of the Prevailing Market Rent is the median of
the three shall be the Prevailing Market Rent. Each party shall pay all
costs, fees and expenses of the appraiser who it selects and the parties
shall share equally the costs, fees and expenses of the third appraiser.
2. INITIAL OPTION TO PURCHASE. Tenant shall have the option to
purchase the Property on the last day of the sixtieth (60th) full month of
the Fixed Term (the "Purchase
<PAGE>
Date"), provided that no Event of Default in the payment of Basic Rent or
Additional Rent shall have occurred and be continuing on the Purchase Date.
Tenant shall exercise its option to purchase by giving written notice thereof
to Landlord not later than six (6) months prior to the Purchase Date, time
being of the essence. If Tenant exercises its option to purchase, the price
to be paid by Tenant shall be Six Million Two Hundred Fifty Thousand Dollars
($6,250,000) minus the sum of (a) any reduction in the principal balance of
the indebtedness secured by the Initial Mortgage from the original principal
balance of $5,750,000 to the principal balance thereof on the Purchase Date
which would have been obtained if all payments under the Initial Mortgage had
been made as and when due thereunder, and (b) the principal reduction
resulting from any release and application of the Reserve Fund described in
Section 6 hereof to the principal balance of such indebtedness. On the
Purchase Date, Tenant shall pay the purchase price to Landlord (for
application, to the extent required, to payment of the unpaid balance of the
indebtedness secured by the Initial Mortgage) and Landlord shall execute and
deliver to Tenant a Limited Warranty Deed, with State Deed Tax paid thereon,
conveying fee title to the Property to Tenant, it being understood that the
title to the Property will be free and clear of any Mortgage and shall be
subject only to the following encumbrances:
(i) the Permitted Exceptions;
(ii) any encumbrances resulting from Tenants's failure to keep or
perform its obligations under this Lease;
(iii) any encumbrances suffered or incurred by Tenant or anyone claiming
under Tenant;
(iv) any encumbrances or takings resulting from a proceeding in eminent
domain or threat thereof;
(v) any non-monetary encumbrances consented to in writing by Tenant;
and
(vi) unpaid taxes and special assessments.
Tenant shall assume and agree to perform all obligations of Landlord under
the Development Agreement from and after the Purchase Date.
Alternatively, Tenant may at its option assume the unpaid balance of
the indebtedness secured by the Initial Mortgage and pay the remainder of the
purchase price to Landlord, provided that Tenant shall procure the consent to
such assumption by the initial Mortgagee and the release of Landlord of all
further liability thereunder.
As soon as reasonably possible after Tenant exercises its option to
purchase, Landlord shall furnish to Tenant a commitment for an ALTA Owner's
Title Insurance Policy covering title to the Property. Tenant shall be
allowed twenty (20) days after receipt thereof for examination of
2
<PAGE>
title and notifying Landlord in writing of any objections thereto. If any
objection to title is not made and Landlord notified as herein provided, said
objection shall be deemed waived. If objections to title are made and
Landlord is notified thereof as herein provided, Landlord shall have until
the Purchase Date to cure such objections. If such objections are not cured
prior to the Purchase Date, Tenant may at its option (i) elect not to
purchase the Property, in which event this Lease shall remain in full force
and effect, (ii) close the purchase in the same manner as if there had been
no title objections, in which event the purchase shall be closed on the
Purchase Date and Landlord shall convey title to the Property subject to the
matters as to which objections were made but without waiving any rights to
damages hereunder, or (iii) attempt to cause such encumbrances to be removed.
However, if Tenant elects alternative (iii) above, closing shall be postponed
until the encumbrances in question are removed and, if Tenant is unable
within a further period of sixty (60) days to cause such encumbrances to be
removed, Tenant may then elect either alternative (i) or (ii) above. No such
postponement shall alter the purchase price. All costs and expenses incurred
by Tenant in causing or attempting to cause such encumbrances to be removed,
including reasonable attorneys fees, shall be payable by Landlord if
attributable to any fault or action by Landlord. Objections which can be
remedied by the payment of money shall be paid from Landlord's proceeds at
the closing.
3. RIGHT OF FIRST OFFER. If during the term hereof, Landlord elects to
offer the Property for sale, it shall notify Tenant thereof and of the price
for which it is willing to sell the Property (the "Offer Price"). Tenant
shall have fifteen (15) days thereafter in which to notify Landlord of its
agreement to purchase the Property for the Offer Price, time being of the
essence. If Tenant so notifies Landlord of its agreement to purchase the
Property, then Landlord shall sell the Property to Tenant and Tenant shall
purchase the Property from Landlord pursuant to the terms and conditions
contained in Section 2 hereof, except that (a) the purchase price shall be
the Offer Price, and (b) the Purchase Date shall be the date which is ninety
(90) days subsequent to the date of Tenant's notice to Landlord (or, if such
date is not a Business Day, the next Business Day thereafter). The Property
shall be conveyed to Tenant pursuant to this Section 3 free from any
Mortgage. If Tenant does not so notify Landlord of its agreement to purchase
the Property for the Offer Price within such 15-day period, then Landlord may
at any time within one (1) year after the date of Landlord's initial notice
to Tenant agree to sell the Property to a third party (and thereafter close
such sale), subject to this Lease, for a sale price which is not less than
ninety-five percent (95%) of the Offer Price. In the event of such a sale of
the Property to a third party, this Section 3 and Section 4 hereof shall
terminate and Tenant shall have no further rights hereunder or thereunder.
Tenant's rights under this Section 3 shall be subordinate to the lien of any
Mortgage.
4. CONDITIONAL OPTION TO PURCHASE. Tenant shall have the further
option to purchase the Property on the last day of the Fixed Term (the
"Expiration Date"), if (a) the Property shall not theretofore have been sold
by Landlord to a third party in accordance with the provisions contained in
Section 3 hereof, and (b) no Event of Default in the payment of Basic Rent or
Additional Rent shall have occurred and be continuing on the Expiration Date.
Tenant shall exercise such option to purchase by giving written notice thereof
to Landlord not sooner
3
<PAGE>
then twelve (12) months nor later than six (6) months prior to the
Expiration Date, time being of the essence. If Tenant exercises such option
to purchase the Property, then Landlord shall sell the Property to Tenant and
Tenant shall purchase the Property from Landlord pursuant to the terms and
conditions contained in Section 2 hereof except, that (i) the purchase price
shall be the Fair Market Value of the Property as of the date which is six
(6) months prior to the Expiration Date, and (ii) the Purchase Date shall be
the Expiration Date. The Property shall be conveyed to Tenant pursuant to
this Section 4 free from any Mortgage. The "Fair Market Value" is the cash
price which would be obtained for the Property, not subject to this Lease,
in an arm's length transaction between a willing buyer and a willing seller
under no compulsion to do so. If the parties have not agreed in writing upon
the Fair Market Value at least four (4) months prior to the Expiration Date,
then it shall be determined by the same appraisal process which is described
in Section 1 hereof for the determination of Prevailing Market Rent. Tenant's
rights under this Section 4 shall be subordinate to the lien of any Mortgage.
5. INITIAL MORTGAGE. In order to finance Landlord's share of the costs
of the work to be performed pursuant to the Construction Agreement, Landlord
shall obtain, on or before July 1, 1997, a mortgage loan (the "Loan") in the
amount of $5,750,000 and containing the terms and conditions described in the
proposal by Juran & Moody, a division of Miller, Johnson & Kuehn, Inc., to
the Ryan Companies US, Inc. dated February 10,1997, which Loan shall be
secured by a first mortgage (the "Initial Mortgage") encumbering the Property
(but not any of Tenant's Equipment). Except as otherwise specifically
provided herein, the Initial Mortgage and every other document evidencing or
securing the Loan (collectively, the "Loan Documents") shall be fully subject
and subordinate to each and every term, covenant and condition of this Lease,
including, without limitation, the option to purchase contained in Section 2
hereof. In no event shall tenant be liable to the holder of the Loan for
payment of any amount whatsoever which is payable pursuant to a Loan Document
and Tenant shall not be required to join in the execution of any Loan
Document, except for a subordination, non-disturbance and attornment
agreement pertaining to this Lease which is consistent with the terms hereof.
The Loan shall be disbursed in accordance with the disbursing and approval
procedure provided for in the Construction Agreement and pursuant to a
disbursing agreement consistent with such procedure among Landlord, Tenant,
the initial Mortgagee and the disbursing agent in connection with the Loan.
The Loan Documents shall be subject to the reasonable approval of Tenant as
to the consistency thereof with the terms of this Lease. Landlord shall not
further encumber the Property prior to the first day of the 61st full month
of the Fixed Term unless Tenant shall fail to timely exercise its option to
purchase the Property pursuant to Section 2 hereof. Prior to such time,
Landlord shall not modify or amend any of the Loan Documents without the
written consent of Tenant. Landlord shall fully and timely pay and perform
all of th terms, covenants or conditions of such Loan Documents in accordance
with their terms. In the event that Landlord shall fail to do so and such
failure continues for ten (10) days after written notice thereof by Tenant to
Landlord, and provided that such failure is not the result of a default by
Tenant hereunder, Tenant shall have the right, but not the obligation, to pay
and perform such terms, covenants and conditions, and deduct from the Basic
Rent and Additional Rent thereafter due
4
<PAGE>
under this Lease any sums reasonably expended by Tenant in taking such
action, together with interest thereon at the rate of 15% per annum from the
date of expenditure.
6. INITIAL MORTGAGE RESERVE FUND. The Initial Mortgage will require
that Landlord establish and maintain a reserve fund with the initial Mortgagee
in the amount of $750,000 (the "Reserve Fund"). Provided that no Event of
Default exists hereunder, Tenant shall have the right to make all investment
decisions with respect to the Reserve Fund which are afforded by the Initial
Mortgagee and Landlord shall pay, or cause to be paid directly, to Tenant
all investment earnings on the Reserve Fund (less any tax liability of
Landlord or its members with respect thereto) as they are received. Provided
that this Lease shall not have been terminated due to an Event of Default,
the Reserve Fund shall be paid to Tenant at the first to occur of (a) the
release thereof by the initial Mortgagee to the Landlord, or (b) the
expiration of the Fixed Term, or (c) at the closing if Tenant purchases the
Property pursuant to its option to purchase contained in Section 2 hereof
and the Reserve Fund has not therefore been applied to reduction of the
principal balance of the Initial Mortgage, or if Tenant purchases the Property
pursuant to Sections 3 or 4 hereof. Landlord and Tenant agree to modify this
Section 6 if required in order to be consistent with the terms and conditions
of the Initial Mortgage.
7. MOTORCYCLES. Tenant agrees to sell to Landlord or its designees,
for the total sum of $36,000, two (2) new Excelsior-Henderson Super X
motorcycles from the first year of production.
8. ADDITIONAL PARKING. Tenant anticipates that there will initially be
approximately 177 persons working at the Property at any one time. By reason
thereof, the City is requiring that only 269 parking spaces be provided on
the Property. However, Tenant shall, at its sole cost and expense, if
necessary construct additional parking spaces on the Property such that there
shall at all times be located thereon a number of parking spaces equal to
the lesser of (a) 35 plus the number of persons working at the Property at
any one time, or (b) the number required pursuant to the applicable ordinance
of the City. Any recorded agreement hereafter entered into between the
Landlord and the City which is consistent with the provisions of this
Section 8 shall also constitute a Permitted Exception.
9. CONSTRUCTION AGREEMENT. Landlord shall fully and timely pay,
perform and comply with all of the terms, covenants and conditions of the
Construction Agreement to be performed up to and including Final Completion
thereunder. In the event Landlord shall fail to do so and, as a result
thereof, Tenant shall terminate the Construction Agreement pursuant to the
terms thereof, then Tenant shall have the right, but not the obligation, to
complete the Improvements, and, provided Tenant has authorized the
disbursement to Landlord of payment for all work performed in accordance with
the Construction Agreement prior to termination, to deduct from the Base Rent
and Additional Rent thereafter due under this Lease any sums reasonably
expended by Tenant in taking such action which are not paid by Landlord to
Tenant within 30 days after demand therefor and the furnishing of evidence
thereof, together with interest thereon at the rate of 15% per annum from the
date of expenditure. In addition, pursuant
5
<PAGE>
to the Construction Agreement Tenant has the right to terminate this Lease in
the event of certain defaults by Landlord under the Construction Agreement.
10. LEASEHOLD MORTGAGES. Tenant may from time to time grant a mortgage
encumbering its leasehold interest hereunder (including its rights to
purchase the Property) to the Minnesota Agricultural and Economic Development
Board, its successors and/or assigns ("MAEDB"), or to an institutional lender
(the "Tenant's Mortgagee"), provided that Landlord is notified thereof in
writing. No more than one such leasehold mortgage may be outstanding at any
one time. In connection with any such leasehold mortgage, Landlord further
agrees as follows:
(a) Landlord will give to Tenant's Mortgagee simultaneously with
service on Tenant a duplicate of any and all notices of default
which are required by the Lease to be given by Landlord to Tenant.
All such notices shall be in writing, either delivered in hand or
sent by first class mail, postage prepaid or sent by telex,
telecopier, facsimile transmission or telegraph, and addressed as
follows if MAEDB is the Tenant's Mortgagee:
Minnesota Agricultural and Economic Development Board
500 Metro Square
121 7th Place East
St. Paul, MN 55101
Attn: Executive Director
and to:
First Bank National Association
c/o First Trust National Association
180 East 5th Street
St. Paul, MN 55101
Attn: Corporate Trust Department
If the Tenant's Mortgagee is other than MAEDB, such notices shall
be addressed to the Tenant's Mortgagee at such address as it may
provide to Landlord.
(b) Upon a default under the Lease, Tenant's Mortgagee shall have the
privilege of performing on behalf of Tenant any of Tenant's covenants
or of curing any defaults by Tenant or of exercising any election,
option or privilege conferred upon Tenant by the terms of the Lease
and Tenant shall be bound thereby. Landlord shall not terminate the
Lease or Tenant's right of possession for any default of Tenant if,
within the period within which Tenant is expressly allowed in the
Lease to cure such default, such default is cured or caused to be
cured by Tenant's Mortgagee. Provided, however, that there shall be
no obligation on the
6
<PAGE>
part of Tenant's Mortgagee to cure any default. If no notice of
default is required by the terms of the Lease, Landlord agrees not
to terminate the Lease unless Tenant's Mortgagee fails to cure such
default within ten (10) days after notice by Landlord to Tenant's
Mortgagee of the occurrence of such default.
(c) No liability for the payment of rent or the performance of any of
Tenant's covenants and obligations of the Lease shall attach to or be
imposed upon Tenant's Mortgagee prior to Tenant's Mortgagee's exercise
of its rights hereunder, all such liability being hereby expressly
waived by Landlord; provided, however, that nothing herein shall
relieve Tenant's Mortgagee of liability for damages resulting from
Tenants Mortgagee's actions or negligence in performing Tenant's
obligations thereunder.
(d) Landlord will not, without prior notice to Tenant's Mortgagee,
enter into any amendment of the Lease that would reduce the original
term of the Lease or would otherwise materially and adversely affect
the collateral interest of Tenant's Mortgagee in the Property.
(e) Upon receipt of a written request therefor, Landlord shall execute
an estoppel certificate certifying, if true, that the Lease has not
been modified and is in full force and effect or, if there has been
a modification of the Lease, that the Lease is in full force and
effect as modified, stating such modifications;specifying the date
to which the rent has been paid; stating whether or not, to the
knowledge of the Landlord, Tenant is in default and, if so, stating
the nature of such default; and stating which options to extend the
term of the lease have been executed, if any.
(f) If any proceedings are brought to foreclose the Tenant's Mortgage
or if Tenant's leasehold interest in the Property is conveyed to
Tenant's Mortgagee by deed in lieu of foreclosure or by any other
means, Landlord shall recognize Tenant's Mortgagee as Tenant under
the Lease. Further, if the Lease is rejected under 11 U.S.C. Section
365, the Lease, at Tenant's Mortgage's option, to be exercised by
notice to Landlord within ten (10) days after such rejection, shall
not be deemed to be terminated and upon such election, Landlord shall
recognize Tenant's Mortgagee as Tenant under the Lease. This
provision shall be effective and self operative without the execution
of any further instrument on the part of any of the parties hereto.
Tenant's Mortgagee shall have the right to assign its leasehold
interest in the Property to an assignee with the prior written consent
of the Landlord, which consent shall not be unreasonably withheld,
delayed or conditions. From and after the time at which Tenant's
Mortgagee or such assignee succeeds to the interest of Tenant under
the Lease, Tenant's Mortgagee
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<PAGE>
or such assignee shall be bound to Landlord under all the terms,
covenants and conditions of the Lease and Tenant's Mortgagee or such
assigns shall have all rights and remedies thereunder.
The terms and conditions of this Section 10 shall survive any termination or
rejection of the Lease.
11. TAXES IN 2007. Tenant agrees that, in accordance with the letter
agreement by it and Landlord to the Belle Plaine Economic Development
Authority and the City of Belle Plaine, Minnesota dated April 15, 1997,
Tenant will if necessary pay all real estate taxes payable with respect to
the Property in the year 2007 not later than May 15, 2007.
8
<PAGE>
CONSTRUCTION AGREEMENT
THIS CONSTRUCTION AGREEMENT is made and entered into this 21st day of
April, 1997, by and between RYAN BELLE PLAINE, LLC, a Minnesota limited
liability company ("Landlord"), and EXCELSIOR-HENDERSON MOTORCYCLE
MANUFACTURING COMPANY, a Minnesota corporation ("Tenant").
RECITALS
A. Landlord and Tenant have entered into a Single Tenant Lease
Agreement of even date herewith (the "Lease"), relating to property located
in Belle Plaine, Minnesota, more particularly described therein (the
"Property"). Terms which are capitalized and not otherwise defined herein
have the meanings ascribed to them in the Lease.
B. This Agreement shall set forth the agreements between Landlord and
Tenant regarding the design and construction of the improvements contemplated
by the Preliminary Plans (defined below). The "Work" is the total design,
construction and other services required under the Contract Documents and
includes, without limitation, all professional design services, the completed
construction, and all labor, materials, equipment and services which are
necessary to produce or which are used or incorporated in such design and
construction. The "Work" also shall include the enforcement of that certain
Public Improvements Agreement dated as of December 31, 1996, by and between
CLC Development, Inc. and the City (defined below), including, without
limitation, taking over performance of the improvements contemplated by such
Agreement pursuant to Section 3.5 of the Development Agreement (defined
below) if necessary in order to insure timely completion of such improvements.
