Exhibit 10.3
NORTH CAROLINA )
) LEASE AGREEMENT
GUILFORD COUNTY )
THIS LEASE AGREEMENT, Made and entered into this 1st day of May, 1998,
by and between MIRACLE PROPERTIES, LLC, a North Carolina Limited Liability
Company (hereinafter called the "Landlord"), and MARKET AMERICA, INC., a North
Carolina corporation (hereinafter called the "Tenant");
WITNESSETH:
That in consideration of the covenants, conditions and agreements
hereinafter contained, Landlord does hereby lease to Tenant, and Tenant does
hereby lease from Landlord, the premises more particularly described as follows:
See "Exhibit A" attached hereto and incorporated herein by reference.
TO HAVE AND TO HOLD said land and premises, together with all
privileges and appurtenances thereunto belonging to Tenant, its successors and
assigns, for the term and under the conditions hereinafter set forth, to-wit:
1. Term. The term of this Lease shall be for a period commencing on the
first day Landlord gains possession of said property and ending on the thirtieth
day of the first full month five years thereafter.
2. Renewal. If this Lease shall not have been canceled pursuant to the
provisions hereinafter set forth and if Tenant shall, during the original term
hereof, keep and perform each and every covenant, provision and agreement herein
contained, and provided that Tenant shall not be in default under any of the
terms, covenants or conditions of this Lease at the end of the term, then Tenant
may, at its option, renew this Lease for any additional term of five years.
If, during the first additional five (5) year term, this Lease shall
not have been canceled pursuant to the provisions hereinafter set forth and if
Tenant shall, during the first additional five (5) year term hereof, keep and
perform each and every covenant, provision and agreement herein contained, and
provided that Tenant shall not be in default under any of the terms, covenants
or conditions of this Lease at the end of said term, then Tenant may, at its
option, renew this Lease for an additional term of five years. If the above
conditions are met by Tenant, then Tenant may, at its option, renew this Lease
for two additional five (5) year terms (three (3) total five-year renewal
options).
Unless Tenant gives written notice to Landlord of its intention not to
exercise its right to renew for the additional five (5) years of this Lease,
within sixty (60) days prior to the date of termination of the original term or
any subsequent renewal term, then this Lease shall automatically be renewed for
an additional five-year term.
4. Rental. As rental for said premises, Tenant shall pay to Landlord or
Landlord's Agent, without notice or demand therefor, as follows:
A. The sum of TWO THOUSAND AND NO/100 DOLLARS ($2,000) per day
for the use of the patio, dock and parking areas, as well as the two
(2) adjacent meeting rooms on the premises:
B. The sum of SEVEN THOUSAND AND NO/100 DOLLARS ($7,000) per
month for the use of the office space and common areas; and
C. The sum of FOUR HUNDRED AND NO/100 DOLLARS ($400) per day
for the use of each of the three (3) bedroom suites and the common
areas associated therewith, to be used by the corporate executives
while on business in south Florida.
4. Late Charge. If Landlord does not receive the rental payment within
fifteen (15) days of its due date, Tenant shall pay to Landlord a late charge of
five percent (5%) of any outstanding balance, including previously unpaid
balances, of the payment due to cover costs of securing and processing any late
payments.
5. Taxes. Landlord shall pay all real property ad valorem taxes and
assessments which may be levied, assessed or charged against the demised
premises. Tenant shall pay all license, privilege or other taxes levied,
assessed or charged against it on account of the operation of its business or on
account of property belonging to Tenant, provided that Landlord and Tenant
respectively shall be entitled either prior to or subsequent to payment to
contest as improper, excessive or invalid any such taxes or assessments. Taxes
will be escrowed and Tenant will pay 1/12th of the annual taxes along with the
rent payment.
6. Utilities. Landlord shall pay all charges for electricity, fuel oil,
natural gas, water, and any other utilities consumed on the premises.
