EXHIBIT 10.31
INDUSTRIAL LEASE
THIS LEASE is made and entered into as of the 21 November 1997 by and
between SF Property Investment LLC, an Oregon limited liability corporation,
with its address at 1121 SW Salmon Street, Portland, Oregon 97205 ("Landlord"),
and PJ Food Service, Inc., with its address at PO Box 99900, Louisville,
Kentucky 40269-9990, (502) 267-0948 ("Tenant").
1. PREMISES AND TERM
A. Premises. In consideration of the covenants and agreements herein
contained, Landlord does hereby lease, let and demise unto Tenant the
leased space depicted on Exhibit "A" attached hereto ("Premises"),
located at 15011 North Lombard Street, Portland, Oregon, and contains
approximately 37,170 square feet ("Building"). Tenant's Premises
represent approximately twenty-nine and thirty-six one hundredths
percent (29.36%) of the total square footage of 126,600 square feet
within the Building. This percentage shall be used as "Tenant's
proportionate share" in determining Tenant's share of taxes,
assessments and operating expenses if applicable. Landlord shall also
provide the improvements shown on the attached Exhibit D.
B. Possession. Delivery of possession shall occur when the Premises are
occupied by tenant or are ready to be occupied by Tenant with all work
to be performed by Landlord substantially completed as determined by
Landlord's architect. No notice shall be required from Landlord if the
Premises are ready on the date set for commencement of the term or on
the first business day thereafter. If Landlord is unable to deliver
possession of the Premises to Tenant because of strikes, acts of God,
or any other cause beyond Landlord's control, then Tenant may take
possession when Landlord notifies Tenant that the Premises are ready
for possession, and the term of this Lease shall commence on such date
and continue for the specified number of months thereafter,
notwithstanding the commencement and termination dates stated above.
Tenant shall owe no rent until the Premises are ready for possession.
Landlord shall have no liability for such delays in delivery of
possession, and neither party shall have the right to terminate except
that Landlord may cancel this Lease without liability if permission to
construct, use, or furnish necessary utilities to the Premises is
denied or revoked by a governmental agency or public utility with such
authority.
C. Term. Landlord leases the Premises to Tenant for a term of sixty (60)
months commencing December 1, 1997, the "Commencement Date" and
continuing through November 30, 2002. Options to renew the lease as
described in the attached Exhibit E may be available to Tenant.
2. BASE RENT AND SECURITY DEPOSIT
A. Base Rent. Tenant agrees to pay to Landlord Base Rent for the
Premises, in advance, without demand, deduction, or set off, for the
entire Lease Term hereof in monthly installments payable on the first
day of each calendar month at the rates shown in the Basic Lease
Information.
B. Security Deposit. Tenant agrees to deposit with Landlord a security
deposit in the amount specified in the Basic Lease Information as
security for the performance of Tenant's covenants and obligations
under this Lease, it being expressly understood and agreed that such
deposit is not an advance rental deposit, not the last month's rent
nor a measure of Landlord's damages in the event of Tenant's default.
If Tenant shall at any time fail to make any payment or fail to keep
or perform any term, covenant, or condition on Tenant's part to be
made or performed or kept under this Lease, Landlord may, but shall
not be obligated to, and without waiving or releasing Tenant from any
obligation under this Lease, apply the whole or any part of the
Security Deposit (a) to the extent of any sum due to Landlord; or (b)
to make any required payment on Tenant's behalf; or (c) to compensate
Landlord for any loss, damage, attorneys' fees, or expense sustained
by Landlord due to Tenant's default. In such event, Tenant shall,
within five (5) days of receipt of written demand by Landlord, remit
to Landlord sufficient funds to restore the Security Deposit to its
original sum; Tenant's failure to do so shall be a material breach of
this Lease. Landlord shall not be required to keep the Security
Deposit separate from its general funds, and Tenant shall not be
entitled to interest on such deposit. Should Tenant comply with all of
the terms, covenants, and conditions of this Lease and at the end of
the term of this Lease leave the Premises in the condition required by
this Lease, then the Security Deposit, less any sums owing to
Landlord, shall be returned to Tenant (or, at Landlord's option to the
last assignee of Tenant's interests hereunder) within 30 days after
the termination of this Lease and vacancy of the Premises by Tenant.
3. USE. The Premises shall be used and occupied for only the use described in
the Basic Lease Information by Tenant and for no other purpose without
prior written approval of Landlord, which approval shall not be
unreasonably withheld. In connection with its use, Tenant shall, at
Tenant's expense, comply with all applicable laws, ordinances, and
regulations of any public authority, including those requiring alteration
of the Premises because of Tenant's specific use; shall create no nuisance
nor allow any objectionable liquid, odor, or noise to be emitted from the
Premises; shall store no gasoline or other highly combustible materials on
the Premises which would violate any applicable fire code or regulation nor
conduct any operation that will increase
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Landlord's fire insurance rates for the Premises; shall not store, use or
deposit, or cause to be stored, used or deposited, on the Premises or
anywhere in the Building, any environmentally hazardous or potentially
environmentally hazardous materials or substances and shall not overload
the floors or electrical circuits of the premises or the Building. Landlord
shall have the right to approve the installation of any power-driven
machinery by Tenant and at its sole expense may select a qualified
electrician whose opinion will reasonably control regarding electrical
installations, an architect or engineer whose opinion will reasonably
control regarding floor loads, and a certified industrial hygienist to
evaluate materials to be used or stored in the Building or on the Premises.
