EXHIBIT 10(c)
This ADDENDUM TO LEASE made and entered into this 5th day of March, 1998,
BY AND BETWEEN:
CENTRAL TOY MANUFACTURING INC., a body politic and corporate, duly
incorporated under the laws of the Province of Quebec, having its head
office and principal place of business at 2350 de la Province, in the City
of Xxxxxxxxx, Xxxxxx, Xxxxxx, herein represented by Xxxxx Xxxxxx, its Vice
President, duly authorized as he so declares.
(hereinafter the "Lessor")
AND:
HASBRO CANADA INC., a body politic and corporate, duly incorporated under
the laws of Canada, having its head office and principal place of business
at 2350 de la Province, in the City of Xxxxxxxxx, Xxxxxx, Xxxxxx, herein
represented by Xxxxxx X. Xxxxxx, its Executive Vice President, duly
authorized as he so declares.
(hereinafter the "Lessee")
WHEREAS the Lessee (then known as Hasbro Industries (Canada) Ltd.) and the
Lessor have entered into an indenture and agreement of lease on December
23, 1976, as amended on October 30, 1977 and as renewed in accordance with
the terms thereof (the "1976 Lease"), with respect to a certain building
comprising an area of ONE HUNDRED AND TWENTY-FOUR THOUSAND EIGHT HUNDRED
square feet (124,800 sq. ft.), consisting of an office area of THREE
THOUSAND EIGHT HUNDRED AND FORTY square feet (3,840 sq. ft.) and a
manufacturing area OF ONE HUNDRED AND TWENTY THOUSAND NINE HUNDRED AND
SIXTY square feet (120,960 sq. ft.), and the parcel of land on which the
said building is located, more specifically, that certain lot of land
situated at 0000 xxx xx xx Xxxxxxxx, in the City of Longueuil, District of
Montreal, Province of Quebec (the "124800 Building");
WHEREAS the Lessor and the Lessee have entered into an indenture and
agreement of lease on May 1, 1987 (the "1987 Lease"), with respect to a
certain building comprising an area of EIGHTY-EIGHT THOUSAND AND FIFTY-FOUR
square feet (88,054 sq. ft.), located at 2350 de la Province, in the City
of Longueuil, District of Montreal, Province of Quebec (the "88054
Building");
WHEREAS the Lessor and the Lessee have entered into an addendum to the 1987
lease on May 1, 1987 (the "1987 Addendum") with respect to the rental of
certain undeveloped land adjacent and contiguous to the 88054 Building,
said land being comprised of two sections, the first section totaling ONE
HUNDRED AND EIGHTY-ONE THOUSAND ONE HUNDRED FORTY-THREE AND SEVENTY-FIVE
ONE HUNDREDTHS square feet (181,143.75 sq. ft.), and the second section
totaling THIRTY THOUSAND SEVEN HUNDRED THIRTY-SEVEN AND SIXTY-EIGHT ONE
HUNDREDTHS square feet (30,737.68 sq. ft.), aggregating in the amount of
TWO HUNDRED ELEVEN THOUSAND EIGHT HUNDRED EIGHTY-ONE AND FORTY-THREE ONE
HUNDREDTHS square feet (211,881.43 sq.ft.) (the "Land") (the 124800
Building, the 88054 Building and the Land being hereinafter collectively
referred to as the "Leased Premises");
WHEREAS as of February 1, 1998, the Lessor's indebtedness secured by
hypothecs encumbering the Leased Premises was as follows:
Creditor Loan Number Amount Outstanding
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Manufacturers Life Insurance Co. 733086 $1,710,111.45
Standard Life Assurance Co. 12543 10,761.13
WHEREAS on or before April 1, 1998, Lessor will completely repay Loan #
12543;
WHEREAS on or before April 1, 1998, the amount outstanding under Loan #
733086 as hereinabove mentioned shall be repaid in part with all then
available cash of Lessor, which was estimated to be approximately $115,000
as of February 1, 1998, net of i) all costs, fees and expenses incurred by
the Lessor in relation to entering into a new loan with another third party
creditor, the whole in accordance with Section 6 hereof and ii) the amount
of the pay-out of Loan # 12543, and all associated costs, fees and
expenses, including those incurred with respect of the discharge and
release of all accessory hypothecs;
WHEREAS the Lessor and the Lessee wish to agree on financing of the Leased
Premises, as defined hereunder, from the date hereof up and until January
31, 2003;
AND WHEREAS the Lessor and the Lessee wish to amend and extend the 1976
Lease and the 1987 Lease, as amended by the 1987 Addendum (collectively,
the "Leases"), upon such terms and conditions as set forth below in this
Addendum to Lease.
