Exhibit 10.36
C O M M E R C I A L L E
A S E A G R E E M E N T
(Triple Net)
THIS LEASE, made this
day of
,
2003, by and between WESTLAND PARK LLC , an Indiana limited
liability company, of 3112 East SR 124, Bluffton, Indiana 46714
(hereinafter “Landlord”), and POORE BROTHERS,
INC. , a
corporation, with principal offices located at 3500 S. La Cometa
Drive, Goodyear, AZ 85338 (hereinafter
“Tenant”).
The parties hereto, in consideration
of the leasing by Landlord to Tenant and the taking by Tenant from
Landlord of the premises hereinafter described and in further
consideration of the obligations of each party to the other hereby
undertaken, covenant and agree as follows:
1.
Leased Premises/Use
. Landlord
leases to Tenant, and Tenant leases from Landlord, 100,000
square-feet (subject to remeasure upon completion from inside wall
to inside wall) of warehouse and distribution space (“Demised
Premises”) located at the northeast corner of the
intersection of SR 124 and West Lancaster Street, commonly
known as 1955 West Lancaster Street, Suite 1, Bluffton, Indiana
46714, and more particularly described on the attached Exhibit
“A” . Landlord shall construct approximately 3,310
sq. ft. of office space as part of the Demised Premises in
accordance with Exhibit “A” and subject to
Tenant’s reasonable approval of same. Any additional
office space required by Tenant shall be constructed by Landlord at
Tenant’s expense. It is understood that the Demised
Premises are to be a part of a larger 200,000 square feet building
(“Building”), such building to be one of two or more
buildings to be constructed by Landlord. The total buildings
constructed on the premises will form the “Project”
. It is understood that the Tenant will share certain common
area elements with future tenants of the Project. These elements
include, but are not limited to, the parking area and drives for
ingress and egress. Tenant shall have the non-exclusive right
to all existing and future easements, parking areas and facilities,
and all appurtenances and fixtures belonging to or appurtenant to
the Building or Project. Tenant’s use of the Demised
Premises, the Building or the Project is limited to the operation
of a warehouse/distribution center, with office administrative use
to support such aforementioned operation. No other use shall
be permitted without the prior written consent of the Landlord,
which consent shall not be unreasonably withheld. The
withholding of consent by Landlord for a use which is inconsistent
with the industrial character of the Project shall be deemed
reasonable.
As Landlord constructs additional
warehouses in the warehouse complex and obtains additional tenants,
Tenant’s pro-rata share of Common Area Maintenance (
paragraph 5 ) will be adjusted by an addendum to this Lease
to reflect the percentage of the square footage of the Demised
Premises as compared to the total square feet in the
Project.
2.
Term; Renewal
. The
initial term of this Lease shall commence December 1, 2003,
the “Lease Commencement Date”, and shall continue for a
period of three (3) years, or as extended pursuant to paragraph
26 of this Lease. If the Demised Premises are not
substantially completed in accordance with Exhibit
“A” by December 1, 2003, the Lease
Commencement Date shall be changed to the first date following
December 1, 2003, that the Demised Premises have been
substantially completed in accordance with Exhibit
“A” . A lease year shall be twelve calendar
months, beginning with the Lease Commencement Date. Landlord
or Tenant shall
submit to the other a letter confirming the
Lease Commencement Date at such time as the date becomes final so
that Tenant may establish its account for the payment of Rent
(hereinafter defined) as required in paragraph 4.
3.
Peaceful Possession
. Landlord
covenants that Tenant, upon paying the rental and performing its
covenants herein contained, shall and may peacefully and quietly
have, hold, and enjoy the Demised Premises for the term of this
Lease. Tenant shall have access to the Demised Premises
during Landlord’s construction of the Building prior to the
Lease Commencement Date for the sole purpose of Tenant’s
installation of wiring and cabling for Tenant’s use of the
Demised Premises. During the twenty (20) days prior to the
Lease Commencement Date, Tenant shall have access to the Demised
Premises for the sole purpose of Tenant’s installation of
floor striping as needed by Tenant for Tenant’s use of the
Demised Premises. During any period of possession of the
Demised Premises prior to the Lease Commencement Date, Tenant shall
have in force the liability insurance required in paragraph
8 of this Lease and agrees to indemnify Landlord from such use
of the Demised Premises in accordance with paragraph 15 of
this Lease.
