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EXHIBIT 10.6
NORTH CAROLINA
LEASE AGREEMENT
GUILFORD COUNTY
THIS LEASE AGREEMENT, Made and entered into this 1st day of February, 2000,
to be effective November 1, 1999, by and between MIRACLE PROPERTIES, LLC, a
North Carolina Limited Liability Company (hereinafter called the "Landlord"),
and MARKET AMERICA, INC., a North Carolina corporation (hereinafter called the
"Tenant");
W I T N E S S E T H:
That in consideration of the covenants, conditions and agreements
hereinafter contained, Landlord does hereby lease to Tenant, and Tenant does
hereby lease from Landlord, the premises more particularly described as follows:
FOR DESCRIPTION SEE EXHIBITS "A","B" and "C" ATTACHED HERETO
TO HAVE AND TO HOLD said land and premises, together with all privileges
and appurtenances thereunto belonging to Tenant, his successors and assigns, for
the term and under the conditions hereinafter set forth, to-wit:
1. Term. The term of this Lease shall be for a period commencing on the
first day Landlord gains possession of said property and ending on the thirtieth
day of the first full month twenty (20) years thereafter.
2. Renewal. If this Lease shall not have been canceled pursuant to the
provisions hereinafter set forth and if Tenant shall, during the original term
hereof, keep and perform each and every covenant, provision and agreement herein
contained, and provided that Tenant shall not be in default under any of the
terms, covenants or conditions of this Lease at the end of the term, then Tenant
may, at its option, renew this Lease for any additional term of twenty (20)
years.
If, during the first additional twenty (20) year term, this Lease shall not
have been canceled pursuant to the provisions hereinafter set forth and if
Tenant shall, during the first additional twenty (20) year term hereof, keep and
perform each and every covenant, provision and agreement herein contained, and
provided that Tenant shall not be
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in default under any of the terms, covenants and conditions of this Lease at the
end of said term, then Tenant may, at its option, renew this Lease for an
additional term of twenty (20) years.
Unless Tenant gives written notice to Landlord of its intention not to
exercise its right to renew within sixty (60) days prior to the date of
termination of the original term or any subsequent renewal term, then this Lease
shall be terminated at the end of said period.
3. Rental. As rental for said premises, Tenant shall pay to Landlord or
Landlord's agent, without notice or demand therefor Sixty Thousand ($60,000.00)
Dollars per month. For Security Deposit see paragraph 24 hereinafter.
4. Late Charge. If Landlord does not receive the rental payment within
fifteen (15) days of its due date, Tenant shall pay to Landlord a late charge of
Five Percent (5%) of any outstanding balance, including previously unpaid
balances, of the payment due to cover costs of securing and processing any late
payments.
5. Taxes. Tenant shall pay all real property ad valorem taxes and
assessments which may be levied, assessed or charged against the demised
premises. Tenant shall pay all license, privilege or other taxes levied,
assessed or charged against it on account of the operation of its business or on
account of property belonging to Tenant, provided that Landlord and Tenant
respectively shall be entitled either prior to or subsequent to payment to
contest as improper, excessive or invalid any such taxes or assessments. Taxes
may be escrowed and Tenant will pay 1/12th of the annual taxes along with the
rent payment.
6. Utilities. Tenant shall pay all charges for electricity, fuel oil,
natural gas, water, and any other utilities consumed on the premises.
7. Repairs and Maintenance. Tenant shall, during the term of this Lease,
and any renewal or extension thereof, at its sole expense, keep the interior of
the leased premises in good order and repair, reasonable wear and tear and
damage by accidental fire or other casualty excepted. Tenant shall not knowingly
permit or willingly permit to be committed any act or thing contrary to the
rules and regulations prescribed from time to time by the Board of Health or
which shall be contrary to the rules and regulations of Federal, State or
Municipal authority.
Tenant's duty to repair and maintain shall include the replacement of all
light bulbs and broken glass in windows in those areas that it occupies as the
leased premises. Tenant shall maintain in good working order and
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repair all plumbing, toilet facilities and other fixtures and equipment
installed for the general supply of hot water and cold water, heat, air
conditioning and electricity.
Tenant, during the term of this Lease, or any renewal or extension thereof,
shall keep the structural supports and exterior walls of the building, including
roof, in good order and repair, shall make repairs to the exterior water, sewer,
and utility services, to the point of entry to the building, and to the air
conditioning and heating systems, other than ordinary maintenance, and all
repairs or restorations necessitated by fire or other peril covered by standard
extended coverage endorsements on fire insurance policies.
