Securities and Exchange Commission
Washington, D.C. 20549
------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 1996
VERMONT PURE HOLDINGS, LTD.
(Exact name of registrant as specified in its charter)
Delaware 0-25686
- - ------------------------------------ --------------------------------
(State or other jurisdiction of Commission File No.
incorporation
Route 66, P.O. Box C
Catamount Industrial Park
Randolph, Vermont 05060
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (802) 728-3600
<PAGE>
Item 2. Acquisition of Assets.
On May 1, 1996, Vermont Pure Springs, Inc., a Delaware corporation
("Springs"), a wholly owned subsidiary of Vermont Pure Holdings, Ltd., a
Delaware corporation ("Holdings"), consummated the purchase of certain assets of
Happy Ice Corp., a New York corporation ("HIC") pursuant to an Asset Purchase
Agreement dated April 30, 1996 ("Purchase Agreement"). HIC, based in Buffalo,
New York, is principally engaged in the bottling, sale and distribution of
spring water in three and five gallon bottles, the rental of water coolers and
coffee dispensers and sale of coffee supplies for home and office customers. HIC
distributes and services its products in the Buffalo, Syracuse and Rochester
markets of Western New York State.
Springs acquired substantially all the assets of HIC, including certain
leases, fix assets, inventory, assigned contracts, records, licenses, account
receivables and customer lists. Springs did not acquire cash and similar assets,
and certain notes receivable from the shareholder of HIC. HIC also exclusively
licensed Springs to use the name "Happy Spring Water" in connection with the
acquired business. HIC has agreed on its behalf and on behalf of its officers,
directors, agents and employees that within the 18 counties in the State of New
York in which HIC operated at the date of closing, they will not directly or
indirectly own, manage, operate, control, be employed by, participate in, or be
connected in any manner with the ownership, management, operation or control of
any business which manufactures similar products as HIC or otherwise compete
with Springs. Springs is also made the beneficiary of certain other
non-competition agreements relating to the sale of packaged ice in the same
geographical area.
Under the terms of the Purchase Agreement, Springs agreed to pay an
aggregate purchase price of up to $1,650,000. Springs paid $1,150,000 in cash at
the closing on May 1, 1996 and delivered two promissory notes, the first of
which is for a principal amount of $200,000 payable in four equal installments
with interest at the rate of 8% per annum, and the second of which is for a
principal amount of $100,000 due June 29, 1996, without interest. In addition,
Springs agreed to pay an amount equal to the lesser of (a) $200,000 or (b) an
amount equal to (i) 3.67 times the average annual earnings before interest,
taxes, depreciation and amortization of the business of Happy Spring Water
Division of HIC for the twenty four months following May 1, 1996, minus (ii)
$1,450,000. The principal amount of this note will be payable on May 1, 1999
with interest at the rate of 8% per annum payable quarterly.
In connection with the purchase of the HIC assets, Holdings and Springs
entered into a term loan agreement with the Chittenden Bank ("Chittenden")
pursuant to which Holdings and Springs borrowed $1,250,000. The loan is for a
period of three years bearing
2
<PAGE>
interest at the prime rate of Chittenden, plus 1.75%. The loan is payable in
monthly installments of principal and interest of $10,420, and the balance of
$892,677.50 is due June 1, 1999. The loan is secured by a pledge of all the
assets acquired from HIC pursuant to the Purchase Agreement, and the inventory,
receivables and intangible assets of Springs and Holdings, the latter of which
were previously pledged to Chittenden under its revolving credit agreement with
Holdings.
Item 7. Financial Statement and Exhibits
(a) The following documents are filed herewith as exhibits:
2.1 Asset Purchase Agreement dated April 30, 1996
(without schedules or exhibits)
10.1 Loan Agreement dated April 26, 1996, among Vermont
Pure Springs, Inc., Vermont Pure Holdings, Ltd. and
Chittenden Bank
10.2 Promissory Note of Vermont Pure Springs, Inc. in
principal amount of $200,000
10.3 Promissory Note of Vermont Pure Springs, Inc. in
principal amount of $100,000
10.4 Form of Promissory Note of Vermont Pure Springs,
Inc. to be entered into May 1, 1998
10.5 Lease dated October 1, 1995
(b) Financial Statements
No financial statements are required to be prepared or filed
in connection with the acquisition of the assets of HIC.
(c) Pro Forma Financial Information
None
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 14, 1996 VERMONT PURE HOLDINGS, LTD.
/s/ Bruce MacDonald
Bruce MacDonald
Chief Financial Officer
ASSET PURCHASE AGREEMENT
BETWEEN
HAPPY ICE CORP.
AND
Vermont Pure Springs, Inc.
Table of Contents
Page No.
1. THE TRANSACTION....................................... 1
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1.1 Sale and Purchase of Assets.................... 1
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1.2 Excluded Assets................................ 2
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1.3 Liabilities.................................... 2
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1.4 Purchase Price................................. 3
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1.5 Allocation of Purchase Price................... 4
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1.6 The Closing.................................... 4
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1.7 Deliveries and Proceedings at Closing.......... 4
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(a) Deliveries by Seller.................... 4
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(b) Deliveries by Buyer..................... 5
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(c) Other Actions At Closing................ 5
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1.8 Regarding Certain Consents..................... 5
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2. REPRESENTATIONS AND WARRANTIES OF SELLER.............. 6
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2.1 Organization and Existence..................... 6
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2.2 No Subsidiaries................................ 6
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2.3 Authorization and Enforceability............... 6
--------------------------------
2.4 No Violation of Laws or Agreements............. 7
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2.5 Inventory...................................... 7
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2.6 No Pending Litigation or Proceedings........... 7
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2.7 Contracts; Compliance.......................... 7
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2.8 Compliance with Laws........................... 8
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2.9 Consents....................................... 8
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2.10 Title to Personal Property; Condition of
Property...................................... 8
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2.11 Brokerage...................................... 8
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2.12 Financial Information.......................... 9
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3. REPRESENTATIONS AND WARRANTIES OF BUYER............... 9
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3.1 Organization and Existence..................... 9
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3.2 Due Authorization.............................. 9
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3.3 No Violation of Laws or Agreements............. 9
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3.4 Brokerage....................................... 10
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<PAGE>
4. CERTAIN OBLIGATIONS OF SELLER PRIOR TO CLOSING......... 10
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4.1 Conduct of Business Pending Closing............. 10
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(a) Ordinary Course; Compliance.............. 10
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(b) Material Transactions.................... 10
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4.2 Insurance....................................... 11
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4.3 Fulfillment of Agreements....................... 11
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4.4 Buyer's Access to Premises and Information...... 11
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5. CONDITIONS PRECEDENT................................... 12
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5.1 Conditions Precedent to Buyer's Performance..... 12
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(a) Accuracy of Representations and Warranties... 12
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(b) Performance.............................. 12
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(c) Satisfactory Instruments of Transfer..... 12
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(d) Required Consents........................ 12
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(e) No Litigation or Orders.................. 12
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(f) No Controversies......................... 13
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(g) Obligations Under Lease.................. 13
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5.2 Conditions Precedent to Seller's Performance.... 13
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(a) Accuracy of Representations and Warranties.. 13
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(b) Performance.............................. 13
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(c) Satisfactory Instruments................. 13
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5.3 Termination..................................... 13
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(a) When Agreement May Be Terminated......... 13
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(b) Effect of Termination.................... 14
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6. CERTAIN ADDITIONAL COVENANTS........................... 14
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6.1 Sales Taxes..................................... 14
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6.2 Expenses........................................ 14
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6.3 Risk of Loss.................................... 14
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6.4 Access to Records After Closing................. 15
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6.5 Further Assurances.............................. 15
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6.6 Restrictive Covenant............................ 15
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6.7 Waiver of Bulk Sales Notification............... 16
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6.8 Guarantor....................................... 16
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6.9 Financial Information........................... 16
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6.10 Collection Efforts....................... 17
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<PAGE>
7. MISCELLANEOUS........................................... 17
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7.1 Survival of Representations and Warranties....... 17
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7.2 Exhibits and Schedules........................... 17
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7.3 Headings......................................... 17
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7.4 Governing Law.................................... 17
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7.5 Notices.......................................... 17
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7.6 Counterparts..................................... 19
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7.7 Assignment; Binding Agreement.................... 19
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7.8 Severability of Provisions....................... 19
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7.9 Entire Agreement................................. 19
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Schedules
1.1(a) Leases.....................................21
1.1(b) Fixed Assets...............................22
1.1(c) Inventory..................................23
1.1(d) Assigned Contracts.........................24
1.5 Allocation of Purchase Price...............25
2.12 Financial Information..............26
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated April 30, 1996 between Happy Ice Corp.
("Seller") and Vermont Pure Springs, Inc., a Delaware corporation ("Buyer").
Background
A. WHEREAS, Vermont Pure Springs, Inc. ("VPS") is a company engaged in the
bottling and sale of natural spring water with its manufacturing facility in
Randolph, Vermont and its principal place of business in Randolph, Vermont, and
B. WHEREAS, Happy Spring Water ("HSW") is an operating division of Happy
Ice Corp., a New York company, engaged in the bottling, sale and distribution of
spring water and the rental of cooler/dispenser equipment for home and office
customers with its principal place of business in Buffalo, New York (the
"Business"), and
C. WHEREAS, both Parties desire to enter into this agreement by which VPS
shall purchase certain assets and the business of HSW;
Terms
NOW THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, and intending to be legally bound, the parties hereby agree as
follows:
1. THE TRANSACTION.
1.1 Sale and Purchase of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, Seller will sell, transfer, convey and
assign to Buyer, and Buyer will purchase and acquire from Seller, at the closing
hereunder (the "Closing") certain of Seller's properties and assets. The
properties and assets of Seller to be transferred hereunder (together, the
"Assets") are as follows:
(a) all of Seller's right, title and interest under, in and to
the leases described in Schedule 1.1(a) (the "Leases") subject to the consent of
the lessors to such assignments;
(b) all of Seller's fixed assets principally used in
connection with thebusiness of HSW and set forth in the attached Schedule 1.1
(b);
(c) all of Seller's inventory described in Schedule 1.1(c);
(d) all of Seller's right, title and interest under, in and to
certain contracts and agreements described in schedule 1.1(d) (the "Assigned
Contracts");
<PAGE>
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(e) all of Seller's records pertaining to the Assets and the
Business, including all historical operating records of such operations, all
records regarding the equipment and facilities included in the Assets, all
records regarding recent or current sales of water to third parties, all
reports, engineering and geological studies, surveys, appraisals and other data
regarding the Assets, and all title abstracts, opinions and other records
regarding title to the other Assets as may exist on the Closing date
(collectively the "Records");
(f) all of Seller's licenses and other governmental approvals
with respect to the operations of its Business and all pending applications
therefor (the "Permits"), to the extent such Permits are assignable and may be
transferred to Buyer;
(g)all of Seller's accounts receivable (without any warranty
or representation as to collectability); and
(h) all customer lists of Seller of the Business.
1.2 Excluded Assets. Seller shall retain and the Assets shall
not include the following assets:
(a) the consideration to be delivered to Seller pursuant
to this Agreement;
(b) all Seller's cash, bank deposits, security deposits,
marketable securities and cash accounts existing on the Closing Date;
(c) all rights with respect to Seller's funded pension
plans;
(d) all intercompany receivables and any note receivables
or other obligations of any shareholder to Seller; and
(e) Seller's rights to the trademark "Happy/Happy Ice/Happy
Spring Water" except that Seller shall license pursuant to the agreement set
forth in Schedule 1.2 to Buyer the exclusive use of the trade name "Happy Spring
Water" in connection with the Buyer's operations of the Business to the extent
of Seller's rights thereto. Such right to use shall cease ten (10) years from
the date Buyer first ceases to use the trade name in the ordinary course of
business for a period of twelve (12) months.
1.3 Liabilities.
(a) With the sole exception of the liabilities specifically
set forth in Section 1.3(b), Buyer will not assume any liabilities, debts or
obligations of Seller or any liabilities, debts or obligations relating to or
arising from the Assets or Seller's operations.
<PAGE>
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Without limiting the foregoing, Buyer will not assume any of Seller's
liabilities, debts or obligations under or in connection with (i) any employment
or labor agreements (except as provided in Section 1.3(b)(iv)), (ii) any
pension, welfare, compensation or other employee benefit plans, (iii) the
cessation of Seller's operations, dismissal of employees, or termination of
employment or labor agreements or pension, welfare, compensation or other
benefit plans, or (iv) workers compensation or occupational disease claims.
(b) At the Closing hereunder, Buyer will assume only the
following liabilities (collectively, the "Assumed Liabilities") by an
appropriate instrument of assumption to be executed at Closing and to be in form
and substance satisfactory to Buyer and Seller (the "Assumption Agreement"):
(i) all current liabilities arising from operating expenses incurred in the
ordinary course of the Business and outstanding on the Closing Date (so long as
the obligee on any such expense is not a shareholder, officer, employee or
director of the Seller or a family member or affiliate of a shareholder,
officer, employee or director of the Seller);
(ii) obligations of Seller for future performance under Assigned Contracts;
and
(iii) accounts payable and trade payables incurred in the ordinary course
of the Business, notes payable on covenants not to compete and customer deposits
(so long as the obligee on any such expense is not a shareholder, officer,
employee or director of the Seller or a family member or affiliate of a
shareholder, officer, employee or director of the Seller); and
(iv) accrued vacation and payroll expense.
1.4 Purchase Price. The purchase price for the Assets (the "Purchase
Price") shall be One Million Six Hundred and Fifty Thousand Dollars ($1,650,000)
provided that:
(a) $1,150,000 of the Purchase Price in cash paid at
Closing.
(b) $200,000 of the Purchase Price to be paid in the form of a
negotiable promissory note ("Promissory Note I") with a term of four (4) years,
with interest and principal payable annually, the first payment of which shall
be due on the first anniversary of the date of the note, bearing 8% simple rate
of interest with the initial payment due on the first anniversary of the date of
the note.
(c) Additional consideration to be paid in the form of a second note
("Promissory Note II"). The principal amount of the Promissory Note II will be
determined
<PAGE>
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by multiplying the average annual earnings before interest, taxes, depreciation
and amortization ("EBITDA") for the twenty four months following Closing by a
factor of 3.67 and subtracting $1,450,000 subject, however to the further
condition that in no event shall the principal amount of the Promissory Note II
be greater than $200,000. The Promissory Note II will be dated May 1, 1998 and
will be due and payable on May 1, 1999 together with interest at the rate of 8%
per annum. For purposes of determining the amount of Promissory Note II, EBITDA
shall be equal to (i) operating income of the Business determined in accordance
with generally accepted accounting principles applied on a consistent basis
exclusive of any charges allocated to the Business which are not directly
related to the Business plus (ii) all depreciation and amortization included in
the determination of operating income of the Business. In the event Seller
notifies Buyer that Seller has a concern about the calculation of EBITDA, then
Seller and Buyer shall meet within 30 days of such notice to resolve such
concerns. If Seller and Buyer are unable to resolve any dispute as to the
calculation of EBITDA within 30 days thereafter, then they shall agree to
appoint a firm of independent public accountants (other than firms engaged by
Seller and Buyer) to resolve such dispute. The determination of the firm so
selected shall be final and binding on the parties.
(d) Additional consideration to be paid in the form of a
promissory note ("Promissory Note III"), in the amount of $100,000, with a sixty
day term commencing on the Closing Date.
1.5 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as set forth in Schedule 1.5 which is to be attached
within sixty (60) days following Closing. Buyer and Seller agree that each will
report the federal, state and local income and other tax consequences of the
purchase and sale contemplated hereby in a manner consistent with such
allocation and that neither will take any position inconsistent therewith upon
examination of any tax return, in any refund claim, in any litigation, or
otherwise.
1.6 The Closing. The Closing shall take place at 10:00 a.m. on April 26,
1996, at the offices of Nixon, Hargrave, Devans and Doyle, LLP, in Rochester,
N.Y. or at such other time, date and place as the parties shall agree. The date
on which Closing occurs is sometimes referred to herein as the "Closing Date."
1.7 Deliveries and Proceedings at Closing. At the Closing:
(a) Deliveries by Seller. Seller will deliver or cause to be delivered to
- - -------------------- Buyer:
<PAGE>
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(i) an assignment of the Leases, duly executed and acknowledged by Seller
and in recordable form (the "Lease Assignment") together with the landlord's
written consent of such assignment;
(ii) an assignment of the Assigned Contracts, duly executed by Seller
(together with the Lease Assignment, the "Assignments");
(iii) a bill of sale and instrument of assignment to the other Assets, duly
executed by Seller;
(iv) an assignment of all transferable or assignable licenses, permits and
warranties relating to the Assets.
(v) title certificates to any motor vehicles included in the Assets duly
executed by Seller (together with any other transfer forms necessary to transfer
title to such vehicles);
(vi) such other instruments of conveyance as shall, in the reasonable
opinion of Buyer and its counsel, be necessary to vest in Buyer good, valid and
marketable title to the Assets; and
(vii) the other documents referred to in Section 5.1 hereof.
(b) Deliveries by Buyer. Buyer will deliver to Seller:
(i) the cash portion of Purchase Price;
(ii) Promissory Notes I, II and III;
(ii) the Assumption Agreement; and
(iii) the other documents referred to in Section 5.2 hereof.
(c) Other Actions At Closing. At the Closing, Buyer and Seller
shall make payment of such amounts with respect to the proration of ad valorem
taxes and assessments and the payment of transfer and recording fees as may
reasonably be required at the Closing in accordance with the terms of this
Agreement.
1.8 Regarding Certain Consents. Nothing in this Agreement shall be
construed as an attempt to assign any contract, agreement, permit, franchise, or
claim included in the Assets which is by its terms or in law nonassignable
without the consent of the other party or
<PAGE>
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parties thereto, unless such consent shall have been given, or as to which all
the remedies for the enforcement thereof enjoyed by Seller would not, as a
matter of law, pass to Buyer as an incident of the assignments provided for by
this Agreement. In order, however, to provide Buyer the full realization and
value of every contract, agreement, permit, franchise and claim of the character
described in the immediately preceding sentence, Seller agrees that prior to, on
and after the Closing, it will, at the request and under the direction of Buyer,
in the name of Seller or otherwise as Buyer shall specify, take all such
reasonable action and do or cause to be done all such things as shall in the
reasonable opinion of Buyer or its counsel be necessary or proper (a) to assure
that the rights of Seller under such contracts, agreements, permits, franchises,
and claims shall be preserved for the benefit of Buyer and (b) to facilitate
receipt of the consideration to be received by Seller in and under every such
contract, agreement, permit, franchise, and claim, which consideration shall be
held for the benefit of, and shall be delivered to, Buyer. Nothing in this
Section shall in any way diminish Seller's obligations hereunder to obtain all
consents and approvals and to take all such other actions prior to or at Closing
as are necessary to enable Seller to convey or assign valid title to all the
Assets to Buyer.
2. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby
represents and warrants to Buyer as follows:
2.1 Organization and Existence. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. Seller has all requisite power and authority to own or lease its
properties and assets as now owned or leased, to carry on its business as and
where now being conducted and to enter into this Agreement and perform its
obligations hereunder. The copies of Seller's articles of incorporation and
bylaws, as amended to date, which have been delivered to Buyer, are correct and
complete and are in full force and effect.
2.2 No Subsidiaries. Seller does not, directly or indirectly, own any stock
of, or any other interest in, any other corporation or business entity.
2.3 Authorization and Enforceability. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action on the part of Seller, including, if necessary, shareholder
approval. This Agreement has been duly executed and delivered by Seller, and
this Agreement constitutes, and the instruments of transfer contemplated hereby
when executed and delivered at the Closing, all subject to the issuance of the
Bankruptcy Court Order, will constitute, the legal, valid and binding
obligations of Seller, enforceable in accordance with their respective terms.
2.4 No Violation of Laws or Agreements. The execution and delivery of this
Agreement do not, and at Closing the consummation of the transactions
contemplated by this
<PAGE>
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Agreement and the compliance with the terms, conditions and provisions of this
Agreement by Seller, will not (a) contravene any provision Seller's articles of
incorporation or bylaws; (b) conflict with or result in a breach of or
constitute a default (or an event which might, with the passage of time or the
giving of notice or both, constitute a default) under any of the terms,
conditions or provisions of any indenture, mortgage, loan or credit agreement or
employee benefit plan or any other agreement or instrument to which Seller is a
party or by which Seller or any of its assets may be bound or affected, or any
judgment or order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable law, rule or
regulation, (c) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon Seller's assets or give to others any
interests or rights therein, (d) result in the maturation or acceleration of any
liability or obligation of Seller (or give others the right to cause such a
maturation or acceleration), or (e) result in the termination of or loss of any
right (or give others the right to cause such a termination or loss) under any
agreement or contract to which Seller is a party or by which any of its property
may be bound.
2.5 Inventory. Schedule 1.1(c) which is a materially complete listing and
description of Seller's inventory as of the date hereof.
2.6 No Pending Litigation or Proceedings. There are no actions,
suits, investigations, or proceedings pending or, to Seller's best knowledge,
threatened against or affecting Seller or any of its assets, at law or in
equity, by or before any court or governmental department, agency or
instrumentality, and there is no basis for any such action, suit, investigation
or proceeding. There are presently no outstanding judgments, decrees or orders
of any court or any governmental or administrative agency against or affecting
Seller or any of its assets.
2.7 Contracts; Compliance. Seller does not have any material lease,
contract or commitment of any kind, oral or written, formal or informal
(including without limitation mortgages, lease agreement, security agreements,
agreements relating to the borrowing of money, employment agreements, collective
bargaining agreements, powers of attorney, distribution arrangements, patent
license agreements, contracts or orders for future purchase or delivery of goods
or rendition of services, bonus, pension or retirement plans, accrued vacation
pay and group insurance and welfare agreements). All leases, contracts and other
commitments to which Seller is a party or by which Seller is bound are in full
force and effect; all parties to such leases, contracts and other commitments
have complied with the provisions thereof; no such party to Seller's knowledge
is in default under any of the terms thereof; and no event has occurred to
Seller's knowledge that with the passage of time or the giving of notice or both
would constitute a default by any party under any provision thereof.
<PAGE>
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2.8 Compliance with Laws. To the best of its knowledge Seller has
complied in all material respects with all federal, state and local laws,
statutes, ordinances, rules, regulations and orders, (including without
limitation those relating to environmental protection, occupational safety and
health and equal employment practices) (collectively, "Laws") applicable to it.
No notice, citation, summons or order has been issued, no complaint
has been filed, no penalty has been assessed and no investigation or review is
pending or threatened by any governmental or other entity in connection with the
Business (a) with respect to any alleged violation by Seller of any of the Laws
or (b) with respect to any alleged failure by Seller to have any Authorization
required in connection with its business or (c) with respect to any generation,
treatment, storage, recycling, transportation or disposal of any hazardous,
toxic or polluting substances or waste (including petroleum products)
("Hazardous Substances") used or generated by Seller.
Seller has not received in connection with the Business any written
request for information, notice of claim, demand or other notification that it
is or may be potentially responsible with respect to any investigation or
clean-up of any threatened or actual release of any Hazardous Substance.
2.9 Consents. No consent, approval or authorization of, or
registration or filing with, any person, including any governmental authority or
other regulatory agency, is required in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
2.10 Title to Personal Property; Condition of Property. Seller owns,
and has the power and authority to convey to Buyer, good and marketable title to
all of the tangible personal property included in the Assets, free and clear of
all pledges, restrictions, claims, options, liens and encumbrances, except for
liens for ad valorem taxes not yet due and payable and purchase money security
interests arising in the ordinary course of business. Except for this Section
2.10, Seller makes no representation or warranty including, but not limited to
implied warranties of merchantability or fitness for a particular purpose, and
the Assets are sold "as is", "where is", and "with all faults".
2.11 Brokerage. Neither Seller nor any direct or indirect shareholder
thereof has made any agreement or taken any other action which might cause
anyone to become entitled to a broker's fee or commission as a result of the
transaction contemplated hereunder except for Capital Formation Group of
Rochester, L.P. which has been engaged by the Seller and for which Seller is
responsible.
<PAGE>
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2.12 Financial Information. Seller has delivered to Buyer certain
financial information set forth in Schedule 2.12 (the "Financial Information").
To Seller's knowledge, the Financial Information: (a) is correct and complete
and in accordance with the books and records of Seller, and (b) fairly presents
the financial condition, assets and liabilities of the Business of Seller as at
the respective dates and with respect to the results of operations and changes
in financial position for the periods covered thereby.
3. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
3.1 Organization and Existence. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
Buyer has all requisite power and authority to own or lease its properties and
assets as now owned or leased, to carry on its business as and where now being
conducted and to enter into this Agreement, and perform its obligations
hereunder.
3.2 Due Authorization. The execution, delivery and performance of
this Agreement by Buyer have been duly authorized by all necessary corporate
action on the part of Buyer, and this Agreement constitutes, and the Assumption
Agreement and the other instruments to be delivered by Buyer at Closing, when
executed and delivered at Closing, will constitute, the legal, valid and binding
obligations of Buyer, respectively, enforceable against Buyer in accordance with
their respective terms.
3.3 No Violation of Laws or Agreements. The execution and delivery of
this Agreement do not, and the consummation of the transactions contemplated by
this Agreement and the compliance with the terms, conditions and provisions of
this Agreement by Buyer will not (a) contravene any provision the articles of
incorporation or bylaws of Buyer; (b) conflict with or result in a breach of or
constitute a default (or an event which might, with the passage of time or the
giving of notice or both, constitute a default) under any of the terms,
conditions or provisions of any indenture, mortgage, loan or credit agreement or
employee benefit plan or any other agreement or instrument to which Buyer is a
party or by which Buyer or any of its assets may be bound or affected, or any
judgment or order of any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, or any applicable law, rule or
regulation, (c) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon the assets of Buyer or give to others
any interests or rights therein, (d) result in the maturation or acceleration of
any liability or obligation of Buyer (or give others the right to cause such a
maturation or acceleration), or (e) result in the termination of or loss of any
right (or give others the right to cause such a termination or loss) under any
agreement or contract to which Buyer is a party or by which any of their
property may be bound.
<PAGE>
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3.4 Brokerage. Except as disclosed in Section 6.2, Buyer has not made
any agreement or taken any other action which might cause anyone to become
entitled to a broker's fee or commission as a result of the transactions
contemplated hereunder.
4. CERTAIN OBLIGATIONS OF SELLER PRIOR TO CLOSING.
4.1 Conduct of Business Pending Closing. From and after the date
hereof and pending Closing, and unless Buyer shall otherwise consent or agree in
writing, Seller covenants and agrees that:
(a) Ordinary Course; Compliance. Seller will maintain its
property, equipment and other assets in at least as good order and condition as
existed on the date of this Agreement; and, to such end, Seller will continue to
retain in its employ employees to maintain its business on the same basis as
those employed by Seller as the date hereof. Seller will timely comply with the
provisions of all its leases, agreements, contracts and commitments, will
obtain, maintain in full force and effect and comply with all Authorizations
required under all Laws in connection with their businesses or assets, and will
comply in all material respects with all Laws applicable to its businesses or
assets.
(b) Material Transactions. Seller will not:
(i) Enter into any contract or commitment the performance of which may
extend beyond the Closing;
(ii) Enter into any employment or consulting contract or arrangement with
any person which is not terminable at will, without penalty or continuing
obligation;
(iii) Sell, transfer, lease or otherwise dispose of any of its Assets other
than Excluded Assets;
(iv) incur, create, assume or suffer to exist any mortgage, pledge, lien,
restriction, encumbrance, tenancy, license, encroachment, covenant, condition,
right-of-way, easement, claim, security interest, charge or other matter
affecting title on any of its assets or other property'
(v) Fail to pay when due all taxes, assessments, governmental charges or
levies imposed upon it or its income, profits or assets or otherwise required to
be paid by it, or fail to pay when due any liability or charge which, if unpaid,
might become a lien or charge upon any of its assets;
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(vi) Make, change or revoke any tax election or make any agreement or
settlement with any taxing authority;
(vii) Make or authorize the making of any capital expenditure in excess of
$2,500.00;
(viii) Incur any debt or other obligation for money borrowed;
(ix) Incur any other obligation or liability, absolute or contingent except
in the ordinary course of business and consistent with past practice;
(x) Waive or permit the loss of any substantial right;
(xi) Guarantee or become a co-maker or accommodation maker or otherwise
become or remain contingently liable in connection with any liability or
obligation of any person; or
(xii) Loan, advance funds or make an investment in or capital contribution
to any person.
4.2 Insurance. Seller shall maintain in full force and effect all
policies of insurance currently in effect, or else will obtain, prior to the
lapse of any such policy, substantially similar coverage with insurers of
recognized standing and approved in writing by Buyer. Seller shall promptly
advise Buyer in writing of any change of insurer or type of coverage in respect
of the policies in existence on or before January 1, 1996.
4.3 Fulfillment of Agreements. Seller shall use its best efforts to
cause all of the conditions to the obligations of Buyer under Section 5.1 of
this Agreement to be satisfied on or prior to the Closing. Seller will promptly
notify Buyer in writing of any event or fact which represents or is likely to
cause a breach of any of its representations, warranties, covenants or
agreements. Seller shall promptly advise Buyer in writing of the occurrence of
any condition or development (exclusive of general economic factors affecting
business in general) of a nature that is or may be materially adverse to the
business, operations, properties, assets, prospects or conditions (financial or
otherwise) of Seller. Seller shall obtain, on or before the Closing Date, the
consent or approval in writing of all parties whose consent or approval is
required in order for Seller to assign to Buyer the Leases.
4.4 Buyer's Access to Premises and Information. From the date hereof
through the Closing, Seller will allow Buyer, and its attorneys, accountants,
engineers and other representatives to examine all of the Records, all of the
Permits and information regarding them, and all other information regarding the
operations of Seller's business and the Assets,
<PAGE>
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and to inspect the premises and the improvements and the other Assets. Unless
the parties otherwise agree, all examinations and inspections by Buyer shall
take place only during normal business hours upon reasonable advance request by
Buyer. Pending the Closing, Buyer will preserve the confidentiality of any
information provided by Seller to Buyer relating to Seller which is confidential
in nature and, if closing is not held, will return all such information to
Seller.
5. CONDITIONS PRECEDENT.
5.1 Conditions Precedent to Buyer's Performance. The obligations of
Buyer under this Agreement are subject to the satisfaction at or before the
Closing, of all of the conditions set forth in this Section 5.1. Buyer may waive
any or all of these conditions, in whole or in part, at their sole option.
(a) Accuracy of Representations and Warranties. Buyer shall be
satisfied, in their sole discretion, that all representations and warranties
made by Seller in this Agreement shall be true and correct in all material
respects on the date hereof and on and as of the Closing Date, with the same
force and effect as though such representations and warranties had been made on
that date.
(b) Performance. Seller shall have performed, satisfied and
complied with all covenants and agreements required by this Agreement to be
performed, satisfied or complied with by Seller on or before the Closing Date.
(c) Satisfactory Instruments of Transfer. All instruments and
documents required on Seller's part to effectuate and consummate the
transactions contemplated hereby shall be delivered to Buyer and shall be in
form and substance reasonably satisfactory to Buyer and its counsel.
(d) Required Consents. All consents and approvals of third
parties to the transactions contemplated hereby shall have been obtained,
including, but not limited to, approvals required by all applicable regulatory
bodies and consents of all lessors under the Leases to the assignments of the
Leases.
(e) No Litigation or Orders. On the Closing Date, there shall
be no pending claim, complaint, suit or proceeding before any court or
governmental agency requesting, nor any effective injunction, writ or temporary
restraining order or any order of any nature issued by a court or governmental
agency directing, that the transactions provided for by this Agreement not be
consummated as herein provided.
<PAGE>
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(f) No Controversies. On the Closing Date there will be (i) no
strike or other dispute involving any of the Assets or the Premises, and (ii) no
proceeding pending or claim made that disputes Seller's performance of the
conditions set forth in Section 5.1(f) above or Buyer's right to acquire the
Assets free of Seller's liabilities.
(g) Obligations Under Lease. Seller will have fulfilled all obligations and
liabilities and paid all amounts then due under the Lease.
5.2 Conditions Precedent to Seller's Performance. The obligations of
Seller under this Agreement are subject to the satisfaction, at or before the
Closing, of all of the conditions set forth in this Section 5.2. Seller may
waive any or all of these conditions, in whole or in part, at Seller's sole
option.
(a) Accuracy of Representations and Warranties. All
representations and warranties made by Buyer in this Agreement shall be true and
correct in all material respects on the date hereof and on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made on that date.
(b) Performance. Buyer shall have performed, satisfied and
complied with all covenants and agreements required by this Agreement to be
performed, satisfied or complied with by Buyer on or before the Closing Date.
(c) Satisfactory Instruments. All instruments and documents
required on Buyer's part to effectuate and consummate the transactions
contemplated hereby shall be delivered by Buyer and shall be in form and
substance reasonably satisfactory to Seller and its counsel.
5.3 Termination.
(a) When Agreement May Be Terminated. This Agreement may be terminated at
any time prior to Closing:
(i) By mutual consent of Buyer and Seller;
(ii) By Buyer if there has been a misrepresentation by Seller, a breach by
Seller of any of its warranties or covenants, or if any of the conditions
specified in Section 5.1 hereof shall not have been fulfilled by the time
required and shall not have been waived by Buyer;
(iii) By Seller if there has been a misrepresentation by Buyer, a breach by
Seller of any of its warranties or covenants, or if any of the conditions
specified in
<PAGE>
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Section 5.2 hereof shall not have been fulfilled by the time required and shall
not have been waived by Seller;
(b) Effect of Termination. In the event of termination of this
Agreement by either Seller or Buyer, as provided above, this Agreement shall
forthwith terminate and there shall be no liability on the part of either Seller
or Buyer or their respective officers or directors, except for liabilities
arising from a breach of this Agreement prior to such termination.
6. CERTAIN ADDITIONAL COVENANTS.
6.1 Sales Taxes. The Buyer shall be responsible for, and shall pay and file
all necessary returns relating to all sales taxes due as a result of the
transaction contemplated by this Agreement.
6.2 Expenses. Each of the parties shall be responsible for and shall
pay all of its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, without limitation, all legal fees
and other expenses incident to the negotiation and preparation of this
Agreement.
6.3 Risk of Loss.
(a) The risk of loss, damage or destruction of or to any of
the Assets by fire, explosion, windstorm or other casualty ("Casualty Loss")
shall remain upon Seller until the Closing. If, prior to the Closing, Seller
shall have knowledge of a Casualty Loss, the reasonable repair or replacement
cost, whichever is less, of which (singly, or when aggregated with any prior
Casualty Loss) is in excess of $50,000 and which Seller elects not to repair or
replace prior to the Closing, Seller shall give Buyer prompt written notice
thereof, accompanied by a good faith estimate by Seller of the repair cost and
replacement cost. In such event Buyer may, at its sole option, terminate this
Agreement by giving written notice of termination to Seller no later than (i)
fourteen days after the giving of written notice of the Casualty Loss or (ii)
the Closing, whichever is earlier, and none of the parties hereto shall have any
further rights or obligations to each other hereunder, except that the terms of
Section 4.5 (relating to confidentiality obligations) shall remain unaffected.
If Buyer fails to exercise the right to terminate this Agreement as above
provided:
(i) the Closing shall occur in accordance with the terms of this Agreement
and Buyer shall acquire and accept the Assets notwithstanding such Casualty
Loss;
<PAGE>
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(ii) Seller shall have no obligation to repair or replace the Assets
involved in such Casualty Loss; and
(iii) Seller will assign to Buyer all of its right, title and interest in
and to all insurance proceeds due as a result of the Casualty Loss and all
rights of action therefor.
(b) If prior to the Closing Date Seller shall receive written
notice of the institution of any proceeding for the condemnation or taking by
eminent domain of any of the Assets ("Condemnation Proceeding"), Seller shall
give Buyer prompt written notice thereof.
In such event:
(i) Buyer may terminate this Agreement by giving written notice of
termination to Seller no later than (x) fourteen days after the receipt of
written notice of such Condemnation Proceeding, or (y) the Closing, whichever is
earlier. In the event Buyer exercises such right, this Agreement shall terminate
and none of the parties shall have any further rights or obligations to the
other pursuant hereto, except that the terms of Section 4.5 (relating to
confidentiality obligations) shall remain unaffected.
(ii) If this Agreement shall not be terminated, the Closing shall occur in
accordance with the terms of this Agreement and Buyer shall acquire and accept
the Assets notwithstanding the institution of any Condemnation Proceeding,
subject to any Condemnation Proceeding, and Seller shall assign to Buyer all of
their right, title and interest in and to any awards with respect to the Assets
involved in any Condemnation Proceeding and any rights of action therefor as may
be made following the Closing.
6.4 Access to Records After Closing. After the Closing Date, Seller
and Buyer will each give to the other party and the representatives of the other
party, during normal business hours, such reasonable access to its books,
records, files and personnel as may be necessary to allow the other party to
obtain information with respect to any claims, demands, audits, suits or matters
of a similar nature involving such other party and involving the business,
assets or operations of Seller.
6.5 Further Assurances. On and after the Closing, each party hereto
shall take such other action and execute such other documents as may be
reasonably requested by any other party hereto from time to time to effectuate
or confirm the transfer of the Assets to Buyer in accordance with the terms of
this Agreement.
