EXHIBIT 10.18
LEASE AGREEMENT
THIS LEASE entered into as of the 22ND day of AUGUST, 05 by and between
A & B Holdings, Inc., whose mailing address is P.O. Box 1379 LaFollette, TN
37766, ("LESSOR"), and D.H.B. Industries, Inc. or Subsidiary maintaining its
corporate offices at 400 Post Ave., Suite 303, Westbury, NY 11590 , (hereinafter
referred to as the "LESSEE").
ARTICLE 1. PREMISES
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
approximately 60,060 square feet of warehouse/manufacturing space in its "as is"
condition situated in Campbell County, State of Tennessee, bearing the address
of 179 Mine Lane, Caryville, Tennessee and more particularly described in
Exhibit A, said exhibit being attached to and made a part of this Lease,
referred to as the "Premises", together with all rights, privileges, easements
and appurtenances belonging or pertaining to the Premises and other improvements
situated upon the Premises to have and to hold, pursuant to the terms and
conditions of this Lease. The premises shall include the driveway, parking area
and land surrounding the improvements as shown on Exhibit A. Lessee agrees to
maintain and keep in good repair the heating and air conditioning system.
ARTICLE 2. TERM
The term of this Lease shall be FIVE (5) years and shall commence on
APRIL 15, 2006 and continue through APRIL 14, 2011, both dates inclusive, unless
such dates are revised by mutual written agreement of the parties.
ARTICLE 3. USE
Lessee shall have the right to use and occupy the Premises for
warehouse/manufacturing space. Lessor warrants that this use of the Premises is
not in conflict with any applicable zoning or use restrictions.
ARTICLE 4. RENT
Lessee shall pay Lessor at P.O. Box 1379, LaFollette, TN 37766, or at
such other place as the Lessor shall from time to time designate in writing, a
Base Rent equal to the sum of $ 2.00 per square foot per year for a total annual
rent of $120,120.00. The monthly rent of $10,010.40 will be paid monthly, in
advance, on the first day of the month.
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ARTICLE 5. TRADE FIXTURES AND BUILDING ALTERATION
All fixtures, appliances, furniture, and any other personal property
which the Lessee may install in or upon the Premises shall remain the personal
property of Lessee, and shall in no way be considered attached to or a part of
the realty, and same may be removed by the Lessee during or at the expiration or
other termination of this Lease or any extension or renewal; provided, however,
Lessee shall repair any physical damage caused to the Premises occasioned by the
removal. Lessee shall not make any alterations to Lessor's building or to the
Premises without the prior written consent of Lessor. Lessee shall not make any
alterations to Lessor premises without the prior written consent of Lessor, such
consent may not be unreasonably withheld.
ARTICLE 6. ASSIGNMENT AND SUBLETTING
Lessee shall not assign or sublet this Lease without the prior written
consent of the Lessor. No such agreement shall operate to relieve the Lessee of
its obligations imposed under this Lease.
ARTICLE 7. SURRENDER OF PREMISES
Lessee, at its own cost and expense, shall, on expiration of this Lease
remove from the Premises all personal property belonging to it. Lessee shall
repair all damage to the Premises caused by such removal, and restore the
Premises to the condition they were in prior to the installation of any property
so removed. Lessee shall, on expiration of the Lease, surrender and deliver the
Premises in good condition, ordinary wear and tear, damage by the elements, fire
or act of God, excepted. Lessee shall at the same time return to Lessor all keys
to the Premises.
Promptly upon the termination of this Lease, whether by term as herein
provided or otherwise, a joint physical survey and written inspection report on
the Premises shall be made to determine whether any damages, other than ordinary
wear and tear occurred to the same while this Lease was in effect, and to
reflect the then present condition. Such report shall be signed by both parties,
and each party shall return a manually signed copy of the report to the other.
