1
EXHIBIT 10.28
[HEDSTROM CORPORATION LETTERHEAD]
LEASE
THIS LEASE AGREEMENT is made and entered into this twenty-fourth day of
January, 1992 at Ashland, Ohio, by and between J.J.D. Properties, Ashland,
Ohio, hereinafter called Lessor, and Hedstrom Corporation, Ashland, Ohio,
hereinafter called Lessee.
ARTICLE I.
Demise, Description, Use, Term and Rent
---------------------------------------
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
that certain property, hereinafter called the leased premises, situated in the
City of Ashland, County of Ashland and State of Ohio and described as follows:
The leased premises shall consist of 61,000 square feet of the
Lessor's building, manufacturing section, beginning where the current
office section ends and extending eastward to encompass a total of
61,000 square feet, being the most westerly portion of the
manufacturing facility. A suitable barrier will be placed, at Lessor's
cost, on a line running north and south at a place where there is a
total of 78,000 square feet of manufacturing space to its west. The
lessee shall occupy and rent 61,000 square feet until or unless it
exercises its option to enlarge the area to a maximum of 78,000 square
feet. On a monthly basis, the Lessee may wish to utilize the space
between the 61,000 square foot line and the 78,000 square foot line.
Utilization will be in 2,500 square foot increments up to the maximum
of 17,000 additional square feet. Any portion of this space utilized
will be payable at the then existing square footage rate. Payments will
be payable monthly for the square footage occupied at the end of each
month. Either party may cancel the additional square footage agreement
upon 60-days prior notice. Lessor agrees that the space will not be
rented to another party without giving the Lessee the option to enlarge
the regular leased space to 78,000 square feet, at which time the
additional square footage becomes a part of the lease and will continue
until the termination of the lease. Included in the original leased
premises is the manufacturing office. In addition, Lessee wishes to
lease 2,380 square feet of office space immediately adjacent to the
west end of the manufacturing area. The office space shall be on a
month-to-month basis at the same rate per square foot as the original
lease. Lessee may upon sixty-days notice elect to discontinue
Page 1
2
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
use of the office area. Additionally there shall be provided a total of
fifty (50) parking spaces for the Lessee immediately adjoining the south
side of the building.
to be used as manufacturing facility and support uses, for the term of five (5)
years commencing on January 1, 1992 and ending on December 31, 1996. The Lessee
is granted the option to extend the initial lease term for five (5) three-year
extension terms. The first extension term is to be exercised by the Lessee
providing written notification to the lessor at least ninety (90) days
preceding the expiration of the initial lease term. The Lessee may extend the
lease, at its option, for a second three-year extension term by providing
written notification to the Lessor of at least ninety (90) days preceding the
end of the first extension three-year term. If the first three-year extension
term is exercised, it shall run from January 1, 1997, through December 31,
1999. If the second three-year extension term is exercised, it shall run from
January 1, 2000, through December 31, 2002. If the third through fifth
three-year extensions are exercised, the terms would be:
Third - January 1, 2003, through December 31, 2005
Fourth - January 1, 2006, through December 31, 2008
Fifth - January 1, 2009, through December 31, 2011
The annual rental shall be payable as specified in Article II.
ARTICLE II.
Rent
The Lesses shall pay to Lessor, at such address as Lessor shall
designate in writing, as rent for the lease premises, the sum of Two and .10
dollars ($2.10) per square foot of leased area, per year. The rent shall be
payable in equal monthly installments due on the first day of January 1992, and
the first day of each month thereafter during the initial lease term of five
(5) years. If the Lessee exercises its first three-year extension term, the
rental shall be in the sum of Two and 20/100 Dollars ($2.20) per square foot of
leased area, per year, payable in equal monthly installments. If the second
through fifth three-year extensions are exercised, the rental amount shall be
determined at that time. However, the rental amount per square foot will not
exceed the change in the Producer Price Index since the beginning of the
immediately preceding three-year extension.
The amount of square footage occupied by the lessee shall determine the
amount of rental to be paid to the Lessor and any changes in the amount of
square footage used by the Lessee shall change the rental as of the date of the
beginning of usage with partial months being prorated.
Page 2
3
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
Additional Charges
The Lessee agrees to pay its prorated share of real estate taxes based
upon the amount of square footage occupied by the Lessee compared to the total
amount of the manufacturing area. The Lessee's share of the real estate taxes
shall not exceed Fourteen Cents ($0.14) per square foot of leased area per
year. The accrual of taxes for the Lessee shall begin on the date of occupancy
and shall be paid on a semi-annual basis corresponding with the due dates of
real estate taxes in Ashland County, Ohio.