4.
Rental . Tenant, in
consideration of the Demised Premises and of the covenants and
obligations of the Landlord contained in this Lease, shall pay
rental for the Demised Premises (subject to the remeasure of the
completed Demised Premises) during the initial term of this Lease
as follows (“Rent”):
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Lease Term
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Annual
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Monthly
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$/Sq. Ft.
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Years 1, 2 & 3
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$
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358,100.00
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$
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29,841.67
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$
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3.581
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Beginning on the Lease Commencement Date, and on
the first day of each month thereafter, Tenant shall pay Rent in
monthly installments as indicated in the above table. Each
monthly payment shall be due and payable in advance on the first
day of each month during the term of this Lease. Any Rent due
for partial months at the commencement or termination of this
Lease, or the beginning or end of any term hereof, shall be
appropriately prorated. The total annual rent shall not be
adjusted, up or down, by the remeasure of the completed Demised
Premises unless such remeasure indicates a variance from 100,000
sq. ft. of more than 1,000 sq. ft.
Tenant shall deliver the monthly
installments of Rent to Landlord by check, money order, at 3112
East SR 124, Bluffton, Indiana 46714, or electronic fund transfer
as directed by Landlord.
5.
Common Area Maintenance
(CAM) . Landlord shall
operate and maintain the common areas and common facilities of the
Project at its sole expense, it being acknowledged by the parties
that Tenant’s pro rata share of the common area maintenance
charges are to be reimbursed by Tenant as additional rent.
Common area maintenance (“CAM”) charges shall be the
actual amount (without profit or “mark up” by Landlord
or any affiliate of Landlord) of all necessary, competitive and
reasonable costs and expenses actually incurred by Landlord in
operating and maintaining the common areas of the Project in an
appropriate manner commensurate with good business practice;
including, but not limited to the following items:
The costs of maintenance and repair
of:
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(a)
driveways,
sidewalks, parking areas and any other paved areas (including
patching, sealing, and line painting);
(b)
building
maintenance including repair to roofs, gutters, downspouts,
canopies, storefronts, electrical and plumbing system, and exterior
painting and sealing;
(c)
water and septic
system repairs and maintenance;
(d)
landscaping
(including replacement of plant materials);
(e)
parking
lot;
(f)
Project
signage;
(g)
pest and weed
control;
(h)
security, if
provided;
(i)
fire protection
(sprinkler system), if provided;
(j)
utilities for the
common areas and the water and septic systems;
(k)
snow
removal;
(l)
trash, garbage,
and refuse removal, if provided;
(m)
powerwashing;
(n)
window cleaning;
and
(o)
surface water
drainage and detention areas.
Notwithstanding anything to the contrary herein,
the following items and costs shall be excluded from Tenant’s
pro-rata share of CAM:
(a)
Costs
attributable to improvements or work which were part of original
plans and specifications for which building permits were issued,
i.e., planting, parking lot lighting, striping, roads, and other
such items of capital improvement.
(b)
Leasing costs of
any type, be it procuring tenants or re-leasing; as well as
retaining existing tenants.
(c)
Costs incurred
due to Landlord violations of any of the terms and conditions of
any leases with any tenant(s) in the Project.
(d)
Costs
attributable to enforcing leases against any tenants in the
Project, such as attorney’s fees, court costs, adverse
judgments and similar expenses.
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(e)
Depreciation and
amortization of debt, but excluding depreciation and amortization
of capital improvements. If the costs of any repairs,
alterations, additions, changes, replacements or other items which
would otherwise be included in CAM are required and/or are of the
type which should be capitalized under the Internal Revenue Code
(further examples given below), then such costs shall not be
included in full as CAM costs, but rather the Landlord shall only
include in CAM for each fiscal year the annual portion of such
costs yielded by amortizing the same over the useful life
thereof.
