UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 14, 2018
ATRM Holdings, Inc. | ||
(Exact name of registrant as specified in its charter) | ||
Minnesota | 001-36318 | 41-1439182 |
(State or Other Jurisdiction
of Incorporation) |
(Commission
File Number) |
(IRS Employer
Identification No.) |
5215 Gershwin Avenue N., Oakdale, Minnesota | 55128 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (651) 704-1800
(Former Name or Former Address, If Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 | Entry into a Material Definitive Agreement. |
Digirad Joint Venture and Services Agreement
On December 14, 2018, ATRM Holdings, Inc. (“ATRM” or the “Company”) entered into a Joint Venture Agreement with Digirad Corporation (“Digirad”), forming Star Procurement, LLC (“Star Procurement”), with each of ATRM and Digirad holding a 50% interest (the “Joint Venture Agreement”). The purpose of the joint venture is for Star Procurement to purchase from third parties and sell building materials and related goods to KBS Builders, Inc. (“KBS”), the Company’s wholly owned subsidiary. Star Procurement entered into a Services Agreement on January 2, 2019 (the “Services Agreement”) with KBS in connection with the joint venture. Digirad’s capital contribution to the joint venture was $1.0 million. ATRM did not make a capital contribution.
Jeffrey E. Eberwein, Chairman of the Company’s Board of Directors (the “Board”), is also the Chairman of the Board of Directors of Digirad. Mr. Eberwein beneficially owns approximately 2.7% of Digirad’s outstanding shares of common stock and directly owns approximately 17.4% of ATRM’s outstanding common stock. Additionally, Mr. Eberwein is the manager of Lone Star Value Investors GP, LLC, the general partner of Lone Star Value Investors, LP (“LSVI”) and Lone Star Value Co-Invest I, LP (“LSV Co-Invest I”), which respectively own 222,577 shares and 374,562 shares of ATRM’s 10.00% Series B Cumulative Preferred Stock (the “Series B Stock”). Also, as of the date of the Joint Venture Agreement, Mr. Eberwein was the sole member of Lone Star Value Management, LLC (“LSVM”), the investment manager of LSVI.
The foregoing descriptions of the Joint Venture Agreement and the Services Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are filed herewith as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.
Purchase of LSVM
On April 1, 2019, the Company entered into a Membership Interest Purchase Agreement (the “LSVM Purchase Agreement”) with LSVM and Mr. Eberwein. Pursuant to the terms of the LSVM Purchase Agreement, Mr. Eberwein sold all of the issued and outstanding membership interests of LSVM to the Company (the “LSVM Acquisition”) for a purchase price of $100.00 subject to a working capital adjustment provision. Pursuant to the LSVM Purchase Agreement, the primary liabilities and assets of Lone Star Value Management existing prior to January 1, 2019 remain with Mr. Eberwein, including the $300,000 LSVM December 2018 Note (as defined and described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 18, 2019). The LSVM Acquisition closed simultaneously with the execution and delivery of the LSVM Purchase Agreement, and was deemed effective as of January 1, 2019 for accounting purposes, as a result of which LSVM became a wholly-owned subsidiary of ATRM. The LSVM Purchase Agreement contains representations, warranties, covenants and indemnification provisions customary for transactions of this type. The Company’s entry into the LSVM Purchase Agreement and the LSVM Acquisition were unanimously approved by a special committee of the Board comprised solely of independent directors.
The foregoing description of the LSVM Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the LSVM Purchase Agreement, which is filed herewith as Exhibit 10.3 and is incorporated herein by reference.
Amendments to KBS and EGBL Loan Agreements
On February 22, 2019, the Company entered into a Ninth Agreement of Amendment to Loan and Security Agreement (the “Ninth KBS Loan Amendment”) to amend the terms of the Loan and Security Agreement, dated as of February 23, 2016 (as amended, the “KBS Loan Agreement”), by and among the Company, KBS and Gerber Finance Inc. (“Gerber Finance”), providing KBS with a credit facility based on a formula tied to certain eligible assets of KBS. The Ninth KBS Loan Amendment amended the KBS Loan Agreement to extend the availability of up to $600,000 of overadvances through no later than February 23, 2020 in order to provide KBS with additional working capital.
On April 1, 2019, the Company entered into a Tenth Agreement of Amendment to Loan and Security Agreement (the “Tenth KBS Loan Amendment”) to amend the terms of the KBS Loan Agreement, and a Fifth Agreement of Amendment to Loan and Security Agreement (the “Fifth EGBL Loan Amendment”) to amend the terms of the Loan and Security Agreement, dated as of October 4, 2016 (as amended, the “EGBL Acquisition Loan Agreement”), by and among the Company, KBS, Edgebuilder, Inc., Glenbrook Building Supply, Inc., and Gerber Finance, providing financing for the Company’s acquisition of its EBGL business. The Tenth KBS Loan Amendment and the Fifth EGBL Loan Amendment amended the terms of the KBS Loan Agreement and the EGBL Acquisition Loan Agreement, respectively, to permit the Company’s acquisition of LSVM and to clarify the parties’ rights and duties in connection therewith, among other things.
In connection with each of the Ninth KBS Loan Amendment and the Tenth KBS Loan Amendment, Mr. Eberwein executed a reaffirmation of guaranty in favor of Gerber Finance relating to his unconditional guaranty of $600,000 of KBS’s obligations under the KBS Loan Agreement arising from the $600,000 of overadvances permitted under the Ninth KBS Loan Amendment.
On April 26, 2019, the Company entered into an Eleventh Agreement of Amendment to Loan and Security Agreement (the “Eleventh KBS Loan Amendment”) to amend the terms of the KBS Loan Agreement to (i) provide for increased borrowing capability; (ii) to eliminate the Leverage Ratio financial covenant required by Schedule III (Financial Covenants); and (iii) to amend the Net Loss covenant required by Schedule III (Financial Covenants). In addition, the Eleventh KBS Loan Amendment provided a waiver for certain covenants for the 2017 and 2018 fiscal years.
In connection with the Eleventh KBS Loan Amendment, Mr. Eberwein executed a reaffirmation of agreements in favor of Gerber Finance relating to his unconditional guaranty as described above and any other documents related to KBS.
Sale of Maine Facilities
Waterford
On April 3, 2019, 947 Waterford Road, LLC (“947 Waterford”) entered into a Purchase and Sale Agreement (the “Waterford Purchase Agreement”) with KBS, pursuant to which 947 Waterford purchased certain real property and related improvements (including buildings) located in Waterford, Maine (the “Waterford Facility”) from KBS (the “Waterford Transaction”), and acquired the Waterford Facility. The Waterford Purchase Agreement contains representations, warranties and covenants of KBS and 947 Waterford that are customary for a transaction of this nature. The purchase price of the Waterford Facility is $990,000, subject to adjustment for taxes and other charges and assessments.
947 Waterford is a wholly-owned indirect subsidiary of Digirad, formed for the purpose of acquiring and holding the Waterford Facility.
Paris
On April 3, 2019, 300 Park Street, LLC (“300 Park”) entered into a Purchase and Sale Agreement (the “Park Purchase Agreement”) with KBS, pursuant to which 300 Park purchased certain real property and related improvements and personal property (including buildings, machinery and equipment) located in Paris, Maine (the “Park Facility”) from KBS (the “Park Transaction”), and acquired the Park Facility. The Park Purchase Agreement contains representations, warranties and covenants of KBS and 300 Park that are customary for a transaction of this nature. The purchase price of the Park Facility is $2.9 million, subject to adjustment for taxes and other charges and assessments.
300 Park is a wholly-owned indirect subsidiary of Digirad, formed for the purpose of acquiring and holding the Park Facility.
The foregoing descriptions of the Waterford Purchase Agreement and the Park Purchase Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are filed herewith as Exhibits 10.4 and 10.5, respectively, and are incorporated herein by reference.
Lease of Maine Facilities
On April 3, 2019, KBS entered into a separate lease agreement with each of 947 Waterford (the “Waterford Lease”) and 300 Park (the “Park Lease”). The Waterford Lease has an initial term of 120 months, which is subject to extension. The base rental payments associated with the initial term under the Waterford Lease are estimated to be between $1.2 million and $1.3 million in the aggregate. The Park Lease has an initial term of 120 months, which is subject to extension. The base rental payments associated with the initial term under the Park Lease are estimated to be between $3.3 million and $3.6 million in the aggregate. ATRM has unconditionally guaranteed the performance of all obligations under the Waterford Lease and Park Lease to be performed by KSB, including, without limitation, the payment of all required rent.
On April 3, 2019, KBS signed a lease (the “Oxford Lease”) with 56 Mechanic Falls Road, LLC (“56 Mechanic”), which will be effective upon the closing of the sale (the “Oxford Transaction”) of the certain real property and related improvements and personal property owned by RJF – Keiser Real Estate, LLC (“RJF”) (including buildings, fixtures, and other improvements on the land, and all machinery and equipment and other personal property, if any, owned by RJF and located on the property) located in Oxford, Maine. The Oxford Lease was amended as of April 18, 2019 (the “Oxford Lease Amendment”) to provide that the commencement date will be the later of the closing of the Oxford Transaction and the date that possession of the leased premises is able to be delivered to KBS. The Oxford Transaction is pursuant to that certain Purchase and Sale Agreement between 56 Mechanic and RJF. The Oxford Lease has an initial term of 120 months, which is subject to extension. The base rental payments associated with the initial term under the Oxford Lease are estimated to be between $1.4 million and $1.6 million in the aggregate. ATRM has unconditionally guaranteed the performance of all obligations under the Oxford Lease to be performed by KBS, including, without limitation, the payment of all required rent.
The foregoing descriptions of the Waterford Lease, the Park Lease, the Oxford Lease and the Oxford Lease Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of such documents, which are filed herewith as Exhibits 10.6, 10.7, 10.8 and 10.9, respectively, and are incorporated herein by reference.
Item 4.01 | Changes in Registrant’s Certifying Accountant. |
(a) Dismissal of Previous Independent Registered Public Accountant.
On April 1, 2019, the Company dismissed Boulay PLLP (“Boulay”) as the Company’s independent registered public accounting firm. The decision to dismiss Boulay was approved by the Audit Committee of the Board (the “Audit Committee”) on March 29, 2019. Boulay will continue to serve as the Company’s auditor for the duration of its review of the Company’s interim financial statements to be included in the Company’s Quarterly Reports on Form 10-Q for the quarters ended June 30, 2017 and September 30, 2017 and its audit of the consolidated financial statements of the Company as of and for the year ended December 31, 2017, which continuation was also approved by the Audit Committee. During the fiscal years ended December 31, 2015 and 2016 and during the period subsequent to December 31, 2016 to the date hereof, there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) with Boulay on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Boulay, would have caused Boulay to make reference to the subject matter of such disagreements in connection with its reports on the financial statements for such years.
Boulay’s reports on the Company’s financial statements for the fiscal years ended December 31, 2015 and 2016 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.
During the Company’s fiscal years ended December 31, 2015 and 2016 and during the period subsequent to December 31, 2016 to the date hereof, there have been no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K), except that management identified a material weakness in the Company’s internal control over financial reporting related to inadequate accounting processes and internal control procedures pertaining to the operations of KBS for the fiscal years ended December 31, 2015 and 2016. Management also identified a material weakness in the Company’s internal control over financial reporting related to inadequate accounting processes and internal control procedures pertaining to the operations of the Company’s EBGL business for the fiscal year ended December 31, 2016 and three months ending March 31, 2017. However, there was no disagreement between the Company and Boulay with respect to these determinations. The Audit Committee has authorized Boulay to respond fully to any inquiries of the Company’s successor independent registered public accounting firm concerning these material weaknesses, and Boulay has agreed to provide such information to the successor independent registered public accounting firm.
The Company has provided Boulay with a copy of the disclosures required by Item 304(a) of Regulation S-K contained in this Current Report on Form 8-K and has requested that Boulay furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether Boulay agrees with the statements made by the Company in this Current Report on Form 8-K and, if not, stating the respects in which it does not agree. A copy of Boulay’s letter, dated April 25, 2019, is filed as Exhibit 16.1 to this Current Report on Form 8-K.
(b) Engagement of New Independent Registered Public Accountant .
On March 29, 2019, the Audit Committee selected BDO USA, LLP (“BDO”) as the Company’s independent registered public accounting firm, subject to completion of BDO’s standard acceptance procedures. On April 15, 2019, BDO was engaged to perform independent audit services for the fiscal year ending December 31, 2018. During the fiscal years ended December 31, 2016 and 2015 and during the period subsequent to December 31, 2016 to the date hereof, neither the Company nor anyone acting on its behalf consulted with BDO regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to the consolidated financial statements of the Company; or (ii) any matter that was the subject of a disagreement as described in Item 304(a)(1)(iv) of Regulation S-K or a “reportable event” as described in Item 304(a)(1)(v) of Regulation S-K.
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On February 16, 2019, Galen Vetter notified the Company of his resignation from the Company’s Board, effective February 18, 2019. Mr. Vetter determined to resign from the Company’s Board due to his commitments to other companies. The resignation did not result from any disagreement with the Company or any person affiliated with the Company.
On April 3, 2019, James Elbaor notified the Company of his resignation from the Company’s Board, effective April 3, 2019. Mr. Elbaor determined to resign from the Company’s Board to pursue other endeavors. The resignation did not result from any disagreement with the Company or any person affiliated with the Company.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
* The schedules and exhibits to this Exhibit have been omitted. The Company agrees to furnish a copy of the omitted schedules and exhibits to the Securities and Exchange Commission on a supplemental basis upon its request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ATRM HOLDINGS, INC. | |||
Dated: April 26, 2019 | By: | /s/ Stephen A. Clark | |
Name: | Stephen A. Clark | ||
Title: | Chief Financial Officer |
ARTICLE I
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DEFINITIONS
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1
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Section 1.1
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Certain Definitions
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1
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ARTICLE II
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ORGANIZATIONAL MATTERS
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10
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Section 2.1
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Legal Status
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10
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Section 2.2
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Name
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10
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Section 2.3
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Purpose
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10
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Section 2.4
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Term
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11
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ARTICLE III
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MEMBERS AND MEMBERSHIP INTERESTS
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11
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Section 3.1
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Holders
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11
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Section 3.2
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Confidentiality
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11
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Section 3.3
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Certification
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12
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ARTICLE IV
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CONTRIBUTIONS AND CAPITAL ACCOUNTS
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12
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Section 4.1
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Capital Contributions
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12
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Section 4.2
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Loans
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12
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Section 4.3
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Return of Capital Contributions; Interest
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12
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Section 4.4
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Capital Accounts
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12
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Section 4.5
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Limitation on Liability
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13
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ARTICLE V
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DISTRIBUTIONS
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13
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Section 5.1
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General
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13
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Section 5.2
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In-Kind Distributions
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13
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Section 5.3
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Tax Distributions
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13
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ARTICLE VI
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ALLOCATIONS
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14
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Section 6.1
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Allocations of Profit or Loss
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14
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Section 6.2
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Special Allocations
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14
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Section 6.3
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Curative Allocations
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16
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Section 6.4
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Section 704(c) and Capital Account Revaluation Allocations
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16
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Section 6.5
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Additional Allocation Rules
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17
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Section 6.6
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Tax Filings, Elections and Cooperation
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17
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Section 6.7
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Partnership Representative
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19
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Section 6.8
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Survival
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20
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ARTICLE VII
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MANAGEMENT
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21
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Section 7.1
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Management of the Company
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21
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Section 7.2
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Resignation
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22
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Section 7.3
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Vacancies
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22
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Section 7.4
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Action by the Board
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22
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Section 7.5
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Action by the Members
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22
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Section 7.6
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Officers
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23
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Section 7.7
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Limitation on Authority of Members
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25
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ARTICLE VIII
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EXCULPATION AND INDEMNIFICATION
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25
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Section 8.1
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Exculpation
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25
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Section 8.2
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Indemnification
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26
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ARTICLE IX
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BOOKS AND RECORDS
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27
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Section 9.1
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Books and Records
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27
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Section 9.2
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Bank Accounts
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28
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ARTICLE X
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TRANSFERS
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28
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Section 10.1
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Restrictions on Transfers
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28
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Section 10.2
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Other Transfer Conditions, Restrictions and Requirements
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28
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Section 10.3
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Termination of Status
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28
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ARTICLE XI
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WITHDRAWAL AND DISSOLUTION
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29
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Section 11.1
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Withdrawal
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29
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Section 11.2
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Events of Dissolution
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29
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Section 11.3
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Liquidating Distributions
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29
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Section 11.4
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Conduct of Winding-Up
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29
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Section 11.5
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Deficit Capital Accounts
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29
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ARTICLE XII
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REPRESENTATIONS, WARRANTIES, AGREEMENTS AND OTHER MATTERS
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30
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Section 12.1
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Holder Representations
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30
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ARTICLE XIII
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MISCELLANEOUS
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31
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Section 13.1
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Counsel Clause
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31
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Section 13.2
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Amendment of Agreement
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31
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Section 13.3
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Remedies
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31
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Section 13.4
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Waiver
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31
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Section 13.5
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Notices
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32
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Section 13.6
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Entire Agreement
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32
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Section 13.7
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Binding Effect; Benefits
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32
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Section 13.8
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Severability
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32
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Section 13.9
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Headings
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32
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Section 13.10
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No Strict Construction
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32
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Section 13.11
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Interpretation
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32
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Section 13.12
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Counterparts
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33
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Section 13.13
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Governing Law
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33
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Section 13.14
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Jurisdiction and Venue
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33
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ATRM HOLDINGS, INC.
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By:
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/s/Daniel M. Koch
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Name:
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Daniel M. Koch
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Title:
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President & CEO
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Holder Name & Address
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Units
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Capital Contribution
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DIGIRAD CORPORATION
1048 Industrial Court
Suwanee, Georgia 30024
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50
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$1,000,000
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ATRM HOLDINGS, INC.
5215 Gershwin Avenue, N.
Oakdale, MN 55128
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50
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0
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TOTAL
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100
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$1,000,000
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2.
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SERVICES
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3.
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PAYMENT TERMS
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4.
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PROPRIETARY RIGHTS
. This Agreement and the performance of this Agreement will not affect the ownership of any intellectual property rights. No Party will gain, by virtue of this Agreement, any rights of ownership of any rights related to the intellectual property owned by any other Party.
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5.
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CONFIDENTIALITY
. Each Party shall keep any confidential or proprietary information of the other Party acquired pursuant to or in connection with this Agreement strictly confidential.
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7.
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TERM AND TERMINATION
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8.
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MISCELLANEOUS
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STAR
PROCUREMENT, LLC
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By:
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/s/
David J. Noble
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Name:
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David J. Noble
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Title:
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Manager
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STAR
PROCUREMENT, LLC
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By:
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/s/
Stephen Clark
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Name:
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Stephen Clark
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Title:
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Manager
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KBS BUILDERS, INC. | |||
By: | /s/ Daniel M. Koch | ||
Name: | Daniel M. Koch | ||
Title: | President |
1.
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Services.
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2.
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Additional Terms Related to Services
.
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Exhibit 10.2
2.
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SERVICES
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3.
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PAYMENT TERMS
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4.
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PROPRIETARY RIGHTS
. This Agreement and the performance of this Agreement will not affect the ownership of any intellectual property rights. No Party will gain, by virtue of this Agreement, any rights of ownership of any rights related to the intellectual property owned by any other Party.
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5.
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CONFIDENTIALITY
. Each Party shall keep any confidential or proprietary information of the other Party acquired pursuant to or in connection with this Agreement strictly confidential.
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7.
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TERM AND TERMINATION
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8.
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MISCELLANEOUS
.
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STAR
PROCUREMENT, LLC
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By:
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/s/
David J. Noble
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Name:
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David J. Noble
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Title:
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Manager
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STAR
PROCUREMENT, LLC
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By:
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/s/
Stephen Clark
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Name:
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Stephen Clark
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Title:
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Manager
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KBS BUILDERS, INC. | |||
By: | /s/ Daniel M. Koch | ||
Name: | Daniel M. Koch | ||
Title: | President |
1.
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Services.
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2.
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Additional Terms Related to Services
.
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Exhibit 10.3
MEMBERSHIP INTEREST PURCHASE AGREEMENT
dated as of April 1, 2019
by and among
ATRM HOLDINGS, INC., a Minnesota corporation,
LONE STAR VALUE MANAGEMENT, LLC, a Connecticut limited liability company,
and
JEFFREY E. EBERWEIN
ARTICLE I PURCHASE AND SALE | 1 |
Section 1.1 Purchase and Sale of the Membership Interests | 1 |
Section 1.2 Working Capital Adjustment | 2 |
Section 1.3 Closing | 2 |
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MEMBER | 3 |
Section 2.1 Organization, Etc | 3 |
Section 2.2 Capitalization | 3 |
Section 2.3 Authority Relative to this Agreement | 3 |
Section 2.4 Consents and Approvals; No Violations | 4 |
Section 2.5 Financial Statements | 4 |
Section 2.6 No Undisclosed Liabilities; Discharge of Obligations | 4 |
Section 2.7 Compliance with Law | 4 |
Section 2.8 Material Contracts | 5 |
Section 2.9 Litigation | 5 |
Section 2.10 Taxes | 5 |
Section 2.11 Owned and Leased Properties | 6 |
Section 2.12 Intellectual Property; Personal Information | 7 |
Section 2.13 Insurance | 7 |
Section 2.14 Environmental Laws | 7 |
Section 2.15 Employee and Labor Matters | 8 |
Section 2.16 Employee Plans | 8 |
Section 2.17 Brokers and Finders | 9 |
Section 2.18 Absence of Questionable Payments | 9 |
Section 2.19 Books and Records | 10 |
Section 2.20 Bank Accounts; Powers of Attorney | 10 |
Section 2.21 Certain Transactions | 10 |
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE MEMBER | 10 |
Section 3.1 Ownership of Membership Interests | 10 |
Section 3.2 Authority Relative to this Agreement | 11 |
Section 3.3 Consents and Approvals; No Violations | 11 |
Section 3.4 Litigation | 11 |
Section 3.5 Brokers and Finders | 11 |
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER | 11 |
Section 4.1 Corporate Organization, Etc | 11 |
Section 4.2 Authority Relative to this Agreement | 12 |
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Section 4.3 Consents and Approvals; No Violations | 12 |
Section 4.4 Financial Statements | 12 |
Section 4.5 Compliance with Law | 12 |
Section 4.6 Litigation | 13 |
Section 4.7 Brokers and Finders | 13 |
Section 4.8 Insurance | 13 |
Section 4.9 Environmental Laws | 13 |
ARTICLE V COVENANTS | 13 |
Section 5.1 Public Announcements | 13 |
Section 5.2 Tax Covenants | 13 |
ARTICLE VI INDEMNIFICATION | 15 |
Section 6.1 Indemnification | 15 |
ARTICLE VII MISCELLANEOUS | 17 |
Section 7.1 Entire Agreement; Binding Effect; Assignment | 17 |
Section 7.2 Notices | 17 |
Section 7.3 Governing Law; Waiver of Jury Trial | 18 |
Section 7.4 Expenses | 18 |
Section 7.5 Severability | 18 |
Section 7.6 Specific Performance | 19 |
Section 7.7 Counterparts | 19 |
Section 7.8 Interpretation | 19 |
Section 7.9 Amendment and Modification; Waiver | 19 |
Section 7.10 Legal Counsel | 20 |
Section 7.11 Definitions | 20 |
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MEMBERSHIP INTEREST PURCHASE AGREEMENT
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “ Agreement ”), dated as of April 1, 2019, is by and among ATRM HOLDINGS, INC., a Minnesota corporation (the “ Buyer ”), LONE STAR VALUE MANAGEMENT, LLC, a Connecticut limited liability company (the “ Company ”), and JEFFREY E. EBERWEIN, the sole member of the Company (the “ Member ”).
RECITALS
WHEREAS, as of the date of this Agreement, 100% of the issued and outstanding membership interests of the Company (the “ Membership Interests ”) are owned by the Member;
WHEREAS, the parties desire to enter into this Agreement to provide for the acquisition by the Buyer of the Company through the purchase by the Buyer from the Member of all of the Membership Interests, effective as of January 1, 2019 for accounting purposes;
WHEREAS, the Buyer issued a promissory note dated December 17, 2018 in the principal amount of $300,000.00 for benefit of the Company in exchange for the same amount in cash, with any then accrued and unpaid interest and any other amounts payable under such note due and payable on November 30, 2020 (the “ Buyer Note ”);
WHEREAS, the Member currently serves as Chairman of the Buyer’s Board of Directors and directly owns 418,017 shares of the Buyer’s common stock (the “ Buyer Common Stock ”), or approximately 17% of the shares outstanding, and may be deemed to beneficially own (i) 374,561 shares of the Buyer’s 10.00% Series B Cumulative Preferred Stock (the “ Buyer Series B Stock ”) and unsecured promissory notes with aggregate principal and interest outstanding in the amount of $1,505,031 held by Lone Star Value Co-Invest I, LP (“ LSV Co-Invest I ”), and (ii) 222,577 shares of Buyer Series B Stock held by Lone Star Value Investors, LP (“ LSVI ”), due to the Member’s status as the general partner of LSVI and LSV Co-Invest I; and
WHEREAS, the Buyer’s entry into this Agreement and the consummation of the Contemplated Transactions (as defined below) were approved by the independent members of the Buyer’s Board of Directors.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
ARTICLE
I
PURCHASE AND SALE
Section 1.1 Purchase and Sale of the Membership Interests . Upon the terms and subject to the conditions of this Agreement, the Member agrees to sell to the Buyer, and the Buyer agrees to purchase from the Member, all of the Membership Interests at the Closing (the “ Membership Interest Purchase ”), with such transaction deemed effective as of January 1, 2019 for accounting purposes. The aggregate purchase price for the Membership Interests shall be $100.00, subject to adjustment as provided in Section 1.2 .
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Section 1.2 Working Capital Adjustment .
(a) The Member has delivered to the Buyer a statement setting forth the Member’s determination of Working Capital as of immediately prior to January 1, 2019 (the “ Working Capital Statement ”), which Working Capital Statement contains all information reasonably necessary to determine Working Capital as of immediately prior to January 1, 2019, includes appropriate supporting documentation, and is certified by the Member to be true and correct. “ Working Capital ” shall mean the total current assets of the Company less than total current liabilities of the Company, each as determined in accordance with generally accepted accounting principles in the United States of America, consistently applied; provided, however, any accrued and unpaid interest and any other amounts payable under the Buyer Note shall be deemed to constitute a current asset of the Company to be reflected in the calculation of Working Capital.
(b) The Buyer shall give written notice to the Member of any objection to the Working Capital Statement (the “ Objection Notice ”) within thirty (30) days after the Closing Date. The Objection Notice shall specify in reasonable detail the items in the Working Capital Statement to which the Buyer objects and shall provide a summary of reasons for such objections. In the event the Buyer does not deliver the Objection Notice within such thirty (30) day period, the Member’s determination of Working Capital as set forth in the Working Capital Statement shall be deemed to be final and binding on the Buyer.
(c) The Buyer and the Member shall use good faith efforts to resolve any dispute involving any matter set forth in the Objection Notice. If the parties are unable to resolve any dispute involving any matter set forth in the Objection Notice within thirty (30) days after receipt by the Member thereof, such dispute shall be referred for decision to a nationally recognized independent accounting firm chosen by the Buyer and reasonably acceptable to the Member (the “ Accounting Firm ”) to decide the dispute within thirty (30) days of such referral. The scope of the Accounting Firm’s engagement shall be limited to the resolution of the disputed items described in the Objection Notice that the Member and the Buyer are unable to resolve, and the recalculation, if any, of the Working Capital in light of such resolution. The decision by the Accounting Firm with respect to such disputed items shall be final and binding on the Member and the Buyer and shall be based upon a review of any relevant books and records or other documents requested by the Accounting Firm. The cost of retaining the Accounting Firm shall be borne equally by the Member and the Buyer.
(d) If the Working Capital as of immediately prior to January 1, 2019, as finally determined in accordance with this Section 1.2 , is greater than $0.00, then the Buyer shall pay the difference to the Member by the later of (x) fifteen (15) days after its final determination and (y) June 30, 2019, by wire transfer of immediately available United States funds into such accounts as shall have been designated by the Member in writing to the Buyer. If the Working Capital as of immediately prior to January 1, 2019, as finally determined, is less than $0.00, then the Member shall pay the difference to the Buyer by the later of (x) fifteen (15) days after its final determination and (y) June 30, 2019, by wire transfer of immediately available United States funds into such account or accounts as shall have been designated by the Buyer in writing to the Member.
Section 1.3 Closing .
(a) Subject to the terms and conditions of this Agreement, the consummation of the Contemplated Transactions (the “ Closing ”) shall take place simultaneously with the execution and delivery of this Agreement, and the date and time of the completion of the foregoing shall be deemed the “ Closing Date ”. The Closing shall take place via the electronic exchange of documents and signatures. The Closing shall be deemed effective as of 11:59 p.m., Eastern Time, on the Closing Date.
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(b) At the Closing, the Member will deliver to the Buyer good and valid title to the Membership Interests, free and clear of all Encumbrances other than Permitted Liens (if any), together with an executed form of assignment for the Membership Interests in a form reasonably acceptable to the Buyer.
ARTICLE
II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MEMBER
Except as set forth in the Company’s disclosure schedule provided herewith (the “ Company Disclosure Schedule ”), the Company and the Member, jointly and severally, hereby represent and warrant to the Buyer, as of the date hereof and as of the Closing Date, except to the extent certain representations and warranties are limited to a certain date set forth in the applicable section, as follows:
Section 2.1 Organization, Etc. The Company is duly formed, validly existing and in good standing under the Laws of the State of Connecticut and has all requisite limited liability company power and authority to conduct its business as it is now being conducted and to own, lease and operate its properties and assets. The Company is qualified to do business and is in good standing in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, could not reasonably be expected to have a Company Material Adverse Effect. True and complete copies of the organizational and governing documents of the Company as presently in effect have been heretofore made available to the Buyer. The Company is not in violation of any term or provision of its organizational or governing documents. The Company does not have, and has never had, any subsidiaries.
Section 2.2 Capitalization . The Member is the sole member of the Company and the owner of all outstanding Membership Interests. All outstanding Membership Interests were duly authorized, validly issued, fully paid and non-assessable, and issued free from preemptive rights and in compliance with all applicable securities Laws. There are no outstanding (a) securities convertible into or exchangeable for Membership Interests of the Company, (b) options, warrants or other rights to purchase or subscribe for securities of the Company, or (c) contracts, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any securities of the Company, any such convertible or exchangeable securities or any such options, warrants or rights, pursuant to which, in any of the foregoing cases, the Company is subject or bound. There are no voting trusts, voting agreements, proxies, Membership Interest holders’ agreements or other similar instruments restricting or relating to the rights of the Member to vote, transfer or receive dividends with respect to any Membership Interests or with respect to the management or control of the Company.
Section 2.3 Authority Relative to this Agreement . The Company has all requisite limited liability company power and authority to execute and deliver the Transaction Documents to which it is a party, to perform its obligations thereunder and to consummate the Contemplated Transactions. The execution and delivery of the Transaction Documents to which it is a party, the performance of its obligations thereunder and the consummation of the Contemplated Transactions have been duly and validly authorized by all required limited liability company or other action on the part of the Company and no other limited liability company or other proceedings on the part of the Company are necessary to authorize the Transaction Documents to which it is a party or to consummate the Contemplated Transactions. This Agreement has been, and each of the other Transaction Documents to which it is a party will be, duly and validly executed and delivered by the Company and, assuming this Agreement has been, and each of the other Transaction Documents to which it is a party will be, duly authorized, executed and delivered by the other parties thereto, this Agreement constitutes, and each of the other Transaction Documents to which it is a party will constitute, a legal, valid and binding obligation of the Company, enforceable against it in accordance with their respective terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other Laws regarding fraudulent conveyances and preferential transfers and subject to the limitations imposed by general equitable principles (regardless whether such enforceability is considered in a proceeding at law or in equity) (collectively, the “ Bankruptcy and Equity Principles ”).
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Section 2.4 Consents and Approvals; No Violations . Except as set forth on Section 2.4 of the Company Disclosure Schedule, none of the execution or delivery of any of the Transaction Documents by the Company, the performance by the Company of any of its obligations thereunder, or the consummation of any of the Contemplated Transactions by the Company will (a) violate any provision of the organizational or governing documents of the Company, (b) require it to obtain or make any consent, waiver, approval, exemption, declaration, license, authorization or permit of, or registration or filing with or notification to, any federal, state, local or foreign government, executive official thereof, governmental, administrative or regulatory authority, agency, body or commission, including any court of competent jurisdiction, domestic or foreign (each, a “ Governmental Entity ”), (c) require a consent under, result in a violation or breach of, constitute (with or without notice or lapse of time or both) a default (or give rise to any right of termination, cancellation, amendment or acceleration or any obligation) under, or result in the creation of any Encumbrance on any of the properties or assets of the Company pursuant to, any of the terms, conditions or provisions of any Material Contract, except for any consents obtained prior to the Closing, or (d) violate any Law of any Governmental Entity applicable to the Company or by which the Company or any of its properties or assets is bound.
Section 2.5 Financial Statements . The Company has previously delivered or made available to the Buyer true and complete copies of the balance sheet of the Company as of June 30, 2018 and December 31, 2018 (collectively, the “ Company Balance Sheet ”). The Company Balance Sheet (A) has been prepared from, and is in accordance with, the books and records of the Company, and (B) fairly presents in all material respects the financial position of the Company as of the date thereof.
Section 2.6 No Undisclosed Liabilities; Discharge of Obligations . The Company has no outstanding liabilities, indebtedness or known, defined financial obligations over $5,000, except as and to the extent set forth, disclosed in, reflected in or otherwise described in the Company Balance Sheet or in Section 2.6 of the Company Disclosure Schedule. The Company has no indebtedness for borrowed money immediately prior to Closing.
Section 2.7 Compliance with Law .
(a) Except as set forth on Section 2.7 of the Company Disclosure Schedule, (i) neither the Company nor the Member nor, to the Knowledge of the Company, any officer, manager or employee of the Company, in such capacity, has received notice from any Governmental Entity of, or to the Knowledge of the Company, is charged or threatened with or under investigation with respect to, any violation of any provision of any applicable Law and (ii) the Company is, and has been for the past three (3) years, in compliance in all material respects with all Laws applicable to it or any of its businesses, properties or assets.
(b) The Company currently is not required to be registered as an investment adviser with the U.S. Securities and Exchange Commission (“ SEC ”), and is currently an exempt reporting advisor with the State of Connecticut reporting to the SEC.
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Section 2.8 Material Contracts .
(a) Section 2.8(a) of the Company Disclosure Schedule sets forth a list of all Contracts that are material to the Company to which it is a party or by which it or any of its properties or assets is bound, including, without limitation, (i) any employment Contract or other Contract for services that is not terminable at will without liability for any penalty or severance payment, (ii) any Contract involving annual payments or receipts by the Company of $25,000 or more, (iii) any Contract containing an exclusivity provision that restricts the Company’s business or any Contract limiting the Company’s freedom to compete in any line of business, in any geographic area or with any Person, and (iv) any Contract providing for the borrowing or lending of money or any guarantee except for those providing funds to Buyer or Buyer’s direct or indirect subsidiaries (collectively, the “ Material Contracts ”). The Company has made available to the Buyer true, correct and complete copies of all Material Contracts.
(b) Each of the Material Contracts constitutes the valid, legally binding and enforceable obligation of the Company and, to the Knowledge of the Company, each of the other parties thereto, except as may be limited by applicable Bankruptcy and Equity Principles. Each Material Contract is in full force and effect.
(c) The Company is not in breach or default in any material respect, and no event has occurred that with notice or lapse of time or both would constitute such a breach or default by the Company or permit termination, modification or acceleration, of or under any of the Material Contracts and, to the Knowledge of the Company, no other party to any Material Contract is in breach or default in any material respect, and no event has occurred that with notice or lapse of time or both would constitute such a breach or default by such party, of or under any Material Contract. The Company has not received written notice of a claim against the Company by any party to a Material Contract in respect of any breach or default thereunder, except as otherwise described in Section 2.8(c) of the Company Disclosure Schedule.
(d) The Company has not received any impending or forthcoming notice of termination, cancellation, material reduction of services or non-renewal that is currently in effect with respect to any Material Contract and, to the Knowledge of the Company, no other party to a Material Contract plans to terminate, cancel or not renew, or materially reduce the services provided to it under, any such Material Contract.