8. Alterations and Additions.
A. Tenant shall have the right to make changes, improvements,
alterations or additions to the areas which it leases, subject to the
Landlord's reasonable approval.
1. No change, improvement, alteration or addition shall at any
time be made which shall impair or adversely affect the structural
soundness or diminish the value of any improvement on the leased
premises.
2. No change, improvement, alteration or addition shall be
undertaken until Tenant shall have procured and paid for all required
municipal or county building permits, and shall have given Landlord
prior notice and received Landlord's approval of the plans for the
alteration or addition.
3. All permanent changes, improvements, alterations, or additions
which become affixed to the building or land shall become the property
of the Landlord at the expiration of the term of this Lease, or any
renewal term, without payment of any kind therefor by Landlord.
9. Insurance. Tenant shall maintain fire and extended coverage, wind and
flood insurance and liability insurance of no less than $1,000,000 and carry
Landlord as an additional insured.
10. Indemnification. With the exception of claims arising out of acts of
negligence of Landlord, its agents or employees, Tenant covenants and agrees
that at its sole expense, it will protect Landlord and save Landlord harmless
from all claims of all persons whomsoever arising from or out of the use or
occupancy of the leased
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premises by Tenant or Tenant's agents or employees, or subleases, including the
reimbursement of Landlord of all reasonable expenses incurred in defending such
claim. This provision shall survive the termination of this Lease with respect
to any damage, injury or death the cause of which occurred prior to such
termination.
11. Condemnation. If at any time during the term hereof the whole of the
leased premises shall be taken by any public authority or by the right of
eminent domain, then in any such event when possession shall have been taken
thereunder by the condemning authority, the term hereof granted and all right
and liability of the Tenant hereunder shall immediately cease and terminate and
the rent shall be apportioned and paid to the time of such termination. The
Landlord shall be entitled to all awards in condemnation for land and
improvements.
12. Fire or Other Casualty Loss. See paragraph 9.
13. Assignment and Subletting. Tenant may sublet or assign its rights
hereunder with the written permission of any mortgage holder and under the
following conditions: Tenant shall first give Landlord at least ninety (90) days
prior written notice of its desire to assign or sublet its rights under the
Lease. For a period of ninety (90) days after receipt of said notice, Landlord
shall have the right to find its own Tenant for the Leased Premises. If Landlord
is able to find a Tenant for the Leased Premises then Landlord shall notify
Tenant and upon the execution of a Lease between Landlord and a new Tenant, the
Tenant shall execute a termination agreement for the existing Lease and all
rights, obligations and liabilities of the Tenant under the existing Lease shall
cease, provided, however, nothing herein contained shall relieve Tenant of any
obligations under this Lease during said 90-day period.
If Landlord is not able to find a new Tenant within the 90-day period, then
Tenant shall be free to assign or sublet the premises, provided:
A. Tenant shall first obtain the prior written consent of Landlord in
each instance, which consent will not be unreasonably withheld; provided,
further, that the business of assignee or sublessee shall not be hazardous,
illegal, or disruptive and that Tenant shall remain primarily liable for
the payment of the rent herein reserved and for the performance of all the
other terms of this Lease required to be performed by Tenant irrespective
of the subletting or assignment;
B. At the time of such assignment or subletting, there shall be no
default under the terms of this Lease;
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C. A duplicate original of said assignment or sublease, in recordable
form, shall be delivered by certified mail to Landlord within thirty (30)
days after execution of said assignment or sublease.
14. Right of Entry. Tenant agrees that Landlord, Landlord's agents or other
representatives, shall have the right without abatement of rent, to enter upon
the Leased Premises, or any part thereof, during regular business hours for the
purpose of examining same or making such repairs or alterations to the Leased
Premises as may be necessary for the safety and preservation thereof; provided,
however, that such examinations, repairs or alterations (unless of an emergency
nature) shall be made so as to cause a minimum of interference to the operation
of Tenant's business conducted in or on the Leased Premises.
15. Default. The happening of one or both (A or B) of the following listed
events shall constitute a breach of this Lease Agreement on the part of the
Tenant, namely:
A. The failure of Tenant to pay rent due under this Lease within ten
(10) days following written notice from Landlord of failure to pay the full
monthly rental on the first day of any rental month. After such notice has
been given to Tenant a total of three times, no further notice shall be
required if Tenant subsequently defaults in payment of any monthly rental
payment next due thereafter.