(f)
Interest on any
mortgages of the Landlord and rental under any ground or underlying
lease.
(g)
Advertising and
promotional expenditures which should be a part of a specific
marketing plan agreed upon by the tenants.
(h)
Repairs and other
work occasioned by fire, or other casualty that the Landlord is
reimbursed by insurance that was required to be carried under the
Lease.
(i)
Any costs, fines
or penalties, incurred due to violations by Landlord of any
governmental rule or authority and the defense of same.
(j)
Repairs and
maintenance performed in a tenant exclusive space and not in the
common area.
(k)
Any expense for
which Landlord receives reimbursement by insurance proceeds or
condemnation awards.
(l)
Any and all
payroll or other benefits, perks, or expenses for employees of
Landlord; provided, however, that Landlord shall be permitted to
pass through reasonable charges relating to third party contractors
performing routine maintenance for the Project, such as mowing the
grass, etc.
Tenant shall reimburse Landlord for
it’s pro rata share of the CAM expense commencing with such
expenses incurred on and after the Lease Commencement Date.
Tenant’s payments of its share of the CAM expense shall be in
accordance with paragraph 31 of this Lease.
The trailer parking area designated
on Exhibit “A” solely for Tenant’s use shall be
maintained by Landlord at Tenant’s sole expense, and shall
not be a part of CAM to be shared by other tenants.
6.
Taxes and Assessments.
Landlord
shall pay all general real estate taxes and all special assessments
levied or assessed against the Project, including the Demised
Premises. Tenant shall reimburse Landlord for Tenant’s
pro rata share of such general real estate taxes and special
assessments paid by Landlord during the term of the Lease,
excluding any penalties or interest for late payment, in accordance
with paragraph 31 of this Lease.
Tenant shall have the right to
contest any real estate tax assessments at its own expense and, if
necessary, in the name of the Landlord. Any recovery of taxes
attributable to Tenant’s
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period of occupancy and the Demised Premises
shall belong to and shall become the property of Tenant to the
extent of Tenant’s pro-rata share. Any contest of
amounts due by Tenant shall not constitute a default
hereunder. Tenant shall have the right of contribution from
other tenants for their pro-rata share of Tenant’s costs of
any successful real estate tax assessment challenge. Tenant
may seek contribution from other tenants or request Landlord to
collect such contribution as part of Landlord’s recovery of
taxes paid in accordance with paragraph 31 of this Lease and the
similar provisions of other tenants’ leases.
Tenant shall pay all personal
property taxes assessed against personal property and leasehold
improvements owned or leased by Tenant and located on the Demised
Premises.
Landlord will make an application to
the County Council of Wells County, Indiana, for a determination
that the Building to be constructed on the Demised Premises
qualifies for a deduction from assessed valuation (Tax
Abatement). Landlord cannot guaranty that such determination
will be approved. Tenant agrees to cooperate with
Landlord’s application to the extent necessary or required
under the applicable state law or regulations. If such
application is approved, Tenant agrees to cooperate with any annual
filing requirements in order to maintain any such deduction
approved.
7.
Utilities . The Demised Premises
will be separately metered for all utilities. Meters will be
installed at Landlord’s expense. Tenant shall
contract for utility service in its name and pay from the date of
occupancy and during the term, all charges for utilities separately
metered to the Demised Premises, such as, but not limited to, gas,
electricity, lights, heat, fire protection system, power, telephone
and other communication and utility services used, rendered, or
supplied upon or in connection with the Demised Premises, and shall
indemnify and hold Landlord harmless against any liability or
damages on such accounts.
8.
Insurance .
a.