Section 2.9 Litigation . Except as set forth on Section 2.7 of the Company Disclosure Schedule or otherwise previously disclosed in writing to the Buyer, there is no action, suit or proceeding pending or, to the Knowledge of the Company, threatened against the Company or any of its properties by or before any Governmental Entity. The Company is not subject to any outstanding injunction, writ, judgment, order or decree of any Governmental Entity. There is no action, suit or proceeding pending or, to Knowledge of the Company, threatened against any current or former officer, manager, employee or consultant of the Company in his or her capacity as such, except as otherwise disclosed in Section 2.9 of the Company Disclosure Schedule or otherwise previously disclosed in writing to the Buyer. There is no action, suit or proceeding pending or, to the Knowledge of the Company, threatened against the Company by or before any Governmental Entity that questions the validity of any of the Transaction Documents or any action to be taken in connection with the consummation of any of the Contemplated Transactions or would otherwise prevent or materially delay the consummation of any of the Contemplated Transactions.
Section 2.10 Taxes . Except as set forth in Section 2.10 of the Company Disclosure Schedule:
(a) The Company or the Member has:
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(i) duly and timely filed, or caused to be filed, in accordance with applicable Law all Company Tax Returns, each of which is true, correct and complete,
(ii) duly and timely paid in full, or caused to be paid in full, all Company Taxes (including but not limited to withholding, payroll and employment Taxes) due and payable (whether or not shown on any Company Tax Return) on or prior to the Closing Date, and
(iii) properly accrued on its books and records a provision for the payment of all Company Taxes that are due, are claimed to be due, or may or will become due with respect to any Pre-Closing Period or the portion ending on the Closing Date of any Straddle Period.
(b) There is no power of attorney in effect with respect or relating to any Company Tax or Company Tax Return.
(c) No audit, action, assessment, examination, hearing, inquiry or investigation is pending, or to the Knowledge of the Company, threatened or proposed with regard to any Company Tax or Company Tax Return.
(d) The statute of limitations applicable or relating to any Company Tax or any Company Tax Return has never been modified, extended or waived, nor has any request been made in writing for any such modification, extension or waiver.
(e) No jurisdiction where a Company Tax Return has not been filed or Company Tax has not been paid has made or, to the Knowledge of the Company, threatened to make a claim for the payment of any Company Tax or the filing of any Company Tax Return.
(f) The Company is and always has been treated as a disregarded entity for federal income tax purposes. The Company has never filed an entity classification election under Code Section 7701.
Section 2.11 Owned and Leased Properties .
(a) The Company owns no interest in any real property. Section 2.11 of the Company Disclosure Schedule contains a correct and complete description of all leases, licenses, permits, subleases and occupancy agreements or arrangements, together with any amendments thereto (each a “ Real Property Lease ” and collectively, the “ Real Property Leases ”), with respect to real property to which the Company is a party to, bound by or enjoys the benefits of (the “ Leased Real Property ”), including the address and a description of uses by the Company of the Leased Real Property.
(b) The Leased Real Property constitutes all of the land, buildings, structures, improvements, fixtures and other interests and rights in real property that are used or occupied by the Company in connection with the business of the Company.
(c) The Company does not have any oral or written agreement with any real estate broker, agent or finder with respect to the Leased Real Property.
(d) True, complete and accurate copies of the Real Property Leases have been provided to the Buyer and the Real Property Leases are listed in Section 2.11(d) of the Company Disclosure Schedule.
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(e) Each Real Property Lease is valid and binding on the Company and, to the Company’s Knowledge, each other party thereto, and is in full force and effect. Except as set forth in Section 2.11(e) of the Company Disclosure Schedule, the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in any Real Property Lease, subleased all or any part of the space demised thereby, or granted any right to the possession, use, occupancy or enjoyment of any Leased Real Property, to any third party. No option has been exercised under any of such Real Property Leases, except options whose exercise has been evidenced by a written document, a true, correct and complete copy of which has been made available to Buyer with the corresponding Real Property Lease. No Real Property Lease will cease to be legal, valid, binding, enforceable and in full force and effect on terms identical to those currently in effect or require consent or notice solely as a result of the consummation of any of the Contemplated Transactions, nor will the consummation of any such transactions constitute a breach or default under any such Real Property Lease or otherwise give the landlord a right to terminate such Real Property Lease. The Company has not received any written notice that it has violated any Law applicable to the operation of the Leased Real Property or any covenant, condition, easement or restriction of record affecting any of the Leased Real Property. All brokerage commissions and other compensation and fees payable by the Company by reason of the Real Property Leases, if any, have been paid in full, and to the Company’s Knowledge, all brokerage commissions and other compensation and fees payable by any other Persons by reason of the Real Property Leases have been paid in full.
Section 2.12 Intellectual Property; Personal Information .
(a) There is no Intellectual Property owned or used by the Company that is material to the Company’s business as currently being conducted. Immediately following the Closing Date, Company will continue to have, and will be permitted to exercise all of Company’s rights under, and will have the same rights with respect to, all Intellectual Property necessary to enable the Company to conduct its business to the same extent Company would have had, and been able to exercise, had the Contemplated Transactions not occurred.
(b) To the Knowledge of the Company, there is no unauthorized use, disclosure, infringement or misappropriation of any Intellectual Property of the Company by any third party. The Company has not received any notice or other communication (in writing or otherwise) of any actual, alleged, possible or potential infringement, misappropriation or unlawful use of, and, to the Knowledge of the Company, the Company is not infringing, misappropriating or making unlawful use of, any Intellectual Property owned by any third party. There are no actions, suits or proceedings that are pending or, to the Knowledge of the Company, threatened against the Company with respect to any infringement, misappropriation or unlawful use of any Intellectual Property owned or used by any third party.
Section 2.13 Insurance . The Company’s liability insurance policies are listed on Section 2.13 of the Company Disclosure Schedule. True, complete and accurate copies of the Company’s insurance policies have been provided to the Buyer. There are no pending claims under any of such policies.
Section 2.14 Environmental Laws . To the Knowledge of the Company, the Company (i) is in material compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety or the environment and with respect to hazardous or toxic substances or wastes, pollutants or contaminants (“ Environmental Laws ”), (ii) has received all material permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business, if any, and (iii) is in material compliance with all terms and conditions of any such permit, license or approval, if any, except where, in each of the three foregoing clauses, the failure to so comply or receive such approvals could not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
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Section 2.15 Employee and Labor Matters . The Company is not a party to any collective bargaining or other labor union Contract applicable to Persons employed by it, no collective bargaining agreement is being negotiated by the Company, and, to the Knowledge of the Company, there are no activities or proceedings of any labor union to organize any of the employees of the Company. Except as set forth in Section 2.15 of the Company Disclosure Schedule, (a) the Company is in compliance in all material respects with all applicable Laws relating to employment and employment practices, wages, hours, occupational safety, health standards, severance payments, equal opportunity, payment of social security, national insurance and other Taxes, and terms and conditions of employment, (b) there are no charges with respect to or relating to the Company, or to the Knowledge of the Company, threatened by or before any Governmental Entity responsible for the prevention of unlawful or discriminatory employment practices or unfair labor practices, and (c) there is no strike, work stoppage, work slowdown, lockout, picketing, concerted refusal to work overtime, or other similar labor activity pending or, to the Knowledge of the Company, threatened against or involving the Company or within the last three years. All sums due for employee, consultant and independent contractor compensation and benefits, including pension and severance benefits, and all vacation time owing to any employees of the Company have been duly and adequately accrued on the accounting records of the Company. Except to the extent a failure to correctly characterize or treat would not result in material liability to the Company, all individuals characterized and treated by the Company as consultants or independent contractors are properly treated as independent contractors under all applicable Laws. Except to the extent a failure to correctly classify would not result in material liability to the Company, all employees of the Company classified as exempt under the Fair Labor Standards Act and state and local wage and hour Laws are properly classified.
Section 2.16 Employee Plans .
(a) Section 2.16(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of:
(i) all “employee benefit plans,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), with respect to which the Company has any obligation or liability, contingent or otherwise (the “ Benefit Plans ”);
(ii) all current managers and officers of the Company; and
(iii) all employment, consulting, termination, profit sharing, severance, change of control, individual compensation and indemnification agreements, and all bonus and other incentive compensation, deferred compensation, salary continuation, disability, severance, equity award, option, equity purchase, educational assistance, legal assistance, club membership, employee discount, employee loan, credit union and vacation agreements, policies and arrangements under which the Company has any obligation or liability (contingent or otherwise) in respect of any current or former officer, manager, employee, consultant or contractor of the Company (the “ Employee Arrangements ”), other than as previously provided to the Buyer in writing.
(b) If applicable, in respect of each Benefit Plan and Employee Arrangement, a complete and correct copy of each of the following documents (if applicable) has been made available to the Buyer: (i) the most recent plan and related trust documents, and all amendments thereto; (ii) the most recent summary plan description, and all related summaries of material modifications thereto; (iii) the most recent Form 5500 (including schedules and attachments); and (iv) each written Employee Arrangement, and all amendments thereto. The Company does not maintain any qualified retirement plans.
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(c) If applicable, all premium payments required to have been made by the Company have been timely and properly made or accrued.
(d) If applicable, the Benefit Plans and Employee Arrangements have been maintained and administered in accordance with their terms and applicable Laws in all material respects; unless otherwise disclosed within Section 2.16(d) of the Company Disclosure Schedule.
(e) Except as set forth on Section 2.16(e) of the Company Disclosure Schedule or otherwise previously disclosed in writing to the Buyer, there are no pending or, to the Knowledge of the Company, threatened actions, claims, suits or proceedings against or relating to any Benefit Plan or Employee Arrangement (other than routine benefit claims by persons entitled to benefits thereunder) and, to the Knowledge of the Company, there are no facts or circumstances which could reasonably be expected to form the basis for any of the foregoing.
(f) Except as set forth on Section 2.16(f) of the Company Disclosure Schedule, the Company has no obligation or liability (contingent or otherwise) to provide post-retirement life insurance or health benefits coverage for current or former officers, managers, employees, consultants or contractors except (i) as may be required under Part 6 of Title I of ERISA, (ii) a medical expense reimbursement account plan pursuant to Section 125 of the Code, or (iii) through the last day of the calendar month in which the participant terminates employment.
(g) None of the assets of any Benefit Plan is equity of the Company.
(h) Except as set forth on Section 2.16(h) of the Company Disclosure Schedule, neither the execution and delivery of any of the Transaction Documents nor the consummation of any of the Contemplated Transactions will (i) result in any payment becoming due to any manager, officer, employee, consultant or contractor (current, former or retired) of the Company, (ii) increase any benefits under any Benefit Plan or Employee Arrangement or (iii) result in the acceleration of the time of payment of, vesting of, or other rights in respect of any such benefits (except as may be required by the partial or full termination of any Benefit Plan intended to be qualified under Section 401 of the Code). No Benefit Plan or Employee Arrangement in effect immediately prior to the Closing Date would result, individually or in the aggregate (including as a result of this Agreement, any of the Transaction Documents or any of the Contemplated Transactions), in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code.
(i) The Company has not entered into any non-qualified deferred compensation plan or arrangement with any employee or service provider.
Section 2.17 Brokers and Finders . Neither of the Company nor any of its Representatives has employed any investment banker, broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders’ fees in connection with any of the Contemplated Transactions for which the Buyer would be liable.
Section 2.18 Absence of Questionable Payments . None of the Company or, to the Knowledge of the Company, the Member, manager, officer, employee, consultant or other Person acting on behalf of the Company has (a) used any funds for unlawful contributions, payments, gifts or expenditures, (b) made any unlawful expenditures of funds relating to political activity to government officials or others or (c) established or maintained any unlawful or unrecorded funds in violation of the Foreign Corrupt Practices Act of 1977, as amended, or any other applicable domestic or foreign Law. None of the Company or, to the Knowledge of the Company, any manager, officer, employee, consultant or other Person acting on behalf of the Company has offered, paid or agreed to pay to any Person (including any governmental official), or solicited, received or agreed to receive from any such Person, directly or indirectly, any unlawful contributions, payments, gifts, expenditures, money or anything of value for the purpose or with the intent of (a) obtaining or maintaining business for the Company, (b) facilitating the purchase or sale of any product or service, or (c) avoiding the imposition of any fine or penalty.
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Section 2.19 Books and Records . Except as set forth on Section 2.19 of the Company Disclosure Schedule, the books of account and other books and records of the Company are complete and accurate in all material respects and have been maintained in accordance with sound business practice, applicable requirements of Law. Except as set forth on Section 2.19 of the Company Disclosure Schedule, the Company has (a) provided Buyer and its authorized Representatives reasonable access to all personnel, books, records (including information related to financial, legal, environmental, regulatory and employee benefits matters), offices and other facilities and properties of the Company as the Buyer may have reasonably requested, (b) permitted the Buyer and its authorized Representatives to make such inspections thereof as the Buyer reasonably requested, and (c) furnished the Buyer with such financial and operating data and other information with respect to the business and operations of the Company as the Buyer may have reasonably requested.
Section 2.20 Bank Accounts; Powers of Attorney . Section 2.20 of the Company Disclosure Schedule sets forth a true, complete and correct list showing: (a) all banks in which the Company maintains a bank account or safe deposit box (collectively, “ Bank Accounts ”), together with, as to each such Bank Account, the type of account, and the names of all signatories thereof ; and (b) the names of all Persons holding powers of attorney from the Company. The account numbers for all Bank Accounts were provided to the Buyer prior to Closing.
Section 2.21 Certain Transactions . Except as set forth on Section 2.21 of the Company Disclosure Schedule, neither the Member nor any of his Affiliates or any member of his immediate family (for this purpose, “immediate family” means such Person’s spouse, parents, children and siblings) is presently a party to any Contract or transaction with the Company, including without limitation, any Contract (a) providing for the furnishing of services by, (b) providing for the rental of real or personal property from, or (c) otherwise requiring payments to (other than for services in the foregoing capacities) any such Person or any corporation, partnership, trust or other entity in which any such Person has a substantial interest as a member, officer, manager, trustee or partner, and no such Person owns directly or indirectly any interest in (excluding passive investments in less than 1% of the shares of any company that lists its shares on a national securities exchange), or serves as an officer or manager or in another similar capacity of, any competitor or customer of the Company or any organization that has a Material Contract with the Company.
ARTICLE
III
REPRESENTATIONS AND WARRANTIES OF THE MEMBER
Except as set forth in the Company Disclosure Schedule, the Member hereby represents and warrants to Buyer, as of the date hereof, except to the extent certain representations and warranties are limited to a certain date set forth in the applicable section, as follows:
Section 3.1 Ownership of Membership Interests . The Member owns all of the Membership Interests free and clear of all Encumbrances except for any Permitted Liens, and, as a result of the Membership Interest Purchase, the Buyer will acquire good, valid and marketable title to such Membership Interests free and clear of all Encumbrances.
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Section 3.2 Authority Relative to this Agreement . The Member has all requisite right, power and authority to execute and deliver the Transaction Documents to which he is a party, to perform his obligations thereunder and to consummate the Contemplated Transactions. This Agreement has been, and each of the other Transaction Documents to which the Member is a party will be, duly and validly executed and delivered by the Member and, assuming this Agreement has been, and each of the other Transaction Documents to which the Member is a party will be, duly authorized, executed and delivered by the other parties thereto, this Agreement constitutes, and each of the other Transaction Documents to which the Member is a party will constitute, a legal, valid and binding obligation of the Member, enforceable against the Member in accordance with their respective terms, except as limited by applicable Bankruptcy and Equity Principles.
Section 3.3 Consents and Approvals; No Violations . None of the execution or delivery of any of the Transaction Documents by the Member, the performance by the Member of its obligations thereunder, or the consummation of any of the Contemplated Transactions by the Member will (a) require the Member to obtain or make any consent, waiver, approval, exemption, declaration, license, authorization or permit of, or registration or filing with or notification to, any Governmental Entity, (b) require a consent under, result in a material violation or material breach of, constitute (with or without notice or lapse of time or both) a material default (or give rise to any right of termination, cancellation, amendment or acceleration or any obligation) under, or result in the creation of any Encumbrance on any of the properties or assets of the Member pursuant to, any of the terms, conditions or provisions of any Contract to which the Member is a party or by which the Member or any of his properties or assets is bound, except for any consents obtained prior to the Closing, or (c) violate any Law of any Governmental Entity applicable to the Member or by which he or any of his properties or assets is bound.
Section 3.4 Litigation . There is no action, suit or proceeding pending or, to the Knowledge of the Member, threatened against the Member by or before any Governmental Entity that questions the validity of any of the Transaction Documents or any action to be taken in connection with the consummation of any of the Contemplated Transactions or would otherwise prevent or materially delay the consummation of any of the Contemplated Transactions.
Section 3.5 Brokers and Finders . The Member has not employed any investment banker, broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders’ fees in connection with any of the Contemplated Transactions for which the Buyer or the Company would be liable.
ARTICLE
IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Except as set forth in the Buyer’s disclosure schedule provided herewith (the “ Buyer Disclosure Schedule ”), the Buyer hereby represents and warrants to the Company and the Member, as of the date hereof and as of the Closing Date, except to the extent certain representations and warranties are limited to a certain date set forth in the applicable section, as follows:
Section 4.1 Corporate Organization, Etc. The Buyer is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Minnesota and has all requisite corporate power and authority to conduct its business as it is now being conducted and to own, lease and operate its properties and assets. The Buyer is qualified to do business as a foreign corporation and is in good standing (to the extent such concept is recognized) in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing (if applicable) would not, individually or in the aggregate, could not reasonably be expected to have a Buyer Material Adverse Effect. True and complete copies of the organizational and governing documents of the Buyer as presently in effect have been heretofore made available to the Company. The Buyer is not in violation of any term or provision of its organizational or governing documents. The Company is to become a separate and independent direct subsidiary of the Buyer upon the Closing.
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Section 4.2 Authority Relative to this Agreement . The Buyer has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party, to perform its obligations thereunder and to consummate the Contemplated Transactions. The execution and delivery of the Transaction Documents to which it is a party, the performance of its obligations thereunder and the consummation of the Contemplated Transactions, including, without limitation, the Membership Interest Purchase, have been duly and validly authorized by all required corporate or other action on the part of the Buyer, and no other corporate or other proceedings on the part of the Buyer are necessary to authorize the Transaction Documents to which it is a party or to consummate the Contemplated Transactions. This Agreement has been, and each of the other Transaction Documents to which it is a party will be, duly and validly executed and delivered by the Buyer and, assuming this Agreement has been, and each of the other Transaction Documents to which it is a party will be, duly authorized, executed and delivered by the other parties thereto, this Agreement constitutes, and each of the other Transaction Documents to which it is a party will constitute, a legal, valid and binding obligation of the Buyer, enforceable against it in accordance with their respective terms, except as limited by applicable Bankruptcy and Equity Principles.
Section 4.3 Consents and Approvals; No Violations . None of the execution or delivery of any of the Transaction Documents by the Buyer, the performance by the Buyer of any of its obligations thereunder, or the consummation of any of the Contemplated Transactions by the Buyer will (a) violate any provision of the organizational or governing documents of the Buyer, (b) require it to obtain or make any consent, waiver, approval, exemption, declaration, license, authorization or permit of, or registration or filing with or notification to, any Governmental Entity, (c) require a consent under, result in a material violation or material breach of, constitute (with or without notice or lapse of time or both) a material default (or give rise to any right of termination, cancellation, amendment or acceleration or any obligation) under, or result in the creation of any Encumbrance on any of the properties or assets of the Buyer pursuant to, any of the terms, conditions or provisions of any material Contract to which the Buyer is a party or by which the Buyer or any of its properties or assets is bound, except for any consents obtained prior to the Closing, (d) violate any Law of any Governmental Entity applicable to the Buyer or by which the Buyer or any of its properties or assets is bound or (e) require the Buyer to obtain the approval of any holders of its capital stock by Law, the Buyer’s articles of incorporation or bylaws or otherwise in order for the Buyer to consummate the Membership Interest Purchase and the Contemplated Transactions.
Section 4.4 Financial Statements . The Buyer has previously delivered or made available to the Company a true and complete copy of the Buyer’s unaudited consolidated balance sheet as of September 30, 2018 (the “ Buyer Balance Sheet ”). The Buyer Balance Sheet (A) has been prepared from, and is in accordance with, the books and records of the Buyer, and (B) fairly presents in all material respects the financial position of the Buyer as of the date thereof.
Section 4.5 Compliance with Law . Except for the Buyer’s delinquent periodic reports required to be filed with the SEC, (i) neither the Buyer nor subsidiaries of the Buyer nor, to the Knowledge of the Buyer, any officer, manager or employee of the Buyer, in such capacity, has received notice from any Governmental Entity of, or to the Knowledge of the Buyer, is charged or threatened with or under investigation with respect to, any violation of any provision of any applicable Law and (ii) the Buyer and the Buyer’s subsidiaries are, and have been for the past three (3) years, in compliance in all material respects with all Laws applicable to it or any of its businesses, properties or assets.
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Section 4.6 Litigation . Except as disclosed in the Buyer’s periodic reports filed with the SEC, there is no action, suit, proceeding or investigation pending or, to the Knowledge of the Buyer, threatened against the Buyer or any of their respective properties by or before any Governmental Entity. The Buyer is not subject to any outstanding injunction, writ, judgment, order or decree of any Governmental Entity. There is no action, suit or proceeding pending or, to the Knowledge of the Buyer, threatened against the Buyer by or before any Governmental Entity that questions the validity of any of the Transaction Documents or any action to be taken in connection with the consummation of any of the Contemplated Transactions or would otherwise prevent or materially delay the consummation of any of the Contemplated Transactions.
Section 4.7 Brokers and Finders . The Buyer has not employed any investment banker, broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or finders’ fees in connection with any of the Contemplated Transactions for which either the Company or the Member would be liable.
Section 4.8 Insurance . The Buyer’s director’s and officer’s insurance policies are listed on Section 4.8 of the Buyer Disclosure Schedule. True, complete and accurate copies of such policies have been provided to the Company. There are no pending claims under any of such policies.
Section 4.9 Environmental Laws . To the Knowledge of the Buyer, the Buyer (i) is in material compliance with any and all applicable Environmental Laws, (ii) has received all material permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business, if any, and (iii) is in material compliance with all terms and conditions of any such permit, license or approval, if any, except where, in each of the three foregoing clauses, the failure to so comply or receive such approvals could not reasonably be expected to have, individually or in the aggregate, a Buyer Material Adverse Effect.
ARTICLE
V
COVENANTS
Section 5.1 Public Announcements . The Buyer, on the one hand, and the Company and the Member, on the other hand, will consult with one another before issuing any press release or otherwise making any public statements in respect of this Agreement or any of the Contemplated Transactions, including the Membership Interest Purchase, and will not issue any such press release or make any such public statement without the prior written consent of the other party; provided , however , that any party may at any time make disclosures regarding the Contemplated Transactions if it is advised by legal counsel that such disclosure is required under applicable Law or by a Governmental Entity or any listing agreement with a public securities exchange, in which case the disclosing party will (a) consult with the other parties hereto prior to such disclosure, and (b) seek confidential treatment for such portions of such disclosure as are reasonably requested by any other party hereto.
Section 5.2 Tax Covenants .
(a) To the extent permitted under applicable Law, the Company shall close or terminate (or cause to be closed or terminated), as of the close of business on the Closing Date, each Tax period relating to any Company Tax or Company Tax Return.
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(b) The Buyer shall prepare and file each Company Tax Return that is due after the Closing Date and relates to a Pre-Closing Period or a Straddle Period in accordance with applicable Law. At least twenty (20) days prior to the date on which any such Company Tax Return is due (after taking into account any valid extension), the Buyer will deliver such Company Tax Return to the Member. No later than fifteen (15) days prior to the date on which such Company Tax Return is due (after taking into account any valid extension), the Member may make reasonable changes and revisions to such Company Tax Return. The Buyer shall cooperate fully in making any reasonable changes and revisions to such Company Tax Return. At least three (3) days prior to the date on which such Company Tax Return (as reasonably revised by a Member) is due (after taking into account any valid extension), the Member shall pay to the Buyer an amount equal to the Company Tax on such Company Tax Return to the extent such Company Tax relates, as determined under Section 5.2(c) , to a Pre-Closing Period (except to the extent such Company Taxes were taken into account in the determination of Working Capital).
(c) In the case of a Company Tax payable for a Straddle Period, the portion of such Company Tax that relates to the portion of the Straddle Period ending on the Closing Date will (i) in the case of a Tax other than a Tax based upon or related to income, employment, sales or other transactions, franchise or receipts, be deemed to be the amount of such Tax for the entire Straddle Period multiplied by a fraction the numerator of which is the number of days in the portion of the Straddle Period ending on the Closing Date and the denominator of which is the number of all of the days in the Straddle Period; and (ii) in the case of a Tax based upon or related to income, employment, sales or other transactions, franchise or receipts, be deemed equal to the amount that would be payable if the Straddle Period ended on the Closing Date and such Tax was based on an interim closing of the books as of the close of business on the Closing Date.
(d) Each party will promptly forward to the other a copy of all written communications from any Governmental Entity relating to any Company Tax or Company Tax Return for a Pre-Closing Period or Straddle Period. Upon reasonable request, each party will make available to the other all information, records and other documents relating to any Company Tax or any Company Tax Return for a Pre-Closing Period or Straddle Period. The parties will preserve all information, records and other documents relating to a Company Tax or a Company Tax Return for a Pre-Closing Period or Straddle Period until the date that is six (6) months after the expiration of the statute of limitations applicable to the Company Tax or the Company Tax Return. Prior to transferring, destroying or discarding any information, records or documents relating to any Company Tax or any Company Tax Return for a Pre-Closing Period or Straddle Period, the Company and the Member, as applicable, will give to Buyer reasonable written notice and, to the extent Buyer so requests, the Company and the Member, as applicable, will permit Buyer to take possession of all such information, records and documents. In addition, the parties will cooperate with each other in connection with all matters relating to the preparation of any Company Tax Return or the payment of any Company Tax for a Pre-Closing Period or Straddle Period and in connection with any audit, action, suit, claim or proceeding relating to any such Company Tax or Company Tax Return, and Buyer will have the right to control any such audit, action, suit, claim or proceeding. Nothing in this Section 5.2(d) will affect or limit any indemnity or similar provision or any representations, warranties or obligations of any of the parties. Each party will bear its own costs and expenses in complying with the provisions of this Section 5.2(d) .
(e) Buyer, on the one hand, and the Member, on the other hand, shall each be liable for and each shall pay when due fifty percent (50%) of all transfer taxes incurred in connection with this Agreement or any of the Contemplated Transactions (“ Transfer Taxes ”). The party as determined and communicated by Buyer required by any legal requirement to file a Tax Return or other documentation with respect to such Transfer Taxes shall do so within the time period prescribed by Law, and the other party shall promptly reimburse such party for any Transfer Taxes for which the other party is responsible upon receipt of notice that such Transfer Taxes are payable. To the extent permitted by any applicable legal requirement, the parties hereto shall cooperate in taking reasonable steps to minimize any Transfer Taxes.
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(f) None of the Member or the Company shall make or request a refund of any Company Tax or with respect to any Company Tax Return or amend any Company Tax Return, unless the Buyer, at its sole discretion, consents in writing thereto. The Buyer shall not be obligated to seek or request any refund of any Company Tax or amend any Company Tax Return; provided that the Buyer shall pay to the Member any refund or credit of Company Taxes with respect to a Pre-Closing Period (including any interest thereon).
(g) Each of the Company and the Member shall terminate or cause to be terminated any Tax sharing or similar agreement with respect to or involving the Company as of the Closing Date, without liability to any party, and any further effect for any year (whether the current year, a future year or a past year) or with respect to any Post-Closing Period. Any amounts payable under any Tax sharing or similar agreement will be cancelled as of the Closing Date, without any liability to the Company.
(h) The Buyer and the Member hereby acknowledge and agree that the purchase and sale of Membership Interests contemplated by this Agreement is intended to be treated as a sale of the Company’s assets for U.S. federal income tax purposes. The Buyer and the Member further agree not to take any action or position that is inconsistent with such treatment unless otherwise required to do so by applicable Law.
(i) In accordance with Section 5.2(h) , the Member shall prepare an allocation of the purchase price (together with all other items treated as consideration for U.S. federal income tax purposes) among the Company’s assets in accordance with Section 1060 and the Treasury regulations thereunder (and any similar provision of state, local, or non-U.S. law, as appropriate) (the “ Allocation ”). The Allocation, as finally determined (and subject to any further amendment in accordance with Section 1.2 ) (the “ Final Allocation ”), shall be binding upon the Member, the Buyer and the Company. The Member, the Buyer and the Company shall report, act, and file all Tax Returns (including, but not limited to Internal Revenue Service Form 8594) in all respects and for all purposes consistent with the Final Allocation prepared by the Member. Neither the Member, the Buyer nor the Company shall take any action or position that is inconsistent with the Final Allocation unless otherwise required to do so by applicable Law.
ARTICLE
VI
INDEMNIFICATION
Section 6.1 Indemnification .
(a) Indemnification by the Member . Subject to the other terms of this Section 6.1 , the Member will defend, indemnify and hold harmless the Buyer and its Representatives (collectively, the “ Buyer Indemnified Parties ”) from and against and in respect of any and all losses, liabilities, obligations, claims, actions, damages, judgments, penalties, fines, settlements and expenses, including reasonable attorneys’ fees (collectively, “ Losses ”), incurred by any of the Buyer Indemnified Parties arising out of, based upon or related to (i) any inaccuracy or breach of any of the representations or warranties made by either the Company or the Member in this Agreement, (ii) any breach of or failure to comply with any covenant or agreement made by either the Company or the Member in this Agreement (except that as to the Company, only with respect to any breach prior to Closing), (iii) any Company Taxes for any Pre-Closing Period (except to the extent such Company Taxes were taken into account in the determination of Working Capital) or (iv) any matters described in Section 2.7 or Section 2.9 of the Company Disclosure Schedule, or any other action, suit, proceeding or investigation relating to periods prior to the Closing.
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(b) Indemnification by the Buyer . Subject to the other terms of this Section 6.1 , the Buyer will defend, indemnify and hold harmless the Member and each of his Representatives (collectively, the “ Member Indemnified Parties ”) from and against and in respect of any and all Losses incurred by any of the Member Indemnified Parties arising out of, based upon or related to (i) any inaccuracy or breach of any of the representations or warranties made by the Buyer in this Agreement, or (ii) any breach of or failure to comply with any covenant or agreement made by the Buyer in this Agreement.
(c) Indemnification Procedure .
(i) The Person seeking indemnification under this Section 6.1 (the “ Indemnified Party ”) shall give to the party(ies) from whom indemnification is sought (the “ Indemnifying Party ”) prompt written notice of any third-party claim which may give rise to any indemnity obligation under this Section 6.1 , and the Indemnifying Party will have the right to assume the defense of any such claim through counsel of its own choosing, by so notifying the Indemnified Party within ten (10) days of receipt of the Indemnified Party’s written notice; provided , however , that such counsel shall be reasonably satisfactory to the Indemnified Party. Failure of the Indemnified Party to give prompt notice shall not affect the Indemnifying Party’s indemnification obligations hereunder except to the extent the Indemnifying Party is materially prejudiced by such failure. If the Indemnified Party desires to participate in any such defense assumed by the Indemnifying Party, it may do so at its sole cost and expense; provided , however , that the Indemnified Party will be entitled to participate in any such defense with separate counsel at the expense of the Indemnifying Party if, in the reasonable judgment of counsel to the Indemnified Party, a conflict or potential conflict exists, or there are separate or additional defenses available to the Indemnified Party, that would make such separate representation advisable. If the Indemnifying Party declines to assume any such defense or fails to diligently pursue any such defense, then the Indemnifying Party will be liable for all reasonable costs and expenses incurred by the Indemnified Party in connection with investigating, defending, settling and/or otherwise dealing with such claim, including reasonable fees and disbursements of counsel. The parties hereto agree to cooperate with each other in connection with the defense of any such claim. The Indemnifying Party will not, without the prior written consent of the Indemnified Party, settle, compromise, or consent to the entry of any judgment with respect to any such claim, unless such settlement, compromise or judgment (A) does not result in the imposition of a consent order, injunction or decree that would restrict the future activity or conduct of the Indemnified Party or any Affiliate thereof, (B) does not involve any remedies other than monetary damages, and (C) includes an unconditional release of the Indemnified Party and its Affiliates for all liability arising out of such claim and any related claim. The Indemnified Party will not, without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld, delayed or conditioned, settle, compromise, or consent to the entry of any judgment with respect to any such claim.
(ii) If an indemnification claim by any Indemnified Party is not disputed by the Indemnifying Party within thirty (30) days after the Indemnifying Party’s having received written notice thereof, or has been resolved by a Law of a Governmental Entity, by a settlement of the indemnification claim in accordance with Section 6.1(c)(i) or by agreement of the Indemnified Party and the Indemnifying Party (any of the foregoing, a “ Resolution ”), then (A) in the case of indemnification under Section 6.1(b) , the Member will deliver evidence of such Resolution to the Buyer, whereupon the Buyer will pay to the Member Indemnified Party promptly following such Resolution an amount in cash equal to the Losses of such Member Indemnified Party as set forth in such Resolution, or (B) in the case of indemnification under Section 6.1(a) , the Buyer will deliver evidence of such Resolution to the Member, whereupon the Member will pay to the Buyer Indemnified Party promptly following such Resolution an amount in cash equal to the Losses of such Buyer Indemnified Party as set forth in such Resolution.
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(d) Limitations . The foregoing indemnification obligations will survive the consummation of the Membership Interest Purchase for a period of eighteen (18) months following the Closing Date; provided , however , that the right to indemnification arising out of, based upon or related to any inaccuracy or breach of any of the representations or warranties contained in Sections 2.1 (Organization, Etc.) , 2.2 (Capitalization) , 2.3 (Authority Relative to this Agreement) , 2.4 (Consents and Approvals; No Violations) , 2.10 (Taxes) , 2.12 (Intellectual Property; Personal Information) , 2.16 (Employee Plans) , 2.17 (Brokers and Finders) , 3.1 (Ownership of Membership Interests) , 3.2 (Authority Relative to this Agreement) , 3.3 (Consents and Approvals; No Violations) , 3.5 (Brokers and Finders) , 4.1 (Corporate Organization, Etc.) , 4.2 (Authority Relative to this Agreement) , 4.3 (Consents and Approvals; No Violations) , 4.5 (Brokers and Finders) , subsection (b) of Section 2.7 , and the first sentence of Section 2.11(a) (collectively, the “ Fundamental Representations ”) or arising under Section 6.1(a)(iii-iv) will survive the Closing until 60 days after the expiration of the statute of limitations for any claim thereunder relating to the matters covered by the applicable Fundamental Representation, including any extensions thereof, or, if no statute of limitations is applicable thereto, for a period of six (6) years after the Closing Date; and provided , further , that claims first asserted in writing within the applicable survival period will not thereafter be barred.
ARTICLE
VII
MISCELLANEOUS
Section 7.1 Entire Agreement; Binding Effect; Assignment . This Agreement (including the exhibits hereto and the Company Disclosure Schedule) constitutes the entire agreement among the parties hereto in respect of the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, among the parties in respect of the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and its successors and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, whether voluntarily or by operation of law, including by way of sale of assets, merger or consolidation, by any of the Company or the Member, on the one hand, or the Buyer, on the other hand, without the prior written consent of the other party(ies). Any assignment in violation of the preceding sentence shall be void.
Section 7.2 Notices . All notices, requests, demands, instructions and other documents and communications to be given under this Agreement shall be in writing and shall be deemed given (a) three (3) Business Days following sending by registered or certified mail, postage prepaid, (b) when sent if sent by email, provided that the e-mail is not returned with an undeliverable, delayed or similar message, provided , further , that such notice must also be sent via the method described in subsection (c) or (d) hereof, (c) when delivered, if delivered personally to the intended recipient, and (d) one Business Day following sending by overnight delivery via a nationally recognized overnight courier service wherein the courier provided proof of delivery, and in each case, addressed to a party at the following address for such party:
if to the Buyer, to: | ATRM Holdings, Inc. | ||
5215 Gershwin Avenue N. | |||
Oakdale, Minnesota 55128 | |||
Attention: | Daniel M. Koch | ||
President and Chief Executive Officer | |||
Email: | dkoch@atrmholdings.com | ||
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or to such other address or email address as the party to whom notice is given shall have previously furnished to the other parties in writing in the manner set forth above.
Section 7.3 Governing Law; Waiver of Jury Trial . This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the choice of law principles thereof to the extent that the application of the Laws of another jurisdiction would be required thereby. All actions, suits or proceedings arising out of or relating to this Agreement or any of the other Transaction Documents shall be heard and determined exclusively in any New York state or federal court. The parties hereto hereby (a) submit to the exclusive jurisdiction of any New York state or federal court located in New York County, New York for the purpose of any action, suit or proceeding arising out of or relating to this Agreement or any of the other Transaction Documents brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, suit or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper, or that this Agreement, any of the other Transaction Documents or any of the Contemplated Transactions may not be enforced in or by any of the above-named courts. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each of the parties hereto hereby consents to process being served by any party to this Agreement in any suit, action or proceeding by delivery of a copy thereof in accordance with the provisions of Section 7.2 . EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING HEREUNDER.