6.6 Restrictive Covenant. In order to protect VPS in its full beneficial
use and enjoyment of the business relationships, marketing techniques and other
know-how developed during or prior to its acquisition of Seller, during the term
of this Agreement and for an
<PAGE>
- 16 -
additional period of two years thereafter, Seller on its behalf and on behalf of
its officers, directors, agents and employees will not, within the eighteen (18)
counties in the State of New York now serviced by Seller, directly or
indirectly, own, manage, operate, control, be employed by, participate in, or be
connected in any manner with the ownership, management, operation, or control of
any business which manufactures similar products as Seller or otherwise does or
will compete with the Seller. During the aforesaid period, Seller shall not make
any statements or commit any acts (including contacting any of the Company's
customers or suppliers) that would in any way be tortiously injurious or
materially detrimental to the Company's image, business or supplier or customer
relations. The provisions of this Section 6.6 shall survive Closing of this
Agreement. It is specifically agreed that Buyer is an intended beneficiary of
the non-compete agreement contained in the Asset Purchase Agreement, dated
February 28, 1996, and entered into among Seller and HI Acquisition LLC and
Kerry Chamberlin with respect to the asset sale of the Ice Division of Happy Ice
Corp. and, in consideration thereof, Buyer agrees for a period of 36 months from
the Closing Date hereof not to engage in the production, distribution and sale
of packaged ice in the same geographical area for which HI Acquisition LLC and
Kerry Chamberlin have agreed not to engage in the sale and distribution of
bottled spring water pursuant to the aforementioned non-compete agreement.
6.7 Waiver of Bulk Sales Notification. The Buyer and Seller waive any
notification required by any bulk sales or similar law. Seller hereby agrees to
indemnify Buyer and its affiliates (including any shareholder, subsidiary and
their respective directors, officers and employees) against and hold them
harmless from any loss, liability, claim, damage, cost or expense (including
reasonable legal fees and expenses and all other costs and expenses incurred in
investigating, preparing for or defending any proceeding, commenced or
threatened, incident to the foregoing or to the enforcement of this Section 6.7
suffered or incurred by any of them for or on account of or arising from or in
connection with the failure of the Seller to give notification pursuant to the
applicable bulk sales or similar law and further, Buyer shall have the right of
setoff against amounts due under paragraph 1.4 herein for any amounts it may
claim pursuant to the indemnity rights set forth in this Section 6.7.
6.8 Guarantor. Buyer shall cause its parent corporation, Vermont Pure
Holdings, Ltd., to guarantee Buyer's obligations under Promissory Notes I, II
and III, as described in Section 1.4.
6.9 Financial Information. For a period of 30 months after Closing, Buyer
shall furnish to Seller a copy of the reporting documents filed by its parent
entity, Vermont Pure Holdings, Ltd., with the Securities and Exchange Commission
at the time such documents are filed. Simultaneously, Buyer shall also furnish
to Seller a profit and loss statement for the Business for each fiscal quarter
of Vermont Pure Holdings, Ltd. and a statement of
<PAGE>
- 17 -
EBITDA for the Business for the same fiscal quarter along with a certificate of
the Chief Financial Officer for Vermont Pure Holdings, Ltd. stating that the
profit and loss statement and EBITDA were correctly prepared in accordance with
generally accepted accounting principles consistently applied and in accordance
with this Agreement.
6.10 Collection Efforts. Buyer shall vigorously and in good faith after
Closing make all reasonable efforts to collect the accounts receivable
transferred to Seller pursuant to this Agreement.
7. MISCELLANEOUS.
7.1 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements contained in this Agreement, and in any
agreements or instruments executed in connection herewith or delivered pursuant
hereto, shall survive the Closing of this Agreement and the consummation of the
transactions contemplated hereby; provided, however, that all representations
and warranties shall only survive for a period of one year from the Closing
Date.
7.2 Exhibits and Schedules. The exhibits and schedules to this
Agreement shall be deemed to be incorporated herein by reference and made a part
hereof as if set out in full herein.
7.3 Headings. The headings contained in this Agreement are included
for purposes of convenience only and shall not be considered a part of this
Agreement in construing or interpreting any provision hereof.
7.4 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
7.5 Notices. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been given on the date of delivery
personally or of deposit in the United States mail, postage prepaid, by
registered or certified mail, return receipt requested, addressed as follows or
to such other person or address as either party shall designate:
<PAGE>
- 18 -
To Seller:
Robert E. Witherspoon, Jr.
Performance & Leadership Development, Ltd.
International Square
1825 Eye Street, NW
Suite 400
Washington, D.C. 20006
Phone: (202) 429 - 2725
Fax: (202) 429 - 9574
With a copy to:
James A. Locke, III
Nixon, Hargrave, Devans & Doyle, LLP
Clinton Square
P.O. Box 1051
Rochester, NY 14604
Phone: (716) 263 - 1633
Fax: (716) 263 - 1600
To Buyer:
Timothy G. Fallon
President/CEO
Vermont Pure Springs, Inc.
P.O. Box C
Randolph, VT 05060
Phone: (802) 728 - 3600
Fax: (802) 728 - 4614
With a copy to:
Kevin F. Berry, Esquire
Berry & Martin
One South Penn Square
Widener Building
Philadelphia, PA 19107
Phone: (215) 977 - 1100
Fax: (215) 557 - 9670
<PAGE>
- 19 -
7.6 Counterparts. This Agreement may be executed by the parties in
counterparts, all of which shall be deemed to constitute one agreement.
7.7 Assignment; Binding Agreement. This Agreement shall not be
assignable, in whole or in part, without the prior written consent of the other
parties, provided, however, that Buyer may assign all or any part of its rights
or responsibilities hereunder to a corporation controlled by Buyer upon written
notice to Seller. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of each of the parties hereto, and their respective
successors and assigns.
7.8 Severability of Provisions. If any provision of this Agreement or
the application thereof to any person or circumstances shall to any extent be
held in any proceeding to be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it was held to be invalid or unenforceable, shall not
be affected thereby, and shall be valid and be enforceable to the fullest extent
permitted by law, but only if and to the extent such enforcement would not
materially and adversely frustrate the parties' essential objectives as
expressed herein.
7.9 Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior and contemporaneous agreements, representations and understandings of the
parties. No modification of this Agreement shall be binding unless executed in
writing by all parties hereto, and, to the extent occurring after the entry of
the Bankruptcy Court Order, approved by the Bankruptcy Court. No waiver of any
of the provisions of this Agreement shall be deemed, or shall constitute, a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver.
<PAGE>
- 20 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day, month and year first above written.
WITNESS: HAPPY ICE CORP.
_______________________ By: __________________________
Robert E. Witherspoon, Jr.
Designated Representative
of the Board of Directors
WITNESS: VERMONT PURE SPRINGS, INC.
________________________ By:__________________________
Timothy G. Fallon
President/CEO
<PAGE>
PROMISSORY NOTE
- - -----------------------------------------------------------------------------
Borrower: Lender:
VERMONT PURE HOLDINGS, LTD. CHITTENDEN TRUST COMPANY
(TIN: 13-3576606) AND VERMONT d/b/a CHITTENDEN BANK
PURE SPRINGS, INC. Burlington
(TIN: 03-0330521) (TIN: ) Two Burlington Square
PO BOX C Burlington, VT 05401
RANDOLPH, VT 05060-1032
- - -----------------------------------------------------------------------------
Principal Amount: $1,250,000.00
Initial Rate: 10.000% Date of Note: April 26, 1996
PROMISE TO PAY. VERMONT PURE HOLDINGS, LTD. (TIN: 13-3576606) AND VERMONT PURE
SPRINGS, INC. (TIN: 03-0330521) ("Borrower") promises to pay to CHITTENDEN TRUST
COMPANY d/b/a CHITTENDEN BANK ("Lender"), or order, in lawful money of the
United States of America, the principal amount of One Million Two Hundred Fifty
Thousand & 00/100 Dollars ($1,250,000.00), together with interest on the unpaid
principal balance from April 26, 1996, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in 35 principal payments of $10,420.00 each and one
final principal and interest payment of $892,677.50. Borrower's first principal
payment is due June 1, 1996, and all subsequent principal payments are due on
the same day of each month after that. In addition, Borrower will pay regular
monthly payments of all accrued unpaid interest due as of each payment date.
Borrower's first interest payment is due June 1, 1996, and all subsequent
interest payments are due on the same day of each month after that. Borrower's
final payment due May 1, 1999, will be for all principal and accrued interest
not yet paid. Interest on this Note is computed on a 365/360 simple interest
basis; that is, by applying th ratio of the annual interest rate over a year of
360 days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. Borrower will pay
Lender at Lender's address shown above or at such other place as Lender may
designate in writing. Unless otherwise agreed or required by applicable law,
payments will be applied first to accrued unpaid interest, then to principal,
and any remaining amount to any unpaid collection costs and late charges.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the "The Wall Street Journal
Prime Rate" (the "Index"). Lender will tell Borrower the current Index rate upon
Borrower's request. Borrower understands that Lender may make loans based on
other rates as well. The interest rate change will not occur more often than
each Day. The index currently is 8.250% per annum. The interest rate to be
applied to the unpaid principal balance of this Note will be at a rate of 1.750
percentage points over the Index, resulting in an initial rate of 10.000% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.
PREPAYMENT. Borrower may pay all or a portion of the amount owed earlier than it
is due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments under the payment
schedule. Rather, they will reduce the principal balance due and may result in
Borrower making fewer payments.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled payment.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c)Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any
<PAGE>
PROMISSORY NOTE
PAGE 2
other creditor or person that may materially affect any of borrower's property
or Borrower's ability to repay this Note or perform Borrower's obligations under
this Note or any of the Related Documents. (d) Any representation or statement
made or furnished to Lender by Borrower or on Borrower's behalf is false or
misleading in any material respect either now or at the time made or furnished.
(e) Borrower becomes insolvent, a receiver is appointed for any part of
Borrower's property, Borrower makes an assignment for the benefit of creditors,
or any proceeding is commenced either by Borrower or against borrower under any
bankruptcy or insolvency laws. (f) Any creditor tries to take any of borrower's
property on or in which Lender has a lien or security interest. This includes a
garnishment of any of Borrower's accounts with Lender. (g) Any guarantor dies or
any of the other events described in this default section occurs with respect to
any guarantor of this Note. (h) A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of payment or performance
of the Indebtedness is impaired. (I) Lender in good faith deems itself insecure.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, with out
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 3.750
percentage points over the Index . The interest rate will not exceed the maximum
rate permitted by applicable law. Lender may hire or pay someone else to help
collect this Note if Borrower does not pay. Borrower also will pay Lender that
amount. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. If not
prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law. This Note has been delivered to
Lender and accepted by Lender in the State of Vermont. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction of the
courts of CHITTENDEN County, the State of Vermont. Lender and Borrower hereby
waive the right to any jury trial in any action, proceeding, or counterclaim
brought by either Lender or Borrower against the other. This Note shall be
governed by and construed in accordance with the laws of the State of Vermont.
DISHONORED ITEM FEE. Borrower will pay a fee to lender of $25.00 if Borrower
makes a payment on borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including with
out limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by A SECURITY AGREEMENT DATED MAY 4, 1994, A
SECURITY AGREEMENT DATED FEBRUARY 22, 1996, A SECURITY AGREEMENT DATED APRIL 26,
1996 AND A LOAN AGREEMENT DATED APRIL 26, 1996.
PURPOSE. The purpose of this loan is BUSINESS: PURCHASE HOME AND OFFICE WATER
COMPANY.
ADDITIONAL TERMS. Refer to Commitment Letter dated MARCH 14, 1996.
<PAGE>
PROMISSORY NOTE
PAGE 3
FINANCIAL STATEMENT SUBMISSION. Borrower agrees to provide to Lender, upon
request, any financial statements or information that Lender deems necessary.
The failure of Borrower to provide financial statements as required hereunder or
under the Loan Agreement, the commitment Letter, or any other document related
to the Note is an event of default under the terms of this Note and is subject
to the remedies outlined in "Lender's Rights", above, including the right of
Lender to increase the interest rate on the Note.
WAIVERS AND CONSENTS. Lender shall not be deemed to have waived any rights under
this Note (or under the Related Documents) unless such waiver is in writing and
signed by Lender. No delay or omission on the part of the Lender in exercising
any right shall operate as a waiver of such right or any other right. A waiver
by any party of a provision of this Note shall not constitute a waiver of or
prejudice the party's right otherwise to demand strict compliance with that
provision in the future or any other provision. No prior waiver by Lender, nor
any course of dealing between Lender and Borrower, shall constitute a waiver of
any Lender's rights or any of Borrower's obligations as to any future
transactions. Whenever consent by Lender is required in this Note, the granting
of such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required.
MULTIPLE ADVANCE CLOSED END FEATURE. This Note has a multiple advance closed end
feature. Once the total amount of principal has been advanced, Borrower is not
entitled to further loan advances. Advances under this Note may be requested
orally by Borrower or as provided in the paragraph. Lender may, but need not,
require that all oral requests be confirmed in writing. All communications,
instructions, or directions by telephone or otherwise to Lender are to be
directed to Lender's office shown above. MINIMUM ADVANCES OF $500.00. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower's
accounts with Lender. The unpaid principal balance owing on the Note at any time
may be evidenced by endorsements on the Note or by Lenders internal records,
including daily computer print-outs. Lender will have no obligation to advance
funds under this Note if (a) Borrower or any guarantor is in default under the
terms of the Note or any agreement that Borrower or any guarantor has with
Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent;
(c)any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor' of this Note or any other loan with Lender; (d) Borrower has
applied funds provided pursuant to this Note for purposes other than those
authorized by Lender; or (e) Lender in good faith deems itself insecure under
this Note or any other agreement between Lender and Borrower. Parties authorized
to request advances under this Note are listed in the Authorization for Oral
Requests Under Commitment. The draw period for advances under this Note shall
expire at 5:00 P.M. on May 1, 1999.
HAZARDOUS SUBSTANCES. Except as disclosed to Lender in writing, no property of
Borrower ever has been, or ever has been, or ever will be so long as this Note
remains in effect, used for the generation, manufacture, storage, treatment,
disposal, release or threatened release of any hazardous waste or substance, as
those terms are defined in the comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq. ("CERCLA), the Superfund Amendments and Reauthorization Act ("SARA"),
applicable state or Federal laws, or investigating the properties for hazardous
waste. Borrower hereby (a) releases and waives any future claims against Lender
for indemnity or contribution in the event Borrower becomes liable for cleanup
or other costs under any such laws, and (b) agrees to indemnify and hold
harmless Lender against any and all claims and losses resulting from a breach of
this provision of this Note. This obligation to indemnify shall survive the
payment and satisfaction of this Note.
CREDIT REPORTS. Any credit investigation information furnished to Lender by any
person, organization or credit reporting agency is authorized by Borrower for
the purpose of originating, reviewing the performance of, or collecting this
Note.
<PAGE>
PROMISSORY NOTE
PAGE 4
SALE OF ASSETS OR CHANGE IN OWNERSHIP. Borrower agrees and covenants that it
will not sell, lease, assign, transfer or otherwise dispose of any of its now
owned or hereafter acquired assets other than in the normal course of business,
and that the ownership of the borrowing entity will not change during the period
of this loan, including any extensions, modifications or renewals thereof,
without the prior written consent of Lender.
LIMITATION ON RIGHT OF SETOFF. Lender agrees that it will exercise its right of
setoff, as described above, only in the event of default under the terms of the
Note or any related document, including (without limitation) the Business Loan
Agreement, any Guaranty, any Mortgage, any Security Agreement, or any Pledge
Agreement.
ADDITIONAL EVENT OF DEFAULT. Borrower will be in default if Borrower (or any
Grantor) fails to keep the collateral insured.
ADDITIONAL LENDER'S RIGHTS. In the event of default, Lender may demand more
security or new parties obligated to pay the Note in return for not using any
other remedy.
ORIGINATION FEE. Borrower agrees to pay an origination fee of $7,500.00.
BANKRUPTCY ARREARAGES. If I file a petition under the Bankruptcy Code and seek
to pay any amount which is past due under this Note, Mortgage and Security
Agreement as of the date of filing of the petition through a Chapter 11 or 13
plan, I agree to pay you Interest on the amounts past due (arrearages) at the
Interest Rate. Interest will be calculated on the total amount past due as of
the date of filing of the petition (this may include Interest on past due
Interest and late charges) for the time required to pay the past due amounts
through the bankruptcy case.
GENERAL PROVISIONS. Lender may delay or fargo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, protest and notice of dishonor. Upon any change
in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation, maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend ( repeatedly and for any length of time) this loan, or
release any party or guarantor or collateral; or impair, fail to realize upon or
perfect Lender's security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of or
notice to anyone other than the party with whom the modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
VERMONT PURE HOLDINGS, LTD. (TIN: 13-3576606) AND VERMONT PURE SPRINGS, INC.
(TIN: 03-0330521)
X /S/ Bruce S. MacDonald
------------------------------------------------------
VERMONT PURE HOLDINGS, LTD. BY BRUCE MACDONALD, CHIEF FINANCIAL OFFICER
X ------------------------------------------------------
/S./ Bruce S. MacDonald
VERMONT PURE SPRINGS, INC. BY BRUCE MACDONALD, CHIEF FINANCIAL OFFICER
<PAGE>
PROMISSORY NOTE I
U.S. $200,000 April 30, 1996
For value received and intending to be legally bound, VERMONT
PURE SPRINGS, INC., a Delaware corporation having a business address in
Randolph, Vermont ("Creditor"), hereby promises to pay to the order of HAPPY ICE
CORP., a New York Corporation having a business address in Fairport, New York ,
("Payee"), after date, the principal sum of Two Hundred Thousand Dollars
($200,000.00), together with interest thereon upon the terms and conditions
hereinafter set forth.
1. Interest Rate. Interest shall accrue from the date hereof
on the outstanding principal balance hereof at a definite and certain, per annum
rate equal to eight percent (8%). Interest shall be calculated on a three
hundred sixty-five (365) day year for the actual number of days elapsed in each
calendar year.
2. Default Rate. Notwithstanding the foregoing, interest will
accrue and be payable on any outstanding principal amount hereof and all other
sums payable hereunder not paid when due (whether at the stated maturity date
thereof or by reason of any requirement for the prepayment thereof, by
acceleration or otherwise), still paid or upon the occurrence and continuation
of any other Event of Default at the rate per annum that is five percent (5%) in
excess of the interest rate set forth in Section 1 above (the "Default Rate").