This signed report shall be conclusive evidence as to the condition of the
Premises on the date the Lease was terminated and possession of the Premises was
actually or constructively returned to the Lessor. In the event of any dispute
as to the contents of the report or the condition of the Premises, the parties
will endeavor to resolve such dispute in an equitable and amicable manner, and
if necessary, by submitting it to binding arbitration. In the event no survey is
performed and a report rendered by the parties within thirty (30) consecutive
days from the date of termination of this Lease, it shall be conclusively
presumed that the Premises, at the time of surrender, was in good order,
condition and repair.
ARTICLE 8. LESSOR'S REMEDIES
If Lessee shall fail to observe or perform any of its obligations under
this Lease, and shall fail to cure such default within thirty (30) days after
written notice form Lessor giving notice of such default, or if Lessee shall be
adjudicated bankrupt, become insolvent or make an assignment for the benefit of
creditors, then in any of such cases Lessor may, at its option and upon thirty
(30) days written notice to Lessee, terminate this Lease. In the event of such
termination, Lessor shall have the right to enter immediately upon the Premises
and take full and exclusive possession of the Premises. The Lessor shall have
the right, at its option, without declaring the Lease void, to sublet the
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Premises and collect the rents. Should Lessor be unable to relet the Premises
after reasonable efforts to do so, or should such monthly rental after relet be
less than the rental Lessee was obligated to pay under this lease, then Lessee
shall pay the amount of such rental deficiency to Lessor. A partial receipt for
rent in arrears shall not operate as a waiver of any forfeiture which may have
occurred before that time. The thirty (30) day cure period will be extended by
Lessor for such time as is necessary to cure the default so long as Lessee
promptly commences efforts to cure the default and continues such efforts with
reasonable diligence. Lessee shall also be responsible to pay to Lessor its
reasonable costs and expenses, including but not limited to reasonable
attorney's fees, in retaking or reletting the Premises.
Any installment of rent or additional rent herein required to be paid
by Lessee which is received after the 25th day of the month by Lessor will
include an additional late payment equal to ten percent (10%) of the rent or
additional rent due.
ARTICLE 9. HOLDOVER
If the Lessee shall remain on the Premises after the expiration of this
Lease, and if at such time the Parties shall have failed to negotiate a renewal
or extension of this Lease, then Lessor shall have the option of pursuing its
remedies in law and equity relative to Lessee's holdover. In the alternative
Lessor, by giving written notice to Lessee at least 30 days prior to any rent
increase, may interpret Lessee's holdover as an offer to rent the Premises on a
month-to-month tenancy, at a monthly basic rental equal to one hundred ten
percent (110%) of the monthly basic rental. Such rental shall be payable in
advance, and acceptance of such rental payment by Lessor shall constitute
acceptance by Lessor of Lessee's offer to rent the premises on a month-to-month
tenancy, and in such event all terms and conditions contained in this Lease
shall be in full force and effect for each succeeding calendar month after
Lessor's acceptance of the basic monthly rental payment. Any such holdover on a
monthly basis may be terminated by either party by giving thirty (30) days
written notice of termination. Said notice must be thirty (30) days before the
beginning of the next rental period.
ARTICLE 10. INDEMNIFICATION
LESSEE'S INDEMNIFICATION: The Lessee agrees to indemnify save and hold
harmless Lessor from and against any and all losses, damages, claims, suits or
actions, judgments and cost which may arise or grow out of any injury to or
death of persons, or damages to property, arising out of or attributable to the
negligent acts or omission of Lessee, its agents, servants, employees or invitee
while on the Premises, except for injury to or death of persons, or damage to
property, arising out of or attributable to the failure of the Lessor to fulfill
its obligations as required under this Lease. In no event shall Lessee be liable
for consequential, incidental or special damages. No provisions of this Article
shall in any way inure to the benefit of any third person so as to constitute
any such person a third party beneficiary of this Lease or of any one or more of
the terms hereof, or otherwise give rise to any cause of action in any person
not a party thereto.