4. SIGNS. Tenant may erect a sign on the exterior of the Building stating
its name, business, and product after first securing Landlord's written
approval, which approval shall not be unreasonably withheld, of the size,
color, design, wording, and location, and all necessary governmental
approvals. Landlord shall have no obligation to approve any sign which
differs in style, size, color, design, or location from signs erected on
the exterior of the Building, or from Landlord's standards or plans for the
Building exterior signage. All signs installed by Tenant shall be removed
upon termination of this lease, with the sign location restored to its
former state. Tenant shall be responsible, at Tenant's sole cost and
expense, to maintain the appearance of all of Tenant's signs. If Tenant
fails to maintain any of Tenant's signs, Landlord may make required repairs
or replace such signs, and Tenant shall promptly reimburse Landlord for the
expense of the repairs or replacements. Window signs and awnings will not
be permitted.
5. ALTERATIONS. Except for those alterations described in Exhibit C attached
to this Lease, Tenant shall make no alterations, additions or improvements
to the Premises, change the color of the exterior of the Building, or add
any lighting to the exterior of the Building, without Landlord's prior
written approval, may be withheld or conditioned as Landlord may deem
appropriate within the exercise of its sole and absolute discretion, and
without a valid building permit, when required, issued by the appropriate
governmental agency. Upon termination of this Lease, any such alterations,
additions, or improvements (including, without limitation, all electrical,
lighting, plumbing, doors, windows, partitions, drapery, carpeting,
counters, and physically attached fixtures) shall at once become part of
the realty upon which the Premises are located and belong to Landlord
unless the terms of the Lease provide otherwise, or unless Landlord
requests in its prior written approval that part or all of the additions,
alterations or improvements be removed. In such case, Tenant shall, at
Tenant's sole cost and expense, promptly remove the specified additions,
alterations, or improvements and repair and restore the affected portion of
the Premises and Building to its or their original condition.
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6. UTILITIES. Tenant shall pay, when due, all charges for electricity,
natural gas, water, garbage collection, janitorial service, sewer, and all
other utilities of any kind furnished to the Premises during the lease
term, including any free rental period of this lease term. Landlord shall
have no liability resulting from any interruption of utility services.
Tenant shall control the temperature in the premises to prevent freezing of
the sprinkler system and plumbing. Tenant shall be responsible to promptly
repair or replace, at Tenant's own sole cost and expense, any parts of the
sprinkler system or plumbing damaged by freezing or any other event,
excluding other acts of God or negligence of Landlord.
7. OPERATING EXPENSES
A. Taxes. Tenant agrees to pay its proportionate share of any and all
real and personal property taxes, regular and special assessments,
license fees and other charges of any kind and nature whatsoever,
payable by Landlord as a result of any public or quasi-public
authority, private party, or owner's association levy, assessment or
imposition against, or arising out of Landlord's interest in, the real
estate described in Exhibit "B" attached hereto, together with the
building and the grounds, parking areas, driveways, roads, and alley
around the building in which the Premises are located, or any part
thereof. Tenant shall not however, be obligated to pay any tax based
upon Landlord's net income. During each month of the Lease Term at the
same time and in the same manner as the payment of monthly base rent,
Tenant shall make a monthly escrow deposit with Landlord ("the
Property Tax Escrow Payment" and the "Insurance Escrow Payment") equal
to 1/12 of its proportionate share of the charges which will be due
and payable for that particular year. The charges are subject to
adjustment after the end of the year on the basis of the actual cost
for such year.
B. Monthly Common Area Maintenance Charges. Common area charges charged
to Tenant hereunder shall include all usual and necessary costs of
operating and maintaining the Premises and any common areas including,
but not limited to, common area entry and exterior loading docks, the
cost of all utilities or services not paid directly by Tenant,
security, management fees, property insurance, maintenance and repair
of landscaping and HVAC units, parking areas and any other common
facilities. Operating expenses shall not include structural repairs of
the roof, exterior walls, and foundations of the buildings, which are
the responsibility of the Landlord. During each month of the Lease
Term at the same time and in the same manner as the payment of monthly
base rent, Tenant shall make a monthly escrow deposit with Landlord
"the Common Area Maintenance Escrow Payment" equal to 1/12 of its
proportionate share of the Charges which will be due and payable for
that particular year.
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C. Prorations. In the event a proration is necessary to determine
Tenant's proportionate share of common area maintenance, taxes and
insurance charges, the proportion shall be the same as the ratio of
the gross leasable square feet of the Premises to the total applicable
gross leasable square footage of the Building or such other equitable
apportionment as may be adopted. Tenants proportionate share is stated
in Section 1 of the lease.
D. Reconciliation's. Tenant's escrow payments shall be reconciled
annually. If the Tenant's total escrow payments are more than Tenant's
actual pro rata share of the taxes, insurance, and common area
maintenance charges, Landlord shall retain such excess and credit it
to Tenant's Escrow Payment account. Tenant shall be allowed to deduct
said excess from future escrow payments until said excess is fully
used. Excess escrow payments may not be deducted from rent. If the
Tenant's total Escrow Payments are less than Tenant's actual pro rata
share of the taxes, insurance, and common area maintenance charges,
Tenant shall reimburse Landlord within fifteen (15) days following
delivery of notice.
