LEASE
THIS AGREEMENT made this 30th day of June, 1998,
by and between ROGER D. PANNIER and PAMELA S. PANNIER,
husband and wife, hereinafter called the "Lessor," and
SCHOOL SPECIALTY, INC., a Delaware Corporation,
hereinafter called the "Lessee."
1. LEASED PREMISES. Lessor, in consideration of
the covenants of the said Lessee hereinafter set forth
does by these presence lease to the said Lessee the
following described property situated in Fremont, Dodge
County, Nebraska, to-wit:
A parcel of land in the West Half of the East Half
and in the East Half of the West Half, of Section
15, Township 17 North, Range 8 East of the 6th
P.M., in Dodge County, Nebraska, bounded and
described as follows: Commencing at a point on
the West margin of the Airport Road 1314.4 feet
North of the North margin of Linden Avenue and 80
feet West of the Burlington Railroad right of way;
thence Northerly along the West margin of Airport
Road a distance of 445.6 feet; thence Westerly
parallel with the North margin of Linden Avenue a
distance of 600 feet; thence Southerly parallel
with the West margin of Airport Road a distance of
445.6 feet; thence Easterly parallel with the
North margin of Linden Avenue 600 feet to the
point of beginning, containing 6 acres, more or
less, subject to Airport Road right-of-way and
together with any lands owned by grantors on the
West to the land herein described.
2. IMPROVEMENTS. The leased premises have been
improved with a building with related fixtures which
are included in this lease as a part of the demised
premises.
3. LEASE TERM. The initial lease term shall be
for a period of five (5) years commencing on the 1st
day of July, 1998, and ending on the 30th day of June,
2003. Lessee is granted the option at the expiration
of the original five (5) year term to continue the
lease for an additional five (5) year term. Lessee
shall notify Lessor in writing of its intent to
exercise this option at least one 180 days prior to the
conclusion of the initial term. The rent for the first
extension of the lease will be determined in accordance
with Paragraph 4 of this lease.
4. RENT. In consideration of the leasing of the
aforedescribed property, Lessee hereby agrees to pay
Lessor as rent for said premises the following:
Initially the monthly rental for the premises
will be $14,700.00, payable in advance on the
first day of each month throughout the term of the
lease. The monthly rental shall be subject to
adjustment each year on July 1st during the term
of the lease, by that percentage, up or down, by
which the Consumer Price Index published by the
bureau of Labor Statistics of the United States
Department of labor changes from the index on the
preceding April 30th. The consumer Price Index
used for the calculation of this adjustment shall
be the index from the City that is the closet
geographically to Fremont, Nebraska and which
publishes the index on a monthly basis. If
publication of the Consumer Price Index shall be
discontinued, the parties shall accept comparable
statistics on the cost of living for the State of
Nebraska, or if there be none, for the City of
Omaha, as they shall be computed and published by
an agency of the United States or by a responsible
financial periodical of recognized authority then
to be selected by the parties, or if the parties
cannot agree upon a selection, by arbitration.
The monthly rental shall be adjusted by a sum
equal to the change in the consumer Price Index
during the twelve (12) month period immediately
preceding each April 30th.
5. LESSEE'S ACCEPTANCE OF PROPERTY. At the
commencement of the lease term, Lessee shall accept the
building, improvements, and any equipment on or in the
leased premises in their existing condition. No
representations, statement, warranties, expressed or
implied, has been made by or on behalf of the Lessor as
to such condition, or as to the use that may be made of
such property except as may be contained in this lease.
In no event shall the Lessor be liable for any defect
in such property or for any limitations on its use
except as may be contained in this lease. The leased
premises are presently zoned industrial pursuant to the
zoning laws of the City of Fremont, Dodge County,
Nebraska. The zoning on the property presently permits
the operation of a printing and publishing plant and
all business associated therewith.
6. ENVIRONMENTAL WARRANTIES, REPRESENTATIONS & AGREEMENTS.
a. Definitions. The following terms shall
have the following meanings for purposes
of this Paragraph 6.
i. "Costs" shall mean all of the
following:
(1) All costs ("Remedial Costs"),
including, but not limited to,
capital, operating, and maintenance
costs, incurred in connection with
the Remediations of the Property,
whether or not such Remediation is
voluntary, or in connection with
the Remediation of any adjoining or
neighboring property for which
Lessee is alleged or found to be
responsible. "Remedial Costs"
shall include but not be limited to
remedial costs as defined in 42
U.S.C. 9601(24), removal costs as
defined in 42 U.S.C. 9601(25) and
costs of repair of natural resource
damage.