Section 7.4 Expenses . All fees and out-of-pocket expenses incurred in connection with this Agreement, any of the other Transaction Documents or any of the Contemplated Transactions (including, without limitation, the fees and expenses of counsel, accountants, consultants and any broker, finder or financial advisor) will be paid by the party incurring such fees and expenses.
Section 7.5 Severability . The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
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Section 7.6 Specific Performance . The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent any breach or threatened breach of this Agreement and to enforce specifically the terms and provisions of this Agreement, without the requirement to post a bond or other security, this being in addition to any other remedy to which they are entitled at law or in equity.
Section 7.7 Counterparts . This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto. Facsimile or .pdf signatures shall have the same force and effect as original signatures.
Section 7.8 Interpretation .
(a) The words “hereof,” “herein,” “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” All terms defined in this Agreement shall have the defined meanings contained herein when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, qualified or supplemented, including (in the case of agreements and instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and all attachments thereto and instruments incorporated therein. References to a Person are also to its successors and permitted assigns.
(b) The phrases “the date of this Agreement,” “the date hereof,” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date set forth in the opening paragraph of this Agreement.
(c) The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
Section 7.9 Amendment and Modification; Waiver . This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the Buyer, the Company and the Member. No action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
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Section 7.10 Legal Counsel . The Company and the Member acknowledge that Olshan Frome Wolosky LLP represents the Buyer and does not, and did not, represent the Company or the Member in connection with this Agreement and the Contemplated Transactions. Each of the Company and the Member acknowledges that it has been represented by Kleinberg, Kaplan, Wolff & Cohen, P.C. in connection with this Agreement and the Contemplated Transactions. Accordingly, any rule of law or any legal decision that would provide any party with a defense to the enforcement of the terms of this Agreement against such party based upon lack of legal counsel shall have no application and is expressly waived.
Section 7.11 Definitions . As used herein:
“ Affiliate ” has the meaning given to it in Rule 12b-2 of Regulation 12B under the Exchange Act.
“ Business Day ” means any day other than a Saturday, a Sunday or a day on which banks in the State of New York generally are closed for regular banking business.
“ Buyer Material Adverse Effect ” means any event, development, change, circumstance, effect, occurrence or condition that, either individually or in the aggregate, (a) has caused or would reasonably be expected to cause a material adverse effect on the business, operations, financial condition or results of operations of Buyer and its subsidiaries, taken as a whole, or (b) prevents or materially impairs or delays the ability, or would reasonably be expected to prevent or materially impair or delay the ability, of the Buyer to perform any of its obligations under any of the Transaction Documents or to consummate any of the Contemplated Transactions.
“ Code ” means the Internal Revenue Code of 1986, as amended.
“ Company Material Adverse Effect ” means any event, development, change, circumstance, effect, occurrence or condition that, either individually or in the aggregate, (a) has caused or would reasonably be expected to cause a material adverse effect on the business, operations, financial condition or results of operations of the Company, or (b) prevents or materially impairs or delays the ability, or would reasonably be expected to prevent or materially impair or delay the ability, of the Company to perform any of their respective obligations under any of the Transaction Documents or to consummate any of the Contemplated Transactions.
“ Company Tax ” means any Tax, if and to the extent that the Company is or may be potentially liable under applicable Law, under Contract or on any other grounds (including, but not limited to, as a transferee or successor, under Code Section 6901 or Treasury Regulation Section 1.1502-6, as a result of any Tax sharing or other agreement, or by operation of Law) for any such Tax.
“ Company Tax Return ” means any Tax Return filed or required to be filed by the Company with any Governmental Entity, if, in any manner or to any extent, relating to or inclusive of the Company, or any Company Tax (which, for the avoidance of doubt, shall not include any personal income Tax Return of the Member).
“ Contemplated Transactions ” means the transactions contemplated by this Agreement and the other Transaction Documents, including the Membership Interest Purchase.
“ Contract ” means any written or oral contract, agreement, arrangement, license, lease, instrument or note that creates a legally binding obligation.
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“ Encumbrance ” means any lien, encumbrance, security interest, claim, charge, surety, mortgage, option, pledge, easement, limitation or restriction (including on any right to vote or Transfer any asset or security) of any nature whatsoever.
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“ Intellectual Property ” means all intellectual property rights arising from or in respect of the following: (a) all patents and applications therefor, including continuations, divisionals, provisionals, continuations-in-part, or reissues of patent applications and patents issuing thereon; (b) all trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, slogans, Internet domain names and individual, limited liability company and business names, together with the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof; (c) copyrights and registrations and applications therefor, works of authorship and mask work rights; (d) all computer programs and software (including any and all software implementations of algorithms, models and methodologies, whether in source code, object code or other form, but excluding off-the-shelf commercial or shrink-wrap software), databases and compilations (including any and all data and collections of data), and all descriptions, flow-charts and other work product used to design, plan, organize or develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons, all technology supporting any of the foregoing, and all documentation, including user manuals and other training documentation, related to any of the foregoing; and (e) all trade secrets, designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development, technical data, programs, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced to practice), creations, improvements and other similar materials, and all recordings, graphs, drawings, reports, analyses and other works of authorship, and other tangible embodiments of the foregoing, in any form, and all related technology.
“ Knowledge ” means (a) in the case of the Company or the Member, the actual or constructive knowledge of Jeffrey E. Eberwein, after due inquiry, and (b) in the case of the Buyer, the actual knowledge of each of Daniel M. Koch and Stephen A. Clark, separately and collectively.
“ Law ” means any order, writ, injunction, decree, judgment, permit, license, ordinance, law, statute, rule, regulation, administrative interpretation, directive or other requirement of any Governmental Entity.
“ Permitted Lien ” means (a) liens for Taxes, assessments of other governmental charges not yet due and payable, (b) landlord’s, supplier’s, materialmens’, mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’ or other like liens arising or incurred in the ordinary course of business if the underlying obligations are not past due, (c) any interest or title of a lessor under an operating lease or capitalized lease or of any licensor or licensee under a license or (d) liens of lessors under Real Property Leases and licensors under intellectual property licenses.
“ Person ” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in the Exchange Act).
“ Pre-Closing Period ” means any Tax period ending on or before the Closing Date, and the portion of any Straddle Period ending on and including the Closing Date.
“ Post-Closing Period ” means any Tax period beginning after the Closing Date.
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“ Representative ” means, with respect to any Person, each of such Person’s Affiliates, managers, officers, employees, partners, members, managers, consultants, advisors, accountants, attorneys, representatives and agents.
“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“ Straddle Period ” means any Tax period beginning before the Closing Date and ending after the Closing Date.
“ Tax ” means any tax, charge, deficiency, duty, fee, levy, toll or other amount (including, without limitation, any net income, gross income, profits, gross receipts, excise, property, sales, ad valorem, withholding, social security, retirement, excise, employment, unemployment, minimum, alternative, add-on minimum, estimated, severance, stamp, occupation, environmental, premium, capital stock, disability, windfall profits, use, service, net worth, payroll, franchise, license, gains, customs, transfer, recording, registration or other tax) assessed or otherwise imposed by any Governmental Entity or under applicable Law, together with any interest, penalties or any other additions or increases.
“ Tax Return ” means mean any return, election, declaration, report, schedule, information return, document, information, opinion, statement, or any amendment to any of the foregoing (including, without limitation, any consolidated, combined or unitary return and any related or supporting information) with respect to Taxes.
“ Transaction Documents ” means this Agreement, the Working Capital Statement, the assignment for the Membership Interests and any Schedule, Annex or Exhibit to any of the foregoing.
“ Transfer ” means any sale, assignment, pledge, hypothecation or other disposition.
“ Treasury Regulations ” means the regulations promulgated under the Code.
[Signature page follows]
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IN WITNESS WHEREOF , each of the parties has caused this Agreement to be duly executed on its behalf as of the date first above written.
BUYER:
ATRM HOLDINGS, INC. |
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By: |
/s/ Daniel M. Koch |
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Name: | Daniel M. Koch | ||
Title: | President and Chief Executive Officer |
COMPANY:
LONE STAR VALUE MANAGEMENT, LLC |
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By: |
/s/ Jeffrey E. Eberwein |
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Name: | Jeffrey E. Eberwein | ||
Title: | Sole Member |
MEMBER: | |
/s/ Jeffrey E. Eberwein |
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JEFFREY E. EBERWEIN |
[Signature Page to Membership Interest Purchase Agreement]
Exhibit 10.4
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of this 3rd day of April, 2019 (the “Effective Date”) by and between KBS Builders, Inc. , a Delaware corporation with a mailing address of 300 Park Street, Paris, Maine 04271 (“Seller”), and 947 Waterford Road, LLC , a Delaware limited liability company with a mailing address of 53 Forest Avenue, Old Greenwich, CT 06870 (“Purchaser”).
1. | Purchase and Sale; Leases at Closing . |
(a) | Subject to the terms and conditions of this Agreement, Seller agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller, the following property: |
(i) | The land located at or about 947 Waterford Road in the Town of Waterford, County of Oxford, and State of Maine, as more particularly described in Schedule 1(a)(i) , attached hereto and made a part hereof, together with all rights, privileges, easements, and appurtenances thereto, including all air rights, water rights, easements, rights-of-way, and other interests in, on, under or to any land, highway, alley, street, or right-of-way abutting, adjoining, or used in connection with said land or otherwise appurtenant to said land, including those, if any, set forth on said Schedule (the “Waterford Land”); |
(ii) | all buildings and other improvements located on the Waterford Land (the “Waterford Improvements” and, together with the Waterford Land, the “Waterford Real Property” or the “Real Property”); |
(iii) | (reserved); |
(iv) | (reserved); |
(v) | (reserved); |
(vi) | (reserved); |
(vii) | (reserved); |
(viii) | all warranties, if any, relating to the Real Property (collectively, the “Warranties”) |
(all of items (i) through (viii) are referred to herein collectively as the “Premises”). Seller and Purchaser acknowledge and agree that Purchaser is not assuming and will not assume at Closing any obligations, debts, or liabilities in connection with the Premises, except as specifically set forth in this Agreement.
(b) | Lease from Purchaser to Seller at Closing . Contemporaneous with the Closing (as hereafter defined), Purchaser, as landlord, and Seller, as tenant, shall enter into the lease agreement with respect to the Premises in substantially the form attached hereto as Schedule 1(b) . |
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2. | Purchase Price . |
(a) | The purchase price for the Premises (the “Purchase Price”) is Nine Hundred Ninety Thousand and 00/100 Dollars ($990,000.00) and shall be payable as follows: |
The Purchase Price, subject to adjustment as provided herein, shall be paid by Purchaser at Closing by cashier’s or treasurer’s check made payable to Seller or by electronic wire transfer in accordance with wiring instructions provided by Seller within a reasonable time prior to the Closing.
(b) | (reserved.) |
3. | Adjustments and Costs . All applicable real estate taxes, common area charges, association dues, fuel value, utility charges and other charges and assessments affecting the Premises shall be apportioned between Seller and Purchaser as of the Closing Date (as hereinafter defined), subject , however , to Seller’s obligations under the Lease. |
4. | Deed; Conveyance . |
(a) | Seller shall convey the Real Property to Purchaser by good and sufficient Quitclaim Deed with Covenant following the Maine statutory short form (the “Deed”). Title to the Real Property shall be good and marketable, free of all encumbrances, and subject only to such real estate taxes for the then-current tax year as are not yet due and payable as of the Closing Date. If requested by Purchaser, Seller agrees to convey the Premises utilizing a description prepared from a survey procured by Purchaser. Seller shall assign the Warranties by good and sufficient assignment instrument. Seller shall have the right to use the Purchase Price paid at Closing to satisfy any indebtedness secured by the Premises or any portion thereof provided that discharges or terminations of all mortgages of and security interests in the Premises are executed and delivered by the holder(s) of such indebtedness at Closing (or commercially reasonable arrangements acceptable to Purchaser and its title insurance company have been made for the execution and delivery of such discharges and terminations have been made at or prior to Closing). |
(b) | Without limiting the generality of Section 4(a), the Premises shall not be considered to be in compliance with the provisions of this Agreement with respect to title unless title to the Real Property is insurable for the benefit of Purchaser at ordinary rates under the 2006 ALTA form of owner’s title insurance policy by a title insurance company of Purchaser’s selection, with so-called “extended coverage,” and including such endorsements as Purchaser shall require and subject only to those exceptions from coverage (including for any easements, restrictions, encumbrances, or other matters set forth or referenced on any schedule hereto) that are approved by Purchaser in its sole discretion as provided in this Agreement. |
(c) | At Closing, Seller shall furnish such evidence of Seller’s existence and authority to enter into and perform the transactions contemplated by this Agreement as is sufficient to satisfy the requirements of Purchaser’s title insurance company and shall execute, acknowledge, and deliver affidavits and indemnity agreements in the forms customarily required by Purchaser’s title insurance company, including those necessary to: (i) delete the exceptions for unfiled mechanics’ liens and for parties in possession; (ii) delete the standard exception for such matters that would be shown by a current ALTA survey; and (iii) insure against matters affecting title to the Premises that arise during the period between the effective date of Purchaser’s title insurance commitment and the recording of the Deed. |
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5. | Items to be Delivered to Purchaser from Seller . To the extent within the possession or control of Seller, and to the extent such documents exist, Seller shall promptly deliver to Purchaser any and all surveys, environmental reports, engineering reports, title insurance policies and title reports, and such other information and/or documentation pertaining to the Premises as is reasonably requested by Purchaser from time-to-time after the Effective Date. |
6. | Specific Conditions . The obligations of Purchaser under this Agreement are subject to Purchaser being satisfied, in its sole discretion, with the following at or prior to Closing: |
(a) | the physical condition (including the environmental condition) of the Premises, including the Improvements; |
(b) | the status of title to the Premises and Purchaser’s ability to obtain an owner’s title insurance policy for the Real Property that is in all respects satisfactory to Purchaser, including with respect to the absence of tenants in possession and other occupants, and with such coverages and endorsements as Purchaser shall reasonably require; |
(c) | the boundaries and other states of facts, conditions and possible conditions shown by, and other results of, any existing surveys of the Real Property, if any, and/or any survey commissioned by or on behalf of Purchaser; and |
(d) | (Reserved.) |
Purchaser shall have the right to enter upon the Premises at reasonable times after the Effective Date in connection with Purchaser’s efforts to satisfy the foregoing conditions. If any of the foregoing conditions are not satisfied, Purchaser shall have the right to terminate this Agreement by giving written notice to Seller, in which event all obligations of the parties hereunder shall cease.
7. | Representation and Warranties. |
(a) | Seller represents and warrants to Purchaser that the following are true and correct as of the date of this Agreement and will be true and correct as of the Closing |
(i) | Seller is a limited liability company, duly organized and validly existing under the laws of the State of Delaware; |
(ii) | Seller has the right, power, and authority to enter into this Agreement or to perform its obligations hereunder, without the joinder of any other party; |
(iii) | The execution and delivery of this Agreement, the consummation of the transactions herein contemplated, and the compliance with the terms of this Agreement will not violate any provisions of the articles of incorporation, bylaws, or any other similar instrument of Seller and will not conflict with or, with or without notice or the passage of time, or both, result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, agreement, or other instrument to which Seller is a party or by which Seller or the Premises are bound, or of any applicable governmental regulation or any judgment, order, or decree of any court or governmental authority having jurisdiction over Seller or the Premises; |
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(iv) | There are no violations of laws or regulations affecting the Premises, including without limitation any laws relating to accessibility or Hazardous Substances (as defined below) and Seller has not received any notice from any source claiming or inquiring into the existence of any such violation; |
(v) | There is no action, suit, legal proceeding, or other proceeding (including proceedings for condemnation or eminent domain) pending or threatened (or, to the best of Seller’s knowledge, any basis therefor) against Seller or affecting any portion of the Premises in any court or before any arbitrator of any kind or before any governmental body or tribunal for dispute resolution that may materially or adversely affect the transactions contemplated by this Agreement or which may affect any portion of the Premises, other than the proceedings that are the subject of attachments recorded in the Oxford County Registry of Deeds in Book 5441, Page 463 and Book 5445, Page 667, both of which either have been fully resolved on or about the Effective Date or will be fully resolved prior to Closing; |
(vi) | Seller has not released or disposed of any Hazardous Substances on, in, under or from the Real Property, and Seller has no knowledge of the release or disposal of any Hazardous Substance on, in, under or from the Real Property at any time by any other person. There are no underground storage tanks on the Real Property. The term “Hazardous Substances” means any flammables, explosives, radioactive materials, gasoline, oil, other petroleum products, lead paint, urea formaldehyde (including urea formaldehyde foam insulation), asbestos, asbestos containing materials, polychlorinated biphenyls, and any other hazardous materials, hazardous waste, hazardous matter, hazardous or toxic substances, chemical pollutants, and other materials or substances defined in or regulated by Environmental Laws. The term “Environmental Laws” means (A) the Clean Water Act; (B) the Clean Air Act; (C) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act; (D) the Toxic Substance Control Act; (E) the Resource Conservation and Recovery Act; (F) the Hazardous Materials Transportation Act; and/or (G) any similar state laws regulating pollution or contamination of the environment; |
(vii) | The Real Property consists of an independent unit that does not rely on any property or facilities (other than public utilities) located on any property not included in such portion of the Real Property for any of the means of ingress or egress, to fulfill any zoning or other municipal or governmental requirements, for structural support, or for utilities, septic or water service, or any similar purposes, and no other property or facilities rely on any of the Real Property for any such purposes; |
(viii) | To the best of Seller’s knowledge, all written information furnished by Seller or its agents to Purchaser and its agents is true, accurate and complete; and no document, certificate or written statement furnished to Purchaser by or on behalf of Seller in connection with this Agreement or the transactions contemplated hereby contains or will contain any untrue statement of a material fact or omit or will omit or state any material fact necessary in order to make the statements contained herein and therein not misleading; |
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(ix) | The Improvements contain all heating systems and fixtures, ventilating systems and fixtures, cooling systems and fixtures, plumbing systems and fixtures (including water supply and wastewater disposal), electrical systems and fixtures, security systems and fixtures, fire alarms, sprinkler systems and fixtures, smoke detection systems and fixtures, storm water management facilities and other mechanical and life safety systems required for the operation of the Improvements for their intended use and in compliance with applicable laws and regulations, and the Improvements and all such systems and fixtures same are in good order, condition, and repair. Seller has not received any notice from any governmental, quasi-governmental agency or other group or individual alleging that the Improvements or any portion thereof does not comply with applicable law or requiring the correction of any condition with respect to the Premises by reason of any violation of any law or ordinance; |
(x) | Seller has paid or shall pay at Closing all taxes, charges and assessments required to be paid to each taxing authority which could in any way constitute a lien against the Premises or any part thereof. Seller has not received any written notice of any special assessments or betterments with respect to the Premises or any written notice of an increase or proposed increase in the assessed valuation of the Premises or any part thereof and no exemption from full taxation of the Premises or any part thereof has been claimed by Seller; |
(xi) | the Premises are not located in whole or in part within 250 feet of the normal high water line of a great pond, river, saltwater body or coastal or fresh water wetland and the Premises are serviced by public water and public sewer services and, if there is a subsurface waste water disposal system located on or serving the Premises, (A) Seller has a written inspection report for an inspection of the subsurface waste water disposal system that was performed within three years prior to the Closing Date by a person certified by the Department of Health and Human Services; and (B) it has not malfunctioned during the 180 days preceding the date of this Agreement and will not have malfunctioned during the 180 days preceding the Closing. |
(xii) | no abandoned or discontinued town ways, public easements, or private roads are located on or abutting the Premises |
(xiii) | the Premises are not subject to any special real estate tax classification, including tree growth, farmland, or open space, or to any tax increment financing arrangement or other arrangement for payments in lieu of taxes. |
(c) | Purchaser represents and warrants to Seller that the following are true as of the Effective Date and will be true as of the Closing: |
(i) | Purchaser is a corporation, duly organized and validly existing under the laws of the State of Delaware; |
(ii) | Purchaser has the right, power and authority to enter into this Agreement or to perform its obligations hereunder; and |
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(iii) | The execution and delivery of this Agreement, the consummation of the transaction herein contemplated, and the compliance with the terms of this Agreement will not violate any provisions of the Articles of Incorporation, Operating Agreement, Bylaws or similar instrument of Purchaser nor conflict with, or with or without notice or the passage of time, or both, result in a breach of, any of the terms or provisions of or constitute a default under any indenture, mortgage, loan agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or any applicable governmental regulation or any judgment, order or decree of any court having jurisdiction over Purchaser. |
(d) | All representations and warranties set forth in this Section shall survive the Closing. If either party discovers that any representation or warranty to the other party is untrue or incorrect in any material respect, it shall promptly notify the other party and the party having made the untrue or incorrect representation or warranty shall indemnify and hold harmless the discovering party for all demands, claims, causes of action, losses, liabilities, costs, and expenses (including reasonable attorneys’ fees), incurred by the discovering party arising out of such untrue or incorrect representation or warranty, which obligation shall survive the Closing. |
8. | Covenants and Agreements of Seller . Seller covenants and agrees with Purchaser that between the Effective Date and the Closing: |
(a) | It shall not dispose of any interest in the Premises; shall not grant, mortgage, pledge or subject to lien or other encumbrances any interest in the Premises; shall not enter into any leases or other agreements relating to the Premises that would affect the sale or survive the Closing; shall keep the Improvements insured for not less than full replacement value and maintain, preserve and keep all of the Improvements in good condition and repair, ordinary and reasonable wear and tear excepted; and shall maintain its general liability insurance in effect consistent with its normal conduct of business; |
(b) | It shall not take any action or fail to take any action that would cause the Premises not to conform with the provisions of this Agreement, would cause any statements set forth in this Agreement to be untrue or incorrect, or would otherwise cause Seller to be unable to perform its obligations under this Agreement. |
9. | Conditions Precedent to Purchaser’s Performance . |
(a) | Purchaser’s obligations hereunder, including the obligation to purchase and pay for the Premises, are subject to the satisfaction of the following conditions, any of which may be waived by Purchaser, but only in a writing signed by Purchaser: |
(i) | All of Seller’s representations and warranties being true and correct as of the Closing Date; |
(ii) | no material adverse changes in the physical condition of the Premises or the results of operations thereof shall have occurred and the Premises shall be in the same condition at the Closing as of the Effective Date, ordinary and reasonable wear and tear excepted; |
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(iii) | no portion of the Premises shall have been condemned or sold in lieu thereof or be the subject of any pending or threatening condemnation proceeding or subject to any pending or threatening legislation, regulation, rezoning or zoning amendment, moratorium or referendum; and |
(iv) | Seller shall have performed all of the obligations required by this Agreement to be performed by Seller and all of the obligations required by a Purchase and Sale Agreement of even or near date between Seller and 300 Park Street, LLC, pertaining to certain property owned by Seller and located at or about 300 Park Street in Paris, Maine, and such agreement shall not have been terminated. |
(b) | If any of the conditions set forth above are, in Purchaser’s sole discretion, not satisfied, Purchaser may, by giving written notice to Seller on or before the Closing Date, elect (i) to waive such condition and proceed with the Closing or (ii) to terminate this Agreement. The foregoing notwithstanding, if such contingency is not satisfied and such dissatisfaction arises as a result of any act or omission of Seller in violation of this Agreement, Purchaser may exercise all remedies available to it, in law or in equity, against Seller for breach of this Agreement. |
10. | Closing . |
(a) | The consummation of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Purchaser’s counsel or at such other place as is agreed upon by the parties on or before April 3, 2019, or such other date as may be agreed upon by the parties (the “Closing Date”). |
(b) | The following shall occur at the Closing, each being a condition precedent to the others and all being considered as occurring simultaneously: |
(i) | Seller shall execute, acknowledge, and deliver to Purchaser the Deed, said Deed being subject only to the matters described in Section 4 and to any Exceptions accepted by Purchaser; |
(ii) | (reserved.); |
(iii) | Seller shall execute, acknowledge, and deliver to Purchaser one or more instruments conveying to Purchaser good and marketable title to the Warranties, free of all encumbrances, in form and substance acceptable to Seller; |
(iv) | Seller shall execute and deliver the title insurance affidavits and indemnities as provided in this Agreement; |
(v) | Seller and Purchaser shall deliver certifications confirming that their respective representations and warranties set forth in this Agreement continue to be true and correct as of the Closing Date; |
(vi) | Seller shall deliver an affidavit indicating that Seller is not a foreign person and that the transaction is exempt from the requirements of 26 U.S.C. § 1445, or in lieu thereof, Purchaser shall be entitled to withhold and account for a portion of the Purchase Price as required by such statute and corresponding regulations; |
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(vii) | Seller shall deliver an affidavit indicating that Seller is a Maine resident, or in lieu thereof, Purchaser shall be entitled to withhold and account for a portion of the Purchase Price as required by 33 M.R.S. §5250-A; |
(viii) | Each party shall deliver to the other a manager’s or member’s certificate certifying as to authority and appropriate resolutions adopted by the party, current officers or other parties authorized to execute documents on behalf of such party, and such other organizational and/or authority documents as shall be reasonably requested in connection with this transaction; |
(ix) | Purchaser shall pay the Purchase Price as provided in this Agreement and the parties shall execute and deliver a settlement statement memorializing the Purchase Price, the adjustments thereto, and other costs and expenses to be paid, or credited to or debited from the amounts due from or to either Party, at Closing; |
(x) | Each party shall deliver to the other such other documents, certificates and the like as may be required herein or as may be necessary to carry out the obligations under this Agreement; and |
(xi) | Seller shall deliver to Purchaser keys to and possession of the Premises, free and clear of any tenancy or persons in possession other than Seller as tenant under the Leases. |
11. | Risk of Loss . |
(a) | Risk of loss to the Premises prior to the Closing shall be borne by Seller. If between the Effective Date and the Closing, any part of the Premises (including any right appurtenant to the Premises) is taken in condemnation or under the right of eminent domain, or any portion of the Premises is damaged by fire or other peril, Purchaser shall have the right to terminate this Agreement by giving written notice to Seller at any time at or prior to Closing. |
(b) | If Purchaser does not elect to terminate this Agreement pursuant to this Section, Seller and Purchaser shall perform their respective obligations under this Agreement and Seller shall (i) deliver to Purchaser at the Closing any insurance proceeds and/or condemnation awards received by Seller as a result of any occurrence specified in this Section in respect of or allocable to the Premises; and (ii) assign to Purchaser all of Seller's right, title, and interest in any to any insurance proceeds and condemnation awards allocable to the Premises which have not yet been received by Seller. |
12. | Broker . Seller and Purchaser warrant and represent to each other that neither has employed or engaged any real estate broker or agent in connection with this transaction that could give rise to a lien against the Premises. Each party agrees to hold the other party harmless from and against any and all demands, claims, causes of action, losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) arising from the breach of such party’s representation or warranty contained in this Section. The provisions of this Section shall survive the Closing. |
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13. | Notices . All notices and other communications required or permitted under this Agreement shall be in writing and shall be hand delivered, or given by certified mail, return receipt requested, or by Federal Express or another nationally recognized overnight courier service, addressed to the party to receive such notice at the address set forth in the preamble of this Agreement. Any such notice shall be deemed effective when personally delivered (in the case of hand delivery) or upon being deposited with such courier service or with the United States Postal Service. Any party may change the address to which its future notices shall be sent by notice given in the manner set forth above. |
14. | Miscellaneous . |
(a) | Any reference herein to time periods of less than seven (7) days shall be computed to exclude Saturdays, Sundays, and statutory holidays in the State of Maine. Any time period provided for herein which ends on a Saturday, Sunday, or statutory holiday in the State of Maine shall extend to midnight at the end of the next day that is not a Saturday, Sunday, or statutory holiday in the State of Maine. |
(b) | Purchaser or Purchaser’s agents shall have the right to enter upon the Real Property prior to the Closing for the purpose of making studies and inspections of the Real Property during normal business hours, so long as Purchaser or Purchaser’s agents do not unreasonably interfere with Seller’s use of the Real Property. Any such entry shall be at Purchaser’s own risk and Purchaser agrees to indemnify and hold Seller harmless from and against any property damage or personal injury or claim or lien against the Premises to the extent caused by any such access or inspection by Purchaser or its representatives. |
(c) | This Agreement shall be binding upon and shall inure to the benefit of Seller and Purchaser and their respective successors and assigns. |
(d) | All understandings, agreements, warranties, and representations, either oral or in writing, heretofore between the parties hereto with respect to the purchase and sale of the Premises are merged into this Agreement, which alone fully and completely expresses the parties’ agreement with respect to the transaction contemplated hereby. The representations and warranties set forth in this Agreement shall survive the Closing. This Agreement may not be modified in any manner except by an instrument in writing signed by Seller and Purchaser. |
(e) | This Agreement, and all claims or causes of action (whether arising in contract, in tort, or by statute) that may be based upon, arise out of or relate to this Agreement, shall be governed by and enforced in accordance with the internal laws of the State of Maine, including its statutes of limitations, without regard or reference to conflicts of law principles. In the event of a breach of this Agreement by any party, the other party shall be entitled to recover reasonable attorneys’ fees incurred in connection with the enforcement of its rights hereunder. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, and all of which, taken together, shall constitute a single instrument. |
(f) | Whenever the word “include,” “includes,” or “including” is used in this Agreement, it is deemed to be followed by the words “without limitation.” The terms “this Agreement,” “hereof,” “herein,” “hereby,” “hereunder” and similar expressions refer to this Agreement as a whole and not to any particular section of this Agreement unless the context otherwise requires. The word “person” includes any individual, corporation, firm, association, partnership (general or limited), joint venture, limited liability company, trust, estate or other legal entity. The section and sub-section headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction, or meaning of the provisions of this Agreement. |
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their undersigned representatives as of the date first written above.
SELLER: | ||
KBS Builders, Inc. | ||
By: | /s/Daniel M. Koch | |
Name: | Daniel M. Koch | |
Its: | President | |
PURCHASER: | ||
947 Waterford Road, LLC | ||
By: | /s/David Noble | |
Name: | David Noble | |
Its: | President |
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Exhibit 10.5
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of this 3rd day of April, 2019 (the “Effective Date”) by and between KBS Builders, Inc. , a Delaware corporation with a mailing address of 300 Park Street, Paris, Maine 04271 (“Seller”), and 300 Park Street, LLC , a Delaware limited liability company with a mailing address of 53 Forest Avenue, Old Greenwich, CT 06870 (“Purchaser”).
1. | Purchase and Sale; Leases at Closing . |
(a) | Subject to the terms and conditions of this Agreement, Seller agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller, the following property: |
(i) | The land located at or about 300 Park Street in the Town of Paris, County of Oxford, and State of Maine, as more particularly described in Schedule 1(a)(i) , attached hereto and made a part hereof, together with all rights, privileges, easements, and appurtenances thereto, including all air rights, water rights, easements, rights-of-way, and other interests in, on, under or to any land, highway, alley, street, or right-of-way abutting, adjoining, or used in connection with said land or otherwise appurtenant to said land, including those, if any, set forth on said Schedule (the “Paris Land”); |
(ii) | all buildings and other improvements located on the Paris Land (the “Paris Improvements” and, together with the Paris Land, the “Paris Real Property” or the “Real Property”); |
(iii) | the machinery, equipment, furniture, furnishings, tangible personal property, trade fixtures, and fixtures located at or used in connection with the Paris Real Property, which are more particularly described on Schedule 1(a)(iii) (all such items, other than the aforesaid excluded items, being referred to herein as the “Paris Personal Property or the Personal Property”); |
(iv) | (reserved); |
(v) | (reserved); |
(vi) | (reserved); |
(vii) | (reserved) |
(viii) | all warranties, if any, relating to the Real Property and all warranties, if any, relating to the Personal Property (collectively, the “Warranties”) |
(all of items (i) through (viii) are referred to herein collectively as the “Premises”). Seller and Purchaser acknowledge and agree that Purchaser is not assuming and will not assume at Closing any obligations, debts, or liabilities in connection with the Premises, except as specifically set forth in this Agreement.
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(b) | Lease from Purchaser to Seller at Closing . Contemporaneous with the Closing (as hereafter defined), Purchaser, as landlord, and Seller, as tenant, shall enter into the lease agreement with respect to the Premises in substantially the form attached hereto as Schedule 1(b) . |
2. | Purchase Price; Allocation . |
(a) | The purchase price for the Premises (the “Purchase Price”) is Two Million Eight Hundred Eighty-Three Thousand Two Hundred Five and 70/100 Dollars ($2,883,205.70) and shall be payable as follows: |
The Purchase Price, subject to adjustment as provided herein, shall be paid by Purchaser at Closing by cashier’s or treasurer’s check made payable to Seller or by electronic wire transfer in accordance with wiring instructions provided by Seller within a reasonable time prior to the Closing.
(b) | The Purchase Price shall be allocated as follows: |
Paris Real Property | $2,335,000.00 | |
Personal Property | ||
Hundegger Saw | $230,105.70 | |
Other Personal Property |
$318,100.00 |
3. | Adjustments and Costs . All applicable real estate taxes, personal property taxes, common area charges, association dues, fuel value, utility charges and other charges and assessments affecting the Premises shall be apportioned between Seller and Purchaser as of the Closing Date (as hereinafter defined), subject , however , to Seller’s obligations under the Lease. |
4. | Deed; Conveyance . |
(a) | Seller shall convey the Real Property to Purchaser by good and sufficient Quitclaim Deed with Covenant following the Maine statutory short form (the “Deed”). Title to the Real Property shall be good and marketable, free of all encumbrances, and subject only to such real estate taxes for the then-current tax year as are not yet due and payable as of the Closing Date. If requested by Purchaser, Seller agrees to convey the Premises utilizing a description prepared from a survey procured by Purchaser. Seller shall convey the Personal Property to Purchaser by one or more good and sufficient warranty bills of sale. Title to the Personal Property shall be good and marketable, free of all encumbrances, and subject only to personal property taxes for the then-current tax year as are not yet due and payable as of the Closing Date. Seller shall assign the Warranties by good and sufficient assignment instrument. Seller shall have the right to use the Purchase Price paid at Closing to satisfy any indebtedness secured by the Premises or any portion thereof provided that discharges or terminations of all mortgages of and security interests in the Premises are executed and delivered by the holder(s) of such indebtedness at Closing (or commercially reasonable arrangements acceptable to Purchaser and its title insurance company have been made for the execution and delivery of such discharges and terminations have been made at or prior to Closing). |
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(b) | Without limiting the generality of Section 4(a), the Premises shall not be considered to be in compliance with the provisions of this Agreement with respect to title unless title to the Real Property is insurable for the benefit of Purchaser at ordinary rates under the 2006 ALTA form of owner’s title insurance policy by a title insurance company of Purchaser’s selection, with so-called “extended coverage,” and including such endorsements as Purchaser shall require and subject only to those exceptions from coverage (including for any easements, restrictions, encumbrances, or other matters set forth or referenced on any schedule hereto) that are approved by Purchaser in its sole discretion as provided in this Agreement. |
(c) | At Closing, Seller shall furnish such evidence of Seller’s existence and authority to enter into and perform the transactions contemplated by this Agreement as is sufficient to satisfy the requirements of Purchaser’s title insurance company and shall execute, acknowledge, and deliver affidavits and indemnity agreements in the forms customarily required by Purchaser’s title insurance company, including those necessary to: (i) delete the exceptions for unfiled mechanics’ liens and for parties in possession; (ii) delete the standard exception for such matters that would be shown by a current ALTA survey; and (iii) insure against matters affecting title to the Premises that arise during the period between the effective date of Purchaser’s title insurance commitment and the recording of the Deed. |
5. | Items to be Delivered to Purchaser from Seller . To the extent within the possession or control of Seller, and to the extent such documents exist, Seller shall promptly deliver to Purchaser any and all surveys, environmental reports, engineering reports, title insurance policies and title reports, and such other information and/or documentation pertaining to the Premises as is reasonably requested by Purchaser from time-to-time after the Effective Date. |
6. | Specific Conditions . The obligations of Purchaser under this Agreement are subject to Purchaser being satisfied, in its sole discretion, with the following at or prior to Closing: |
(a) | the physical condition (including the environmental condition) of the Premises, including the Improvements and the Personal Property; |
(b) | the status of title to the Premises and Purchaser’s ability to obtain an owner’s title insurance policy for the Real Property that is in all respects satisfactory to Purchaser, including with respect to the absence of tenants in possession and other occupants, and with such coverages and endorsements as Purchaser shall reasonably require; |
(c) | the boundaries and other states of facts, conditions and possible conditions shown by, and other results of, any existing surveys of the Real Property, if any, and/or any survey commissioned by or on behalf of Purchaser; and |
(d) | (Reserved.) |
Purchaser shall have the right to enter upon the Premises at reasonable times after the Effective Date in connection with Purchaser’s efforts to satisfy the foregoing conditions. If any of the foregoing conditions are not satisfied, Purchaser shall have the right to terminate this Agreement by giving written notice to Seller, in which event all obligations of the parties hereunder shall cease.