NOW, THEREFORE, THE ADDENDUM WITNESSETH AS FOLLOWS:
1. Preamble. The preamble hereinabove shall be deemed an integral part
of this Addendum as if recited herein at length.
2. Term. The term of the 1976 Lease is hereby extended for a period of
three (3) years and one (1) month commencing as of January 1, 1998
and ending on January 31, 2001, under the same terms and conditions
as set forth therein, save and except as provided for in this
Addendum. The term of the 1987 Lease is hereby extended for a period
of three (3) years and nine months commencing as of May 1, 1997 and
ending on January 31, 2001, under the same terms and conditions as
set forth therein, save and except as provided for in this Addendum.
3. Rent. Rent payable under the 1976 Lease shall continue to be
$213,408 year. Rent payable under the 1987 Lease shall continue to be
$323,598.48 per year. Rent payable under the 1987 Addendum shall
continue to be $42,376.29 per year.
4. Option to Extend. The Lessee shall have the right to further extend
the term hereinbefore stated of the Leases for the following three (3)
consecutive three-year terms: (i) February 1, 2001 to January 31,
2004, (ii) February 1, 2004 to January 31, 2007, and (iii) February
1, 2007 to January 31, 2010, all of which, up and until January 31,
2010, upon the same terms and conditions as those found in the
relevant Leases, mutatis mutandis, save for rent, which shall be at
fair market rental, determined in accordance with this Section 4.
(a) In order to exercise any said extension option, the Lessee shall
give written notice to the Lessor at least six (6) months prior
to the expiry of the then current term, of its intention to
extend the term for a further three (3) years. The date of the
giving of such notice shall be hereinafter referred to as the
"Exercise Date".
(b) Following the Exercise Date, Lessor and Lessee shall in good
faith attempt to agree on the fair market rental. If Lessee and
Lessor are unable to agree upon such fair market rental, then
within fifteen (15) days of the Exercise Date, Lessee and Lessor
shall jointly appoint a real estate appraisal firm based in
Montreal with at least five (5) years experience in appraising
commercial real estate (an "Appraiser") to determine such fair
market rental. Lessee and the Lessor agree that the Appraiser
in making its appraisal of the fair market rental shall take
into account the terms of the Leases, including the triple net
nature thereof, the condition of the Leased Premises, the rent
payable for premises similar to the Leased Premises having regard
to the nature, location and usage of the Leased Premises and all
other appropriate factors. The fair market rental shall be
determined by such Appraiser within ninety (90) days of the
Exercise Date.
(c) If Lessor and Lessee cannot jointly agree on an Appraiser, then
within twenty (20) days of the Exercise Date, each shall appoint
an Appraiser. Both appraisals shall be completed and delivered
simultaneously to Lessor and Lessee on the fiftieth (50th) day
following the Exercise Date. If the higher appraisal is less
than 5% greater than the lower appraisal, then the fair market
rental shall be the average of both appraisals. If the higher
appraisal is more than 5% greater than the lower appraisal, then
within sixty-five (65) days following the Exercise Date, the
Appraisers shall jointly select another Appraiser to make an
additional appraisal of the fair market rental, which shall be
completed and delivered to Lessor and Lessee within ninety (90)
days following the Exercise Date. In this last case, fair market
rental shall be the average of the two closest appraisals.
(d) Each party shall bear the cost of the Appraiser selected solely
by such party. All costs of any Appraisers jointly selected by
Lessor and Lessee shall be borne equally by Lessor and Lessee.