7. Repairs and Maintenance. Landlord shall, during the term of this
Lease, and any renewal or extension thereof, at its sole expense, keep the
interior of the leased premises in good order and repair, reasonable wear and
tear and damage by accidental fire or other casualty excepted. Tenant shall not
knowingly permit or willingly permit to be committed any act or thing contrary
to the rules and regulations prescribed from time to time by the Board of Health
or which shall be contrary to the rules and regulations of Federal, State or
Municipal authority.
Landlord's duty to repair and maintain shall include the replacement of
all light bulbs and broken glass in windows in those areas that it occupies as
the leased premises. Landlord shall maintain in good working order and repair
all plumbing, toilet facilities and other fixtures and equipment installed for
the general supply of hot water and cold water, heat, air conditioning and
electricity.
Landlord, during the term of this Lease, or any renewal or extension
thereof, shall keep the structural supports and exterior walls of the building,
including roof, in good order and repair, shall make repairs to the exterior
water, sewer, and utility services, to the point of entry to the building, and
to the air conditioning and heating systems, other than ordinary maintenance,
and all repairs or restorations necessitated by fire or other peril covered by
standard extended coverage endorsements on fire insurance policies.
8. Alterations and Additions.
A. Tenant shall have the right to make changes, improvements,
alterations or additions to the areas which it leases, subject to the
Landlord's reasonable approval.
1. No change, improvement, alteration or addition
shall at any time be made which shall impair or adversely
affect the structural soundness or diminish the value of any
improvement on the leased premises.
2. No change, improvement, alteration or addition
shall be undertaken until Tenant shall have procured and paid
for all required municipal or county building permits, and
shall have given Landlord prior notice and received Landlord's
approval of the plans for the alteration or addition.
3. All permanent changes, improvements, alterations,
or additions which become affixed to the building or land
shall become the property of the Landlord at the expiration of
the term of this Lease, or any renewal term, without payment
of any kind therefor by Landlord.
B. It is agreed that Tenant owns certain personal property and
shall have the right to install in the demised premises certain
personal property including without limitation countertops, shelving
and equipment which may be attached to interior walls and floors, the
same may be removed at the termination of this Lease; provided,
however, this Lease is not terminated by the occurrence of one or more
events of default enumerated in Paragraph 17 below. Tenant shall pay or
replace any damage to said premises on account of removal of items of
personal property. Any rights of Landlord in and to personal property
of the Tenant pursuant to this paragraph and Paragraph 15 shall be
governed by applicable North Carolina law with respect to possessory
landlord's liens.
9. Insurance. Landlord shall at all times during the term of this Lease
and any renewal period thereof, at its own cost and expense, insure and keep in
effect on the building located on the demised premises standard fire and
extended coverage insurance with a company authorized to do business in North
Carolina for its replacement value naming Landlord as the insured and Tenant as
additional insured. payment. In addition thereto, Tenant shall insure any of its
equipment, machinery, fixtures and other assets located on the demised premises
in such amount and against such risks as it may deem advisable. Landlord shall,
during the term of this Lease Agreement or any renewal thereof, carry and
maintain comprehensive public liability insurance, including property damage,
insuring Tenant and Landlord against liability for injuries to persons or
property occurring in or about the leased premises or common areas or arising
out of the ownership, maintenance, use or occupancy thereof. The liability of
this insurance shall not be less than ONE MILLION DOLLARS ($1,000,000) for any
one person injured or killed and not less than FIVE HUNDRED THOUSAND DOLLARS
($500,000) for personal property damage per accident. Landlord and Tenant and
all parties claiming under them hereby mutually release and discharge each other
from all claims and liabilities arising from or caused by any hazard covered by
insurance on the leased property, or covered by insurance in connection with
property or activities conducted on the leased property, regardless of the cause
of the damage or loss, and the parties each agree to have their respective
insurance companies waive, if possible, in writing and for the express benefit
of the others any rights of subrogation that the companies may have, if at all,
against the Landlord or Tenant, as the case may be.
10. Indemnification. With the exception of claims arising out of acts
of negligence of Landlord, its agents or employees, Tenant covenants and agrees
that at its sole expense, it will protect Landlord and save Landlord harmless
from all claims of all persons whomsoever arising from or out of the use or
occupancy of the leased premises by Tenant or Tenant's agents or employees, or
subleases, including the reimbursement of Landlord of all reasonable expenses
incurred in defending such claim.