NOW, THEREFORE, in consideration of the mutual terms hereof and of the
Lease, Landlord and Tenant agree as follows:
1. CONTRACT DOCUMENTS. The Contract Documents consist of the following:
(a) This Agreement;
(b) The Preliminary Plans and Outline Specifications described on
ATTACHMENT 1 to this Agreement (the "Preliminary Plans");
(c) The General Conditions for Construction attached as
ATTACHMENT 2 to this Agreement (the "General Conditions");
<PAGE>
(d) The Contract Schedule attached as ATTACHMENT 3 to this
Agreement (the "Contract Schedule");
(e) The Schedule of Values attached hereto as ATTACHMENT 4 to
this Agreement (the "Schedule of Values");
(f) The Final Plans (defined below); and
(g) Written modifications signed by Landlord and Tenant.
Additionally, the General Conditions are hereby incorporated by reference
into and constitute a part of this Agreement for all purposes of this
Agreement, the Lease and all other documents and agreements executed in
connection herewith.
2. FINAL PLANS. Landlord shall submit to Tenant for its approval final
design and construction drawings and specifications setting forth in detail
the requirements for construction of the Improvements (the "Final Plans").
Such Final Plans shall be prepared and certified by licensed architects or
engineers in the respective disciplines selected by Landlord. Tenant agrees
that it will not unreasonably withhold its approval of the Final Plans so
long as they are consistent with the Preliminary Plans. When the Final Plans
have been approved, they shall be signed or otherwise approved in writing by
Landlord and Tenant and shall supersede the Preliminary Plans.
3. CONTRACT TIME. Landlord shall perform the Work with due diligence so
as to achieve the various construction milestones provided in the Contract
Schedule, subject to the provision in the General Conditions dealing with
Excusable Delay. Time is of the essence of this Agreement. Landlord has
agreed that, subject to the provisions in the General Conditions dealing with
Excusable Delay, it bears all risk of delay under this Agreement (including
all risk of increased costs attributable to such delay) that is occasioned by
any delay in the performance or completion of the Work. Landlord shall employ
sufficient forces and take all other steps necessary to achieve each of the
intermediate milestone dates, if any, and dates for Substantial Completion and
Final Completion set forth in this paragraph.
4. CONTRACT SUM.
4.1 CONTRACT SUM. In consideration of the performance of the Work,
Tenant shall pay Landlord the sum of Three Million Sixty Thousand Eight
Hundred Five and No/100 Dollars ($3,060,805.00) (the "Company Funds"),
subject to any additions and deductions as provided in the Contract
Documents. Landlord and Tenant acknowledge and agree that as of the date of
this Agreement Tenant has prepaid to Landlord Fifty-One Thousand Two Hundred
Eighty-Six and No/100 ($51,286.00) of the Company Funds, the receipt of which
is hereby acknowledged by Landlord. In addition, the Belle Plaine Economic
Development Authority (the "Authority") has agreed to contribute towards the
cost of performing the Work the sum of
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<PAGE>
One Million One Hundred Thousand and No/100 Dollars ($1,100,000.00) (the
"Authority Funds") pursuant to that certain Contract for Private Development
dated December 31, 1996, among Tenant, the City of Belle Plaine, Minnesota
(the "City") and the Authority, as amended by Assignment, Assumption and
Amendment of Development Contract dated as of even date with the Lease among
Landlord, Tenant, the City and the Authority (collectively, the "Development
Agreement"). The Company Funds and the Authority Funds have been or will be
paid into an escrow account (the "Escrow Account") and held for disbursement
in accordance with this Agreement and pursuant to that certain Escrow
Agreement dated as of even date herewith by and among the Authority,
Landlord, Tenant and Commonwealth Land Title Insurance Company (the "Escrow
Agreement"). Except as otherwise provided in this Agreement, (i) the Company
Funds and the Authority Funds are absolute maximums and shall not be
increased for any reason whatsoever, and (ii) all remaining sums necessary to
complete the Work shall be the "Landlord's Contribution" and shall be paid by
Landlord as and when incurred. Landlord anticipates financing Five Million
and No/100 Dollars ($5,000,000.00) of Landlord's Contribution pursuant to the
Initial Mortgage (as defined in the Lease), but the obtaining of the Initial
Mortgage shall in no event be deemed to be a condition to Landlord's
obligations hereunder. The sum of the Company's Funds, the Authority Funds
and the Landlord's Contribution shall hereinafter be referred to as the
"Contract Sum". Except as otherwise provided herein, the Contract Sum shall
be full compensation to the Landlord for the performance of the Work pursuant
to the Contract Documents, including so-called "soft costs" and all of
Landlord's profits and fees. It is the expressed intention of the Parties
that all material costs comprising the Contract Sum have been disclosed to
Tenant. To the extent that Tenant has not been furnished with the
documentation substantiating the costs comprising the Contract Sum, Landlord
shall so provide any and all such documents not previously provided to Tenant
upon Tenant's written request.
4.2 CONCEALED CONDITIONS. Should Landlord encounter subsurface
conditions which differ materially from those identified in the subsurface
exploration report by Braun Intertec, dated January 31, 1997, or should
Landlord encounter any hazardous substances or underground tanks on the
Property, Tenant and Landlord shall issue a Change Order with respect to any
Changed Work reasonably necessitated thereby. Landlord shall notify Tenant
within five (5) days after the first observance of any such concealed
conditions.
4.3 ALLOWANCES. If the cost to Landlord of any element of the Work
for which an allowance is set forth in the Contract Documents differs from
the allowance amount, the difference shall be paid in cash to Landlord or
Tenant as the case may be; such adjustments to be made within thirty (30)
days after the date on which Substantial Completion is achieved.
4.4 SOFT COSTS ALLOWANCE. The Contract Sum includes an allowance
amount of $527,225 (the "Soft Costs Allowance") for the following soft costs
associated with the Work:
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<PAGE>
COST ALLOWANCE
- ---- ---------
Legal Expense:
(a) Ryan $ 15,000
(b) Lender $ 25,000
Title & Recording
(a) Mortgage Registration Tax $ 13,225
(b) Title Insurance Premium $ 17,500
(c) Disbursing Fee $ 2,500
(d) Closing & Recording $ 2,000
Financing Fee $138,000
Interim Interest
(Through Rent Commencement) $100,000
Interest on Land Closing $ 8,000
Advance at 9.5%
Initial Closing Costs $ 3,900
Interest to CLC Development $ 14,100
Survey $ 10,000
Appraisal $ 5,000
Environmental Assessment $ 15,000
Real Estate Taxes $ 5,000
Corporate Real Estate Fee $ 62,500
Tennessen Fee $ 20,000
Special Consideration $ 36,000
Contingency for Above Items $ 34,500
--------
$527,225
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<PAGE>
If the actual total amount of the above soft costs differs from the total Soft
Costs Allowance then Landlord shall pay to Tenant (if it is less) or Tenant
shall pay to Landlord (if it is more) the difference between such actual
total costs and the Soft Costs Allowance, such adjustment to be made in
connection with the payment of the Retainage pursuant to Section 5.7.
Landlord shall reimburse Tenant for the amount of any of the foregoing soft
costs paid by Tenant directly within ten (10) days after Tenant Landlord with
evidence of such payment.
5. PAYMENT OF CONTRACT SUM.
5.1 PAYMENT. The Company Funds and the Authority Funds shall be
held pursuant to the Escrow Agreement for disbursement in accordance with
this Agreement. After such disbursement has been completed, Landlord shall
pay when due all other costs associated or incurred in connection with the
Work. Landlord shall be responsible for fully complying with all of the terms
and conditions of the Development Agreement with respect to the application
of the Authority Funds. Without limitation to the foregoing, Landlord shall
ensure that Authority Funds are paid only for qualifying "Site Improvement
Costs" under the Development Agreement and shall coordinate with the City and
the Authority in connection therewith.
5.2 APPLICATION FOR PAYMENT OF COMPANY FUNDS AND AUTHORITY FUNDS.
Landlord may submit to Tenant not more often than once each month an
"Application for Payment" with respect to the Company Funds and the Authority
Funds. Each Application for Payment shall be submitted on a form reasonably
acceptable to Tenant and shall contain the same items and sequence as the
Schedule of Values. Two notarized originals (signed by a responsible officer
of Landlord acceptable to Tenant) and one copy of the Application for Payment
shall be submitted to Tenant. Upon Tenant's request, Landlord shall furnish
Tenant with such backup material and supporting data for each Application for
Payment with respect to any Changed Work or allowance items as Tenant may
reasonably require under the circumstances. The Application for Payment shall
indicate the percentage of completion of each portion of the Work as of the
end of the period covered by the Application for Payment. No Application for
Payment shall include (i) any amount relating to changes in the Work until a
Change Order has been issued by the Tenant with respect to such change, or
(ii) requests for payment of amounts Landlord does not intend to pay to a
subcontractor or material supplier because of a dispute or other reason.
5.3 RETAINAGE. Until such time as the Work is fifty percent (50%)
complete, each Application for Payment shall contain a retainage of ten
percent (10%) of the amount set forth therein for all elements of Work set
forth on the Schedule of Values, except soft costs ("Retainage"). No
Retainage shall be deducted from Applications for Payment submitted
subsequent to such time as the Work is fifty percent (50%) complete. Such
Retainage shall not be payable until final payment pursuant to Section 5.7.
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5.4 LIEN WAIVERS. Landlord shall submit its conditional lien
waiver with each Application for Payment. On each Application for Payment,
Landlord shall also certify that all bills and/or subcontrators have been
paid for which previous Applications for Payment have been issued upon which
payment has been made; if partial payment has been made, then Landlord shall
identify payments made to subcontractors and material suppliers. Landlord
shall also submit lien waivers from subcontractors and material suppliers
covering prior payments in excess of One Thousand Dollars ($1,000) with the
second and each subsequent Application for Payment. In addition, in
connection with the Final Payment Tenant in its discretion may require lien
waivers shall be provided concurrently in exchange for the payments to which
they relate. The lien shall state the dollar amount of all payments and shall
be on a form acceptable to Tenant.
5.5 PARTIAL PAYMENTS. Subject to the terms and conditions of the
General Conditions, within ten (10) days after receipt of the Application for
Payment by Tenant as aforesaid, Tenant shall authorize the payment to
Landlord from the Escrow Account of those amounts set forth in the
Application, provided the Application is in proper form and is accompanied by
the required supporting data, unless Tenant legitimately objects in writing
to payment and, in such event, Landlord shall be entitled to be paid any
undisputed amount, with amount in dispute to be resolved in accordance with
the terms of the Contract Documents. If Tenant wrongfully fails to authorize
any payment to Landlord within such 10-day period, Tenant shall be liable to
Landlord for interest on the amount due at the rate of twelve percent (12%)
per annum from the last day of such 10-day period until such payment is
authorized by Landlord. Such interest shall be paid upon demand.
5.6 MORTGAGE DISBURSEMENTS. Landlord shall not draw down or cause
the disbursement of any loan proceeds or other sums whatsoever which shall be
secured by the Initial Mortgage or otherwise until such time as the Landlord
shall have satisfied the Application For Payment, lien waiver, Tenant
authorization and other requirements set forth in this Article 5 in the same
manner as if such sums were payments of Company Funds.
5.7 PAYMENT UPON SUBSTANTIAL COMPLETION. Tenant shall authorize
payment to Landlord of the remaining unpaid portion of the Contract Sum
(other than amounts held pursuant to Section 5.8), including the Retainage
when both (1) Substantial Completion has been achieved, and (2) a final
Application for Payment has been issued by the Landlord and approved by
Tenant, which final Application for Payment shall include, without
limitation, a comprehensive punch list of items remaining to be corrected or
completed. Such final payment shall be authorized by Landlord not more than
twenty (20) days after Tenant's receipt of the final Application for Payment,
provided it is approved by Tenant, and such approval shall not be
unreasonably withheld.
5.8 PUNCH LIST. Tenant may withhold authorization of payment to
Landlord from the payment under Section 5.7 of a sum equal to one hundred
fifty percent (150%) of the cost (as reasonably estimated by Tenant) of
completing any unfinished Work as identified on
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<PAGE>
the punch list of elements of the Work which are either incomplete or do not
conform to the Final Plans, prepared by Landlord as aforesaid and
supplemented by Tenant and delivered to Landlord within twenty (20) days
after receipt of Landlord's final Application for Payment. Landlord will
proceed expeditiously and with due diligence to complete and/or correct all
punch list items, prior to the date required by this Agreement for Final
Completion. Tenant shall authorize the payment to Landlord of the sum so
withheld within ten (10) days after (i) the achievement of Final Completion,
and (ii) submission by Landlord to Tenant of a supplemental Application for
Payment therefor.
5.9 LANDLORD'S RECORDS. Landlord shall keep complete and
accurate records with regard to all costs incurred in connection with any
allowance items and Changed Work. Such records shall be maintained in a
manner reasonably satisfactory to Tenant. Tenant shall have access at all
reasonable times to Landlord's records and other documents of any kind
relating to such Work, including, without limitation, all subcontracts,
purchase orders, receipts, vouchers and correspondence. All of the foregoing
records and other documents shall be preserved by Landlord, and the Tenant
shall have access to them, for not less than two (2) years after Substantial
Completion. Tenant may conduct periodic audits of Landlord's records and
other documents relating to such Work, and Landlord shall cooperate with
Tenant in conducting such audits.
6. INSURANCE. Landlord shall purchase and maintain the insurance
required by the Contract Documents until the date on which Final Completion
is achieved.
7. CHANGES IN THE WORK. Tenant may order changes in the Work in
accordance with the Contract Documents. In the event Changed Work is ordered,
the Contract Sum shall be adjusted only as provided in the Contract
Documents, subject, in all events, to the provisions of Subparagraph 11.1.1
of the General Conditions. If an adjustment is to be made, the increase or
decrease in the Contract Sum shall be determined on the basis of the
reasonable expenditures and savings of those performing the Changed Work,
plus, with respect to each additive change, a Landlord's fee equal to five
percent (5%) of the additional expenditures; subject, however to the further
limitations set forth in Subparagraph 11.1.3 of the General Conditions. As a
condition to Landlord undertaking any Changed Work that increases the
Contract Sum, Landlord may require Tenant to escrow the entire amount
reasonably estimated by the parties to be the cost of the Changed Work and
the Landlord's fee thereon as aforesaid in the Escrow Account, and the
Schedule of Values shall be revised accordingly. In the case of any deletion
or change which results in a net decrease in the cost of the Work, the
adjustment to the Contract Sum determined as aforesaid shall be deducted in
full from the Company Funds owing under this Agreement and promptly paid to
Tenant by Landlord at Substantial Completion.
8. LANDLORD DEFAULT.
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8.1 LANDLORD DEFAULT. Without limitation to any of Tenant's other
rights or remedies, after five (5) days' notice to Landlord, Tenant may
withhold authorization of any payment to Landlord during the continuance of
any of the following defaults by Landlord:
(a) Landlord is adjudged a bankrupt or makes a general assignment
for the benefit of creditors, or a receiver is appointed on
account of its insolvency;
(b) Landlord persistently or repeatedly refuses or fails to supply
enough properly-skilled workmen or proper materials, or fails
to achieve the Contract Schedule;
(c) Landlord persistently fails or neglects to carry out the Work
in accordance with the Contract Documents;
(d) Landlord fails to make prompt payment to subcontractors for
labor or materials;
(e) Landlord persistently disregards laws, ordinances, rules,
regulations, or orders of any public authority having
jurisdiction; or
(f) Landlord otherwise is guilty of a material violation of a
provision of the Contract Documents.
In addition, in the event any of the foregoing defaults shall occur prior to
achievement of Substantial Completion and shall continue for a period of
sixty (60) days after notice thereof from Tenant to Landlord and the Initial
Mortgagee (as defined in the Lease), Tenant at its election may do any of
the following: (i) terminate this Agreement, (ii) terminate the Lease,
(iii) exercise any of Tenant's rights and remedies under the Lease, and/or
(iv) exercise any or all of Tenant's legal, equitable, statutory and other
rights and remedies. The Initial Mortgagee also shall have the right to cure
any such default within such sixty (60) day period.
8.2 REIMBURSEMENT; COMPANY MORTGAGE. Without limitation to any of
Tenant's other rights and remedies, in the event the Lease is terminated
pursuant to Section 8.1, Landlord shall promptly reimburse Tenant for the
entire amount of the Company Funds. Such reimbursement obligation of Landlord
is secured by a Mortgage dated as of even date herewith between Landlord and
Tenant and encumbering the Property (the "Company Mortgage"). Tenant shall
fully subordinate the Company Mortgage to the Initial Mortgagee. Tenant will
satisfy and discharge the Company Mortgage upon the achievement of
Substantial Completion.
8.3 DAMAGES. Notwithstanding any exercise or alleged exercise of
any of Tenant's other rights and remedies, Landlord hereby indemnifies and
agrees to hold Tenant
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harmless from and against any and all losses and/or damages incurred by
Tenant in connection with any failure by Landlord to fully, completely and
promptly pay, perform and comply with any of the terms, covenants or
conditions of this Agreement, including, without limitation, any bargain
value of the Lease, any and all costs and expenses incurred or paid by Tenant
in connection with this Agreement, the Lease or otherwise with respect to
this transaction, including, without limitation, the Company Funds and the
Authority Funds (which Tenant has guaranteed and, in some circumstances, has
agreed to repay to the Authority, pursuant to the Development Agreement), and
all costs and expenses (including, without limitation, reasonable attorneys'
fees) incurred by Tenant in connection with such failure. The foregoing
obligations shall survive expiration or earlier termination of this Agreement.
8.4 RIGHTS CUMULATIVE. Each right, power or remedy herein conferred
upon the Tenant is cumulative and in addition to every other right, power or
remedy, express or implied, now or hereafter arising, available to Tenant, at
law or in equity, or under any other agreement, and each and every right,
power and remedy herein set forth or otherwise so existing may be exercised
from time to time as often and in such order as may be deemed expedient by
the Tenant and shall not be a waiver of the right to exercise at any time
thereafter any other right, power or remedy. No delay or omission by the
Tenant in the exercise of any right, power or remedy arising hereunder or
arising otherwise shall impair any such right, power or remedy or the right
of Tenant to resort thereto at a later date or be construed to be a waiver of
any default under this Agreement.