The fair market rental determined by (i) the sole jointly elected
Appraiser in accordance with Section 4(b) or (ii) by averaging
certain appraisals pursuant to Section 4(c) shall be final and
binding on Lessor and Lessee with respect to the three year
renewal term in question.
5. Sale of the Property. For the duration of the term or any extension
thereof, the Lessor shall be entitled to sell the land and the
buildings which together make up the Leased Premises only as a whole
and not separately, subject to the following:
(a) Right of First Refusal.
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If Lessor receives a genuine bona fide written offer (the "Third
Party Offer") from an unrelated bona fide third party (the
"Third Party") for the whole of the Leased Premises price, and
the Third Party Offer is acceptable to the Lessor, then the
Lessor shall first offer to sell (the "Offer") the Leased
Premises to the Lessee on the same terms and conditions as those
contained in the Third Party Offer. The Offer shall be sent to
the Lessee and shall be open for acceptance for ten (10) business
days (the "Offer Period") from the date of receipt of the Third
Party Offer by the Lessee. If the Lessee fails to accept the
Offer within the Offer Period, then the Lessor shall be free for
a period of sixty (60) days from the end of the Offer Period to
sell all (but not less than all) of the Leased Premises to the
Third Party on the same terms and conditions provided in the
Third Party Offer, it being understood, however, that, should the
ultimately negotiated sale price be lower than the one submitted
in the Offer (other than as a result of normal closing
adjustments), the Lessee shall be notified of such occurrence by
the Lessor at least five (5) business days before entering in the
deed of sale, and should the Lessee so notify the Lessor within
such period, the Lessor shall not sell the Leased Premises
without again following and being subject to the provisions of
this Section 5 by presenting a new Offer, taking into account the
said ultimately negotiated price. If no sale to the Third Party
takes place within the applicable sixty (60) day period, then the
Lessor shall not sell the Leased Premises without again following
and being subject to the provisions of this Section 5.
(b) Lapse of First Refusal Right.
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Should the Lessee fail to give written notice to the Lessor of
its intention to extend the term for a further three (3) years in
accordance with the provisions of Section 4 hereof, the above-
mentioned right of first refusal shall lapse concurrently with
the said option to extend. Notwithstanding the foregoing, should
the procedure under the first refusal right hereunder have been
initiated prior to any such right lapsing or prior to the
termination of the Leases, the terms of subsection 5 a) shall
remain in full force and effect until said procedure has been
completed.
(c) Breach of First Refusal Right by Lessee.
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If the Lessee accepts the Offer during the Offer Period, but does
not complete the purchase transaction within 60 days from the
date when all of the conditions (other than conditions totally
within the control of Lessee) to the Third Party Offer are
satisfied as a result of a breach of Lessee's obligations under
the Third Party Offer as accepted by Lessee, the Lessor shall be
entitled to seek specific performance of the Lessee's obligations
under the Offer as accepted by Lessee and the Lessee shall be
liable to the Lessor for all losses, damages, and expenses
(including broker and legal fees) suffered or incurred by the
Lessor as a result of the Lessee's breach.
6. Financing of the Leased Premises. Lessee has obtained a binding
financing commitment from a third party creditor for anew loan on
commercially reasonable market terms, including market interest rate,
secured by a first-ranking hypothec on the Leased Premises, for a term
not exceeding five years and in an amount not greater than the then
outstanding balance of Loan # 733086 after reduction of the balance of
said loan by Lessor with all available cash as above provided. The
Lessor shall consent to enter into such deeds of loan and hypothecs
that shall be contemplated by said financing commitment in accordance
with the above. The Lessor shall be solely responsible to pay all
costs, fees and expenses customarily borne by a borrower in commercial
mortgage transactions. Lessee represents that it has not incurred
any costs, and Lessor shall not be responsible to pay Lessee for its
efforts, in arranging such new loan on behalf of Lessor.
Upon request by Lessor's third party creditor, Lessee shall
subordinate the Leases to such third party creditor's security;
provided, that, upon request by Lessee, such third party creditor
shall deliver to Lessee non-disturbance agreements such that if the
third party creditor becomes the owner and/or administrator of the
Leased Premises the Leases shall be respected so long as Lessee is not
in default (with the benefit of any grace or cure periods) pursuant to
the provisions of the Leases.