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7. | Representation and Warranties. |
(a) | Seller represents and warrants to Purchaser that the following are true and correct as of the date of this Agreement and will be true and correct as of the Closing |
(i) | Seller is a limited liability company, duly organized and validly existing under the laws of the State of Delaware; |
(ii) | Seller has the right, power, and authority to enter into this Agreement or to perform its obligations hereunder, without the joinder of any other party; |
(iii) | The execution and delivery of this Agreement, the consummation of the transactions herein contemplated, and the compliance with the terms of this Agreement will not violate any provisions of the articles of incorporation, bylaws, or any other similar instrument of Seller and will not conflict with or, with or without notice or the passage of time, or both, result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, agreement, or other instrument to which Seller is a party or by which Seller or the Premises are bound, or of any applicable governmental regulation or any judgment, order, or decree of any court or governmental authority having jurisdiction over Seller or the Premises; |
(iv) | There are no violations of laws or regulations affecting the Premises, including without limitation any laws relating to accessibility or Hazardous Substances (as defined below) and Seller has not received any notice from any source claiming or inquiring into the existence of any such violation; |
(v) | There is no action, suit, legal proceeding, or other proceeding (including proceedings for condemnation or eminent domain) pending or threatened (or, to the best of Seller’s knowledge, any basis therefor) against Seller or affecting any portion of the Premises in any court or before any arbitrator of any kind or before any governmental body or tribunal for dispute resolution that may materially or adversely affect the transactions contemplated by this Agreement or which may affect any portion of the Premises, other than the proceedings that are the subject of attachments recorded in the Oxford County Registry of Deeds in Book 5441, Page 463 and Book 5445, Page 667, both of which either have been fully resolved on or about the Effective Date or will be fully resolved prior to Closing; |
(vi) | Seller has not released or disposed of any Hazardous Substances on, in, under or from the Real Property, and Seller has no knowledge of the release or disposal of any Hazardous Substance on, in, under or from the Real Property at any time by any other person. There are no underground storage tanks on the Real Property. The term “Hazardous Substances” means any flammables, explosives, radioactive materials, gasoline, oil, other petroleum products, lead paint, urea formaldehyde (including urea formaldehyde foam insulation), asbestos, asbestos containing materials, polychlorinated biphenyls, and any other hazardous materials, hazardous waste, hazardous matter, hazardous or toxic substances, chemical pollutants, and other materials or substances defined in or regulated by Environmental Laws. The term “Environmental Laws” means (A) the Clean Water Act; (B) the Clean Air Act; (C) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act; (D) the Toxic Substance Control Act; (E) the Resource Conservation and Recovery Act; (F) the Hazardous Materials Transportation Act; and/or (G) any similar state laws regulating pollution or contamination of the environment; |
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(vii) | The Real Property consists of an independent unit that does not rely on any property or facilities (other than public utilities) located on any property not included in such portion of the Real Property for any of the means of ingress or egress, to fulfill any zoning or other municipal or governmental requirements, for structural support, or for utilities, septic or water service, or any similar purposes, and no other property or facilities rely on any of the Real Property for any such purposes; |
(viii) | To the best of Seller’s knowledge, all written information furnished by Seller or its agents to Purchaser and its agents is true, accurate and complete; and no document, certificate or written statement furnished to Purchaser by or on behalf of Seller in connection with this Agreement or the transactions contemplated hereby contains or will contain any untrue statement of a material fact or omit or will omit or state any material fact necessary in order to make the statements contained herein and therein not misleading; |
(ix) | The Improvements contain all heating systems and fixtures, ventilating systems and fixtures, cooling systems and fixtures, plumbing systems and fixtures (including water supply and wastewater disposal), electrical systems and fixtures, security systems and fixtures, fire alarms, sprinkler systems and fixtures, smoke detection systems and fixtures, storm water management facilities and other mechanical and life safety systems required for the operation of the Improvements for their intended use and in compliance with applicable laws and regulations, and the Improvements and all such systems and fixtures same are in good order, condition, and repair. Seller has not received any notice from any governmental, quasi-governmental agency or other group or individual alleging that the Improvements or any portion thereof does not comply with applicable law or requiring the correction of any condition with respect to the Premises by reason of any violation of any law or ordinance; |
(x) | Seller has paid or shall pay at Closing all taxes, charges and assessments required to be paid to each taxing authority which could in any way constitute a lien against the Premises or any part thereof. Seller has not received any written notice of any special assessments or betterments with respect to the Premises or any written notice of an increase or proposed increase in the assessed valuation of the Premises or any part thereof and no exemption from full taxation of the Premises or any part thereof has been claimed by Seller; |
(xi) | the Premises are not located in whole or in part within 250 feet of the normal high water line of a great pond, river, saltwater body or coastal or fresh water wetland and the Premises are serviced by public water and public sewer services. |
(xii) | no abandoned or discontinued town ways, public easements, or private roads are located on or abutting the Premises |
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(xiii) | the Premises are not subject to any special real estate tax classification, including tree growth, farmland, or open space, or to any tax increment financing arrangement or other arrangement for payments in lieu of taxes. |
(c) | Purchaser represents and warrants to Seller that the following are true as of the Effective Date and will be true as of the Closing: |
(i) | Purchaser is a corporation, duly organized and validly existing under the laws of the State of Delaware; |
(ii) | Purchaser has the right, power and authority to enter into this Agreement or to perform its obligations hereunder; and |
(iii) | The execution and delivery of this Agreement, the consummation of the transaction herein contemplated, and the compliance with the terms of this Agreement will not violate any provisions of the Articles of Incorporation, Operating Agreement, Bylaws or similar instrument of Purchaser nor conflict with, or with or without notice or the passage of time, or both, result in a breach of, any of the terms or provisions of or constitute a default under any indenture, mortgage, loan agreement or instrument to which Purchaser is a party or by which Purchaser is bound, or any applicable governmental regulation or any judgment, order or decree of any court having jurisdiction over Purchaser. |
(d) | All representations and warranties set forth in this Section shall survive the Closing. If either party discovers that any representation or warranty to the other party is untrue or incorrect in any material respect, it shall promptly notify the other party and the party having made the untrue or incorrect representation or warranty shall indemnify and hold harmless the discovering party for all demands, claims, causes of action, losses, liabilities, costs, and expenses (including reasonable attorneys’ fees), incurred by the discovering party arising out of such untrue or incorrect representation or warranty, which obligation shall survive the Closing. |
8. | Covenants and Agreements of Seller . Seller covenants and agrees with Purchaser that between the Effective Date and the Closing: |
(a) | It shall not dispose of any interest in the Premises; shall not grant, mortgage, pledge or subject to lien or other encumbrances any interest in the Premises; shall not enter into any leases or other agreements relating to the Premises that would affect the sale or survive the Closing; shall keep the Improvements and Personal Property insured for not less than full replacement value and maintain, preserve and keep all of the Improvements and Personal Property in good condition and repair, ordinary and reasonable wear and tear excepted; and shall maintain its general liability insurance in effect consistent with its normal conduct of business; |
(b) | It shall not take any action or fail to take any action that would cause the Premises not to conform with the provisions of this Agreement, would cause any statements set forth in this Agreement to be untrue or incorrect, or would otherwise cause Seller to be unable to perform its obligations under this Agreement. |
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9. | Conditions Precedent to Purchaser’s Performance . |
(a) | Purchaser’s obligations hereunder, including the obligation to purchase and pay for the Premises, are subject to the satisfaction of the following conditions, any of which may be waived by Purchaser, but only in a writing signed by Purchaser: |
(i) | All of Seller’s representations and warranties being true and correct as of the Closing Date; |
(ii) | no material adverse changes in the physical condition of the Premises or the results of operations thereof shall have occurred and the Premises shall be in the same condition at the Closing as of the Effective Date, ordinary and reasonable wear and tear excepted; |
(iii) | no portion of the Premises shall have been condemned or sold in lieu thereof or be the subject of any pending or threatening condemnation proceeding or subject to any pending or threatening legislation, regulation, rezoning or zoning amendment, moratorium or referendum; and |
(iv) | Seller shall have performed all of the obligations required by this Agreement to be performed by Seller and all of the obligations required by a Purchase and Sale Agreement of even or near date between Seller and 947 Waterford Road, LLC, pertaining to certain property owned by Seller and located at or about 947 Waterford Road in Waterford, Maine, and such agreement shall not have been terminated. |
(b) | If any of the conditions set forth above are, in Purchaser’s sole discretion, not satisfied, Purchaser may, by giving written notice to Seller on or before the Closing Date, elect (i) to waive such condition and proceed with the Closing or (ii) to terminate this Agreement. The foregoing notwithstanding, if such contingency is not satisfied and such dissatisfaction arises as a result of any act or omission of Seller in violation of this Agreement, Purchaser may exercise all remedies available to it, in law or in equity, against Seller for breach of this Agreement. |
10. | Closing . |
(a) | The consummation of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Purchaser’s counsel or at such other place as is agreed upon by the parties on or before April 3, 2019, or such other date as may be agreed upon by the parties (the “Closing Date”). |
(b) | The following shall occur at the Closing, each being a condition precedent to the others and all being considered as occurring simultaneously: |
(i) | Seller shall execute, acknowledge, and deliver to Purchaser the Deed, said Deed being subject only to the matters described in Section 4 and to any Exceptions accepted by Purchaser; |
(ii) | Seller shall execute, acknowledge, and deliver to Purchaser one or more warranty bills of sale conveying to Purchaser good and marketable title to the Personal Property, free of all encumbrances, in form and substance acceptable to Seller; |
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(iii) | Seller shall execute, acknowledge, and deliver to Purchaser one or more instruments conveying to Purchaser good and marketable title to the Warranties, free of all encumbrances, in form and substance acceptable to Seller; |
(iv) | Seller shall execute and deliver the title insurance affidavits and indemnities as provided in this Agreement; |
(v) | Seller and Purchaser shall deliver certifications confirming that their respective representations and warranties set forth in this Agreement continue to be true and correct as of the Closing Date; |
(vi) | Seller shall deliver an affidavit indicating that Seller is not a foreign person and that the transaction is exempt from the requirements of 26 U.S.C. § 1445, or in lieu thereof, Purchaser shall be entitled to withhold and account for a portion of the Purchase Price as required by such statute and corresponding regulations; |
(vii) | Seller shall deliver an affidavit indicating that Seller is a Maine resident, or in lieu thereof, Purchaser shall be entitled to withhold and account for a portion of the Purchase Price as required by 33 M.R.S. §5250-A; |
(viii) | Each party shall deliver to the other a manager’s or member’s certificate certifying as to authority and appropriate resolutions adopted by the party, current officers or other parties authorized to execute documents on behalf of such party, and such other organizational and/or authority documents as shall be reasonably requested in connection with this transaction; |
(ix) | Purchaser shall pay the Purchase Price as provided in this Agreement and the parties shall execute and deliver a settlement statement memorializing the Purchase Price, the adjustments thereto, and other costs and expenses to be paid, or credited to or debited from the amounts due from or to either Party, at Closing; |
(x) | Each party shall deliver to the other such other documents, certificates and the like as may be required herein or as may be necessary to carry out the obligations under this Agreement; and |
(xi) | Seller shall deliver to Purchaser keys to and possession of the Premises, free and clear of any tenancy or persons in possession other than Seller as tenant under the Leases. |
11. | Risk of Loss . |
(a) | Risk of loss to the Premises prior to the Closing shall be borne by Seller. If between the Effective Date and the Closing, any part of the Premises (including any right appurtenant to the Premises) is taken in condemnation or under the right of eminent domain, or any portion of the Premises is damaged by fire or other peril, Purchaser shall have the right to terminate this Agreement by giving written notice to Seller at any time at or prior to Closing. |
(b) | If Purchaser does not elect to terminate this Agreement pursuant to this Section, Seller and Purchaser shall perform their respective obligations under this Agreement and Seller shall (i) deliver to Purchaser at the Closing any insurance proceeds and/or condemnation awards received by Seller as a result of any occurrence specified in this Section in respect of or allocable to the Premises; and (ii) assign to Purchaser all of Seller's right, title, and interest in any to any insurance proceeds and condemnation awards allocable to the Premises which have not yet been received by Seller. |
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12. | Broker . Seller and Purchaser warrant and represent to each other that neither has employed or engaged any real estate broker or agent in connection with this transaction that could give rise to a lien against the Premises. Each party agrees to hold the other party harmless from and against any and all demands, claims, causes of action, losses, liabilities, damages, costs, and expenses (including reasonable attorneys’ fees) arising from the breach of such party’s representation or warranty contained in this Section. The provisions of this Section shall survive the Closing. |
13. | Notices . All notices and other communications required or permitted under this Agreement shall be in writing and shall be hand delivered, or given by certified mail, return receipt requested, or by Federal Express or another nationally recognized overnight courier service, addressed to the party to receive such notice at the address set forth in the preamble of this Agreement. Any such notice shall be deemed effective when personally delivered (in the case of hand delivery) or upon being deposited with such courier service or with the United States Postal Service. Any party may change the address to which its future notices shall be sent by notice given in the manner set forth above. |
14. | Miscellaneous . |
(a) | Any reference herein to time periods of less than seven (7) days shall be computed to exclude Saturdays, Sundays, and statutory holidays in the State of Maine. Any time period provided for herein which ends on a Saturday, Sunday, or statutory holiday in the State of Maine shall extend to midnight at the end of the next day that is not a Saturday, Sunday, or statutory holiday in the State of Maine. |
(b) | Purchaser or Purchaser’s agents shall have the right to enter upon the Real Property prior to the Closing for the purpose of making studies and inspections of the Real Property during normal business hours, so long as Purchaser or Purchaser’s agents do not unreasonably interfere with Seller’s use of the Real Property. Any such entry shall be at Purchaser’s own risk and Purchaser agrees to indemnify and hold Seller harmless from and against any property damage or personal injury or claim or lien against the Premises to the extent caused by any such access or inspection by Purchaser or its representatives. |
(c) | This Agreement shall be binding upon and shall inure to the benefit of Seller and Purchaser and their respective successors and assigns. |
(d) | All understandings, agreements, warranties, and representations, either oral or in writing, heretofore between the parties hereto with respect to the purchase and sale of the Premises are merged into this Agreement, which alone fully and completely expresses the parties’ agreement with respect to the transaction contemplated hereby. The representations and warranties set forth in this Agreement shall survive the Closing. This Agreement may not be modified in any manner except by an instrument in writing signed by Seller and Purchaser. |
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(e) | This Agreement, and all claims or causes of action (whether arising in contract, in tort, or by statute) that may be based upon, arise out of or relate to this Agreement, shall be governed by and enforced in accordance with the internal laws of the State of Maine, including its statutes of limitations, without regard or reference to conflicts of law principles. In the event of a breach of this Agreement by any party, the other party shall be entitled to recover reasonable attorneys’ fees incurred in connection with the enforcement of its rights hereunder. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, and all of which, taken together, shall constitute a single instrument. |
(f) | Whenever the word “include,” “includes,” or “including” is used in this Agreement, it is deemed to be followed by the words “without limitation.” The terms “this Agreement,” “hereof,” “herein,” “hereby,” “hereunder” and similar expressions refer to this Agreement as a whole and not to any particular section of this Agreement unless the context otherwise requires. The word “person” includes any individual, corporation, firm, association, partnership (general or limited), joint venture, limited liability company, trust, estate or other legal entity. The section and sub-section headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction, or meaning of the provisions of this Agreement. |
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their undersigned representatives as of the date first written above.
SELLER : | ||
KBS Builders, Inc. | ||
By: | /s/David Noble | |
Name: | David Noble | |
Its: | President | |
PURCHASER: | ||
300 Park Street, LLC | ||
By: | /s/ David Noble | |
Name: | David Noble | |
Its: | President |
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Exhibit 10.6
LEASE AGREEMENT
THIS LEASE AGREEMENT (this “Lease”) is made this 3rd day of April, 2019 (the “Commencement Date”), by and between 947 Waterford Road, LLC , a Delaware limited liability company with a mailing address of 53 Forest Avenue, Old Greenwich, Connecticut 06870 (“Landlord”), and KBS Builders, Inc., a Delaware corporation with a mailing address of 300 Park Street, Paris, Maine 04271 (“Tenant”). The parties hereby agree as follows:
LEASE INFORMATION AND DEFINITIONS
The following information and definitions are incorporated into and made a part of this Lease:
Leased Premises: |
Certain land located in the Town of Waterford, County of Oxford, and State of Maine, and being more particularly described on Exhibit A , attached hereto and made a part hereof, together with all improvements thereon and all rights and easements appurtenant thereto (the “Leased Premises” or the “Real Property”).
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Term: |
The “Term” means:
(a) an “Initial Term,” being a period commencing on the Commencement Date and ending at 5:00 p.m. on March 31, 2029, subject to adjustment and earlier termination as provided in the Lease; and
(b) if Tenant duly exercises its option to extend the term of this Lease for one or both Extension Terms as provided in the Lease, then also each such Extension Term for which Tenant has duly exercised such option. |
Extension Terms: |
The Extension Terms shall be two (2) separate, consecutive sixty (60) month periods (hereinafter referred to as "First Extension Term” and the “Second Extension Term,” respectively, and also referred to in the singular as an “Extension Term” and in the plural as the “Extension Terms”), all on the terms and conditions set forth in the Lease.
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Rent Commencement Date: |
Tenant’s obligations to pay Base Rent shall commence on July 1, 2019 (the “Rent Commencement Date”), provided , however , that Tenant shall have the right, exercisable only by giving written notice to Landlord prior to May 1, 2019 (the “Rent Commencement Extension Notice”), to elect to defer the Rent Commencement Date until October 1, 2019.
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Base Rent: |
(a) In the event that Tenant does not give Landlord a timely Rent Commencement Extension Notice as provided herein, the Base Rent for the Leased Premises during the Initial Term shall be as set forth on Exhibit B , attached hereto and made a part hereof.
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(b) In the event that Tenant gives Landlord a timely Rent Commencement Extension Notice as provided herein, the Base Rent for the Leased Premises during the Initial Term shall be as set forth on Exhibit C , attached hereto and made a part hereof. | |
(c) The Base Rent for the Leased Premises for each year of each Extension Term shall be shall be an amount which is equal to 100% of the prevailing market rates in effect at the time of Tenant’ s exercise of its extension right for property comparable to the Leased Premises in the vicinity of the Leased Premises (and, for clarity, shall include annual escalators consistent with such prevailing market), all as determined by a licensed commercial real estate broker or appraiser doing business in the greater Portland, Maine vicinity and chosen by Landlord, but in no event shall Base Rent for any year of any Extension Term be less than the Base Rent payable for the immediately preceding year of the Term. | |
Rent: |
The term “Rent” means Base Rent and all other sums payable by Tenant under this Lease.
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Taxes: |
Without limiting the “net” nature of this Lease as provided in herein, Tenant shall pay all Taxes (as defined in this Lease).
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Utilities: |
Without limiting the “net” nature of this Lease as provided herein, Tenant shall contract for and pay for all Utilities (as defined in this Lease).
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Operating Expenses; Maintenance and Repairs: |
Without limiting the “net” nature of this Lease as provided herein, Tenant shall pay 100% of all costs and expenses associated with the use, occupancy, operation, maintenance, repair, and/or replacement of the Leased Premises.
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Permitted Use:
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Subject in all events to the terms and conditions of the Lease, the Leased Premises shall be used only for purposes of a facility for the manufacture of modular homes and other components of modular home construction and associated administrative and general business offices of Tenant in connection therewith. |
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1. Leased Premises . Landlord leases to Tenant, in consideration of the Rent to be paid by Tenant and subject to the terms and conditions set forth herein, the Leased Premises. Tenant acknowledges that Tenant was the owner of the Leased Premises prior to the Commencement Date and has conveyed the Leased Premises to Landlord on the Commencement Date. Accordingly, Tenant agrees that Tenant accepts and is leasing the Leased Premises in their “as is” condition.
2. Commencement and Term . The term of this Lease shall commence on the Commencement Date and shall be the Lease Term, unless earlier terminated or extended by mutual agreement of the parties or as otherwise provided in this Lease.
3. Rent; Net Lease .
(a) Tenant covenants and agrees to pay to Landlord at its address as set forth in the preamble to this Lease or at such other place as Landlord shall from time to time designate in writing, during the Lease Term, the Base Rent, without holdback or set-off, in advance, commencing on the Rent Commencement Date and continuing thereafter on the first day of each calendar month during the Lease Term. All other items of Rent shall be paid, without holdback or set-off, in accordance with the terms of this Lease. If any payment of Rent is received by Landlord more than five (5) days after the date when such payment is due, a late charge of five percent (5%) of the past due payment shall be assessed, due and payable immediately and without notice.
(b) Landlord and Tenant acknowledge and agree that this Lease is intended to constitute, and shall constitute, an absolutely ‘net” Lease such that the Rent shall provide Landlord with a “net” return for the Term, free of all expenses and charges with respect to the Leased Premises, all of which shall be Tenant’s responsibility. Accordingly, Tenant shall pay as additional Rent and discharge, at the times specified herein, or if no time is specified, before failure to pay the same shall give rise to any interest or penalty or create any risk of lien or forfeiture, each and every item of expense, of every kind and nature whatsoever, foreseen or unforeseen, ordinary or extraordinary, related to or arising from the Leased Premises, or by reason of, or in any manner connected with or arising from, the development, leasing, operation, management, maintenance, repair, replacement, use, and/or occupancy of the Leased Premises.
4. (Reserved.)
5. (Reserved.)
6. Permitted Use; Compliance with Laws .
(a) Tenant agrees to use and occupy the Leased Premises for the Permitted Use, and for no other purpose without the written consent of Landlord, and further agrees not to use the Leased Premises for any purpose deemed extra hazardous or not covered by insurance. Tenant acknowledges and agrees that Landlord shall have the right to adopt reasonable rules and regulations for the use and/or occupancy of the Leased Premises and Tenant agrees that it shall at all times observe and comply with such rules and regulations.
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(b) Tenant agrees to abide by and comply with all Laws (as hereafter defined) applicable to the Leased Premises and/or the use or occupancy of the Leased Premises. It is the responsibility of Tenant to determine all zoning information and secure all necessary permits, licenses, and approvals for Tenant’s use and occupancy of the Leased Premises. Without limiting the generality of the foregoing, Tenant agrees to maintain in full force and effect, during the Lease Term, at Tenant’s cost and expense, all permits, licenses, registrations, and approvals required under applicable Laws for the use and/or occupancy of the Leased Premises. Without limiting the “AS IS” nature of this Lease, Tenant acknowledges and agrees that Landlord has not made and is not making any representations or warranties as to the suitability of, or the ability to obtain any permits or approvals for, Tenant’s intended use of the Leased Premises.
(c) As used in this Lease, the term “Laws” means all federal, state, municipal or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).
7. Taxes .
(a) Tenant shall be responsible for the prompt payment of all taxes, levies, betterments, and assessments, and governmental impositions of every kind or nature, whether now existing or hereafter created, general or special, ordinary or extraordinary, foreseen or unforeseen, that may be charged, assessed, laid, levied, or imposed upon, or become a lien or liens against, the Leased Premises or this Lease, including any amount that Landlord may be required to pay to any governmental authority as sales tax, gross receipt tax, or any tax of like nature specifically measured as a percentage of, or fraction of, or other factors based upon the all or any portion of the Rent payable hereunder (whether in lieu of, or in addition to the current system of real estate taxation) (all amounts payable under this Section being referred to herein as “Taxes”).
(b) Tenant shall pay all Taxes , at Landlord’s option, either (i) to Landlord as additional Rent in estimated monthly installments, with the actual amount of Taxes reconciled against such estimated monthly installments annually and, within thirty (30) days of such reconciliation, Landlord remitting to Tenant the amount by which the payment of estimated Taxes exceeds the actual Taxes for such annual period (provided Tenant is not then in breach of this Lease), or Tenant paying to Landlord the amount by which the actual Taxes for such annual period exceeds the estimated payments made by Tenant to Landlord; or (ii) to Landlord within thirty (30) days after Landlord makes demand therefor, with copies of any bills for Taxes; or (iii) directly to the taxing authority, in which event Tenant shall provide to Landlord evidence of the prompt payment of all Taxes prior to the date the same are due without the accrual of any interest on such Taxes.
8. Utilities .
(a) Tenant shall make arrangements for, and pay on or before the date the same become due, all charges for or relating to gas, oil, electricity, water, sewer, septic, telecommunications, and all other services used at or supplied to the Leased Premises (collectively, “Utilities”).
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(b) Landlord shall in no way be liable for any loss, expense, or damage (whether direct or indirect) that Tenant may sustain or incur by reason of any change, failure, interference, disruption, interruption, or defect in the supply or character of any Utilities serving the Leased Premises, regardless of its duration, or if the quantity or character of Utilities become unavailable to the Leased Premises or no longer suitable for Tenant’s requirements. Additionally, any such change, failure, interference, disruption, interruption, defect, unavailability, or unsuitability mentioned in this Section shall not: (i) constitute an actual or constructive eviction of Tenant, in whole or in part; (ii) entitle Tenant to any abatement or diminution of Rent, or any other costs due from Tenant pursuant to this Lease; (iii) relieve or release Tenant from any of its obligations under this Lease; or (iv) entitle Tenant to terminate this Lease.
9. Operation, Maintenance and Repairs .
(a) Tenant agrees that from and after the Commencement Date, Tenant will keep neat and clean and maintain in good and safe order, condition and repair, and in compliance with all Laws the entirety of the Leased Premises, including any and all alterations or improvements to the Leased Premises occurring after the date of this Lease. Tenant agrees to pay the costs for cleaning and janitorial services relating to the Leased Premises (including trash removal and trash hauling), which services shall be provided or caused to be provided by Tenant. Tenant shall be responsible for the plowing, shoveling, and treatment of snow and ice and all grounds keeping, including all landscaping and sweeping of pavement and other hardscaped surfaces. Tenant shall be responsible for all items of maintenance and all repairs to and replacements (except as otherwise provided in Section 18) of all buildings and improvements and all Building Systems (as hereafter defined), and all foundations, structural supports, walls, ceilings, windows (including plate glass), siding, roof structure, roofing materials, doors, plate glass, driveways, parking areas, fences and signs located in, on or at the Leased Premises) that the Leased Premises may require from time to time during the Term, whether interior or exterior, structural or non-structural, ordinary or extra-ordinary, foreseen or unforeseen, all to keep the Leased Premises in good and safe order, condition, and repairs, and in at least as good condition as the Leased Premises are in on the Commencement Date. The term “Building Systems” means all heating systems, ventilating systems, air conditioning systems, fire alarm systems, sprinkler systems, and other life safety systems, septic systems, water supply systems (including any water treatment or filtration systems), plumbing systems, electrical systems, storm water management facilities, and all other systems located at or serving the Real Property.
(b) Without limiting the generality of sub-section (a) of this Section, Tenant shall procure and maintain, with qualified vendors reasonably acceptable to Landlord, contracts providing for periodic inspections and maintenance of the heating, ventilating, and air conditioning (HVAC) systems, fire alarm, sprinkler, and life safety systems, the septic system, the crane(s) and related appurtenances in the building, at such intervals as are reasonably required by Landlord, but in all events at least annually.
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(c) Without limiting the generality of sub-section (a) of this Section, Tenant shall promptly after the Commencement Date undertake all investigations (including an evaluation by a structural engineer and a roofing surveyor) with respect to, and promptly undertake all work necessary to repair, the roof (including roof framing) of the building on the Leased Premises and all damage and other adverse conditions associated with or arising out of the condition of the roof of the building, including any damage to the flooring, walls, siding, windows, ceilings (including drop ceilings), and trim of the building and any Building Systems that may have been adversely affected by any damage to or leaks in the roof of the Building. Tenant shall keep Landlord informed as to the results of all inspections and shall provide all plans and specifications for the foregoing repair work, which will be subject to the approval of Landlord, which will not be unreasonably withheld.
10. Alterations, Renovations and Improvements . Tenant shall not make any alterations, renovations or improvements to the Leased Premises without obtaining Landlord’s prior written consent to the plans and specifications therefor and the contractor(s) to be retained by Tenant to perform such work, which shall not be unreasonably withheld, conditioned, or delayed in the case of cosmetic renovations that do not affect the structural elements of the improvements, the roof(s) of any buildings, or any of the Building Systems, but otherwise shall be in Landlord’s sole discretion. Prior to any contractor or subcontractor (of any tier) providing or furnishing any labor, materials, or services in connection with any alterations, renovations, or improvements, Tenant shall obtain and furnish to Landlord the name and address of each such contractor and subcontractor. In addition, prior to any such labor, materials, or services being provided or furnished, Tenant shall furnish to Landlord a mechanic’s lien waiver and notice to prevent lien in a form prescribed by Landlord, duly executed by each such contractor or subcontractor who will furnish or provide labor, materials, and/or services. Tenant shall ensure that all such alterations, renovations and improvements are performed in a good and workmanlike and in compliance with all applicable Laws. In the event any lien is filed against the Leased Premises in connection with or arising out of any work performed at or materials, labor or other services supplied to the Leased Premises, Tenant shall cause the same to be discharged within thirty (30) days after such lien is filed. Tenant shall indemnify and hold Landlord harmless from and against all claims, demands, liabilities, liens, losses, costs and expenses (including reasonable attorneys’ fees) which may arise or be incurred by Landlord as a direct or indirect result of or in connection with such alterations, renovations and improvements, and Tenant shall be responsible for all costs, liabilities, and expenses arising out of such alterations, renovations and/or improvements. All alterations, renovations and improvements which may be made or installed by or on behalf of Tenant upon the Leased Premises and which in any manner are attached to the floors, walls or ceilings shall, at Landlord's option, remain upon the Leased Premises, and, upon termination of this Lease, shall be surrendered with the Leased Premises as a part thereof without disturbance, molestation or injury, provided, however, that Tenant’s furniture, equipment, other personal property, and trade fixtures (which, for avoidance of doubt, shall in no event include the crane(s) or related appurtenances located at the Leased Premises) may be removed by Tenant from the Leased Premises upon the expiration or termination of this Lease, subject to the provisions relating to removal thereof as provided in this Lease.
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11. Signs . Tenant shall have the right to maintain the existing signage at the Real Property as of the Commencement Date and shall have the right to install additional signage that does not affect the structural elements of the improvements, the roof(s) of any buildings, or any of the Building Systems, provided, however, that all signage shall be at Tenant’s sole cost and expense, and shall comply with all applicable Laws.
12. Surrender; Holdover . Tenant shall vacate and surrender the Leased Premises to Landlord at the expiration or sooner termination of the Lease Term and the same shall be in the same condition as Tenant is required to maintain the same during the Lease Term, free of all of Tenant’s personal property except as may otherwise be provided herein, “broom clean,” and otherwise in accordance with the provisions of the Lease. Tenant shall have no right to holdover beyond the expiration of the Lease Term. If Tenant continues to occupy the Leased Premises after the end of the Lease Term, such continued occupancy shall be deemed a tenancy-at-sufferance even if Landlord accepts any payment from Tenant, but in the event that a court of competent jurisdiction deems such acceptance of a payment to constitute acceptance of “rent”, such acceptance shall create no rights in Tenant beyond a tenancy-at-will under the terms and conditions stated herein but at a Base Rent rate equal to one hundred fifty percent (150%) of the Base Rent applicable immediately preceding the end of the Lease Term, plus all additional Rent, until (i) Tenant shall vacate the Leased Premises; (ii) the termination of the tenancy-at-will; or (iii) Landlord shall give notice of a different rental amount. Nothing contained in this Section shall be deemed to (a) constitute consent by Landlord to such occupancy or holdover by Tenant; (b) confer any rights on Tenant as more than a tenant-at-sufferance or, if Landlord accepts any rental payments applicable to such period of holding over, a tenant-at-will; or (c) relieve Tenant from liability for damages suffered by Landlord as a result of such holding over.
13. Removal of Tenant’s Property . Tenant’s trade fixtures, personal property, furniture and equipment, other than those items which are to remain or which Landlord elects to have remain at the Leased Premises as provided in Section 10 of this Lease, may be removed by Tenant at the termination of this Lease, provided (a) Tenant is not then be breach of any provision of this Lease; (b) such removal shall not cause any material damage to any portion of the Leased Premises, and any other damage created by such removal shall be repaired by Tenant at Tenant's expense prior to the expiration of the Lease Term to at least as good condition as existed when possession of the Leased Premises was delivered to Tenant; and (c) such removal shall be made before the termination of the Lease Term.
14. Subletting and Assignment . Tenant shall not assign this Lease, in whole or in part, or sublet the Leased Premises or any portion thereof, or encumber the leasehold interest created by this Lease in any manner without the prior written consent of Landlord, which may be withheld in Landlord’s sole discretion during the first twenty-four full calendar months of the Term, and thereafter will not be unreasonably withheld. No assignment or sublease shall operate to release Tenant from any of its obligations under this Lease. Each sublease of the Leased Premises or any portion thereof must contain a release of and waiver of claims against Landlord and the other Releasees (as that term is defined in this Lease), in form and content acceptable to Landlord, and must require the subtenant’s property insurer to issue in favor of Landlord and the other Releasees waiver of subrogation rights endorsements to all policies of property insurance carried in connection with the Leased Premises and the contents thereof. Every transfer by levy or sale on execution, or other legal process, every transfer in bankruptcy, every transfer by merger, consolidation, or by operation of Law, every transfer of a controlling interest in Tenant, and every transfer under any compulsory procedure or order of court shall be deemed to constitute an “assignment” within the meaning of this Lease. Any attempted assignment or sublease in violation of this Section shall, at Landlord’s option, be void and shall constitute a default under this Lease. Consent by Landlord to an assignment or sublease in one instance shall not operate to release the requirement that consent from Landlord be obtained for any further or subsequent assignment or sublease. Tenant shall pay all fees and expenses, including reasonable attorneys’ fees, incurred by Landlord in connection with any proposed subletting or assignment, irrespective of whether Landlord’s consent is in fact granted.
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15. Indemnification and Insurance .
(a) Tenant agrees to maintain in full force during the Lease Term insurance as follows:
(i) commercial general liability insurance, written on an occurrence basis, with a deductible in an amount not to exceed $10,000.00, and providing:
(A) minimum limits of (y) $1,000,000.00 per occurrence with $3,000,000.00 annual aggregate limit for bodily injury (including death) and property damage; and (z) $3,000,000.00 in the annual aggregate with respect to products and completed operations;
(B) coverage for damages arising out of bodily injury (including death) sustained by any person or persons or arising out of damage to or destruction of property;
(C) coverage for damages arising out of premises liability, personal injury and advertising injury;
(D) pollution liability coverage for sudden and accidental pollution;
(E) for extension of such coverage to include liability for the operation of non-owned motor vehicles;
(F) specific coverage for Tenant’s indemnification obligations under this Lease (but neither this provision nor such coverage shall be deemed to limit any of Tenant’s obligations under this Lease);
(G) that Tenant’s commercial general liability insurance is provided on a primary and non-contributory basis;
(H) that Landlord, Landlord’s mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time are named as additional insureds by an endorsement provided on ISO Form 2026 (1185) or its equivalent, without modification, or such other endorsement as is acceptable to Landlord, acting reasonably; and
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(I) for waiver of subrogation in favor of Landlord, Landlord’s mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time.
(ii) Automobile liability insurance covering all motor vehicles owned, leased, or licensed by Tenant, covering injury to or death of one or more persons or damage to or destruction of property, with a minimum limit of liability of $3,000,000.00 for each accident.
(iii) Workers compensation insurance in accordance with the requirements of all applicable Laws, and employers liability insurance with limits of at least $1,000,000.00, with such workers compensation insurance and employers liability insurance providing for waiver of subrogation in favor of Landlord, its mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time.
(iv) Umbrella excess liability insurance in a minimum amount of $10,000,000.00, on a following form basis over the insurance described in clauses (i) through (iii), above.
(v) Special causes of loss form (also sometimes known as “all risk”) property insurance insuring, on a replacement cost basis (without any deduction for depreciation), all personal property and trade fixtures owned by or within the care, custody or control of Tenant, with limits in an amount of not less than one hundred percent (100%) of the full replacement cost of such property, without co-insurance provisions, and with a deductible of not more than $10,000.00, and with Landlord (and Landlord’s mortgagee(s) of the Leased Premises from time-to-time) named as additional insured(s). Such policy(ies) of property insurance must insure against fire, sprinkler leakages, and earthquake, flood and collapse, and all other perils as are from time to time included in the standard special causes of loss form (also sometimes known as “all risk”) coverage;
(vi) Until such time, if any, as Landlord elects to carry property insurance for the buildings and improvements located on the Leased Premises, special causes of loss form (also sometimes known as “all risk”) property insurance insuring, on a replacement cost basis (without any deduction for depreciation), all buildings and improvements (including fixtures) located on the Leased Premises, with limits in an amount of not less than one hundred percent (100%) of the full replacement cost of such buildings and improvements, and in all events sufficient at all times to avoid causing the insured to be or become a co-insurer, and with a deductible of not more than $10,000.00, and with Landlord (and Landlord’s mortgagee(s) of the Leased Premises from time-to-time) named as loss payee(s) and additional insured(s). Notwithstanding the foregoing, the insurance policy(ies) required by this sub-section may insure the building on an actual cash value basis during those portions of the Term for which Landlord has provided prior consent to the policy(ies) providing coverage on such basis. Such policy(ies) of property insurance must insure against fire, sprinkler leakages, and earthquake, flood and collapse, and all other perils as are from time to time included in the standard special causes of loss form (also sometimes known as “all risk”) coverage;
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(vii) business interruption insurance covering all of Tenant’s obligations under this Lease with respect to the payment of Rent for a period of at least eighteen (18) months.