11. Condemnation. If at any time during the term hereof the whole of
the leased premises shall be taken by any public authority or by the right of
eminent domain, then in any such event when possession shall have been taken
thereunder by the condemning authority, the term hereof granted and all right
and liability of the Tenant hereunder shall immediately cease and terminate and
the rent shall be apportioned and paid to the time of such termination. The
Landlord shall be entitled to all award in condemnation for land and
improvements.
If fifteen percent (15%) or more of the floor area of the building of
the leased premises shall be appropriated or taken under the power of eminent
domain, then and in such event, the Tenant shall have the right to cancel and
terminate the Lease as of the date the condemning authority acquires possession
of said portion, provided that the Tenant has notified the Landlord in writing
of such election within thirty (30) days after receipt by the Tenant from the
Landlord of written notice that said percentage of the premises have been so
appropriated or taken. In the event of such cancellation, the Tenant shall
thereupon be released from further liability under this Lease. If less than
fifteen percent (15%) of the floor area of the building upon the leased premises
shall be so appropriated or taken, or if more than fifteen percent (15%) of the
floor area of the building upon the leased premises shall be so appropriated or
taken and the Tenant shall not elect to so terminate this Lease but shall remain
in that portion of the premises which shall have not been appropriated or taken,
then in either such event, the Landlord, at its own cost and expense, shall
immediately restore the building remaining to a complete unit of like quality
and character as existed prior to such appropriation or taking, and rent as to
that portion of the building rendered untenantable for the Tenant's ordinary use
and occupation during the period of demolition and/or restoration shall be
reduced and thereafter the rental shall be reduced in the ratio to that floor
area of the part of the building taken which is included within the leased
premises before such taking. Landlord must notify Tenant of any notice of
condemnation within 30 days of receipt by Landlord of said notice of
condemnation.
12. Fire or Other Casualty Loss. If the leased premises be partially
damaged by fire or other casualty during the base term of this Lease or any
renewal thereof, Landlord shall repair the same at his own expense with
reasonable dispatch, and if as a result thereof the premises hereby leased shall
be partially unsuitable or unfit for Tenant's purpose, use or occupation, then
and in such event, the rent herein reserved shall be reduced in proportion to
the space not usable until such premises have been repaired and restored. If
Tenant shall be unable to carry on its normal business operations for a period
of sixty (60) days or more, Tenant shall have the right to terminate this Lease
by giving (30) days prior written notice of such termination to Landlord. Upon
such termination, Landlord's and Tenant's obligation hereunder, and each of
them, including payment of rent, shall cease and terminate effective as of the
day the premises were so damaged or destroyed. If the Tenant cannot carry on its
normal business operations for a period of less than sixty (60) days by virtue
of such damage or destruction, rent shall abate for the period that the premises
are untentable and this Lease shall remain in full force and effect. If the
premises shall be totally destroyed, either party may, within fifteen (15) days
after the happening of such fire or other casualty, elect to terminate this
Lease and the term hereby granted by giving to the other party written notice
thereof, and upon giving such notice, this Lease shall terminate and be at an
end.
13. Assignment and Subletting. Tenant may sublet or assign its rights
hereunder under the following conditions: Tenant shall first give Landlord at
least 90 days prior written notice of its desire to assign or sublet its rights
under the Lease. For a period of 90 days after receipt of said notice, Landlord
shall have the right to find its own Tenant for the Leased Premises. If Landlord
is able to find a Tenant for the Leased Premises then Landlord shall notify
Tenant and upon the execution of a Lease between Landlord and a new tenant, the
Tenant shall execute a termination agreement for the existing Lease and all
rights, obligations and liabilities of the Tenant under the existing Lease shall
cease, provided, however, nothing herein contained shall relieve Tenant of any
obligations under this Lease during said 90-day period.