Fire and
Extended Coverage Insurance . Landlord shall obtain
and keep in effect at all times fire and extended coverage
insurance on the Building and improvements comprising the Demised
Premises from the date of occupancy and during the term and any
renewal term exercised by Tenant in an amount equal to the full
replacement value of such buildings and improvements. Neither
Tenant nor its agents, employees, or guests shall be liable for any
loss or damage to the Demised Premises by fire or any cause within
the scope of coverage actually provided by and paid for by such
fire and extended coverage insurance, it being understood that the
Landlord shall be looked at solely for reimbursement for such
covered loss or damage. Tenant shall have the right to request and
receive evidence of Landlord’s proof of
insurance.
b.
Liability
Insurance . Prior to Tenant
assuming possession, complete or partial, of the Demised premises
and during the term of this Lease, Tenant shall obtain and maintain
comprehensive general public liability insurance against claims for
personal injury, death, or property damage occurring on, in, or
about the Demised Premises, such insurance to afford minimum
protection of not less than
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$1,000,000.00 in
respect of personal injury or death to any one person, and not less
than $1,000,000.00 in respect of any one occurrence, and of not
less than $1,000,000.00 for property damage. Neither Tenant,
its agents, employees, nor guests shall be liable for any claims
for personal injury, death, or property damage within the scope of
coverage actually provided by and paid for by such liability
insurance, it being understood that the Tenant shall be looked at
solely for reimbursement for such covered claims. Landlord
shall have the right to request and receive evidence of
Tenant’s proof of insurance.
Landlord shall at all times maintain
in effect comprehensive public liability insurance with respect to
the Demised Premises and the common areas of the Project for
personal injury, bodily injury, and property damage, in amounts of
not less than those required of Tenant herein. Neither
Landlord, its agents, nor employees, shall be liable for any claims
for personal injury, death, or property damage within the scope of
coverage actually provided by such liability insurance, it being
understood that the Landlord shall be looked at solely for
reimbursement for such covered claims.
c.
Loss of Rents
Insurance . Landlord may maintain
loss of rents insurance to cover any loss of rents required to be
paid by this Lease.
All insurance required by this
paragraph shall be placed with responsible companies. All
such policies shall be non-assessable and shall require thirty (30)
days’ notice by registered mail to Landlord and Tenant of any
cancellation thereof or change affecting the coverage
thereunder.
All insurance required by this
paragraph shall name both Landlord and Tenant as an insured as
their respective interests may appear.
Neither party shall violate nor
permit to be violated any of the conditions or provisions of any
such insurance policy.
Landlord and Tenant and all parties
claiming, by, through or under them mutually release and discharge
each other from all claims and liabilities arising from or caused
by any casualty or hazard covered or required hereunder to be
covered in whole or in part by insurance on the Demised Premises,
or in connection with activities conducted on the Demised Premises,
or in or on the Project, and waive any right of subrogation which
might otherwise exist in or accrue to any person on account thereof
and further agree to evidence such waiver by endorsement to the
required insurance policies, provided that such release shall not
operate in any case where the effect is to invalidate or increase
the cost of such insurance coverage. In the case of increased cost,
the other party shall have the right, within thirty (30) days
following written notice, to pay such increased cost, thereby
keeping such release and waiver in full force and
effect.
Tenant shall reimburse Landlord for
Tenant’s pro rata portion of Landlord’s insurance
expense in accordance with paragraph 31 of this Lease.
Landlord shall reasonably estimate Tenant’s Proportionate
Share of the Landlord’s insurance costs and Tenant shall pay
one twelfth (1/12) together with the payment of Rent.
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9.
Repair and Maintenance
. During
the term of this Lease, Tenant shall, at its expense, maintain and
repair the Demised Premises and every part thereof, excluding
Landlord’s responsibilities as set forth below, and shall use
all reasonable precaution to prevent waste, damage, or injury
thereto, ordinary wear, tear, use and acts of God excepted.
Specifically, but not intended to be limited hereby, Tenant shall
be responsible for maintaining the interior of the Demised
Premises, the HVAC systems, the lighting (including bulb and
ballasts replacements), interior plumbing and plumbing fixtures,
doors, windows, glass, electrical, and communication wiring located
on or within the Demised Premises. Warranties in existence during
the Lease will be used by Tenant.