B. The failure of Tenant to fully and promptly perform any act
required under this Lease or to otherwise comply with any terms or
provisions hereof for thirty (30) days or more after written notice is
given to Tenant by Landlord notifying it of said default. In all matters in
this Agreement, time is of the essence.
C. For the purposes of Section B of this Paragraph 17, if the default
complained of be a default other than one which may be cured by the payment
of money, no default on the part of the Tenant in the performance of work
required to be performed or acts to be done or conditions to be met shall
be deemed to exist if steps shall have been commenced in good faith by the
Tenant within the 30-day grace period to rectify same and shall be
prosecuted to completion with diligence and continuity.
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Upon the happening of any event of default by Tenant, Landlord, if Landlord
shall so elect, may either (1) terminate the terms of this Lease Agreement, or
(2) terminate Tenant's right to possession or occupancy of the premises without
terminating the term of this Lease Agreement, and, in the event Landlord shall
exercise such second right of election, the same shall be effective as of twenty
(20) days after the date of such event of default.
If Landlord shall elect to terminate the terms of this Lease Agreement,
Landlord, upon such termination, shall be entitled to recover of Tenant all
accrued rent due and payable at the time of such default, plus any rents paid in
advance, which shall be applied to any balance due Landlord, of whatever kind,
or in the alternative, as liquidated damages forfeited to Landlord without
waiver of any other rights or remedies of Landlord. If Landlord shall elect to
terminate the terms of the Lease Agreement after all accrued rents and any funds
owed to Landlord on account of any other terms of this Lease are paid, then
Tenant's obligations and liability under this Lease shall terminate.
If Landlord shall elect to terminate Tenant's right to possession only
without terminating the terms of this Lease, Landlord, at Landlord's option, may
enter upon the premises, remove Tenant's property, and hold possession of and
sell the same and apply the proceeds first to the cost of sale, second to rents
and damages due Landlord, and the surplus, if any, shall be paid to Tenant,
without any such possession or sale terminating the terms of this Lease or
otherwise releasing Tenant in full or in part from its obligation to pay the
rent herein reserved for the full term hereof, and in such case, Tenant shall
remain liable to Landlord for all rents due under this Lease. However, Landlord
will make reasonable efforts to relet the premises, or any part thereof, at a
reasonable rent to any person, firm or corporation other than Tenant. If any
rent collected by Landlord upon such re-letting is not sufficient to pay monthly
the full amount theretofore paid by Tenant, Tenant shall pay to Landlord the
amount of each monthly deficiency upon demand, and, if the rent so collected
from such re-letting is more than sufficient to pay the full amount of the rent
reserved hereunto, Landlord shall, at the end of the stated term hereof, apply
any surplus to the extent thereof to the discharge of any obligation for Tenant
under the terms of this Lease, and any remaining surplus shall be paid to
Tenant. However, nothing herein shall render Tenant liable for any greater sum
than would be payable if Tenant were not in default under the Lease.
In addition to the foregoing, Landlord may declare the entire amount of all
rents which would have become due and payable during the remainder of the Lease
Term, due and payable immediately, in which event Tenant
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agrees to pay the same (reduced to present value) at once to Landlord. Such
payments shall not constitute a penalty, a forfeiture, or liquidated damages,
but shall merely constitute payment in advance of the rent for the remainder of
the Lease term. The acceptance of such payment by Landlord shall not constitute
a waiver of any failure of Tenant to comply with any term, provision, condition,
or covenant of this Lease.
No act or thing done by Landlord or its agents during the term hereof shall
be deemed an acceptance of a surrender of the demised premises. The acceptance
of rent by Landlord with knowledge of the breach of any covenant contained in
this Lease and/or the failure of Landlord to enforce any of rules and
regulations now or hereafter adopted against Tenant (or any other lessee) shall
not be deemed a waiver. Any agreement to accept a surrender of the demised
premises or accept a waiver of said rules and regulations by Landord shall not
be valid unless made in writing and signed by Landlord. The mention in this
Lease or the pursuit of any particular remedy shall not preclude Landlord from
any other remedy Landlord might have, either in law or in equity.
16. Bankruptcy. In the event Tenant shall be adjudicated a bankrupt, or a
temporary or permanent receiver is appointed for the Tenant in any Federal or
State Court, or petition in insolvency or liquidation proceedings is filed
against Tenant which shall not be dismissed within ninety (90) days, Landlord
shall have the right at his option, to immediately declare this Lease null and
void and resume possession of the property. In addition, Landlord shall be
entitled to recover reasonable attorneys fees incurred by the Landlord in any
proceeding protecting its rights under this paragraph.
