SUBLEASE AGREEMENT EXHIBIT 10.F
THIS SUBLEASE AGREEMENT entered into this 28 day of August, 1991, by and
between UNITED GROCERS, INC, an Oregon corporation, hereinafter designated as
Sublessor, and HOWARDS ON SCHOLLS, INC. and ▇▇▇▇▇▇ ▇▇▇▇▇, hereinafter jointly
and severally designated as Sublessee;
WITNESSETH
WHEREAS, the Sublessor has entered into a Lease dated August 28, 1991,
with Landlord for a supermarket located at ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Oregon, commencing on the date set forth in the
attached Exhibit "A," a copy of which is hereby incorporated by reference, as
fully as if its terms and conditions were herein set forth.
WHEREAS, Sublessees desire to sublet said premises for a period of 13
years 5 months, commencing on date set forth in Exhibit "▇," "▇" (Modification
of Lease), and "C" (Rental Amounts) and Sublessor is willing to so sublet in
accordance with the terms and conditions hereinafter set forth; now, therefore,
IT IS HEREBY AGREED as follows:
(1) Sublessor hereby sublets unto Sublessees those premises
described in said Exhibit "▇," "▇," and "C."
1.1 The Sublessees, so long as they are not in default hereunder,
shall be granted the right to exercise the renewal options contained in Exhibit
"▇," "▇," and "C," as set forth in said Exhibits, upon the condition that
Sublessees are not in default and provide Sublessor with lease guaranty
insurance for the renewal term as outlined in the Lease Modification Agreement,
Exhibit "B" and further provide that the Sublessees are not in default in any
other agreements with United Grocers, Inc. or any of its subsidiary companies.
(2) Sublessees covenant and agree to pay for the whole of said term
the same rental, together with all affirmative covenants including, without
limitation, those pertaining to basic rent, percentage of gross sales, taxes,
assessments, insurance and all of the covenants and obligations to be performed
by Sublessees, as set forth in said Exhibit "▇," "▇," and "C" and to make such
payments and provide such performance when due by the terms of the lease and
amendments thereto. Notwithstanding the foregoing, Sublessee shall be obligated
to pay the real property taxes due November 15, 1991 and thereafter commencing
December 1, 1991 and each month thereafter, pay to Sublessor an amount which is
equal to 1/12 of the estimated real property taxes as provided in page 4 of 8 of
the "Lease Assignment and Modification Agreement." The provision contained in
the first paragraph of page 5 of 8 of said "Lease Assignment
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and Modification Agreement" is for the sole and exclusive benefit of Sublessor.
(3) Sublessees shall upon execution hereof, pay any and all rental,
or security deposits, as required pursuant to the terms and conditions of said
Exhibits "▇," "▇," and "C."
(4) Sublessees shall be bound by the same responsibilities, rights,
privileges and duties as Sublessor, as enumerated in Exhibits "▇," "▇," and "C,"
which rights are retained by Sublessor, and covenants and agrees to fully
indemnify and hold Sublessor harmless from any and all responsibility and/or
liability which Sublessor may incur by virtue of said Exhibit "A," and/or
Sublessees' occupancy of the premises. Furthermore, Sublessees shall be bound by
any subsequent amendment, revision, supplement or addition to the prime lease
between Sublessor and the prime Lessor with prior written notice to Lessee, and
to keep the Sublessor indemnified against all actions, claims and demands
whatsoever in respect to said Exhibit "A," and Sublessees use of the demised
premises.
4.1 Assignment and Subletting. Sublessees acknowledge that
provisions for extension options and assignment and subletting in the Lease are
applicable to the prime Lessor and Sublessor only. Sublessees will not assign
this Sublease or sublet the premises without the prior written consent of
Sublessor which may be granted or withheld in its absolute discretion. A direct
or indirect transfer of ownership and control of a majority of the voting stock
of a corporate Sublessees, by whatever demands, shall be deemed an assignment of
this Sublease for the purposes of this paragraph.