Landlord shall be responsible for
maintenance and repair of the structure, roof and exterior
foundation of the Demised Premises, the sprinkler system, plumbing
for common areas and all aspects of the remainder of the
Project.
10.
Alterations
. All
alterations or remodeling of the Demised Premises shall be done at
Tenant’s own cost. No alterations or remodeling
projects exceeding $2,500 shall occur without Landlord’s
prior approval of the plans and specifications for such alteration,
which shall not be unreasonably withheld.
All such alterations, changes, and
improvements to the Demised Premises shall be deemed to be the sole
property of the Landlord and a part of the Demised Premises, except
that all movable trade fixtures purchased by and installed by
Tenant shall be and remain the property of Tenant and shall be
removed by Tenant at the expiration of the term hereof.
Tenant shall repair any damage to the Demised Premises resulting
from Tenant’s removal of such movable trade
fixtures.
11.
Compliance With Laws
. Except as
may be otherwise provided paragraph 9, during the term, Tenant
shall, at its own expense, promptly observe and comply with all
present and future laws, ordinances and other regulations of all
governmental authorities having jurisdiction over the Demised
Premises, Tenant shall not, however, be responsible for any
condition of whatever nature that existed prior to Tenant’s
date of occupancy of the Demised Premises and Landlord hereby
agrees to indemnify and hold Tenant harmless on account of
same.
12.
Signs . Landlord shall erect
a sign at the entrance to the Project as specified in the
construction specifications document. The Landlord shall
install an electrical box in the front of the Building for
Tenant’s use on or prior to the Commencement Date.
Tenant may erect, at its own expense, a sign or signs to identify
and advertise Tenant’s business, on and about the Demised
Premises.
All signs installed by Tenant will
remain the property of Tenant, removable by Tenant from the Demised
Premises within thirty (30) days after the expiration or
termination of this Lease. Tenant shall repair any damage to the
Demised Premises resulting from Tenant’s removal of such
signs.
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13.
Title Warranty
. Landlord
represents and covenants that Landlord is fee simple owner of the
real estate encompassing the Demised Premises, subject, however,
only to existing mortgages and other encumbrances covering the
Demised Premises and leases affecting the common areas of the
Project.
14.
Damage and Destruction
. It is
mutually agreed that in the event the Demised Premises, or the
means of ingress and egress therefrom and thereto are injured by
fire or other damage or destruction during the term of the Lease,
the rent provided for herein shall abate entirely in case the
entire Demised Premises or any substantial portion thereof is
untenantable and, in the case a non-substantial portion of the
Demised Premises is untenantable, shall partially abate and shall
be prorated for the portion rendered untenantable, until the
Demised Premises are restored by Landlord to a good, tenantable
condition (which Landlord shall undertake to do with due
diligence), the Tenant paying during such time the proportion of
rent that the part of the Demised Premises remaining tenantable
shall bear to the entire Demised Premises during such period;
provided, however, that there shall be no abatement of rent on
account of the condition of said Demised Premises by reason of any
loss or damage by fire or other damage or destruction if such
damage or destruction was caused by the negligent or willful act of
Tenant. In the event that the Demised Premises is destroyed or
damaged so that it can not be repaired or reconstructed with
reasonable diligence being exercised within one hundred twenty
(120) days from the date of such destruction or damage by reason of
fire or other casualty, either party may terminate this Lease by
giving written notice to the other party within forty-five (45)
days after the date of such destruction or damage; provided,
however, that Tenant may require Landlord to rebuild and restore
the Demised Premises to its previous condition by giving Landlord
written notice within such forty-five (45) day period; provided
further, however, if there is less than one (1) year remaining on
the term of this Lease, Landlord shall have the right to terminate
this Lease unless Tenant is agreeable to renewing this Lease for a
minimum term of three (3) years, in which event Landlord shall not
have the right to terminate.
For purposes of this paragraph, the
term “tenantable condition” shall mean a condition of
the Demised Premise
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