ARTICLE III.
Utilities
The Lessor shall provide, at its cost, a separate metering system for
natural gas, electric and water usage of the Lessee. The Lessee shall be
responsible for the actual cost of gas, electric and water utilities used by it
for the leased area.
Any telephone usage shall be at the cost of the Lessee including the
cost of installation. The building is currently heated through a boiler system,
the Lessee will pay the cost of the heating gas and charge other tenants a
rateable share based on square footage used. However, tenants who do not have
any full-time employees and would require no heat will not be charged a
pro-ratio share of the heating cost. The Lessor shall provide suitable access
to sewer drains.
ARTICLE IV.
Insurance
Lessee agrees to secure from a good and responsible company or
companies doing insurance business in the State of Ohio and maintain during the
entire term of this lease the following insurance coverages:
a. Public liability insurance in the minimum amount of Five Million
Dollars ($5,000,000.00) for loss from an accident resulting in
bodily injury to or death of persons, and One Million Dollars
($1,000,000.00) for loss from an accident resulting in damage to
or destruction of property.
b. Fire and extended coverage insurance on Lessee's fixtures, goods,
wares and merchandise, in or on the leased premises.
Page 3
4
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
Lessee agrees that the Lessor shall be named as an additional insured
on the aforementioned policies of insurance.
On securing the foregoing coverages, the Lessee shall give the Lessor
written notice of a certificate of insurance as to the coverages obtained.
Proof must also be given by Lessee to the Lessor that the policies provided for
in this Article expressly provides that they shall not be cancelled or altered
without thirty (30) days prior written notice to the Lessor.
If the building is damaged by fire, flood, or other casualty, the
Lessor shall make such repairs that will restore the premises to a condition at
least as good as that immediately preceding the casualty, as more fully
provided below.
If the building on the leased premises should be totally destroyed by
fire, flood, or other casualty, or if it should be so damaged that rebuilding
or repairs cannot reasonably be completed within sixty (60) working days from
the date of the occurrence, this lease shall be terminable by the Lessee and
rent shall be abated for the unexpired portion of this lease, effective as of
the date of said occurrence.
If the building or other improvements on the leased premises should be
damaged by fire, flood, or other casualty, but not to such an extent that
rebuilding or repairs cannot be reasonably completed within sixty (60) working
days from the date of the occurrence, this lease shall not terminate, but
Lessor shall, at its sole cost and risk proceed forthwith to rebuild or repair
such building and other improvements to substantially the condition to which
they existed prior to such damage. If the building and other improvements are
to be rebuilt or repaired and are untenantable in whole or in part following
such damage, the rent payable hereunder during the period in which they are
untenantable shall be adjusted equitably. In the event that lessor shall fail
to complete such rebuilding or repairs, within sixty (60) working days from
the date of occurrence, Lessee may at its option terminate this lease by
written notification at such time to Lessor, whereon all rights and obligations
hereunder shall cease.
ARTICLE V.
Waste and Nuisance
Lessee shall not commit, or suffer to be committed, any waste on the
leased premises, nor shall it maintain, commit, or permit the maintenance or
commission of any nuisance on the leased premises or use the leased premises
for any unlawful purpose.
Page 4
5
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
Repairs
Lessee agrees to keep the leased premises in good order and repair,
reasonable wear and tear (and damage by accident, fire, or other casualty not
resulting from Lessee's negligence) excepted.
Lessor shall maintain the leased premises in condition fit for its
intended use and shall make all necessary repairs except that the Lessee shall
make all repairs of the leased premises occasioned by its negligent use of the
leased premises.
More specifically, Lessor shall repair and maintain the leased premises
so that the premises will have:
a. Effective waterproofing and weather protection of roof and
exterior walls, including unbroken windows and doors.
b. Plumbing facilities that conform to applicable law in effect at
the time of installation, maintained in good working order.
c. Restroom facilities for the exclusive use of the employees and
guests of Lessee.
d. A water supply approved under applicable law which is under the
control of Lessee, capable of producing hot and cold running
water.
e. Heating facilities which conform with applicable law at the time
of installation, maintained in good working order.
f. Electrical lighting, with wiring and electrical equipment which
conform with applicable law at the time of installation,
maintained in good working order.
g. Building, grounds, and appurtenances at the time of the
commencement of the lease in every part clean, sanitary, and
free from all accumulations of debris, filth, rubbish, garbage,
rodents, and vermin.
h. Floors maintained in good repair.