17. Subordination - Attornment. This Lease shall be deemed subject and
subordinate to any mortgage which may heretofore or hereafter be executed by
Landlord covering the land, unless the mortgagee requests that this Lease be
superior to its mortgage. In the event any proceedings are brought for
foreclosure of any mortgage on the land, Tenant will attorn to the purchaser at
a foreclosure sale and recognize such purchaser as Landlord, provided purchaser
or Trustee agrees not to disturb Tenant's possession as long as it is not in
default under the terms of this Lease. Provided that Lender executes a
non-disturbance agreement with Tenant, Tenant shall execute at Landlord's
request, and within five (5) days thereof, instruments evidencing the
subordinate position of this Lease, and as often as requested shall sign
estoppel certificates setting forth the date it accepted possession, that it
occupies the premises, the termination date of its Lease, the date to which rent
has been paid and the amount of monthly rent
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in effect as of such certification, whether or not it has any defense or offset
to the enforcement of the Lease, any knowledge it has of any default or breach
by Landlord, and that the Lease is in full force and effect except as to
modifications, agreements or amendments thereto, copies of each of which shall
be attached to the certificate.
18. Signs. Tenant may not erect or display any sign upon the demised
premises without the prior written consent of Landlord, which consent shall not
be unreasonably withheld. If Landlord has given prior written consent to Tenant
for a particular sign, Landlord shall cooperate with Tenant in obtaining any
permit required to install or erect the sign.
19. Quiet Enjoyment. If Tenant promptly and punctually complies with each
of its obligations hereunder, it shall have and enjoy the peaceful and quiet
possession of the demised premises during the term hereof, providing that no
action of Landlord in work shall be deemed a breach of this covenant, or give
Tenant any right to modify this Lease, either as to term, rent payable or other
obligations to perform.
20. Relationship Between Parties. This Lease shall not be construed to
create a partnership, joint venture, or agency relationship between the parties
hereto.
21. Notices. Wherever it is provided in the Lease that either the Landlord
or Tenant may or shall give written notice to the other party, such notice shall
be deemed sufficiently given and effective if mailed by certified mail, return
receipt requested.
22. Lease Binding Upon Heirs. The terms, covenants, conditions, provisions
and undertakings in this Lease shall extend to and be binding upon the heirs,
personal representatives, executors, administrators, successors and assigns of
such party, as if in each and every case so expressed.
23. Renovations. All renovations and modifications to the property will be
paid by Tenant.
24. Security Deposit. Tenant shall deliver to Landlord, to be held in
escrow by Landlord's mortgagee, a Certificate of Deposit in the amount of Six
Hundred Thousand ($600,000) Dollars, issued by an institution suitable to said
mortgagee. In the event Tenant defaults with respect to any provision of this
lease, mortgagee may thereupon apply said Certificate of Deposit to the balance
of the mortgage.
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In the event that Tenant shall fully and faithfully comply with all of the
terms, provisions, covenants and conditions of this Lease, the security deposit
shall be returned to Tenant, without interest, after the date fixed as the end
of the Lease, and after delivery of entire possession of the demised premises to
Landlord.
25. Radon Notice: As required by Section 404.056 of Florida Statutes, the
following warning is given: RADON GAS: Radon is a naturally occurring
radioactive gas, that, when it has accumulated in a building in sufficient
quantities, may present health risks to persons who are exposed to it over time.
Levels of radon that exceed federal and state guidelines have been found in
buildings in Florida. Additional information regarding radon and radon testing
may be obtained from your county public health unit.
26. Waiver of Subrogation. Landlord and Tenant shall each obtain from their
respective insurers under all policies of fire, theft, public liability,
workmen's compensation and other insurance maintained by either of them at any
time, during the term hereof, insuring or covering the Property, or any portion
thereof, or operations therein, a waiver of all rights of subrogation which the
insurer of one party might have against the other party, and Landlord and Tenant
shall each indemnify the other against any loss or expense, including reasonable
attorneys' fees, resulting from the failure to obtain such waiver. It is the
express intention of this provision that, where possible, the parties hereto
allocate the risks of loss or liability to the insurers under the insurance
policies provided for herein, and accordingly the foregoing waivers should be
liberally construed and applied notwithstanding statutory provisions or judicial
principles disfavoring waivers of claims for future conduct.