3. Payments.
a. Interest. Interest that accrued on the outstanding principal balance
hereof at the rate set forth above shall be due and payable annually in arrears,
together with annual principal installments, commencing on May 1, 1997 and
thereafter on May 1, 1998, May 1, 1999 and May 1, 2000.
b. Principal Balance. The principal balance of this Note shall be payable
in four (4) equal and consecutive annual installments of Fifty Thousand Dollars
($50,000.00) commencing on May 1, 1997 and thereafter on May 1, 1998, May 1,
1999 and one final payment, on May 1, 2000, of the entire outstanding principal
balance hereof and all accrued interest and all other sums due and owing
hereunder.
4. Prepayment. Creditor shall have the right to prepay,
without premium or penalty, the principal sum hereof, in whole or in part, at
any time, provided that such repayment is accompanied by the payment of all
interest accrued hereunder to the date of prepayment and all other fees and
charges due hereunder.
<PAGE>
- 2 -
5. Place of Payment. Principal and interest hereunder shall be payable at
Robert E. Witherspoon, Jr., Performance & Leadership Development, Ltd.,
International Square, 1825 Eye Street NW, Suite 400, Washington, D.C. 20006.
6. Events of Default. Upon the occurrence and during the
continuance of any of the following events (each of which shall be an "Event of
Default"), Creditor may declare the principal of and interest on this Note
immediately due and payable, and the principal of and interest on this Note
shall become immediately due and payable, anything in this Note to the contrary
notwithstanding:
(a) Debtor fails to pay any principal of or interest on this Note when due
and such default is not cured by Debtor within five (5) business days of written
notice being given by Creditor to Debtor of such default.
(b) Debtor fails to pay when due any other indebtedness and such default is
not timely cured.
(c) Debtor makes an assignment for the benefit of creditors, commences (as
the debtor) a case in bankruptcy, or commences (as the debtor) any proceeding
under any other insolvency law.
(d) A case in bankruptcy or any proceeding under any other insolvency law
is commenced against Debtor (as the debtor) and a court having jurisdiction in
the premises enters a decree or order for relief against Debtor as the debtor in
such case or proceeding, and such case or proceeding is continued for sixty (60)
days, or Debtor consents to or admits the material allegations against it in any
such case or proceeding.
(e) A trustee, receiver or agent (however named) is appointed or authorized
to take charge of substantially all of the property of Debtor for the purpose of
enforcing a lien against such property or for the purpose of general
administration of such property for the benefit of creditors.
7. Severability. If any provision of this Note is held to be
invalid or enforceable by a court of competent jurisdiction, the other
provisions of this Note remain in full force and effect and shall be liberally
construed in favor of Payee in order to effect the provisions of this Note.
8. Limitation of Interest to Maximum Lawful Rate. In no event shall the
rate of interest payable hereunder exceed the maximum rate of interest permitted
to be charged by applicable law (including the choice of law rules) and any
interest paid in excess of the permitted rate shall be refunded to Creditor.
Such refund shall be made by application of the
<PAGE>
- 3 -
excessive amount of interest paid against any sums outstanding and shall be
applied in such order as Payee may determine. If the excessive amount of
interest paid exceeds the sums outstanding, the portion exceeding the said sums
outstanding shall be refunded in cash to Creditor by Payee. Any such crediting
or refund shall not cure or waive any default by Creditor hereunder.
9. Applicable Law. This instrument shall be governed by and construed
according to the laws of the State of New York.
10. Cost of Collection. Debtor agrees to pay all reasonable out-of-pocket
expenses of Creditor (including reasonable attorneys fees) in connection with
the enforcement or collection of this Note.
11. Successors and Assigns. This Note shall inure to the benefit of
Creditor, any holder of this Note and their respective successors and assigns.
12. Captions. The option or headings of the paragraphs to this Note are for
convenience only and shall not control or affect the meaning or construction of
any of the terms or provisions of this Note.
13. Construction. Whenever used, the singular number shall include the
plural, the plural the singular and the use of any gender shall be applicable to
all genders. The words "Payee" and "Creditor" shall be deemed to include the
respective heirs, personal representatives, successors and assigns of Payee and
Creditor.
IN WITNESS WHEREOF, Creditor, intending to be legally bound
hereby, has caused this Note to be duly executed the date and year first above
written.
VERMONT PURE SPRINGS, INC.
By: __________________________
Bruce S. MacDonald
Vice President, Chief Financial Officer
<PAGE>
Exhibit 10.3
PROMISSORY NOTE III
U.S. $100,000.00 April 30, 1996
FOR VALUE RECEIVED, the undersigned, Vermont Pure Springs,
Inc., a Delaware corporation ("Debtor"), hereby promises to pay to the order of
Happy Ice Corp., a New York corporation ("Creditor"), the principal sum of ONE
HUNDRED THOUSAND DOLLARS ($100,000) without interest except as otherwise set
forth.
1. Principal and Interest. The principal of this Note shall be
payable in United States currency on June 30, 1996. If payment is not made on
the due date, then the unpaid principal amount of this Note shall bear interest
at the rate of 13% per annum from the due date thereof until paid.
2. Prepayments. The principal amount of this Note may be prepaid, without
premium or penalty, at Debtor's option, at any time and from time to time, in
whole or in part.
3. Events of Default. Upon the occurrence and during the
continuance of any of the following events (each of which shall be an "Event of
Default"), Creditor may declare the principal of and interest on this Note
immediately due and payable, and the principal of and interest on this Note
shall become immediately due and payable, anything in this Note to the contrary
notwithstanding:
(a) Debtor fails to pay any principal of or interest on this Note when due.
(b) Debtor fails to pay when due any other indebtedness and such default is
not timely cured.
(c) Debtor makes an assignment for the benefit of creditors, commences (as
the debtor) a case in bankruptcy, or commences (as the debtor) any proceeding
under any other insolvency law.
(d) A case in bankruptcy or any proceeding under any other insolvency law
is commenced against Debtor (as the debtor) and a court having jurisdiction in
the premises enters a decree or order for relief against Debtor as the debtor in
such case or proceeding, and such case or proceeding is continued for sixty (60)
days, or Debtor consents to or admits the material allegations against it in any
such case or proceeding.
(e) A trustee, receiver or agent (however named) is appointed or authorized
to take charge of substantially all of the property of Debtor for the purpose of
enforcing a lien against such property or for the purpose of general
administration of such property for the benefit of creditors.
<PAGE>
-2 -
4. Costs of Collection. Debtor agrees to pay all reasonable out-of-pocket
expenses of Creditor (including reasonable attorneys fees) in connection with
the enforcement or collection of this Note.
5. No Waiver of Remedies. No failure or delay on the part of
Creditor in the exercise of any power or right in this Note shall operate as a
waiver thereof, and no exercise or waiver of any single power or right, or the
partial exercise thereof, shall affect Creditor's rights with respect to any and
all other rights and powers.
6. Certain Waivers. Debtor waives presentment and demand for payment,
notice of dishonor, protest and notice of protest of this Note.
7. Maximum Interest. This Note is subject to the express
condition that at no time shall Debtor be obligated or required to pay interest
on the unpaid principal balance due hereunder at a rate which is in excess of
the maximum interest rate permitted under applicable law. If by the terms of
this Note, Debtor is at any time required or obligated to pay interest on the
unpaid principal balance due hereunder at a rate in excess of such maximum rate,
then for such time as the rate of interest under this Note would be deemed
excessive, its application shall be suspended and there shall be charged instead
interest at such maximum rate.
8. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed given when delivered in
the manner described in the Asset Purchase Agreement of even date herewith among
Debtor and Creditor.
9. Successors and Assigns. This Note shall inure to the benefit of
Creditor, any holder of this Note and their respective successors and assigns.
10. Governing Law. This Note shall be governed by the laws of the State of
New York without reference to its principles of conflicts of law.
IN WITNESS WHEREOF, the undersigned has executed this Note as
of the date first written above.
VERMONT PURE SPRINGS, INC.
By: ______________________________
Bruce S. MacDonald
Vice President, Chief Financial
Officer
<PAGE>
PROMISSORY NOTE II
U.S. (up to) $200,000 April 30, 1996
For value received and intending to be legally bound, VERMONT
PURE SPRINGS, INC., a Delaware corporation having a business address in
Randolph, Vermont ("Creditor"), hereby promises to pay to the order to HAPPY ICE
CORP., a New York Corporation having a business address in Fairport, New York,
("Payee"), after date, the principal sum of up to Two Hundred Thousand Dollars
($200,000), as such amount is detailed in Section 1 below, together with
interest thereon upon the terms and conditions hereinafter set forth.
Capitalized terms used herein and not herein defined shall have the meaning
ascribed to such terms in the Asset Purchase Agreement dated as of the date
hereof between Maker and Payee.
1. Principal Amount. The principal amount of this Note shall
be determined by multiplying the average annual EBITDA for the twenty-four (24)
months following Closing by a factor of 3.67 and subtracting $1,450,000, as more
particularly provided in its Asset Purchase Agreement, subject, however, to the
further condition that in no event shall the principal amount of this Note be
greater than $200,000.
2. Interest Rate. Interest shall accrue on the outstanding
principal balance hereof at a definite and certain, per annum rate equal to
eight percent (8%), but such interest shall not begin to accrue until May 1,
1998. Interest shall be calculated on a three hundred sixty-five (365) day year
for the actual number of days elapsed in each calendar year.
3. Default Rate. Notwithstanding the foregoing, interest will
accrue and be payable on any outstanding principal amount hereof and all other
sums payable hereunder not paid when due (whether at the stated maturity date
thereof or by reason of any requirement for the prepayment thereof, by
acceleration or otherwise), still paid or upon the occurrence and continuation
of any other Event of Default at the rate per annum that is five percent (5%) in
excess of the interest rate set forth in Section 2 above (the "Default Rate").
4. Payments.
a. Interest. Interest that accrues on the outstanding principal balance
hereof at the rate set forth above shall be due and payable quarterly in
arrears, commencing on May 1, 1998.
b. Principal Balance. The principal balance of this Note shall be due and
payable on May 1, 1999 together with all accrued interest and all other sums due
and owing hereunder.
5. Prepayment. Maker shall have the right to prepay, without premium or
penalty, the principal sum hereof, in whole or in part, at any time, provided
that such
<PAGE>
- 2 -
repayment is accompanied by the payment of all interest accrued hereunder to the
date of prepayment and all other fees and charges due hereunder.
6. Place of Payment. Principal and interest hereunder shall be payable to
Robert E. Witherspoon, Jr., Performance & Leadership Development, Ltd.,
International Square, 1825 Eye Street, NW, Suite 400, Washington, D.C. 20006.
7. Events of Default. Upon the occurrence and during the
continuance of any of the following events (each of which shall be an "Event of
Default"), Maker may declare the principal of and interest on this Note
immediately due and payable, and the principal of and interest on this Note
shall become immediately due and payable, anything in this Note to the contrary
notwithstanding:
(a) Debtor fails to pay any principal of or interest on this Note when due
and such default is not cured by Debtor within five (5) business days of written
notice being given by Maker to Debtor of such default.
(b) Debtor fails to pay when due any other indebtedness and such default is
not timely cured.
(c) Debtor makes an assignment for the benefit of creditors, commences (as
the debtor) a case in bankruptcy, or commences (as the debtor) any proceeding
under any other insolvency law.
(d) A case in bankruptcy or any proceeding under any other insolvency law
is commenced against Debtor (as the debtor) and a court having jurisdiction in
the premises enters a decree or order for relief against Debtor as the debtor in
such case or proceeding, and such case or proceeding is continued for sixty (60)
days, or Debtor consents to or admits the material allegations against it in any
such case or proceeding.
(e) A trustee, receiver or agent (however named) is appointed or authorized
to take charge of substantially all of the property of Debtor for the purpose of
enforcing a lien against such property or for the purpose of general
administration of such property for the benefit of creditors.
8. Severability. If any provision of this Note is held to be invalid or
enforceable by a court of competent jurisdiction, the other provisions of this
Note remain in full force and effect and shall be liberally construed in favor
of Payee in order to effect the provisions of this Note.
<PAGE>
- 3 -
9. Limitation of Interest to Maximum Lawful Rate. In no event
shall the rate of interest payable hereunder exceed the maximum rate of interest
permitted to be charged by applicable law (including the choice of law rules)
and any interest paid in excess of the permitted rate shall be refunded to
Maker. Such refund shall be made by application of the excessive amount of
interest paid against any sums outstanding and shall be applied in such order as
Payee may determine. If the excessive amount of interest paid exceeds the sums
outstanding, the portion exceeding the said sums outstanding shall be refunded
in cash to Maker by Payee. Any such crediting or refund shall not cure or waive
any default by Maker hereunder.
10. Cost of Collection. Debtor agrees to pay all reasonable out-of-pocket
expenses of Maker (including reasonable attorneys fees) in connection with the
enforcement or collection of this Note.
11. Successors and Assigns. This Note shall inure to the benefit of Maker,
any holder of this Note and their respective successors and assigns.
12. Applicable Law. This instrument shall be governed by and construed
according to the laws of the State of New York.
13. Captions. The option or headings of the paragraphs in this Note are for
convenience only and shall not control or affect the meaning or construction of
any of the terms or provisions of this Note.
14. Construction. Whenever used, the singular number shall include the
plural, the plural the singular and the use of any gender shall be applicable to
all genders. The words "Payee" and "Maker" shall be deemed to include the
respective heirs, personal representatives, successors and assigns of Payee and
Maker.
IN WITNESS WHEREOF, Maker, intending to be legally bound
hereby, has caused this Note to be duly executed the day and year first above
written.
VERMONT PURE SPRINGS, INC.
By: _________________________
Bruce S. MacDonald
Vice President, Chief Financial Officer
<PAGE>
LEASE
INTERNATIONAL AIRPORT CENTER
THIS LEASE is entered into by Landlord and Tenant described in the
following Basic Lease Information as of October 1, 1990.
Landlord and Tenant agree:
ARTICLE 1.00 BASIC LEASE INFORMATION
In addition to the term which are defined elsewhere in this Lease, the
following defined terms are used in this Lease:
( a ) DATE: As of October 1, 1990
( b ) TENANT: Happy Ice Corp.
( c ) TENANT'S ADDRESS: 900 Turk Hill Road
Fairport, NY 14450
With a copy at the
same time to : Harter, Secrest & Emery
700 Midtown Tower
Rochester, NY 14604-2070
Attn: James E. Locke, Esq.
( d ) LANDLORD: Sonwil Distribution Center, Inc.,
a New York corporation.
( e ) LANDLORD'S ADDRESS: 100 Sonwil Drive
Cheektowaga, New York 14225
Attn: Stuart J. Wilson, President
With a copy at the
same time to: Zdarsky, Sawicki & Agostinelli
404 Cathedral Place
298 Main Street
Buffalo, New York 14202
Attn: Joseph E. Zdarsky, Esq.
( f ) LEASED PREMISES: 258 Sonwil Drive
Cheektowaga, New York 14225
( g ) COMMENCEMENT DATE: October 1, 1990, or as
extended pursuant to Section 3.03 hereinbelow.
( h ) EXPIRATION DATE: The last day of the month
five ( 5 ) years after the Commencement Date, subject to earlier termination
as provided herein.
( I ) BASE ANNUAL RENT: $40,560 ($6.00 per square
foot) per year.
( k ) BASE MONTHLY RENT: $3,380 per month.
<PAGE>
2
( l ) RENT: The Base Monthly Rent and Additional Rent.
( m ) ADDITIONAL RENT: Any amounts that this Lease
requires Tenant to pay in addition to Base Monthly Rent.
( n ) TENANT'S SHARE: 19.31% (determined from
time to time by Landlord, by dividing the Rentable Area of the Leased Premises
by the Rentable Area of the Building and multiplying the resulting quotient
{to the second decimal place} by one hundred).
( o ) RENTABLE AREA OF THE BUILDING: 35,000 square feet.
( p ) RENTABLE AREA OF THE LEASE PREMISES: 6,760 square feet.
( q ) SECURITY DEPOSIT: $ -0-
( r ) BUILDING: The building that is commonly known as 250
Sonwil Drive (sometimes known as Building "H") and is located on Landlord's
Property, and of which the Leased Premises are a part.
( s ) LANDLORD'S PROPERTY: The premises described in Exhibit A
to this Lease and all improvements thereon, including without limitation the
Building, parking lot, walkways, driveways, fences and landscaping.
( t ) LEASED PREMISES: The premises shown in Exhibit B to
this Lease.
( u ) PRIME RATE: The rate of interest announced by Key
Bank of Western New York N.A. (The "Bank"), or any successor to it, as its
prime rate. If the Bank or any successor to it ceases to announce its prime
rate, the Prime Rate shall be a comparable interest rate designated by
Landlord which replaces the Prime Rate.
( v ) BROKER: None
( w ) LEASE YEAR: A period of twelve (12) consecutive calendar
months. The first Lease Year shall consist of the first twelve (12) consecutive
calendar months of the Term and any prior partial month. Each subsequent Lease
Year shall consist of the next succeeding periods of twelve (12) calendar
months.
These exhibits are attached to this Lease and made part of this
Lease: EXHIBIT A - Legal Description of and survey of
Landlord's Property EXHIBIT B - the Leased Premises EXHIBIT C
- Landlord's Work EXHIBIT D - Rules and Regulation EXHIBIT E -
The Adjacent Space EXHIBIT F - The Additional Space
ARTICLE 2.00 - AGREEMENT
Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby
leases the Leased Premises from Landlord, according to the terms and conditions
of this Lease.
ARTICLE 3.00 TERM, DELIVERY AND ACCEPTANCE OF LEASED PREMISES
3.01 General. The duration of this Lese shall be the Term. The Term
shall commence on the Commencement Date and shall expire on the Expiration Date.
3.02 Delivery of Possession. Landlord shall construct or install in the
Leased Premises
<PAGE>
3
the improvements to be constructed or installed by Landlord according to Exhibit
C to this Lease. Landlord shall be deemed to have delivered possession of the
Leased Premises to Tenant when Landlord has given Tenant ten (10) days notice
that Landlord has substantially completed (or will complete within ten (10)
days) the improvements, subject only to the completion of Landlord's
"punch-list" items which do not materially interfere with Tenant's use and
enjoyment of the Lease Premises.
3.03 Failure to Deliver Possession. If for any reason Landlord cannot
deliver possession of the Leased Premises to Tenant on the Commencement Date, (
a ) this Lease shall not be void or voidable, ( b ) Landlord shall not be liable
to Tenant for any resultant loss or damage, and ( c ) unless Landlord is unable
to deliver possession of the Leased Premises to Tenant on the Commencement Date
because of Tenant's delays, Rent will be waived for the period between the
Commencement Date and the date on which Landlord delivers possession of the
Leased Premises to Tenant. If delivery of possession of the Leased Premises is
delayed beyond the Commencement Date and Tenant is not responsible for delays in
completion of the Leased Premises, ( I ) the Commencement Date shall be extended
automatically for each day after the Commencement Date and before delivery or
possession: and ( ii ) Landlord and Tenant shall execute a certificate
confirming the commencement Date.