(2) All costs arising out of
claims made by any governmental
authority based on or relating to
an alleged Environmental Condition,
including Remedial Costs.
(3) All costs arising out of
claims made by private parties,
including, but not limited to,
Remedial Costs, claims for
reimbursement or contribution under
CERCLA (as defined in section 1(c)
hereof), or otherwise, claims for
injury to person and claims for
injury to property.
(4) All attorneys' fees and costs
relating to any of the foregoing.
ii. "Environmental Condition" shall
mean with respect to any property
any condition that violates or
fails to comply with any
Environmental Laws or any condition
requiring Remediation under
Environmental Laws, including, but
not limited to, all such
conditions that exist on such property,
whether or not now known or
knowable and whether or not
currently foreseen by the parties
hereto. Without limitation of the
generality of the foregoing,
"Environmental Condition" shall
include the presence of any
Hazardous Substance and shall
include all of the conditions
described or referred to in the
attached Exhibit B or in the
reports and other documents listed
in the attached Exhibit B.
iii. "Environmental Laws" shall mean all
federal, estate, and local laws,
including statutes, regulations,
ordinances, codes, rules, and other
governmental restrictions and
requirements, relating to the
discharge of air pollutants, water
pollutants, or process waste water
or otherwise relating to pollution,
protection of the environment, or
human health or other related
matters (including any matters
relating to emission, discharge,
release, threatened release,
generation, possession, or
existence of hazardous or toxic
substances, materials, or wastes),
including, but not limited to, the
Federal Solid Waste Disposal Act,
the Federal Clean Air Act, the
Federal Clean Water Act, the
Federal Resource Conservation and
Recovery Act of 1976, and the
Federal Comprehensive Environmental
Response, compensation, and
Liability Act of 1980 ("CERCLA"),
regulations of the Environmental
Protection Agency, regulations of
the Nuclear Regulatory Agency, and
regulations of any state department
of natural resources or state
environmental protection agency,
now or at any time hereafter in
effect, as any of the foregoing may
be amended from time to time.
iv. "Environmental Permits" shall mean
all permits, licenses,
authorizations, registrations, and
other governmental consents
required under applicable
Environmental laws relating to the
use, storage, treatment,
Remediation, and disposal of
Hazardous
Substances or otherwise
relating to or necessary for
compliance with Environmental Laws.
v. "Hazardous Substance" shall mean
any substance, including, but not
limited to, petroleum products and
by-products, that is defined as a
hazardous or toxic substance or
hazardous or toxic waste under one
or more Environmental Laws or any
substance the generation,
possession, or existing of which is
prohibited or governed by one or
more Environmental Laws.
vi. "Remediation" shall mean
investigation or monitoring of site
conditions, cleanup, containment,
removal, or remediation of
Hazardous Substances, repair of
natural resource damage, and other
action to correct, remediate, or
terminate any Environmental
Condition.
b. Warranty Relating to the Property.
Lessor warrants that (a) no
Environmental Condition exists on or
with respect to the Property will cause
an Environmental Condition to exist on
or with respect to the Property as a
result of spreading, migration, seepage,
or otherwise, and (b no underground
storage tanks are now located on the
Property.
c. Warranty and Agreement Relating to
Lessor's Environmental Compliance.
Lessor warrants and agrees that (a)
Lessor is in compliance with all
applicable Environmental laws with
respect to the Lessor Property, the
Property and Lessor's or prior tenant of
the Lessor's operations on the Property,
(b) Lessor has obtained and is in
compliance with all Environmental
Permits required to be obtained or
complied with by Lessor as of the date
hereof, and Lessor has or will obtain
and comply with all Environmental
Permits required to be obtained or
complied with by Lessor in the future,
and (c) all such Environmental Permits
(other than those to be obtained in the
future) are in full force and effect and
lessor
has made all appropriate filings
for issuance or renewal of such
Environmental Permits.
d. Release. Lessor releases Lessee,
Lessee's directors, officers,
shareholders, employees, parent
corporation, subsidiaries, and agents,
and the successors and assigns of any of
the foregoing, against any and all
claims (including, but not limited to,
third party claims for personal injury
or injury to property), actions,
administrative proceedings (including
informal proceedings), judgment,
damages, punitive damages, penalties,
fines, costs, liabilities (including
sums reasonably paid in settlement of
claims and including attorneys' fees and
expenses), interest, losses, consultant
fees, and expert fees arising from or
relating to any Environmental Condition
on the Property, which existed as of the
commencement of the term of this Lease
including, but not limited to, all
claims for reimbursement or contribution
under CERCLA.