8. PARKING AND STORAGE AREAS
A. Parking. Tenant, its employees, and customers shall have the
exclusive right to use up to 52 private parking spaces adjacent to the
portion of the Building upon which the Premises are located. Tenant
shall control the use of such parking spaces so that there will be no
unreasonable interference with the normal traffic flow, and shall
permit no parking on any landscaped or unpaved surface. Under no
circumstances shall trucks serving the Premises be permitted to block
streets. Said parking spaces shall be limited to vehicles no larger
than standard size automobiles or pickup utility vehicles, and Tenant
shall not park larger trucks or other large vehicles except in areas
designated by Landlord for "loading" or "truck parking".
B. Storage. Outside storage, including without limitations, trucks or
other vehicles, is prohibited without Landlord's prior written
consent, which shall not be unreasonably withheld. Tenant shall not
store any materials, supplies, or equipment outside in any unapproved
or unscreened area. Trash and garbage receptacles shall be stored in
designated areas and shall be kept covered at all times.
9. TENANT RESPONSIBILITIES
A. Prohibition Against Liens. Tenant shall not allow any liens to attach
to the Premises, Building or real property, upon which the Premises
are located, as a result of its activities.
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September 24, 1997
B. Liability Insurance. Tenant shall carry public liability and property
damage insurance with limits of not less than One Million Dollars
($1,000,000.00) for injury to one person in one occurrence, Two
Million Dollars ($2,000,000.00) for injuries to more than one person
in one occurrence, and Five Hundred Thousand Dollars ($500,000.00)
property damage. Such insurance shall be evidenced by a certificate
delivered to Landlord stating that the coverage will not be canceled
or materially altered without thirty (30) days' advance written notice
to Landlord. Landlord shall be named as an additional insured on such
policy.
C. Tenant's Liability. Tenant hereby agrees that Landlord shall not be
liable for injury to Tenant's business or any loss of income therefrom
or for damage to the goods, wares, merchandise, equipment and vehicles
or other property of Tenant, Tenant's employees, invitees, customers,
or any person in or about the Premises, nor, unless through its sole
negligence, shall Landlord be liable for injury to the person of
Tenant, Tenant's employees, agents or contractors and invitees,
whether such damage or injury is caused by or results from fire,
steam, electricity, gas, water or rain, or from defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether the said damage or injury
results from conditions arising upon the Premises or upon other
portions of the Building of which the Premises are a part, or from
other sources or places, and regardless of whether the cause of such
damage or injury or the means of repairing the same is inaccessible to
Landlord or Tenant. Landlord shall not be liable for any damages
arising from any act or neglect of any other tenant, if any, of the
building in which the Premises are located.
D. Indemnity. Tenant shall indemnify, defend and hold Landlord harmless
from any and all claims, losses or damages arising from Tenant's use
of the Premises, and the related parking areas and common areas, or
from the conduct of its business or from any activity, work or things
which may be permitted or suffered by Tenant in or about the Premises,
and shall further indemnify, defend and hold Landlord harmless from
and against any and all claims arising from any breach or default in
the performance of any obligation on Tenant's part to be performed
under the provisions of this Lease or arising from any act, omission
or negligence of Tenant or any of its agents, contractors, employees,
or invitees and from any and all costs, attorneys' fees, expenses and
liabilities incurred in the defense of any such claim or action or
proceeding brought thereon, including any appeal therefrom. Tenant
hereby assumes all risk or damage to property or injury to persons in
or about the Premises, and Tenant hereby waives all claims in respect
thereof against Landlord, except where said damage arises out of
negligence of Landlord.
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September 24, 1997
E. Tenant shall, at its own cost and expense, enter into a regularly
scheduled preventative maintenance/service contract with a maintenance
contractor for servicing all heating and air conditioning systems and
equipment within the Premises.
10. CASUALTY DAMAGE
A. Casualty Damage. If fire or other casualty causes damage to the
Premises in an amount exceeding thirty percent (30%) of the full
construction-replacement cost of the Premises, Landlord may elect to
terminate this Lease as of the date of the damage by notice in writing
to Tenant within thirty (30) days after such date. Otherwise, Landlord
shall promptly repair the damage and restore the Premises to their
former condition as soon as practicable. Rent shall be abated during
the period and to the extent the Premises are not reasonably usable
for the use permitted by this Lease.
B. Insurance. Landlord shall be responsible for insuring the Premises and
Tenant for insuring its personal property and trade fixtures located
on the Premises. If any activity by Tenant on the Premises causes
Landlord's fire insurance rate to increase, Tenant shall pay the
amount of such increase promptly following written demand from
Landlord.
C. Subrogation. Neither party shall be liable to the other for any loss
or damage to the Premises or Tenant's personal property thereon caused
by any of the risks covered by a standard fire insurance policy with
extended coverage and sprinkler leakage endorsements, and there shall
be no subrogated claim by one party's insurance carrier against the
other party arising out of any such loss.