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LESSOR'S DISCLAIMER OF LIABILITY: Lessor shall not be liable for loss
of or damage to any property of Lessee, nor for any loss of or damage to any
property of others resulting from any cause whatsoever nature, unless caused by
or due to any act or omission of Lessor, its agents contractors (of whatever
tier), servants, employees or invitee. No provision of this Article shall in any
way inure to the benefit of any third person so as to constitute any such person
a third party beneficiary of this Lease or of any one or more of the terms
hereof, or otherwise give rise to any cause of action in any person not a party
hereto.
INDEMNIFICATION: Lessor represents, covenants, warrants to and with
Lessee to defend, indemnify, save and hold harmless Lessee, its parent and their
respective directors, officers, employees, agents and assigns, from and against
any and all suits, causes of action, legal or administrative proceedings,
claims, demands, liabilities, losses, damages, awards, judgments, costs,
attorneys' fees, and all expenses of whatever kind or nature (including expenses
to enforce this indemnity), now existing or which may hereafter arise, exist,
result from, or caused by any physical or environmental condition or human
health risk, upon, over, under or affecting the Premises, which is inherent in
the Premises, other than those physical or environmental conditions or human
health risks which directly result from or are caused by the operations and
activities of the Lessee while occupying the Premises during the term of this
Lease, or for any such obligation arising after notice of such condition is
given by Lessor to Lessee. This provision shall survive the termination of this
Lease.
ARTICLE 11. WASTE AND NUISANCE
Neither party shall commit or suffer to be committed any waste on or
about the Premises, nor shall either party maintain, commit or permit the
maintenance or commission of any nuisance on the Premises or use the Premises
for any unlawful purpose. Each party shall indemnify and hold harmless the other
from and against all liability arising out of, as a result of, or in connection
with the other party's illegal or unlawful use of the Premises.
ARTICLE 12. HAZARDOUS WASTE
Lessee agrees not to place or permit to be placed on the premises any
hazardous waste or hazardous substance, except in accordance with all State,
Local, and Federal regulations, nor will Lessee release or permit the release of
any hazardous waste or hazardous substance on the premises. In the event that
Lessee places or permits to be placed on the premises any hazardous waste or
hazardous substance, or in the event that Lessee releases or permits the release
of any hazardous waste or hazardous substance on the premises, Lessee will bear
all costs, liabilities, damages, fines, penalties and expense arising or
resulting from the clean up, neutralization, removal or remediation of ant such
hazardous waste or hazardous substance. Lessee further agrees to indemnify,
defend, and hold Lessor harmless from and against any and all claims, demands,
liabilities, damages, suits, acts, judgements, fines, penalties, loss, costs and
expense (including, without limitation, attorney's fees) arising or resulting
from, or incurred by Lessor as a result (either directly or indirectly), of,
Lessee placing or permitting to be placed, or releasing or permitting the
release of a hazardous waste or hazardous substance on the premises, whether
during the term of the Lease or thereafter. The term "hazardous substance" as
used herein shall include both "hazardous waste" and "petroleum," and all terms
as used herein shall have the same meaning and definition as set forth in UNITED
STATES CODE, Title 42, and TENNESSEE CODE ANNOTATED, S 68-46-101, ET SEQ. Lessor
warrants and represents to the best of Lessor's knowledge that there is no
hazardous waste at, on, or under the premises at the present time.
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ARTICLE 13. QUIET POSSESSION
Lessor shall, on the commencement date of the term of this Lease, place
Lessee in quiet possession of the Premises and shall secure Lessee in the quiet
possession of the Premises against all persons claiming the same during the
entire Lease term, or any extension thereof.
ARTICLE 14. RIGHT TO OFFER FOR LET
Lessor shall be permitted, during the one hundred eighty (180) days
preceding the termination of this Lease, to keep or exhibit on the Premises a
reasonable sign for display indicating the Premises are available for rental.