e. Indemnification. Lessor indemnifies and
holds harmless Lessee, Lessee's
directors, officers, shareholders,
employees, parent corporation,
subsidiaries, and agents, mortgagees of
the Property, and successors and assigns
of any of the foregoing, against any and
all claims (including, but not limited
to, property), actions, administrative
proceedings (including informal
proceedings), judgments, damages,
punitive damages, penalties, fines,
costs, liabilities (including sums
reasonably paid in settlements of claims
and including attorneys' fees and
expenses), interest, losses, consultant
fees and expert fees arising from or
relating to (a) the failure of any
warranty or representation of Lessor
herein to be true, correct, and
complete, (b) the failure of Lessor to
comply with Lessor's agreements in this
section, or (c) any Environmental
Condition on the Property or the Lessor
Property, in the case of each of the
foregoing, including but not limited to
all Costs.
f. Notice. Each of Lessor and Lessee agree
to promptly provide to the other party
copies of any notices, demands, claims,
inquiries, or any other correspondence
received form any governmental entity or
private party relating to or alleging
any Environmental Condition on the
Property or on the Lessor Property.
g. Survival of Obligations. Lessor's
warranties, representations, and
obligations under this Paragraph 6 shall
survive termination of the term of the
lease.
h. Attorneys' Fees. Lessor shall pay all
attorneys' fees and costs incurred by
Lessee in any action based on this
Paragraph 6.
7. ALTERATIONS. The Lessee shall not have the
right, to make any alterations or improvements to the
building on the leased property that exceed $10,000.00,
unless prior to commencement of any such alterations or
improvements, the Lessee shall have procured the
written consent of the Lessor. If consent is given:
(A) No change or alteration shall at any time be
made which shall impair the structural soundness or
diminish the value of the manufactural building on the
leased property.
(B) All work done in connection with any change
or alteration shall be done in a good and workmanlike
manner and in compliance with the Building and Zoning
laws, and with all other laws, ordinances, orders,
rules, regulations and requirements of all Federal,
State and Municipal Governments, and appropriate
departments, commissions, boards and officers thereof.
(C) Any alteration, addition, or improvements
made by the Lessee shall remain the property of the
Lessor. In addition, in the event Lessee fails to
obtain the prior written permission prior to the
commencement of any alterations, additions,
improvements or changes in the premises, such
alterations, additions or improvements shall become the
property of the Lessor and shall remain on the premises
at the termination of Lessee's tenancy.
8. USE OF LEASED PREMISES. The Lessee may use
and occupy the leased premises for the purpose of a
printing and publishing plant and all business
associated therewith.
The Lessee shall be entitled to use the premises for
purposes related to printing and publishing
operations and for any other lawful purpose
provided if same does not increase the casualty risk
and cost of insurance to the facility. Further, the
Lessee shall not use nor allow, nor permit the use of
said premises for any unlawful, immoral, or objectional
purposes; nor permit anything to be done which will
create a fire hazard or nuisance; and comply with all
applicable laws, regulations, and directions of
governmental authorities. Lessee shall not permit
anything to be done in or on the leased property which
will in any way violate any governmental laws or
regulations.
9. UTILITIES AND SERVICES. Lessor shall not be
required to furnish Lessee any utilities or services.
Lessee shall be responsible for all gas, electricity,
telephone, water, sewer and any other utilities as may
be required by Lessee. Lessee shall keep said leased
premises free and clear of any lien or encumbrance of
any kind whatsoever created by lessee's negligent act
or omission and shall indemnify the Lessor against any
liability or damages on such account.
10. TAXES. The Lessee shall be responsible for
the real property taxes and assessments upon the leased
property which are due and assessed during the lease
term.
11. INSURANCE.
A. During the term, Lessee, at its own cost and expense, shall:
(1) Keep all buildings and improvements
and equipment on, in or appurtenant to the
demised premises at the commencement of the
term and thereafter erected thereon or
therein, insured against loss or damage by
perils of fire, lightning, wind, hail,
explosion, riot, riot attending a strike,
civil commotion, aircraft, vehicles, smoke,
vandalism and malicious mischief in an amount
sufficient to cover the cost of replacing the
building(s) and improvements (without
deduction for depreciation), exclusive of
foundation supports below the surface of the
ground, and the costs of excavation,
underground pipes, flues, wiring, and drains.