8.5 RIGHT TO DISCONTINUE REMEDIES. In the event Tenant shall have
proceeded to invoke any right, remedy or recourse permitted under this
Agreement and shall thereafter elect to discontinue or abandon the same for
any reason, Tenant shall have the unqualified right to do so.
9. MISCELLANEOUS.
9.1 ENTIRE AGREEMENT. The Lease, this Agreement and the other
Contract Documents constitute the entire agreement between the parties with
respect to the construction of the Improvements and supersedes all prior
negotiations between the parties with respect to the subject matter thereof,
except to the extent that such negotiations resulted in executed agreements
which have been specifically referenced and incorporated herein.
9.2 ASSIGNMENT. Landlord may not assign or otherwise transfer its
interest or obligations under this Agreement without the prior written
consent of Tenant, except as collateral to the holder of the Initial Mortgage
(as defined in the Lease).
9.3 TERMS. Unless otherwise provided in this Agreement, defined
terms used in this Exhibit which not are defined herein shall have the
meanings given to them in the Lease and the Contract Documents.
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9.4 GUARANTY. Landlord and Tenant acknowledge that all of the
Landlord's obligations under the Contract Documents have been guaranteed
by Ryan Companies US, Inc., a Minnesota corporation, pursuant to a
Guaranty of even date herewith.
9.5 NOTICES. Any notices required to be given by the parties
pursuant to the Contract Documents shall be given as provided in
Section 32 of the Lease; provided, however, any notices, requests or
submission to Tenant shall simultaneously be given to Corporate Real
Estate, 750 South Plaza Drive, Suite 201, Mendota Heights,
Minnesota 55120, Attention: Bruce Maus.
9.6 UNENFORCEABILITY OF CERTAIN CLAUSES. The unenforceability or
invalidity of any provisions of this Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Agreement to be
duly executed as of the date first above written.
RYAN BELLE PLAINE, LLC
By-------------------------------
Its Chief Manager
EXCELSIOR-HENDERSON
MOTORCYCLE MANUFACTURING
COMPANY
By-------------------------------
Its Chief Financial Officer
-----------------------------
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ATTACHMENT 1
Preliminary Plans and Outline Specifications
Final Outline Specification for the Design and Construction of Ryan Companies
(Owner) Excelsior-Henderson Motorcycle Manufacturing Company (Tenant) 170,000
Manufacturing/Office Building, Belle Plaine, Minnesota; Prepared by Ryan
Companies US, Inc., dated April 8, 1997.
DRAWING NO. DRAWING TITLE PREPARED BY DATE
- ----------- ------------- ----------- ----
A1 Roof Plan/Site Plan Pope Associates, Inc. 3/17/97
A2 First Floor Plan Pope Associates, Inc. 3/17/97
A2E Equipment Plan Pope Associates, Inc. 3/5/97
A3 Partial First Floor Plan Pope Associates, Inc. 3/17/97
A4 Second Floor Plan Pope Associates, Inc. 3/17/97
A5 Enlarged Floor Plans Pope Associates, Inc. 3/17/97
A6 Sections Pope Associates, Inc. 12/10/96
A6 Exterior Elevations Pope Associates, Inc. 3/17/97
A8 Sections Pope Associates, Inc. 3/17/97
A9 Sections Pope Associates, Inc. 3/17/97
A10 Sections Pope Associates, Inc. 2/21/97
A11 Sections/Details Pope Associates, Inc. 3/17/97
Reflected Ceiling Plan Pope Associates, Inc. 3/17/97
S1 Foundation Plan McConkey & Associates, Inc. 3/4/97
S2 Roof Framing Plan McConkey & Associates, Inc. 3/4/97
S3 Second Floor & Mezz. McConkey & Associates, Inc. 3/4/97
Framing Plan
S4 Sections McConkey & Associates, Inc. 3/4/97
S5 Sections McConkey & Associates, Inc. 3/4/97
S6 Structural Notes, Plans McConkey & Associates, Inc. 3/4/97
& Sections
M1 Mechanical First Floor Dunham Associates 3/7/79
Plan
M2 Mechanical Second Floor Dunham Associates 3/7/97
Plan
L1 Landscape Plan British Landscapes, Ltd. 1/16/97
62640-001 Grading and Drainage Schoell & Madson 3/13/97
62640-002 Utility Schoell & Madson 4/15/97
62640-003 Detail Schoell & Madson 2/28/97
<PAGE>
ATTACHMENT 2
GENERAL CONDITIONS FOR CONSTRUCTION OF IMPROVEMENTS
These General Conditions are attached to and a part of the Construction
Agreement dated as of April 21, 1997 (together with these General Conditions,
the "Agreement"), between Ryan Belle Plaine, LLC, a Minnesota limited liability
company ("Landlord"), and Excelsior-Henderson Motorcycle Manufacturing Company,
a Minnesota corporation ("Tenant").
1. OWNERSHIP AND USE OF DOCUMENTS. All information, reports and other
documents provided by Tenant to Landlord shall be owned by Tenant. Landlord
shall treat all information relating to Tenant's business and all information
supplied to Landlord by Tenant, or any agent for or contractor of Tenant, as
confidential and proprietary information of Tenant, and shall not permit its
release to other parties or make any public announcement or publicity
releases except upon the express written instruction of Tenant; provided,
however, that Landlord may, to the extent necessary to enable it to perform
its services under the Agreement, disclose such information to (1) its
accountants, attorneys, advisers, lenders, subcontractors, suppliers,
architects, and engineers; (2) public officials in connection with obtaining
city or other governmental approvals for the Improvements; and (3) any party
to whom Landlord becomes legally compelled to make disclosure by order of a
court of competent jurisdiction. The drawings, specifications and other
documents prepared by Landlord for the Improvements are the property of
Landlord. Tenant shall be permitted to retain copies, including reproductive
copies and automated drafting disks, of the drawings, specifications, and
other documents for information and reference. Further, Tenant shall be
granted an irrevocable royalty free license to reproduce, distribute, and
otherwise use the drawings, specifications, or other documents, or any part
them of any information contained in them for additions to the project by
others, or for the completion of the project by others if the agreement
between Tenant and Landlord is terminated. Landlord agrees that it shall not
re-use, sell, transfer, give, or assign copies of the drawings,
specifications, and other documents (in their entirety or any substantial or
distinctive portion thereof) to any other party nor itself re-use, reproduce,
and market the drawings, specifications, and other documents (in their
entirety or any substantial or distinctive portion thereof) nor permit or
license any third party to re-use, reproduce, or market the drawings,
specifications, and other documents (in their entirety or any substantial or
distinctive portion thereof). The provisions of this paragraph shall survive
the expiration or termination of the Agreement.
2. TENANT.
2.1 TENANT'S RIGHT TO CARRY OUT THE WORK. If Landlord defaults or
neglects to carry out the Work in accordance with the Contract Documents and
fails within ten (10) days upon receipt of written notice from Tenant to
commence and continue correction of such default or neglect with diligence and
promptness, Tenant, without prejudice to any other
<PAGE>
remedy it may have, may make good such deficiencies. In such case, there
shall be deducted from the payments then or thereafter due to Landlord the
cost of correcting such deficiencies. If the payments then or thereafter due
Landlord are not sufficient to cover such amount, Landlord shall pay the
difference to Tenant. This right of Tenant to carry out the Work shall not
give rise to any duty on the part of Tenant to exercise this right for the
benefit of Landlord or any other person or entity.
2.1 TENANT'S RIGHT TO REJECT THE WORK. Tenant will have the right to
reject Work which does not conform to the Contract Documents. Tenant will also
have the right to require special inspection or testing of the Work in
accordance with the Contract Documents, whether or not such Work is then
fabricated, installed, or completed. Neither Tenant's right to act under this
subparagraph nor any decision made by it either to exercise or not to exercise
such right shall give rise to any duty or responsibility of Tenant to Landlord
or to any other person or entity.
2.3 TENANT'S REVIEW OF SUBMITTALS.
2.3.1 Tenant will review Landlord's submittals such as Shop
Drawings, Product Data and Samples. Landlord acknowledges that any such
review by Tenant shall be only for the purpose of ensuring that Tenant has a
record thereof and for general conformance with the design concept of the
Work, and for compatibility with the Tenant's Equipment; Tenant shall not be
responsible for errors, omissions or deficiencies in shop drawings or other
submittals. Nothing in Tenant's approval of Shop Drawings, Product Data or
Samples shall be construed as authorizing additional Work, which
authorization may only be made by Change Order as provided herein. Neither
Tenant's right to act under this Subparagraph nor any action taken or not
taken by Tenant with respect to any submittal shall relieve Landlord from any
responsibility with respect to the design of the Project, or impose any such
responsibility on Tenant.
2.3.2 Tenant shall render decisions with respect to
matters affecting the Project with reasonable promptness so as to cause no
delay. When Tenant's decision with respect to any matter is required within
a particular time, Landlord shall so advise Tenant, and Tenant shall inform
Landlord of Tenant's decision within such time provided, however, (1) the
decision requested of Tenant is properly a matter for Tenant's decision, (2)
the decision is requested at an appropriate stage, given the sequencing of
the design and construction process, (3) Landlord provides Tenant with a
complete description of all relevant alternatives, appropriate back-up
information, and an outline of Landlord's recommendations, and (4) the time
allowed for Tenant's decision is reasonable, taking into consideration the
character, complexity and magnitude of the decision, the stage of
construction, the availability of relevant information, and the need for
appropriate deliberations and consultations, both internally and with outside
consultants. If Tenant fails to respond in a timely fashion, any resulting
delay shall constitute "Tenant Delay" for purposes of the Contract Documents
if (1) Landlord informs Tenant in writing that Tenant has failed to respond
within the time required
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and that any further delay may cause a delay in the progress of the Work, and
(2) such delay, in fact, causes a delay in the progress of the Work.
2.4 TENANT'S SITE REPRESENTATIVE (TSR). Tenant has appointed Bruce
Maus of Corporate Real Estate as its Tenant Site Representative ("TSR") in
connection with the Work. Tenant's instructions to Landlord will be issued
through the TSR. Any shop drawings, product data, and samples for
Tenant-supplied equipment will be forwarded to Landlord by the TSR. The TSR
shall, at all times, have access to the Work and Landlord shall provide
facilities for such access. Landlord shall simultaneously forward to the TSR
duplicate copies of all notices, correspondence, submissions (including,
without limitation, all Final Plans, Applications for Payment, Shop Drawings,
Product Data and Samples) and other deliveries made in connection with the
Work. The TSR may schedule and conduct periodic Project meetings at the
site, which Landlord shall attend as requested. The TSR will endeavor to
facilitate communication and the transmission of information between Tenant
and Landlord; however, the TSR shall have no authority whatsoever to amend,
abridge, modify, or interpret the Agreement or Contract Documents in any way.
No supervision or inspection by the TSR, nor the authority to act nor any
other actions taken by the TSR, shall relieve Landlord of any of its
obligations under the Contract Documents nor give rise to any duty on the
part of Tenant.
3. LANDLORD.
3.1 INDEPENDENT CONTRACTOR. Landlord acknowledges that it is an
independent contractor and not an agent of Tenant.
3.2 POSITION OF TRUST. Landlord acknowledges the position of trust
it occupies, and that Tenant will rely upon Landlord for the proper performance
of the Work.
3.3 INDEPENDENT INVESTIGATION. Landlord acknowledges that, except
as specifically provided in the Contract Documents, Tenant, by supplying
maps, drawings, data or other technical information makes no representations
as to the accuracy of such maps, drawings, data or technical information and
that it is Landlord's responsibility to verify all conditions. Landlord
represents that it has: (a) visited the Property, (b) taken such other steps
as may be necessary to ascertain the nature and location of the Work and the
general and local conditions which affect the Work or the cost thereof, and
(c) examined the site, the obstacles which may be encountered and all other
conditions (including, without limitation, the availability of labor and any
potential labor difficulties) having a bearing upon the performance of the
Work, the superintendent of the Work, the time of completion and all other
relevant matters. Landlord acknowledges that, except as specifically
provided in the Contract Documents, Tenant has no responsibility for
understandings or representations concerning conditions made by any of
Tenant's agents, representatives or employees prior to the execution of the
Contract Documents.
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3.4 COORDINATION. Landlord acknowledges its responsibility to
coordinate the Work with that of separate contractors to be selected for the
installation of other work within the Project. Landlord expressly promises to
use reasonable efforts to schedule and coordinate its Work with such separate
contractors so as to assist them and permit the Project to be completed on
schedule.
3.5 DELAYS. Landlord agrees that no payment or compensation of any
kind shall be made to it for any damages which may arise out of or be caused by
any delay from any cause in the progress of the Work, whether such delay be
avoidable or unavoidable, and Landlord waives any right to claim such damages.
The foregoing does not affect Landlord's ability to make a claim for an increase
in the Contract Time or the Contract Sum to the extent and in the manner
expressly permitted elsewhere in the Contract Documents.
3.6 SOLE RESPONSIBILITY. Landlord shall have the sole responsibility
for designing, constructing, and completing the Work.
3.7 SUPERVISION AND CONSTRUCTION PROCEDURES.
3.7.1 Landlord shall construct the Work. Construction services shall
be performed by qualified personnel of Landlord and by qualified Subcontractors,
Sub-subcontractors and suppliers under the direction and control of Landlord,
and for whom Landlord shall be responsible. Landlord shall supervise and direct
the Work using its best skill and attention. It shall be solely responsible for
all construction means, methods, techniques, sequences and procedures and for
coordinating all portions of the Work under the Contract Documents.
3.7.2 Landlord shall be responsible to Tenant for the acts and
omissions of Landlord and Landlord's agents and employees. Landlord shall
defend, indemnify and hold harmless Tenant, the TSR and Tenant's agents and
employees from any claims, damages, losses, costs and expenses (including
attorneys' fees) arising out of, caused by, or incurred in connection with such
acts or omissions. Landlord further agrees to obtain, maintain, and pay for
such general liability insurance coverage and endorsements as will insure the
provisions of this subparagraph.
3.7.3 Landlord shall be responsible for the acts and omissions of the
Subcontractors and Sub-subcontractors, their agents and employees, anyone acting
on behalf of any of them, and any other persons performing any of the Work
directly or indirectly under a contract with Landlord including design
professionals, and their consultants. Landlord shall defend, indemnify and hold
harmless Tenant, the TSR and Tenant's agents and employees from any claims,
damages, losses, costs and expenses (including attorneys' fees) arising out of,
caused by, or incurred in connection with such acts or omissions. Landlord
further agrees to obtain, maintain, and pay for such general liability insurance
coverage and endorsements as will insure the provisions of this paragraph.
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<PAGE>
3.7.4 Landlord shall at all times enforce strict discipline and good
order among its employees and other persons performing the Work and shall not
employ or permit the employment of unfit persons or persons not skilled in the
task assigned to them.
3.7.5 Landlord shall not be relieved from its obligations to perform
the Work in accordance with the Contract Documents either by the activities or
duties of the representatives of Tenant, or by inspections, tests or approvals
required or performed by persons other than Landlord.
3.8 LABOR AND MATERIALS. Unless otherwise provided in the Contract
Documents, Landlord shall provide and promptly pay for all labor, materials,
equipment, tools, construction equipment and machinery, water, heat,
utilities, transportation and other facilities and services necessary for the
proper execution and completion of the Work, whether temporary or permanent
and whether or not incorporated or to be incorporated in the Work.
3.9 WARRANTY PROVISION. Landlord warrants to Tenant that all
materials and equipment furnished under this Agreement will be of good
quality and will be new unless otherwise specified, and that all Work will be
of good quality, free from faults and defects and in conformance with the
Contract Documents. All Work not conforming to these requirements, including
substitutions not properly approved and authorized, shall be considered
defective. Landlord's warranties shall not be affected by the specification
of any product or procedure. Landlord's warranty shall not be restricted by
the limitations of any manufacturer's warranty. Inability or refusal of a
subcontractor, sub-subcontractor of any tier, or supplier responsible for any
defective Work, to correct shall Work, shall not relieve Landlord from
performing under the Warranty. If required by Tenant, Landlord shall furnish
satisfactory evidence as to the kind of quality of materials and equipment
incorporated in the Work. This warranty is in addition to and not in
limitation of any other warranty or remedy required by law or under the
Contract Documents. In addition, upon Substantial Completion Landlord shall
assign to Tenant any and all manufacturer's, subcontractor's or supplier's
warranties associated with any portion or element of the Work.
3.10 TAXES. Landlord shall pay all sales, consumer, use and other
similar taxes for the Work or portions thereof provided by Landlord, which
taxes are legally enacted at the date hereof, whether or not yet effective.
3.11 PERMITS. Unless otherwise provided in the Contract Documents,
Landlord shall secure and pay for construction permits and for all other
permits and governmental fees, licenses, approvals and inspections necessary
for the proper execution and completion of the Work. Tenant shall secure and
pay for all permits, licenses and approval necessary for the operation of its
business at the Property.
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3.12 COMPLIANCE WITH LAWS.
3.12.1 Landlord shall give all notices and comply with all laws,
ordinances, rules, regulations and lawful orders of any public authority
bearing on the performance of the Work, and in the event of an allegation
that Landlord has failed to do so, Landlord shall pay any fines or penalties
imposed upon Tenant, and shall reimburse Tenant for any expenses (including
attorneys' fees) incurred by Tenant, as a result of such allegation.
3.12.2 It is the responsibility of Landlord to make certain that
the Contract Documents are in accordance with applicable laws, ordinances,
building codes, rules and regulations.
3.12.3 If Landlord performs any Work which is contrary to such laws,
statutes, ordinances, building codes, rules and regulations, Landlord shall
correct such Work at its expense and shall be responsible for all costs,
delays and damages attributable thereto.
3.13 SUPERINTENDENT.
3.13.1 Landlord shall employ a competent superintendent and
necessary assistants who shall be in attendance at the Project site during
the progress of the Work. The superintendent shall represent Landlord and
all communications given to the superintendent shall be binding upon
Landlord. Upon written request in each case, Tenant shall confirm important
communications in writing to Landlord's Project manager.