ARTICLE 15. INSURANCE
Lessee agrees to maintain public liability insurance of at least
$1,000,000 per individual injury, $2,000,000 aggregate and $1,000,000 property
damage liability for any one occurrence naming the Lessor as additional named
insured. Also, it is agreed that the Lessee shall furnish $2,000,000 of
insurance in an "all risk" policy to insure the building and property with no
greater than $5,000.00 deductible and any damage will be paid to Lessor by the
insurance company plus any deductible will be paid by the Lessee to the Lessor.
All insurance provided for in this lease shall be in effect under enforceable
policies issued by insurers of recognized responsibility and licensed to do
business in this state at least 15 days prior to the expiration date of any
policy, the original renewal policy for such insurance shall be delivered by
Lessee to Lessor. Upon Lessor's request, Lessee shall provide Lessor with
certifications that the coverage set forth herein is in effect. Within 15 days
after the premium on any policy shall become due and payable, the Lessor shall
be furnished with satisfactory evidence of its payment.
If the Lessor so requires, the policies of insurance provided for, shall be
payable to the holder of any mortgage, as the interest of such holder may
appear, pursuant to a standard mortgage clause. All such policies shall, to the
extent obtainable provide that any loss shall be payable to the Lessor or to the
holder of any mortgage notwithstanding any act of negligence of the Lessee which
might otherwise result if forfeiture of such insurance. All such policies shall
contain agreement by the insurers that such policies shall not be canceled
without at least thirty (30) days prior written notice to the Lessor and to the
holder of any mortgage to whom loss hereunder may be payable. Lessee will carry
at Lessee's own expense insurance coverage on all equipment, fixtures and
appliances.
WAIVER OF SUBROGATION: Lessor and Lessee hereby agree to release each other from
all liability, be it for negligence or otherwise, in connection with any and all
insurable losses covered by any insurance policies which either party carries
with respect to the Premises, or any interest or property therein. This
provision is enforceable only to the extent that such a loss is collected upon
under said insurance policies. Moreover, this release is conditioned upon the
inclusion I the policy or policies of a provision whereby any such release shall
not adversely affect said polices or prejudice any right of the releasers to
recover hereunder.
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ARTICLE 16. CONDITION OF PREMISES
Except as otherwise provided elsewhere in this Lease, Lessor covenants
to keep, or cause to be kept in good order, repair and condition, the
foundation, roof and exterior walls, unless such repairs or maintenance is
required as a result of Lessee's abusive use of the Premises, provided however,
Lessor shall have no obligation to clean or clear floors, driveways, sidewalks,
parking areas, or loading docks and Lessee shall be responsible for cleaning or
clearing such areas. Lessee is responsible for all maintenance of landscaping,
including all grassed areas. Lessee shall notify Lessor of any condition
existing at the Premises which requires repair and which is the responsibility
of Lessor, hereunder, and Lessor shall have a reasonable period thereafter
within which to perform the necessary repairs.
Lessee shall, at all times during the Lease and at its own cost and
expense, repair, replace, and maintain in a good, safe, and substantial
condition, all interior portions of the building and any improvements,
additions, and alterations thereto including the HVAC System on the Premises,
and shall use all reasonable precaution to prevent waste, damage, or injury to
the Premises. Lessor shall transfer any new equipment warranties which are
provided by suppliers or manufacturers.
ARTICLE 17. FIRE AND OTHER CASUALTY
If the Premises shall be so damaged by fire, the elements, casualty,
public disorder, any act, authorized or unauthorized, on the part of any
governmental authority, or for any other cause or happening so as to be
substantially destroyed, then this Lease shall terminate, and any unearned rent
paid in advance by Lessee shall be refunded to it. In the event of partial
damage, Lessee shall receive a refund of any unearned rent as to that portion of
the Premises rendered untenantable, and further there shall be an abatement of
future rental in proportion to that portion of the Premises which remain
untenantable prior to repair or restoration. If Lessor shall fail to start to
restore the Premises within thirty days, Lessee may terminate this Lease upon
giving five (5) days written notice.