However, no duty on the part of the Lessor shall arise with respect to
maintenance or repairs under the above paragraph if Lessee is in substantial
violation of any one or more of the following affirmative obligations:
a. To keep that portion of the leased premises which it occupies
and uses as clean and sanitary as the condition of the premises
permits.
b. To dispose from the leased premises all rubbish, garbage and
other waste, in a clean and sanitary manner.
Page 5
6
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
c. To use and operate properly all electrical, gas, and plumbing
fixtures and keep them as clean and sanitary as their condition
permits.
d. Not to permit any person on the premises, with its permission,
willfully or wantonly to destroy, deface, damage, impair, or
remove any part of the lease premises or the facilities,
equipment, or appurtenances thereto.
If, within a reasonable time after Lessee's notice to Lessor of repairs
or maintenance which Lessor has a duty to repair, Lessor neglects to make such
repairs, Lessee may repair the same itself, and if the cost of the repairs does
not require an expenditure greater than one (1) month's rent, to deduct the
expenses of such repairs from the rent.
Notwithstanding the foregoing provisions, Lessor shall have no
liability to the Lessee, nor for any damage to Lessee's property or the
interruption of Lessee's business that results from any storm, flood, riot,
civil disturbance, any act of God, or nature.
ARTICLE VI.
Usage, Alterations, Improvements and Fixtures
The intended use of the leased premises is for the conducting of the
Lessee's manufacturing of plastic products through the rotocast process. All
equipment brought to the premises or installed or affixed to the property shall
remain the personal property of the Lessee and may be removed at the expiration
of the lease or any extensions thereof. In the event that the Lessee does
remove any property from the premises at the end of the lease, than it shall be
required to restore the premises to its prior condition, normal wear and tear
excepted.
To facilitate the operation of the Lessee's manufacturing process, it
will be necessary to provide roof vents which shall be installed at the
Lessee's cost. At the expiration of the lease, the Lessee shall repair the roof
to its prior condition or, at Lessor's election, leave the roof vents in place.
The Lessee shall not alter or improve the leased premises without the prior
approval of Lessor which approval shall not unreasonably be withheld.
All improvements, equipment and fixtures placed on the leased premises
by lessee shall at all times be and remain the property of Lessee, and Lessee
shall have the option and right to remove said improvements, equipment and
fixtures at any time during the lease term and within sixty (60) days after
the expiration or sooner termination of this lease. Should Lessee fail to
remove such
Page 6
7
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
improvements, equipment, fixtures, or any of them within said sixty (60) day
period, such property remaining on the leased premises shall be deemed
abandoned by the Lessee and shall thereupon become the absolute property of the
Lessor without compensation to the Lessee.
ARTICLE VII.
Environmental Matters
Lessee covenants that it will not permit any hazardous substance or
contamination to be released or discharged into or upon the premises in any
way, nor will Lessee permit any hazardous substance or contamination to be
released or discharged into any sewer or drainage system flowing through, from
or upon the land of which the premises are a part. In this regard, Lessee
agrees to indemnify and hold Lessor harmless from any and all claims, actions
and causes of action that may be asserted against Lessor (whether during the
term of this Lease or subsequent to the term) that arise out of or by reason of
Tenant's breach of its covenants under this Section. Lessor agrees that Lessee
will be held harmless from any and all claims, actions and causes of action
that may be asserted against Lessor for any release of hazardous substances
caused by former tenants prior to the commencement date of this Lease. Lessee
will also be held harmless for any hazardous substance release which may be
cause during the term of this lease by other tenants of the premises. As used
herein, the words "hazardous substance or contamination" means any substance
that is toxic, ignitable, reactive or corrosive and that is regulated by any
local, state or federal governmental agency or entity, or any material or
substance that is defined as "hazardous waste", "extremely hazardous waste" or
a "hazardous substance" under any local, state or federal law or regulation.
ARTICLE VIII.
Quiet Possession
Lessor shall, on the commencement date of the term of this lease, place
Lessee in quiet possession of the leased premises and shall secure it in the
quiet possession thereof against all persons lawfully claiming the same during
the entire lease term and any extension thereof.
Lessor covenants that the leased premises are not subject to any lien,
claim, or encumbrance, and that it is not in default or arrears in the making
of any payment or the performance of any obligation relating to the leased
premises.
ARTICLE IX.