11. CONDEMNATION. If a condemning authority takes the entire Premises or a
portion sufficient to render the remainder unsuitable for Tenant's use,
then either party may elect to terminate this Lease effective on the date
that title passes to the condemning authority. Otherwise, Landlord shall
proceed as soon as practicable to restore the remaining Premises to a
condition comparable to that existing at the time of the taking. Rent shall
be abated during the period of restoration to the extent the Premises are
reasonably usable by Tenant, and rent shall be reduced for the remainder of
the term in an amount equal to the reduction in rental value of the
Premises caused by the taking. All condemnation proceeds shall solely
belong to the Landlord.
12. ASSIGNMENT AND SUBLETTING. Except to another wholly owned subsidiary of
Papa John's International, Tenant shall not assign its interest under this
Lease nor sublet the Premises without first obtaining Landlord's consent in
writing, which consent shall not be unreasonably withheld.
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No consent in one instance shall prevent this provision from applying to
each subsequent instance. This provision shall apply to all transfers by
operation of law including, but not limited to, mergers and changes in
control of Tenant. No assignment shall relieve Tenant of its obligation to
pay rent or perform other obligations required by this Lease. If Tenant
assigns this Lease or sublets the premises for an amount in excess of the
rent called for by this Lease, such excess shall be paid to Landlord
promptly as it is received by Tenant. In the event that Landlord gives its
consent, Tenant shall pay Landlord a reasonable fee, not to exceed $500.00,
to reimburse Landlord for processing costs incurred in connection with said
consent.
13. DEFAULT
Any of the following shall constitute a default by Tenant under this Lease:
a. Tenant's failure to pay rent or any other charge under this Lease
within five (5) business days after receipt of notice that said amount
is past due.
b. Failure to comply with any other term or condition of this lease
other than rent or any other charge within thirty (30) business days
following written notice from Landlord specifying the noncompliance.
If such noncompliance cannot be cured within the thirty business (30)
day period, this provision shall be satisfied if Tenant commences
correction within such period and thereafter proceeds in good faith
and with reasonable diligence to effect compliance as soon as
possible.
c. Tenant's insolvency, assignment for the benefit of its creditors,
business failure by Tenant, Tenant's voluntary petition in bankruptcy
or adjudication as bankrupt, or the appointment of a receiver for
Tenant's properties.
14. REMEDIES FOR DEFAULT. In case of default as described in paragraph 13
above, Landlord shall have the right to the following remedies which are
intended to be cumulative and in addition to any other remedies, including
but not limited to the rights of the Tenant, provided under applicable law:
a. Retake possession of the Premises and relet the Premises upon any
reasonable terms. No such reletting shall be construed as an
acceptance or a surrender of Tenant's leasehold interest.
b. Recover damages caused by Tenant's default, including, without
limitation, reasonable attorneys' fees at trial and on any appeal
therefrom, lost rentals and lease commissions incurred to re-
lease the Premises. Landlord may sue
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September 24, 1997
periodically to recover damages as they occur throughout the
lease term, and no action for accrued damages shall bar a later
action for damages subsequently accruing. Landlord may elect in
any one action to recover accrued damages plus damages
attributable to the remaining term of the Lease equal to the
difference between the rent under this Lease and the reasonable
rental value of the Premises for the remainder of the term,
discounted to the time of judgment at the prevailing rate on
judgments.
c. Make any payment or perform any obligation required of Tenant so
as to cure Tenant's default, in which case Landlord shall be
entitled to recover all amounts so expended from Tenant, plus
interest from the date of the expenditure at the rate of ten
percent (10%) per annum.
15. SURRENDER ON TERMINATION. On expiration or early termination of this
Lease, Tenant shall deliver all keys to Landlord, have final utility
readings made on the date of move out, and surrender the Premises clean and
free of debris inside and out, with all mechanical, electrical, and
plumbing systems in good operating condition, all signage removed and
defacement corrected and all repairs called for under this Lease completed.
Subject to the provisions of section 5 hereof, the Premises shall be
delivered in the same condition as at the commencement of the term, subject
only to depreciation and wear from ordinary use. Tenant shall remove all of
its furnishings and trade fixtures that remain Tenant's property and
restore all damage resulting from such removal. Failure to remove shall be
an abandonment of the property, and Landlord may dispose of it in any
manner without liability.
16. LANDLORD'S REPAIRS. After reasonable notice from Tenant, Landlord shall
repair structural problems occurring in the roof, exterior walls, building
structure and foundations. Tenant shall repair and pay for any damage to
such items to be maintained by Landlord caused by any act, omission or
negligence of Tenant, or Tenant's employees, agents, licenses or invitees,
or caused by Tenant's default hereunder. The Term "walls" as used herein
shall not include windows, glass or plate glass, doors, special store
fronts or office entries. Tenant shall immediately give Landlord written
notice of defect or need for repairs, after which Landlord shall have a
reasonable opportunity and time to repair same or cure such defect.
Landlord's liability with respect to any defects, repairs or maintenance
for which Landlord is responsible under any provisions of this Lease shall
be limited to the cost of such repairs or maintenance or the curing of such
defect. In no event will Landlord be responsible for paying incidental or
consequential damages resulting from Landlord's failure to cure such
defects.
17. LATE CHARGES. Landlord may impose a late charge for rent not paid within
five (5) business days of when due. The late charge shall commence on the
sixth business day following the due date and shall be
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September 24, 1997
equal to One Hundred Dollars ($100.00) per day until the rent due is paid
in full. In the event Tenant fails to pay rent within five (5) business
days of when due on greater than two (2) occasions during any calendar
year, Landlord shall have the option to terminate this Lease by giving
Tenant written notice of termination. In the event Landlord exercises its
option to terminate this Lease, Tenant shall surrender the Premises to
Landlord within ten (10) days of the notice of termination in accordance
with the provisions of paragraph 15.