Notwithstanding the foregoing, if Sublessees desire to transfer by
sale, gift, or as a result of death, its interest herein to its lawful issue,
the Sublessor shall not unreasonably withhold consent to such a transfer,
provided, such transferee agrees that it holds such interest subject to the
restrictions and conditions contained in this sublease agreement
4.2 Covenants, Representations and Warranties.
(a) Membership in United Grocers, Inc. Upon execution and during the
term hereof, Sublessees agree to maintain or cause to be maintained the
membership of the store in good standing in United Grocers, in accordance with
the Bylaws of United Grocers as long as this Sublease remains in effect.
(b) Purchases from Sublessor, Sublessees agree that throughout the
term of the Sublease and any extensions or renewals thereof, except as
hereinafter provided, Sublessees will purchase from Sublessor not less than
fifty-three percent (53%) of its retail sales of all goods and merchandise by it
for resale on the premises to the extent that Sublessor shall now or
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hereafter be able to supply such goods and merchandise to the Sublessees, and
Sublessor will supply all of Sublessees' requirements at such prices and on such
terms as are reasonably comparable to those offered by Sublessor to other
purchasers from Sublessor carrying on businesses similar to that of the
Sublessees in Portland, Oregon. If, at any time, the Sublessees contend that
Sublessor is not able to supply particular goods or merchandise customarily
stocked by retail supermarkets in Portland, Oregon, or that terms offered by
Sublessor are not reasonably comparable to those offered by Sublessor to other
purchasers described above, the Sublessees shall so advise Sublessor in writing,
specifying such contention with particularity. If, within 30 days after receipt
of such notice, Sublessor does not offer to supply goods or merchandise so
specified or does not advise Sublessees that the terms and conditions offered
are reasonably comparable to those offered to such other purchasers, Sublessees
shall be free to secure such specified goods and merchandise from any source
which it desires. If Sublessor demonstrates that it is offering reasonably
comparable terms, and Sublessees nonetheless purchase from another source, such
purchase or purchases shall not be an exception from the 53% requirement
specified above. If the above percentage requirements are not complied with, it
shall constitute a default hereunder. In the event of a breach of this purchase
covenant, Sublessor may terminate this sublease and, in addition to the remedies
hereinafter offered Sublessor, Sublessee agrees to pay Sublessor, as liquidated
damages, and not as a penalty or forfeiture, a sum computed as follows:
1. The average weekly purchases from the date of the agreement to
the date of the breach shall be determined;
2. The average weekly purchases so determined shall then be
multiplied by the number of weeks from the date of the breach to the end
of the term of the purchase agreement; and
3. The computed sum shall be multiplied by one and three-quarters
(1-3/4%) to determine the liquidated damages due and owing Sublessor by
reason of Sublessee's default Said sum shall become immediately due and
owing within 15 days from date of written notice of the liquidated
damages.
(c) Sublessees covenant that as long as this Sublease remains in
effect, and for an additional period of six (6) months thereafter, Sublessees
shall not directly or indirectly sell or permit the sale of the store and the
owners of Sublessees shall not directly or indirectly sell controlling interests
in Sublessees (whether in one or a series of related transactions) without first
offering to sell said store or controlling interest, as the case may be, to
Sublessor upon the same terms and conditions as the Sublessees or their owners,
as the case may be, are prepared to accept from a third party. Prior to such
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sale by the Sublessees or their owners, the Sublessees shall first notify
Sublessor of the desire to sell the store or controlling interest in the
Sublessees and of all the terms and conditions of such sale and shall provide to
Sublessor all documents, instruments, agreements, offers, acceptances,
appraisals, inventories, equipment lists, leases, financial statements and such
other material and information as Sublessor may reasonably request to aid in its
decision to exercise or decline its right to purchase as hereinafter provided.