3.04 Early Access. If tenant is permitted access to the Leased Premises
prior to the Commencement Date for the purpose of installing fixtures or any
other purpose permitted by Landlord, such early entry shall be a Tenant's sole
risk and subject to all the terms and conditions of this Lease as though the
Commencement Date had occurred, except for the payment of Base Monthly Rent,
which shall commence on the Commencement Date. Tenant, its agents and employees
shall not interfere with or delay Landlord's completion of construction of the
improvements, and all rights of Tenant under this Section 3.04 shall be subject
to the requirements. Landlord shall have the right to impose such additional
conditions on Tenant's early entry as Landlord, in its sole discretion, deems
appropriate, and shall further have the right to require that Tenant execute an
early-entry agreement containing such conditions prior to Tenant's early entry.
3.05 Condition of the Leased Premises. Prior to the Commencement Date,
Tenant shall conduct a walk-through inspection of the Leased Premises with
Landlord and prepare a punch- list of items, if any, not completed in accordance
with Exhibit C hereto. Other than the items specified in the punch-list, by
taking possession of the Leased Premises Tenant shall be deemed to have accepted
the Leased Premises in their condition on the date of delivery of possession.
The punch-list shall not include any damage to the Leased Premises caused by
Tenant's move-in or early access, if permitted. Damage caused by Tenant shall,
at Landlord's option, be repaired or corrected by Landlord, at Tenant's expense.
Tenant acknowledges that neither Landlord nor its agents or employees have made
any representations or warranties as to the suitability or fitness of the Leased
Premises for the conduct of Tenant's business or for any other purpose, nor
alterations or construct any improvements to the Leased Premises except as
expressly provided in this Lease, including Exhibit C to this Lease. If Tenant
fails to submit a punch-list to Landlord prior to the commencement Date, it will
be deemed that there are no items needing additional work or repair by Landlord.
Landlord's contractor shall complete all proper punch- list items with in thriry
(30) days after the walk-through inspection or as soon as practicable after such
walk-through inspection.
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4
3.06 ECIDA Bond Transaction. This Lease is subject and subordinate to
the ECIDA Lease (as hereinbelow defined), the Collateral Lease Assignment ( as
hereinbelow defined), the Mortgage (as hereinbelow defined) and the Bond
Documents (as hereinafter defined), and is further subject to the written
approval of the Erie County Industrial Development Agency (hereinbelow "the
ECIDA") and Bondholder (as hereinafter defined). Tenant acknowledges and agrees
that Landlord's Property, including the Leased Premises, is or will be owned by
ECIDA and is or will be leased to Landlord under the ECIDA Lease. As used in
this Lease, the following terms shall have the indicate meanings:
a. "ECIDA Lease" shall mean a Lease Agreement to be entered into by and
between ECIDA, as lessor and Landlord, as lessee, covering the Landlord's
Property, a memorandum of which will be recorded in the Erie County Clerk's
Office, as such lease may be amended from time to time.
b. "Collateral Lease Assignment" shall mean a Collateral Assignment of
Leases to be made by Landlord to Bondholder and to be recorded in the Erie
County Clerk's Office.
c. "Mortgage" shall mean the Mortgage and Security Agreement to be entered
into between ECIDA and Bondholder and to be recorded in the Erie County Clerk's
Office.
d. "Bond Documents" shall mean the ECIDA Lease, the Mortgage and any
other documents to be executed in connection with an ECIDA Industrial
Development Revenue Bond to be issued with respect to Landlord's Property.
e. "Bondholder" shall mean the owner or holder of the Mortgage under the
Bond Documents.
Within thirty (30) days after execution of the bond Documents, Landlord
shall notify Tenant that the bond Documents have been executed. Thereafter,
within thirty (30) days after receipt of written request therefor from Tenant,
Landlord shall deliver to Tenant a copy of the ECIDA Lease, the Collateral Lease
Assignment, the Mortgage and such other of the Bond documents as Tenant shall
reasonably request.
Without limiting any other term or condition of this Lease, Tenant
shall within twenty (20) days after receipt of written request from Landlord,
execute and deliver to Landlord or its designee any agreements or certificates
of subordination, attornment or estoppel referred to in the Bond Documents and
requested by Landlord, ECIDA or Bondholder.
ARTICLE 4.00 BASE MONTHLY RENT
4.01 GENERAL. Throughout the Term of this Lease, Tenant shall pay Base
Annual Rent to landlord as rent for the Leased Premises, and the same shall be
payable as Base Monthly Rent in advance on or before the first day of each
calendar month of the Term. If the Term commences on a day other than the first
day of a calendar month or ends on a day other than the last day of a calendar
month, then Base Monthly Rent shall be appropriately prorated by Landlord for
such partial month. If the Term commences on a day other than the first day of a
calendar month, then the prorated Base Monthly Rent for such month shall be paid
on or before the first day of the Term. Notwithstanding the foregoing provisions
of this Section 4.01, Base Monthly Rent for the first full month of the Term
shall be paid by Tenant on the date of execution of this Lease. Base Monthly
Rent, and all Rent, shall be paid to Landlord, without notice or demand, and
without deduction or offset, in lawful money of the United States of
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5
America at landlord's Address, or to such other person or at such other place as
landlord may from time to time designate in writing.
ARTICLE 5.00 REAL ESTATE TAXES
5.01 General. In addition to the Base Monthly Rent, tenant shall pay,
as Additional Rent, Tenant's Pro Rata Share of All Real Estate Taxes (as
hereinbelow defined) on Landlord's Property (including the Building and all
improvements thereon), to the extent the same are allocable to the Term of this
Lease. As used herein, the term "Real Estate Taxes" shall mean all real estate
taxes, assessments, sewer rents and other governmental charges levied or
assessed against Landlord's Property (including, without limitation, any sums
payable in lieu thereof) to the extent the same are for all or part of a fiscal
tax year with in the Term of this Lease. Tenant acknowledges and agrees that the
Landlord's Property is now subject to payments in lieu of taxes pursuant to one
or more agreements with the appropriate taxing authorities. Nothing contained in
this Lease shall require Tenant to pay any franchise, corporate, estate,
inheritance, succession, capital levy or transfer tax payable by Landlord.
All sums payable by tenant under this Article 5.00 shall be paid
within twenty (20) days after receipt from Landlord of a statement therefor
containing the computation thereof.
ARTICLE 6.00 INSURANCE
6.01 Landlord's Insurance. At all times during the term of this Lease,
Landlord shall carry and maintain ( a ) fire and extended coverage insurance
covering the Building, parking area and other common areas, the Building's
equipment and common area furnishings and leasehold improvements in the Leased
Premises, ( b ) public liability and property damage insurance in such amounts
as Landlord determines from time to time in its reasonable discretion, and ( c )
such other insurance pertaining to Landlord's Property (including, without
limitation, rent-loss insurance) as Landlord may be required to maintain by
reason of provisions of the Bond Documents or as Landlord may otherwise maintain
in its reasonable discretion. The insurance referred to in this Section 6.01 and
in effect from time to time is hereinbelow referred to as "Landlord's
Insurance".
6.02 Increases Payable by Tenant. In addition to Base Monthly Rent,
Tenant shall pay, as Additional Rent, each Lease Year after the first Lease
Year, Tenant's Pro Rata Share of any increase in premiums payable for Landlord's
Insurance in any Lease Year after the first Lease Year. All sums so payable
shall be paid within twenty (20) days after receipt from landlord of a statement
containing the computation thereof.
6.03 Tenant's Insurance. At all times during the Term of this Lease,
Tenant shall carry and maintain, at Tenant's expense, the following insurance,
in the amounts specified below or such other amounts as landlord may from time
to time reasonably request, with insurance companies and on forms satisfactory
to Landlord:
( a ) Public liability and property damage liability insurance, with a
combined single occurrence limit of not less than $2,000,000. All such insurance
shall specifically included, without limitation, contractual liability coverage
for the performance by Tenant of the indemnity
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6
agreements set forth in Article 21.00 of this Lease.
( b ) Insurance covering all of Tenant's equipment, trade fixtures,
appliances, furnishings and personal property, from time to time in, on or upon
the Leased Premises, in an amount not less than the full replacement cost
without deduction for depreciation from time to time during the Term of This
Lease, providing protection against all perils including within the
classification of fire, extended coverage, vandalism, malicious mischief,
special extended peril (all risk), boiler, flood, glass breakage and sprinkler
leakage. All policy proceeds shall be used for the repair or replacement of the
property damaged or destroyed; provided however, if this Lease ceases under the
provisions of Article 18.00 hereinbelow, Tenant shall be entitled to any
proceeds resulting from damage to Tenant's equipment, trade fixtures,
appliances, furniture and personal property, and Landlord shall be entitled to
all other proceeds.
( c ) Workmen's compensation insurance insuring against and satisfying
Tenant's obligations and liabilities under the workmen's compensation laws of
the state of New York.
6.04 Forms of the Policies. All policies of liability insurance which
Tenant is obligated to maintain according to this Lease (other than any policy
of workmen's compensation insurance) shall name Landlord, ECIDA, Bondholder and
such other persons or firms as Landlord specifies from time to time as
additional insureds. Original or copies of original policies (together with
copies of the endorsements naming Landlord and any others specified by Landlord
as additional insureds) and evidence of the payment of all premiums of such
policies shall be delivered to Landlord prior to Tenant's occupancy of the
Leased Premises and from time to time at least thirty (30) days prior to the
expiration of the term of each such policy. All public liability and property
damage liability policies maintained by Tenant shall contain a provision that
Landlord, ECIDA, bondholder and any other insureds shall b e entitled to recover
under such policies for any loss sustained by Landlord and the other additional
insureds and their respective agents and employees as a result of the acts or
omissions of tenant. All such policies maintained by Tenant shall provide that
they may not be terminated or amended except after thirty (300 days' prior
written notice to Landlord, ECIDA, and Bondholder. All public liability,
property damage liability and casualty policies maintained by Tenant shall be
written as primary policies, not contributing with and not supplemental to the
coverage that Landlord may carry. Insurance required to be maintained by Tenant
by this Article 6.00 may be subject to a deductible of up to $1,000.00.
6.05 Waiver of Subrogation. Landlord and tenant each waive any and all
rights to recover against the other or against any other tenant or occupant of
the Building, or against the officers, directors, shareholders, partners, joint
venturers, employees, agents, customers, invitees or business visitors of such
other party or of such other tenant or occupant of landlord's Property, for any
loss or damage to such waiving party arising from any cause covered by any
insurance required to be carried by such party pursuant to this Article 6.00 or
any other insurance actually carried by such party. Landlord and Tenant, from
time to time, shall cause their respective insurers to issue appropriate waiver
of subrogation rights endorsements to all policies of insurance carried in
connection with Landlord's Property or the Leased Premises or the contents of
Landlord's Property or the Leased Premises or the contents of Landlord's
Property or the Leased Premises. Tenant agrees to cause all other occupants of
the Leased Premises claiming by, under, or through Tenant to execute and deliver
to Landlord such a waiver of claims and to obtain such waiver of subrogation
rights endorsements.
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7
6.06 Adequacy of Coverage. Landlord, its agents and employees make no
representation that the limits of liability specified to be carried by Tenant
pursuant to this Article 6.00 are adequate to protect Tenant. If Tenant believes
that any of such insurance coverage is inadequate, Tenant shall obtain, at
Tenant's sole expense, such additional insurance coverage as Tenant deems
adequate.
ARTICLE 7.00 USE
The Leased Premises shall be used for warehousing, distribution,
telemarketing and general sales and for uses incidental to such purposes and for
no other purposes. Tenant shall not: do or permit to be done in or about the
Leased Premises, or bring to, keep or permit to be brought or kept in the Leased
Premises, anything which is prohibited by or will in any way conflict with any
law, statute, ordinance or governmental rule or regulation which is now in force
or which may be enacted or promulgated after the Date; do or permit anything to
be done in or about the Leased Premises which will in any way obstruct or
interfere with the rights of other tenants of the Building or Landlord's
Property, or injure or annoy them; use or allow the Leased Premises to be used
for any improper, immoral, unlawful or objectionable purpose; cause, maintain or
permit any nuisance in, on, or about the Leased Premises or Landlord's Property
or commit or allow to be comitted any waste in, on, or about the Leased Premises
or Landlord's Property. Without limiting the foregoing, the Leased Premises
shall not be used for any purpose that is not permitted in a "Project", as that
term is defined and used in the Bond Documents.
ARTICLE 8.00 REQUIREMENTS OF LAW; FIRE INSURANCE
8.01 General. Tenant, at its expense, shall comply with all applicable
governmental laws, orders and regulations, including, without limitation, those
pertaining to the environment, and with any direction of any public officer or
officers, according to law, which may impose any violation, order or duty upon
Landlord or Tenant with respect to the Leased Premises, or their use or
occupancy.
8.02 Toxic Materials. Tenant shall not store, use or dispose of any
toxic materials (as hereinbelow defined) in, on, or about the Leased Premises or
Landlord's Property; provided however, subject to Landlord's express prior
written consent in each instance obtained, minimal quantities of Toxic materials
which are not unreasonably hazardous and which are commonly used in or about
properties similar to Landlord's Property may be used and stored if needed by
Tenant for its business at the Leased Premises. Tenant, at its sole cost, shall
comply with all laws relating to tenant's storage, use and disposal of
hazardous, toxic or radioactive matter (collectively "Toxic Materials"). Tenant
shall be solely responsible for and shall defend, indemnify and hold Landlord,
ECIDA and Bondholder and their respective principals, officers directors, agents
and employees safe and harmless from and against all claims, costs and
liabilities, including, without limitation, attorneys' fees and disbursements,
arising out of or in connection with Tenant's storage, use and disposal of Toxic
Materials. Tenant shall be solely responsible for and defend, indemnify and hold
Landlord, ECIDA and Bondholder and their respective principals, officers,
directors, agents and employees safe and harmless from and
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8
against any and all claims, costs and liabilities, including, without
limitation, attorneys' fees and disbursements, arising out of or in connection
with the removal, clean-up and restoration work and materials necessary to
return the Leased Premises and any other property of whatever nature located on
Landlord's Property to their condition existing prior to the appearance of
Tenant's Toxic Materials on the Leased Premises. Tenant's obligations under this
Section shall survive the termination of this Lease.
8.03 Certain Insurance Risks. Tenant shall not do or permit to be done
any act or thing upon the Leased Premises that would ( a ) jeopardize or be in
conflict with fire insurance policies covering Landlord's Property and fixtures
and property in Landlord's Property, or ( b ) increase the rate of fire
insurance applicable to Landlord's Property to an amount higher than it would
otherwise be or ( c ) subject Landlord to any liability or responsibility for
injury or death to any person or persons or to property by reason of any
business or operation being carried on upon the Leased Premises; all without
regard to the permitted purposes and uses stated in Article 7.00 hereinabove.
8.04 Excess Insurance Payments. If, as a result of any act or omission
by Tenant or violation of this Lease, the rate of fire insurance applicable to
the Building or Landlord's Property or any other insurance carried by Landlord
is increased to an amount higher than it otherwise would have been, Tenant shall
reimburse Landlord for the increased cost of Landlord's insurance premiums. Such
reimbursement shall be Additional Rent payable upon the first day of the month
following Landlord's delivery to Tenant of a statement showing evidence of such
increased insurance premiums. In any action or proceeding in which Landlord and
Tenant are parties, a schedule or "make up" of rates for the Building or
Landlord's Property issued by the body making fire insurance rates for the
Leased Premises shall be presumptive evidence of the facts stated therein and of
the several items and charges in the fire insurance rate then applicable to
landlord's Property or any part thereof.
ARTICLE 9.00 ASSIGNMENT AND SUBLETTING
9.01 General. Tenant, for itself, its successors and assigns, covenants
that it will not assign, mortgage or encumber this Lease, or sublease the Leased
Premises or any part of the Leased Premises or any part of the Leased Premises
to be used or occupied by others, without the express prior written consent of
Landlord in each instance obtained, which consent may be withheld for any
reason. The transfer of a majority of the issued and outstanding capital stock
of any corporate tenant or subtenant of this Lease or a majority of the total
interest in any partnership tenant or subtenant, however accomplished, and
whether in a single transaction or in a series of related or unrelated
transactions, shall be deemed an assignment of this Lease or of such sublease
requiring Landlord's prior written consent in each instance.
9.02 Assignment, Sublease Void. Any assignment or sublease in violation of
Section 9.01 hereinabove shall be void. If this Lease is assigned, or if the
Leased Premises or any part of the Leased Premises is subleased or occupied by
any one other than Tenant, Landlord may, after default by Tenant, collect rent
from the assignee, subtenant or occupant, and apply the net amount collected to
Rent. No assignment, sublease, occupancy or collection shall be deemed ( a ) a
waiver by Landlord of the provisions of Section 9.01 hereinabove; or ( b ) the
acceptance by Landlord of the assignee, subtenant or occupant as tenant: or (c
) a release of Tenant from the
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9
further performance by Tenant of covenants on the part of Tenant contained in
this Lease . The consent by Landlord to an assignment or sublease shall not be
construed to relieve Tenant from obtaining Landlord's prior written consent in
writing to any further assignment or sublease. No permitted subtenant may assign
or encumber its subleased space or any part of its subleased space, or otherwise
permit the subleased space or any part of its subleased space to be used or
occupied by others, without Landlord's prior express written consent in each
instance obtained.
9.03 Limitation on Remedies. Tenant shall not be entitled to make, nor
shall Tenant make, any claim, and Tenant by this Section 9.03 waives any claim,
for money damages (nor shall Tenant claim any money damages by way of set-off,
counterclaim or defense) based upon any claim or assertion by Tenant that
Landlord has unreasonably withheld or unreasonably delayed its consent or
approval to a proposed assignment or subletting as provided for in this Section.
Tenant's sole remedy shall be an action or proceeding to enforce any such
provision, or for specific performance, injunction, or declaratory judgment.
ARTICLE 10.00 RULES AND REGULATIONS
Tenant and its employees, agents, licensees and visitors shall at all
times observe faithfully, and comply strictly with, the rules and regulations
set forth in Exhibit D. Landlord may from time to time amend, delete or modify
existing rules and regulations, or adopt reasonable new rules and regulations,
for the use, safety, cleanliness and care of the Leased Premises, the Building,
and Landlord's Property, and the comfort, quiet and convenience of occupants of
the Building. Modifications or additions to the rules and regulations shall be
effective upon notice to Tenant from Landlord. In the event of any breach of any
rules or regulations, Landlord will have all remedies which this Lease provides
for default by Tenant, and shall, in addition, have any remedies available at
law or in equity, including the right to enjoin any breach of such rules and
regulations. Landlord shall not be liable to Tenant for violation of such rules
and regulations by any other tenant, its employees, agents, visitors or
licensees or any other person. In the event of any conflict between the
provisions of this Lease and the rules and regulations, the provisions of this
Lease shall govern.