Such replacement value initially shall be
determined to be $1,500,000.00 and shall be
determined from time to time, hereafter, but
not more
frequently than once in any thirty-
six (36) consecutive calendar months, at the
request of Lessor, by one of the insurers or,
at the option of Lessor, by an appraiser,
architect or contractor who shall be mutually
and reasonably acceptable to Lessor and
Lessee.
(2) Provide and keep in force
comprehensive general public liability
insurance against claims for personal injury,
death or property damage occurring on, in or
about the demised premises or the adjoining,
property and passageways. not less than
single limit coverage in the amount of
$5,000,000.00.
(3) Provide and keep in force such
other insurance and in such amounts as may
from time to time be required by Lessor
against such other insurable hazards as at
the time are commonly insured against in the
case of premises similarly situated.
B. All insurance provided by Lessee as
required by Lessor shall be carried in favor of
Lessor and Lessee, as their respective interest
may appear, and any underlying Lessor, fee owner
or affiliate corporation, trustee or mortgagee
designed by lessor. If requested by Lessor, such
insurance against fire or other casualty shall
include the interest of the holder of any mortgage
on the fee and shall provide that loss, if any,
shall be payable to such holder under a standard
mortgagee clause. Rent insurance and use and
occupancy insurance may be carried in favor of
Lessee but he proceeds thereof are hereby assigned
to lessor to be held by Lessor as security for the
payment of the rent and additional rent hereunder
until restoration of the demised premises. All
such insurance shall be taken in such responsible
companies licensed to do business in the state in
which the demised premises are located. All such
policies shall be non-assessable and shall require
thirty (30) days notice by registered mail to
lessor of any cancellation thereof or change
affecting Lessor's coverage thereunder.
C. Lessee shall procure policies for all
such insurance for periods not less than one year
and shall deliver to Lessor such policies or
certificates thereof with evidence of the payment
of premises thereon, and shall procure renewals
thereof from time to time at least thirty (30)
days before the expiration thereof.
D. Lessee and Lessor shall cooperate in
connection with the collection of any insurance
moneys that may be due in the event of loss, and
Lessee shall execute and deliver to Lessor such
proofs of loss and other instruments which may be
required for the purpose of obtaining the recovery
of any such insurance moneys. All insurance
policies shall be written with insurance companies
rated A+ or better by Best's Insurance Guide.
12. INDEMNIFICATION. Lessee will indemnify and
save Lessor harmless from and against any and all
claims, actions, damages, liability expenses in
connection with loss of life, personal injury, and/or
damage to property, arising from any act or omission of
Lessee, its agents, family, employees, occupants,
servants, guests or licensees.
13. DUTIES OF LESSEE. The Lessee shall
faithfully perform the following duties:
(A) The Lessee shall be responsible for all
repairs, maintenance, and other upkeep on the
building.
(B) Maintain the occupied and used premises
in a clean and safe condition, and upon
termination of the residency, place premises in at
least as clean a condition, except for ordinary
wear and tear, as when the residency commenced.
(C) Dispose from the facility all wastes,
rubbish, garbage and manure in a clean and safe
manner and in accordance with all governmental
regulations.
(D) Remove the snow and ice from all public
and private areas located on the premises and to
keep all weeds, grass and other vegetation cut and
trimmed on the premises.
(E) Conduct themselves and require other
persons on the premises with its consent to
conduct themselves in a manner that will not
disturb the neighbors' peaceful enjoyment of their
premises.
(F) Lessee, shall at all times during the
term, and at its own cost and expense, keep and
maintain in good order and condition the building
and all improvements on the demised premises and
their full equipment and appurtenances, and make
all repairs thereto and any restorations,
replacements and renewals thereof, structural and non-
structural, seen and unforeseen, howsoever the
necessity or desirability for repairs may occur
and shall use all reasonable precaution to prevent
waste, damage or injury, except normal and
reasonable wear and tear.
14. NON-COMPLIANCE BY LESSEE. In the event of
the Lessee's non-compliance with any provision of this
lease, the Lessor may give written notice to the Lessee
specifying the acts and omissions constituting the
breach and that the lease agreement will terminate on a
date not less than thirty (30) days after receipt of
the notice if the breach is not remedied in fourteen
(14) days and the rental agreement will then terminate
as provided in that notice. In any event, the Lessor
may terminate the lease agreement if rent is unpaid
when due and the Lessee fails to pay rent within thirty
(30) days after written notice by the Lessor of non-
payment and their intentions to terminate the lease
agreement if the rent is not paid within that period of
time.