3.14 PROGRESS SCHEDULE. Landlord, along with the assistance of
Tenant, shall develop and maintain a construction progress schedule
consistent with meeting the Substantial Completion deadline set forth in the
Agreement. Landlord shall regularly update and distribute the schedule as
required to inform all parties of the status of the Work.
3.15 DOCUMENTS AND SAMPLES AT THE SITE. Landlord shall maintain in
good order at the site for Tenant one copy of all drawings, specifications,
Addenda, Change Orders and other Modifications, and approved Shop Drawings,
Product Data, Samples and similar required submittals. These shall be available
to Tenant and the TSR and shall be delivered to Tenant upon completion of the
Work.
3.16 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES.
3.16.1 "Shop Drawings" are drawings, diagrams, schedules and other
data specially prepared for the Work by Landlord or any Subcontractor,
manufacturer, supplier or distributor to illustrate some portion of the Work.
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3.16.2 "Product Data" are illustrations, standard schedules,
performance charts, instructions, brochures, diagrams and other information
furnished to illustrate a material, product or system for some portion of the
Work.
3.16.3 "Samples" are physical examples which illustrate materials,
equipment or workmanship and establish standards by which the Work will be
judged.
3.16.4 Landlord shall review, approve and submit with reasonable
promptness and in such sequence as to cause no delay in the Work or in the work
of Tenant or any separate contractor, all Shop Drawings, Product Data, Samples
and similar submittals required by the Contract Documents. Tenant will review,
approve or take other appropriate action with respect to such submittals. Upon
the award of each Subcontract, Landlord will deliver to TSR and Tenant a
schedule of approximate dates that Shop Drawings, Product Data and Samples will
be delivered to Pope Associates, Inc. and TSR for their approval.
3.16.5 No portion of the Work requiring submission of Shop Drawings,
Product Data, Samples or similar submittals shall be commenced until the
submittal has been approved by Tenant as provided in the Contract Documents.
All such portions of the Work shall be in accordance with approved submittals.
3.16.6 By approving and submitting Shop Drawings, Product Data,
Samples and similar submittals, Landlord represents that it has determined
and verified all materials, field measurements, and field construction
criteria related thereto, or that it will do so, and that it has checked and
coordinated the information contained in such submittals with the
requirements of the Work and of the Contract Documents. Landlord shall
obtain from Tenant Shop Drawings and Product Data of all Tenant-supplied
equipment. Landlord shall review and return a copy thereof to Tenant with
comments and approval. Approval by Landlord shall represent that field
conditions have been or will be coordinated to receive Tenant-supplied
equipment as so approved by Landlord.
3.16.7 Landlord will submit three (3) copies of all Shop Drawings,
Product Data and Samples to Tenant for approval. Landlord will stamp all
Shop Drawings, Product Data and Supplies, with a form of stamp acceptable to
Tenant, confirming that Landlord has made all of the determinations and
verifications required by these General Conditions. Landlord shall not be
relieved of responsibility for any deviation from the requirements of the
Contract Documents by Landlord's approval of Shop Drawings, Product Data,
Samples or similar submittals. Landlord shall specifically inform Tenant in
writing of any deviation from the requirements of the Contract Documents at
the time of submission. Landlord shall not be relieved from responsibility
for errors or omissions in the Shop Drawings, Product Data, Samples or
similar submittals by Tenant's receipt thereof.
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3.16.8 Landlord shall direct specific attention, in writing or noted
on resubmitted Shop Drawings, Product Data, Samples or similar submittals, to
revisions other than those requested by Tenant on previous submittals.
3.16.9 Landlord shall furnish copies of approved Shop Drawings,
Product Data, Samples and similar submittals to separate contractors and to
Subcontractors as may be necessary to coordinate their work or upon their
request.
3.17 USE OF SITE. Landlord shall confine operations at the site to
areas permitted by law, ordinances, permits and the Contract Documents and shall
not unreasonably encumber the site with any materials or equipment.
3.18 CUTTING AND PATCHING OF WORK.
3.18.1 Landlord shall be responsible for all cutting, fitting or
patching that may be required to complete the Work or to make its several
parts fit together properly, except as otherwise specifically provided in the
Contract Documents.
3.18.2 Landlord shall not damage or endanger any portion of the
Work or the work of Tenant or any separate contractors by excavation or by
cutting, patching or otherwise altering any work. Landlord shall not cut or
otherwise alter the work of Tenant or any separate contractor except with the
written consent of Tenant and of such separate contractor. Landlord shall not
unreasonably withhold from Tenant or any separate contractor its consent to
cutting or otherwise altering the Work.
3.18.3 Cutting shall be accurately located and neatly done.
Unnecessary cutting shall be avoided. Patching shall be done by skilled
mechanics experienced in the particular type of work involved. Patching work
shall conform to the standards of the specifications where applicable, and
where not specified, such work shall conform to the highest standards of the
trade. Finished patching work shall be acceptable to the contractor whose
work has been patched.
3.18.4 Landlord shall leave all holes, chases and other openings in
its construction required by other contractors for the installation of their
work, provided such openings are accurately located by the party requiring
them before the execution of the construction. Landlord shall afford other
contractors a reasonable opportunity to locate such openings.
3.19 CLEANING UP.
3.19.1 Landlord at all times shall keep the Property free from
accumulation of waste materials or rubbish caused by its operations. At the
completion of the Work it shall
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remove all of its waste materials and rubbish from and about the Property as
well as all of its tools, construction equipment, machinery and surplus
materials.
3.19.2 Immediately prior to the Work being submitted to Tenant as
Substantially Complete, Landlord shall remove all waste materials, rubbish,
Landlord's tools, construction equipment, machinery and surplus materials
from the area to be inspected. Landlord shall also remove all protective
coatings, temporary work, barriers and other protective devices.
(1) Finished spaces which are to be inspected shall be cleaned as
necessary to remove all stains, dirt and dust. Glass shall be
cleaned on both faces, and carpet shall be vacuumed.
(2) Unfinished spaces such as mechanical and electrical equipment
rooms which are to be inspected shall be "broom clean".
(3) Mechanical work such as unit heaters, finned tube radiation and
its covers, grilles and registers in finished spaces shall be
cleaned as necessary to remove all stains, dirt and dust, in
unfinished spaces, mechanical work such as equipment, ducts, and
pipes shall be "broom clean".
(4) Electrical work such as light fixtures in finished spaces shall
be cleaned as necessary to remove all stains, dirt and dust. In
unfinished spaces, electrical work shall be "broom clean".
Landlord shall replace burned out lamps.
3.19.3 Prior to Substantial Completion, or prior to Tenant's
partial or complete occupancy, Landlord shall do the following: (1) Clean
all spaces of the Work so that they are ready for Tenant's occupancy without
additional cleaning; (2) Remove from the site all temporary buildings or
facilities; (3) Replace filters in air handling equipment according to the
specifications; and (4) Replace burned out lamps. This obligation is in
addition to and not by way of limitation of Landlord's obligation to provide
the Work complete and ready to use in all respects by the time limits set
forth in this Agreement.
3.19.4 If Landlord fails to clean up at the completion of the Work,
and Landlord does not correct such failure within three days after receipt of
written notice from Tenant, Tenant may do so and the cost thereof shall be
charged to Landlord and may be deducted from any amounts then or thereafter
due to Landlord.
3.20 COMMUNICATIONS. Except as otherwise directed by Tenant, Landlord
shall direct all communications, correspondence and submittals to Tenant through
the TSR. If
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the Contract Documents require written notice, it shall be given in
accordance with the Agreement.
3.21 ROYALTIES AND PATENTS. Landlord shall pay all royalties and
license fees incurred in connection with the Work. It shall defend all suits
or claims for infringement of any patent, trademark, trade secret, copyright
or other intellectual property rights, and shall save Tenant harmless from
loss on account thereof, except that Tenant shall be responsible for all such
loss when a particular design or process or the product of a particular
manufacturer or manufacturers is specified by Tenant, but if Landlord has
reason to believe that the design, process or product specified is an
infringement of a patent, it shall be responsible for such loss unless it
promptly gives such information to Tenant.
3.22 INDEMNIFICATION.
3.22.1 Landlord agrees to assume entire responsibility and liability
to the fullest extent permitted by law, for all damages or injury (including
death) to all persons, whether employees or otherwise, and to all property
(including the Work and loss of use), arising out of (in whole or in part),
resulting from, or in any manner connected with the execution of the Work
provided for in this Agreement, except as may result solely from the
negligence or intentional acts of Tenant or TSR or any agent or separate
contractor of Tenant. Landlord, to the fullest extent permitted by law,
agrees to indemnify and save harmless Tenant and TSR, their officers,
directors, and employees from and against any and all claims, losses,
expenses, penalties, costs and other liabilities arising out of or resulting
from or in any manner connected with the Work or this Agreement, except those
which are attributable solely to the negligence or intentional acts of Tenant
or TSR or any agent or separate contractor of Tenant and all losses, costs,
penalties, damages (including punitive damages) or expense, including legal
fees and disbursements, related to such claims or to the enforcement of the
provisions of this paragraph. Landlord further agrees to obtain, maintain,
and pay for such general liability insurance coverage and endorsements as
will insure the provisions of this paragraph. The foregoing indemnity
obligation shall not be construed to negate, abridge or otherwise reduce any
other right or obligation of indemnity which would otherwise exist as to any
party or person described in this Subparagraph 3.23.1. The obligations of
Landlord under this paragraph shall survive the expiration or termination of
the Agreement and shall extend to claims, losses, damages and expenses
asserted or arising after completion of the Work as well as during the Work's
progress.
3.22.2 In any and all claims against any of the Indemnified Parties
by an employee of Landlord, a Subcontractor or Sub-subcontractor, anyone
directly or indirectly employed by any of them or anyone acting on behalf of
any of them, the indemnification obligation under this paragraph shall not be
limited in any way by any limitation on the amount or type of damages,
compensation or benefits payable by or for Landlord or any Subcontractor or
Sub-subcontractor or other party under workers' compensation acts, disability
benefit acts or other employee benefit acts.
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3.22.3 Without limiting any other indemnification obligations, to
the extent permitted by law, Landlord shall indemnify and save harmless Tenant
and the Project from any liens or security interests filed or threatened by
Landlord or any subcontractors, sub-subcontractors of any tier, or suppliers and
from any related costs, liabilities, judgments, executions, attorneys' fees and
disbursements, except that Landlord need not defend or indemnify Tenant for
mechanics' lien claims caused by Tenant's wrongful failure to make payment in
accordance with the Contract Documents for the Work to which such mechanics'
lien claims relate.
3.23 ACCESS TO THE WORK. Landlord shall allow Tenant, the TSR and
Tenant's representatives, agents and consultants free access to the site and
to the Work wherever located at all times. Landlord shall provide facilities
for such access.
3.24 MANUALS AND INSTRUCTIONS.
3.24.1 Landlord shall be responsible for collecting, identifying and
collating the following materials from Subcontractors, and shall deliver two
copies to Tenant at the time of Final Completion:
(1) Complete equipment diagrams, operating instructions, maintenance
manuals, parts lists, wiring diagrams, pneumatic and/or
electrical control diagrams, test and balance reports, inspection
reports, guarantees and warranties, as applicable, for each piece
of fixed equipment furnished under the Agreement, together with
specific information regarding manufacturer's name and address,
nearest distributor, service representative's name, address,
office and home phone number, make and model numbers, operating
designs and characteristics, and the like. These materials shall
be supplied in a ring binder, hard-cover book, properly indexed
for ready reference.
(2) Name and address of all Subcontractors and Sub-subcontractors
(including equipment and material suppliers), together with their
respective areas of work, materials or equipment furnished.
(3) Complete list of all materials and equipment utilized, together
with the respective location in the Work.
(4) Complete operating instructions for each equipment system.
(5) Complete parts lists, together with recommended spare parts for
each type and model of equipment installed.
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3.25 AS-BUILT DRAWINGS. At the time of Final Completion, Landlord
shall deliver two (2) copies of as-built drawings and one set of sepia to
Tenant.
4. SUBCONTRACTORS.
4.1 DEFINITION.
4.1.1 A Subcontractor is a person or entity who has a direct
contract with Landlord to perform any of the Work at the site. The term
Subcontractor is referred to throughout the Contract Documents as if singular
in number and masculine in gender and means a Subcontractor or its authorized
representative. The term Subcontractor does not include any separate
contractor or its subcontractors.
4.1.2 A Sub-subcontractor is a person or entity who has a direct or
indirect contract with a Subcontractor to perform any of the Work at the
site. The term Sub-subcontractor is referred to throughout the Contract
Documents as if singular in number and masculine in gender and means a
Sub-subcontractor or an authorized representative thereof.
4.2 AWARD OF SUBCONTRACTS FOR CHANGED WORK. With respect to any
Changed Work, Landlord shall submit to Tenant copies of all bids and other
proposals from potential Subcontractors, and shall advise Tenant which
Subcontractors it proposes to use. Landlord shall submit to Tenant copies of
all bids and other proposals. Landlord shall also submit a bid for each
portion of the Work which Landlord proposes to perform with its own forces.
If reasonably requested by Tenant, Landlord shall obtain at least three (3)
bids for each such Work. Tenant may designate entities from whom Landlord
shall solicit bid, and Tenant may require that additional bids be obtained if
it determines the initial bids to be unsatisfactory. Landlord shall in all
cases submit a recommendation for award, supported by a comparative bid
analysis for all bids taken, and Landlord's original estimate for the Work
being priced to Tenant. Tenant will determine with the advice of Landlord
which bids will be accepted.
4.3 SUBCONTRACTUAL RELATIONS.
4.3.1 By an appropriate written agreement, Landlord shall require
each Subcontractor, to the extent of the Work to be performed by the
Subcontractor, to be bound to Landlord by the terms of the Contract
Documents, and to assume toward Landlord all obligations and responsibilities
which Landlord, by these documents, assumes toward Tenant. Said agreement
shall preserve and protect the rights of Tenant under the Contract Documents
with respect to the Work to be performed by the Subcontractor so that the
subcontracting thereof will not prejudice such rights. Landlord shall
require each Subcontractor to enter into similar agreements with its
Sub-subcontractors. Landlord shall make available to each proposed
Subcontractor, prior to the execution of the subcontract agreement, copies of
the
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Contract Documents to which the Subcontractor will be bound by this
subparagraph and shall identify to the Subcontractor any terms and conditions
of the proposed subcontract which may be at variance with the Contract
Documents. Landlord shall require each Subcontractor similarly to make
copies of such documents available to its Sub-subcontractors.
4.3.2 Landlord shall not award a subcontract for any Changed Work on
the basis of the cost of the work plus a fee without Tenant's prior consent.
In addition, Landlord shall not award a subcontract for any Changed Work
which provides that the allowance for overhead and profit payable to the
Subcontractor with respect to changes in the Work is greater than the
following: 1) with respect to those portions of such Work performed by such
Subcontractor, the allowance shall not exceed ten (10%) percent of the cost
of such portions of the Work, 2) with respect to those portions of such Work
performed by any lower tier Sub-subcontractor, the allowance shall not exceed
five (5%) percent of the amount paid to such lower tier Sub-subcontractor as
a result of such change.
4.3.3 Each subcontract agreement for a portion of the Work is
assigned by Landlord to Tenant, provided that such assignment is effective
only after the termination of the Agreement by Tenant for cause and provided
that such assignment is effective only as to those subcontracts which Tenant
specifically accepts by notifying the Subcontractor in writing. Landlord
agrees to execute such additional documents as Tenant may request to confirm
such assignments. Landlord shall insure that each subcontract agreement
recognizes the rights of Tenant pursuant to the foregoing contingent
assignment. Landlord shall provide Tenant with a copy of each subcontract
agreement upon request.
5. WORK BY TENANT OR BY SEPARATE CONTRACTORS.
5.1 TENANT'S RIGHT TO PERFORM WORK AND TO AWARD SEPARATE CONTRACTS.
5.1.1 Tenant shall have the right to perform work related to the
Project, including, without limitation, with respect to the Tenant's
Equipment, with its own forces and to award separate contracts in connection
with other portions of the Project or other work on the site. Tenant shall
not award contracts to any contractor who is not signatory to a collective
bargaining agreement with a local AFL-CIO Building Traders Union without the
prior written approval of Landlord.
5.1.2 Tenant will provide for the coordination of the work of its own
forces and of each separate contractor with the Work of Landlord, who shall
cooperate therewith as provided in the Contract Documents. If Tenant's own
forces or any separate contractor fail to so coordinate with the Work of
Landlord, any resulting delay shall constitute "Tenant Delay" for purposes of
the General Conditions if (i) Landlord informs Tenant in writing that Tenant's
forces or separate contractor has failed to coordinate with the Work of
Landlord, and that continued failure to coordinate may cause a delay in the
progress of the Work, and (ii) to the extent that such failure to coordinate in
fact causes a delay in the progress of the Work. If
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Tenant's election to use its own forces or separate contractors shall give
rise to a labor dispute, any resulting delay shall also constitute "Tenant
Delay" for purposes of the General Conditions if (i) Landlord informs Tenant
in writing that Tenant's use of its own forces or separate contractors has
given rise to a labor dispute that may cause a delay in the progress of the
Work, and (ii) to the extent that the labor dispute in fact causes a delay in
the progress of the Work.
5.2 MUTUAL RESPONSIBILITY.
5.2.1 Landlord shall afford Tenant and separate contractors
reasonable opportunity for the introduction and storage of their materials
and equipment and the execution of their work, and shall connect and
coordinate its Work with theirs as required by the Contract Documents.
5.2.2 If any part of Landlord's work depends for proper execution or
results upon the work of Tenant or any separate contractor, Landlord shall,
prior to proceeding with the Work, promptly report to Tenant any apparent
discrepancies or defects in such other work that render it unsuitable for
such proper execution and results. Failure of Landlord so to report shall
constitute an acceptance of Tenant's or separate contractor's work as fit and
proper to receive its Work, except as to defects which were not reasonably
discoverable but which may subsequently become apparent in such work by
others.
5.2.3 Any costs caused by defective or ill-timed work shall be borne by
the party responsible therefor.
5.2.4 Should Landlord cause damage to the work or property of Tenant,
or to other work on the site, Landlord shall promptly remedy such damage.