(viii) Such other insurance policies, such other endorsements, such other deductibles, and/or such other insurance policy limits as may from time to time be reasonably required by Landlord, provided that, at the time, such other insurance policies, endorsements, deductibles, and/or insurance policy limits are commonly carried for premises and/or buildings or improvements similar in construction, design, general location, use, operation, and occupancy to those located on or appurtenant to the Leased Premises or for operations similar to those conducted on or from the Leased Premises.
(b) Without limiting the exculpatory provisions of this Lease, each policy of property insurance maintained by Tenant under this Lease shall contain waivers of subrogation in favor of Landlord and all other Releasees.
(c) All insurance required to be obtained and maintained by Tenant pursuant to this Section must be with insurers authorized to transact insurance business and cover risks in the State of Maine and that are rated "A-" or better by A.M. Best Company, Inc. or other insurance companies of recognized responsibility acceptable to Landlord, acting reasonably.
(d) The policies of insurance required to be maintained by Tenant under this Lease shall be endorsed to require that each policy will not be cancelled or materially changed without at least thirty (30) days prior written notice to Landlord.
(e) Tenant shall deliver to Landlord copies of each policy of insurance (including all endorsements) required to be maintained by Tenant under this Lease or such other evidence of each such policy of insurance (and all required endorsements) as is acceptable to Landlord, acting reasonably.
(f) If Tenant fails to obtain, maintain and/or pay for the insurance required by this Lease at the times and for the amounts and duration specified herein, Landlord has the right, but not the obligation, at any time and from time to time, to obtain such insurance and/or pay the premiums for such insurance, without limiting any other rights or remedies available to Landlord for such failure. In such event, Tenant shall repay Landlord, immediately upon demand, all sums so paid by Landlord and all costs and expenses incurred by Landlord in connection therewith (including reasonable attorneys’ fees), all without prejudice to any other rights or remedies available to Landlord.
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(g) Landlord shall have the right, at any time during the Term, to elect, by giving written notice to Tenant, to carry property insurance for the buildings and improvements located on the Leased Premises, in which event, Tenant shall pay to Landlord the amount of all premiums for such property insurance procured and maintained by Landlord with respect to the Real Property. Tenant shall pay such amounts to Landlord in estimated monthly installments, with the actual amount of incurred by Landlord for such premiums being reconciled against such estimated monthly installments annually and, within thirty (30) days of such reconciliation, Landlord remitting to Tenant the amount by which the payment of estimated premiums exceeds the actual premiums for such annual period (provided Tenant is not then in breach of this Lease), or Tenant paying to Landlord the amount by which the actual premiums for such annual period exceeds the estimated payments made by Tenant to Landlord.
(h) Tenant acknowledges and agrees that such property insurance as Landlord elects to purchase with respect to the Real Property shall be for the sole benefit of Landlord and that such insurance shall not cover any personal property, trade fixtures, leasehold improvements, or other property or appurtenances owned by or within the care, custody, or control of Tenant, or otherwise located in the Leased Premises (collectively, “Tenant’s Property”) and that in the event of damage to or loss of any of Tenant’s Property, neither Landlord, its mortgagee(s) of the Leased Premises from time-to-time (if any), nor any of the shareholders, members, directors, managers, officers, employees, or agents of Landlord or any such mortgagee(s) (each in the singular “Releasee”, and in the plural, “Releasees”) shall have any obligation to repair or replace the same. Notwithstanding any exception to Tenant’s indemnification obligations under this Lease, Tenant does hereby expressly release all Releasees of and from, and agrees to indemnify, hold harmless, and defend Releasees from and against, any and all claims for damages to or loss of any of Tenant’s Property, regardless of the cause thereof, including, damage or loss due to any Releasee’s negligence.
(i) Tenant shall indemnify and hold all Releasees harmless and, if requested by Landlord, defend such Releasee(s) with counsel reasonably satisfactory to Landlord, from and against any and all liabilities, losses, claims, causes of action, damages, costs, and expenses (including reasonable attorney’s fees) incurred by or threatened against any Releasee arising out of (i) any occurrence on the Leased Premises or the use of the Leased Premises by Tenant, its employees, agents, licensees, or invitees, except to the extent caused by the negligence or willful misconduct of Landlord (but such exception shall not apply to limit the application of sub-section (h) of this Section); or (ii) Tenant’s breach of any provision of this Lease. Tenant agrees that the foregoing agreement to indemnify, defend, and hold harmless extends to liabilities, losses, claims, causes of action, damages, costs and expenses (including reasonable attorney’s fees) arising out of claims of Tenant's employees without regard to any immunity, statutory or otherwise, including any immunity under the workers compensation Laws of Maine or any other applicable jurisdiction, which immunity Tenant hereby waives, but only for the purposes of Tenant’s obligations to the Releasees under this sub-section. Tenant's obligations under this sub-section shall survive the termination of this Lease.
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16. Hazardous Materials . Tenant covenants and agrees that Tenant will not permit any Hazardous Substances (as hereafter defined) to be stored, generated, or released from the Leased Premises, other than Hazardous Substances incidental to Tenant’s use, maintenance, and operation of the Leased Premises for the Permitted Use provided that Tenant shall store, generate, handle, and dispose of all such Hazardous Substances in full compliance with all applicable laws. Tenant hereby covenants and agrees to indemnify, hold harmless, and, if requested by Landlord, defend, Landlord from and from and against any and all demands, claims, causes, of action, losses, liabilities, damages, fines, costs, and expenses (including reasonable attorneys’ fees, court costs and clean-up costs) that may arise out of any Hazardous Substances located at or generated or released from the Leased Premises, irrespective of whether first occurring prior to or after the Commencement Date. The term “Hazardous Substances” means any flammables, explosives, radioactive materials, gasoline, oil, other petroleum products, lead paint, urea formaldehyde (including urea formaldehyde foam insulation), asbestos, asbestos containing materials, polychlorinated biphenyls, and any other hazardous materials, hazardous waste, hazardous matter, hazardous or toxic substances, chemical pollutants, and other materials or substances defined in or regulated by Environmental Laws. The term “Environmental Laws” means (A) the Clean Water Act; (B) the Clean Air Act; (C) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act; (D) the Toxic Substance Control Act; (E) the Resource Conservation and Recovery Act; (F) the Hazardous Materials Transportation Act; and/or (G) any similar state Laws regulating pollution or contamination of the environment The obligations of Tenant under this Section shall survive the termination of this Lease.
17. Right to Enter . Tenant agrees to permit Landlord or its duly authorized agents to enter on the Leased Premises during Tenant's normal business hours, with reasonable prior notice, to examine the condition of said Leased Premises, exercise any rights of Landlord under this Lease, and/or to show the same to prospective tenants, lenders, or purchasers, provided such access to the Leased Premises shall not unnecessarily interfere with Tenant's use of the Leased Premises or the conduct of Tenant's business activities thereon. Notwithstanding the foregoing, Landlord shall have the right (but not the obligation) to enter the Leased Premises without prior notice in the event of an emergency in which prior notice is not practicable in the circumstances.
18. Total or Partial Destruction .
(a) In the event the improvements on the Real Property (including any Building Systems) are damaged or destroyed by fire or other peril (a “Casualty”), Tenant shall give Landlord notice of such Casualty as soon as reasonably possible after the Casualty. Landlord shall have the right to elect whether to have such improvements rebuilt or restored. In the event that Landlord elects not to have the improvements rebuilt or restored, and the nature of the Casualty is such as would, absent such rebuilding or restoration, materially impair Tenant’s ability to use and occupy such Leased Premises in substantially the same manner as they were used prior to the Casualty, this Lease shall terminate effective as of the date of the Casualty. In the event that Landlord elects to have the improvements rebuilt or restored, this Lease shall remain in effect without reduction or abatement of Rent, and the following provisions shall apply:
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(i) Landlord shall, with reasonable promptness rebuild or restore such improvements to at least substantially the same condition, quality, and class as existed prior to the Casualty, using the proceeds of insurance covering such improvements, provided , however , that in no event shall Landlord be obligated to expend for any such rebuilding or restoration an amount in excess of the insurance proceeds actually collected by Landlord on account of the Casualty, less the costs and expenses (including reasonable attorneys’ fees) incurred by Landlord in collecting such proceeds.
(ii) Notwithstanding the preceding clause (i), Landlord shall have the right to elect, by giving written notice to Tenant, to have Tenant rebuild or restore the Leased Premises, in which event Tenant shall, with reasonable promptness, and in all events within twelve (12) months of the date of Landlord’s election notice, rebuild or restore such improvements to at least substantially the same condition, quality, and class as existed prior to the Casualty, using the proceeds of insurance covering such improvements. The selection of all engineers, architects, and contractors engaged in connection with such rebuilding or restoration and all plans and specifications for such rebuilding or restoration, shall be subject to review and approval by Landlord. In the event that Landlord makes the election to have Tenant rebuild or restore as provided in this clause (ii), all proceeds payable by reason of any Casualty under all applicable policies of insurance (whether Tenant is carrying such insurance, or Landlord has elected to do so as provided in this Lease) shall be paid to Landlord or its mortgagee, and such proceeds will be held by Landlord or its mortgagee in an interest-bearing account and, provided Tenant is not in breach of this Lease, shall be made available for rebuilding or restoring the improvements, and shall be paid by Landlord (or such mortgagee) from time- to-time during the progress of construction for the costs of such reconstruction or repair, all subject to and in accordance with reasonable terms, conditions, and construction disbursement procedures specified by Landlord and/or such mortgagee. Any excess proceeds of insurance (and accrued interest) remaining after the completion of the restoration or reconstruction of the Leased Premises shall be paid to Landlord.
(b) (Reserved.)
(c) Tenant shall be responsible for all insurance deductibles applicable to any Casualty affecting any of the improvements on the Real Property (including Building Systems).
(d) The provisions of this Section shall be subject and subordinate to the provisions of any mortgage now or hereafter placed upon the Real Property and the requirements of any mortgagee holding such mortgage.
19. Condemnation .
(a) “Condemnation” means any taking of title to or any interest in the Leased Premises or any part thereof or any other property used in connection with the Leased Premises (including for ingress, egress, parking, septic service, water supply or other services or utilities) by exercise of any right of eminent domain by, or by any similar proceeding or act of, any person having the power and legal authority to do so (or by purchase in lieu thereof). For the purposes of this definition, the effective date of any Condemnation shall be deemed to be the later of: (i) the date when title to the Leased Premises or part thereof or such other property is transferred by such proceeding or act of the condemning authority, and (ii) the date when Tenant o is no longer permitted to occupy the Leased Premises or to use such other property.
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(b) “ Substantial Condemnation ” means any Condemnation that affects all or a substantial portion of the Leased Premises or any Condemnation that has or is reasonably likely to have a materially adverse effect on any business operations then being conducted on the Leased Premises. Tenant may waive its right to treat as a Substantial Condemnation any Condemnation that would otherwise qualify as such.
(c) “Insubstantial Condemnation” means any Condemnation that is not a Substantial Condemnation.
(d) If a Substantial Condemnation occurs, this Lease shall terminate upon the effective date of the Substantial Condemnation.
(e) If an Insubstantial Condemnation occurs, then this Lease shall continue in full force and effect without reduction or abatement of Rent.
(f) In the event of any Condemnation, Landlord shall be entitled to receive and retain the amounts awarded for the Leased Premises, and Tenant shall be entitled to receive and retain any amounts which may be specifically awarded to it in any such condemnation proceedings because of its business loss or the taking of its trade fixtures, furniture, or other property.
20. Force Majeure . In any case where either party is required to perform any act pursuant to this Lease, except for Tenant’s monetary obligations hereunder, the time for the performance thereof shall be extended by a period of time equal to the period of any delay caused by or resulting from an act of God, war, civil commotion, fire or other casualty, labor difficulties, shortages of energy or labor, government regulations, or delays caused by one party to the other, whether such period be designated by a fixed date, a fixed time, or as a reasonable date or time.
21. Quiet Enjoyment . Tenant, on paying the Rent and performing and observing the covenants in this Lease, may hold and enjoy the Leased Premises for the Term without unreasonably interference from any person claiming by, through, or under Landlord, subject and subordinate to all provisions of this Lease.
22. Default.
(a) In the event that:
(i) Tenant shall fail to pay when due the Rent or any other sums payable hereunder when due and such failure remains uncured for five (5) days after Landlord delivers a default notice to Tenant for such failure to pay rent; or
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(ii) any petition in bankruptcy shall be filed by Tenant or any guarantor hereof or other petition or proceeding shall be filed or commenced by Tenant or any guarantor hereof to declare Tenant insolvent, or to delay, reduce or modify Tenant’s or any such guarantor’s debts or obligations, or Tenant or any such guarantor admits its inability to pay its debts, or Tenant or any such guarantor makes an assignment for the benefit of creditors; or
(iii) any bankruptcy petition or proceeding shall be filed against Tenant or any guarantor hereof or to otherwise declare Tenant or any guarantor hereof bankrupt or insolvent or to delay, reduce or modify Tenant’s or any such guarantor’s debts or obligations or a receiver, trustee or other similar type of appointment or court appointee or nominee is appointed for Tenant or any such guarantor or any of the property of Tenant or any such guarantor, and such petition, appointment or proceeding is not dismissed within sixty (60) days after it is commenced; or
(iv) the leasehold interest of Tenant is levied upon or attached by process of law, including the filing of any mechanic’s lien, and such levy, lien, or attachment is not dissolved within thirty (30) days after it is made; or
(v) Tenant shall abandon the Leased Premises during the Lease Term; or
(vi) Tenant shall assign this Lease or sublet any portion of the Leased Premises, or attempt to do either of the foregoing, in violation of this Lease; or
(vii) Tenant violates or fails to observe or comply with any Laws applicable to the Leased Premises, Tenant’s use thereof, or Tenant's operations, activities or conduct of business at or from the Leased Premises; or
(viii) any other event, occurrence, act, or omission described in any provision of this Lease as constituting a “default” or an “Event of Default” occurs;
(ix) Tenant shall neglect or fail to perform or observe any of the other covenants, terms, provisions or conditions contained in this Lease and, if the neglect or failure is capable of being cured, such neglect or failure continues for more than thirty (30) days after written notice thereof ( provided , however , that if such neglect or failure is capable of being cured, but is not capable of being cured within said thirty (30) day period, then Tenant shall have such additional period of time, not to exceed an additional sixty (60) days, as is reasonably necessary to cure the same provided Tenant commences to cure within said thirty (30) day period and diligently and continuously prosecutes the cure to completion); or
(x) there is a default by Tenant under (A) that certain Lease Agreement of even or near date herewith between Tenant and 300 Park Street, LLC pertaining to property located in the Town of Paris, County of Oxford, and State of Maine; and/or (B) that certain Lease Agreement of even or near date herewith between Tenant and 56 Mechanic Falls Road, LLC, pertaining to property located in the Town of Oxford, County of Oxford, and State of Maine, and any such default continues beyond the expiration of applicable notice and cure periods (if any), then, and in any of said cases (notwithstanding any license of any former breach of covenant or waiver of the benefit hereof or consent in a former instance), and without limitation of any other remedies that might be available to Landlord under this Lease, at law, or in equity, Landlord lawfully may, immediately or at any time thereafter, terminate this Lease by sending written notice of termination to Tenant, or, subject to compliance with applicable Laws, enter into and upon the Leased Premises or any part thereof in the name of the whole and repossess the same as of its former estate, and expel Tenant and those claiming through or under it and remove it or their effects without being deemed guilty of any manner of trespass, in each case without prejudice to any rights or remedies which might otherwise be available to Landlord for collection of Rent and other damages for breach of covenant, and upon entry as aforesaid or upon sending of such notice, this Lease shall terminate.
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(b) Without limiting other remedies of Landlord at law or in equity for any breach of or on account of termination of this Lease, Tenant covenants that in case of such termination under sub-section (a) of this Section, Tenant shall pay to Landlord the unpaid Rent owed to Landlord through the time of termination, plus interest thereon at the rate of 18% per annum from the date the same was due until paid; and (ii) at the election of Landlord, either:
(1) the present value of a sum which, at the time of such termination of this Lease is equal to (A) the aggregate of the Rent which would have been payable by Tenant for the period commencing upon such termination of this Lease and continuing through the date this Lease would have terminated had there been no default by Tenant; minus (B) the fair market rental value of the Leased Premises (after deducting reasonable projections for Landlord’s costs and expenses of re-letting the Leased Premises, including advertising expenses, brokerage commissions, reasonable attorneys’ fees, and commercially reasonable costs of repairing, renovating, or otherwise altering the Leased Premises to suit the new tenant); or
(2) for the period of time commencing upon such termination of this Lease and continuing through the date this Lease would have terminated had there been no default by Tenant hereunder, the difference, if any, between the Rent which would have been due had there been no such termination and the amount being received by Landlord as rent from a replacement Tenant of Leased Premises, if any. In addition, Tenant shall pay to Landlord all costs and expenses of such re-letting, including advertising expenses, brokerage commissions, reasonable attorneys’ fees, and commercially reasonable costs of repairing, renovating, or otherwise altering the Leased Premises to suit the new tenant.
(c) If Tenant shall default in the performance or observance of any covenant, agreement, or condition in this Lease contained on its part to be performed or observed and shall not cure any such default as provided herein, Landlord may, at its option, without waiving any claim for damages or any other right or remedy for breach of this Lease, at any time thereafter, cure such default. Any amount paid or any liability incurred by Landlord in so doing shall be deemed paid or incurred for the account of Tenant, and Tenant agrees to immediately reimburse Landlord therefor, as additional Rent.
(d) Tenant shall pay all reasonable attorneys’ fees incurred by Landlord in connection with the enforcement of Tenant’s obligations under this Lease.
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(e) Landlord shall in no event be in default in the performance of any of its obligations hereunder unless and until Landlord shall have failed to perform, or failed diligently to attempt to perform, such obligations within thirty (30) days or such additional time as is reasonably required to correct any such default after notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation.
(f) In no event shall Landlord be liable to Tenant for incidental, consequential, or punitive damages in connection with any matter arising out of this Lease or the Leased Premises. Without in any way limiting or impairing the effect of the other provisions of this Lease, Tenant shall neither assert nor seek to enforce any claim arising out of this Lease or out of the use or occupancy of the Leased Premises against Landlord, its shareholders, directors, officers, employees, or agents, or any of its or their assets other than the value of Landlord’s interest in the Leased Premises and Tenant agrees to look solely to such interest and insurance coverage for the satisfaction of any claim arising out of this Lease or out of the use or occupancy of the Leased Premises.
23. Sale or Mortgage; Estoppel; Subordination .
(a) Nothing contained in this Lease shall limit Landlord's right to sell, mortgage, or otherwise encumber its fee interest in the Leased Premises, or affect Landlord's right to assign this Lease or the Rent payable under this Lease, whether as further security under a fee mortgage or otherwise. Any such assignment of this Lease or of the Rent payable under this Lease shall be honored by Tenant.
(b) In the event Landlord shall sell, transfer, or otherwise convey the Leased Premises, Landlord, upon the written assumption by the transferee of the obligations arising hereunder after the date of such transfer, shall be entirely freed and relieved of all covenants and obligations of Landlord hereunder. Nothing in the preceding sentence shall be construed to impair Tenant’s leasehold interest under this Lease so long as Tenant performs and observes the covenants and terms of this Lease on its part to be performed and observed.
(c) This Lease shall, at Landlord’s option, be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the Leased Premises, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Tenant's right to quiet possession of the Leased Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the Rent and observe and perform all of the provisions of this Lease. If any mortgagee, trustee, or ground lessor shall elect to have this Lease made prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior to or subsequent to the date of said mortgage, deed of trust, or ground lease or the date of recording thereof. Tenant agrees to execute any documents required to effectuate an attornment, a subordination, or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be. Tenant's failure to execute such documents within ten (10) days after written demand shall constitute an Event of Default by Tenant hereunder.
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(d) At any time, and from time to time, upon the written request of Landlord or any mortgagee or prospective purchaser of the Leased Premises, Tenant, within ten (10) business days after such written request, agrees to execute, acknowledge and deliver to Landlord and/or mortgagee, without charge, an estoppel certificate which shall contain (i) a certification that this Lease is unmodified and in full force and effect or, if modified, a statement of the nature of any such modification and a certification that this Lease, as so modified, is in full force and effect; (ii) a certification of the date to which the Rent payable by Tenant are paid (including any payments in advance); (iii) a certification that Tenant is not in default hereunder and that there are not, to Tenant's knowledge, any uncured events of default on the part of Landlord hereunder, or a specification of such events of default if any are claimed by Tenant; and (iv) such other commercially reasonable certifications as are identified in such request. Tenant's failure to deliver such estoppel certificate within the time frame set forth above shall, at Landlord’s option, constitute an Event of Default hereunder and shall, at Landlord’s option, be conclusive proof 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 of Landlord's obligations under this Lease, and that not more than one month's Rent has been paid in advance.
(e) If Landlord desires to finance, refinance, or sell the Leased Premises, Tenant hereby agrees to deliver to any lender or purchaser designated by Landlord, and cause any guarantor to so deliver, such financial statements and other financial information pertaining to Tenant and such guarantor as may be reasonably required by such lender or purchaser. Tenant's failure to provide such information or cause such information to be provided within ten (10) days after written demand shall constitute an Event of Default by Tenant hereunder.
24. Notices . Any notice, request, demand, approval or consent given or required to be given under this Lease shall be, unless otherwise stated, in writing and shall be deemed to have been given (i) when hand delivered to the other party; or (ii) on the day on which the same shall have been mailed by United States registered or certified mail, return receipt requested, with all postage prepaid, or by Federal Express or similar nationally-recognized overnight courier service that provides evidence of delivery, to the address of the party to receive such notice as set forth in the preamble hereof, provided that either party may, by such manner of notice, add or substitute one or more persons or addresses for provision of such notice.
25. Tenant Representations .
(a) Neither Tenant nor any key personnel of Tenant nor any of Tenant’s underlying beneficial owners have engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any U.S., international or other anti-money laundering regulations or conventions, including without limitation the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. §1 et seq., as amended), any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 and the regulations promulgated thereunder (collectively, the “ Patriot Act ”), or any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“ OFAC ”); or (ii) in contravention of Executive Order No. 13224 issued by the President of the United States on September 24, 2001 (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time (“ Executive Order 13224 ”); or (iii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, OFAC, Financial Action Task Force, U.S. Securities & Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time.
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(b) Neither Tenant nor any key personnel of Tenant nor any of the underlying beneficial owners of Tenant is or will be a person or entity (i) that is listed in the Annex to or is otherwise subject to the provisions of Executive Order 13224; or (ii) whose name appears on OFAC’s most current list of “Specially Designated Nationals and Blocked Persons,” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf ); or (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in Executive Order 13224; or (iv) who has been associated with or is otherwise affiliated with any entity or person listed above.
(c) Tenant represents that it has all requisite power and authority to enter into this Lease and the person executing this Lease on behalf of Tenant represents that he or she has all requisite power and authority to do so.
26. Miscellaneous Provisions .
(a) Invalidity of Particular Provisions . If any term or provision of this Lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by applicable Laws.
(b) Governing Law . This Lease, and all claims or causes of action (whether arising in contract, in tort, or by statute) that may be based upon, arise out of or relate to this Lease, shall be governed by and enforced in accordance with the internal Laws of the State of Maine, including its statutes of limitations, without regard or reference to conflicts of law principles.
(c) Interpretation . Whenever the word “include,” “includes,” or “including” is used in this Lease, it is deemed to be followed by the words “without limitation.” The terms “this Lease,” “hereof,” “herein,” “hereby,” “hereunder” and similar expressions refer to this Lease as a whole and not to any particular section of this Lease unless the context otherwise requires. The word “person” includes any individual, corporation, firm, association, partnership (general or limited), joint venture, limited liability company, trust, estate or other legal entity. The section and sub-section headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction, or meaning of the provisions of this Lease. Whenever in this Lease provision is made for the doing of any act by any party, it is understood and agreed that said act shall be done by such party at its own cost and expense, unless a contrary intent is expressed.
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(d) Entire Agreement; Binding Effect . All negotiations, considerations, representations, and understandings between Landlord and Tenant are incorporated herein and may be modified or altered only by agreement in writing between Landlord and Tenant, and no act or omission of any employee or agent of Landlord shall alter, change, or modify any of the provisions hereof. All rights, obligations and liabilities contained herein given to, or imposed upon, Landlord and Tenant shall extend to and bind the several respective administrators, trustees, receivers, legal representatives, successors, heirs and permitted assigns of Landlord and Tenant. If the “Tenant” under this Lease consists of more than one person or entity, each such person and/or entity shall be bound jointly and severally by the terms, covenants and agreements herein and jointly and severally liable for all obligations arising hereunder.
(e) Language . Words of any gender used in this instrument shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires.
(f) Recording; Notice of Lease . Landlord and Tenant agree that this Lease shall not be recorded. The parties agree that at the request of either party, they will execute, acknowledge, and deliver a notice or memorandum of this Lease in recordable form for recording in the Oxford County Registry of Deeds. The requesting party shall bear the expense of recording such notice or memorandum. The Memorandum of Lease shall not be construed to vary the terms and conditions hereof. Landlord and Tenant also agree that, upon the request of either party, they will execute, acknowledge, and deliver a commercially reasonable instrument in recordable form with respect to the termination date of this Lease.
(g) Timeliness of Landlord’s Notices . Landlord's failure during the Lease Term to prepare or deliver any of the statements, notices, or bills, or invoices for any sum payable by Tenant under this Lease shall not in any way cause Landlord to forfeit or surrender its rights to collect any amount that may have become due and owing from Tenant during the Lease Term.
(h) Waiver of Jury Trial . Tenant, for itself and its heirs, successors, and assigns, does hereby WAIVE THE RIGHT TO A TRIAL BY JURY in any action or proceeding based upon, or related to, the subject matter of this Lease. This waiver is knowingly, intentionally, and voluntarily made by Tenant and Tenant acknowledges that neither Landlord nor any person acting on behalf of Landlord has made any representations of fact to induce this waiver of trial by jury or in any way to modify or nullify its effect. Tenant further acknowledges that it has been represented (or has had the opportunity to be represented) in the signing of this Lease and in the making of this waiver by independent legal counsel, selected of its own free will, and that it has had the opportunity to discuss this waiver with counsel. Tenant further acknowledges that it has read and understands the meaning and ramifications of this waiver provision.
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27. (Reserved.)
[Signature Page(s) and Guaranty Follow]
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed by their duly authorized undersigned representatives as an instrument under seal as of the day and year first written above.
WITNESS: | LANDLORD: | ||
947 Waterford Road, LLC | |||
By: | /s/ David Noble | ||
Name: | David Noble | ||
Title: | President |
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TENANT: | |||
KBS Builders, Inc. | |||
By: | /s/ Daniel M. Koch | ||
Printed Name: | Daniel M. Koch | ||
Its: | President |
GUARANTY
For value received, and in consideration of and as an inducement to Landlord to enter into the foregoing Lease (the “Lease”) with Tenant, the undersigned, ATRM Holdings, Inc. (“Guarantor”), does hereby unconditionally guaranty to Landlord the complete and due performance and observation of each and every agreement, covenant, term, and condition of the Lease to be performed or observed by Tenant, including, without limitation, the payment of all Rent required under the Lease. The validity of this Guaranty and the obligations of the Guarantor hereunder shall not be terminated, affected, or impaired by reason of the granting by the Landlord of any indulgences to the Tenant. This Guaranty shall remain and continue in full force and effect with respect to any and all renewals, modifications, or extensions of the Lease, irrespective of whether Guarantor shall have received any notice of or consented to such renewal, modification, or extension. The liability of the Guarantor hereunder shall be primary, and in any right of action that shall accrue to the Landlord under the Lease or applicable law, the Landlord may proceed against Guarantor without having commenced any action against or having obtained any judgment against Tenant and/or may proceed against Guarantor and Tenant, jointly and severally. Guarantor hereby waives all guaranty and suretyship defenses. All of the terms and provisions of this Guaranty shall inure to the benefit of the successors and assigns of the Landlord and shall be binding upon the successors and assigns of Guarantor. Capitalized terms that are used, but not defined, in this Guaranty shall have the meaning ascribed thereto in the Lease.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as an instrument under seal as of the date of the Lease.
GUARANTOR: | |||
ATRM Holdings, Inc. | |||
By: | /s/ Daniel M. Koch | ||
Printed Name: | Daniel M. Koch | ||
Its: | President and Chief Executive Officer |
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List of Exhibits
Exhibit A – Description of the Leased Premises
Exhibit B – Base Rent if Tenant does not give a timely Rent Commencement Extension Notice
Exhibit C – Base Rent if Tenant does give a timely Rent Commencement Extension Notice
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EXHIBIT A
(Description of Leased Premises)
*
EXHIBIT B
(Base Rent if Tenant does not give a timely Rent Commencement Extension Notice)
Months | Annual Rental Rate | Monthly Installment |
Commencement Date through June 30, 2019 |
$0.00
|
$0.00
|
July 1, 2019 through March 31, 2020 |
$108,900.00 (Annual Rate)
|
$9,075.00
|
April 1, 2020 through March 31, 2021 |
$111,078.00
|
$9,256.50
|
April 1, 2021 through March 31, 2022 |
$113,299.56
|
$9,441.63
|
April 1, 2022 through March 31, 2023 |
$115,565.55
|
$9,630.46
|
April 1, 2023 through March 31, 2024 |
$117,876.86
|
$9,823.07
|
April 1, 2024 through March 31, 2025 |
$120,234.40
|
$10,019.53
|
April 1, 2025 through March 31, 2026 |
$122,639.09
|
$10,219.92
|
April 1, 2026 through March 31, 2027 |
$125,091.87
|
$10,424.32
|
April 1, 2027 through March 31, 2028 |
$127,593.71
|
$10,632.81
|
April 1, 2028 through March 31, 2029 |
$130,145.58
|
$10,845.47
|
EXHIBIT C
(Base Rent if Tenant does give a timely Rent Commencement Extension Notice)
Months | Annual Base Rent | Monthly Installment |
Commencement Date through September 30, 2019 |
$0.00
|
$0.00
|
October 1, 2019 through March 31, 2020 |
$118,800.00 (Annual Rate) |
$9,900.00
|
April 1, 2020 through March 31, 2021 |
$121,176.00
|
$10,098.00
|
April 1, 2021 through March 31, 2022 |
$123,599.52
|
$10,299.96
|
April 1, 2022 through March 31, 2023 |
$126,071.51
|
$10,505.96
|
April 1, 2023 through March 31, 2024 |
$128,592.94
|
$10,716.08
|
April 1, 2024 through March 31, 2025 |
$131,164.80
|
$10,930.40
|
April 1, 2025 through March 31, 2026 |
$133,788.10
|
$11,149.01
|
April 1, 2026 through March 31, 2027 |
$136,463.86
|
$11,371.99
|
April 1, 2027 through March 31, 2028 |
$139,193.14
|
$11,599.43
|
April 1, 2028 through March 31, 2029 |
$141,977.00
|
$11,831.42
|
Exhibit 10.7
LEASE AGREEMENT
THIS LEASE AGREEMENT (this “Lease”) is made this 3rd day of April, 2019 (the “Commencement Date”), by and between 300 Park Street, LLC , a Delaware limited liability company with a mailing address of 53 Forest Avenue, Old Greenwich, Connecticut 06870 (“Landlord”), and KBS Builders, Inc., a Delaware corporation with a mailing address of 300 Park Street, Paris, Maine 04271 (“Tenant”). The parties hereby agree as follows:
LEASE INFORMATION AND DEFINITIONS
The following information and definitions are incorporated into and made a part of this Lease:
Leased Premises: |
The “Leased Premises” means certain land located in the Town of Paris, County of Oxford, and State of Maine, and being more particularly described on Exhibit A , attached hereto and made a part hereof, together with all improvements thereon and all rights and easements appurtenant thereto (the “Real Property”), together with certain personal property consisting of the Personal Property (as that term is defined in the Purchase and Sale Agreement of even or near date between Tenant, as seller, and Landlord, as purchaser, and more particularly listed on Exhibit A-1 , attached hereto and made a part hereof (the “Leased Personal Property”).
|
Term: |
The “Term” means:
(a) an “Initial Term,” being a period commencing on the Commencement Date and ending at 5:00 p.m. on March 31, 2029, subject to adjustment and earlier termination as provided in the Lease; and
(b) if Tenant duly exercises its option to extend the term of this Lease for one or both Extension Terms as provided in the Lease, then also each such Extension Term for which Tenant has duly exercised such option. |
Extension Terms: |
The Extension Terms shall be two (2) separate, consecutive sixty (60) month periods (hereinafter referred to as "First Extension Term” and the “Second Extension Term,” respectively, and also referred to in the singular as an “Extension Term” and in the plural as the “Extension Terms”), all on the terms and conditions set forth in the Lease.
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Permitted Use:
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Subject in all events to the terms and conditions of the Lease, the Leased Premises shall be used only for purposes of a facility for the manufacture of modular homes and other components of modular home construction and associated administrative and general business offices of Tenant in connection therewith. |
1. Leased Premises . Landlord leases to Tenant, in consideration of the Rent to be paid by Tenant and subject to the terms and conditions set forth herein, the Leased Premises. Tenant acknowledges that Tenant was the owner of the Leased Premises prior to the Commencement Date and has conveyed the Leased Premises to Landlord on the Commencement Date. Accordingly, Tenant agrees that Tenant accepts and is leasing the Leased Premises in their “as is” condition.
2. Commencement and Term . The term of this Lease shall commence on the Commencement Date and shall be the Lease Term, unless earlier terminated or extended by mutual agreement of the parties or as otherwise provided in this Lease.
3. Rent; Net Lease .
(a) Tenant covenants and agrees to pay to Landlord at its address as set forth in the preamble to this Lease or at such other place as Landlord shall from time to time designate in writing, during the Lease Term, the Base Rent, without holdback or set-off, in advance, commencing on the Rent Commencement Date and continuing thereafter on the first day of each calendar month during the Lease Term. All other items of Rent shall be paid, without holdback or set-off, in accordance with the terms of this Lease. If any payment of Rent is received by Landlord more than five (5) days after the date when such payment is due, a late charge of five percent (5%) of the past due payment shall be assessed, due and payable immediately and without notice.
(b) Landlord and Tenant acknowledge and agree that this Lease is intended to constitute, and shall constitute, an absolutely ‘net” Lease such that the Rent shall provide Landlord with a “net” return for the Term, free of all expenses and charges with respect to the Leased Premises, all of which shall be Tenant’s responsibility. Accordingly, Tenant shall pay as additional Rent and discharge, at the times specified herein, or if no time is specified, before failure to pay the same shall give rise to any interest or penalty or create any risk of lien or forfeiture, each and every item of expense, of every kind and nature whatsoever, foreseen or unforeseen, ordinary or extraordinary, related to or arising from the Leased Premises, or by reason of, or in any manner connected with or arising from, the development, leasing, operation, management, maintenance, repair, replacement, use, and/or occupancy of the Leased Premises.
4. (Reserved.)
5. (Reserved.)
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6. Permitted Use; Compliance with Laws .
(a) Tenant agrees to use and occupy the Leased Premises for the Permitted Use, and for no other purpose without the written consent of Landlord, and further agrees not to use the Leased Premises for any purpose deemed extra hazardous or not covered by insurance. Tenant acknowledges and agrees that Landlord shall have the right to adopt reasonable rules and regulations for the use and/or occupancy of the Leased Premises and Tenant agrees that it shall at all times observe and comply with such rules and regulations.
(b) Tenant agrees to abide by and comply with all Laws (as hereafter defined) applicable to the Leased Premises and/or the use or occupancy of the Leased Premises. It is the responsibility of Tenant to determine all zoning information and secure all necessary permits, licenses, and approvals for Tenant’s use and occupancy of the Leased Premises. Without limiting the generality of the foregoing, Tenant agrees to maintain in full force and effect, during the Lease Term, at Tenant’s cost and expense, all permits, licenses, registrations, and approvals required under applicable Laws for the use and/or occupancy of the Leased Premises. Without limiting the “AS IS” nature of this Lease, Tenant acknowledges and agrees that Landlord has not made and is not making any representations or warranties as to the suitability of, or the ability to obtain any permits or approvals for, Tenant’s intended use of the Leased Premises.