Within 30 days following receipt of such notice of desire to sell and all
materials and information reasonably requested by Sublessor, Sublessor shall
advise Sublessees whether Sublessor elects to purchase or declines to purchase
the store or such controlling interest upon the offered terms and conditions. If
Sublessor shall elect to purchase, Sublessor shall purchase and the Sublessees
or their owners shall sell, such retail grocery business or such controlling
interest, as the case may be, all on the terms set forth in the offer. If
Sublessor declines the purchase, the Sublessees or their owners shall be free to
sell the store or controlling interest, as the case may be, upon (and only upon)
the terms and conditions offered as aforesaid to Sublessor, provided that such
sale is consummated within 120 days following the date Sublessor declined the
purchase, and if such sale is not consummated in accordance with the offered
terms and conditions within said 120-day period, the provisions of this
paragraph shall apply again and no subsequent sale of any portion of the offered
store or controlling interest may be effected without again offering the same to
Sublessor as provided herein. Sublessor may waive its rights under this section
provided such waiver is in writing. The foregoing provisions shall not apply to
transfers of assets or interests by sale, gift or as a result of death to the
lawful issue of Sublessees, or transfers of assets to a corporation or
partnership or transfers of a controlling interest to a trust as long as such
corporation, partnership or trust is controlled by the transferor; provided such
transferee agrees that it holds such assets or controlling interest subject to
the restrictions contained in this paragraph.
(d) Sublessees represent and warrant that there are no brokers,
finders or other persons entitled to any fee, commission or other compensation
in connection with this Sublease, and agree to hold Sublessor harmless from any
claims for such fees, commissions and/or compensation.
(e) Sublessees hereby represent and warrant to Sublessor that the
financial statements, appraisals and other documents submitted to Sublessor in
connection herewith or pursuant hereto are and shall be true, correct, complete
and accurate in every respect and said financial statements fairly and
accurately present the assets, liabilities, financial condition and results of
operations reflected herein.
(5) Security Agreement.
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5.1 Grant, Collateral and Obligations. Sublessees and Sublessor
agree that this Sublease shall constitute a security agreement within the
meaning of the Oregon Uniform Commercial Code (hereinafter referred to as the
"Code") with respect to:
(a) required cash deposits (as defined in the Bylaws
of Sublessor) presently or hereafter held by or deposited with
Sublessor by Sublessees;
(b) any and all patronage rebates and rebate notes representing
patronage rebates (as defined in the Bylaws of Sublessor) earned or hereafter
earned by reason of patronage of Sublessor by Sublessees;
(c) subject to liens securing purchase money financing and personal
property leases therefor as described in Exhibit "X," all trade, store and other
fixtures and all leasehold improvements and all equipment and other personal
property of Sublessees used or useful in the operation of the store in or on the
premises whether now owned or hereafter acquired including, without limitation,
the property described in Exhibit "Y," attached hereto, if any, and
(d) all replacements of substitutions for, and additions to the
foregoing, and the proceeds thereof (all of said personal property and the
replacements, substitutions and additions thereto and the proceeds thereof being
sometimes hereinafter collectively referred to as the "Collateral"), and that a
security interest in and to the Collateral is hereby granted to the Sublessor,
and the Collateral and all of the Sublessees' right, title and interest therein
are hereby assigned to the Sublessor, all to secure all presently existing or
hereafter incurred direct, indirect, absolute or contingent indebtedness,
liabilities and other obligations of Sublessees to Sublessor (referred to as
"the Obligations" herein) including, but not limited to, the payment of all rent
and other sums and the performance of all other obligations of Sublessees under
this Sublease, all renewals and extensions thereof, the price of goods, services
and merchandise purchased by Sublessees from Sublessor from time to time and all
costs of collection, legal expenses and attorneys' fees paid or incurred by
Sublessor in enforcing any rights in respect to the Obligations or in connection
with assembling, collecting, selling or otherwise dealing with or realizing upon
the Collateral. Notwithstanding the foregoing, the reference to Sublessors shall
also refer to Sublessor's lending subsidiary, United Resources, Inc., as secured
party.