In the event that (a) the closing of the financing contemplated by the
binding financing commitment received by the Lessor pursuant to this
Section does not occur by April 1, 1998 because of a default by the
third party creditor or by Lessee, then upon demand of payment issued
to the Lessor by the creditor under the terms of Loan #733086 or (b)
such new loan shall terminate prior to January 31, 2003 (and shall
not have been renewed to at least January 31, 0000), Xxxxxx shall be
responsible to advance, on behalf of the shareholders of the Lessor
other than the Estate of Xxxxxxx Xxxxxxxxxx, which is a 25%
shareholder of Lessor, sufficient funds to the Lessor to provide for
the repayment of 75% of the then outstanding loan and, if the Leases
shall have terminated, the payment of 75% of all expenses incurred for
the operation and maintenance of the Leased Premises, including taxes,
but excluding any depreciation and/or amortization. It is understood
that the funds for the repayment of the remaining 25% of said then
outstanding loan and the payment of the remaining 25% of said expenses
shall be advanced to the Lessor by the Estate of Xxxxxxx Xxxxxxxxxx.
Lessee's obligation to advance sufficient funds to Lessor in
accordance with the above shall never extend further than five years
from February 1, 1998, and any and all funds so advanced by Lessee
shall be reimbursed to Lessee by Lessor on or before January 31, 2003,
which reimbursement shall be secured by a first ranking hypothec on
the Leased Premises in favour of Lessee, the whole on terms similar to
those found in the hypothec that shall then encumber the property
mutatis mutandis.
No shareholder on behalf of which the Lessee shall advance funds to
the Lessor in accordance with the above shall be liable personally for
reimbursements of funds so advanced by Lessee to the Lessor, Lessee's
sole security in respect thereto being the above-mentioned hypothec
granted to the Lessee.
Notwithstanding the fact that financing of the Leased Premises after
expiry of the term of Loan # 733086 be effected through renewal of the
existing loan, new third party loan or Lessee's advances, Lessor, in
all cases, shall bind and oblige itself to commit all funds received
as income from the Leased Premises, net of any expenses incurred by
the Lessor for the purpose of operation and maintenance of the Leased
Premises, including taxes but excluding any depreciation and/or
amortization, to repay said loan or Lessee's advances in respect
thereof, as the case may be.
If, by August 1, 2000, Lessee shall fail to give Lessor notice of
exercise of its option to extend the Lease pursuant to Section 4 of
this Addendum, Lessor shall promptly proceed to attempt to sell or
lease the Leased Premises to a third party. If Lessor shall enter
into a lease with a third party, Lessor shall promptly either renew or
extend the then existing loan or obtain a new loan with a third party
creditor. The proceeds of any sale or other alienation of, or any
loan obtained with respect to, the Leased Premises shall be applied
first to pay any and all outstanding advances made by Lessee to
Lessor. In addition, upon the closing of such sale or other
alienation or such new, renewed or extended loan, all of Lessee's
obligations to make advances hereunder shall terminate.
7. Counterparts. This agreement may be executed in any number of
counterparts, each of which once executed shall be deemed to be an
original, but all of which together shall constitute one and the same
agreement.
8. Notices. Any notice or communication required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or
by registered mail to the offices of the other party at the address
hereinbefore mentioned or at any other address within the Province of
Quebec that either party may so notify to the other party hereto.
9. Governing Law. This agreement shall be governed by and interpreted
and construed in accordance with the laws in force of the Province of
Quebec and the laws of Canada applicable therein. All references to
dollars in this agreement are references to Canadian dollars.
10. Language. The parties have specifically requested that the present
agreement be written in the English language. Les parties aux
presentes ont exige que la presente soit ecrite en langue anglaise.
IN WITNESS WHEREOF, the parties hereto have executed this Addendum on the
date and at the place first hereinabove written.
CENTRAL TOY MANUFACTURING INC.
Per: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Vice President
HASBRO CANADA INC.
Per: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Executive Vice President