ARTICLE 18. CONDEMNATION
In the event that the Premises in whole or in part are taken or
condemned for a temporary or permanent public or quasi-public use so as to
substantially destroy the use of the Premises, Lessee may, at its option,
terminate this Lease and receive a refund of any rental paid in advance. Lessor
and Lessee shall each be entitled to receive and retain such separate awards as
may be allocated to their respective interests in any condemnation proceedings.
The termination of this Lease shall not affect the rights of the respective
parties to such awards.
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ARTICLE 19. LESSOR'S RIGHT OF ENTRY
Upon reasonable notice from Lessor, but not less than 48 hours, Lessee
shall permit Lessor and its agents to enter upon the Premises at all reasonable
times for the purpose of inspecting same, or for the purpose of maintaining the
Premises or making repairs or alterations.
ARTICLE 20. UTILITIES AND TAXES
Lessor shall, during the term herein demised or any extended term pay,
and Lessee shall reimburse, all real property taxes and/or any in lieu of tax
payment costs. Such costs shall be invoiced annually by Lessor to Lessee and due
upon receipt. If said payment is not received by Lessor within thirty (30) days
of due date, Lessee will be in default of said lease, and Lessor is entitled to
pursue the remedies as outlined in ARTICLE 8, LESSOR'S REMEDIES. Lessee shall,
during the term pay all assessments, water and sewer rents, rates and charges,
charges for public utilities, excises, levies, and all other license and permit
fees and other governmental charges, general and special, ordinary and
extraordinary, unforeseen and foreseen, of any kind and nature whatsoever which
at any time during the term or extended term of this Lease may be assessed,
levied, imposed upon, or due or become due and payable out of or in respect of
or become a lien on, the Premises or any part thereof or any appurtenance
thereto, for any period during the term of this Lease.
ARTICLE 21. SUCCESSOR'S RIGHTS AND OBLIGATIONS
It is understood and agreed that the covenants and agreements contained
in this Lease shall be binding upon and inure to the respective successors and
assigns of the parties.
ARTICLE 22. ENTIRE AGREEMENT
This Lease embodies the entire agreement of the parties and no
understandings or agreements, verbal or otherwise, exist between the parties
except as expressly set forth in this Lease. The provisions of the Lease may
only be modified or changed by mutual written agreement signed by an authorized
representative of Lessor and Lessee.
ARTICLE 23. WAIVER
Failure of either party to insist upon the strict performance of any
provision of this Lease or to exercise any right or remedy shall not be deemed a
general waiver of any right or remedy, or of any existing or subsequent breach
or default, and the election by either party of any particular remedy or default
shall not be deemed exclusive of any other, and all rights and remedies of both
parties be cumulative.
ARTICLE 24. HEADINGS
The headings as to the contents of particular Articles are in no way to
be construed as a part of this Lease or as a limitation on the scope of the
particular Articles to which they refer.
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ARTICLE 25. LIENS
A. The Lessee covenants and agrees with the Lessor that the Lessor may
encumber its title to the Premises with a mortgage, irrespective of the
existence of this Lease. Lessee shall have no power or authority to mortgage or
otherwise encumber its interest in this Lease.
B. The Lessee shall never, under any circumstances, have the power to
subject the present or residual interests of the Lessor in the Premises or any
improvements thereof, to any mechanic or materialman's lien or other liens of
any kind. All persons who may hereafter during the life of this Lease furnish
work, labor, services or materials to the Premises, by or through the Lessee,
must look wholly to the interests of the Lessee, and not to that of the Lessor.
C. Lessee consents to the assignment of the Lease from Lessor to any
Lender or Mortgagee ("the lender"). During the time of any such assignment to
the Lender, the parties agree that the Lease shall not be modified or amended
without the prior written consent of the Lender. Lessor will provide notice of
any such assignment to Lessee including the assignee's name and address. In the
event of a default by Lessor under the Lease, Lessee agrees to give the Lender
prompt written notice of such default at the same time such notice is given to
Lessor. The notice and cure periods shall be the same as afforded Lessor under
the Lease and shall run successive to those periods afforded Lessor.