If Landlord is not able to find a new Tenant within the 90-day period,
then Tenant shall be free to assign or sublet the premises, provided:
A. Tenant shall first obtain the prior written consent of
Landlord in each instance, which consent will not be unreasonably
withheld; provided, further, that the business of assignee or sublessee
shall not be hazardous, illegal, or disruptive and that Tenant shall
remain primarily liable for the payment of the rent herein reserved and
for the performance of all the other terms of this Lease required to be
performed by Tenant irrespective of the subletting or assignment;
B. At the time of such assignment or subletting, there shall
be no default under the terms of this Lease;
C. A duplicate original of said assignment or sublease, in
recordable form, shall be delivered by certified mail to Landlord
within thirty (30) days after execution of said assignment or sublease.
14. Right of Entry. Tenant agrees that Landlord, Landlord's agents or
other representatives, shall have the right without abatement or rent, to enter
into and upon the Leased Premises, or any part thereof, during regular business
hours for the purpose of examining same or making such repairs or alterations to
the Leased Premises as may be necessary for the safety and preservation thereof;
provided, however, that such examinations, repairs or alterations (unless of an
emergency nature) shall be made as to cause a minimum of interference to the
operation of Tenant's business conducted in or on the Leased Premises.
15. Default. The happening of one or both (A or B) of the following
listed events shall constitute a breach of this Lease Agreement on the part of
the Tenant, namely:
A. The failure of Tenant to pay rent payable under this Lease
within ten (10) days following written notice from Landlord of failure
to pay the full monthly rental on the first day of any rental month.
After such notice has been given to Tenant a total of three times, no
further notice shall be required if Tenant subsequently defaults in
payment of any monthly rental payment next due thereafter.
B. The failure of Tenant to fully and promptly perform any act
required under this Lease or to otherwise comply with any terms or
provisions hereof for thirty (30) days or more after written notice is
given to Tenant by Landlord notifying it of said default. In all
matters in this Agreement, time is of the essence.
C. For the purposes of Section B of this Paragraph 15, if the
default complained of be a default other than one which may be cured by
the payment of money, no default on the part of the Tenant in the
performance of work required by the performed or acts to be done or
conditions to be met shall be deemed to exist if steps shall have been
commenced in good faith commenced by the Tenant within the 30-day grace
period to rectify same and shall be prosecuted to completion with
diligence and continuity.
Upon the happening of any event of default by Tenant,
Landlord, if Landlord shall so elect, may either (1) terminate the
terms of this Lease Agreement, or (2) terminate Tenant's right to
possession or occupancy of the premises without terminating the term of
this Lease Agreement, and, in the event Landlord shall exercise such
second right of election, the same shall be effective as of twenty (20)
days after the date of such event of default.
If Landlord shall elect to terminate the terms of this Lease
Agreement, Landlord, upon such termination, shall be entitled to
recover of Tenant all accrued rent due and payable at the time of such
default, plus any rents paid in advance, which shall be applied to any
balance due Landlord, of whatever kind, or in the alternative, as
liquidated damages forfeited to Landlord without waiver of any other
rights or remedies of Landlord. If Landlord shall elect to terminate
the terms of the Lease Agreement then after all accrued rents are paid
the Landlord and any funds owed to Landlord on account of any other
terms of this Lease are paid, then Tenant's obligations and liability
under this Lease shall terminate.
If Landlord shall elect to terminate Tenant's right to
possession only without terminating the terms of this Lease, Landlord,
at Landlord's option, may enter into the premises, remove Tenant's
property, and hold possession of and sell the same and apply the
proceeds first to the cost of sale, second to rents and damages due
Landlord, and the surplus, if any, shall be paid to Tenant, without any
such possession or sale terminating the terms of this Lease or
otherwise releasing Tenant in full or in part from its obligation to
pay the rent herein reserved for the full term hereof, and in such
case, Tenant shall remain liable to Landlord for all rents due under
this Lease. However, Landlord will make reasonable efforts to relet the
premises, or any part thereof, at a reasonable rent to any person, firm
or corporation other than Tenant. If any rent collected by Landlord
upon such re-letting is not sufficient to pay monthly the full amount
theretofore paid by Tenant, Tenant shall pay to Landlord the amount of
each monthly deficiency upon demand, and, if the rent so collected from
such re-letting is more than sufficient to pay the full amount of the
rent reserved hereunto, Landlord shall, at the end of the stated term
hereof, apply any surplus to the extent thereof to the discharge of any
obligation for Tenant under the terms of this Lease, and any remaining
surplus shall be paid to Tenant. However, nothing herein shall render
Tenant liable for any greater sum than would be payable if Tenant were
not in default under the Lease.