ARTICLE 11.00 COMMON AREAS
11.01 General. As used in this Lease, the term "Common Areas" shall
mean, without limitation, the driveways, walkways, parking areas, lawn and all
other areas and facilities in Landlord's Property which are provided and
designated from time to time by Landlord for the general nonexclusive use and
convenience of Tenant with other tenants of Landlord's Property and their
respective employees, invitees, licensees or other visitors. Landlord grants
Tenant, its employees, invitees, licensees and other visitors a nonexclusive
license for the Term to use the Common Areas in common with others entitled to
use the common areas including, without limitation, Landlord and other tenants
of the Building or Landlord's Property, and their respective employees,
invitees, licenses and visitors, and other persons authorized by Landlord,
subject to the terms and conditions of this Lease. Without advance notice the
Tenant (except with respect to matters covered by subsection ( a ) below) and
without any liability to Tenant in any respect, Landlord shall have the right
to:
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10
( a ) Establish and enforce reasonable rules and regulations concerning the
maintenance, management, use and operation of the Common Areas;
( b ) Close off any of the common Areas to whatever extent required in
the opinion of Landlord and its counsel to prevent a dedication of any of the
Common Areas or the accrual of any rights by any person or the public to the
common Areas, provided such closure does not deprive Tenant of the substantial
benefit and enjoyment of the Leased Premises;
( c ) Temporarily close any of the common Areas for maintenance, alteration
or improvement purposes;
( d ) Select, appoint or contract with any person for the purpose of
operating and maintaining the Common Areas, subject to such terms and at such
rates as Landlord deems reasonable and proper;
( e ) Change the size, use, shape or nature of any Common Areas,
provided such change does not deprive Tenant of the substantial benefit and
enjoyment of the Leased Premises. So long as Tenant is not thus deprived of the
substantial use and benefit of the Leased Premises, Landlord shall also have the
right at any time to change the arrangement or location of, or both, or to
regulate or eliminate the use of, any concourse, parking spaces, garage, or any
elevators, stairs, toilets or other public conveniences in Landlord's Property,
without incurring any liability to Tenant or entitling Tenant to any abatement
of rent and such action will not constitute an actual or constructive eviction
of Tenant; and
( f ) Erect one or more additional buildings on the common areas,
expand the building or other buildings to cover a portion of the Common Areas to
a portion of the Building or other buildings, or convert any portion of the
Building (excluding the Leased Premises) or other buildings to Common Areas. In
the event of any such changes in the size or use of the Building or Common Areas
of the Building Landlord's Property, Landlord may make an appropriate, and a
corresponding adjustment to Tenant's Share of Common Area Expenses payable
pursuant to Section 11.02 hereinbelow.
11.02 Common Area Expenses. In addition to Base Monthly rent, and
subject to the further provisions of this Section 11.02, Tenant shall pay
Tenant's Share of the Common Area Expenses (as hereinbelow defined) paid or
incurred by Landlord in each calendar Lease Year or partial Lease Year during
the Term. As used in this Lease, the term "Common Area Expenses" shall mean:
( a ) all costs and expenses paid or incurred by Landlord for the
maintenance, repair, replacement, upkeep, operation, snowplowing, cleaning and
landscaping of the Common Areas; and
( b ) The cost (amortized over such reasonable period as Landlord may
determine) together with interest at the greater of ( I ) the Prime Rate from
time to time prevailing plus two percent (2%), or ( ii ) Landlord's borrowing
rate for such capital improvements plus two percent (2%) on the unamortized
balance of any capital improvements: (A) which are made to Landlord's Property
by landlord during the term and which reduce other Common Area Expenses by an
amount which is equal to or more than the annual amortized cost of such
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11
improvement, or (B) which are made to Landlord's Property by Landlord after the
Date and which are required under any governmental law or regulation that was
not applicable to Landlord's Property at the time it was constructed and are not
a result of tenant's unique use of the Lease Premises.
Any capital improvements which are required to be made, to landlord's
Property after the Date as a result of Tenant's unique use of the Leased
premises shall be made, at landlord's option, by landlord at Tenant's sole cost
and expense.
Common Area Expenses shall not include: (1) depreciation on Landlord's
Property (other than depreciation on personal property, equipment, window
coverings on exterior windows provided by Landlord and carpeting in public
corridors); (2) costs of improvements made for other tenants of Landlord's
Property; (3) finders' fees and real estate brokers' commissions; (4) mortgage
principal or interest; and (5) capital items other than those referred to in
clause (b) above.
11.03 Parking License. Tenant, its agents, employees and invitees shall
have a non-exclusive license, in common with Landlord and other tenants, to park
automobiles in the parking area of the Common Areas.
ARTICLE 12.00 LANDLORD'S REPAIRS AND SERVICES
12.01 Landlord's Repair and Maintenance. Subject to Article 13.00
hereinbelow, landlord shall maintain and repair the roof, weight-bearing walls
and foundations of the Leased Premises; except for damage caused by the acts or
omissions of Tenant, Tenant's agents, employees or invitees, or by the failure
of Tenant to perform or comply with any terms, conditions or covenants in this
lease, any of which damage shall be repaired by Tenant at Tenant's expense, or
at Landlord's option by Landlord at tenant's expense. As a condition precedent
to all obligations of landlord to repair under this Section 12.01, Tenant shall
notify landlord in writing of the need for such repairs, and Landlord shall have
a reasonable time after receipt thereof to make any required repairs.
12.02 Landlord's Services. Except to the extent, if any, expressly
provided in this Lease, landlord shall not be required to furnish any services
to Tenant or the Leased Premises.
12.03 Utilities and Services. Landlord will install electrical service
tot he premises for normal lighting and office equipment, for a warehouse
facility for the maintenance and distribution of ice, and for ten refrigerated
trucks. In addition, landlord will install service to the Leased Premises for
(I) running water sufficient for normal lavatory and kitchen use, and for a
warehouse facility; and (ii) heating and air conditioning at appropriate levels
for warehouse and office space respectively.
Tenant shall be solely responsible for the promptly pay all charges for
use or consumption of sewer, gas, electric, water, waste removal and/or other
utility services. Landlord shall have the right, but not the obligation, to
furnish any and all utility services. If Landlord elects to supply any such
utility services, tenant shall purchase and pay for the same as additional rent,
on the first day of each month in advance, commencing upon the Commencement
Date. The rate Tenant shall pay for such services shall be the same as the rate
it would be charged by the local utility company to furnish comparable services
to the Premises.
Landlord shall not be in default under this lease or be liable for any
damages directly or
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12
indirectly resulting from, not shall any Rent reserved in this Lease by abated
in whole or in part by reason of, (1) the installation, use or interruption of
use of any equipment in connection with the furnishing of any such utility
services, (2) failure to furnish or delay in furnishing any such utility
services or by the making of repairs or improvements to the Leased Premises or
to the Building, or (3) the limitation, curtailment, rationing or restrictions
on use of water, electricity, gas or any other utility serving the Leased
Premises or the Building.
12.04 Deleted.
12.05 Limitation on Liability. Landlord shall not be liable to Tenant
or any other person or entity for direct or consequential damages resulting from
the admission to or exclusion from the Building or Landlord's Property of any
person. In the event of invasion, mob, riot, public excitement or other
circumstances rendering such action advisable in Landlord's sole opinion,
Landlord shall have the right to prevent access to the building during the
continuance of the same by such means as Landlord, in its sole discretion, may
deem appropriate, including, without limitation, by locking doors and closing
parking areas and other Common Areas. Landlord shall not be liable for damages
to person or property or for injury to, or interruption of, business for any
discontinuance permitted under this Article 12.00, nor shall such discontinuance
in any way be construed as an eviction of Tenant or cause an abatement of rent
or operate to release Tenant from any of Tenant's obligations under this Lease.
ARTICLE 13.00 TENANT'S REPAIRS
13.01 General. Except for maintenance and repairs for which Landlord is
responsible under Section 12.01 hereinabove, tenant shall be responsible at its
sole cost and expense for maintaining and repairing the Leased Premises in good
order and condition, including, without limitation, such portions of the leased
Premises as doors, windows, window glass, heating, ventilating and air
conditioning systems, plumbing, sprinkler, electric, gas and sewerage systems,
facilities and equipment and other systems and improvements located within the
Leased Premises. At landlord's option, any maintenance or repairs required to be
made by Tenant according to the provisions of this Section 13.01 or of Section
12.01 hereinabove may be made by Landlord at the expense of Tenant, subject to a
ten (10) day notice sent by registered mail and such expense (together with
fifteen percent (15%) of such expense for landlord's overhead) shall be
collectible as Additional rent and shall be paid by Tenant within ten (10) days
after receipt of a statement for such expense provided proper notice was given.
ARTICLE 14.00 ALTERATIONS
14.01 General. After the initial improvements to the leased Premises
are made, Tenant shall not make or suffer to be made any alteration, additions
or improvements to the Leased Premises or any part of the leased Premises, or
attach any fixtures or equipment tot he leased Premises, without first obtaining
Landlord's written consent. All such alterations, additions and improvements
consented to by landlord (a) shall be performed by contractors and subject to
conditions specified by landlord (which may include requiring the posting of a
mechanic's or materialmen's lien bond); and (b) at Landlord's option, shall be
made by landlord for Tenant's
<PAGE>
13
account, and tenant shall reimburse landlord for their cost (including fifteen
percent (15%) for Landlord's overhead) within ten (10) days after receipt of a
statement of such cost. Subject to tenant's rights under article 16.00, all
alterations, Additions, fixtures and improvements, whether temporary or
permanent in character, made in or upon the Leased Premises either by tenant or
landlord, shall immediately become landlord's property and at the end of the
Term shall remain on the Leased Premises without compensation to Tenant. By
notice given to Tenant no less than thirty (30) days prior to the expiration of
this Lease, landlord may require that Tenant remove any or all alterations,
additions, fixtures and improvements which are made in or upon the Leased
Premises by or for Tenant after the initial improvements to the Leased Premises.
In that event, Tenant shall remove such alterations, additions, fixtures and
improvements at Tenant's sole cost and shall restore the Leased Premises to the
condition in which they were before such alterations. Additions, fixtures,
improvements and additions were made, reasonable wear and tear excepted.
14.02 Partitions. Tenant shall have the right to install freestanding
workstation partitions either as part of the initial improvement of the Leased
Premises, or, after such initial improvement, without Landlord's prior written
consent, so long as no building or other governmental permit is required for
their installation or relocation; provided, however, if a permit is required,
Landlord shall not unreasonable withhold its consent to such relocation or
installation. The freestanding workstation partitions for which tenant pays
shall be part of tenant's trade fixtures for all purposes under this Lease. All
other partitions which are installed in the Leased Premises are and shall be
Landlord's property for all purposes under this Lease.
ARTICLE 15.00 MECHANICS' LIENS
15.01 General. Tenant shall pay or cause to be paid all costs and
charges for work done by Tenant or caused to be done by Tenant in or to the
Leased Premises, and for all material furnished for or in connection with such
work. Tenant shall indemnify Landlord and ECIDA against, and hold Landlord and
ECIDA, the Leased Premises and Landlord's Property free, clear and harmless of
and from, all mechanics' liens and claims of liens, and all other liabilities,
liens, claims and demands on account of such work by or on behalf of Tenant. If
any such lien, at any time, is filled against the Leased Premises, or any part
of landlord's Property, Tenant shall cause such lien to be discharged of record
within ten (10) days after the filing of such lien, except that if Tenant
desires to contest such lien, it shall furnish Landlord, within such ten (10)
day period, security reasonably satisfactory to Landlord of at least one hundred
fifty percent (150%) of the amount of the claim, plus costs and interest as
estimated by Landlord. If a final judgment establishing the validity or
existence of a lien for any amount is entered, Tenant shall immediately pay and
satisfy the same. If Tenant fails to pay any charge for which such a mechanics'
lien has been filed, and/or has not given Landlord security as described above,
Landlord may, at its option, pay such charge and related costs and interest, and
the amount so paid, together with reasonable attorneys' fees and disbursements
incurred in connection with such lien, shall be immediately due from Tenant to
Landlord. Nothing contained in this Lease shall be deemed the consent or
agreement of Landlord to subject the interest of Landlord or of ECIDA in
Landlord's Property or the ECIDA Lease to liability under any mechanics' or
other lien law. If Tenant receives notice that a lien has been or is about to be
filed against the Leased
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14
Premises or Landlord's Property or any action affecting title to Landlord's
Property has been commenced on account of work done by or for or materials
furnished to or for Tenant, Tenant shall immediately notify Landlord in writing
of such notice.
15.02 Prior Notice to Landlord. At least fifteen (15) days prior to the
commencement of any work (including, but not limited to, any maintenance,
repairs, alterations, additions, improvements or installations) in or to the
Leased Premises, by or for Tenant, Tenant shall give Landlord written notice of
the proposed work and the names and addresses of the persons supplying labor and
materials for the proposed work. Landlord shall have the right to post notices
of non-responsibility or similar notices on Landlord's Property in order to
protect Landlord's Property against any such liens.
ARTICLE 16.00 END OF TERM
At the expiration or earlier termination of this Lease, Tenant shall
promptly quit and surrender the Leased Premises broom-clean and in good order
and repair, ordinary wear and tear excepted. If Tenant is not then in default,
Tenant may remove from the Leased Premises any trade fixtures, equipment and
movable furniture placed in the Leased Premises by Tenant, whether or not such
trade fixtures or equipment are fastened to the Building; provided, however,
Tenant shall not remove any trade fixtures or equipment without Landlord's prior
written consent if such fixtures or equipment are used in the operation of the
building or its improvements or if the removal of such fixtures or equipment
will adversely affect the structure of the Building or its improvements. Whether
or not Tenant is in default, Tenant shall remove such alterations, additions,
improvements, trade fixtures, equipment and furniture as Landlord may request in
accordance with Article 14.00 hereinabove. Tenant shall fully and promptly
repair any damage occasioned by the removal of any trade fixtures, equipment,
furniture, alteration, additions and improvements. All trade fixtures,
equipment, furniture, inventory, effects alterations, additions and improvements
not so removed shall be deemed conclusively to have been abandoned by Tenant and
may be appropriated, sold, stored, destroyed or otherwise dispose of by Landlord
at its sole discretion without notice to Tenant or any other person and without
obligation to account therefor; and Tenant shall pay Landlord for all expenses
incurred in connection with such property, including, but not limited to, the
cost of repairing any damage to the Building or the Lease Premises caused by the
removal of such property. Tenant's obligation to observe and perform this
covenant shall survive the expiration or other termination of this Lease.
ARTICLE 17.00 EMINENT DOMAIN
If all of the Leased Premises is taken by exercise of the power of
eminent domain (or conveyed by Landlord in lieu of such exercise), this Lease
shall terminate on a date (the "Termination Date") which is the earlier of the
date upon which the condemning authority takes possession of the Leased Premises
or the date on which title to the Leased Premises is vested in the condemning
authority. If more than twenty-five percent (25%) of the rentable Area of the
Leased Premises is so taken, Tenant shall have the right to cancel this Lease by
written notice to Landlord given within twenty (20) days after the Termination
Date. If all or substantially all of
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15
Landlord's Property is so taken, Landlord may cancel this Lease by written
notice to Tenant given within thirty (30) days after the termination Date. In
the event of any such taking, the entire award shall be paid to Landlord, and
Tenant shall have no right or claim to any part of such award; provided,
however, Tenant shall have the right to assert a claim against the condemning
authority in a separate action, and so long as Landlord's award is not reduced
by such claim, for (a) Tenant's moving expenses and (b) leasehold improvements
paid for by Tenant, but only to the extent such separate claims by Tenant will
no reduce or delay the award to Landlord.
ARTICLE 18.00 DAMAGE AND DESTRUCTION
18.01 General. The parties hereto mutually agree that if the Leased
Premises are partially or totally destroyed or damaged by fire or otherwise,
then Landlord (subject to being able to obtain all necessary permits and
approvals therefore) shall repair and restore the Leased Premises as soon as is
reasonably practicable to substantially the same condition in which the Leased
Premises existed before such damage; provided that if the insurance proceeds
collected or collectible and available to Landlord to pay the cost of such
repairs and restorations by Landlord as a consequence of such destruction or
damage are less than the cost of such repairs and restorations as estimated by
Landlord's architect, Land shall not be obligated to commence or perform such
repairs and restorations, and this Lease upon notice by Landlord to Tenant shall
at the option of Landlord terminate unless Tenant undertakes (in form and upon
terms satisfactory to Landlord) to pay the difference between such estimated
cost and such insurance proceeds. If, however, the Leased Premises are
completely destroyed or so damaged that Landlord cannot reasonably restore or
rebuild in four (4) months to substantially the same condition in which the
Leased Premises were before such damage, then Landlord shall not be required or
rebuild or restore, and this Lease shall be terminable by Landlord by serving
written notice upon Tenant. In any event, if repairs have not been commenced
within ninety (90) days after the date on which Landlord receives the full and
sufficient insurance proceeds, this Lease may be terminated by Tenant serving
notice upon Landlord following the expiration of such ninety (90) days, but in
no event may Tenant terminate this Lease after such repairs have been commenced
by Landlord.
18.02 No Abatement. In the event the Leased Premises are completely or
partially destroyed or so damaged by fire or other hazard that the Leased
Premises cannot be reasonably used by Tenant or can only be partially used by
Tenant and this Lease is not terminated as above provided, there shall be not
abatement of rent, it being understood and agreed that the Tenant, at this cost
and expense, shall procure insurance necessary to protect itself against any
interruption of its business.
18.03 Restoration During Last Two Years. Anything in Section 18.01 to
the contrary notwithstanding, if, within two (2) years prior to the expiration
of the Term of this Lease the Leased Premises shall be damaged or destroyed by
fire or otherwise and the estimated cost of restoration exceed Twenty-Five
Thousand Dollars ($25,000), Landlord shall be under no obligation to repair and
restore the Leased Premises, and at the election of Landlord by notice to Tenant
the Lease shall terminate.
18.04 Tenant's Obligation Upon Restoration. In the event of damage or
destruction to
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16
the Leased Premises and unless this Lease is terminated by Landlord or Tenant as
provided in this Article 18, Tenant shall, as soon as possible, repair,
redecorate and refixture the Leased Premises in a manner and to at lease a
condition equal to that existing prior to its destruction or casualty, and
reopen the entire Leased Premises for business. All proceeds of insurance
carried by Tenant on Tenant's personal property shall be held in trust for such
purpose.