18. SUBORDINATION. This Lease may, at Landlord's option, be made subordinate
to any ground lease, mortgage, land sale contract or deed of trust, which
may hereafter affect the real property of which the Building and Premises
form a part. Tenant or Tenant's successors in interest will execute and
deliver any documents required to effectuate such subordination to any
ground lease, mortgage, land sale contract or deed of trust. Landlord is
hereby irrevocable appointed and authorized as attorney-in-fact for Tenant
to execute all such subordination instruments in the event Tenant fails to
execute and deliver said instruments within ten (10) days after Landlord's
written demand for execution thereof.
19. ESTOPPEL CERTIFICATE
A. Estoppel Certificate. Tenant shall, at any time upon not less than
five (5) business days' prior written notice from Landlord, execute,
acknowledge and deliver to Landlord a statement in writing certifying
that the Lease is in full force and effect (or, if modified, stating
the nature of such modification and certifying that this Lease, as so
modified, is in full force and effect) and the date to which the rent
and other charges are paid in advance, if any, and acknowledging that
there are not, to Tenant's knowledge, any uncured defaults on the part
of the Landlord hereunder, or specifying such defaults, if any are
claimed. Any such statement may be conclusively relied upon by
prospective purchaser or encumbrance of the Premises or of the
Building.
B. Tenant's failure to deliver such statement within such time shall be
conclusive upon Tenant that this Lease is in full force and effect,
without modification except as may be represented by Landlord that
there are no uncured defaults in Landlord's performance, and that not
more than one month's base rent has been paid in advance.
C. If Landlord desires to finance or refinance the entire Building, or
any part thereof, Tenant hereby agrees to deliver to any lender
designated by Landlord such financial statements of Tenant as may be
reasonably required by such lender. Tenant shall also provide Landlord
with Tenant's financial statements each year during the term of this
lease on or before March 1, covering the prior
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September 24, 1997
calendar year, or within ninety (90) days of the end of Tenant's
fiscal year. All such financial statements shall be received by
Landlord in confidence and shall be used for the purposes herein set
forth.
21. MODIFICATIONS TO PREMISES. If Tenant wants to make any modifications to the
Tenant's space, Tenant shall, at Tenant's sole cost and expense, construct
the improvements on the Premises, all of which are subject to paragraph 5
above.
22. HAZARDOUS SUBSTANCES. Tenant shall not, and shall not cause or allow any
other party to, construct, use, deposit, store, dispose, place or locate on
or about the Premises any Hazardous Substances (as later defined) without
the prior written consent of Landlord, which shall not be unreasonably
withheld as long as Tenant demonstrates to Landlord's reasonable
satisfaction that (a) the nature and quality of any Hazardous Substances
are necessary, useful, and appropriate to Tenant's business conducted at
the Premises: (b) the Hazardous Substances will be used, kept and stored
with the highest degree of care and in a manner that complies with all
governmental laws, ordinances, regulations, orders, and policies regulating
any such hazardous material so brought upon or used or kept in or about the
Premises (c) such Hazardous Substances are disposed of off the Premises and
the land described in Exhibit B, in a disposal site licensed or designated
for such Hazardous Substances, with the utmost care and caution and in a
manner consistent with applicable governmental laws, ordinances,
regulations, orders and policies; (d) Tenant pays as additional rent any
increase in the premiums charged Landlord for insurance coverage by reason
of Tenant's storage, placement, location, or use of Hazardous Substances or
any premiums for additional insurance coverage's deemed appropriate by
Landlord because of the presence of such Hazardous Substances; and (e)
Tenant procures any insurance coverage's demanded by Landlord.
Tenant shall indemnify, defend, and hold Landlord harmless from any and all
claims, judgments, damages, penalties, fines, costs, liabilities, or losses
(including, without limitation, diminution in value of the Premises,
damages for the loss or restriction on use of rentable or usable space or
of any amenity of the Premises, damages arising from any adverse impact on
marketing of space, and sums paid in settlement of claims, attorneys' fees,
consultant fees, and expert fees) which arise during or after the lease
term as a result of contamination by Hazardous Substances as a result of
Tenant's use or activities, or of Tenant's agents or contractors. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of the site conditions or any
cleanup, remediation, removal, or restoration work required by any federal,
state, or local governmental agency or political subdivision because of
Hazardous Substances present in the soil or ground water on or under the
Premises. Without limiting the foregoing, if the presence of any Hazardous
Substances on the Premises caused or permitted by Tenant or its agents
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September 24, 1997
or contractors result in any contamination of the Premises, Tenant shall
promptly take all actions at its sole expense as are necessary to return
the Premises to the condition existing prior to the release of any such
hazardous material to the Premises, provided that Landlord's approval of
such actions shall first be obtained, which approval shall not be
unreasonable withheld so long as such actions would not potentially have
any material adverse long-term or short-term effect on the Premises. The
foregoing indemnity shall survive the expiration or earlier termination of
this lease.