16. Bankruptcy. In the event Tenant shall be adjudicated a bankrupt, or
a temporary or permanent receiver is appointed for the Tenant in any Federal or
State Court, or petition in insolvency or liquidation proceedings is filed
against Tenant which shall not be dismissed within ninety (90) days, Landlord
shall have the right at his option, to immediately declare this contact and
lease null and void and resume possession of the property. In addition, Landlord
shall be entitled to recover reasonable attorneys fees incurred by the Landlord
in any proceeding protecting its rights under this paragraph.
17. Subordination - Attornment. This Lease shall be deemed subject and
subordinate to any mortgage which may heretofore or hereafter be executed by
Landlord covering the building and land upon which the building is located,
unless the mortgagee requests that this Lease be superior to its mortgage. In
the event any proceedings are brought for foreclosure of any mortgage on the
premises, Tenant will attorn to the purchaser at a foreclosure sale and
recognize such purchaser as Landlord, provided purchaser or Trustee agrees not
to disturb Tenant's possession as long as it is not in default under the terms
of this Lease. Provided that Lender executes a non-disturbance agreement with
Tenant, Tenant shall execute at Landlord's request, and within five (5) days
thereof, instruments evidencing the subordinate position of this Lease, and as
often as requested shall sign estoppel certificates setting forth the date it
accepted possession, that it occupies the premises, the termination date of its
Lease, the date to which rent has been paid and the amount of monthly rent in
effect as of such certification, whether or not it has any defense or offset to
the enforcement of the Lease, any knowledge it has of any default or breach by
Landlord, and that the Lease is in full force and effect except as to
modifications, agreements or amendments thereto, copies of each of which shall
be attached to the certificate.
18. Signs. Tenant may not erect or display any sign upon the exterior
of the demised premises without the prior written consent of Landlord, which
consent shall not be unreasonably withheld. If Landlord has given prior written
consent to Tenant for a particular sign, Landlord shall cooperate with Tenant in
obtaining any permit required to install or erect the sign.
19. Quiet Enjoyment. If Tenant promptly and punctually complies with
each of its obligations hereunder, it shall have and enjoy the peaceful and
quiet possession of the demised premises during the term hereof, providing that
no action of Landlord in work in other space in the building or in repairing or
restoring the leased space, shall be deemed a breach of this covenant, or give
Tenant any right to modify this Lease, either as to term, rent payable or other
obligations to perform.
20. Relationship Between Parties. This Lease shall not be construed to
create a partnership, joint venture, or agency relationship between the parties
hereto.
21. Notices. Wherever in the lease it is provided that either the
Landlord or Tenant may or shall give written notice to the other party, such
notice shall be deemed sufficiently given and effective if mailed by registered
mail, return receipt requested.
22. Parking. Landlord and Tenant shall each have the use of parking
available to the leased premises.
23. Lease Binding Upon Heirs. The terms, covenants, conditions,
provisions and undertakings in this Lease shall extend to and be binding upon
the heirs, personal representatives, executors, administrators, successors and
assigns of such party, as if in each and every case so expressed.
24. Renovations. All renovations and modifications to the property will
be paid by Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have each executed this Lease
Agreement for the purposes and uses herein stated, in duplicate originals on the
day and year first above written.
TENANT:
/s/ James H. Ridinger (SEAL)
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MARKET AMERICA, INC.
NORTH CAROLINA
GUILFORD COUNTY
I, _________________________, a Notary Public for said County and
State, do hereby certify that __________________________ personally appeared
before me this date and acknowledged the due execution of the foregoing
instrument.
WITNESS my hand and seal, this the ____ day of _____________, 1998.
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Notary Public
My commission expires: ______________