5.2 Security Agreement Warranties. In addition to and without
limiting the force or effect of any other covenants, representations and
warranties of Sublessees contained in this Sublease, Sublessees hereby covenant,
represent and warrant to and with Sublessor as follows:
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(a) Sublessees are the owners of the Collateral free and clear of
liens, security interests and encumbrances of every kind and description, except
liens, security interests and encumbrances securing indebtedness to Sublessor
and those described in Exhibit X.
(b) Sublessees will not sell, dispose of, encumber or permit any
other security interest, lien or encumbrance to attach to the Collateral without
the prior written consent of United Grocers, Inc., which consent shall not be
unreasonably withheld except the security interest of Sublessor and the
Permitted Liens.
(c) All tangible Collateral shall be kept at Sublessees' place(s) of
business located on the premises, and Sublessees shall not permit the same to be
removed therefrom without the prior written consent of Sublessor.
(d) Sublessees shall keep the tangible Collateral at all times
insured against risks of loss or damage by fire (including so-called extended
coverage), theft and such other casualties as Sublessor may reasonably require,
all in such amounts, under such forms of policies, upon such terms, for such
periods and written by such companies or underwriters as Sublessor may approve.
All such policies of insurance shall name Sublessor and/or its subsidiary as
loss payee thereon as its interest may appear and shall provide for at least 30
days' prior written notice of modification or cancellation to Sublessor.
Sublessees shall furnish Sublessor with certificates of such insurance or other
evidence satisfactory to Sublessor as to compliance with the provisions of this
paragraph. Sublessor may act as attorney-in-fact for Sublessees in making,
adjusting and settling claims under and canceling such insurance and endorsing
Sublessees' name on any drafts drawn by insurers of the Collateral.
(e) Sublessees will keep the Collateral in good order and repair,
shall not waste or destroy the Collateral or any part thereof, and shall not use
the Collateral in violation of any statute, ordinance or policy of insurance
thereon. Sublessor may examine and inspect the Collateral at any reasonable time
or times, wherever located.
(f) Sublessees will pay promptly when due all taxes and assessments
upon the Collateral or for its use or operation or upon this Sublease or upon
any instruments evidencing the Obligations.
(g) Sublessees will pay promptly when due all indebtedness secured
by any lien or other security interest in the Collateral whether superior or
junior to the security interest established hereby.
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5.3 Additional Remedies. Upon any default hereunder and at any time
thereafter (such default not having previously been cured), Sublessor at its
option may declare all Obligations immediately due and payable and shall have
the remedies of a secured party under the Uniform Commercial Code of Oregon (the
"Code"), including without limitation the right to take immediate and exclusive
possession of the Collateral.
5.4 Financing Statements. Sublessees will at their own cost and
expense, upon demand, furnish to Sublessor such financing statements and other
documents in form satisfactory to Sublessor and will do all such acts and things
as Sublessor may at any time or from time to time request or as may be necessary
or appropriate to establish and maintain a perfected security interest in the
Collateral.
5.5 Attorneys' Fees. In the event of the institution of any suit or
action to terminate this Sublease, or to enforce the terms or provisions hereto,
the nonprevailing party shall and does hereby agree to pay, in addition to the
costs and disbursements provided by statute, reasonable attorneys' fees in such
proceedings or on any appeal from any judgment or decree entered therein.