The term "Hazardous Substances" shall include (a) any chemical, material,
element, compound, solution, mixture, substance, or other matter of any
kind whatsoever which is a hazardous substance defined in, or related by
the Federal Comprehensive Environmental Response Compensation and Liability
Act, 42 USC (S)9601 et seq., as amended; the regulations promulgated from
time to time thereunder; the waste listed in the United States Department
of Transportation Hazardous Materials Table (49 CFR 172.101); the United
States Environmental Protection Agency Hazardous Substances (40 CFR Part
302), and amendments thereto; environmental laws and regulations
administered by the Environmental Protection Agency or its delegees;
similar laws and regulations of the State of Oregon, City of Portland, or
any state or local governmental organization or agency, or additional or
substitute laws or regulations with respect to the same subject matter
enacted or promulgated by the federal, state, local, or quasi-governmental
organization or agency; and (b) asbestos or materials containing asbestos,
petroleum products, or such other substances, materials, and wastes that
are or become regulated under the applicable local, state, or federal laws,
whether or not within clause (a).
23. RELOCATION. Landlord reserves the right to relocate Tenant, at Landlord's
sole discretion and cost, to another similar location within the Building
during the term of this Lease. In the event Landlord chooses to exercise
its rights under this provision, Landlord shall also be responsible to
reimburse Tenant for all reasonable additional costs and expenses incurred
by Tenant and for any lost profits Tenant may incur as a result of said
relocation.
24. BROKERAGE FEES. Landlord agrees to pay a real estate fee to Tony Reser,
Cushman & Wakefield. Landlord agrees to indemnify and hold Tenant free and
harmless from and against all claims for brokerage commissions or fees
and/or finder's fees by any person or entity claiming to have been retained
by Landlord in connection with this transaction or to be the procuring
cause of this transaction. Tenant agrees to indemnify and hold Landlord
free and harmless from and against all claims for brokerage commissions or
fees and/or finder's fees from any person or entity claiming to have been
retained by Tenant in connection with this transaction or to be the
procuring cause of this transaction, other than
SN Properties Triple Net Lease - Page 12
September 24, 1997
the real estate fee to Paul Breuer, Colliers through Tony Reser above which
Landlord has agreed to pay hereunder.
25. GENERAL PROVISIONS
A. Waiver by either party of strict performance of any provision of this
Lease shall not be a waiver nor prejudice the party's right otherwise
to require performance of the same provision or any other provision.
B. Subject to the limitations on transfer of Tenant's interest, this
Lease shall bind and inure to the benefit of the parties, their
respective heirs, successors and assigns.
C. Landlord shall have the right to enter upon the Premises at any time
with provision of reasonable notice to determine Tenant's compliance
with this Lease, to make necessary repairs to the Building or the
Premises, or to show the Premises to any prospective tenant or
purchasers subject to signing a Confidentiality and Non-disclosure
Agreement, (Exhibit E). Within six (6) months of the end of the
initial lease term or any renewal thereof in the event Tenant
exercises any such renewal, Landlord may place and maintain upon the
Premises notices for leasing or sale of the Premises notices for
leasing or sale of the Premises.
D. If this Lease commences or terminates at a time other than the
beginning or end of one of the specified rental periods, then the rent
(including Tenant's share of real property taxes and common area
charges, if any) shall be prorated as of such date, and in the event
of termination for reasons other than default, all prepaid rent shall
be refunded to tenant or paid on this account.
E. Landlord warrants that, so long as Tenant complies with all terms of
this Lease, it shall be entitled to peaceable and undisturbed
possession of the Premises free from any eviction or disturbance by
Landlord or persons claiming through Landlord.
F. The term "Landlord" as used herein shall mean only the owner of the
fee title to the Building and the land on which it is situated. In the
event of any transfer of such title or interest, Landlord herein named
(and in case of any subsequent transfers, the then Landlord) shall be
relieved from and after the date of such transfer of all liability as
respects Landlord's obligations thereafter to be performed, provided
that any funds in the hands of Landlord, or the then Landlord at the
time of such transfer, in which Tenant has an interest, shall be
delivered to the succeeding Landlord.
SN Properties Triple Net Lease - Page 13
September 24, 1997
G. Notices between the parties relating to this Lease shall be in
writing, effective when delivered, or if mailed, effective on the
second day following mailing, postage prepaid, certified mail, return
receipt requested, to the address for the party stated in this Lease
or to such other address as either party may specify by notice to the
other. Rent shall be payable to Landlord at the same address.
If to Landlord: SF Property Investments, LLC
1121 SW Salmon Street
Portland, OR 97205
503-248-2000
Fax-503-248-9140
Attn: Jordan Schnitzer
If to Tenant: PJ Food Service, Inc.
PO Box 99900
Louisville, Kentucky 40269-9990
502-267-0948
H. Time is of the essence with respect to the performance of each and
every provision of this Lease. This Lease shall be governed by the
laws of the State of Oregon.
I. If either party brings legal action against the other party to enforce
any provision of this Lease, the prevailing party shall be entitled to
recover reasonable attorneys' fees in addition to any other damages
awarded at arbitration, trial and upon any appeal.
J. In the event Tenant renews or extends this lease, Landlord shall not
be responsible for paying any outside brokerage or consulting fees for
the extension period. Should Tenant retain an outside broker,
consultant, Tenant shall be solely responsible for any compensation
due.