5.2.5 Should Landlord cause damage to the work or property of any
separate contractor, Landlord shall promptly attempt to settle with such
separate contractor or otherwise to resolve the dispute. If such separate
contractor sues or initiates an arbitration proceeding against Tenant on
account of any damage alleged to have been caused by Landlord, Tenant shall
notify Landlord who shall defend such proceedings at Landlord's expense, and
if any judgment or award against Tenant arises therefrom, Landlord shall pay
or satisfy it and shall reimburse Tenant for all attorney's fees and court or
arbitration costs which Tenant has incurred.
5.2.6 Should any separate contractor of Tenant cause damage to the
work or property of Landlord or any of its Subcontractors, Tenant will use
reasonable efforts to cause such separate contractor to promptly attempt to
settle with Landlord or otherwise to resolve the dispute.
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5.3 TENANT'S RIGHT TO CLEAN UP. If a dispute arises between Landlord
and separate contractors as to their responsibility for cleaning up, Tenant may
clean up and charge the cost thereof to the parties responsible therefor as
Tenant shall determine to be just.
6. MISCELLANEOUS PROVISIONS.
6.1 SUCCESSORS AND ASSIGNS. Tenant and Landlord each binds itself,
its partners, successors, assigns and legal representatives to the other
party hereto and to the partners, successors, assigns and legal
representatives of such other party in respect to all covenants, agreements
and obligations contained in the Contract Documents. Landlord shall not
assign the Contract nor shall Landlord assign any moneys due or to become due
to it under the Contract without the previous written consent of Tenant.
Tenant may assign, transfer, convey, pledge, or otherwise dispose of its
interest, or any part thereof, under the Contract Documents only in
connection with a permitted assignment of the Lease. From and after the
effective date of such assignment, Landlord shall recognize such assignee as
being in the stead and place of Tenant, but all of the obligations of
Landlord to Tenant hereunder shall be performed for, and shall run in favor
of, both such assignee and also the original Tenant, and the original Tenant
hereunder shall retain the right to enforce all of its rights and remedies
and all of Landlord's obligations, including without limitation, all
warranties.
6.2 RIGHTS AND REMEDIES.
6.2.1 The duties and obligations imposed by the Contract Documents
and the rights and remedies available thereunder are cumulative and are in
addition to, and not a limitation on, any duties, obligations, rights and
remedies otherwise imposed or available by law.
6.2.2 No action or failure to act by Tenant or Landlord shall
constitute a waiver of any right or duty afforded either of them under the
Contract, nor shall any such action or failure to act constitute an approval
of or acquiescence in any breach thereunder, except as may be specifically
provided in the Contract Documents or agreed in writing.
6.2.3 Subparagraphs 6.2.1 and 6.2.2 shall not permit Landlord to assert
a claim which has not been timely made or has otherwise been waived under the
terms of the Contract Documents.
6.2.4 Should any litigation or proceeding be commenced between the
parties hereto or their representatives concerning the Contract Documents, or
the rights or duties of any person or entity in relation thereto, the party or
parties prevailing in such litigation shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum as and for its or their
attorneys' fees and court costs in such litigation or proceeding which shall be
determined by the court in such litigation or proceeding or in a separate action
brought for that purpose. In connection with Landlord's obligation to provide a
legal defense to Tenant or
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other Indemnified Parties pursuant to any provision of this Agreement, Tenant
shall have the right to select counsel to provide such defense.
6.3 CONTINUATION OF WORK. Landlord shall carry on the Work and
adhere to the Construction Schedule during all disputes and disagreements with
Tenant. No Work shall be delayed or postponed pending resolution of any
disputes or disagreements. Pending the resolution of any such dispute or
disagreement, Tenant shall (subject to the General Conditions) pay or authorize
payment to Landlord any amounts owed to Landlord that are not in dispute.
6.4 USE OR OCCUPANCY PRIOR TO SUBSTANTIAL COMPLETION.
6.4.1 Tenant shall have the right to install its furnishings and
Tenant's Equipment within the Work prior to Substantial Completion, provided
such installation does not materially interfere with the progress of the
Work. Such installation shall not constitute occupancy or use by Tenant.
Tenant shall have the responsibility to protect such furnishings and
equipment.
6.4.2 Tenant shall procure and maintain all-risk property insurance
with respect to the Tenant's Equipment, and Landlord shall have no liability
for any loss or damage thereto which is coverable by such insurance,
irrespective of whether its negligence may have contributed to such loss or
damage.
7. TIME.
7.1 DEFINITIONS. The time allotted for the completion of the Work,
or designated portions thereof, as provided in the Construction Schedule is
the Contract Time. The Construction Schedule is set forth in the Agreement
and may be adjusted only in accordance with the Contract Documents.
7.2 PROGRESS AND COMPLETION. All time limits stated in the Contract
Documents are of the essence of the Contract. Landlord shall employ
sufficient forces and take all other steps necessary to achieve each of the
dates set forth in the Construction Schedule. In the event any delays are
experienced in the performance of the Work, Landlord shall accelerate its
performance, employ overtime, cause the Subcontractors to employ overtime,
and take such other steps as are necessary to meet the Construction Schedule.
7.3 DELAYS AND EXTENSIONS OF TIME.
7.3.1 An "Excusable Delay" is a delay in the progress of the Work
caused by (i) unusual delay in transportation, (ii) adverse weather conditions
not reasonably foreseeable, (iii) damage to the Work by fire or other casualty,
(iv) labor disputes, (v) governmental action or non-action, (vi) some other
event or circumstance so unique, unusual and unexpected that
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no reputable and responsible Landlord in the position of Landlord on this
Project could be expected to have anticipated it, or (vii) by an Tenant
Delay. A "Tenant Delay" is a delay in the progress of the Work caused by (1)
Tenant's failure to approve or disapprove any timely manner drawings or other
submittals properly submitted by Landlord pursuant to this Agreement, (2)
Tenant's failure to render a decision in a timely manner with respect to any
matter properly submitted by Landlord pursuant to the General Conditions, (3)
Tenant's own forces or separate contractors, to the extent provided in the
General Conditions, or (4) Change Orders issued in accordance with the
Agreement which specifically provides for a time extension.
7.3.2 Any claim of an Excusable Delay shall be made by written
notice to Tenant not more than twenty (20) days after the commencement of the
delay; otherwise it shall be waived. In the case of a continuing delay only
one claim is necessary. Landlord shall provide an estimate of the probable
effect of such delay on the progress and cost of the Work.
7.3.3 In the event of an Excusable Delay, the Contract Time shall be
extended by Change Order for such reasonable time as is attributable thereto,
provided Landlord makes timely request as provided herein. Delays affecting
events not on the critical path will not be cause for a time extension. In
lieu of granting an extension of time, Tenant may issue a Change Order or a
Directive directing Landlord to accelerate its performance to meet the
Construction Schedule, in which case the Contract Sum shall be adjusted as
provided in the Contract Documents for a change in the Work to reflect the
actual increase, if any, in the cost of performance as a result of such
acceleration, except that there shall be no additional fee or allowance for
overhead and profit payable to Landlord for such change. Tenant shall have
the right to determine in its discretion whether to handle an Excusable Delay
by extending the Contract Time or by directing Landlord to accelerate its
performance, or by a combination of both.
7.4 DAMAGES FOR DELAY.
7.4.1 Landlord shall be responsible for damages and expenses
incurred by Tenant and any separate contractors for delay resulting from
Landlord's failure to complete the Work within the Contract Time or resulting
from the progress of the Work failing to conform to the Construction Schedule.
7.4.2 In case of Tenant Delay (i) Tenant shall reimburse Landlord
actual out of pocket costs and expenses incurred by Landlord that are in the
nature of general conditions and overhead costs described in the Agreement,
including additional interest expense in the Initial Mortgage, but only to the
extent that Landlord would not have incurred such costs and expenses but for
such Tenant Delay, and (ii) the Contract Sum shall be increased to reflect any
increase in labor rates under applicable union agreements, but only to the
extent that such Tenant Delay is the only factor preventing completion of the
Work before the effective date of
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the labor rate increase under such union agreements. In no event, however,
will Tenant be responsible to Landlord for consequential damages.
8. PAYMENTS AND COMPLETION.
8.1 CONTRACT SUM. The Contract Sum is stated in the Agreement and,
together with authorized adjustments thereto, is the total amount payable to
Landlord for the performance of the Work under the Contract Documents. The
Contract Sum will be paid in periodic progress payments following the procedures
set forth in the Contract Documents.
8.2 APPLICATIONS FOR PAYMENT.
8.2.1 Unless otherwise provided in the Contract Documents, payments
shall be made on account of materials and equipment delivered and suitably
stored at the site for subsequent incorporation in the Work. If approved in
advance by Tenant, payment may similarly be made for materials and equipment
suitably stored off the site at a location agreed upon in writing. Payment
for materials and equipment stored on or off the site shall be conditioned
upon compliance by Landlord with procedures satisfactory to Tenant to
establish Tenant's title to such materials and equipment or otherwise protect
Tenant's interest, and shall include applicable insurance, storage and
transportation to the site for such materials and equipment stored off the
site.
8.2.2 The Application for Payment shall constitute a representation by
Landlord to Tenant that the Work has progressed to the point indicated, that the
quality of the Work covered by the Application is in accordance with the
Contract Documents, and that Landlord is entitled to payment in the amount
requested.
8.2.3 Landlord warrants that it will pay all subcontractors and
suppliers due payment as a result of work performed on the Project and will take
such steps as are necessary to remove all liens and encumbrances placed on the
Property by Landlord's subcontractors and/or suppliers.
8.3 PROGRESS PAYMENTS.
8.3.1 Promptly upon receipt of payments, Landlord shall pay each
Subcontractor out of the amount paid to Landlord on account of such
Subcontractor's work the amount to which said Subcontractor is entitled,
reflecting the percentage actually retained, if any, from payments to
Landlord on account of such Subcontractor's work. Landlord shall, by an
appropriate agreement with each Subcontractor, require each Subcontractor to
make payments to Sub-subcontractors in similar manner.
8.3.1 Tenant shall have no obligation to pay or to see to the payment
of any moneys to any Subcontractor.
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8.4 PAYMENTS WITHHELD.
8.4.1 Tenant may decline to approve Landlord's Application for
Payment in whole or in part to the extent reasonably necessary to protect
Tenant if, in Tenant's reasonable opinion, the Work has not progressed to the
point indicated on the Application for Payment or the quality of the Work is
not in accordance with the Contract Documents.
8.4.2 In the event any liens are filed by any Subcontractor,
Sub-subcontractor or material supplier, Tenant may withhold from amounts
otherwise due Landlord an amount equal to one hundred fifty percent (150%) of
the amount of such liens (or accept other security from Landlord in lieu of
such withholding, acceptable to Tenant, including an escrow with the title
insurer) until such liens are resolved or insured over. Landlord shall
release and remove from record or otherwise discharge of record or cause to
be insured against any lien, charge, encumbrance or other claim or security
interest within twenty (20) days of request from Tenant. The foregoing is in
addition to Tenant's rights under Subparagraph 8.4.1 and any other provisions
of the Contract Documents.
8.4.3 When the above reasons for withholding payment are removed,
payment shall be made for amounts withheld because of them.
8.5 SUBSTANTIAL COMPLETION AND FINAL COMPLETION.
8.5.1 Upon Substantial Completion of the Work, Landlord shall notify
Tenant in writing and shall submit to Tenant a comprehensive punch list of
items remaining to be corrected or completed. Tenant shall have the right to
supplement said punch list. Landlord shall correct or complete all items on
the punch list prior to the date established for Final Completion in the
Construction Schedule. The failure to include an item on such punch list (or
the failure of Tenant to supplement such punch list) does not relieve
Landlord from the responsibility to complete all Work in accordance with the
Contract Documents. Tenant may conduct such inspections of the Work as
Tenant deems appropriate. If it is determined that any items (whether or not
on the punch list) are not in accordance with the Contract Documents,
Landlord shall complete or correct such items prior to the date established
for Final Completion in the Construction Schedule. Neither the failure of
Tenant to conduct inspections nor the failure of Tenant to notify Landlord of
items not in accordance with the Contract Documents shall relieve Landlord
from the responsibility to complete all Work in accordance with the Contract
Documents.
8.5.2 Pursuant to the Agreement, Tenant may withhold until Final
Completion authorization of payment to Landlord of an amount equal to one
hundred fifty percent (150%) of the cost (as reasonably estimated by Tenant) of
completing all punch list items.
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8.5.3 "Substantial Completion" means completion of the Work to the
extent that a certificate of occupancy has been issued for the Improvements
and that Tenant can install the Tenant's Equipment in the Improvements and
use the facility for its intended purpose to the same extent as if the Work
were fully complete, subject only to completion or correction of minor punch
list items. "Final Completion" means full and final completion of the Work in
strict accordance with the Contract Documents, including, without limitation,
correction and completion of all punch list items.
8.6 FINAL PAYMENT.
8.6.1 After Tenant has accepted Final Completion, and after Landlord
has achieved Final Completion and delivered all manuals and instructions,
insurance certificates, bonds and other documents required by the Contract
Documents, and a final certificate of occupancy for the Project issued by the
City of Belle Plain, Landlord may submit a supplemental Application for
Payment, following the procedure set forth in the Agreement.
8.6.2 The final payment shall not be earned by Landlord or owed by
Tenant until Landlord submits to Tenant: (1) an affidavit that all payrolls,
bills for materials and equipment and other indebtedness connected with the
Work for which Tenant or its property may in any way be responsible have been
paid or otherwise satisfied; (2) other data establishing payment or
satisfaction of all such obligations in excess of $1,000, such as receipts,
releases and waivers of liens arising out of the Contract, to the extent and
in such form as may be designated or required by Tenant; (3) consent of
surety, if any, to final payment; and (4) the manuals and instructions,
certificates of insurance and all other documents required to be submitted by
Landlord under the Contract Documents.
8.6.3 If any Subcontractor refuses to furnish a release or waiver
required by Tenant, Landlord may furnish a bond satisfactory to Tenant to
indemnify it against any such lien. If any such lien remains unsatisfied
after all payments are made, Landlord shall refund to Tenant all moneys that
the latter may be compelled to pay in discharging such lien, including all
costs and reasonable attorneys' fees.
8.6.4 The acceptance of final payment shall constitute a waiver of
all claims by Landlord except those previously made in writing and identified
by Landlord as unsettled at the time of the final Application for Payment.
8.7 NO WAIVER BY TENANT. Landlord's obligation to perform and
complete the Work in accordance with the Contract Documents shall be absolute.
Neither the approval of any Application for Payment, the making of any payment,
the giving of any approval, the use or occupancy of the Work or any part
thereof, the acceptance of Final Completion, the making of final payment, or any
other action on the part of Tenant shall constitute a waiver of claims by Tenant
or an acceptance of any Work which is not in accordance with the Contract
Documents.
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9. PROTECTION OF PERSONS AND PROPERTY.
9.1 SAFETY PRECAUTIONS AND PROGRAMS.
9.1.1 Landlord shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with the
performance of the Work, including compliance with the requirements of OSHA.
9.1.2 Landlord shall establish a written safety program for the
Project ("Landlord's Written Safety Program") that will, at a minimum,
require that all persons working on the Project comply with all federal,
state and local safety rules, ordinances, laws and regulations. Landlord
shall use reasonable efforts to cause all of its employees, agents and
subcontractors performing Work on the Project to comply with Landlord's
Written Safety Program. Tenant shall in its agreements with any separate
contractors (i) obligate such separate contractors (including their
employees, agents and subcontractors) to comply with Landlord's Written
Safety Program, and (ii) provide that such separate contractors shall be
directly answerable and liable to Landlord for any and all loss, cost,
damage, and expense suffered by Landlord as a result of such separate
contractor's failure to abide by Landlord's Written Safety Program.
9.2 SAFETY OF PERSONS AND PROPERTY.
9.2.1 Landlord shall take all reasonable precautions for the safety
of, and shall provide all reasonable protection to prevent damage, injury or
loss to:
(1) all employees on the Work and all other persons who may be
affected thereby;
(2) all the Work and all materials and equipment to be incorporated
therein, whether in storage on or off the site, under the care,
custody or control of Landlord or any Subcontractor or
Sub-subcontractor; and
(3) other property at the site or adjacent thereto, such as trees,
shrubs, lawns, walks, pavements, roadways, structures and
utilities not designated for removal, relocation or replacement
in the course of construction.
9.2.2 Landlord shall give all notices and comply with all applicable
laws, ordinances, rules, regulations and lawful orders of any public
authority bearing on the safety of persons or property or their protection
from damage, injury or loss.
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9.2.3 Landlord shall erect and maintain, as required by existing
conditions and by performance of the Agreement, all reasonable safeguards for
safety and protection, including posting danger signs and other warnings
against hazards, promulgating safety regulations and notifying tenants and
users of adjacent utilities.
9.2.4 When the use or storage of explosives or other hazardous
materials or equipment or unusual methods are necessary for the execution of
the Work, Landlord shall exercise the utmost care and shall carry on such
activities under the supervision of properly qualified personnel.
9.2.5 Landlord shall promptly remedy all damage or loss to any
property referred to in Subparagraphs 9.2.1.2 and 9.2.1.3 caused in whole or
in part by Landlord or any Subcontractor or Sub-subcontractor, or anyone
directly or indirectly employed by any of them, or anyone acting on behalf of
any of them. The foregoing obligations of Landlord are in addition to its
obligations under the Contract Documents.
9.2.6 Landlord shall designate a responsible member of its
organization at the site whose duty shall be the prevention of accidents.
This person shall be Landlord's superintendent unless otherwise designated by
Landlord in writing to Tenant.
9.2.7 Landlord shall not load or permit any part of the Work to be
loaded so as to endanger its safety.
9.3 EMERGENCIES. In any emergency affecting the safety of persons or
property, Landlord shall act, at its discretion, to prevent threatened damage,
injury or loss. Any additional compensation or extension of time claimed by
Landlord on account of emergency work shall be determined as provided in Article
11 for changes in the Work and in Article 7 for Excusable Delays.
9.4 HAZARD COMMUNICATION PROGRAMS. Landlord shall be responsible
for coordinating any exchange of material safety data sheets or other hazard
communication information required to be made available to or exchanged
between or among employers at the site in accordance with the requirements of
OSHA and other applicable laws and regulations.