(6) Default. The following shall constitute a default under this
Sublease:
6.1 Any failure by Sublessees to pay, when due, rent or any other
amount due under the Lease or to perform in any other obligation of Sublessor
under the Lease or any other default under the Lease which continues for up to
one-half of the cure period as defined in the lease, provided with respect
thereto in the Lease;
6.2 Any failure by Sublessees to pay when due rent or any other
amount due under the Sublease or to perform when due any other obligation of
Sublessees hereunder;
6.3 If any warranty, representation or statement made or furnished
to Sublessor by or on behalf of the Sublessees is false in any material respect
when made or furnished;
6.4 Any failure by Sublessees to pay when due and/or satisfy any
other present or hereinafter incurred indebtedness or obligation of Sublessees
to Sublessor within five (5) days after written notice, including but not
limited to those arising from Sublessees' purchases of goods and services from
Sublessor any other loans or leases Sublessees may have or enter into with
Sublessor, and Sublessees obligations under the Bylaws of Sublessor and its
application for membership in Sublessor;
6.5 If Sublessees vacate or abandon the premises or allow the
premises to remain vacant or unoccupied;
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6.6 If Sublessees make an assignment for the benefit of creditors,
or if, with or without Sublessees' acquiescence, a petition in bankruptcy is
filed against Sublessees, or Sublessees are adjudicated a bankrupt or insolvent,
or a trustee, receiver or liquidator is appointed for all or part of Sublessees'
assets, or a petition or answer is filed by or against Sublessees selling or
acquiescing in any reorganization, liquidation or similar relief under any
federal, state or local law relating to bankruptcy, insolvency or other relief
for debtors; and
6.7 If Sublessees sell or otherwise dispose of all or any material
(in excess of $5,000.00) portion of the assets of Sublessees located at or
associated with the store, other than inventory sold at retail in the ordinary
course of business.
(7) Remedies. In the event of any default under this Sublease:
7.1 Sublessor shall have the right, at its election then or at any
time thereafter, upon notice to Sublessees, to terminate this Sublease or to
terminate Sublessees' rights of possession in the premises without terminating
this Sublease;
7.2 Sublessor shall have the immediate right, whether or not the
Sublease shall have been terminated pursuant to paragraph 7.1, to re-enter and
repossess the premises or any part thereof by force, summary proceedings,
ejectment or any other legal or equitable process, all without any liability on
Sublessor's part for such entry, repossession or removal;
7.3 Sublessor may (but shall be under no obligation to), whether or
not this Sublease shall have been terminated pursuant to paragraph 7.1, resublet
the premises, or any part thereof, in the name of Sublessees, Sublessor or
otherwise, without notice to Sublessees for such term or terms and for such uses
as Sublessor, in its absolute discretion, may determine and may collect and
receive rents payable by reason of such resubletting (without any liability for
any failure to collect such rents);
7.4 Sublessor may (but shall be under no obligation to) procure any
insurance, pay any rentals, taxes or liens, make any repairs pay any sums
required to be paid, and to do and perform such other acts as may be required of
Sublessees hereunder, and any payments so made shall bear interest at the rate
of 3 percentage points over the then existing prime rate per annum from the time
of such payment until repaid; and
7.5 Sublessor may exercise any and all other rights and remedies
afforded to the prime Lessor upon default under the Lease and any and all other
rights and remedies Sublessor may have as provided herein, pursuant to the laws
of the state of Oregon. In addition to the other remedies provided above,
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Sublessor shall be entitled to current damages and final damages as provided in
paragraph (8) below, and, to the extent permitted by applicable law, to
injunctive relief in case of the violation, or attempted or threatened
violation, of any of the provisions of this Sublease, or to a decree compelling
performance of this Sublease.
7.6 No expiration or termination of this Sublease, repossession of
the premises or any part thereof, or resubletting of the premises or any part
thereof, whether pursuant to the above paragraph or by operation of law or
otherwise, shall relieve Sublessee of their liabilities and obligations under
this Sublease, all of which shall survive such expiration, termination,
repossession or resubletting.
(8) Damages.