ARTICLE 19.00 SUBORDINATION
19.01 General. This lease and Tenant's rights under this Lease are
subject and subordinate to any ground or underlying lease (including, without
limitation, the Mortgage), together with any renewals, extensions,
modifications, consolidations and replacements of any of same now or after the
Date affecting or placed, charged or enforced against the Building or all or any
portion of Landlord's Property, or any interest of Landlord and/or ECIDA in any
of same, or Landlord's and/or Bondholder's interest in this Lease and the
leasehold estate created by this Lease (except to the extent any such instrument
will expressly provide that this Lease is superior to such instrument). This
provision shall be self-operative and no further instrument of subordination
shall be required in order to effect it. Nevertheless, Tenant shall execute,
acknowledge and deliver to Landlord, at any time and from time to time, up
demand by Landlord, ECIDA or Bondholder, such documents as may be requested
Landlord, ECIDA or Bondholder, as the case may be, or any ground or underlying
lessor, or any mortgagee, to confirm or effect any such subordination. If Tenant
fails or refuses to execute, acknowledge and deliver any such document within
ten (10) days after written demand, Landlord, ECIDA and Bondholder, and their
respective successors and assigns, shall each be entitled to execute,
acknowledge and deliver any and all such documents for and on behalf of Tenant
as attorney-in-fact for Tenant. Tenant by this Section 19.01 constitutes and
irrevocably appoints Landlord, ECIDA or Bondholder, and each of them, and their
respective successors and assigns as Tenant's attorney-in-fact to execute,
acknowledge and deliver any and all documents described in this Section 19.01
for and on behalf of Tenant, as provided in this Section 19.01.
19.02 Attornment. Tenant agrees that in the event that any holder of
any ground or underlying lease (including, without limitation, the ECIDA Lease),
mortgage (including, without limitation, the Mortgage), deed of trust, or other
encumbrance encumbering any part of Landlord's Property succeeds to Landlord's
interest in the Leased Premises, Tenant shall pay to such holder all rents
subsequently payable under this Lease. Further, Tenant agrees that in the event
of the enforcement by the trustee or the beneficiary under or holder or owner of
any such mortgage, deed of trust, or land or ground lease of the remedies
provided for by law or by such mortgage, deed of trust, or land or ground lease,
Tenant will, upon request of any person or party succeeding to the interest of
Landlord as a result of such enforcement, automatically become the tenant of,
and attorn to, such successor in interest without change in the terms of
provisions of this Lease. Such successor in interest will not be bound by (a)
any payment of Base Monthly Rent or Rent for more than one month in advance
except prepayments in the nature of security for the performance by Tenant of
its obligations under this Lease, or (b) any amendment or modification of this
Lease made without the written consent of such trustee, beneficiary, holder or
owner or such of such trustee, beneficiary, holder or owner or such of such
trustee, beneficiary holder or owner or such successor in interest. Upon request
by such successor in
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17
interest or by ECIDA or Bondholder, and without cost to Landlord or such
successor in interest or ECIDA or Bondholder, Tenant shall execute, acknowledge
and deliver any such document within ten (ten) days after written demand, such
successor in interest or ECIDA or Bondholder, as the case may be shall each be
entitled to execute, acknowledge and deliver any and all such documents for and
on behalf of Tenant as attorney-in-fact for Tenant. Tenant by this Section 19.02
constitutes and irrevocably appoints such successor in interest and ECIDA and
Bondholder, and each of the, and their respective successors and assigns, as
Tenant's attorney-in-fact to execute, acknowledge and deliver any and all
documents described in this Section 19.02 for and on behalf of Tenant, as
provided in this Section 19.02.
ARTICLE 20.00 ENTRY BY LANDLORD
Landlord, its agents, employees, and contractors may enter the Leased
Premises at any time in response to an emergency and at reasonable hours
otherwise to (a) inspect the same, (b) exhibit the same to prospective
purchasers, lenders or tenants, ( c) determine whether Tenant is complying with
its obligations under this Lease, (d) perform any act permitted to be performed
by Landlord according to the terms of this Lease, (e) post notices of
non-responsibility or similar notices, or (f) make repairs required or permitted
to be made by Landlord under the terms of this Lease or repairs to any adjoining
space or utility services or make repairs, alternations or improvements to any
other portion of the Building; provided, however, all such work shall be done as
promptly as reasonably possible and so as to cause as little interference to
Tenant as reasonably possible. Tenant by this Article 20.00 waives any claim
against Landlord, its agents, employees or contractors for damages for: any
injury or inconvenience to or interference with Tenant's business, any loss of
occupancy or quiet enjoyment of the Leased Premises, or any other loss
occasioned by such entry. Landlord shall at all times have and retain a key with
which to unlock all doors in, on, or about the Leased Premises (excluding
Tenant's vaults, safes and similar sensitive areas reasonably designated in
writing by Tenant in advance). Landlord shall have the right to use any and all
means that Landlord may deem proper to open doors in and to the Leased Premises
in order to obtain entry to the Leased Premises in a situation deemed an
emergency by Landlord. Any entry to the Leased Premises obtained by Landlord by
any means permitted under this Article 20.00 shall not under any circumstances
be constructed or deemed to be forcible or unlawful entry into or a detainer of
the Leased Premises or an eviction, actual or constructive, of Tenant from the
Leased Premises, or any portion of the Leased Premises, nor will any such entry
entitle Tenant to damages or an abatement of Base Monthly Rent, Additional Rent,
or other charges that this Lease requires Tenant to pay.
ARTICLE 21.00 INDEMNIFICATION, WAIVER AND RELEASE
21.01 Indemnification. Tenant shall neither hold nor attempt to hold
Landlord, ECIDA or Bondholder, or any of the respective principals, officers,
directors, employees or agents thereof, liable for, and Tenant shall indemnify
and hold harmless Landlord, ECIDA and Bondholder and all of their respective
principals, officers, directors, employees and agents from and against, any and
all demands, claims, causes of action, liabilities, fines, penalties, damages
(including, without limitation, attorneys' fees and disbursements) incurred in
connection with
<PAGE>
18
loss of life, personal injury or property damage with respect to or arising
from:
(a) the use or occupancy or manner of use or occupancy of the Leased
Premises or any other part of Landlord's Property by Tenant or any person
claiming under Tenant;
(b) any activity, work or thing, done, permitted or suffered by Tenant to
be done in or about the Leased Premises or elsewhere on Landlord's Property;
(c ) any acts, omissions or negligence of Tenant or any person claiming
under Tenant, or the contractors, agents, employees, invites or visitors of
Tenant, or any such person; or
(d) any breach, violation or nonperformance, by Tenant or any person
claiming under Tenant, or the employees, agents, contractors, invites or
visitors of Tenant or of any such person claiming under Tenant, of any term,
covenant or provision of this Lease or of any law, ordinance or governmental
requirement; except for any loss of life or personal injury or on the Leased
Premises which is proximately caused by or results proximately from the gross
negligence or deliberate act of Landlord or its employees.
If any action or proceeding is brought against Landlord, ECIDA or
Bondholder or any of their respective principals, officers, directors, employees
or agents by reason of any such claim for which Tenant has indemnified Landlord,
Tenant, upon notice from Landlord, ECIDA or Bondholder, as the case may be,
shall defend the same at Tenant's expense with counsel satisfactory to Landlord,
ECIDA or Bondholder, as the case may be.
21.02 Waiver and Release. Tenant, as a material part of the
consideration to Landlord for this Lease, by this Section 21.02 waives and
releases all claims against Landlord, its principals, officers, directors,
employees and agents with respect to all matters for which Landlord has
disclaimed liability pursuant to the provisions of this Lease. Except for any
damage or injury to person or property on the Leased Premises that is
proximately caused by or results proximately from the gross negligence or
deliberate act of Landlord or its employees, Tenant covenants and agrees that
Landlord or its employees, Tenant covenants and agrees that Landlord and its
principals, officers, directors, agents and employees shall not at any time or
to any extent whatsoever by liable, responsible or in any way accountable for
any loss, injury, death or damage (including consequential damages) to persons,
property or Tenant's business occasioned by theft, act of God, public enemy,
injunction, riot, strike, insurrection, war, court order, requisition, order of
governmental body or authority, fire, explosion, falling objects, steam, water,
rain or snow, leak, or flow of water (including fluid from the elevator system),
rain or snow from or into part of Landlord's Property or from the roof, street,
subsurface or from any other place, or by dampness, or from the breakage,
leakage, obstruction or other defects of the pipes, sprinklers, wires,
appliances, plumbing, air conditioning or lighting fixtures of Landlord's
Property, or from construction, repair or alteration of any other premises in
the Building, the Leased Premises or any other part of Landlord's Property; or
from any acts or omissions of any other tenant, occupant or visitor of Landlords
Property, or from any cause beyond Landlord's control.
ARTICLE 22.00 SECURITY DEPOSIT
Tenant has deposited the Security Deposit with Landlord as security for
the full, faithful and timely performance of every provision of this Lease to be
performed by Tenant. If Tenant defaults with respect to any provision of this
Lease, including but not limited to the provisions
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19
relating to the payment of Rent, Landlord may use, apply or retain all or any
part of the Security Deposit for the payment of any Rent or any other sum in
default, or for the payment of any other amount which Landlord may spend or
become obligated to spend by reason of Tenant's default, or to compensate
Landlord for any other loss or damage that Landlord may suffer by reason of
Tenant's default. If any portion of the Security Deposit is so used, applied or
retained, Tenant shall within five (5) days after written demand deposit cash
with Landlord in an amount sufficient to restore the Security Deposit to its
original amount. Landlord shall not be required to keep the Security Deposit
separate from its general funds and Tenant shall not be entitled to interest on
the Security Deposit. The Security Deposit shall not be deemed a limitation on
Landlord's damages or a payment of liquidated damages or a payment of the Base
Monthly Rent due for the last month or any other month of the Term. If Tenant
fully, faithfully and in a timely manner performs every term, covenant and
provision of this Lease to be performed by Tenant, the Security Deposit or any
balance of the Security Deposit shall be returned to Tenant within sixty (60)
days after the expiration of the Term. Landlord may deliver the funds deposited
under this Lease by Tenant to the purchaser of the Building or at Landlord's
interest therein in the event the Building or such interest is sold, and
thereafter, Landlord shall have no further liability to Tenant with respect to
the Security Deposit.
ARTICLE 23.00 QUIET ENJOYMENT
Landlord covenants and agrees with Tenant that so long as Tenant pays
the Rent and observes and performs all the terms, covenants and conditions of
this Lease on Tenant's's part to be observed and performed, Tenant may peaceably
and quietly enjoy the Leased Premises, and Tenant's possession will not be
disturbed by anyone claiming by, through or under Landlord subject,
nevertheless, to the terms and conditions of this Lease, the ECIDA Lease, the
Collateral Lease Assignment and the Mortgage.
ARTICLE 24.00 EFFECT OF SALE
A sale, conveyance or assignment of the Building or Landlord's
Property, or of Landlord's interest therein or of Landlord's interest in the
ECIDA Lease, shall operate to release Landlord from liability from under this
Lease and after the effective date of such sale, conveyance or assignment upon
all of the covenants, terms and conditions of this Lease, express or implied,
except those liabilities that arose prior to such effective date, and, after the
effective date of such sale, conveyance or assignment, Tenant shall look solely
to Landlord's successor in interest in and to this Lease. This Lease shall not
be affected by any such sale, conveyance or assignment, and Tenant shall attorn
to Landlord's successor in interest to this Lease.
ARTICLE 25.00 DEFAULT
25.01 Events of Default. The following events are referred to collectively
as "Events of Default," or individually as an "Event of Default:"
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20
(a) Tenant defaults in the due and punctual payment of Rent, and such
default continues for ten (10) days after notice from Landlord; provided,
however, Tenant shall not be entitled to more than (1) notice for monetary
defaults during any twelve (12) month period, and if after such notice any Rent
is not paid when due, and Event of Default will be considered to have occurred
without the requirement for any notice;
(b) Tenant vacates or abandons the Leased Premises;
(c ) This Lease or the Leased Premises or any part of the Leased
Premises is taken upon execution or by other process of law directed against
Tenant, or are taken upon or subject to any attachment at the instance of any
creditor or claimant against Tenant, and the attachment is not discharged or
disposed of within fifteen (15) days after its levy;
(d) Tenant files a petition in bankruptcy or insolvency or for
reorganization or arrangement under the bankruptcy laws of the United States or
under any insolvency act of any state, or admits the material allegations of any
such petition by answer or otherwise, or is dissolved or makes an assignment for
the benefit of creditors;
(e) Involuntary proceedings under any such bankruptcy law or insolvency
act or for the dissolution of Tenant are instituted against Tenant, or a
receiver or trustee is appointed for all or substantially all of the property of
Tenant, and such proceeding is not dismissed or such receivership or trusteeship
vacated within sixty (60) days after such institution or appointment;
(f) Tenant fails to take possession of the Leased Premises on the
Commencement Date of the Term; or
(g) Tenant breaches any of the other agreements, terms, covenants or
conditions which this Lease requires Tenant to perform, and such breach
continues for a period of twenty (20) days after notice from Landlord to Tenant;
or if such breach cannot reasonably be cured within such twenty (20) day period
and Tenant fails promptly within said twenty (20) day period to commence and
proceed diligently and in good faith to cure such breach, and fails to complete
such cure, within a reasonable time.
25.02 Landlord's Remedies. If any one or more Events of Default set
forth in Section 25.01 shall occur, then Landlord has the right, at its
election:
(a) to give Tenant written notice of Landlord's intention to terminate
this Lease on the earliest date permitted by law or on any later date specified
in such notice, in which case Tenant's right to possession of the Leased
Premises shall cease and this Lease shall be terminated, except as to Tenant's
liability, as if the termination date specified in such notice were the original
Expiration Date of the Term; or
(b) without further demand or notice, and whether or not Landlord
terminates the Lease as provided in subsection (a) hereinabove, to reenter, take
possession of the Leased Premises, or any part of the Leased Premises, repossess
the same, expel Tenant and those claiming through or under Tenant, and remove
the effects of both or either, using such force for such purposes as Landlord
shall deem necessary, without being liable for persecution, without being deemed
guilty of any manner of trespass, and without prejudice to any remedies for
arrears of Base Monthly Rent or other amounts payable under this Lease or as a
result of any preceding breach of covenants or conditions; or
(c ) without further demand or notice, to cure any Event of Default and
to charge Tenant for the cost of effecting such cure, including, without
limitation, attorneys' fees and disbursements and interest on the amount so
advanced at the rate set forth in Section 26.22;
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21
provided, however, Landlord shall have no obligation to cure any such Event of
Default of Tenant.
25.03 Right to Relent. Should Landlord elect to reenter as provided in
subsection (b), or should Landlord take possession pursuant to legal proceedings
or pursuant to any notice provided by law, Landlord may, from time to time,
without terminating this Lease, relent the Leased Premises or any part of the
Leased Premises in Landlord's or Tenant's name, but for the account of Tenant,
for such term or terms (which may be greater or less than the period which would
otherwise have constituted the balance of the Term) and on such conditions and
upon such terms (which may include concessions of free rent and alteration and
repair of the Leased Premises) as Landlord, in its sole discretion, may
determine, and Landlord may collect and receive all Rent. Landlord shall in no
way be responsible or liable for any failure to relent the Leased Premises or
any part of the Leased Premises, or for any failure to collect any Rent due upon
such reletting. No such reentry or taking possession of the Leased Premises by
Landlord shall be construed as an election on the Landlord's part to terminate
this Lease unless an express written notice of such election is given to Tenant.
No notice from Landlord under this Section or under a forcible or unlawful entry
and detainer statute or similar law shall constitute an election by Landlord to
terminate this Lease unless such notice specifically so states. Landlord
reserves the right following such reentry or reletting to exercise its right to
terminate this Lease by giving Tenant such written notice, in which event this
Lease shall terminate as specified in such notice.
25.04 Certain Damages. In the event that Landlord does not elect to
terminate this Lease as permitted in subsection (a) of Section 25.02, but
instead elects to take possession as provided in subsection (b) of Section
25.02, Tenant shall pay to Landlord; (a) Base Monthly Rent and other sums as
provided in this Lease, which would be payable under this Lease if such
repossession had not occurred, less (b) the net proceeds, if any, of any
reletting of the Leased Premises after deducting all Landlord's reasonable
expenses in connection with such reletting, including, without limitation, all
repossession costs, brokerage commissions, attorneys' fees and disbursements,
expenses of employees, alteration and repair costs and expenses of preparation
for such reletting. If, in connection with any reletting, the new lease term
extends beyond the existing Term, or the premises covered by such new lease
include other premises not part of the Leased Premises, a fair apportionment of
the rent received from such reletting and the expenses incurred in connection
with such reletting as provided in this Section shall be made by Landlord in
determining the net proceeds from such reletting, and any rent concessions shall
be equally apportioned over the term of the new lease. Tenant shall pay such
rent and other sums to Landlord monthly on the day on which the Base Monthly
Rent would have been payable under this Lease if possession had not been
retaken, and Landlord will be entitled to receive such rent and other sums from
Tenant on each such day.
25.05 Continuing Liability After Termination. If this Lease is
terminated on account of the occurrence of an Event of Default, Tenant shall
remain liable to Landlord for damages in an amount equal to Base Monthly Rent
and other amounts which would have been owing by Tenant for the balance of the
Term, had this Lease not been terminated, less the net proceeds, if any, of any
reletting of the Leased Premises by Landlord subsequent to such termination,
after deducting all Landlord's expenses in connection with such relenting,
including, without limitation, the expenses enumerated in Section 25.04.
Landlord shall be entitled to collect such damages from Tenant monthly on the
day on which Base Monthly Rent and other amounts would have been
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22
payable under this Lease if this Lease had not been terminated, and Landlord
shall be entitled to receive such Base Monthly Rent and other amounts from
Tenant on each such day. Alternatively, at the option of Landlord, in the event
this Lease is so terminated, Landlord shall be entitled to recover against
Tenant as aggregate damages an amount which, a the time of such termination of
this Lease, represents the excess of the aggregate the Bast Monthly Rent and all
other Rent payable by Tenant that would have accrued for the balance of the Term
over the aggregate rental value of the Leased Premises (such rental value to be
computed on the basis of a tenant paying not only a rent to Landlord for the use
and occupation of the Leased Premises, but also such other charges as are
required to be paid by Tenant under the terms of this Lease) for the balance of
such term, both discounted to present value at the lesser of eight percent (8%)
or the discount rate of the New York Federal Reserve Bank on the date of the
Event of Default.