IN WITNESS WHEREOF, the parties have executed this Lease as of the day and
year first written above.
Landlord: Tenant:
SF Property Investments LLC PJ Food Service, Inc.
By /s/ Harold Shultz By /s/ Robert J. Wadell
-------------------------- --------------------------------
Title President Title President P.J. Food Service
------------------------ -----------------------------
Date Nov. 21, 1997 Date Nov. 13, 1997
------------------------- ------------------------------
SN Properties Triple Net Lease-Page 14
September 24, 1997
EXHIBIT A
[FLOOR PLAN APPEARS HERE]
EXHIBIT B
LEGAL DESCRIPTION
BLOCK 29
LOT 7, TRACT 1
A parcel of land located in the Northeast 1/4 of Section 26, Township 2 North,
Range 1 West, Willamette Meridian, City of Portland, Multnomah County, Oregon
and further described as follows:
Beginning at the Southeast corner of Lot 7 of the duly recorded plat of
"Rivergate Industrial District Block 29, Lots 1-8", recorded in book 1218, page
51, dated 5-21-86, said point being on the West right-of-way line of N. Lombard
Street; thence leaving the aforesaid right-of-way line, along the South Line of
Lot 7, North 90(degrees)00'00" West 465.81 feet, to the Southwest corner of Lot
7 of said plat; thence along the Westerly line of Lot 7 & 8, along the arc of a
2812.93 foot radius nontangent curve to the right, through a central angle of
7(degrees)20'09" a distance of 360.15 feet to a point that bears North
18(degrees)43'19" East a distance of 359.91 feet from the last described point;
thence along the Westerly line of Lot 8, North 22(degrees)23'23" East a distance
of 220.00 feet; thence leaving the Westerly line of Lot 8, South
72(degrees)27'08" East a distance of 279.49 feet to a point on the East line of
Lot 8 and the West right-of-way line of North Lombard Street; thence South
00(degrees)00'00" East along the West right-of-way line of N. Lombard Street, a
distance of 460.00 feet to the TRUE POINT OF BEGINNING, containing 4.41 acres
more or less.
PLA746
BUREAU OF PLANNING
City of Portland
First Floor . Permit Center
1120 S.W. Fifth Avenue
Portland, Oregon 97204-1992
REGISTERED
PROFESSIONAL
LAND SURVEYOR
/s/ David A. Foster
-------------------
OREGON
DEC. 10, 1909
DAVID A. FOSTER
#1934
RENEWED THRU 12/31/97
EXHIBIT C
Tenant's Specialty Improvements
Upon termination of the Lease or an option period, where Tenant is required to
vacate the Premises, Landlord may, at its option, require Tenant, at Tenant's
sole expense, to remove Tenant's Speciality Improvements and restore the
Premises to its original condition prior to construction of Tenant's Specialty
Improvements.
Attached are the layouts for the Building at Rivergate Distribution Center
at 15011 North Lombard Street, Portland, Oregon 97203.
There is a layout for Phase One which will be constructed first and a
layout for Phase Two which would be constructed once the store numbers are
increased for the area.
Narrative for Phase One:
The Office Area includes Five Offices, Conference Room, Reception
Area, Logistics Office, Shipping & Receiving Office, Copier Room,
Women's & Men's Restroom, Break Room, Maintenance Area and a Mezzanine
above the Office Area for added storage or future offices.
There is going to be a Freezer and a Dough Cooler installed, to
warehouse the dough balls and perishables, for the individual pizza
stores.
The Production Room will be the area where the dough will be produced.
Inside the "Dough Room" there will be a mixer, divider, rounder,
proofer and conveyors in which the dough balls will be placed into
trays then conveyed to the dough cooler. There will be support
utilities for the "Dough Room" which includes a chiller, ozonization
system, water heater, air compressor with a dryer and a hydraulic
pump. A Production Office will be connected to the Production Room.
In the open Warehouse Area, there will be a Battery Charging Area for
the forklifts, guardrails and a tray washer at the back of the
building.
Narrative for Phase Two:
In additional to the above, a Cheese Cooler, a larger Tray Washer, an
Automated Tray Conveyor, another Mixer, a Weigh Hopper and a Silo
System would be installed at a later date. Also some of the Dough Room
Equipment might be upgraded.
See the attached drawings for the above Narratives.
[DRAFT APPEARS HERE]
[DRAFT APPEARS HERE]
EXHIBIT D
Landlord's Work
Landlord shall, at its sole cost and expense (unless otherwise noted below)
construct the following improvements:
1. Construct a demising wall to separate the lease space from the balance of
the building.
2. Provide Tenant with a 1,200 amp, 480 volt, 3-phase electrical panel.
3. Install insulation to allow the building to be heated above 45 degrees
Farenheit. Cost of said improvement shall be shared co-equally by Landlord and
Tenant up to a maximum cost of $20,000.00 total, or $10,000.00 each to Landlord
and Tenant.
4. When required by Tenant, in writing, install a rail spur to the subject
space sufficient to allow a rail car to be spotted at the northerly most rail
door.