8.1 Current Damages. In the event of any expiration or termination
of this Sublease or repossession of the premises or any part thereof by reason
of the occurrence of an event of default, Sublessees will pay to Sublessor the
rent and other sums required to be paid by Sublessees for the period to and
including the date of such expiration, termination or repossession; and,
thereafter, until the end of what would have been the term in the absence of
such expiration, termination or repossession, and whether or not the premises or
any part thereof shall have been resublet, Sublessees shall be liable to
Sublessor for, and shall pay to Sublessor, as liquidated and agreed current
damages the rent and other sums which would be payable under this Sublease by
Sublessees in the absence of such expiration, termination or repossession, less
the net proceeds, if any, of any resubletting effected for the account of
Sublessees, after deducting from such proceeds all of Sublessor's expenses
reasonably incurred in connection with such resubletting (including, without
limitation, all repossession costs, brokerage commissions, legal expenses,
attorney's fees, employee expenses, alteration costs and expenses of preparation
for such resubletting). Sublessees will pay such current damages on the days on
which rent would have been payable under this Sublease in the absence of such
expiration, termination or repossession, and Sublessor shall be entitled to
recover the same from Sublessees on each such day.
8.2 At any time after any such expiration or termination of this
Sublease or repossession of the premises or any part thereof by reason of the
occurrence of an event of default, whether or not Sublessor shall have collected
any current damages pursuant to paragraph 8.1, Sublessor shall be entitled to
recover from Sublessees, and Sublessees will pay to Sublessor on demand, as and
for liquidated and agreed final damages for Sublessees' default and in lieu of
all current damages beyond the date of such demand (it being agreed that it
would be impracticable or extremely difficult to fix the actual damages), an
amount equal to the excess, if any, of (a) the rent
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and other sums which would be payable under this Sublease from the date of such
demand (or, if it be earlier, the date to which Sublessees shall have satisfied
in full their obligations under paragraph 8.1 to pay current damages) for what
would be the then unexpired term in the absence of such expiration, termination
or repossession, discounted to present value at an assumed interest rate of
seven percent (7%) per annum, over (b) the then net rental value of the premises
discounted to present value at an assumed interest rate of seven percent (7%)
per annum for the same period. Rental value shall be established by reference to
the terms and conditions upon which Sublessor resublets the premises if such
resubletting is accomplished within a reasonable period of time after such
expiration, termination or repossession, and otherwise established on the basis
of Sublessor's estimates and assumptions of fact regarding market and other
relevant circumstances, which shall govern unless shown to be erroneous. If any
statute or rule of law shall validly limit the amount of such liquidated final
damages to less than the amount above agreed upon, Sublessor shall be entitled
to the maximum amount allowable under such statute or rule of law.
(9) Rights Cumulative, Nonwaiver. No right or remedy herein
conferred upon or reserved to Sublessor is intended to be exclusive of any other
right or remedy, and each and every right and remedy shall be cumulative and in
addition to any other right or remedy given hereunder or now or hereafter
existing at law or in equity or by statute. The failure of Sublessor to insist
at any time upon the strict performance of any covenant or agreement or to
exercise any option, right, power or remedy contained in this Sublease shall not
be construed as a waiver or relinquishment thereof for the future. No waiver by
Sublessor of any provision of this Sublease shall be deemed to have been made
whether due in the receipt of rent or otherwise, unless expressed in writing or
signed by Sublessor.
(10) Notices. Any notice or demand required or permitted to be given
under this Sublease shall be deemed to have been properly given when, and only
when, the same is in writing and has been deposited in the United States Mail,
with postage prepaid, to be forwarded by registered or certified mail and
addressed to the party to be notified at the address appearing below its
signature. Such addresses may be changed from time to time by serving of notice
as above provided.
IN WITNESS WHEREOF, the parties have executed the foregoing Sublease
Agreement the day and year first above written.
SUBLESSOR United Grocers, Inc., an Oregon corporation
By /s/ ▇. ▇. ▇▇▇▇▇▇▇, Assistant Secretary
▇. ▇. ▇▇▇▇▇▇▇, Assistant Secretary
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▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇
P. O. Box 22187
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
SUBLESSEES HOWARDS ON SCHOLLS, INC., an Oregon corporation
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary
INDIVIDUALLY:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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