27. Compliance with Laws. During the term of this Lease, Tenant shall at
its sole cost and expense promptly comply with all laws, statutes, ordinances
and governmental rules, regulations or requirements now in force, or which may
hereafter be in force, with requirements of any board of fire underwriters or
other similar body now, or hereafter constituted, with any direction or
occupancy certificate issued pursuant to any law by any public officer or
officers, as well as the provisions of any recorded documents affecting the
demised premises, insofar as any thereof relate to or affect the condition, use
or occupancy of the demised premises, with respect to the demised premises or
its use, whether or not the same shall interfere with the use or occupancy of
the demised premises.
28. Attorney Fees. If, as a result of any breach or default in the
performance of any of the provisions of this Lease, Landlord or Tenant uses the
services of an attorney in order to secure compliance with such provisions or
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recover damages therefor, or to terminate this Lease, or evict Tenant, the
prevailing party shall be reimbursed by the other party upon demand for any and
all reasonable attorney's fees and expenses so incurred by the prevailing
party,whether incurred at the pretrial, trial or any appellate level.
29. Mechanic's Lien. As security for the performance of Tenant's
obligations under this Lease, Tenant hereby grants to Landlord a security
interest in, and Landlord's lien upon all of Tenant's Property located in the
demised premises as the same may exist from time to time, it being understood
and agreed that Tenant may, from time to time without first obtaining Landlord's
consent, replace or remove any such property from the demised premises. Provided
that if Tenant fails to execute the same within twenty (20) days of Landlord's
written request therefor. Tenant hereby irrevocably appoints Landlord as
Tenant's attorney-in-fact and empowers Landlord to execute on Tenant's behalf a
UCC-1 Financing Statement, renewals and terminations thereof, for the purpose of
perfecting Landlord's security interest as provided herein or as otherwise
provided by law. Landlord agrees to subordinate the lien granted to Landlord
herein to any lien or other security interest which secures the payment of the
deferred portion of the purchase price of any furnishings, inventory, equipment
or fixtures of Tenant placed in or on the demised premises, provided any such
subordination instruments requested by a purchase money lender is reasonably
satisfactory in form and content to Landlord and counsel of Landlord and
includes reasonable assurances that any such purchase money lender removing any
property of Tenant from the demised premises shall notify Landlord in writing
prior to such removal, shall repair any damage to the demised premises
occasioned by such removal and that such purchase money lender shall remove any
such property from the demised premises within five (5) days after termination
of the Lease.
Tenant agrees that it will make full and prompt payment of all sums
necessary to pay for the cost of repairs, alterations, improvements, changes or
other work done by Tenant to the demised premises and further agrees to
indemnify and hold harmless Landlord from and against any and all such costs and
liabilities incurred by Tenant, and against any and all mechanic's,
materialmen's or laborer's liens arising out of or from such work or the cost
thereof which may be asserted, claimed or charged against the demised premises
or the property. Notwithstanding anything to the contrary in this Lease, the
interest of Landlord in the demised premises shall not be subject to liens for
improvements made by or for Tenant, whether or not the same shall be made or
done in accordance with any
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agreement between Landlord and Tenant, and it is specifically understood and
agreed that in no event shall Landlord or the interest of Landlord in the
demised premises be liable for or subjected to any mechanic's, materialmen s or
laborer's liens for improvement or work made by or for Tenant. This Lease
specifically prohibits the subjecting of Landlord's interest in the demised
premises to any mechanic's, materialmen's or laborer's liens for improvements
made by Tenant or for which Tenant is responsible for payment under the terms of
this provision. Tenant shall adivse its contractors, subcontractors, materialmen
and any other lienors of this provision. In the event any notice or claim of
lien shall be asserted of record against the interest of Landlord in the demised
premises or the site on which it is located on account of or growing out of any
improvement or work done by or for Tenant, or any person claiming by, through or
under Tenant, for improvements or work the cost of which is the responsibility
of Tenant, Tenant agrees to have such notice of claim of lien canceled and
discharged of record as a claim against the interest of Landlord in the demised
premises or property (either by payment or bond as permitted by law) within
twenty (20) days after notice to Tenant by Landlord, and in the event Tenant
shall fail to do so, Tenant shall be considered in default under this Lease.
IN WITNESS WHEREOF, Landlord and Tenant have each executed this Lease
Agreement for the purposes and uses herein stated, in duplicate originals on the
day and year first above written.
/s/ Richard D. Hall Jr. LANDLORD:
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Witness
MIRACLE PROPERTIES, LLC
/s/ Sylvia G. Sims
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Witness By: /s/ James H. Ridinger
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/s/ Richard D. Hall Jr. TENANT:
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Witness
MARKET AMERICA, INC.
/s/ Slyvia G. Sims
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Witness By: /s/ Martin Weissman
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