D. Lessor shall have the right to transfer, assign, mortgage or convey
in whole or in part the Premises, land upon which it is situated, and any and
all of its rights under this Lease, and nothing herein shall be construed as a
restriction upon Lessor's so doing. This Lease and all rights of the Lessor
hereunder are subject and subordinate to any deeds of trust, mortgage or other
instruments of security which do now or may hereafter cover the Building and the
land or any interest of Lessor therein, and to any and all advances made on the
security thereof, and to any and all increases, renewals, modifications,
consolidations, replacements and extensions of any such deeds of trust,
mortgages or instruments of security. This provision is hereby declared to be
self- operative and no further instrument shall be required to effect such
subordination of this Lease. Lessor will insure that each such instrument to
which this is to be subordinate provides that Lessee's possession shall not be
disturbed so long as Lessee is not in default hereunder, not withstanding any
default by Lessor under such instrument. Lessee shall execute any necessary
instruments in this regard.
ARTICLE 26. NOTICES
Any notices required or desired to be given to the parties shall be
sent by certified mail, return receipt requested to the following addresses:
If to Lessor: A & B Holdings, Inc.
Attn: B. Chris Arnold
P.O. Box 1379 LaFollette,
TN 37766-1379
If to Lessee: D.H.B. Industries, Inc.
Attn: Dawn Schlegel
400 Post Ave., Suite 303
Westbury, NY 11590
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ARTICLE 27. ESTOPPEL CERTIFICATE
Lessee will from time to time and on a reasonable number of occasions
upon not less than thirty (30) days prior request by Lessor, execute,
acknowledge and deliver to Lessor a statement in writing executed by Lessee
certifying that the Lease is unmodified and in full effect or if there have been
modifications, that this Lease is in full effect or as modified, setting forth
such modifications; the dates to which the rent has been paid and either stating
that to the knowledge of the signer of the said statement that default exists or
specifying each such default of which the signer may have knowledge. It is
intended that any such statement executed by Lessee may be relied upon by any
prospective purchaser or mortgagee or existing mortgagee of the building or land
upon which it is situated.
ARTICLE 28. MEMORANDUM OF LEASE
Each party agrees upon the request of the other party to execute and
deliver a memorandum of this Lease in recordable form for recording in the
Campbell County registrar's office, setting forth the existence of the Lease,
Lease term, and renewal terms.
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IN WITNESS THEREOF, the parties hereto have executed this Lease as of the day
and year first above written.
WITNESS: LESSOR:
David A. Winchester BY: B. Chris Arnold
_________________________ ________________________________
ITS: Pres.
______________________________
WITNESS: LESSEE:
David A. Winchester BY: Pat Lennex
_________________________ ________________________________
ITS: President, Paca
_______________________________
CORPORATE ACKNOWLEDGEMENT
STATE OF Tenn
__________________________________:
: ss
COUNTY OF Campell
__________________________________:
On this the 22 day of Aug , 2005 , before me appeared B. Chris Arnold to me
personally known, who being by me duly sworn, did say that he is the President
of the Lessor and that said instrument was signed and sealed in behalf of said
corporation by authority of its Board of Directors, and said acknowledged said
instrument to be the free act and deed of said corporation.
Witness my hand and official seal at office, this 22 day of Aug , 2005.
My Commission expires: 3-27-06
notary public Lillian H. Winchester
CORPORATE ACKNOWLEDGEMENT
STATE OF Tenn.
__________________________________:
: ss
COUNTY OF Campbell
__________________________________:
On this the 22 day of Aug , 2005 , before me appeared Pat Lennex to me
personally known, who being by me duly sworn, did say that he is the Pres of
Lessee , and that said instrument was signed and sealed in behalf of said
partners by authority of its Partnership Agreement and said acknowledged said
instrument to be the free act and deed of said corporation.
Witness my hand and official seal at office, this 22 day of Aug , 2005.
My Commission expires: 3-27-06
notary public Lillian H. Winchester
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