10. INSURANCE.
10.1 LANDLORD'S LIABILITY INSURANCE.
10.1.1 Landlord shall maintain, in a company or companies
satisfactory to Tenant and licensed to do business in the state in which the
Property is located, worker's compensation insurance, employer's liability
insurance, and general and automobile liability insurance. Such insurance shall
be sufficient to protect Landlord and Tenant from claims
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which arise out of, result from, or are in any manner connected with the
execution of the Work or the operations under the Agreement by Landlord and
all Subcontractors and Sub-subcontractors, except claims which arise solely
out of the acts or negligence of Tenant or its separate contractors or their
agents or employees. All of the insurance required to be obtained by
Landlord pursuant to the Contract Documents shall be with companies rated no
less than X as to financial rating and no less than A as to policyholder's
rating in the current edition of Best's Insurance Guide. Such insurance
shall include the minimum coverages and limits of liability set forth in
Subparagraph 10.1.2 below, and such additional coverages and higher limits as
may be specified elsewhere in the Contract Documents.
10.1.2 The insurance carried by Landlord shall include the
following minimum coverages and limits of liability:
10.1.3 Worker's compensation and employer's liability insurance:
(a) Worker's compensation insurance as required by any applicable law
or regulation.
(b) Employer's liability insurance in the amount of $1,000,000 each
accident for bodily injury, $1,000,000 policy limit for bodily
injury by disease and $1,000,000 each employee for bodily injury
by disease.
10.1.4 General liability insurance: Commercial General Liability
insurance covering all operations by or on behalf of Landlord, which shall
include the following minimum limits of liability and coverages:
(a) Required coverages:
(1) Premises and Operations,
(2) Products and Completed Operations,
(3) Contractual Liability, insuring the indemnity obligations
assumed by Landlord under the Contract Documents,
(4) Broad Form Property Damage (including Completed Operations),
(5) Explosion, Collapse and Underground Hazards, and
(6) Personal Injury Liability.
(b) Minimum limits of liability:
(1) $1,000,000 each occurrence (for bodily injury and property
damage),
(2) $1,000,000 for Personal Injury Liability,
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(3) $2,000,000 aggregate for Products and Completed Operations
(which shall be maintained for a three (3) year period
following final completion of the Work),
(4) $2,000,000 general aggregate applying separately to this
Project
10.1.5 Automobile Liability Insurance: Automobile liability
insurance (bodily injury and property damage liability) including coverage
for owned, hired, and nonowned automobiles. The limits of liability shall
not be less than $1,000,000 combined single limit each accident for bodily
injury and property damage combined. Landlord shall also require each of its
Subcontractors to include in their liability insurance policies coverage for
Automobile Contractual Liability.
10.1.6 Umbrella/Excess Liability Insurance: Landlord shall also
carry umbrella/excess liability insurance in the amount of $5,000,000. If
there is no per project aggregate under the Commercial General Liability
policy, the limit shall be $5,000,000.
10.1.7 Landlord's liability insurance shall be written on an
occurrence basis. Landlord's insurance shall include an endorsement whereby
Tenant and its TSR are named as additional insureds as respects all
operations performed by or on behalf of Landlord in connection with the Work.
Landlord's insurance shall also include an endorsement providing that there
shall be severability of interests with respect to the additional insureds.
All of the coverage afforded to Tenant through Landlord's insurance shall be
primary and not contributory to any coverage available to Tenant under any
other insurance held by Tenant. Prior to commencing the Work, Landlord shall
submit to Tenant a certificate of insurance evidencing that the required
insurance is in full force and effect. This certificate shall contain
certification by the insurance companies that such insurance may not be
canceled, non-renewed, materially changed or subject to a reduction in limits
without 30 days prior written notification to Tenant. Upon request of
Tenant, Landlord shall submit copies of the insurance policies to Tenant.
10.1.8 It is the obligation of Landlord to provide insurance which
complies with the requirements of the Contract Documents. Landlord's
agreement to provide insurance is a material part of Landlord's obligations
under the Contract Documents. The parties intend that Landlord shall provide
the required insurance and that such insurance shall protect the interests of
Landlord and Tenant notwithstanding any assertion or determination that any
indemnity provision of the Contract Documents is void or unenforceable. The
obligations of Landlord under the Contract Documents with respect to
insurance shall not be waived by Tenant's failure to request evidence of
insurance or to enforce any of the other provisions of the Contract Documents
respecting insurance, or by Tenant's failure to respond to or object to any
submission by Landlord respecting insurance. Landlord shall be liable to
Tenant for all damages incurred by Tenant as a result of Landlord's failure
to carry or to cause any Subcontractor to carry the required insurance.
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10.2 PROPERTY INSURANCE.
10.2.1 Landlord shall maintain property insurance on the Work.
Such insurance shall:
10.2.1.1 include the interest of Tenant, Landlord,
subcontractors, suppliers, and any other persons or entities identified
in the Agreement, each of whom is deemed to have an insurable interest
and shall be listed as an insured or additional insured;
10.2.1.2 be written on a Builder's Risk-All-Risk or open peril
or special causes of loss policy form that shall at least include
insurance for physical loss or damage to the Work, temporary buildings,
false work, and work in transit, and shall insure against at least the
following perils: fire, lightning, extended coverage, theft, vandalism,
and malicious mischief, earthquake, collapse, debris removal,
demolition occasioned by enforcement of laws and regulations, water
damage, and such other perils as may be specifically required by the
Agreement;
10.2.1.3 include expenses incurred in the repair or
replacement of any insured property (including, but not limited to,
fees and charges of engineers and architects);
10.2.1.4 cover materials and equipment stored at the site or
at other location that was agreed to in writing by Tenant prior to being
incorporated into the Work, provided that such materials and equipment
have been included in the Application for Payment submitted by
Landlord; and
10.2.1.5 be maintained in effect until Substantial Completion
has been achieved, unless otherwise agreed to in writing by Tenant and
Landlord within thirty (30) days' written notice to each other
additional insured to whom a Certificate of Insurance has been issued.
10.2.2 Landlord shall purchase and maintain such boiler and
machinery insurance or additional property insurance as may be required to
protect Landlord's equipment (but not Tenant's Equipment) or otherwise
required by this Agreement or any laws and regulations and shall include the
interests of Landlord, Tenant, subcontractors, and any other persons or
entities identified in the Agreement, each of whom is deemed to have an
insurable interest and shall be listed as an insured or additional insured.
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11. CHANGES IN THE WORK.
11.1 CHANGE ORDERS.
11.1.1 Tenant, without invalidating the Agreement, may order changes
in the Work within the general scope of the Agreement, consisting of
additions, deletions or other revisions by way of Change Orders. If the
change directed by Tenant involves a material increase or decrease in the
scope of the Work, the Contract Sum and/or Contract Time will be
appropriately increased or decreased, as provided in the relevant Change
Order. If the change directed by Tenant does not involve a material increase
or decrease in the scope of the Work, there shall be no adjustment to the
Contract Sum or Contract Time.
11.1.2 A Change Order is a written order, signed by Landlord and
Tenant, modifying the Contract by authorizing a change in the Work and/or an
adjustment to the Contract Sum or Contract Time. The Contract Sum and the
Contract Time may be changed only by Change Orders. A Change Order signed by
Landlord indicates agreement therewith including the adjustment, if any, in
the Contract Sum and Contract Time.
11.1.3 The increase or decrease in the Contract Sum (subject, in all
events, to Subparagraph 11.1.1) resulting from a change in the Work shall be
determined in accordance with the other Contract Documents; provided,
however, the additional profit and overhead with respect to any Subcontractor
or Sub-subcontractor shall not exceed the following: 1) with respect to those
portions of such Work performed by such Subcontractor or Sub-subcontractor
with its own forces, the amount of such allowance shall not exceed ten (10%)
percent of the cost of such portions of the Work, 2) with respect to those
portions of such Work performed by any lower tier Sub-subcontractor, the
amount of such allowance shall not exceed five percent (5%) of the amount
paid to such lower tier Sub-subcontractor as a result of such change. Unless
otherwise provided in the Contract Documents, the expenditures included in
the cost of such Work (a) shall be limited to only those costs actually and
properly paid by Landlord and incurred in the performance of the changed Work
for items which are required for the proper completion of the changed Work in
accordance with the Contract Documents and any additional interest expense
under the Initial Mortgage (as defined in the Lease) resulting from any
applicable extension of the Contract Time (which shall be reimbursed pursuant
to Section 4.4), and (b) shall be further limited by the following:
Landlord's actual cost of materials and equipment incorporated into the
changed Work, including sales tax and cost of delivery; Landlord's actual
cost of labor, including social security, old age and unemployment insurance,
and fringe benefits required by agreement or custom; workers' compensation
insurance; rental value of equipment and machinery; and the additional costs
of supervision and field office personnel directly attributable to the
change. When both additions and credits covering related Work or
substitutions are involved in any one change, the Landlord's five percent
(5%) fee shall be calculated on the basis of the net increase, if any, with
respect to that change. In calculating the cost of the changed Work, all cash
discounts, rebates, or refunds, all trade discounts, rebates, or refunds, and
all proceeds
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from the return of surplus materials and equipment shall be deducted
therefrom and shall accrue to the benefit of the tenant. In addition, the
cost of the changed Work shall be calculated at rates not higher than those
prevailing in the location of the performance of the changed Work.
11.1.4 Landlord shall keep and present, in form reasonably
acceptable to Tenant, an itemized accounting together with appropriate
supporting data of the cost of Work resulting from a change in the Work.
11.1.5 Any change in the Work which affects the Contract Time shall
require the prompt notification by Landlord as to the time impact of such
change. In computing the cost of such changes for submission to Tenant,
Landlord shall alternately compute costs on the basis of completion of the
Work within the existing Contract Time and on the basis of completion on an
extended Contract Time.
11.2 MINOR CHANGES IN THE WORK. Tenant shall have the right to order
minor changes in the Work not involving an adjustment in the Contract Sum or an
extension of Contract Time and not inconsistent with the intent of the Contract
Documents. Such changes shall be affected by written field orders and shall be
binding on Tenant and Landlord. Landlord shall carry out field orders promptly.
12. UNCOVERING AND CORRECTION OF WORK.
12.1 UNCOVERING OF WORK.
12.1.1 If any portion of the Work should be covered contrary to the
request of Tenant or to requirements specifically expressed in the Contract
Documents, it must, if required in writing by Tenant, be uncovered for its
observation and shall be replaced at Landlord's expense.
12.1.2 If any portion of the Work has been covered which Tenant has
not specifically requested to observe prior to being covered, Tenant may
request to see such Work and it shall be uncovered by Landlord. If such Work
is found to be in accordance with the Contract Documents, the cost of
uncovering and replacement shall, by appropriate Change Order, be charged to
Tenant. If such Work is found not to be in accordance with the Contract
Documents, Landlord shall pay such costs unless it is found that this
condition was caused by Tenant or a separate contractor, in which event
Tenant shall be responsible for the payment of such costs.
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12.2 CORRECTION OF WORK.
12.2.1 Landlord shall promptly correct all Work rejected by Tenant
as defective or as failing to conform to the Contract Documents whether
observed before or after Final Completion and whether or not fabricated,
installed or completed, provided that Landlord is notified thereof by Tenant
in writing prior to the expiration of the Correction Period. Landlord shall
bear all costs of correcting such rejected Work.
12.2.2 As used in this Subparagraph 12.2.2, the term "Correction
Period" means one (1) year after Substantial Completion. If, within the
Correction Period any of the Work is found to be defective or not in
accordance with the Contract Documents, and if Landlord is notified thereof
by Tenant within the Correction Period, Landlord shall correct it promptly
after receipt of a written notice from Tenant to do. This obligation shall
survive termination of the Agreement. Tenant shall give such notice promptly
after discovery of the condition. Landlord will assign to Tenant any
applicable special warranty required by the Contract Documents which extends
beyond the Correction Period.
12.2.3 Landlord shall remove from the site all portions of the Work
which are defective or nonconforming and which have not been corrected,
unless removal is waived by Tenant.
12.2.4 If Landlord fails to correct defective or non-conforming
Work, Tenant may correct it at the expense of Landlord in accordance with the
Contract Documents.
12.2.5 If Landlord does not proceed promptly and diligently with the
correction of defective or non-conforming Work, Tenant may remove it and may
store any salvageable materials or equipment at the expense of Landlord. If
Landlord does not pay the cost of such removal and storage within ten (10)
days after written notice, Tenant may upon ten (10) additional days' written
notice sell such materials and equipment at auction or at a private sale.
Tenant shall account for the net proceeds thereof after deducting all costs
that should have been borne by Landlord. If such proceeds of sale do not
cover all costs which Landlord should have borne, the difference shall be
deducted from the payments then or thereafter due Landlord. If the payments
then or thereafter due Landlord are not sufficient to cover such amount,
Landlord shall promptly pay the difference to Tenant.
12.2.6 Landlord shall bear the cost of making good all work of
Tenant or separate contractors destroyed or damaged by correction or removal of
defective or non-conforming Work.
12.2.7 Nothing contained in this Article shall be construed to
establish a period of limitation with respect to any other obligation which
Landlord might have under the Contract Documents. The establishment of time
periods set forth in this Article relate only to the specific obligations of
Landlord to correct the Work and has no relationship to the time
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within which its obligation to comply with the Contract Documents may be
sought to be enforced nor to the time within which proceedings may be
commenced to establish Landlord's liability with respect to its obligations
other than specifically to correct the Work.
12.3 ACCEPTANCE OF DEFECTIVE OR NONCONFORMING WORK. If Tenant
prefers to accept defective or non-conforming Work, it may do so instead of
requiring its removal and correction, in which case a Change Order will be
issued to reflect a reduction in the Contract Sum where appropriate and
equitable. Such adjustment shall be effected whether or not final payment
has been made.
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ATTACHMENT 3
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Contract Schedule
Commencement April 14, 1997
Fifty Percent (50%) Completion of the Work August 1, 1997
Substantial Completion November 14, 1997
Final Completion December 31, 1997
<PAGE>
GUARANTY
THIS GUARANTY is made and entered into as of this 21st day of April, 1997,
by RYAN COMPANIES US, INC., a Minnesota corporation ("Guarantor"), in favor of
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY, a Minnesota corporation
(the "Company").
WITNESSETH:
A. The Belle Plaine Economic Development Authority (the "Authority"),
the City of Belle Plaine, Minnesota (the "City") and the Company have entered
into that certain Contract For Private Development dated as of December 31,
1996 (the "Original Contract"), pursuant to which the Authority and City
agreed to provide certain assistance to facilitate development of the
Development Property (as defined in the Original Contract), and the Company
agreed to construct certain improvements thereon and undertake various other
obligations in connection with such development.
B. The Company has partially assigned its rights and obligations under
the Original Contract to Ryan Belle Plaine, LLC, a Minnesota limited
liability company ("Ryan"), and the Original Contract was amended in certain
respects pursuant to certain terms and conditions set forth in that certain
Assignment, Assumption and Amendment of Development Contract dated as of even
date herewith by and among the Company, the City, the Authority and Ryan (the
"Assignment", while the Original Contract and the Assignment being
hereinafter collectively referred to as the "Development Contract").
C. Ryan and the Company have entered into that certain Construction
Agreement dated as of even date herewith (the "Construction Agreement")
pursuant to which Ryan agreed to perform certain improvements at and around
the Development Property.
D. In fulfillment of certain obligations imposed pursuant to the
Development Contract, the Authority, Ryan, the Company and Commonwealth Land
Title Insurance Company have entered into that certain Escrow Agreement dated
as of even date hereunder (the "Escrow Agreement"), pursuant to which, in
part, the Company deposited the Company Funds (as defined in the Escrow
Agreement and the Construction Agreement) into escrow to be held pending
disbursement on account of costs incurred by Ryan in performing the work
required under the Construction Agreement.
E. Ryan, as landlord, and the Company, as tenant, have entered into
that certain Lease Agreement dated as of even date herewith (the "Lease"),
pursuant to which Ryan leased to the Company, and the Company leased from
Ryan, the entire Development Property, together with the improvements to be
constructed pursuant to the Construction Agreement.
<PAGE>
F. Certain payment obligations of Ryan under the Construction
Agreement are secured by that certain Mortgage dated as of even date herewith
by Ryan in favor of the Company and encumbering the Development Property (the
"Mortgage").
G. As a condition to entering into the Assignment, the Escrow
Agreement, the Lease and the Construction Agreement, the Company has required
that Guarantor execute and deliver this Guaranty.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Guarantor hereby agrees as
follows:
Section 1. GUARANTY. Guarantor hereby unconditionally guarantees (a)
the full, complete and punctual payment, performance and compliance with when
due of all payments and other obligations of Ryan now or hereafter existing
under the Construction Agreement, including, without limitation, as modified
by any subsequent instrument, and (b) payment of all fees, expenses or
damages incurred by the Company by reason of Ryan's failure to so pay and
perform and/or comply (the foregoing being collectively referred to herein as
the "Obligations"). Guarantor further agrees to pay any and all expenses
incurred by the Company in enforcing any rights under this Guaranty.
Section 2. GUARANTY ABSOLUTE. Guarantor unconditionally guarantees
that the Obligations will be paid or performed strictly in accordance with
the terms of the Construction Agreement, regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Company with respect thereto. The liability of
Guarantor under this Guaranty shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of the Development
Contract, the Escrow Agreement, the Lease, the Construction Agreement, the
Mortgage, or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment or performance
of, or in any other term of, all or any of the Obligations or any other
amendment or waiver of or any consent to departure from the Development
Contract, the Escrow Agreement, the Lease, the Construction Agreement, the
Mortgage, or any other agreement or instrument relating thereto;
(iii) any exchange, release or non-perfection of any collateral or
any release or amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Obligations;
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(iv) any discharge of Ryan from any of the Obligations pursuant to any
bankruptcy, reorganization, insolvency or liquidation proceedings, or any
similar proceedings for relief under any bankruptcy or under laws for the
relief of debtors; or
(v) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Ryan in respect of the Obligations unless
based upon the default of the Company under the Construction Agreement.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment or performance of any of the Obligations is
rescinded or must otherwise be returned by the Company upon the insolvency,
bankruptcy or reorganization of Ryan or otherwise, all as though such payment
had not been made. Guarantor expressly agrees it shall remain liable for any
deficiency remaining after foreclosure of the Mortgage (by any means) whether or
not the liability of Ryan or any other obligor for such deficiency is discharged
pursuant to statute or judicial decision.