5. Relocate unit space heaters as required by Tenant.
SN Properties Triple Net Lease - Page 19
September 24, 1997
EXHIBIT E
Renewal Options
If Lessee is not then in default, Lessee shall have the right to renew the Term
of the Lease for up to two (2) additional periods of five (5) years each. Lessee
must exercise its right to renew by providing Lessor with not less than six (6)
months advance written notice. Lessee may only exercise its right as to the
second option period if it is not then in default and it has previously
exercised the first option. The terms and conditions during any renewal Term
shall be the same as provided in the Lease except as to Base Rent which shall be
as set forth below.
During the first Option Period (consisting of Lease years 6-10), Base Rent
shall increase annually over the preceding year's Base Rent effective on the
first day of the first month of each succeeding Lease Year in the same
proportion as any increase in the "Consumer Index" during the 12-month period
ending immediately before each such first day of the Lease Year; subject
however, to the limitation that such increase shall be not less than three
percent (3%) nor more than five percent (5%).
At the beginning of the second Option Period (consisting of Lease years 11-
15), there shall be a one-time adjustment of Base Rent specifically for the
first year of the second Option Term (Lease Year 11) which could result in an
increase over the previous period (Lease Year 10), no change or a decrease. This
special one-time adjustment shall be determined by adding the actual annual
changes in the Consumer Index from each of the first ten (10) lease years
(increases, no changes or decreases) and applying that cumulative factor to the
Lease's initial annual Base Rent rate of $133,800.00. Thereafter, during Lease
Years 12-15, the Base Rent shall be increased annually in proportion to the
increase in the "Consumer Index" as described above; subject however, to the
same limitation that such increase shall be not less than three percent (3%) nor
more than five percent (5%).
The "Consumer Index" shall mean the Consumer Price Index for Urban Wage Earners
and Clerical Workers (1982-1984=100) U.S. City Average for All Items, as
published by the United States Department of Labor, Bureau of Labor Statistics.
If the Consumer Index is discontinued or revised during the Term, then such
other index or computation with which it is replaced or other reasonable
replacement as determined by Landlord shall be used. Landlord shall submit a
statement to Tenant reflecting the increase, if any, as provided in this
section. If such statement is delayed, Tenant shall continue to pay the Base
Rent in effect and shall immediately pay to Landlord any deficiency in Base Rent
due upon submission of such statement.
EXHIBIT F
PJ FOOD SERVICE
BUSINESS VISITORS CONFIDENTIALITY AGREEMENT
AND LIABILITY WAIVER
PJ Food Service, Inc. ("PJFS") is engaged in the production, sale and
distribution of various food products. PJFS has acquired or developed, at
considerable expenditure of time and other resources, valuable proprietary
information, the unauthorized disclosure or use of which would adversely affect
the successful conduct of PJFS's business. In consideration of the opportunity
to visit PJFS's facilities to perform services for PJFS or otherwise in
furtherance of a business relationship between PJFS and the undersigned, the
undersigned hereby agrees as follows:
1. The undersigned assumes any risk attendant upon such visit and agrees
that PJFS, its employees, officers, directors and shareholders shall not be
liable under any circumstances for any injury to the undersigned or any agent or
employee of the undersigned or damage to the undersigned's property sustained
when on PJFS's premises, regardless of cause (excepting willful misconduct or
gross negligence of PJFS or its agents or employees).
2. In connection with my visit, the undersigned may acquire, have access
to or be exposed to "Confidential Information" of PJFS (as defined below). The
undersigned will not disclose or make available such Confidential Information,
directly or indirectly, to any other person or entity whatsoever (except as
strictly necessary in the performance of services for PJFS or in furtherance of
a business relationship with PJFS, subject to the provisions of paragraph 4,
below) and the undersigned will ensure the return to PJFS of all materials
containing Confidential Information (and any copies thereof) upon termination of
any business relationship with PJFS or upon PJFS's request, whichever first
occurs.
3. As used herein, the term "Confidential Information" means all
confidential proprietary information (regardless of whether marked or labeled as
such) used by PJFS in the development, production, processing, preparation,
sale, distribution or transportation of its food products, including: (a) all
processes, procedures, formulae, recipes or other techniques; (b) all technical,
business and economic information and data relevant to PJFS's food products; (c)
all machinery, tools and equipment, and all drawings, designs and specifications
therefor, used or developed by PJFS but which are not generally used by the
food service or baking industries at large; and (d) all research data and
information in PJFS's possession relating to PJFS's food products, including
products that are under development, consideration or study. Confidential
Information does not include information that: (i) is in the public domain; (ii)
becomes in the public domain or is acquired other than through breach of this
Agreement or breach by any party of any duty, obligation or restriction imposed
by agreement, operation of law or otherwise; or (iii) is already in the
possession of the undersigned company/business at the time of exposure or
disclosure by PJFS.
4. To the extent it becomes necessary for the undersigned to communicate
Confidential Information to other agents or employees of the undersigned, the
undersigned will inform them of the confidential nature of such information and
the necessity and responsibility for keeping such information confidential and
will make all reasonable efforts to ensure that such individuals keep such
information confidential.
5. The provisions of this Agreement shall apply to each and every visit
made by the undersigned to a PJFS facility and shall be interpreted and applied
in accordance with the laws of the Commonwealth of Kentucky. This Agreement
shall inure to the benefit of and be enforceable by, PJFS and its successors and
assigns.
- --------------------------------- ---------------------------------
Company Name Individual Visitor
By: ----------------------------- ---------------------------------
Individual Visitor
Title: -------------------------- ---------------------------------
Individual Visitor