(c) As used in this Lease, the term “Laws” means all federal, state, municipal or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).
7. Taxes .
(a) Tenant shall be responsible for the prompt payment of all taxes, levies, betterments, and assessments, and governmental impositions of every kind or nature, whether now existing or hereafter created, general or special, ordinary or extraordinary, foreseen or unforeseen, that may be charged, assessed, laid, levied, or imposed upon, or become a lien or liens against, the Leased Premises (including the Real Property and the Leased Personal Property) or this Lease, including any amount that Landlord may be required to pay to any governmental authority as sales tax, gross receipt tax, or any tax of like nature specifically measured as a percentage of, or fraction of, or other factors based upon the all or any portion of the Rent payable hereunder (whether in lieu of, or in addition to the current system of real estate taxation) (all amounts payable under this Section being referred to herein as “Taxes”).
(b) Tenant shall pay all Taxes , at Landlord’s option, either (i) to Landlord as additional Rent in estimated monthly installments, with the actual amount of Taxes reconciled against such estimated monthly installments annually and, within thirty (30) days of such reconciliation, Landlord remitting to Tenant the amount by which the payment of estimated Taxes exceeds the actual Taxes for such annual period (provided Tenant is not then in breach of this Lease), or Tenant paying to Landlord the amount by which the actual Taxes for such annual period exceeds the estimated payments made by Tenant to Landlord; or (ii) to Landlord within thirty (30) days after Landlord makes demand therefor, with copies of any bills for Taxes; or (iii) directly to the taxing authority, in which event Tenant shall provide to Landlord evidence of the prompt payment of all Taxes prior to the date the same are due without the accrual of any interest on such Taxes.
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8. Utilities .
(a) Tenant shall make arrangements for, and pay on or before the date the same become due, all charges for or relating to gas, oil, electricity, water, sewer, septic, telecommunications, and all other services used at or supplied to the Leased Premises (collectively, “Utilities”).
(b) Landlord shall in no way be liable for any loss, expense, or damage (whether direct or indirect) that Tenant may sustain or incur by reason of any change, failure, interference, disruption, interruption, or defect in the supply or character of any Utilities serving the Leased Premises, regardless of its duration, or if the quantity or character of Utilities become unavailable to the Leased Premises or no longer suitable for Tenant’s requirements. Additionally, any such change, failure, interference, disruption, interruption, defect, unavailability, or unsuitability mentioned in this Section shall not: (i) constitute an actual or constructive eviction of Tenant, in whole or in part; (ii) entitle Tenant to any abatement or diminution of Rent, or any other costs due from Tenant pursuant to this Lease; (iii) relieve or release Tenant from any of its obligations under this Lease; or (iv) entitle Tenant to terminate this Lease.
9. Operation, Maintenance and Repairs .
(a) Tenant agrees that from and after the Commencement Date, Tenant will keep neat and clean and maintain in good and safe order, condition and repair, and in compliance with all Laws the entirety of the Leased Premises, including any and all alterations or improvements to the Leased Premises occurring after the date of this Lease. Tenant agrees to pay the costs for cleaning and janitorial services relating to the Leased Premises (including trash removal and trash hauling), which services shall be provided or caused to be provided by Tenant. Tenant shall be responsible for the plowing, shoveling, and treatment of snow and ice and all grounds keeping, including all landscaping and sweeping of pavement and other hardscaped surfaces. Tenant shall be responsible for all items of maintenance and all repairs to and replacements (except as otherwise provided in Section 18) of all buildings and improvements and all Building Systems (as hereafter defined), and all foundations, structural supports, walls, ceilings, windows (including plate glass), siding, roof structure, roofing materials, doors, plate glass, driveways, parking areas, fences and signs located in, on or at the Leased Premises) that the Leased Premises may require from time to time during the Term, whether interior or exterior, structural or non-structural, ordinary or extra-ordinary, foreseen or unforeseen, all to keep the Leased Premises in good and safe order, condition, and repairs, and in at least as good condition as the Leased Premises are in on the Commencement Date. The term “Building Systems” means all heating systems, ventilating systems, air conditioning systems, fire alarm systems, sprinkler systems, and other life safety systems, septic systems, water supply systems (including any water treatment or filtration systems), plumbing systems, electrical systems, storm water management facilities, and all other systems located at or serving the Real Property.
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(b) Without limiting the generality of sub-section (a) of this Section, Tenant shall procure and maintain, with qualified vendors reasonably acceptable to Landlord, contracts providing for periodic inspections and maintenance of the heating, ventilating, and air conditioning (HVAC) systems, fire alarm, sprinkler, and life safety systems, the septic system (if any), the crane(s) and related appurtenances in the building, and the Hundegger saw, at such intervals as are reasonably required by Landlord, but in all events at least annually.
10. Alterations, Renovations and Improvements . Tenant shall not make any alterations, renovations or improvements to the Leased Premises without obtaining Landlord’s prior written consent to the plans and specifications therefor and the contractor(s) to be retained by Tenant to perform such work, which shall not be unreasonably withheld, conditioned, or delayed in the case of cosmetic renovations that do not affect the structural elements of the improvements, the roof(s) of any buildings, or any of the Building Systems, but otherwise shall be in Landlord’s sole discretion. Prior to any contractor or subcontractor (of any tier) providing or furnishing any labor, materials, or services in connection with any alterations, renovations, or improvements, Tenant shall obtain and furnish to Landlord the name and address of each such contractor and subcontractor. In addition, prior to any such labor, materials, or services being provided or furnished, Tenant shall furnish to Landlord a mechanic’s lien waiver and notice to prevent lien in a form prescribed by Landlord, duly executed by each such contractor or subcontractor who will furnish or provide labor, materials, and/or services. Tenant shall ensure that all such alterations, renovations and improvements are performed in a good and workmanlike and in compliance with all applicable Laws. In the event any lien is filed against the Leased Premises in connection with or arising out of any work performed at or materials, labor or other services supplied to the Leased Premises, Tenant shall cause the same to be discharged within thirty (30) days after such lien is filed. Tenant shall indemnify and hold Landlord harmless from and against all claims, demands, liabilities, liens, losses, costs and expenses (including reasonable attorneys’ fees) which may arise or be incurred by Landlord as a direct or indirect result of or in connection with such alterations, renovations and improvements, and Tenant shall be responsible for all costs, liabilities, and expenses arising out of such alterations, renovations and/or improvements. All alterations, renovations and improvements which may be made or installed by or on behalf of Tenant upon the Leased Premises and which in any manner are attached to the floors, walls or ceilings shall, at Landlord's option, remain upon the Leased Premises, and, upon termination of this Lease, shall be surrendered with the Leased Premises as a part thereof without disturbance, molestation or injury, provided, however, that Tenant’s furniture, equipment, other personal property, and trade fixtures (which, for avoidance of doubt, shall in no event include the Leased Personal Property or the crane(s) or related appurtenances located at the Leased Premises) may be removed by Tenant from the Leased Premises upon the expiration or termination of this Lease, subject to the provisions relating to removal thereof as provided in this Lease.
11. Signs . Tenant shall have the right to maintain the existing signage at the Real Property as of the Commencement Date and shall have the right to install additional signage that does not affect the structural elements of the improvements, the roof(s) of any buildings, or any of the Building Systems, provided, however, that all signage shall be at Tenant’s sole cost and expense, and shall comply with all applicable Laws.
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12. Surrender; Holdover . Tenant shall vacate and surrender the Leased Premises to Landlord at the expiration or sooner termination of the Lease Term and the same shall be in the same condition as Tenant is required to maintain the same during the Lease Term, free of all of Tenant’s personal property except as may otherwise be provided herein, “broom clean,” and otherwise in accordance with the provisions of the Lease. Tenant shall have no right to holdover beyond the expiration of the Lease Term. If Tenant continues to occupy the Leased Premises after the end of the Lease Term, such continued occupancy shall be deemed a tenancy-at-sufferance even if Landlord accepts any payment from Tenant, but in the event that a court of competent jurisdiction deems such acceptance of a payment to constitute acceptance of “rent”, such acceptance shall create no rights in Tenant beyond a tenancy-at-will under the terms and conditions stated herein but at a Base Rent rate equal to one hundred fifty percent (150%) of the Base Rent applicable immediately preceding the end of the Lease Term, plus all additional Rent, until (i) Tenant shall vacate the Leased Premises; (ii) the termination of the tenancy-at-will; or (iii) Landlord shall give notice of a different rental amount. Nothing contained in this Section shall be deemed to (a) constitute consent by Landlord to such occupancy or holdover by Tenant; (b) confer any rights on Tenant as more than a tenant-at-sufferance or, if Landlord accepts any rental payments applicable to such period of holding over, a tenant-at-will; or (c) relieve Tenant from liability for damages suffered by Landlord as a result of such holding over.
13. Removal of Tenant’s Property . Tenant’s trade fixtures, personal property, furniture and equipment, other than those items which are to remain or which Landlord elects to have remain at the Leased Premises as provided in Section 10 of this Lease, may be removed by Tenant at the termination of this Lease, provided (a) Tenant is not then be breach of any provision of this Lease; (b) such removal shall not cause any material damage to any portion of the Leased Premises, and any other damage created by such removal shall be repaired by Tenant at Tenant's expense prior to the expiration of the Lease Term to at least as good condition as existed when possession of the Leased Premises was delivered to Tenant; and (c) such removal shall be made before the termination of the Lease Term.
14. Subletting and Assignment . Tenant shall not assign this Lease, in whole or in part, or sublet the Leased Premises or any portion thereof, or encumber the leasehold interest created by this Lease in any manner (including the creation of any security interest in or other pledge of or lien upon the Leased Personal Property) without the prior written consent of Landlord, which may be withheld in Landlord’s sole discretion during the first twenty-four full calendar months of the Term, and thereafter will not be unreasonably withheld. No assignment or sublease shall operate to release Tenant from any of its obligations under this Lease. Each sublease of the Leased Premises or any portion thereof must contain a release of and waiver of claims against Landlord and the other Releasees (as that term is defined in this Lease), in form and content acceptable to Landlord, and must require the subtenant’s property insurer to issue in favor of Landlord and the other Releasees waiver of subrogation rights endorsements to all policies of property insurance carried in connection with the Leased Premises and the contents thereof. Every transfer by levy or sale on execution, or other legal process, every transfer in bankruptcy, every transfer by merger, consolidation, or by operation of Law, every transfer of a controlling interest in Tenant, and every transfer under any compulsory procedure or order of court shall be deemed to constitute an “assignment” within the meaning of this Lease. Any attempted assignment or sublease in violation of this Section shall, at Landlord’s option, be void and shall constitute a default under this Lease. Consent by Landlord to an assignment or sublease in one instance shall not operate to release the requirement that consent from Landlord be obtained for any further or subsequent assignment or sublease. Tenant shall pay all fees and expenses, including reasonable attorneys’ fees, incurred by Landlord in connection with any proposed subletting or assignment, irrespective of whether Landlord’s consent is in fact granted.
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15. Indemnification and Insurance .
(a) Tenant agrees to maintain in full force during the Lease Term insurance as follows:
(i) commercial general liability insurance, written on an occurrence basis, with a deductible in an amount not to exceed $10,000.00, and providing:
(A) minimum limits of (y) $1,000,000.00 per occurrence with $3,000,000.00 annual aggregate limit for bodily injury (including death) and property damage; and (z) $3,000,000.00 in the annual aggregate with respect to products and completed operations;
(B) coverage for damages arising out of bodily injury (including death) sustained by any person or persons or arising out of damage to or destruction of property;
(C) coverage for damages arising out of premises liability, personal injury and advertising injury;
(D) pollution liability coverage for sudden and accidental pollution;
(E) for extension of such coverage to include liability for the operation of non-owned motor vehicles;
(F) specific coverage for Tenant’s indemnification obligations under this Lease (but neither this provision nor such coverage shall be deemed to limit any of Tenant’s obligations under this Lease);
(G) that Tenant’s commercial general liability insurance is provided on a primary and non-contributory basis;
(H) that Landlord, Landlord’s mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time are named as additional insureds by an endorsement provided on ISO Form 2026 (1185) or its equivalent, without modification, or such other endorsement as is acceptable to Landlord, acting reasonably; and
(I) for waiver of subrogation in favor of Landlord, Landlord’s mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time.
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(ii) Automobile liability insurance covering all motor vehicles owned, leased, or licensed by Tenant, covering injury to or death of one or more persons or damage to or destruction of property, with a minimum limit of liability of $3,000,000.00 for each accident.
(iii) Workers compensation insurance in accordance with the requirements of all applicable Laws, and employers liability insurance with limits of at least $1,000,000.00, with such workers compensation insurance and employers liability insurance providing for waiver of subrogation in favor of Landlord, its mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time.
(iv) Umbrella excess liability insurance in a minimum amount of $10,000,000.00, on a following form basis over the insurance described in clauses (i) through (iii), above.
(v) Special causes of loss form (also sometimes known as “all risk”) property insurance insuring, on a replacement cost basis (without any deduction for depreciation), all personal property and trade fixtures owned by or within the care, custody or control of Tenant (including the Leased Personal Property), with limits in an amount of not less than one hundred percent (100%) of the full replacement cost of such property, without co-insurance provisions, and with a deductible of not more than $10,000.00, and with Landlord (and Landlord’s mortgagee(s) of the Leased Premises from time-to-time) named as loss payee(s) with respect to the Leased Personal Property and additional insured(s). Such policy(ies) of property insurance must insure against fire, sprinkler leakages, and earthquake, flood and collapse, and all other perils as are from time to time included in the standard special causes of loss form (also sometimes known as “all risk”) coverage;
(vi) Until such time, if any, as Landlord elects to carry property insurance for the buildings and improvements located on the Leased Premises, special causes of loss form (also sometimes known as “all risk”) property insurance insuring, on a replacement cost basis (without any deduction for depreciation), all buildings and improvements (including fixtures) located on the Leased Premises, with limits in an amount of not less than one hundred percent (100%) of the full replacement cost of such buildings and improvements, and in all events sufficient at all times to avoid causing the insured to be or become a co-insurer, and with a deductible of not more than $10,000.00, and with Landlord (and Landlord’s mortgagee(s) of the Leased Premises from time-to-time) named as loss payee(s) and additional insured(s). Such policy(ies) of property insurance must insure against fire, sprinkler leakages, and earthquake, flood and collapse, and all other perils as are from time to time included in the standard special causes of loss form (also sometimes known as “all risk”) coverage;
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(vii) business interruption insurance covering all of Tenant’s obligations under this Lease with respect to the payment of Rent for a period of at least eighteen (18) months.
(viii) Such other insurance policies, such other endorsements, such other deductibles, and/or such other insurance policy limits as may from time to time be reasonably required by Landlord, provided that, at the time, such other insurance policies, endorsements, deductibles, and/or insurance policy limits are commonly carried for premises and/or buildings or improvements similar in construction, design, general location, use, operation, and occupancy to those located on or appurtenant to the Leased Premises or for operations similar to those conducted on or from the Leased Premises.
(b) Without limiting the exculpatory provisions of this Lease, each policy of property insurance maintained by Tenant under this Lease shall contain waivers of subrogation in favor of Landlord and all other Releasees.
(c) All insurance required to be obtained and maintained by Tenant pursuant to this Section must be with insurers authorized to transact insurance business and cover risks in the State of Maine and that are rated "A-" or better by A.M. Best Company, Inc. or other insurance companies of recognized responsibility acceptable to Landlord, acting reasonably.
(d) The policies of insurance required to be maintained by Tenant under this Lease shall be endorsed to require that each policy will not be cancelled or materially changed without at least thirty (30) days prior written notice to Landlord.
(e) Tenant shall deliver to Landlord copies of each policy of insurance (including all endorsements) required to be maintained by Tenant under this Lease or such other evidence of each such policy of insurance (and all required endorsements) as is acceptable to Landlord, acting reasonably.
(f) If Tenant fails to obtain, maintain and/or pay for the insurance required by this Lease at the times and for the amounts and duration specified herein, Landlord has the right, but not the obligation, at any time and from time to time, to obtain such insurance and/or pay the premiums for such insurance, without limiting any other rights or remedies available to Landlord for such failure. In such event, Tenant shall repay Landlord, immediately upon demand, all sums so paid by Landlord and all costs and expenses incurred by Landlord in connection therewith (including reasonable attorneys’ fees), all without prejudice to any other rights or remedies available to Landlord.
(g) Landlord shall have the right, at any time during the Term, to elect, by giving written notice to Tenant, to carry property insurance for the buildings and improvements located on the Leased Premises, in which event, Tenant shall pay to Landlord the amount of all premiums for such property insurance procured and maintained by Landlord with respect to the Real Property. Tenant shall pay such amounts to Landlord in estimated monthly installments, with the actual amount of incurred by Landlord for such premiums being reconciled against such estimated monthly installments annually and, within thirty (30) days of such reconciliation, Landlord remitting to Tenant the amount by which the payment of estimated premiums exceeds the actual premiums for such annual period (provided Tenant is not then in breach of this Lease), or Tenant paying to Landlord the amount by which the actual premiums for such annual period exceeds the estimated payments made by Tenant to Landlord.
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(h) Tenant acknowledges and agrees that such property insurance as Landlord elects to purchase with respect to the Real Property shall be for the sole benefit of Landlord and that such insurance shall not cover any personal property, trade fixtures, leasehold improvements, or other property or appurtenances owned by or within the care, custody, or control of Tenant, or otherwise located in the Leased Premises (collectively, “Tenant’s Property”) and that in the event of damage to or loss of any of Tenant’s Property, neither Landlord, its mortgagee(s) of the Leased Premises from time-to-time (if any), nor any of the shareholders, members, directors, managers, officers, employees, or agents of Landlord or any such mortgagee(s) (each in the singular “Releasee”, and in the plural, “Releasees”) shall have any obligation to repair or replace the same. Notwithstanding any exception to Tenant’s indemnification obligations under this Lease, Tenant does hereby expressly release all Releasees of and from, and agrees to indemnify, hold harmless, and defend Releasees from and against, any and all claims for damages to or loss of any of Tenant’s Property, regardless of the cause thereof, including, damage or loss due to any Releasee’s negligence.
(i) Tenant shall indemnify and hold all Releasees harmless and, if requested by Landlord, defend such Releasee(s) with counsel reasonably satisfactory to Landlord, from and against any and all liabilities, losses, claims, causes of action, damages, costs, and expenses (including reasonable attorney’s fees) incurred by or threatened against any Releasee arising out of (i) any occurrence on the Leased Premises or the use of the Leased Premises by Tenant, its employees, agents, licensees, or invitees, except to the extent caused by the negligence or willful misconduct of Landlord (but such exception shall not apply to limit the application of sub-section (h) of this Section); or (ii) Tenant’s breach of any provision of this Lease. Tenant agrees that the foregoing agreement to indemnify, defend, and hold harmless extends to liabilities, losses, claims, causes of action, damages, costs and expenses (including reasonable attorney’s fees) arising out of claims of Tenant's employees without regard to any immunity, statutory or otherwise, including any immunity under the workers compensation Laws of Maine or any other applicable jurisdiction, which immunity Tenant hereby waives, but only for the purposes of Tenant’s obligations to the Releasees under this sub-section. Tenant's obligations under this sub-section shall survive the termination of this Lease.
16. Hazardous Materials . Tenant covenants and agrees that Tenant will not permit any Hazardous Substances (as hereafter defined) to be stored, generated, or released from the Leased Premises, other than Hazardous Substances incidental to Tenant’s use, maintenance, and operation of the Leased Premises for the Permitted Use provided that Tenant shall store, generate, handle, and dispose of all such Hazardous Substances in full compliance with all applicable laws. Tenant hereby covenants and agrees to indemnify, hold harmless, and, if requested by Landlord, defend, Landlord from and from and against any and all demands, claims, causes, of action, losses, liabilities, damages, fines, costs, and expenses (including reasonable attorneys’ fees, court costs and clean-up costs) that may arise out of any Hazardous Substances located at or generated or released from the Leased Premises, irrespective of whether first occurring prior to or after the Commencement Date. The term “Hazardous Substances” means any flammables, explosives, radioactive materials, gasoline, oil, other petroleum products, lead paint, urea formaldehyde (including urea formaldehyde foam insulation), asbestos, asbestos containing materials, polychlorinated biphenyls, and any other hazardous materials, hazardous waste, hazardous matter, hazardous or toxic substances, chemical pollutants, and other materials or substances defined in or regulated by Environmental Laws. The term “Environmental Laws” means (A) the Clean Water Act; (B) the Clean Air Act; (C) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act; (D) the Toxic Substance Control Act; (E) the Resource Conservation and Recovery Act; (F) the Hazardous Materials Transportation Act; and/or (G) any similar state Laws regulating pollution or contamination of the environment The obligations of Tenant under this Section shall survive the termination of this Lease.
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17. Right to Enter . Tenant agrees to permit Landlord or its duly authorized agents to enter on the Leased Premises during Tenant's normal business hours, with reasonable prior notice, to examine the condition of said Leased Premises, exercise any rights of Landlord under this Lease, and/or to show the same to prospective tenants, lenders, or purchasers, provided such access to the Leased Premises shall not unnecessarily interfere with Tenant's use of the Leased Premises or the conduct of Tenant's business activities thereon. Notwithstanding the foregoing, Landlord shall have the right (but not the obligation) to enter the Leased Premises without prior notice in the event of an emergency in which prior notice is not practicable in the circumstances.
18. Total or Partial Destruction .
(a) In the event the improvements on the Real Property (including any Building Systems) are damaged or destroyed by fire or other peril (a “Casualty”), Tenant shall give Landlord notice of such Casualty as soon as reasonably possible after the Casualty. Landlord shall have the right to elect whether to have such improvements rebuilt or restored. In the event that Landlord elects not to have the improvements rebuilt or restored, and the nature of the Casualty is such as would, absent such rebuilding or restoration, materially impair Tenant’s ability to use and occupy such Leased Premises in substantially the same manner as they were used prior to the Casualty, this Lease shall terminate effective as of the date of the Casualty. In the event that Landlord elects to have the improvements rebuilt or restored, this Lease shall remain in effect without reduction or abatement of Rent, and the following provisions shall apply:
(i) Landlord shall, with reasonable promptness rebuild or restore such improvements to at least substantially the same condition, quality, and class as existed prior to the Casualty, using the proceeds of insurance covering such improvements, provided , however , that in no event shall Landlord be obligated to expend for any such rebuilding or restoration an amount in excess of the insurance proceeds actually collected by Landlord on account of the Casualty, less the costs and expenses (including reasonable attorneys’ fees) incurred by Landlord in collecting such proceeds.
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(ii) Notwithstanding the preceding clause (i), Landlord shall have the right to elect, by giving written notice to Tenant, to have Tenant rebuild or restore the Leased Premises, in which event Tenant shall, with reasonable promptness, and in all events within twelve (12) months of the date of Landlord’s election notice, rebuild or restore such improvements to at least substantially the same condition, quality, and class as existed prior to the Casualty, using the proceeds of insurance covering such improvements. The selection of all engineers, architects, and contractors engaged in connection with such rebuilding or restoration and all plans and specifications for such rebuilding or restoration, shall be subject to review and approval by Landlord. In the event that Landlord makes the election to have Tenant rebuild or restore as provided in this clause (ii), all proceeds payable by reason of any Casualty under all applicable policies of insurance (whether Tenant is carrying such insurance, or Landlord has elected to do so as provided in this Lease) shall be paid to Landlord or its mortgagee, and such proceeds will be held by Landlord or its mortgagee in an interest-bearing account and, provided Tenant is not in breach of this Lease, shall be made available for rebuilding or restoring the improvements, and shall be paid by Landlord (or such mortgagee) from time- to-time during the progress of construction for the costs of such reconstruction or repair, all subject to and in accordance with reasonable terms, conditions, and construction disbursement procedures specified by Landlord and/or such mortgagee. Any excess proceeds of insurance (and accrued interest) remaining after the completion of the restoration or reconstruction of the Leased Premises shall be paid to Landlord.
(b) Loss or Damage affecting Leased Personal Property . In the event of any loss or destruction of or damage to any of the Leased Personal Property, Tenant shall, unless Landlord or its mortgagee elects to retain any proceeds of insurance allocable to such Leased Personal Property, be responsible for the repair and replacement of such lost, destroyed, or damaged Leased Personal Property, with the restored or replacement items of at least equivalent condition, quality, class, and value to the item(s) of Leased Personal Property prior to such loss, destruction, or damage. All proceeds payable under all applicable policies of insurance by reason of any loss or destruction of or damage to any Leased Personal Property shall be paid to Landlord or its mortgagee. Unless Landlord or its mortgagee elect to retain such proceeds of insurance allocable to such Leased Personal Property, such proceeds will be held by Landlord or its mortgagee in an interest-bearing account and, provided Tenant is not in breach of this Lease, shall be made available for such repair or replacement, and shall be paid out by Landlord (or such mortgagee) from time to time during the progress of the repair or replacement for the reasonable costs of such repair or replacement, all subject to and in accordance with reasonable terms, conditions, and disbursement procedures specified by Landlord and/or such mortgagee. Any excess proceeds of insurance (and accrued interest) remaining after the completion of the repair or replacement of such Leased Personal Property shall be paid to Landlord. There shall be no abatement or reduction of Rent on account of any such loss, destruction, or damage.
(c) Tenant shall be responsible for all insurance deductibles applicable to any Casualty affecting any of the improvements on the Real Property (including Building Systems) and/or any loss or destruction of or damage to any of the Leased Personal Property.
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(d) The provisions of this Section shall be subject and subordinate to the provisions of any mortgage now or hereafter placed upon the Real Property, the provisions of any security agreement now or hereafter affecting the Leased Personal Property, and the requirements of any mortgagee holding such mortgage or secured party holding the security interest under such security agreement.
19. Condemnation .
(a) “Condemnation” means any taking of title to or any interest in the Leased Premises or any part thereof or any other property used in connection with the Leased Premises (including for ingress, egress, parking, septic service, water supply or other services or utilities) by exercise of any right of eminent domain by, or by any similar proceeding or act of, any person having the power and legal authority to do so (or by purchase in lieu thereof). For the purposes of this definition, the effective date of any Condemnation shall be deemed to be the later of: (i) the date when title to the Leased Premises or part thereof or such other property is transferred by such proceeding or act of the condemning authority, and (ii) the date when Tenant o is no longer permitted to occupy the Leased Premises or to use such other property.
(b) “ Substantial Condemnation ” means any Condemnation that affects all or a substantial portion of the Leased Premises or any Condemnation that has or is reasonably likely to have a materially adverse effect on any business operations then being conducted on the Leased Premises. Tenant may waive its right to treat as a Substantial Condemnation any Condemnation that would otherwise qualify as such.
(c) “Insubstantial Condemnation” means any Condemnation that is not a Substantial Condemnation.
(d) If a Substantial Condemnation occurs, this Lease shall terminate upon the effective date of the Substantial Condemnation.
(e) If an Insubstantial Condemnation occurs, then this Lease shall continue in full force and effect without reduction or abatement of Rent.
(f) In the event of any Condemnation, Landlord shall be entitled to receive and retain the amounts awarded for the Leased Premises, and Tenant shall be entitled to receive and retain any amounts which may be specifically awarded to it in any such condemnation proceedings because of its business loss or the taking of its trade fixtures, furniture, or other property.
20. Force Majeure . In any case where either party is required to perform any act pursuant to this Lease, except for Tenant’s monetary obligations hereunder, the time for the performance thereof shall be extended by a period of time equal to the period of any delay caused by or resulting from an act of God, war, civil commotion, fire or other casualty, labor difficulties, shortages of energy or labor, government regulations, or delays caused by one party to the other, whether such period be designated by a fixed date, a fixed time, or as a reasonable date or time.
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21. Quiet Enjoyment . Tenant, on paying the Rent and performing and observing the covenants in this Lease, may hold and enjoy the Leased Premises for the Term without unreasonably interference from any person claiming by, through, or under Landlord, subject and subordinate to all provisions of this Lease.
22. Default.
(a) In the event that:
(i) Tenant shall fail to pay when due the Rent or any other sums payable hereunder when due and such failure remains uncured for five (5) days after Landlord delivers a default notice to Tenant for such failure to pay rent; or
(ii) any petition in bankruptcy shall be filed by Tenant or any guarantor hereof or other petition or proceeding shall be filed or commenced by Tenant or any guarantor hereof to declare Tenant insolvent, or to delay, reduce or modify Tenant’s or any such guarantor’s debts or obligations, or Tenant or any such guarantor admits its inability to pay its debts, or Tenant or any such guarantor makes an assignment for the benefit of creditors; or
(iii) any bankruptcy petition or proceeding shall be filed against Tenant or any guarantor hereof or to otherwise declare Tenant or any guarantor hereof bankrupt or insolvent or to delay, reduce or modify Tenant’s or any such guarantor’s debts or obligations or a receiver, trustee or other similar type of appointment or court appointee or nominee is appointed for Tenant or any such guarantor or any of the property of Tenant or any such guarantor, and such petition, appointment or proceeding is not dismissed within sixty (60) days after it is commenced; or
(iv) the leasehold interest of Tenant is levied upon or attached by process of law, including the filing of any mechanic’s lien, and such levy, lien, or attachment is not dissolved within thirty (30) days after it is made; or
(v) Tenant shall abandon the Leased Premises during the Lease Term; or
(vi) Tenant shall assign this Lease or sublet any portion of the Leased Premises, or attempt to do either of the foregoing, in violation of this Lease; or
(vii) Tenant violates or fails to observe or comply with any Laws applicable to the Leased Premises, Tenant’s use thereof, or Tenant's operations, activities or conduct of business at or from the Leased Premises; or
(viii) any other event, occurrence, act, or omission described in any provision of this Lease as constituting a “default” or an “Event of Default” occurs;
(ix) Tenant shall neglect or fail to perform or observe any of the other covenants, terms, provisions or conditions contained in this Lease and, if the neglect or failure is capable of being cured, such neglect or failure continues for more than thirty (30) days after written notice thereof ( provided , however , that if such neglect or failure is capable of being cured, but is not capable of being cured within said thirty (30) day period, then Tenant shall have such additional period of time, not to exceed an additional sixty (60) days, as is reasonably necessary to cure the same provided Tenant commences to cure within said thirty (30) day period and diligently and continuously prosecutes the cure to completion); or
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(x) there is a default by Tenant under (A) that certain Lease Agreement of even or near date herewith between Tenant and 947 Waterford Road, LLC pertaining to property located in the Town of Waterford, County of Oxford, and State of Maine; and/or (B) that certain Lease Agreement of even or near date herewith between Tenant and 56 Mechanic Falls Road, LLC pertaining to property located in the Town of Oxford, County of Oxford, and State of Maine, and any such default continues beyond the expiration of applicable notice and cure periods (if any),
then, and in any of said cases (notwithstanding any license of any former breach of covenant or waiver of the benefit hereof or consent in a former instance), and without limitation of any other remedies that might be available to Landlord under this Lease, at law, or in equity, Landlord lawfully may, immediately or at any time thereafter, terminate this Lease by sending written notice of termination to Tenant, or, subject to compliance with applicable Laws, enter into and upon the Leased Premises or any part thereof in the name of the whole and repossess the same as of its former estate, and expel Tenant and those claiming through or under it and remove it or their effects without being deemed guilty of any manner of trespass, in each case without prejudice to any rights or remedies which might otherwise be available to Landlord for collection of Rent and other damages for breach of covenant, and upon entry as aforesaid or upon sending of such notice, this Lease shall terminate.
(b) Without limiting other remedies of Landlord at law or in equity for any breach of or on account of termination of this Lease, Tenant covenants that in case of such termination under sub-section (a) of this Section, Tenant shall pay to Landlord the unpaid Rent owed to Landlord through the time of termination, plus interest thereon at the rate of 18% per annum from the date the same was due until paid; and (ii) at the election of Landlord, either:
(1) the present value of a sum which, at the time of such termination of this Lease is equal to (A) the aggregate of the Rent which would have been payable by Tenant for the period commencing upon such termination of this Lease and continuing through the date this Lease would have terminated had there been no default by Tenant; minus (B) the fair market rental value of the Leased Premises (after deducting reasonable projections for Landlord’s costs and expenses of re-letting the Leased Premises, including advertising expenses, brokerage commissions, reasonable attorneys’ fees, and commercially reasonable costs of repairing, renovating, or otherwise altering the Leased Premises to suit the new tenant); or
(2) for the period of time commencing upon such termination of this Lease and continuing through the date this Lease would have terminated had there been no default by Tenant hereunder, the difference, if any, between the Rent which would have been due had there been no such termination and the amount being received by Landlord as rent from a replacement Tenant of Leased Premises, if any. In addition, Tenant shall pay to Landlord all costs and expenses of such re-letting, including advertising expenses, brokerage commissions, reasonable attorneys’ fees, and commercially reasonable costs of repairing, renovating, or otherwise altering the Leased Premises to suit the new tenant.
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(c) If Tenant shall default in the performance or observance of any covenant, agreement, or condition in this Lease contained on its part to be performed or observed and shall not cure any such default as provided herein, Landlord may, at its option, without waiving any claim for damages or any other right or remedy for breach of this Lease, at any time thereafter, cure such default. Any amount paid or any liability incurred by Landlord in so doing shall be deemed paid or incurred for the account of Tenant, and Tenant agrees to immediately reimburse Landlord therefor, as additional Rent.
(d) Tenant shall pay all reasonable attorneys’ fees incurred by Landlord in connection with the enforcement of Tenant’s obligations under this Lease.
(e) Landlord shall in no event be in default in the performance of any of its obligations hereunder unless and until Landlord shall have failed to perform, or failed diligently to attempt to perform, such obligations within thirty (30) days or such additional time as is reasonably required to correct any such default after notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation.
(f) In no event shall Landlord be liable to Tenant for incidental, consequential, or punitive damages in connection with any matter arising out of this Lease or the Leased Premises. Without in any way limiting or impairing the effect of the other provisions of this Lease, Tenant shall neither assert nor seek to enforce any claim arising out of this Lease or out of the use or occupancy of the Leased Premises against Landlord, its shareholders, directors, officers, employees, or agents, or any of its or their assets other than the value of Landlord’s interest in the Leased Premises and Tenant agrees to look solely to such interest and insurance coverage for the satisfaction of any claim arising out of this Lease or out of the use or occupancy of the Leased Premises.
23. Sale or Mortgage; Estoppel; Subordination .
(a) Nothing contained in this Lease shall limit Landlord's right to sell, mortgage, or otherwise encumber its fee interest in the Leased Premises, or affect Landlord's right to assign this Lease or the Rent payable under this Lease, whether as further security under a fee mortgage or otherwise. Any such assignment of this Lease or of the Rent payable under this Lease shall be honored by Tenant.
(b) In the event Landlord shall sell, transfer, or otherwise convey the Leased Premises, Landlord, upon the written assumption by the transferee of the obligations arising hereunder after the date of such transfer, shall be entirely freed and relieved of all covenants and obligations of Landlord hereunder. Nothing in the preceding sentence shall be construed to impair Tenant’s leasehold interest under this Lease so long as Tenant performs and observes the covenants and terms of this Lease on its part to be performed and observed.
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(c) This Lease shall, at Landlord’s option, be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the Leased Premises, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Tenant's right to quiet possession of the Leased Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the Rent and observe and perform all of the provisions of this Lease. If any mortgagee, trustee, or ground lessor shall elect to have this Lease made prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior to or subsequent to the date of said mortgage, deed of trust, or ground lease or the date of recording thereof. Tenant agrees to execute any documents required to effectuate an attornment, a subordination, or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be. Tenant's failure to execute such documents within ten (10) days after written demand shall constitute an Event of Default by Tenant hereunder.
(d) At any time, and from time to time, upon the written request of Landlord or any mortgagee or prospective purchaser of the Leased Premises, Tenant, within ten (10) business days after such written request, agrees to execute, acknowledge and deliver to Landlord and/or mortgagee, without charge, an estoppel certificate which shall contain (i) a certification that this Lease is unmodified and in full force and effect or, if modified, a statement of the nature of any such modification and a certification that this Lease, as so modified, is in full force and effect; (ii) a certification of the date to which the Rent payable by Tenant are paid (including any payments in advance); (iii) a certification that Tenant is not in default hereunder and that there are not, to Tenant's knowledge, any uncured events of default on the part of Landlord hereunder, or a specification of such events of default if any are claimed by Tenant; and (iv) such other commercially reasonable certifications as are identified in such request. Tenant's failure to deliver such estoppel certificate within the time frame set forth above shall, at Landlord’s option, constitute an Event of Default hereunder and shall, at Landlord’s option, be conclusive proof 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 of Landlord's obligations under this Lease, and that not more than one month's Rent has been paid in advance.
(e) If Landlord desires to finance, refinance, or sell the Leased Premises, Tenant hereby agrees to deliver to any lender or purchaser designated by Landlord, and cause any guarantor to so deliver, such financial statements and other financial information pertaining to Tenant and such guarantor as may be reasonably required by such lender or purchaser. Tenant's failure to provide such information or cause such information to be provided within ten (10) days after written demand shall constitute an Event of Default by Tenant hereunder.