Section 3. WAIVER. Guarantor hereby waives promptness, diligence,
notice of acceptance and any other notice with respect to any of the Obligations
and this Guaranty and any requirement that the Company protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against Ryan or any other person or entity,
including, without limitation, any other guarantor or any collateral. Guarantor
further waives any notice to which it may be entitled regarding changes,
amendments, waivers or other modifications of, or defaults under, the
Development Contract, the Escrow Agreement, the Lease, the Construction
Agreement, the Mortgage, or any other agreement or instrument relating thereto,
as well as any notices regarding disposition or retention of any collateral by
the Company.
Section 4. SUBROGATION. Guarantor shall not exercise any rights which
it may acquire by way of subrogation under this Guaranty, by any payment or
performance made hereunder or otherwise, until all the Obligations shall have
been paid or performed in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all the Obligations shall
not have been paid in full, such amount shall be held in trust for the benefit
of the Company and shall forthwith be paid to the Company to be credited and
applied upon the Obligations, whether matured or unmatured. If (i) Guarantor
shall make payment to the Company of all or any part of the Obligations, or
perform all or any part of the Obligations and (ii) all the Obligations shall be
paid or performed in full, the Company will, at Guarantor's request, execute and
deliver to Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
Guarantor of an interest in the Obligations resulting from such payment or
performance by Guarantor.
Section 5. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents
and warrants that: (a) it is a corporation duly organized and in good standing
under the laws of
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the State of Minnesota, is not in violation of any provisions of its articles
of incorporation, bylaws or the laws of the State, is duly authorized to
transact business in the State, has full power and authority to enter into
and perform its obligations under this Guaranty and has duly authorized the
execution, delivery and performance of this Guaranty by proper action of its
directors; and (b) the execution and delivery and compliance with the terms
hereof shall not contravene or constitute a default under any indenture,
commitment, agreement or other instrument to which Guarantor is bound or any
judgment, order or decree to which it is subject.
Section 6. CONSIDERATION. As a condition to entering into the
Assignment, the Escrow Agreement, the Lease and the Construction Agreement,
the Company has required that Guarantor execute and deliver this Guaranty.
Section 7. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by Guarantor herefrom shall in any
event be effective unless the same shall be in writing and signed by the
Company, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 8. ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing (including facsimile
communication) and, if to Guarantor, mailed or telegraphed or delivered to
it, addressed to the Guarantor at 700 International Centre, 900 Second Avenue
South, Minneapolis, MN 55402, Attention: Timothy M. Gray; if to the Company,
mailed or delivered to it at 607 West Travelers Trail, Burnsville, Minnesota
55337, Attention: Dan Hanlon, addressed to such party at, or as to each party
as such other address as shall be designated by such party in a written
notice to the other party. All such notices and other communications shall,
when mailed or telegraphed, respectively, be effective when deposited in the
mails or delivered by facsimile, respectively, addressed as aforesaid.
Section 9. NO WAIVER; REMEDIES. No failure on the part of the Company
to exercise, and no delay in exercising, any right hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 10. CONTINUING GUARANTY. This Guaranty is a continuing,
irrevocable guaranty and shall: (i) remain in full force and effect until
payment and performance in full of the Obligations and all other amounts payable
under this Guaranty; (ii) be binding upon Guarantor, its successors, transferees
and assigns; and (iii) inure to the benefit of and be enforceable by the Company
and its successors, transferees and assigns.
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Section 11. GOVERNING LAW; SEVERABILITY. This Guaranty shall be
governed by, and construed in accordance with the laws of the State of
Minnesota. If any provision of this Guaranty shall be held to be invalid by
any court of competent jurisdiction, the invalidity of such provision shall
not affect any of the remaining provisions.
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
and delivered as of the date first above written.
GUARANTOR:
RYAN COMPANIES US, INC.
By [Illegible]
------------------------------
Its V-Pres.
------------------------
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REV 97
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
AMENDED AND RESTATED 1995 STOCK PLAN
1. AMENDMENT OF EXISTING PLAN; PURPOSE. This Excelsior-Henderson
Motorcycle Manufacturing Company Amended and Restated 1995 Stock Plan (the
"Plan") amends and restates in its entirety the Hanlon Manufacturing Company
1995 Stock Plan. The purpose of the Plan is to attract, motivate and retain
employees, directors, advisors and officers to produce a superior return to
the shareholders of Excelsior-Henderson Motorcycle Manufacturing Company by
offering such persons an opportunity to realize Stock appreciation, by
facilitating Stock ownership and by rewarding them for achieving a high level
of corporate financial performance. The Plan is also intended to facilitate
recruiting and retaining experienced and knowledgeable advisors and
independent contractors by permitting such persons to acquire a proprietary
interest in the Company.
2. DEFINITIONS AND RULES OF CONSTRUCTION. The capitalized terms used
in this Plan have the meanings, and certain rules of construction are, set
forth in the list of defined terms attached to this Plan as EXHIBIT A.
3. ADMINISTRATION.
3.1 AUTHORITY OF COMMITTEE. The Committee shall administer the
Plan. The Committee shall have exclusive power to make Awards, to
determine when and to whom Awards will be granted, the form of each
Award, the amount of each Award, and any other terms or conditions of
each Award. Each Award shall be subject to an Agreement authorized by the
Committee. The Committee's interpretation of the Plan and of any Awards
made under the Plan shall be final and binding on all persons with an
interest therein. The Committee shall have the power to establish
regulations to administer the Plan and to change such regulations. Solely
for purposes of determining and administering Awards to Participants who
are not then subject to the reporting requirements of Section 16 of the
Exchange Act, the Committee may delegate all or any portion of its
authority under the Plan to persons who are not Non-Employee Directors.
3.2 AWARDS TO OUTSIDE DIRECTORS. Notwithstanding any
contrary provisions of the Plan, the granting, terms, conditions and
eligibility requirements of Awards granted to Outside Directors under
Section 9.3 of the Plan are governed solely by the provisions of the Plan
pertaining thereto, and the Committee shall have no discretion with respect
to the granting of such Awards or to alter or amend any terms, conditions
or eligibility requirements of such Awards to Outside Directors. Provided,
however, that the Committee may make Awards to Outside Directors in
addition to Awards granted under such Section 9.3 and such other Awards
need not be upon the same terms as Awards granted under such Section 9.3
<PAGE>
3.3 INDEMNIFICATION. To the full extent permitted by law,
(i) no member of the Committee or any person to whom the Committee
delegates authority under the Plan shall be liable for any action or
determination taken or made in good faith with respect to the Plan or any
Award made under the Plan, and (ii) the members of the Committee and each
person to whom the Committee delegates authority under the Plan shall be
entitled to indemnification by the Company with regard to such actions and
determinations.
4. SHARES AVAILABLE UNDER THE PLAN.
4.1 SHARES AVAILABLE. The number of Shares available for
distribution under the Plan shall not exceed 1,000,000 (subject to
adjustment pursuant to Section 15 hereof). Any Shares subject to the
terms and conditions of an Award under this Plan which are not used
because the terms and conditions of the Award are not met may again be
used for an Award under the Plan.
4.2 CONDITIONAL ISSUANCES. If the Plan is amended at any time
subject to shareholder approval, then the Committee may, in accordance
with the terms and conditions of the Plan, grant Awards on a conditional
basis, subject to such approval by the shareholders of the Company not
later than the next annual meeting of the shareholders of the Company
following the date of such conditional grant. Any Award granted on a
conditional basis shall not be exercisable unless and until the amendment
to the Plan is approved by the shareholders of the Company. If such an
amendment is not approved by the shareholders at the next annual meeting
of shareholders of the Company following the conditional grant, then the
conditional grant shall be canceled.
5. ELIGIBILITY. Except as otherwise provided in Section 9 hereof, the
granting of Awards to Participants is solely at the discretion of the Committee.
The Committee shall determine the Participants, and the form, amount and other
terms and conditions of each Award, taking into consideration such factors,
including any recommendations of officers of the Company, as it deems relevant
to select and motivate Participants to advance the interests of the Company.
Participants shall be persons determined by the Committee as having contributed
materially to the success of the Company or as being in a position to contribute
materially to the future success of the Company.
6. GENERAL TERMS OF AWARDS.
6.1 AMOUNT OF AWARD. Each Agreement shall set forth the number
of Shares of Restricted Stock or other Stock subject to such Agreement,
or the number of Shares to which the Option subject to such Agreement
applies, as the case may be.
6.2 TERM. Each Agreement, other than those relating solely to
Awards of Stock without restrictions, shall set forth the Term of the
Option or Restricted Stock, as the case may be. An Agreement may permit
acceleration of the commencement of the applicable Term and the
expiration of any restrictions on exercisability upon such terms and
conditions as shall be set forth in the Agreement, which may, but need
not, include without limitation acceleration resulting from the
occurrence of an Event, Fundamental Change, the meeting
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of performance objectives established by the Committee in an Agreement, or
in the event of the Participant's death or Retirement.
6.3 TRANSFERABILITY. During the lifetime of a Participant to whom
an Award is granted, only such Participant (or such Participant's
legal representative) may exercise an Option. No Award of Restricted
Stock (prior to the expiration of the restrictions) or Options may be sold,
assigned, transferred, exchanged or otherwise encumbered other than
pursuant to a qualified domestic relations order as defined in the Code or
Title 1 of the Employee Retirement Income Security Act ("ERISA") or the
rules thereunder, and any attempt to do so shall be of no effect.
Notwithstanding the immediately preceding sentence, an Agreement may
provide that (i) the Award subject to the Agreement shall be transferable
to a Successor in the event of a Participant's death or (ii) a Non-
Statutory Stock Option shall be transferable to any member of a
Participant's "immediate family" (as such term is defined in Rule 16a-1(e)
promulgated under the Exchange Act, or any successor rule or regulation) or
to one or more trusts whose beneficiaries are members of such Participant's
"immediate family" or partnerships in which such family members are the
only partners; provided, however, that (1) the Agreement with respect to
such Options, which must be approved by the Committee, expressly so
provides either at the time of initial grant or by amendment to an
outstanding Agreement, (2) the Participant receives no consideration for
the transfer and (3) such transferred Non-Statutory Stock Option shall
continue to be subject to the same terms and conditions as were applicable
to such Non-Statutory Stock Option immediately prior to its transfer.
6.4 TERMINATION OF EMPLOYMENT. Except as otherwise provided in
the applicable Agreement with any Participant, for any Participant who
is an employee of the Company, no Option may be exercised by the
Participant, and all Restricted Stock held by the Participant shall
be forfeited (i) after the 45th day following the day the Participant's
employment by the Company ceases if such cessation of employment is for a
reason other than death, Retirement, or Total and Permanent Disability, or
(ii) three months after Participant's employment by the Company ceases if
such cessation of employment is because of death, Retirement, or Total
and Permanent Disability, or (iii) if applicable, the date of breach by
a Participant of any employment or confidentiality agreement by and
between the Company and Participant, except as, and to the extent, provided
in the Agreement applicable to that Award. An Award may be exercised by,
or paid to, the Successor of a Participant following the death of such
Participant to the extent, and during the period of time, if any,
provided in the applicable Agreement.
7. RESTRICTED STOCK AWARDS. An Award of Restricted Stock under the
Plan shall consist of Shares subject to restrictions on transfer and
conditions of forfeiture, which restrictions and conditions shall be included
in the applicable Agreement. Except as otherwise provided in the applicable
Agreement, each Stock certificate issued in respect to an Award of Restricted
Stock shall either be deposited with the Company or its designee, together
with an assignment separate from such certificate, in blank, signed by the
Participant, or bear such legends with respect to the restricted nature of
the Restricted Stock evidenced thereby as shall be provided for in the
applicable Agreement. The Agreement shall describe the terms and conditions
by which the restrictions upon
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<PAGE>
awarded Restricted Stock shall lapse. Upon the lapse of the restrictions,
stock certificates free of restrictive legends, if any, relating to such
restrictions shall be issued to the Participant or his Successor. The
Agreement shall also set forth any required payment for such Restricted
Stock, if such payment is required by the Committee, and any provisions
regarding repurchase of such Restricted Stock in the event of forfeiture. A
Participant with a Restricted Stock Award shall have all the other rights of
a shareholder including, but not limited to, the right to receive dividends
and the right to vote the Shares of Restricted Stock. Unless the issuance of
shares pursuant to a Restricted Stock Award is registered or exempt under
federal or state securities laws, the Participant shall be required to give
an investment representation at the time of the Award, and transfer of the
shares shall be appropriately restricted.
8. STOCK AWARDS. Awards of Stock without restrictions may be made by
the Committee to a Participant in furtherance of the Plan's purposes. A
Participant receiving a Stock Award shall be entitled to all of the rights
and privileges in the Common Stock awarded as of the date on which the Award
is made. Unless the issuance of shares pursuant to a Stock Award is
registered or exempt under federal or state securities laws, the Participant
shall be required to give an investment representation at the time of the
Award, and transfer of the shares shall be appropriately restricted.
9. STOCK OPTIONS.
9.1 TERMS OF ALL OPTIONS. An Option shall be granted pursuant to an
Agreement as either an Incentive Stock Option or a Non-Statutory Stock
Option. Only Non-Statutory Stock Options may be granted to Participants who
are not employees of the Company or an Affiliate. The purchase price of
each Share subject to an Option shall be determined by the Committee and
set forth in the Agreement, but shall not be less than 85% of the Fair
Market Value of a Share as of the date the Option is granted. The purchase
price of the Shares with respect to which an Option is exercised shall be
payable in full at the time of exercise, provided that to the extent
permitted by law, the Agreement may permit Participants to simultaneously
exercise Options and sell the Shares thereby acquired pursuant to a
brokerage or similar relationship and use the proceeds from such sale as
payment of the purchase price of such Shares or to engage in a Net
Exercise. The purchase price may be payable in cash, in Stock having a
Fair Market Value as of the date the Option is exercised equal to the
purchase price of the Stock being purchased pursuant to the Option, or a
combination thereof, as determined by the Committee and provided in the
Agreement; provided, however, that a person exercising an Option shall not
be permitted to pay any portion of the purchase price with Stock or through
a Net Exercise if, in the opinion of the Committee, payment in such manner
could have adverse financial accounting consequences for the Company. Each
Option shall be exercisable in whole or in part on the terms provided in
the Agreement. In no event shall any Option be exercisable at any time
after its expiration date. When an Option is no longer exercisable, it
shall be deemed to have lapsed or terminated. Unless the issuance of the
shares upon the exercise of an Option hereunder is subject to a
registration or exemption under applicable federal and state securities
laws, the Participant shall be required to give an investment
representation at the time of exercise and transfer of the shares shall be
appropriately restricted.
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<PAGE>
9.2 INCENTIVE STOCK OPTIONS. In addition to the other terms and
conditions applicable to all Options:
(i) the aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares with respect to which Incentive Stock
Options held by an individual first become exercisable in any calendar
year (under this Plan and all other incentive stock option plans of the
Company and its Affiliates) shall not exceed $100,000 (or such other limit
as may be required by the Code) if such limitation is necessary to qualify
the Option as an Incentive Stock Option;
(ii) the purchase price of Shares covered by Incentive Stock Options
must not be less than 100% of the Fair Market Value of the Shares on the
date of grant;
(iii) an Incentive Stock Option shall not be exercisable more than
10 years after the date of grant (or such other limit as may be required
by the Code) if such limitation is necessary to qualify the Option as an
Incentive Stock Option;
(iv) unless otherwise specified by the Committee in the Agreement,
and except as otherwise provided in Section 6.4 or Section 16, a
Participant may exercise an Incentive Stock Option at any time up to 10
years from the date of grant of the Option, in whole or in part subject
to any vesting schedule determined by the Committee;
(v) if the Participant owns, or is deemed under Section 424(d)
of the Code to own, stock of the Company or of any Affiliate possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock therein at the time the Incentive Stock Option is
granted:
(a) the purchase price of the Shares covered by the Incentive
Stock Option must not be less than 110% of the Fair Market Value of
Shares on the date of grant; and
(b) the Term of the Incentive Stock Option must not be greater
than five years from the date of grant; and
(vi) the Agreement covering an Incentive Stock Option shall contain
such other terms and provisions which the Committee determines necessary to
qualify such Option as an Incentive Stock Option.
9.3 OUTSIDE DIRECTOR OPTIONS.
(i) During the term of this Plan, each person who is elected to the
Board of Directors and who is an Outside Director when elected shall
immediately be granted, by virtue of their election to the Board of
Directors, a Non-Statutory Stock Option. The date of such election
shall be the date of grant for options granted
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<PAGE>
pursuant to this subsection 9.3(i). The number of shares covered by each
such option shall be 15,000 (subject to adjustment pursuant to Section 15
hereof).
(ii) Beginning with the Annual Meeting of Shareholders to be held
during calendar year 1998 and for every Annual Meeting of Shareholders
thereafter during the term of this Plan, each person serving as an Outside
Director immediately following such Annual Meeting shall be granted, by
virtue of serving as an Outside Director, a Non-Statutory Stock Option. The
date of such Annual Meeting shall be the date of grant for options granted
pursuant to this subsection 9.3(ii). The number of Shares covered by each
such option shall be 10,000 (subject to adjustment pursuant to Section 15
hereof). Director Options granted pursuant to this subsection 9.3(ii) shall
be in addition to those granted pursuant to subsection 9.3(i).
Notwithstanding the foregoing, no Outside Director shall receive a grant of
options pursuant to this subsection 9.3(ii) prior to completing a minimum of
six months of service as an Outside Director.
(iii) Director Options granted pursuant to subsection 9.3(i)
shall vest and become exercisable one year following the date of grant.
Director Options granted pursuant to subsection 9.3(ii) shall vest and
become exercisable on the date of the Annual Meeting next following the
grant of Director Options. Notwithstanding the foregoing, Director
Options shall vest and become immediately exercisable in full upon the
occurrence of any Event or upon the death of an Outside Director.
Director Options shall expire at the 10-year anniversary of the date of
grant.
(iv) The purchase price of each Share subject to a Director Option
pursuant to this Section 9.3 shall be 100% of the Fair Market Value of a
Share as of the date of grant. Notwithstanding anything to the contrary
stated in this Plan, for purposes of this Section 9.3 and the definition of
Fair Market Value in Exhibit A attached hereto, each Director Option shall
be deemed conclusively to have been granted prior to close of the applicable
securities exchange or system on the date of grant. An Outside Director may
exercise a Director Option using as payment any form of consideration
provided for in Section 9.1.