Page 7
8
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
Defaults and Remedies
If the rent provided for herein or any part thereof shall at any time
be in arrears and unpaid for more than twenty (20) days, and without any demand
being make therefor, or if the Lessee shall fail to keep and perform any of the
covenants, agreements or conditions of this lease on the part of the Lessee to
be kept and performed, or shall make an assignment for the benefit of
creditors, or if the interest of the Lessee therein shall be sold under
execution or other legal process, or if Lessee shall abandon or vacate said
premises during said term, then in any such case it shall be lawful for Lessor
to enter into said premises and again have, repossess and enjoy the same as if
this lease has not been made, and thereupon this lease and everything herein
contained on the part of Lessor to be done and performed shall cease, determine
and be utterly void; without prejudice, however, to the right of the Lessor to
recover from Lessee rent due up to the time of such entry. The commencement of
a proceeding or suit in forcible entry and detainer, or in ejectment or
otherwise, after any default by the Lessee, shall be equivalent in every
respect to an actual entry by the Lessor. In case of any default and entry by
Lessor, Lessor may relet said premises for the remainder of said term at the
highest rent reasonably obtainable and may recover from Lessee any deficiency
between the amount obtained and the rent hereinbefore reserved.
If Lessor defaults in the performance of any term, covenant, or
condition required to be performed by it under this Agreement, Lessee may elect
either one of the following:
a. After the expiration of a reasonable amount of time subsequent to
written notice to Lessor, Lessee may remedy such default by any
necessary action, and in connection with remedy may pay expenses
and employ counsel; all reasonable sums expensed or obligations
incurred by Lessee in connection therewith shall be paid by Lessor
to Lessee on demand, and on failure of such reimbursement, Lessee
may, in addition to any other right or remedy the Lessee may have,
deduct the costs and expenses thereof from rent subsequently
becoming due hereunder; or
b. Elect to terminate this Agreement after the expiration of a
reasonable amount of time to lessor of such intention, thereby
terminating this Agreement on the date designated in such notice,
unless Lessor shall have cured such default prior to the expiration
of a reasonable amount of time.
Assignment and Sublease
Lessee shall not have the right without prior approval of Lessor to
assign this lease, any interest therein, or to sublet the leased premises, or
any part thereof, provided, however, that the Lessor's approval shall not
unreasonably be withheld.
Page 8
9
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
ARTICLE X.
Miscellaneous
All notices provided to be given under this Agreement shall be given by
certified mail addressed to the proper party at the following addresses:
Lessor Lessee
- ------ ------
J.J.D. Properties Hedstrom Corporation
611 County Road 620 710 Orange Street
R.D. 3 Ashland, OH 44805
Ashland, OH 44805
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
This Agreement shall be construed under and in accordance with the laws of
the State of Ohio and all obligations of the parties created hereunder are
performable in Ashland County, Ohio.
In case any one or more of the provisions contained in this lease shall
for any reason be held to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect any other
provision thereof and this lease shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
This lease constitutes the sole and only agreement of the parties hereto
and supersedes any prior understandings or written or oral agreements between
the parties respecting the within subject matter.
No amendment, modification, or alteration of the terms hereof shall be
binding unless the same shall be in writing, dated subsequent to the date
hereof, and duly executed by the parties hereto.
No waiver by the parties hereto of any default or breach of any term,
condition, or covenant of this lease shall be deemed to be a waiver of any
other breach of the same or any other term, condition, or covenant contained
herein.
Page 9
10
Lease Agreement between J.J.D. Properties
and Hedstrom Corporation
IN WITNESS WHEREOF, the undersigned Lessor and Lessee hereto execute
this agreement as of the day and year first above written.
Signed in the presence of: LESSOR
/s/ JANICE K. STEELE
- ------------------------------
/s/ [ILLEGIBLE] by [ILLEGIBLE]
- ------------------------------ -----------------------------
LESSEE
/s/ MARTIN T. ALAN
- ------------------------------
/s/ KATHY BECK by /s/ JAMES D. BRAEUNIG
- ------------------------------ -----------------------------
The State of Ohio, County of Ashland:
Before me, a notary public, in and for said County and State,
personally appeared, Lessor, J.J.D. Properties, by L. Thomas S. [ILLEGIBLE], its
proprietor, who acknowledges that he did sign the foregoing instrument for and
on behalf of said Corporation, and that the same is the free act and deed of
said Corporation, and the free act and deed of him personally and as such
officer.
In Testimony Whereof, I have hereunto set my hand and official seal at
Ashland, Ohio, this 19th day of February, 1991.
/s/ JANICE K. STEELE
--------------------------------
notary public
My Commission expires 5/2/95
Page 10