24. Notices . Any notice, request, demand, approval or consent given or required to be given under this Lease shall be, unless otherwise stated, in writing and shall be deemed to have been given (i) when hand delivered to the other party; or (ii) on the day on which the same shall have been mailed by United States registered or certified mail, return receipt requested, with all postage prepaid, or by Federal Express or similar nationally-recognized overnight courier service that provides evidence of delivery, to the address of the party to receive such notice as set forth in the preamble hereof, provided that either party may, by such manner of notice, add or substitute one or more persons or addresses for provision of such notice.
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25. Tenant Representations .
(a) Neither Tenant nor any key personnel of Tenant nor any of Tenant’s underlying beneficial owners have engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any U.S., international or other anti-money laundering regulations or conventions, including without limitation the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. §1 et seq., as amended), any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 and the regulations promulgated thereunder (collectively, the “ Patriot Act ”), or any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“ OFAC ”); or (ii) in contravention of Executive Order No. 13224 issued by the President of the United States on September 24, 2001 (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time (“ Executive Order 13224 ”); or (iii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, OFAC, Financial Action Task Force, U.S. Securities & Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time.
(b) Neither Tenant nor any key personnel of Tenant nor any of the underlying beneficial owners of Tenant is or will be a person or entity (i) that is listed in the Annex to or is otherwise subject to the provisions of Executive Order 13224; or (ii) whose name appears on OFAC’s most current list of “Specially Designated Nationals and Blocked Persons,” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf ); or (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in Executive Order 13224; or (iv) who has been associated with or is otherwise affiliated with any entity or person listed above.
(c) Tenant represents that it has all requisite power and authority to enter into this Lease and the person executing this Lease on behalf of Tenant represents that he or she has all requisite power and authority to do so.
26. Miscellaneous Provisions .
(a) Invalidity of Particular Provisions . If any term or provision of this Lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by applicable Laws.
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(b) Governing Law . This Lease, and all claims or causes of action (whether arising in contract, in tort, or by statute) that may be based upon, arise out of or relate to this Lease, shall be governed by and enforced in accordance with the internal Laws of the State of Maine, including its statutes of limitations, without regard or reference to conflicts of law principles.
(c) Interpretation . Whenever the word “include,” “includes,” or “including” is used in this Lease, it is deemed to be followed by the words “without limitation.” The terms “this Lease,” “hereof,” “herein,” “hereby,” “hereunder” and similar expressions refer to this Lease as a whole and not to any particular section of this Lease unless the context otherwise requires. The word “person” includes any individual, corporation, firm, association, partnership (general or limited), joint venture, limited liability company, trust, estate or other legal entity. The section and sub-section headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction, or meaning of the provisions of this Lease. Whenever in this Lease provision is made for the doing of any act by any party, it is understood and agreed that said act shall be done by such party at its own cost and expense, unless a contrary intent is expressed.
(d) Entire Agreement; Binding Effect . All negotiations, considerations, representations, and understandings between Landlord and Tenant are incorporated herein and may be modified or altered only by agreement in writing between Landlord and Tenant, and no act or omission of any employee or agent of Landlord shall alter, change, or modify any of the provisions hereof. All rights, obligations and liabilities contained herein given to, or imposed upon, Landlord and Tenant shall extend to and bind the several respective administrators, trustees, receivers, legal representatives, successors, heirs and permitted assigns of Landlord and Tenant. If the “Tenant” under this Lease consists of more than one person or entity, each such person and/or entity shall be bound jointly and severally by the terms, covenants and agreements herein and jointly and severally liable for all obligations arising hereunder.
(e) Language . Words of any gender used in this instrument shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires.
(f) Recording; Notice of Lease . Landlord and Tenant agree that this Lease shall not be recorded. The parties agree that at the request of either party, they will execute, acknowledge, and deliver a notice or memorandum of this Lease in recordable form for recording in the Oxford County Registry of Deeds. The requesting party shall bear the expense of recording such notice or memorandum. The Memorandum of Lease shall not be construed to vary the terms and conditions hereof. Landlord and Tenant also agree that, upon the request of either party, they will execute, acknowledge, and deliver a commercially reasonable instrument in recordable form with respect to the termination date of this Lease.
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(g) Timeliness of Landlord’s Notices . Landlord's failure during the Lease Term to prepare or deliver any of the statements, notices, or bills, or invoices for any sum payable by Tenant under this Lease shall not in any way cause Landlord to forfeit or surrender its rights to collect any amount that may have become due and owing from Tenant during the Lease Term.
(h) Waiver of Jury Trial . Tenant, for itself and its heirs, successors, and assigns, does hereby WAIVE THE RIGHT TO A TRIAL BY JURY in any action or proceeding based upon, or related to, the subject matter of this Lease. This waiver is knowingly, intentionally, and voluntarily made by Tenant and Tenant acknowledges that neither Landlord nor any person acting on behalf of Landlord has made any representations of fact to induce this waiver of trial by jury or in any way to modify or nullify its effect. Tenant further acknowledges that it has been represented (or has had the opportunity to be represented) in the signing of this Lease and in the making of this waiver by independent legal counsel, selected of its own free will, and that it has had the opportunity to discuss this waiver with counsel. Tenant further acknowledges that it has read and understands the meaning and ramifications of this waiver provision.
27. Additional Provisions Pertaining to Leased Personal Property .
(a) Without limiting any other provision of this Lease, Tenant agrees that (i) title to the Leased Personal Property shall remain vested in Landlord; (ii) Tenant will not represent to any party that Tenant has title to the Leased Personal Property; (iii) the Leased Personal Property may not be used as collateral to secure any obligations of Tenant to any party; (iv) Tenant will not allow the Leased Personal Property to become encumbered in any way whatsoever; and (v) Tenant will not remove the Leased Personal Property from the Real Property without the written consent of Landlord. Tenant agrees that Landlord may file any financing statements or other documents Landlord deems reasonably necessary or desirable to protect or enforce its rights and interest in the Leased Personal Property and Tenant agrees to execute such documents as Landlord reasonably requests in connection therewith. In the event any of Leased Personal Property is lost, stolen, damaged, or destroyed, Tenant will be responsible for the full replacement of the same.
(b) THE LEASED PERSONAL PROPERTY IS BEING PROVIDED TO TENANT IN “AS IS, WHERE IS” CONDITION, WITH ALL FAULTS. LANDLORD MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR ANY WARRANTY OF MERCHANTABILITY, WITH RESPECT TO THE LEASED PERSONAL PROPERTY, AND ALL SUCH WARRANTIES AND REPRESENTATIONS ARE EXPRESSLY DISCLAIMED BY LANDLORD.
[Signature Page(s) and Guaranty Follow]
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed by their duly authorized undersigned representatives as an instrument under seal as of the day and year first written above.
WITNESS: | LANDLORD: | ||
300 Park Street, LLC | |||
By: | /s/ David Noble | ||
Name: | David Noble | ||
Title: | President |
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TENANT: | |||
KBS Builders, Inc. | |||
By: | /s/ Daniel M. Koch | ||
Printed Name: | Daniel M. Koch | ||
Its: | President |
GUARANTY
For value received, and in consideration of and as an inducement to Landlord to enter into the foregoing Lease (the “Lease”) with Tenant, the undersigned, ATRM Holdings, Inc. (“Guarantor”), does hereby unconditionally guaranty to Landlord the complete and due performance and observation of each and every agreement, covenant, term, and condition of the Lease to be performed or observed by Tenant, including, without limitation, the payment of all Rent required under the Lease. The validity of this Guaranty and the obligations of the Guarantor hereunder shall not be terminated, affected, or impaired by reason of the granting by the Landlord of any indulgences to the Tenant. This Guaranty shall remain and continue in full force and effect with respect to any and all renewals, modifications, or extensions of the Lease, irrespective of whether Guarantor shall have received any notice of or consented to such renewal, modification, or extension. The liability of the Guarantor hereunder shall be primary, and in any right of action that shall accrue to the Landlord under the Lease or applicable law, the Landlord may proceed against Guarantor without having commenced any action against or having obtained any judgment against Tenant and/or may proceed against Guarantor and Tenant, jointly and severally. Guarantor hereby waives all guaranty and suretyship defenses. All of the terms and provisions of this Guaranty shall inure to the benefit of the successors and assigns of the Landlord and shall be binding upon the successors and assigns of Guarantor. Capitalized terms that are used, but not defined, in this Guaranty shall have the meaning ascribed thereto in the Lease.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as an instrument under seal as of the date of the Lease.
GUARANTOR: | |||
ATRM Holdings, Inc. | |||
By: | /s/ Daniel M. Koch | ||
Printed Name: | Daniel M. Koch | ||
Its: | President and Chief Executive Officer |
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List of Exhibits
Exhibit A – Description of the Leased Premises
Exhibit A-1-List of Leased Personal Property
Exhibit B – Base Rent if Tenant does not give a timely Rent Commencement Extension Notice
Exhibit C – Base Rent if Tenant does give a timely Rent Commencement Extension Notice
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EXHIBIT A
(Description of Leased Premises)
*
EXHIBIT A-1
(Personal Property)
*
EXHIBIT B
(Base Rent if Tenant does not give a timely Rent Commencement Extension Notice)
Months | Annual Base Rent ( Real Property ) | Annual Base Rent - ( Leased Personal Property ) |
Total Monthly Installment of Base Rent |
Commencement Date through June 30, 2019 |
$0.00 |
$0.00 |
$0.00 |
July 1, 2019 through March 31, 2020 |
$256,850.00 (Annual Rate) |
$60,302.63 (Annual Rate) |
$26,429.39 |
April 1, 2020 through March 31, 2021 |
$261,987.00 |
$60,302.63 |
$26,857.47 |
April 1, 2021 through March 31, 2022 |
$267,226.74 |
$60,302.63 |
$27,294.11 |
April 1, 2022 through March 31, 2023 |
$272,571.27 |
$60,302.63 |
$27,739.49 |
April 1, 2023 through March 31, 2024 |
$278,022.70 |
$60,302.63 |
$28,193.78 |
April 1, 2024 through March 31, 2025 |
$283,583.15 |
$60,302.63 |
$28,657.15 |
April 1, 2025 through March 31, 2026 |
$289,254.81 |
$60,302.63 |
$29,129.79 |
April 1, 2026 through March 31, 2027 |
$295,039.91 |
$60,302.63 |
$29,611.88 |
April 1, 2027 through March 31, 2028 |
$300,940.71 |
$60,302.63 |
$30,103.61 |
April 1, 2028 through March 31, 2029 |
$306,959.52 |
$60,302.63 |
$30,605.18 |
EXHIBIT C
(Base Rent if Tenant does give a timely Rent Commencement Extension Notice)
Months | Annual Base Rent ( Real Property ) | Annual Base Rent - ( Leased Personal Property ) |
Total Monthly Installment of Base Rent |
Commencement Date through September 30, 2019 |
$0.00 |
$0.00 |
$0.00 |
October 1, 2019 through March 31, 2020 |
$280,200.00 (Annual Rate) |
$65,784.68 (Annual Rate) |
$28,832.06 |
April 1, 2020 through March 31, 2021 |
$285,804.00 |
$65,784.68 |
$29,299.06 |
April 1, 2021 through March 31, 2022 |
$291,520.08 |
$65,784.68 |
$29,775.40 |
April 1, 2022 through March 31, 2023 |
$297,350.48 |
$65,784.68 |
$30,261.26 |
April 1, 2023 through March 31, 2024 |
$303,297.49 |
$65,784.68 |
$30,756.85 |
April 1, 2024 through March 31, 2025 |
$309,363.44 |
$65,784.68 |
$31,262.34 |
April 1, 2025 through March 31, 2026 |
$315,550.71 |
$65,784.68 |
$31,777.95 |
April 1, 2026 through March 31, 2027 |
$321,861.72 |
$65,784.68 |
$32,303.87 |
April 1, 2027 through March 31, 2028 |
$328,298.95 |
$65,784.68 |
$32,840.30 |
April 1, 2028 through March 31, 2029 |
$334,864.93 |
$65,784.68 |
$33,387.47 |
Exhibit 10.8
LEASE AGREEMENT
THIS LEASE AGREEMENT (this “Lease”) is made this 3rd day of April, 2019, by and between 56 Mechanic Falls Road, LLC , a Delaware limited liability company with a mailing address of 53 Forest Avenue, Old Greenwich, Connecticut 06870 (“Landlord”), and KBS Builders, Inc., a Delaware corporation with a mailing address of 300 Park Street, Paris, Maine 04271 (“Tenant”). The parties hereby agree as follows:
LEASE INFORMATION AND DEFINITIONS
The following information and definitions are incorporated into and made a part of this Lease:
Leased Premises: |
The “Leased Premises” means certain land located in the Town of Oxford, County of Oxford, and State of Maine, and being more particularly described on Exhibit A , attached hereto and made a part hereof, together with all improvements thereon and all rights and easements appurtenant thereto (the “Real Property”), together with those certain items of personal property listed on Exhibit A-1 , attached hereto and made a part hereof (the “Leased Personal Property”).
|
Term: |
The “Term” means:
(a) an “Initial Term,” being a period commencing on the Acquisition Date (as defined in Section 28) (the “Commencement Date”) and ending at 5:00 p.m. on March 31, 2029, subject to adjustment and earlier termination as provided in the Lease; and
(b) if Tenant duly exercises its option to extend the term of this Lease for one or both Extension Terms as provided in the Lease, then also each such Extension Term for which Tenant has duly exercised such option.
|
Extension Terms: |
The Extension Terms shall be two (2) separate, consecutive sixty (60) month periods (hereinafter referred to as "First Extension Term” and the “Second Extension Term,” respectively, and also referred to in the singular as an “Extension Term” and in the plural as the “Extension Terms”), all on the terms and conditions set forth in the Lease.
|
Rent Commencement Date: |
Tenant’s obligations to pay Base Rent shall commence on August 1, 2019 (the “Rent Commencement Date”), provided , however , that Tenant shall have the right, exercisable only by giving written notice to Landlord prior to June 1, 2019 (the “Rent Commencement Extension Notice”), to elect to defer the Rent Commencement Date until November 1, 2019.
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Base Rent: |
(a) In the event that Tenant does not give Landlord a timely Rent Commencement Extension Notice as provided herein, the Base Rent for the Leased Premises during the Initial Term shall be as set forth on Exhibit B , attached hereto and made a part hereof.
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(b) In the event that Tenant gives Landlord a timely Rent Commencement Extension Notice as provided herein, the Base Rent for the Leased Premises during the Initial Term shall be as set forth on Exhibit C , attached hereto and made a part hereof.
(c) The Base Rent for the Leased Premises for each year of each Extension Term shall be shall be an amount which is equal to 100% of the prevailing market rates in effect at the time of Tenant’ s exercise of its extension right for property comparable to the Leased Premises in the vicinity of the Leased Premises (and, for clarity, shall include annual escalators consistent with such prevailing market), all as determined by a licensed commercial real estate broker or appraiser doing business in the greater Portland, Maine vicinity and chosen by Landlord, but in no event shall Base Rent for any year of any Extension Term be less than the Base Rent payable for the immediately preceding year of the Term. |
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Rent: |
The term “Rent” means Base Rent and all other sums payable by Tenant under this Lease.
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Taxes: |
Without limiting the “net” nature of this Lease as provided in herein, Tenant shall pay all Taxes (as defined in this Lease).
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Utilities: |
Without limiting the “net” nature of this Lease as provided herein, Tenant shall contract for and pay for all Utilities (as defined in this Lease).
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Operating Expenses; Maintenance and Repairs: |
Without limiting the “net” nature of this Lease as provided herein, Tenant shall pay 100% of all costs and expenses associated with the use, occupancy, operation, maintenance, repair, and/or replacement of the Leased Premises.
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Permitted Use:
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Subject in all events to the terms and conditions of the Lease, the Leased Premises shall be used only for purposes of a facility for the manufacture of modular homes and other components of modular home construction and associated administrative and general business offices of Tenant in connection therewith.
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1. Leased Premises . Landlord leases to Tenant, in consideration of the Rent to be paid by Tenant and subject to the terms and conditions set forth herein, the Leased Premises. Tenant agrees that Tenant accepts and is leasing the Leased Premises in their “as is” condition.
2. Commencement and Term . The term of this Lease shall commence on the Commencement Date and shall be the Lease Term, unless earlier terminated or extended by mutual agreement of the parties or as otherwise provided in this Lease.
3. Rent; Net Lease .
(a) Tenant covenants and agrees to pay to Landlord at its address as set forth in the preamble to this Lease or at such other place as Landlord shall from time to time designate in writing, during the Lease Term, the Base Rent, without holdback or set-off, in advance, commencing on the Rent Commencement Date and continuing thereafter on the first day of each calendar month during the Lease Term. All other items of Rent shall be paid, without holdback or set-off, in accordance with the terms of this Lease. If any payment of Rent is received by Landlord more than five (5) days after the date when such payment is due, a late charge of five percent (5%) of the past due payment shall be assessed, due and payable immediately and without notice.
(b) Landlord and Tenant acknowledge and agree that this Lease is intended to constitute, and shall constitute, an absolutely ‘net” Lease such that the Rent shall provide Landlord with a “net” return for the Term, free of all expenses and charges with respect to the Leased Premises, all of which shall be Tenant’s responsibility. Accordingly, Tenant shall pay as additional Rent and discharge, at the times specified herein, or if no time is specified, before failure to pay the same shall give rise to any interest or penalty or create any risk of lien or forfeiture, each and every item of expense, of every kind and nature whatsoever, foreseen or unforeseen, ordinary or extraordinary, related to or arising from the Leased Premises, or by reason of, or in any manner connected with or arising from, the development, leasing, operation, management, maintenance, repair, replacement, use, and/or occupancy of the Leased Premises.
4. (Reserved.)
5. (Reserved.)
6. Permitted Use; Compliance with Laws .
(a) Tenant agrees to use and occupy the Leased Premises for the Permitted Use, and for no other purpose without the written consent of Landlord, and further agrees not to use the Leased Premises for any purpose deemed extra hazardous or not covered by insurance. Tenant acknowledges and agrees that Landlord shall have the right to adopt reasonable rules and regulations for the use and/or occupancy of the Leased Premises and Tenant agrees that it shall at all times observe and comply with such rules and regulations.
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(b) Tenant agrees to abide by and comply with all Laws (as hereafter defined) applicable to the Leased Premises and/or the use or occupancy of the Leased Premises. It is the responsibility of Tenant to determine all zoning information and secure all necessary permits, licenses, and approvals for Tenant’s use and occupancy of the Leased Premises. Without limiting the generality of the foregoing, Tenant agrees to maintain in full force and effect, during the Lease Term, at Tenant’s cost and expense, all permits, licenses, registrations, and approvals required under applicable Laws for the use and/or occupancy of the Leased Premises. Without limiting the “AS IS” nature of this Lease, Tenant acknowledges and agrees that Landlord has not made and is not making any representations or warranties as to the suitability of, or the ability to obtain any permits or approvals for, Tenant’s intended use of the Leased Premises.
(c) As used in this Lease, the term “Laws” means all federal, state, municipal or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).
7. Taxes .
(a) Tenant shall be responsible for the prompt payment of all taxes, levies, betterments, and assessments, and governmental impositions of every kind or nature, whether now existing or hereafter created, general or special, ordinary or extraordinary, foreseen or unforeseen, that may be charged, assessed, laid, levied, or imposed upon, or become a lien or liens against, the Leased Premises (including the Real Property and the Leased Personal Property) or this Lease, including any amount that Landlord may be required to pay to any governmental authority as sales tax, gross receipt tax, or any tax of like nature specifically measured as a percentage of, or fraction of, or other factors based upon the all or any portion of the Rent payable hereunder (whether in lieu of, or in addition to the current system of real estate taxation) (all amounts payable under this Section being referred to herein as “Taxes”).
(b) Tenant shall pay all Taxes , at Landlord’s option, either (i) to Landlord as additional Rent in estimated monthly installments, with the actual amount of Taxes reconciled against such estimated monthly installments annually and, within thirty (30) days of such reconciliation, Landlord remitting to Tenant the amount by which the payment of estimated Taxes exceeds the actual Taxes for such annual period (provided Tenant is not then in breach of this Lease), or Tenant paying to Landlord the amount by which the actual Taxes for such annual period exceeds the estimated payments made by Tenant to Landlord; or (ii) to Landlord within thirty (30) days after Landlord makes demand therefor, with copies of any bills for Taxes; or (iii) directly to the taxing authority, in which event Tenant shall provide to Landlord evidence of the prompt payment of all Taxes prior to the date the same are due without the accrual of any interest on such Taxes.
8. Utilities .
(a) Tenant shall make arrangements for , and pay on or before the date the same become due , all charges for or relating to gas, oil, electricity, water, sewer, septic, telecommunications, and all other services used at or supplied to the Leased Premises (collectively, “Utilities”) .
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(b) Landlord shall in no way be liable for any loss, expense, or damage (whether direct or indirect) that Tenant may sustain or incur by reason of any change, failure, interference, disruption, interruption, or defect in the supply or character of any Utilities serving the Leased Premises, regardless of its duration, or if the quantity or character of Utilities become unavailable to the Leased Premises or no longer suitable for Tenant’s requirements. Additionally, any such change, failure, interference, disruption, interruption, defect, unavailability, or unsuitability mentioned in this Section shall not: (i) constitute an actual or constructive eviction of Tenant, in whole or in part; (ii) entitle Tenant to any abatement or diminution of Rent, or any other costs due from Tenant pursuant to this Lease; (iii) relieve or release Tenant from any of its obligations under this Lease; or (iv) entitle Tenant to terminate this Lease.
9. Operation, Maintenance and Repairs .
(a) Tenant agrees that from and after the Commencement Date, Tenant will keep neat and clean and maintain in good and safe order, condition and repair, and in compliance with all Laws the entirety of the Leased Premises, including any and all alterations or improvements to the Leased Premises occurring after the date of this Lease. Tenant agrees to pay the costs for cleaning and janitorial services relating to the Leased Premises (including trash removal and trash hauling), which services shall be provided or caused to be provided by Tenant. Tenant shall be responsible for the plowing, shoveling, and treatment of snow and ice and all grounds keeping, including all landscaping and sweeping of pavement and other hardscaped surfaces. Tenant shall be responsible for all items of maintenance and all repairs to and replacements (except as otherwise provided in Section 18) of all buildings and improvements and all Building Systems (as hereafter defined), and all foundations, structural supports, walls, ceilings, windows (including plate glass), siding, roof structure, roofing materials, doors, plate glass, driveways, parking areas, fences and signs located in, on or at the Leased Premises) that the Leased Premises may require from time to time during the Term, whether interior or exterior, structural or non-structural, ordinary or extra-ordinary, foreseen or unforeseen, all to keep the Leased Premises in good and safe order, condition, and repairs, and in at least as good condition as the Leased Premises are in on the Commencement Date. The term “Building Systems” means all heating systems, ventilating systems, air conditioning systems, fire alarm systems, sprinkler systems, and other life safety systems, septic systems, water supply systems (including any water treatment or filtration systems), plumbing systems, electrical systems, storm water management facilities, and all other systems located at or serving the Real Property.
(b) Without limiting the generality of sub-section (a) of this Section, Tenant shall procure and maintain, with qualified vendors reasonably acceptable to Landlord, contracts providing for periodic inspections and maintenance of the heating, ventilating, and air conditioning (HVAC) systems, fire alarm, sprinkler, and life safety systems, the septic system (if any), the crane(s) and related appurtenances in the building, and the Hundegger saw, at such intervals as are reasonably required by Landlord, but in all events at least annually.
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10. Alterations, Renovations and Improvements . Tenant shall not make any alterations, renovations or improvements to the Leased Premises without obtaining Landlord’s prior written consent to the plans and specifications therefor and the contractor(s) to be retained by Tenant to perform such work, which shall not be unreasonably withheld, conditioned, or delayed in the case of cosmetic renovations that do not affect the structural elements of the improvements, the roof(s) of any buildings, or any of the Building Systems, but otherwise shall be in Landlord’s sole discretion. Prior to any contractor or subcontractor (of any tier) providing or furnishing any labor, materials, or services in connection with any alterations, renovations, or improvements, Tenant shall obtain and furnish to Landlord the name and address of each such contractor and subcontractor. In addition, prior to any such labor, materials, or services being provided or furnished, Tenant shall furnish to Landlord a mechanic’s lien waiver and notice to prevent lien in a form prescribed by Landlord, duly executed by each such contractor or subcontractor who will furnish or provide labor, materials, and/or services. Tenant shall ensure that all such alterations, renovations and improvements are performed in a good and workmanlike and in compliance with all applicable Laws. In the event any lien is filed against the Leased Premises in connection with or arising out of any work performed at or materials, labor or other services supplied to the Leased Premises, Tenant shall cause the same to be discharged within thirty (30) days after such lien is filed. Tenant shall indemnify and hold Landlord harmless from and against all claims, demands, liabilities, liens, losses, costs and expenses (including reasonable attorneys’ fees) which may arise or be incurred by Landlord as a direct or indirect result of or in connection with such alterations, renovations and improvements, and Tenant shall be responsible for all costs, liabilities, and expenses arising out of such alterations, renovations and/or improvements. All alterations, renovations and improvements which may be made or installed by or on behalf of Tenant upon the Leased Premises and which in any manner are attached to the floors, walls or ceilings shall, at Landlord's option, remain upon the Leased Premises, and, upon termination of this Lease, shall be surrendered with the Leased Premises as a part thereof without disturbance, molestation or injury, provided, however, that Tenant’s furniture, equipment, other personal property, and trade fixtures (which, for avoidance of doubt, shall in no event include the Leased Personal Property or the crane(s) or related appurtenances located at the Leased Premises) may be removed by Tenant from the Leased Premises upon the expiration or termination of this Lease, subject to the provisions relating to removal thereof as provided in this Lease.
11. Signs . Tenant shall have the right to maintain the existing signage at the Real Property as of the Commencement Date and shall have the right to install additional signage that does not affect the structural elements of the improvements, the roof(s) of any buildings, or any of the Building Systems, provided, however, that all signage shall be at Tenant’s sole cost and expense, and shall comply with all applicable Laws.
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12. Surrender; Holdover . Tenant shall vacate and surrender the Leased Premises to Landlord at the expiration or sooner termination of the Lease Term and the same shall be in the same condition as Tenant is required to maintain the same during the Lease Term, free of all of Tenant’s personal property except as may otherwise be provided herein, “broom clean,” and otherwise in accordance with the provisions of the Lease. Tenant shall have no right to holdover beyond the expiration of the Lease Term. If Tenant continues to occupy the Leased Premises after the end of the Lease Term, such continued occupancy shall be deemed a tenancy-at-sufferance even if Landlord accepts any payment from Tenant, but in the event that a court of competent jurisdiction deems such acceptance of a payment to constitute acceptance of “rent”, such acceptance shall create no rights in Tenant beyond a tenancy-at-will under the terms and conditions stated herein but at a Base Rent rate equal to one hundred fifty percent (150%) of the Base Rent applicable immediately preceding the end of the Lease Term, plus all additional Rent, until (i) Tenant shall vacate the Leased Premises; (ii) the termination of the tenancy-at-will; or (iii) Landlord shall give notice of a different rental amount. Nothing contained in this Section shall be deemed to (a) constitute consent by Landlord to such occupancy or holdover by Tenant; (b) confer any rights on Tenant as more than a tenant-at-sufferance or, if Landlord accepts any rental payments applicable to such period of holding over, a tenant-at-will; or (c) relieve Tenant from liability for damages suffered by Landlord as a result of such holding over.
13. Removal of Tenant’s Property . Tenant’s trade fixtures, personal property, furniture and equipment, other than those items which are to remain or which Landlord elects to have remain at the Leased Premises as provided in Section 10 of this Lease, may be removed by Tenant at the termination of this Lease, provided (a) Tenant is not then be breach of any provision of this Lease; (b) such removal shall not cause any material damage to any portion of the Leased Premises, and any other damage created by such removal shall be repaired by Tenant at Tenant's expense prior to the expiration of the Lease Term to at least as good condition as existed when possession of the Leased Premises was delivered to Tenant; and (c) such removal shall be made before the termination of the Lease Term.
14. Subletting and Assignment . Tenant shall not assign this Lease, in whole or in part, or sublet the Leased Premises or any portion thereof, or encumber the leasehold interest created by this Lease in any manner (including the creation of any security interest in or other pledge of or lien upon the Leased Personal Property) without the prior written consent of Landlord, which may be withheld in Landlord’s sole discretion during the first twenty-four full calendar months of the Term, and thereafter will not be unreasonably withheld. No assignment or sublease shall operate to release Tenant from any of its obligations under this Lease. Each sublease of the Leased Premises or any portion thereof must contain a release of and waiver of claims against Landlord and the other Releasees (as that term is defined in this Lease), in form and content acceptable to Landlord, and must require the subtenant’s property insurer to issue in favor of Landlord and the other Releasees waiver of subrogation rights endorsements to all policies of property insurance carried in connection with the Leased Premises and the contents thereof. Every transfer by levy or sale on execution, or other legal process, every transfer in bankruptcy, every transfer by merger, consolidation, or by operation of Law, every transfer of a controlling interest in Tenant, and every transfer under any compulsory procedure or order of court shall be deemed to constitute an “assignment” within the meaning of this Lease. Any attempted assignment or sublease in violation of this Section shall, at Landlord’s option, be void and shall constitute a default under this Lease. Consent by Landlord to an assignment or sublease in one instance shall not operate to release the requirement that consent from Landlord be obtained for any further or subsequent assignment or sublease. Tenant shall pay all fees and expenses, including reasonable attorneys’ fees, incurred by Landlord in connection with any proposed subletting or assignment, irrespective of whether Landlord’s consent is in fact granted.
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15. Indemnification and Insurance .
(a) Tenant agrees to maintain in full force during the Lease Term insurance as follows:
(i) commercial general liability insurance, written on an occurrence basis, with a deductible in an amount not to exceed $10,000.00, and providing:
(A) minimum limits of (y) $1,000,000.00 per occurrence with $3,000,000.00 annual aggregate limit for bodily injury (including death) and property damage; and (z) $3,000,000.00 in the annual aggregate with respect to products and completed operations;
(B) coverage for damages arising out of bodily injury (including death) sustained by any person or persons or arising out of damage to or destruction of property;
(C) coverage for damages arising out of premises liability, personal injury and advertising injury;
(D) pollution liability coverage for sudden and accidental pollution;
(E) for extension of such coverage to include liability for the operation of non-owned motor vehicles;
(F) specific coverage for Tenant’s indemnification obligations under this Lease (but neither this provision nor such coverage shall be deemed to limit any of Tenant’s obligations under this Lease);
(G) that Tenant’s commercial general liability insurance is provided on a primary and non-contributory basis;
(H) that Landlord, Landlord’s mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time are named as additional insureds by an endorsement provided on ISO Form 2026 (1185) or its equivalent, without modification, or such other endorsement as is acceptable to Landlord, acting reasonably; and
(I) for waiver of subrogation in favor of Landlord, Landlord’s mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time.
(ii) Automobile liability insurance covering all motor vehicles owned, leased, or licensed by Tenant, covering injury to or death of one or more persons or damage to or destruction of property, with a minimum limit of liability of $3,000,000.00 for each accident.
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(iii) Workers compensation insurance in accordance with the requirements of all applicable Laws, and employers liability insurance with limits of at least $1,000,000.00, with such workers compensation insurance and employers liability insurance providing for waiver of subrogation in favor of Landlord, its mortgagee(s) of the Leased Premises from time-to-time (if any), and any other persons reasonably designated in writing by Landlord from time-to-time.
(iv) Umbrella excess liability insurance in a minimum amount of $10,000,000.00, on a following form basis over the insurance described in clauses (i) through (iii), above.
(v) Special causes of loss form (also sometimes known as “all risk”) property insurance insuring, on a replacement cost basis (without any deduction for depreciation), all personal property and trade fixtures owned by or within the care, custody or control of Tenant (including the Leased Personal Property), with limits in an amount of not less than one hundred percent (100%) of the full replacement cost of such property, without co-insurance provisions, and with a deductible of not more than $10,000.00, and with Landlord (and Landlord’s mortgagee(s) of the Leased Premises from time-to-time) named as loss payee(s) with respect to the Leased Personal Property and additional insured(s). Such policy(ies) of property insurance must insure against fire, sprinkler leakages, and earthquake, flood and collapse, and all other perils as are from time to time included in the standard special causes of loss form (also sometimes known as “all risk”) coverage;
(vi) Until such time, if any, as Landlord elects to carry property insurance for the buildings and improvements located on the Leased Premises, special causes of loss form (also sometimes known as “all risk”) property insurance insuring, on a replacement cost basis (without any deduction for depreciation), all buildings and improvements (including fixtures) located on the Leased Premises, with limits in an amount of not less than one hundred percent (100%) of the full replacement cost of such buildings and improvements, and in all events sufficient at all times to avoid causing the insured to be or become a co-insurer, and with a deductible of not more than $10,000.00, and with Landlord (and Landlord’s mortgagee(s) of the Leased Premises from time-to-time) named as loss payee(s) and additional insured(s). Such policy(ies) of property insurance must insure against fire, sprinkler leakages, and earthquake, flood and collapse, and all other perils as are from time to time included in the standard special causes of loss form (also sometimes known as “all risk”) coverage;
(vii) business interruption insurance covering all of Tenant’s obligations under this Lease with respect to the payment of Rent for a period of at least eighteen (18) months.
(viii) Such other insurance policies, such other endorsements, such other deductibles, and/or such other insurance policy limits as may from time to time be reasonably required by Landlord, provided that, at the time, such other insurance policies, endorsements, deductibles, and/or insurance policy limits are commonly carried for premises and/or buildings or improvements similar in construction, design, general location, use, operation, and occupancy to those located on or appurtenant to the Leased Premises or for operations similar to those conducted on or from the Leased Premises.
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(b) Without limiting the exculpatory provisions of this Lease, each policy of property insurance maintained by Tenant under this Lease shall contain waivers of subrogation in favor of Landlord and all other Releasees.
(c) All insurance required to be obtained and maintained by Tenant pursuant to this Section must be with insurers authorized to transact insurance business and cover risks in the State of Maine and that are rated "A-" or better by A.M. Best Company, Inc. or other insurance companies of recognized responsibility acceptable to Landlord, acting reasonably.
(d) The policies of insurance required to be maintained by Tenant under this Lease shall be endorsed to require that each policy will not be cancelled or materially changed without at least thirty (30) days prior written notice to Landlord.
(e) Tenant shall deliver to Landlord copies of each policy of insurance (including all endorsements) required to be maintained by Tenant under this Lease or such other evidence of each such policy of insurance (and all required endorsements) as is acceptable to Landlord, acting reasonably.
(f) If Tenant fails to obtain, maintain and/or pay for the insurance required by this Lease at the times and for the amounts and duration specified herein, Landlord has the right, but not the obligation, at any time and from time to time, to obtain such insurance and/or pay the premiums for such insurance, without limiting any other rights or remedies available to Landlord for such failure. In such event, Tenant shall repay Landlord, immediately upon demand, all sums so paid by Landlord and all costs and expenses incurred by Landlord in connection therewith (including reasonable attorneys’ fees), all without prejudice to any other rights or remedies available to Landlord.
(g) Landlord shall have the right, at any time during the Term, to elect, by giving written notice to Tenant, to carry property insurance for the buildings and improvements located on the Leased Premises, in which event, Tenant shall pay to Landlord the amount of all premiums for such property insurance procured and maintained by Landlord with respect to the Real Property. Tenant shall pay such amounts to Landlord in estimated monthly installments, with the actual amount of incurred by Landlord for such premiums being reconciled against such estimated monthly installments annually and, within thirty (30) days of such reconciliation, Landlord remitting to Tenant the amount by which the payment of estimated premiums exceeds the actual premiums for such annual period (provided Tenant is not then in breach of this Lease), or Tenant paying to Landlord the amount by which the actual premiums for such annual period exceeds the estimated payments made by Tenant to Landlord.
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(h) Tenant acknowledges and agrees that such property insurance as Landlord elects to purchase with respect to the Real Property shall be for the sole benefit of Landlord and that such insurance shall not cover any personal property, trade fixtures, leasehold improvements, or other property or appurtenances owned by or within the care, custody, or control of Tenant, or otherwise located in the Leased Premises (collectively, “Tenant’s Property”) and that in the event of damage to or loss of any of Tenant’s Property, neither Landlord, its mortgagee(s) of the Leased Premises from time-to-time (if any), nor any of the shareholders, members, directors, managers, officers, employees, or agents of Landlord or any such mortgagee(s) (each in the singular “Releasee”, and in the plural, “Releasees”) shall have any obligation to repair or replace the same. Notwithstanding any exception to Tenant’s indemnification obligations under this Lease, Tenant does hereby expressly release all Releasees of and from, and agrees to indemnify, hold harmless, and defend Releasees from and against, any and all claims for damages to or loss of any of Tenant’s Property, regardless of the cause thereof, including, damage or loss due to any Releasee’s negligence.