(v) Director Options shall be evidenced by an agreement signed
on behalf of the Company by an officer thereof which only incorporates by
reference the terms of this Plan.
(vi) Unless the Director Option shall have expired, in the event
of an Outside Director's death, the Director Option granted to such Outside
Director shall be transferable to the beneficiary, if any, designated by the
Outside Director in writing to the Company prior to the Outside Director's
death and such beneficiary shall succeed to the rights of the Outside
Director to the extent permitted by law. If no such designation of a
beneficiary has been made, the Outside Director's legal representative shall
succeed to the Director Option, which shall be transferable by will or
pursuant to the laws of descent and distribution.
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10. SUBSTITUTION OPTIONS. Options may be granted under this Plan from
time to time in substitution for stock options held by employees of other
corporations who are about to become Employees of the Company or a subsidiary
of the Company, or whose employer is about to become a subsidiary of the
Company, as the result of a merger or consolidation of the Company or a
subsidiary of the Company with another corporation, the acquisition by the
Company or a subsidiary of the Company of all or substantially all the assets
of another corporation or the acquisition by the Company or a subsidiary of
the Company of at least 50% of the issued and outstanding stock of another
corporation. The terms and conditions of the substitute Options so granted
may vary from the terms and conditions set forth in this Plan to such extent
as the Board (or the Committee) at the time of the grant may deem appropriate
to conform, in whole or in part, to the provisions of the stock options in
substitution for which they are granted, but with respect to stock options
which are Incentive Stock Options, no such variation shall be permitted which
affects the status of any such substitute Option as an "incentive stock
option" under Section 422 of the Code.
11. EFFECTIVE DATE OF THE PLAN.
11.1 EFFECTIVE DATE. The Plan shall become effective as of
December 15, 1995, provided that the Plan is approved and ratified by the
affirmative vote of the holders of a majority of the outstanding Shares of
Stock present or represented and entitled to vote in person or by proxy at
a meeting of the shareholders of the Company no later than June 30, 1996.
11.2 DURATION OF THE PLAN. The Plan shall remain in effect until all
Stock subject to it shall be distributed or until all Awards have expired
or lapsed, or the Plan is terminated pursuant to Section 14. No Award of an
Incentive Stock Option shall be made more than 10 years after the Effective
Date (or such other limit as may be required by the Code) if such limitation
is necessary to qualify the Option as an Incentive Stock Option. The date
and time of approval by the Committee of the granting of an Award shall be
considered the date and time at which such Award is made or granted.
12. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan shall confer
upon any Participant the right to continue in the employment of the Company
or any Affiliate or affect any right which the Company or any Affiliate may
have to terminate the employment of the Participant with or without cause.
13. TAX WITHHOLDING. The Company shall have the right to withhold from
any cash payment under the Plan to a Participant or other person an amount
sufficient to cover any required withholding taxes. The Company shall have
the right to require a Participant or other person receiving Stock under the
Plan to pay the Company a cash amount sufficient to cover any required
withholding taxes. In lieu of all or any part of such a cash payment from a
person receiving Stock under the Plan, the Committee may permit the
individual to elect to cover all or any part of the required withholdings,
and to cover any additional withholdings up to the amount needed to cover the
individual's full FICA and Medicare, and federal, state and local income tax
with respect to income arising from payment of the Award, through a reduction
of the number of Shares delivered
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<PAGE>
to him or a subsequent return to the Company of Shares held by the Participant
or other person, in each case valued in the same manner as used in computing the
withholding taxes under the applicable laws.
14. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN. The Board may
at any time terminate, suspend or modify the Plan. Amendments are subject to
approval of the shareholders of the Company only if such approval is
necessary to maintain the Plan in compliance with the requirements of
Exchange Act Rule 16b-3, Code Section 422, their successor provisions or any
other applicable law or regulation. No termination, suspension, or
modification of the Plan may materially and adversely affect any right
acquired by any Participant (or his legal representative) or any Successor
under an Award granted before the date of termination, suspension, or
modification, unless otherwise agreed to by the Participant in the Agreement
or otherwise or required as a matter of law; but it will be conclusively
presumed that any adjustment for changes in capitalization provided for in
Section 15 does not adversely affect any right.
15. ADJUSTMENT FOR CHANGES IN CAPITALIZATION. Appropriate adjustments
in the aggregate number and type of Shares available for Awards under the
Plan, in the number and type of Shares subject to Options thereafter issued
and in the number and type of Shares subject to Awards then outstanding, and
in the Option price as to any outstanding Options, may be made by the
Committee in its sole discretion to give effect to adjustments made in the
number or type of Shares of the Company through a Fundamental Change (subject
to Section 16), recapitalization, reclassification, stock dividend, stock
split, stock combination or other relevant change, provided that fractional
Shares shall be rounded to the nearest whole share.
16. FUNDAMENTAL CHANGE. In the event of a proposed Fundamental Change,
the Committee may, but shall not be obligated to:
a. if the Fundamental Change is a merger or consolidation or
statutory share exchange, make appropriate provision for the protection of
the outstanding Options by the substitution of options and appropriate
voting common stock of the corporation surviving any merger or
consolidation or, if appropriate, the parent corporation of the Company
or such surviving corporation to be issuable upon the exercise of
Options, in lieu of options and capital stock of the Company; or
b. at least 30 days prior to the occurrence of the Fundamental
Change, declare, and provide written notice to each holder of an Option
of the declaration, that each outstanding Option, whether or not then
exercisable, shall be canceled at the time of, or immediately prior to
the occurrence of the Fundamental Change in exchange for payment to each
holder of an Option, within ten days after the Fundamental Change, of
cash equal to, for each Share covered by the canceled Option, the amount,
if any, by which the Fair Market Value (as hereinafter defined in this
Section) per Share exceeds the exercise price per Share covered by such
Option. At the time of the declaration provided for in the immediately
preceding sentence, each Option shall immediately become exercisable in
full and each person holding an Option shall have the right, during the
period preceding the time of cancellation of the Option, to exercise his
Option as to all or any part of the Shares
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covered thereby in whole or in part, as the case may be. In the event of a
declaration pursuant to this Section 16(b), each outstanding Option
granted pursuant to the Plan that shall not have been exercised prior to
the Fundamental Change shall be canceled at the time of, or immediately
prior to, the Fundamental Change, as provided in the declaration.
Notwithstanding the foregoing, no person holding an Option shall be
entitled to the payment provided for in this Section 16(b) if such Option
shall have expired pursuant to the Agreement. For purposes of this
Section only, "Fair Market Value" per Share shall mean the cash plus the
fair market value, as determined in good faith by the Committee, of the
non-cash consideration to be received per Share by the shareholders of
the Company upon the occurrence of the Fundamental Change,
notwithstanding anything to the contrary provided in the Plan.
17. UNFUNDED PLAN. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan.
18. OTHER BENEFIT AND COMPENSATION PROGRAMS. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan
shall not be deemed a part of a Participant's regular, recurring compensation
for purposes of the termination, indemnity or severance pay law of any
country and shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan, contract or
similar arrangement provided by the Company or an Affiliate unless expressly
so provided by such other plan, contract or arrangement, or unless the
Committee expressly determines that an Award or portion of an Award should be
included to accurately reflect competitive compensation practices or to
recognize that an Award has been made in lieu of a portion of competitive
cash compensation.
19. BENEFICIARY UPON PARTICIPANT'S DEATH. To the extent that the
transfer of a Participant's Award at his death is permitted under an
Agreement, (i) a Participant's Award shall be transferable at his death to
the beneficiary, if any, designated on forms prescribed by and filed with the
Committee and (ii) upon the death of the Participant, such beneficiary shall
succeed to the rights of the Participant to the extent permitted by law. If
no such designation of a beneficiary has been made, the Participant's legal
representative shall succeed to the Awards which shall be transferable by
will or pursuant to laws of descent and distribution to the extent permitted
under an Agreement.
20. GOVERNING LAW. To the extent that Federal laws do not otherwise
control, the Plan and all determinations made and actions taken pursuant to
the Plan shall be governed by the laws of Minnesota and construed
accordingly.
-9-
<PAGE>
EXHIBIT A
EXCELSIOR-HENDERSON MOTORCYCLE MANUFACTURING COMPANY
AMENDED AND RESTATED 1995 STOCK PLAN
DEFINED TERMS AND RULES OF CONSTRUCTION
1. DEFINITIONS.
Set forth below are the meanings of certain terms used in this Plan.
a. "AFFILIATE" means any corporation that is a "parent corporation"
or "subsidiary corporation" of the Company, as those terms are defined
in Section 424(e) and (f) of the Code, or any successor provision.
b. "AGREEMENT" means a written contract entered into between the
Company or an Affiliate and a Participant containing the terms and
conditions of an Award in such form and not inconsistent with this Plan
as the Committee shall approve from time to time, together with all
amendments thereto, which amendments may be unilaterally made by the
Company (with the approval of the Committee) unless such amendments
are deemed by the Committee to be materially adverse to the
Participant and are not required as a matter of law.
c. "AWARD" means a grant made under this Plan in the form of
Restricted Stock, Options or Stock.
d. "BOARD" means the Board of Directors of the Company.
e. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
f. "COMMITTEE" means such committee appointed by the Board from
time to time to administer the Plan or, if no such committee is
appointed, the Board itself; provided, however that the Board shall
appoint a committee of three or more Non-Employee Directors to
determine and administer Awards to any Participants who are then
subject to the reporting requirements of Section 16 of the Exchange
Act.
g. "COMPANY" means Excelsior-Henderson Motorcycle Manufacturing
Company, a Minnesota corporation, or any successor to substantially all
of its businesses.
h. "DIRECTOR" means a director of the Company.
i. "DIRECTOR OPTION" means a Non-Statutory Stock Option granted to
an Outside Director under Section 9.3 hereof.
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j. "EFFECTIVE DATE" means the effective date of the Plan specified
in Section 11.1 hereof.
k. "EVENT" means any of the following; provided, however, that no
Event shall be deemed to have occurred unless and until a majority of
the directors constituting the Incumbent Board (as defined below)
shall have declared that an Event has occurred and further provided
that an Event shall not be deemed to occur prior to the date that
the Stock becomes registered under the Exchange Act:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Exchange Act Rule 13d-3)
of 20% (except for acquisitions by any individual, entity or group
that, prior to the effectiveness of this Plan, owns 20% or more of any
class of capital stock of the Company) or more of either (i) the then
outstanding shares of common stock of the Company (the "Outstanding
Company Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of the Board (the "Outstanding Company
Voting Securities"); provided, however, that the following
acquisitions shall not constitute an Event:
(A) any acquisition of voting securities of the Company
directly from the Company,
(B) any acquisition of voting securities of the Company by
the Company or any of its wholly owned Subsidiaries,
(C) any acquisition of voting securities of the Company by
any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Subsidiaries, or
(D) any acquisition by any corporation with respect to
which, immediately following such acquisition, more than 60% of
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally
in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such acquisition in substantially
the same proportions as was their ownership, immediately prior to
such acquisition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be;
(2) Individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director of the Board
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<PAGE>
subsequent to the Effective Date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest which was (or, if threatened, would have been)
subject to Exchange Act Rule 14a-11;
(3) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or statutory exchange of
Outstanding Company Voting Securities, unless immediately following
such reorganization, merger, consolidation or exchange, all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger, consolidation or exchange beneficially
own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such reorganization, merger, consolidation or exchange
in substantially the same proportions as was their ownership,
immediately prior to such reorganization, merger, consolidation or
exchange, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be; or
(4) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the
Company, other than to a corporation with respect to which,
immediately following such sale or other disposition, more than 60%
of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as was their ownership, immediately
prior to such sale or other disposition, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case
may be.
Notwithstanding the above, an Event shall not be deemed to occur with
respect to a recipient of an Award if the acquisition of the 20% or greater
interest referred to in paragraph (1) is by a group, acting in concert,
that includes that recipient or if at least 40% of the then outstanding
common stock or combined voting power of the then outstanding voting
securities (or voting equity interests) of the surviving corporation or of
any corporation (or other entity) acquiring all or substantially all of the
assets of the Company shall be beneficially owned, directly or indirectly,
immediately after a reorganization,
A-3
<PAGE>
merger, consolidation, statutory share exchange or sale or other
disposition of assets referred to in paragraphs (3) or (4) by a group,
acting in concert, that includes that recipient.
l. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time.
m. "FAIR MARKET VALUE" as of any date means, unless otherwise
expressly provided in the Plan:
(i) the closing price of a Share on the date immediately
preceding that date or, if no sale of Shares shall have occurred on
that date, on the next preceding day on which a sale of Shares
occurred,
(A) on the composite tape for New York Stock Exchange
listed shares, or
(B) if the Shares are not quoted on the composite tape for
New York Stock Exchange listed shares, on the principal United
States Securities Exchange registered under the Exchange Act on
which the Shares are listed, or
(C) if the Shares are not listed on any such exchange, on
the Nasdaq National Market, or
(ii) if clause (i) is inapplicable, the mean between the closing
"bid" and the closing "asked" quotation of a Share on the date
immediately preceding that date, or, if no closing bid or asked
quotation is made on that date, on the next preceding day on which
a quotation is made, on any system maintained by the National
Association of Securities Dealers, Inc. or any system then in
use, or
(iii) if clauses (i) and (ii) are inapplicable, what the
Committee determines in good faith to be 100% of the fair market
value of a Share on that date.
However, if the applicable securities exchange or system has closed for the
day at the time the event occurs that triggers a determination of Fair
Market Value, whether the grant of an Award, the exercise of an Option or
otherwise, all references in this paragraph to the "date immediately
preceding that date" shall be deemed to be references to "that date". In
the case of an Incentive Stock Option, if such determination of Fair Market
Value is not consistent with the then current regulations of the Secretary
of the Treasury, Fair Market Value shall be determined in accordance with
said regulations. The determination of Fair Market Value shall be subject
to adjustment as provided in Section 15.
n. "FUNDAMENTAL CHANGE" shall mean a dissolution or liquidation of
the Company, a sale of substantially all of the assets of the Company, a
merger or consolidation of the Company with or into any other corporation,
regardless of whether the Company is
A-4
<PAGE>
the surviving corporation, or a statutory share exchange involving capital
stock of the Company.
o. "INCENTIVE STOCK OPTION" means any Option designated as such and
granted in accordance with the requirements of Code Section 422 or any
successor to said section.
p. "NET EXERCISE" means the right of a Participant (the "Conversion
Right") to convert an Option or any portion thereof into Shares as provided
in this paragraph at any time or from time to time prior to its expiration,
subject to the restrictions set forth in this Plan. Upon exercise of the
Conversion Right with respect to a particular number of Shares subject to
an Option (the "Converted Option Shares"), the Company shall deliver to the
holder of the Option, without payment by the holder of any exercise price
or any cash or other consideration, that number of Shares equal to the
quotient obtained by dividing the Net Value (as hereinafter defined) of the
Converted Option Shares by the Fair Market Value of a single Share,
determined in each case as of the close of business on the Conversion Date
(as hereinafter defined). The "Net Value" of the Converted Option Shares
shall be determined by subtracting the aggregate purchase price of the
Converted Option Shares from the aggregate Fair Market Value of the
Converted Option Shares. Notwithstanding anything in this paragraph to the
contrary, the Conversion Right cannot be exercised with respect to a number
of Converted Option Shares having a Net Value below $100. No fractional
shares shall be issuable upon exercise of the Conversion Right, and if the
number of shares to be issued in accordance with the foregoing formula is
other than a whole number, the Company shall pay to the holder of the
Option an amount in cash equal to the Fair Market Value of the resulting
fractional share.
q. "NON-EMPLOYEE DIRECTOR" means a member of the Board who is
considered a non-employee director within the meaning of Exchange Act Rule
16b-3(i) or any successor definition.
r. "NON-STATUTORY STOCK OPTION" means an Option other than an
Incentive Stock Option.
s. "OPTION" means a right to purchase Stock, including both
Non-Statutory Stock Options and Incentive Stock Options.
t. "OUTSIDE DIRECTOR" means a Director who is not an employee of the
Company or any affiliate.
u. "PARTICIPANT" means any salaried employee, and any officer,
director (including any director who is not an employee of the Company),
contractor or advisor to or representative of the Company or any Affiliate
thereof, whether or not such person is an employee of the Company within
the meaning of the Code; PROVIDED, HOWEVER, that salaried employees of the
Company or its Affiliates within the meaning of the Code (including any
such employee who is also an officer or director of the Company or any
Affiliate thereof) shall be the only persons eligible to receive Options
intended to constitute Incentive Stock Options.
A-5
<PAGE>
v. "PLAN" means this Excelsior-Henderson Motorcycle Manufacturing
Company Amended and Restated 1995 Stock Plan, as amended from time to time.
w. "RESTRICTED STOCK" means Stock granted under Section 7 so long as
such Stock remains subject to such restrictions.
x. "RETIREMENT" as applied to a Participant, means (i) until such
time as the Company adopts an employee pension benefit plan (as that term
is defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974), termination of employment with the Company at any time upon or
after attaining age 65; or (ii) after adoption by the Company of an
employee pension benefit plan, termination of employment with the Company
at a time when the Participant is eligible for normal retirement under such
a plan, as amended from time to time, or any successor plan thereto.
y. "SHARE" means a share of Stock.
z. "STOCK" means the Common Stock, $.01 par value per share (as such
par value may be adjusted from time to time), of the Company.
aa. "SUBSIDIARY" means a "subsidiary corporation", as that term is
defined in Code Section 424(f) or any successor provision.
bb. "SUCCESSOR" means the legal representative of the estate of a
deceased Participant or the person or persons who may, by bequest or
inheritance, or pursuant to the terms of an Award or of forms submitted by
the Participant to the Committee pursuant to Section 19, acquire the right
to exercise an Option or Stock Appreciation Right or to receive cash or
Shares issuable in satisfaction of an Award in the event of a Participant's
death.
cc. "TERM" means the period during which an Option may be exercised
or the period during which the restrictions placed on Restricted Stock are
in effect.
dd. "TOTAL AND PERMANENT DISABILITY" as applied to a Participant,
means total and permanent disability within the meaning of Section 22(e)(3)
of the Code or any successor provision.
2. GENDER AND NUMBER.
Except when otherwise indicated by context, reference to the
masculine gender shall include, when used, the feminine gender and any
term used in the singular shall also include the plural.
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