15. ENTRY TO PREMISES. The Lessor may enter onto
the premises in order to inspect the premises, or
exhibit the premises to prospective or actual
purchasers, mortgagers, tenants, workmen, or
contractors. Unless it is impractical to do so, the
Lessor shall give the Lessee notice of its intent to
enter and shall enter only at reasonable times.
16. ASSIGNMENT AND SUBLETTING. The Lessee is
permitted to assign this lease or any interest thereon
or let or underlet the said premises, provided,
however, that any assignment or sublet shall not
release the liability of Lessee for the obligations due
under this lease, further, any assignee shall also be
made liable on this lease in addition and in
conjunction with the obligation of Lessee. This lease
shall be fully assignable by the Lessor or its assigns.
17. DESTRUCTION OF PREMISES. In the case of
damage by fire or other major casualty to the building
on the leased property, without the fault of the
Lessee, if the damage is so extensive as to destroy the
usefulness of the premises for the purpose for which
the premises were lease then, either party to this
lease may terminate the lease within thirty (30) days
notice of the event which caused the total destruction
of the leased property. In the event the lease is
canceled by either party, the rent shall be apportioned
to the time of the damage. In all other cases where
the leased property is damaged by fire or other major
casualty without the fault of
the Lessee, the Lessor shall have the option of repairing
the damage and apportioning the rent until the damage has
been repaired or to terminate the remaining part of the
lease term.
18. CONDEMNATION. If the whole or any part of
the premises hereby leased shall be taken by any public
authority under the power of eminent domain, then the
term of this lease shall cease on the part so taken
from the day the possession of that part shall be
required for any public purpose, and the rent shall be
paid up to that day, and if such portion of the demised
premises is so taken as to destroy the usefulness of
the premises for the purpose for which the premises
were lease then, from that day the Lessee shall have
the right either to terminate this lease and declare
the same null and void or to continue in the possession
of the remainder of the same under the terms herein
provided, except that the rent shall be reduced in
proportion to the amount of the premises taken. All
damages awarded for such taking shall belong to and be
the property of the Lessor whether such damages shall
be awarded as compensation for reduction in value to
the lease-hold or to the fee of the premises herein
leased; provided, however, that the Lessor shall not be
entitled to any portion of the award made to the
Lessee.
19. ATTORNEY FEES. In the event of any
litigation between the parties hereto arising out of
this lease, or the leased premises, the prevailing
party shall be allowed all reasonable attorney fees
expended or incurred in such litigation to be recovered
as part of the cost therein.
20. FUTURE CONSTRUCTION. If during the term of
this lease, Lessor and Lessee agree that Lessor shall
construct and provide any additions to the building,
Lessee agrees to pay Lessor an additional monthly
rental in the sum of 1.25% of the total cost of the
addition. This amount will be paid for the remaining
of the lease and shall further be subject to the
Consumer Price Index annual adjustment. Further, all
other provisions of the lease will apply to the
addition including but not limited to tax obligations,
insurance obligations, repairs an maintenance
obligations of Lessee.
21. NOTICES. Any and all notices or demands
required or permitted to be given hereunder shall be
deemed to be properly service if sent by registered or
certified mail, postage prepaid, addressed as follows:
TO THE LESSOR: Roger D. Pannier & Pamela S. Pannier
1415 N. Bristolwood Drive
Fremont, NE 68025
TO THE LESSEE: School Specialty, Inc.
A Delaware Corporation
Atten: Daniel P. Spalding
1000 N. Bluemound Drive
P.O. Box 1579
Appleton, WI 54913-1579
or at such other address or addresses as ether party
may hereafter designate in writing to the other. Any
notice of demand so mailed shall be effective for all
purposes at the time of deposit thereof in the United
States mail.
22. ENTIRE AGREEMENT. This agreement contains
the entire agreement between the parties regarding the
subject matter of this lease and can only be amended in
writing between the parties hereto. No representations
by Lessor or Lessee or their agents not included herein
shall be binding on the parties.
23. BINDING EFFECT. This agreement shall be
binding upon the parties hereto, their heirs, legatees,
personal representatives, successor and assigns.
24. GOVERNING LAW. This lease shall be governed
by and construed in accordance with the laws of the
State of Nebraska.
IN WITNESS WHEREOF, Lessor and Lessee have
executed this lease agreement on the year and date
above written.
/s/ Roger D. Pannier /s/ Pamela S. Pannier
- ------------------------ --------------------------
Roger D. Pannier, Lessor Pamela S. Pannier, Lessor
School Specialty, Inc.
A Delaware Corporation, Lessee
BY: /s/ Donald J. Noskowiak
--------------------------------------------
Its Representative (Chief Financial Officer)