25.06 Cumulative Remedies. Any suit or suits for the recovery of the
amounts and damages set forth in Sections 25.04 and 25.05 may be brought by
Landlord, from time to time, at Landlord's election, and nothing in this Lease
will be deemed to require Landlord to await the date upon which this Lease or
the Term would have expired had there occurred no Event of Default. Each right
and remedy provided for in this Lease is cumulative and is in addition to every
other right or remedy provided for in this lease or now or after the Date
existing at law or in equity or by statute or otherwise, and the exercise or
beginning of the exercise by Landlord of any one or more of the rights or
remedies provided for in this Lease or now or after the Date existing at law or
in equity or by statute or otherwise will not preclude the simultaneous or later
exercise by Landlord of any or all other rights or remedies provided for in this
Lease or now or after the Date existing at law or in equity or by statute or
otherwise. All costs and expenses paid or incurred by Landlord in collecting or
attempting to collect any amounts and damages owing by Tenant pursuant to the
provisions of this Lease or to enforce or attempt to enforce any provision of
this Lease, including, without limitation, reasonable attorneys' fees from the
date any such matter is turned over to an attorney, whether or not one or more
actions are commenced by Landlord, will also be recoverable by Landlord from
Tenant.
25.07 Right of Redemption. Tenant hereby waives any right of redemption
under any existing or future statute or case law.
ARTICLE 26.00 MISCELLANEOUS
26.01 No Offer. This lease is submitted to Tenant on the understanding
that it will not be considered an offer and will not bind Landlord in any way
until (a) Tenant has duly executed and delivered duplicate originals to Landlord
and (b) Landlord has executed and delivered one of such originals to Tenant.
26.02 Joint and Several Liability. If Tenant is composed of more than
one signatory to this Lease, each signatory will be jointly and severally liable
with each other signatory for payment and performance according to this Lease.
26.03 No Construction Against Drafting Party. Landlord and Tenant
acknowledge that each of them and their counsel have had an opportunity to
review this Lease and that this Lease will not be construed against Landlord
merely because Landlord has prepared it.
26.04 Time of the Essence. Time is of the essence of each and every
provision of this Lease.
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26.05 No Recordation. Tenant's recordation of this Lease or any memorandum
or short form of it will be void and a default under this Lease.
26.06 No Waiver. The waiver by Landlord of any agreement, condition or
provision contained in this Lease shall not be deemed to be a waiver of any
subsequent breach of the same or any other agreement, condition or provision
contained in this Lease, nor will any custom or practice that may involve or
arise between the parties in the administration of the terms of this Lease be
construed to waive or to lessen the right of Landlord to insist upon performance
by Tenant in strict accordance with the terms of this Lease. The subsequent
acceptance of Rent by Landlord will not be deemed to be a waiver of any
preceding breach by Tenant of any agreement, condition or provision of this
Lease, other than the failure of Tenant to pay the particular Rent so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such Rent.
26.07 Limitation on Recourse. Tenant specifically agrees to look solely
to Landlord's interest in Landlord's Property for the recovery of any judgements
from Landlord. Landlord (and its shareholders, principals, agents, officers,
directors and employees) shall not be personally liable for any such judgments.
The provisions contained in the preceding sentences are not intended to, and
shall not, limit any right that Tenant might otherwise have to obtain injunctive
relief against Landlord or relief in any suit or action in connection with
enforcement or collection of amounts which may become owing or payable under or
on account of insurance maintained by Landlord.
26.08 Estoppel Certificates. At any time and from time to time but
within ten (10) days after written request by Landlord, ECIDA or Bondholder,
Tenant shall execute, acknowledge and deliver to Landlord, ECIDA, Bondholder, as
the case may be, a certificate certifying (a) that this Lease is unmodified and
in full force and effect or, if there have been modification, that this Lease is
in full force and effect, as modified, and stating the date and nature of each
modification, (b) the date, if any, to which Base Monthly Rent and other sums
payable under this Lease have been paid, (c ) that no notice has been given to
Landlord of any default that has not been cured, except as to defaults specified
in the certificate, and (d) such other matters as may be reasonably requested by
Landlord. Any such certificate may be relied upon by any prospective purchaser
or existing or perspective mortgagee of the Building or any part of Landlord's
Property.
26.09 Waiver of Jury Trial. Landlord and Tenant by this Section 26.09
waiver trial by jury in any action, proceeding or counterclaim brought by either
of the parties to this Lease against the other on any matters whatsoever arising
out of or in any way connected with this Lease, the relationship of Landlord and
Tenant, Tenant's use or occupancy of the Leased Premises, or any other claims
(except claims for personal injury or property damage), and any emergency
statutory or any other statutory remedy.
26.10 No Merger. The voluntary or other surrender of this Lease by
Tenant or the cancellation of this Lease by mutual agreement of Tenant and
Landlord or the termination of this Lease on account of Tenant's default shall
not cause a merger, and shall, at Landlord's option, (a) terminate all of any
subleases and subtenancies, or (b) operate as an assignment to Landlord of all
or any subleases or subtenancies. Landlord's option under this Section 26.10
shall be exercised by notice to Tenant and all known sublessee or subtenants in
the Leased Premises or any part of the Leased Premises.
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24
26.11 Holding Over. Tenant shall have no right to remain in possession
of all or any part of the Leased Premises after the expiration or earlier
termination of the Term. If Tenant remains in possession of all or any part of
the Leased Premises after the expiration of the Term, with the express or
implied consent of Landlord: (a) such tenancy shall be deemed to be a periodic
tenancy from month-to-month only; (b) such tenancy shall not constitute a
renewal or extension of this Lease of any further term; and (c ) such tenancy
may be terminated by Landlord upon the earlier of (I) thirty (30) days prior
written notice or (ii) the earliest date permitted by law. If Tenant, with or
without the express or implied consent of Landlord, remains in possession of all
or any part of the Leased Premises after the expiration of the Term, Base
Monthly Rent shall be increased to an amount equal to one hundred fifty percent
(150%) of the Base Monthly Rent payable during the last mont of the Term, and
any other sums due under this Lease shall be payable in the amount and at the
times specified in this Lease. Such month-to-month tenancy or any other
hold-over tenancy shall be subject to every other term, condition, and covenant
contained in this Lease.
26.12 Notices. Any notice, request, demand, consent, approval or other
communication required or permitted under this Lease shall be in writing and
shall be deemed to have been given when personally delivered or deposited in any
depository regularly maintained by the United States Postal Service, postage
prepaid, certified mail, return receipt requested, addressed to the party for
whom it is intended at its address set forth in Article 1.00. Either Landlord or
Tenant may add additional addresses or change its address for purposes of
receipt of any such communication by giving ten (10) days prior written notice
of such change to the other party in the manner prescribed in this Section
26.12.
26.13 Severability. If any provision of this Lease is determined to be
illegal, invalid or unenforceable, the remainder of this Lease shall not be
affected by such finding, and in lieu of each provision of this Lease that is
illegal, invalid or unenforceable, a provision shall be added as part of this
Lease as similar in terms to such illegal, invalid or unenforceable provision as
may be possible and be legal, valid and enforceable.
26.14 Written Amendment Required. No amendment, alteration,
modification of or addition to this Lease shall be valid or binding unless and
until expressed in writing and signed by Landlord and Tenant and by ECIDA and
Bondholder. Tenant agrees to make any modifications of the terms and provisions
of this Lease required or requested by any lending institution providing
financing for the Building or Landlord's Property, as the case may be, provided
that no such modifications shall materially adversely affect Tenant's rights and
obligations under this Lease.
26.15 Entire Agreement. This Lease, including all Exhibits hereto
contain the entire understanding and agreement between Landlord and Tenant and
may be amended only by subsequent written agreement in accordance with the terms
and conditions of this Lease. No promises, warranties or representations, except
as expressly and specifically contained in this Lease, have been made to Tenant
respecting the condition of the Leased Premises or the manner of operating the
Building or Landlord's Property or respecting anything else whatsoever.
26.16 Captions. The captions of the various Articles and Sections of
this Lease are for convenience only and do not necessarily define, limit,
describe or construe the contents of such Articles or Sections.
26.17 Notice of Landlord's Default. In the event of any alleged default in
the obligation
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25
of Landlord under this Lease, Tenant shall deliver in the obligation of Landlord
under this Lease, Tenant shall deliver to Landlord a written notice stating the
full details of the alleged default, and Landlord shall have thirty (30) days
following receipt of such notice to cure such alleged default or, in the event
the alleged default cannot reasonably be cured within a thirty (30) day period,
to commence action to cure and proceed diligently to cure such alleged default.
A copy of such notice to Landlord shall be sent to ECIDA, Bondholder and any
holder of a mortgage or other encumbrance on the Building or Landlord's Property
of which Tenant has been notified in writing, and ECIDA, Bondholder and any such
holder shall also have the same time periods to cure such alleged default.
26.18 Authority. Tenant and the party executing this Lease on behalf of
Tenant each represents to Landlord that such party is authorized to execute this
Lease for and on behalf of Tenant and thereby to bind Tenant to all of the terms
and conditions of this Lease, and that all requisite action of the board of
directors, or partners of Tenant, as the case may be, has been duly taken and
not rescinded, and they agree upon request to deliver to Landlord a resolution
or similar document satisfactory to Landlord to that effect.
26.19 Brokers. Landlord and Tenant respectively represent and warrant
to each other that neither of them has consulted or negotiated with any broker
or finder with regard to the Leased Premises except the Broker named in Article
1.00(v), if any. Each party shall indemnify the other against and hold the other
harmless from any claims for fees or commissions from anyone with whom either of
them has consulted or negotiated with regard to the Leased Premises except the
Broker. Landlord shall pay any fees or commissions due the Broker.
26.20 Governing Law. This Lease will be governed by and construed and
interpreted pursuant solely to the laws of the State of New York.
26.21 Force Majeure. Landlord shall have no liability to Tenant, nor
shall Tenant have any right to terminate this Lease or abate Rent or assert a
claim of partial or total actual or constructive eviction, because of Landlord's
failure to perform any of its obligations in the Lease if such failure is due to
reasons beyond the Landlord's reasonable control, including, without limitation,
strikes or other labor difficulties; inability to obtain necessary governmental
permits and approvals (including building permits or certificates of occupancy);
unavailability or scarcity of materials; war; riot; civil insurrection;
accident; acts of God; and governmental preemption in connection with a national
emergency or other governmental action. If Landlord fails to perform its
obligations because of any reasons beyond Landlord's reasonable control
(including those enumerated above), the period for Landlord's performance shall
be extended day for day for the duration of such cause of Landlord's failure.
26.22 Late Payments. Any payment of Rent, including, but not limited
to, Base Monthly Rent, that is not received by Landlord within fifteen (15) days
after it is due will be subject to a late charge equal to five percent (5%) of
the unpaid payment, or $100.00, whichever is greater. This amount is in
compensation of Landlord's additional cost of processing late payments. In
addition, any Rent which is not paid when due, including, without limitation,
Base Monthly Rent, shall accrue interest at a late-rate charge of the Prime Rate
plus five percent (5%) per annum (but in no event in an amount in excess of the
maximum rate allowed by applicable law) from the date on which it was due until
the date on which it is paid in full with accrued interest.
26.23 No Easements for Air or Light. Any diminution or shutting off of
light, air or view by any structure which may be erected on lands adjacent to
the Building shall in no way affect
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26
this Lease or impose any liability on Landlord.
26.24 Tax Credits. Landlord shall be entitled to claim and obtain all
tax credits and depreciation attributable to leasehold improvements in the
Leased Premises. Promptly after Landlord's demand, Landlord and Tenant shall
prepare a detailed list of the leasehold improvements and fixtures and their
respective costs for which Landlord or Tenant has paid. Landlord shall designate
those items for which Landlord intends to claim tax credits and depreciation;
Tenant shall be entitled to any remaining tax credits and depreciation for
leasehold improvements not so designated by Landlord.
26.25 Relocation of the Leased Premises. Landlord reserves the
unrestricted and unconditional right to relocate the Leased Premises to
substantially comparable space within Landlord's Property or any adjoining
premises owned, leased or otherwise controlled by Landlord. Landlord shall give
Tenant a written notice of its intention to relocate the Leased Premises, and
Tenant shall complete such relocation within thirty (30) days after receipt of
such written notice. If the furnishings of the space to which Landlord proposes
to relocate Tenant are not substantially the same as those of the Leased
Premises, or if the Base Monthly Rent of the new space is not substantially the
same as the prior Base Monthly Rent, and if Tenant so notifies Landlord and
Landlord fails to offer space reasonably satisfactory to Tenant, Tenant may
terminate this Lease effective as of the thirtieth (30th) day after Landlord's
initial notice. Upon Tenant's peaceable vacation and abandonment of the Leased
Premises, Landlord shall pay Tenant a sum equal to one monthly installment of
the Base Monthly Rent payable under this Lease. If Tenant does relocate within
Landlord's Property, then, effective on the date of such relocation this Lease
shall be amended by deleting the description of the original Leased Premises and
substituting for it a description of such comparable space. Landlord agrees to
reimburse Tenant for its actual moving costs to such other space within
Landlord's Property, to the extent such costs are reasonable.
26.26 Landlord's Fees. Whenever Tenant requests Landlord to take any
action or give any consent required or permitted under this Lease, Tenant shall
reimburse Landlord for all of Landlord's reasonable costs and expenses paid or
incurred in reviewing the proposed action or consent, including, without
limitation, reasonable attorney's, engineers' or architects' fees, together with
all of their disbursements, within ten (10) days after Landlord's delivery to
Tenant of a statement of such costs and expenses. Tenant shall be obligated to
make such reimbursement without regard to whether Landlord consents to any such
proposed action, and Landlord shall not be obligated to take any such requested
action or decide whether to grant any such consent unless and until such
reimbursement is made to Landlord for such costs and expenses so paid and
incurred.
26.27 Binding Effect. The covenants, conditions and agreements
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant and their respective heirs, distributees, executors, administrators,
successors, and, except as otherwise provided in this Lease, their assigns.
Landlord and Tenant have executed this Lease as of the day and year first above
written.
ARTICLE 27.00 ADJACENT SPACE
27.01 Definition of Adjacent Space. As used in this Article, the term
"Adjacent Space"
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27
shall mean that space consisting of approximately 13,000 square feet measuring
approximately 100 feet by 130 feet within the Building and immediately adjacent
to the Leased Premises, as shown on Exhibit E hereto and designated thereon as
the "Adjacent Space".
27.02 Option for Adjacent Space. As long as Tenant is not in default
under this Lease, then, unless and until Landlord leases the Adjacent Space to
another tenant, Tenant may elect to lease the Adjacent Space from Landlord and
thereby cause the Adjacent Space to become part of the Leased Premises on the
following terms and conditions: (I) notice of such election by Tenant shall be
given to Landlord not less than four (4) months prior to the effective date of
such election; (ii) as of the effective date of such election, the base annual
rent shall be increased by Fifty-eight Thousand Dollars ($58,000) per year (by
$4833.33 per month); (iii) all of the terms and conditions of this Lease, except
original base rent, shall apply to the Adjacent Space as fully and with the same
effect as to the original Leased Premises, and, without limiting the generality
of the foregoing, the term of this Lease with respect to the Adjacent Space
shall end on the expiration, or earlier termination, of the term of this Lease;
and (iv) Tenant shall pay Landlord, within ten (10) days after demand therefor,
Landlord's cost of the insulation under the floor slab of the Adjacent Space,
which cost is estimated by the parties to be not less than $40,000.
27.03 Right of First Refusal for Adjacent Space. As long as Tenant is
not in default under this lease, then, Tenant shall have the following right of
first refusal to lease the Adjacent Space: If Landlord intends to lease the
Adjacent Space to a third party, Landlord shall give Tenant written notice of
such intention, which notice (hereinafter in this Article "Landlord's Notice")
shall contain the material terms and conditions of the intended lease to the
third party. If Tenant desires to lease the Adjacent Space on the terms and
conditions set forth in Landlord's Notice, Tenant shall so advise Landlord by
giving Landlord written notice (hereinafter in this Article "Tenant's Notice")
within ten (10) days after the giving of Landlord's Notice. If Tenant gives
Tenant's Notice within said 10-day period, Landlord and Tenant shall promptly
enter into and execute a lease for the Adjacent Space containing the terms and
conditions set forth in Landlord's Notice and such other terms and conditions
not inconsistent therewith as may be agreed upon by Landlord and Tenant;
provided, however, if Landlord's Notice is in the form of a lease of the
Adjacent Space (whether or not executed by the prospective third-party tenant),
such Landlord's Notice shall constitute the lease between Landlord and Tenant
for the Adjacent Space and shall be promptly executed by Landlord and Tenant. If
Tenant does not give Tenant's Notice within said 10-day period, Tenant's right
of first refusal to lease the Adjacent Space shall be of no further force or
effect unless and until the lease thereof to such third party (including any
exercised options therein) expires or terminates, in which event Tenant's right
of first refusal to lease the Adjacent Space shall agin be in full force and
effect according to the terms and conditions hereof.
ARTICLE 28.00 ADDITIONAL SPACE
28.01 Definition of Additional Space. As used in this Article, the term
"Additional Space" shall mean that space consisting of approximately 15,240
square fee measuring approximately 117.23 feet by 130 feet and immediately
adjacent to the Adjacent Space, as shown on Exhibit F hereto and designated
therein as the "Additional Space".
28.02 Right of First Refusal for Additional Space. As long as Tenant is not
in default
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under this Lease, and if Tenant then occupies the Adjacent Space, either under
this Lease or under a separate lease with Landlord, Tenant shall have the
following right of first refusal to lease the Additional Space from Landlord: If
Landlord intends to lease the Additional Space to a third party, Landlord shall
give Tenant written notice of such intention, which notice (hereinafter in this
Article "Landlord's Notice") shall contain the material terms and conditions of
the intended lease to the third party. If Tenant desires to lease the Additional
Space on the terms and conditions set forth in Landlord's Notice, Tenant shall
so advise Landlord by giving Landlord written notice (hereinafter in this
Article "Tenant's Notice") within ten (10) days after the giving of Landlord's
Notice. If Tenant gives such notice within said 10-day period, Landlord and
Tenant shall promptly enter into and execute a lease for the Additional Space
containing the terms and conditions set forth in Landlord's Notice and such
other terms and conditions not inconsistent therewith as may be agreed upon by
Landlord and Tenant; provided, however, if Landlord's Notice is in the form of a
lease of the Additional Space (whether or not executed by the prospective third
party tenant), such Landlord's Notice shall constitute the lease between
Landlord and Tenant for the Additional Space and shall be promptly executed by
Landlord and Tenant.
If Tenant does not give Tenant's Notice within said 10-day period, Tenant's
right of first refusal to lease the Additional Space shall be of no further
force or effect unless and until the lease thereof to such third party
(including any exercised options therein) expires or terminates in which event
Tenant's right of first refusal to lease the Additional Space shall again be in
full force and effect to the terms and conditions hereof.
LANDLORD: SONWIL DISTRIBUTION CENTER, INC.
By: /s/ Stuart J. Wilson
Stuart J. Wilson, President
TENANT: HAPPY ICE CORP.
BY: /s/ Kerry Chamberlain
Name: Kerry Chamberlain
Title: President
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