(i) Tenant shall indemnify and hold all Releasees harmless and, if requested by Landlord, defend such Releasee(s) with counsel reasonably satisfactory to Landlord, from and against any and all liabilities, losses, claims, causes of action, damages, costs, and expenses (including reasonable attorney’s fees) incurred by or threatened against any Releasee arising out of (i) any occurrence on the Leased Premises or the use of the Leased Premises by Tenant, its employees, agents, licensees, or invitees, except to the extent caused by the negligence or willful misconduct of Landlord (but such exception shall not apply to limit the application of sub-section (h) of this Section); or (ii) Tenant’s breach of any provision of this Lease. Tenant agrees that the foregoing agreement to indemnify, defend, and hold harmless extends to liabilities, losses, claims, causes of action, damages, costs and expenses (including reasonable attorney’s fees) arising out of claims of Tenant's employees without regard to any immunity, statutory or otherwise, including any immunity under the workers compensation Laws of Maine or any other applicable jurisdiction, which immunity Tenant hereby waives, but only for the purposes of Tenant’s obligations to the Releasees under this sub-section. Tenant's obligations under this sub-section shall survive the termination of this Lease.
16. Hazardous Materials . Tenant covenants and agrees that Tenant will not permit any Hazardous Substances (as hereafter defined) to be stored, generated, or released from the Leased Premises, other than Hazardous Substances incidental to Tenant’s use, maintenance, and operation of the Leased Premises for the Permitted Use provided that Tenant shall store, generate, handle, and dispose of all such Hazardous Substances in full compliance with all applicable laws. Tenant hereby covenants and agrees to indemnify, hold harmless, and, if requested by Landlord, defend, Landlord from and from and against any and all demands, claims, causes, of action, losses, liabilities, damages, fines, costs, and expenses (including reasonable attorneys’ fees, court costs and clean-up costs) that may arise out of any Hazardous Substances located at or generated or released from the Leased Premises, irrespective of whether first occurring prior to or after the Commencement Date. The term “Hazardous Substances” means any flammables, explosives, radioactive materials, gasoline, oil, other petroleum products, lead paint, urea formaldehyde (including urea formaldehyde foam insulation), asbestos, asbestos containing materials, polychlorinated biphenyls, and any other hazardous materials, hazardous waste, hazardous matter, hazardous or toxic substances, chemical pollutants, and other materials or substances defined in or regulated by Environmental Laws. The term “Environmental Laws” means (A) the Clean Water Act; (B) the Clean Air Act; (C) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act; (D) the Toxic Substance Control Act; (E) the Resource Conservation and Recovery Act; (F) the Hazardous Materials Transportation Act; and/or (G) any similar state Laws regulating pollution or contamination of the environment The obligations of Tenant under this Section shall survive the termination of this Lease.
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17. Right to Enter . Tenant agrees to permit Landlord or its duly authorized agents to enter on the Leased Premises during Tenant's normal business hours, with reasonable prior notice, to examine the condition of said Leased Premises, exercise any rights of Landlord under this Lease, and/or to show the same to prospective tenants, lenders, or purchasers, provided such access to the Leased Premises shall not unnecessarily interfere with Tenant's use of the Leased Premises or the conduct of Tenant's business activities thereon. Notwithstanding the foregoing, Landlord shall have the right (but not the obligation) to enter the Leased Premises without prior notice in the event of an emergency in which prior notice is not practicable in the circumstances.
18. Total or Partial Destruction .
(a) In the event the improvements on the Real Property (including any Building Systems) are damaged or destroyed by fire or other peril (a “Casualty”), Tenant shall give Landlord notice of such Casualty as soon as reasonably possible after the Casualty. Landlord shall have the right to elect whether to have such improvements rebuilt or restored. In the event that Landlord elects not to have the improvements rebuilt or restored, and the nature of the Casualty is such as would, absent such rebuilding or restoration, materially impair Tenant’s ability to use and occupy such Leased Premises in substantially the same manner as they were used prior to the Casualty, this Lease shall terminate effective as of the date of the Casualty. In the event that Landlord elects to have the improvements rebuilt or restored, this Lease shall remain in effect without reduction or abatement of Rent, and the following provisions shall apply:
(i) Landlord shall, with reasonable promptness rebuild or restore such improvements to at least substantially the same condition, quality, and class as existed prior to the Casualty, using the proceeds of insurance covering such improvements, provided , however , that in no event shall Landlord be obligated to expend for any such rebuilding or restoration an amount in excess of the insurance proceeds actually collected by Landlord on account of the Casualty, less the costs and expenses (including reasonable attorneys’ fees) incurred by Landlord in collecting such proceeds.
(ii) Notwithstanding the preceding clause (i), Landlord shall have the right to elect, by giving written notice to Tenant, to have Tenant rebuild or restore the Leased Premises, in which event Tenant shall, with reasonable promptness, and in all events within twelve (12) months of the date of Landlord’s election notice, rebuild or restore such improvements to at least substantially the same condition, quality, and class as existed prior to the Casualty, using the proceeds of insurance covering such improvements. The selection of all engineers, architects, and contractors engaged in connection with such rebuilding or restoration and all plans and specifications for such rebuilding or restoration, shall be subject to review and approval by Landlord. In the event that Landlord makes the election to have Tenant rebuild or restore as provided in this clause (ii), all proceeds payable by reason of any Casualty under all applicable policies of insurance (whether Tenant is carrying such insurance, or Landlord has elected to do so as provided in this Lease) shall be paid to Landlord or its mortgagee, and such proceeds will be held by Landlord or its mortgagee in an interest-bearing account and, provided Tenant is not in breach of this Lease, shall be made available for rebuilding or restoring the improvements, and shall be paid by Landlord (or such mortgagee) from time- to-time during the progress of construction for the costs of such reconstruction or repair, all subject to and in accordance with reasonable terms, conditions, and construction disbursement procedures specified by Landlord and/or such mortgagee. Any excess proceeds of insurance (and accrued interest) remaining after the completion of the restoration or reconstruction of the Leased Premises shall be paid to Landlord.
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(b) Loss or Damage affecting Leased Personal Property . In the event of any loss or destruction of or damage to any of the Leased Personal Property, Tenant shall, unless Landlord or its mortgagee elects to retain any proceeds of insurance allocable to such Leased Personal Property, be responsible for the repair and replacement of such lost, destroyed, or damaged Leased Personal Property, with the restored or replacement items of at least equivalent condition, quality, class, and value to the item(s) of Leased Personal Property prior to such loss, destruction, or damage. All proceeds payable under all applicable policies of insurance by reason of any loss or destruction of or damage to any Leased Personal Property shall be paid to Landlord or its mortgagee. Unless Landlord or its mortgagee elect to retain such proceeds of insurance allocable to such Leased Personal Property, such proceeds will be held by Landlord or its mortgagee in an interest-bearing account and, provided Tenant is not in breach of this Lease, shall be made available for such repair or replacement, and shall be paid out by Landlord (or such mortgagee) from time to time during the progress of the repair or replacement for the reasonable costs of such repair or replacement, all subject to and in accordance with reasonable terms, conditions, and disbursement procedures specified by Landlord and/or such mortgagee. Any excess proceeds of insurance (and accrued interest) remaining after the completion of the repair or replacement of such Leased Personal Property shall be paid to Landlord. There shall be no abatement or reduction of Rent on account of any such loss, destruction, or damage.
(c) Tenant shall be responsible for all insurance deductibles applicable to any Casualty affecting any of the improvements on the Real Property (including Building Systems) and/or any loss or destruction of or damage to any of the Leased Personal Property.
(d) The provisions of this Section shall be subject and subordinate to the provisions of any mortgage now or hereafter placed upon the Real Property, the provisions of any security agreement now or hereafter affecting the Leased Personal Property, and the requirements of any mortgagee holding such mortgage or secured party holding the security interest under such security agreement.
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19. Condemnation .
(a) “Condemnation” means any taking of title to or any interest in the Leased Premises or any part thereof or any other property used in connection with the Leased Premises (including for ingress, egress, parking, septic service, water supply or other services or utilities) by exercise of any right of eminent domain by, or by any similar proceeding or act of, any person having the power and legal authority to do so (or by purchase in lieu thereof). For the purposes of this definition, the effective date of any Condemnation shall be deemed to be the later of: (i) the date when title to the Leased Premises or part thereof or such other property is transferred by such proceeding or act of the condemning authority, and (ii) the date when Tenant o is no longer permitted to occupy the Leased Premises or to use such other property.
(b) “Substantial Condemnation” means any Condemnation that affects all or a substantial portion of the Leased Premises or any Condemnation that has or is reasonably likely to have a materially adverse effect on any business operations then being conducted on the Leased Premises. Tenant may waive its right to treat as a Substantial Condemnation any Condemnation that would otherwise qualify as such.
(c) “Insubstantial Condemnation” means any Condemnation that is not a Substantial Condemnation.
(d) If a Substantial Condemnation occurs, this Lease shall terminate upon the effective date of the Substantial Condemnation.
(e) If an Insubstantial Condemnation occurs, then this Lease shall continue in full force and effect without reduction or abatement of Rent.
(f) In the event of any Condemnation, Landlord shall be entitled to receive and retain the amounts awarded for the Leased Premises, and Tenant shall be entitled to receive and retain any amounts which may be specifically awarded to it in any such condemnation proceedings because of its business loss or the taking of its trade fixtures, furniture, or other property.
20. Force Majeure . In any case where either party is required to perform any act pursuant to this Lease, except for Tenant’s monetary obligations hereunder, the time for the performance thereof shall be extended by a period of time equal to the period of any delay caused by or resulting from an act of God, war, civil commotion, fire or other casualty, labor difficulties, shortages of energy or labor, government regulations, or delays caused by one party to the other, whether such period be designated by a fixed date, a fixed time, or as a reasonable date or time.
21. Quiet Enjoyment . Tenant, on paying the Rent and performing and observing the covenants in this Lease, may hold and enjoy the Leased Premises for the Term without unreasonably interference from any person claiming by, through, or under Landlord, subject and subordinate to all provisions of this Lease.
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22. Default.
(a) In the event that:
(i) Tenant shall fail to pay when due the Rent or any other sums payable hereunder when due and such failure remains uncured for five (5) days after Landlord delivers a default notice to Tenant for such failure to pay rent ; or
(ii) any petition in bankruptcy shall be filed by Tenant or any guarantor hereof or other petition or proceeding shall be filed or commenced by Tenant or any guarantor hereof to declare Tenant insolvent, or to delay, reduce or modify Tenant’s or any such guarantor’s debts or obligations, or Tenant or any such guarantor admits its inability to pay its debts, or Tenant or any such guarantor makes an assignment for the benefit of creditors; or
(iii) any bankruptcy petition or proceeding shall be filed against Tenant or any guarantor hereof or to otherwise declare Tenant or any guarantor hereof bankrupt or insolvent or to delay, reduce or modify Tenant’s or any such guarantor’s debts or obligations or a receiver, trustee or other similar type of appointment or court appointee or nominee is appointed for Tenant or any such guarantor or any of the property of Tenant or any such guarantor, and such petition, appointment or proceeding is not dismissed within sixty (60) days after it is commenced; or
(iv) the leasehold interest of Tenant is levied upon or attached by process of law, including the filing of any mechanic’s lien, and such levy, lien, or attachment is not dissolved within thirty (30) days after it is made; or
(v) Tenant shall abandon the Leased Premises during the Lease Term; or
(vi) Tenant shall assign this Lease or sublet any portion of the Leased Premises, or attempt to do either of the foregoing, in violation of this Lease; or
(vii) Tenant violates or fails to observe or comply with any Laws applicable to the Leased Premises, Tenant’s use thereof, or Tenant's operations, activities or conduct of business at or from the Leased Premises; or
(viii) any other event, occurrence, act, or omission described in any provision of this Lease as constituting a “default” or an “Event of Default” occurs;
(ix) Tenant shall neglect or fail to perform or observe any of the other covenants, terms, provisions or conditions contained in this Lease and, if the neglect or failure is capable of being cured, such neglect or failure continues for more than thirty (30) days after written notice thereof ( provided , however , that if such neglect or failure is capable of being cured, but is not capable of being cured within said thirty (30) day period, then Tenant shall have such additional period of time, not to exceed an additional sixty (60) days, as is reasonably necessary to cure the same provided Tenant commences to cure within said thirty (30) day period and diligently and continuously prosecutes the cure to completion); or
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(x) there is a default by Tenant under (A) that certain Lease Agreement of even or near date herewith between Tenant and 947 Waterford Road, LLC pertaining to property located in the Town of Waterford, County of Oxford, and State of Maine; and/or (B) that certain Lease Agreement of even or near date herewith between Tenant and 300 Park Street, LLC pertaining to property located in the Town of Paris, County of Oxford and State of Maine, and any such default continues beyond the expiration of applicable notice and cure periods (if any),
then, and in any of said cases (notwithstanding any license of any former breach of covenant or waiver of the benefit hereof or consent in a former instance), and without limitation of any other remedies that might be available to Landlord under this Lease, at law, or in equity, Landlord lawfully may, immediately or at any time thereafter, terminate this Lease by sending written notice of termination to Tenant, or, subject to compliance with applicable Laws, enter into and upon the Leased Premises or any part thereof in the name of the whole and repossess the same as of its former estate, and expel Tenant and those claiming through or under it and remove it or their effects without being deemed guilty of any manner of trespass, in each case without prejudice to any rights or remedies which might otherwise be available to Landlord for collection of Rent and other damages for breach of covenant, and upon entry as aforesaid or upon sending of such notice, this Lease shall terminate.
(b) Without limiting other remedies of Landlord at law or in equity for any breach of or on account of termination of this Lease, Tenant covenants that in case of such termination under sub-section (a) of this Section, Tenant shall pay to Landlord the unpaid Rent owed to Landlord through the time of termination, plus interest thereon at the rate of 18% per annum from the date the same was due until paid; and (ii) at the election of Landlord, either:
(1) the present value of a sum which, at the time of such termination of this Lease is equal to (A) the aggregate of the Rent which would have been payable by Tenant for the period commencing upon such termination of this Lease and continuing through the date this Lease would have terminated had there been no default by Tenant; minus (B) the fair market rental value of the Leased Premises (after deducting reasonable projections for Landlord’s costs and expenses of re-letting the Leased Premises, including advertising expenses, brokerage commissions, reasonable attorneys’ fees, and commercially reasonable costs of repairing, renovating, or otherwise altering the Leased Premises to suit the new tenant); or
(2) for the period of time commencing upon such termination of this Lease and continuing through the date this Lease would have terminated had there been no default by Tenant hereunder, the difference, if any, between the Rent which would have been due had there been no such termination and the amount being received by Landlord as rent from a replacement Tenant of Leased Premises, if any. In addition, Tenant shall pay to Landlord all costs and expenses of such re-letting, including advertising expenses, brokerage commissions, reasonable attorneys’ fees, and commercially reasonable costs of repairing, renovating, or otherwise altering the Leased Premises to suit the new tenant.
(c) If Tenant shall default in the performance or observance of any covenant, agreement, or condition in this Lease contained on its part to be performed or observed and shall not cure any such default as provided herein, Landlord may, at its option, without waiving any claim for damages or any other right or remedy for breach of this Lease, at any time thereafter, cure such default. Any amount paid or any liability incurred by Landlord in so doing shall be deemed paid or incurred for the account of Tenant, and Tenant agrees to immediately reimburse Landlord therefor, as additional Rent.
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(d) Tenant shall pay all reasonable attorneys’ fees incurred by Landlord in connection with the enforcement of Tenant’s obligations under this Lease.
(e) Landlord shall in no event be in default in the performance of any of its obligations hereunder unless and until Landlord shall have failed to perform, or failed diligently to attempt to perform, such obligations within thirty (30) days or such additional time as is reasonably required to correct any such default after notice by Tenant to Landlord properly specifying wherein Landlord has failed to perform any such obligation.
(f) In no event shall Landlord be liable to Tenant for incidental, consequential, or punitive damages in connection with any matter arising out of this Lease or the Leased Premises. Without in any way limiting or impairing the effect of the other provisions of this Lease, Tenant shall neither assert nor seek to enforce any claim arising out of this Lease or out of the use or occupancy of the Leased Premises against Landlord, its shareholders, directors, officers, employees, or agents, or any of its or their assets other than the value of Landlord’s interest in the Leased Premises and Tenant agrees to look solely to such interest and insurance coverage for the satisfaction of any claim arising out of this Lease or out of the use or occupancy of the Leased Premises.
23. Sale or Mortgage; Estoppel; Subordination .
(a) Nothing contained in this Lease shall limit Landlord's right to sell, mortgage, or otherwise encumber its fee interest in the Leased Premises, or affect Landlord's right to assign this Lease or the Rent payable under this Lease, whether as further security under a fee mortgage or otherwise. Any such assignment of this Lease or of the Rent payable under this Lease shall be honored by Tenant.
(b) In the event Landlord shall sell, transfer, or otherwise convey the Leased Premises, Landlord, upon the written assumption by the transferee of the obligations arising hereunder after the date of such transfer, shall be entirely freed and relieved of all covenants and obligations of Landlord hereunder. Nothing in the preceding sentence shall be construed to impair Tenant’s leasehold interest under this Lease so long as Tenant performs and observes the covenants and terms of this Lease on its part to be performed and observed.
(c) This Lease shall, at Landlord’s option, be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the Leased Premises, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. Notwithstanding such subordination, Tenant's right to quiet possession of the Leased Premises shall not be disturbed if Tenant is not in default and so long as Tenant shall pay the Rent and observe and perform all of the provisions of this Lease. If any mortgagee, trustee, or ground lessor shall elect to have this Lease made prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior to or subsequent to the date of said mortgage, deed of trust, or ground lease or the date of recording thereof. Tenant agrees to execute any documents required to effectuate an attornment, a subordination, or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be. Tenant's failure to execute such documents within ten (10) days after written demand shall constitute an Event of Default by Tenant hereunder.
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(d) At any time, and from time to time, upon the written request of Landlord or any mortgagee or prospective purchaser of the Leased Premises, Tenant, within ten (10) business days after such written request, agrees to execute, acknowledge and deliver to Landlord and/or mortgagee, without charge, an estoppel certificate which shall contain (i) a certification that this Lease is unmodified and in full force and effect or, if modified, a statement of the nature of any such modification and a certification that this Lease, as so modified, is in full force and effect; (ii) a certification of the date to which the Rent payable by Tenant are paid (including any payments in advance); (iii) a certification that Tenant is not in default hereunder and that there are not, to Tenant's knowledge, any uncured events of default on the part of Landlord hereunder, or a specification of such events of default if any are claimed by Tenant; and (iv) such other commercially reasonable certifications as are identified in such request. Tenant's failure to deliver such estoppel certificate within the time frame set forth above shall, at Landlord’s option, constitute an Event of Default hereunder and shall, at Landlord’s option, be conclusive proof 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 of Landlord's obligations under this Lease, and that not more than one month's Rent has been paid in advance.
(e) If Landlord desires to finance, refinance, or sell the Leased Premises, Tenant hereby agrees to deliver to any lender or purchaser designated by Landlord, and cause any guarantor to so deliver, such financial statements and other financial information pertaining to Tenant and such guarantor as may be reasonably required by such lender or purchaser. Tenant's failure to provide such information or cause such information to be provided within ten (10) days after written demand shall constitute an Event of Default by Tenant hereunder.
24. Notices . Any notice, request, demand, approval or consent given or required to be given under this Lease shall be, unless otherwise stated, in writing and shall be deemed to have been given (i) when hand delivered to the other party; or (ii) on the day on which the same shall have been mailed by United States registered or certified mail, return receipt requested, with all postage prepaid, or by Federal Express or similar nationally-recognized overnight courier service that provides evidence of delivery, to the address of the party to receive such notice as set forth in the preamble hereof, provided that either party may, by such manner of notice, add or substitute one or more persons or addresses for provision of such notice.
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25. Tenant Representations .
(a) Neither Tenant nor any key personnel of Tenant nor any of Tenant’s underlying beneficial owners have engaged in any dealings or transactions, directly or indirectly, (i) in contravention of any U.S., international or other anti-money laundering regulations or conventions, including without limitation the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, the United States International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001, Trading with the Enemy Act (50 U.S.C. §1 et seq., as amended), any foreign asset control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 and the regulations promulgated thereunder (collectively, the “ Patriot Act ”), or any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“ OFAC ”); or (ii) in contravention of Executive Order No. 13224 issued by the President of the United States on September 24, 2001 (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), as may be amended or supplemented from time to time (“ Executive Order 13224 ”); or (iii) on behalf of terrorists or terrorist organizations, including those persons or entities that are included on any relevant lists maintained by the United Nations, North Atlantic Treaty Organization, Organization of Economic Cooperation and Development, OFAC, Financial Action Task Force, U.S. Securities & Exchange Commission, U.S. Federal Bureau of Investigation, U.S. Central Intelligence Agency, U.S. Internal Revenue Service, or any country or organization, all as may be amended from time to time.
(b) Neither Tenant nor any key personnel of Tenant nor any of the underlying beneficial owners of Tenant is or will be a person or entity (i) that is listed in the Annex to or is otherwise subject to the provisions of Executive Order 13224; or (ii) whose name appears on OFAC’s most current list of “Specially Designated Nationals and Blocked Persons,” (which list may be published from time to time in various mediums including, but not limited to, the OFAC website, http:www.treas.gov/ofac/t11sdn.pdf ); or (iii) who commits, threatens to commit or supports “terrorism”, as that term is defined in Executive Order 13224; or (iv) who has been associated with or is otherwise affiliated with any entity or person listed above.
(c) Tenant represents that it has all requisite power and authority to enter into this Lease and the person executing this Lease on behalf of Tenant represents that he or she has all requisite power and authority to do so.
26. Miscellaneous Provisions .
(a) Invalidity of Particular Provisions . If any term or provision of this Lease, or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by applicable Laws.
(b) Governing Law . This Lease, and all claims or causes of action (whether arising in contract, in tort, or by statute) that may be based upon, arise out of or relate to this Lease, shall be governed by and enforced in accordance with the internal Laws of the State of Maine, including its statutes of limitations, without regard or reference to conflicts of law principles.
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(c) Interpretation . Whenever the word “include,” “includes,” or “including” is used in this Lease, it is deemed to be followed by the words “without limitation.” The terms “this Lease,” “hereof,” “herein,” “hereby,” “hereunder” and similar expressions refer to this Lease as a whole and not to any particular section of this Lease unless the context otherwise requires. The word “person” includes any individual, corporation, firm, association, partnership (general or limited), joint venture, limited liability company, trust, estate or other legal entity. The section and sub-section headings throughout this instrument are for convenience and reference only, and the words contained therein shall in no way be held to explain, modify, amplify, or aid in the interpretation, construction, or meaning of the provisions of this Lease. Whenever in this Lease provision is made for the doing of any act by any party, it is understood and agreed that said act shall be done by such party at its own cost and expense, unless a contrary intent is expressed.
(d) Entire Agreement; Binding Effect . All negotiations, considerations, representations, and understandings between Landlord and Tenant are incorporated herein and may be modified or altered only by agreement in writing between Landlord and Tenant, and no act or omission of any employee or agent of Landlord shall alter, change, or modify any of the provisions hereof. All rights, obligations and liabilities contained herein given to, or imposed upon, Landlord and Tenant shall extend to and bind the several respective administrators, trustees, receivers, legal representatives, successors, heirs and permitted assigns of Landlord and Tenant. If the “Tenant” under this Lease consists of more than one person or entity, each such person and/or entity shall be bound jointly and severally by the terms, covenants and agreements herein and jointly and severally liable for all obligations arising hereunder.
(e) Language . Words of any gender used in this instrument shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires.
(f) Recording; Notice of Lease . Landlord and Tenant agree that this Lease shall not be recorded. The parties agree that at the request of either party, they will execute, acknowledge, and deliver a notice or memorandum of this Lease in recordable form for recording in the Oxford County Registry of Deeds. The requesting party shall bear the expense of recording such notice or memorandum. The Memorandum of Lease shall not be construed to vary the terms and conditions hereof. Landlord and Tenant also agree that, upon the request of either party, they will execute, acknowledge, and deliver a commercially reasonable instrument in recordable form with respect to the termination date of this Lease.
(g) Timeliness of Landlord’s Notices . Landlord's failure during the Lease Term to prepare or deliver any of the statements, notices, or bills, or invoices for any sum payable by Tenant under this Lease shall not in any way cause Landlord to forfeit or surrender its rights to collect any amount that may have become due and owing from Tenant during the Lease Term.
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(h) Waiver of Jury Trial . Tenant, for itself and its heirs, successors, and assigns, does hereby WAIVE THE RIGHT TO A TRIAL BY JURY in any action or proceeding based upon, or related to, the subject matter of this Lease. This waiver is knowingly, intentionally, and voluntarily made by Tenant and Tenant acknowledges that neither Landlord nor any person acting on behalf of Landlord has made any representations of fact to induce this waiver of trial by jury or in any way to modify or nullify its effect. Tenant further acknowledges that it has been represented (or has had the opportunity to be represented) in the signing of this Lease and in the making of this waiver by independent legal counsel, selected of its own free will, and that it has had the opportunity to discuss this waiver with counsel. Tenant further acknowledges that it has read and understands the meaning and ramifications of this waiver provision.
27. Additional Provisions Pertaining to Leased Personal Property .
(a) Without limiting any other provision of this Lease, Tenant agrees that (i) title to the Leased Personal Property shall remain vested in Landlord; (ii) Tenant will not represent to any party that Tenant has title to the Leased Personal Property; (iii) the Leased Personal Property may not be used as collateral to secure any obligations of Tenant to any party; (iv) Tenant will not allow the Leased Personal Property to become encumbered in any way whatsoever; and (v) Tenant will not remove the Leased Personal Property from the Real Property without the written consent of Landlord. Tenant agrees that Landlord may file any financing statements or other documents Landlord deems reasonably necessary or desirable to protect or enforce its rights and interest in the Leased Personal Property and Tenant agrees to execute such documents as Landlord reasonably requests in connection therewith. In the event any of Leased Personal Property is lost, stolen, damaged, or destroyed, Tenant will be responsible for the full replacement of the same.
(b) THE LEASED PERSONAL PROPERTY IS BEING PROVIDED TO TENANT IN “AS IS, WHERE IS” CONDITION, WITH ALL FAULTS. LANDLORD MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR ANY WARRANTY OF MERCHANTABILITY, WITH RESPECT TO THE LEASED PERSONAL PROPERTY, AND ALL SUCH WARRANTIES AND REPRESENTATIONS ARE EXPRESSLY DISCLAIMED BY LANDLORD.
28. Contingency for Acquisition of Leased Premises . The parties acknowledge that Landlord does not yet own the Premises and agree that this Lease is contingent upon Landlord acquiring fee title to the Real Property by no later than May 31, 2019. In the event that Landlord has not acquired fee title to the Real Property on or before May 31, 2019 (or such later date as the parties may agree upon in writing), this Lease shall automatically terminate. If Landlord does acquire fee title to the Real Property on or before May 31, 2019, then the date upon which Landlord acquires fee title to the Real Property is referred to herein as the “Acquisition Date.” Tenant shall not be entitled to possession of the Premises until the Acquisition Date (also referred to in this Lease as the Commencement Date).
[Signature Page(s) and Guaranty Follow]
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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed by their duly authorized undersigned representatives as an instrument under seal as of the day and year first written above.
WITNESS: | LANDLORD: | ||
56 Mechanic Falls Road, LLC | |||
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By: |
/s/ David J. Noble
|
|
Name: |
David J. Noble
|
||
Title: |
President
|
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TENANT: | |||
KBS Builders, INC. | |||
/s/
|
By: |
/s/ Daniel M. Koch
|
|
Printed Name: |
Daniel M. Koch
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||
Title: |
President
|
GUARANTY
For value received, and in consideration of and as an inducement to Landlord to enter into the foregoing Lease (the “Lease”) with Tenant, the undersigned, ATRM Holdings, Inc. (“Guarantor”), does hereby unconditionally guaranty to Landlord the complete and due performance and observation of each and every agreement, covenant, term, and condition of the Lease to be performed or observed by Tenant, including, without limitation, the payment of all Rent required under the Lease. The validity of this Guaranty and the obligations of the Guarantor hereunder shall not be terminated, affected, or impaired by reason of the granting by the Landlord of any indulgences to the Tenant. This Guaranty shall remain and continue in full force and effect with respect to any and all renewals, modifications, or extensions of the Lease, irrespective of whether Guarantor shall have received any notice of or consented to such renewal, modification, or extension. The liability of the Guarantor hereunder shall be primary, and in any right of action that shall accrue to the Landlord under the Lease or applicable law, the Landlord may proceed against Guarantor without having commenced any action against or having obtained any judgment against Tenant and/or may proceed against Guarantor and Tenant, jointly and severally. Guarantor hereby waives all guaranty and suretyship defenses. All of the terms and provisions of this Guaranty shall inure to the benefit of the successors and assigns of the Landlord and shall be binding upon the successors and assigns of Guarantor. Capitalized terms that are used, but not defined, in this Guaranty shall have the meaning ascribed thereto in the Lease.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty as an instrument under seal as of the date of the Lease.
GUARANTOR: | |||
ATRM Holdings, INC. | |||
/s/
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By: |
/s/ Daniel M. Koch
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Printed Name: |
Daniel M. Koch
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||
Title: |
President and CEO
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List of Exhibits
Exhibit A – Description of the Leased Premises
Exhibit B – Base Rent if Tenant does not give a timely Rent Commencement Extension Notice
Exhibit C – Base Rent if Tenant does give a timely Rent Commencement Extension Notice
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EXHIBIT A
(Description of Leased Premises)
*
EXHIBIT B
(Base Rent if Tenant does not give a timely Rent Commencement Extension Notice)
Months |
Annual Base Rent
( Real Property ) |
Annual Base Rent - ( Leased Personal Property ) |
Total
Monthly Installment of
|
Commencement Date through July 31, 2019 |
$0.00 |
$0.00 |
$0.00 |
August 1, 2019 through March 31, 2020 |
$132,000.00 (Annual Rate) |
$0.00 (Annual Rate) |
$11,000.00 |
April 1, 2020 through March 31, 2021 |
$134,640.00 |
$0.00 |
$11,220.00 |
April 1, 2021 through March 31, 2022 |
$137,332.80 |
$0.00 |
$11,444.40 |
April 1, 2022 through March 31, 2023 |
$140,079.46 |
$0.00 |
$11,673.29 |
April 1, 2023 through March 31, 2024 |
$142,881.05 |
$0.00 |
$11,906.75 |
April 1, 2024 through March 31, 2025 |
$145,738.67 |
$0.00 |
$12,144.89 |
April 1, 2025 through March 31, 2026 |
$148,653.44 |
$0.00 |
$12,387.79 |
April 1, 2026 through March 31, 2027 |
$151,626.51 |
$0.00 |
$12,635.54 |
April 1, 2027 through March 31, 2028 |
$154,659.04 |
$0.00 |
$12,888.25 |
April 1, 2028 through March 31, 2029 |
$157,752.22 |
$0.00 |
$13,146.02 |
EXHIBIT C
(Base Rent if Tenant does give a timely Rent Commencement Extension Notice)
Months |
Annual Base Rent
( Real Property ) |
Annual Base Rent - ( Leased Personal Property ) |
Total
Monthly Installment of
|
Commencement Date through October 31, 2019 |
$0.00 |
$0.00 |
$0.00 |
November 1, 2019 through March 31, 2020 |
$144,000.00 (Annual Rate) |
$0.00 (Annual Rate) |
$12,000.00 |
April 1, 2020 through March 31, 2021 |
$146,880.00 |
$0.00 |
$12,240.00 |
April 1, 2021 through March 31, 2022 |
$149,817.60 |
$0.00 |
$12,484.80 |
April 1, 2022 through March 31, 2023 |
$152,813.95 |
$0.00 |
$12,734.50 |
April 1, 2023 through March 31, 2024 |
$155,870.23 |
$0.00 |
$12,989.19 |
April 1, 2024 through March 31, 2025 |
$158,987.63 |
$0.00 |
$13,248.97 |
April 1, 2025 through March 31, 2026 |
$162,167.38 |
$0.00 |
$13,513.95 |
April 1, 2026 through March 31, 2027 |
$165,410.73 |
$0.00 |
$13,784.23 |
April 1, 2027 through March 31, 2028 |
$168,718.94 |
$0.00 |
$14,059.91 |
April 1, 2028 through March 31, 2029 |
$172,093.32 |
$0.00 |
$14,341.11 |
Exhibit 10.9
FIRST AMENDMENT TO LEASE
This First Amendment To Lease (this “Amendment”) is made as of this 18th day of April, 2019, by and between 56 Mechanic Falls Road , LLC , a Delaware limited liability company with a mailing address of 53 Forest Avenue, Old Greenwich, Connecticut 06870 (“Landlord”), and KBS Builders , INC., a Delaware corporation with a mailing address of 300 Park Street, Paris, Maine 04271 (“Tenant”).
WHEREAS, Landlord and Tenant are parties to a certain Lease Agreement dated April 3 2019 (the “Lease”), which Lease pertains to certain property located at or about 56 Mechanic Falls Road in the Town of Oxford, County of Oxford, and State of Maine, as more fully described in the Lease (referred to herein as the “Leased Premises”); and
WHEREAS, the Commencement Date (as defined in the Lease) under the Lease is scheduled to occur on the Acquisition Date (as defined in the Lease) and parties desire to amend the Commencement Date.
NOW THEREFORE in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the parties, intending to be 1egally bound, hereby agree as follows:
1. Amendment to Commencement Date . The term “Commencement Date,” as used in the Lease, is hereby amended to mean the later of (i) the Acquisition Date; or (ii) the date that Landlord is able to deliver possession of the Leased Premises to Tenant.
2. Capitalized Terms . Capitalized terms that are used but not defined in this Amendment but that are defined in the Lease have the meaning ascribed to such terms in the Lease.
3. Ratifications . The Lease, as amended by this Amendment, remains in full force and effect and is hereby ratified and confirmed.
4. Successors and Assigns . This Amendment is binding upon and inures to the benefit of the parties hereto and their respective successors and assigns (but the foregoing is not to be construed as consent on the part of Landlord to any assignment by Tenant of the Lease, as amended by this Amendment).
5. Governing Law . This Amendment and all claims and/or causes of action (whether arising in contract, in tort, or by statute) that may be based upon, arise out of, or relate to this Amendment, shall be governed by, and enforced in accordance with, the laws of the State of Maine, without regard or reference to conflicts of law principles.
6. Multiple Counterparts . This Amendment may be executed in multiple counterparts, each of which will constitute an original, and all of which, taken together, will constitute a single instrument.
{Signature Page Follows}
IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to be executed by their duly authorized undersigned representatives as of the day and year first written above.
WITNESS: | LANDLORD: | ||
56 Mechanic Falls Road, LLC | |||
|
By: |
/s/ David J. Noble
|
|
Name: |
David J. Noble
|
||
Title: |
President
|
TENANT: | |||
KBS Builders, INC. | |||
/s/
|
By: |
/s/ Daniel M. Koch |
|
Printed Name: |
Daniel M. Koch |
||
Title: |
President |
SEEN AND AGREED TO : | |||
GUARANTOR: | |||
ATRM Holdings, INC. | |||
/s/
|
By: |
/s/ Daniel M. Koch |
|
Printed Name: |
Daniel M. Koch |
||
Title: |
President & CEO |
Exhibit 16.1
April 25, 2019
U.S. Securities and Exchange Commission
Office of the Chief Accountant
100 F Street, N.E.
Washington, DC 20549
Re: ATRM Holdings, Inc. (File No. 001-36318)
Commissioners:
We are currently principal accountants for ATRM Holdings, Inc. On April 10, 2019, we were notified that ATRM Holdings, Inc. engaged BDO USA, LLP as its principal accountant for the year ending December 31,2018 and that the auditor-client relationship with Boulay PLLP will cease upon completion of the audit of ATRM Holdings’ Inc’s consolidated financial statements as of and for the year ending December 31, 2017. Upon notification on the change in auditor on April 10, 2019, we issued our Exhibit 16 letter to ATRM Holdings, Inc. on that date. We have read ATRM Holdings Inc.’s statements included under Item 4.01 of its Form 8-K which we understand will be filed with the Securities and Exchange Commission, pursuant to Item 4.01 of Form 8-K. We agree with such statements included in item 4.01.
Very truly yours,
Boulay PLLP
Minneapolis, Minnesota
Boulay 7500 Flying Cloud Drive Suite 800 Minneapolis, MN 55344 (t) 952.893.9320 (f) 952.835.7296 BoulayGroup.com
Member of Prime Global, A Global Association of Independent Firms