Exhibit 10.5
EXECUTION COPY
LEASE
AGREEMENT
THIS LEASE AGREEMENT (this “
Lease ”) made this 10th day of July, 2009 (the “
Commencement Date ”), by and between AVIS INDUSTRIAL
CORPORATION, an Indiana corporation (“ Landlord
”), and BADGER EQUIPMENT COMPANY, a Minnesota corporation
(“ Tenant ”).
Background
Landlord is the owner of certain
premises located at and known as 217 Patneaude Drive, Winona, MN
55987 (the “ Premises ”). The Premises consists
of (i) the land described in Exhibit A (the “
Land ”), (ii) the buildings and improvements
constructed thereon (the “ Improvements ”),
(iii) all easements, rights of way, licenses, privileges and
appurtenances, if any, belonging to or inuring to the benefit of
the Land or the Improvements. Landlord desires to let and demise to
Tenant and Tenant desires to take and hire from Landlord the
Premises, subject to the terms and conditions hereinafter set
forth.
Agreement
NOW THEREFORE, intending to be
legally bound, Landlord and Tenant hereby agree as
follows:
1. Premises and Term .
Landlord hereby lets and demises to Tenant and Tenant hereby takes
and hires from Landlord the Premises for a term (the “
Lease Term ”) beginning on the Commencement Date and
expiring without further notice or act on the tenth (10th) day
of the month in which the fifth (5th) anniversary of the
Commencement Date occurs. Landlord hereby represents and warrants
that, as of the date of this Lease, the Premises is not subject to
any restrictions, encumbrances or other title matters that could
adversely affect Tenant’s intended use of the Premises (as
described in Section 6 below) except for those matters set
forth on Exhibit B attached hereto.
2. Rent .
(a) Tenant shall pay to Landlord in
lawful money of the United States minimum annual rental in the
amount of Three Hundred Thousand and 00/100 Dollars ($300,000.00)
(“ Annual Fixed Rent ”) in equal monthly
installments of one-twelfth of the amount thereof, payable in
advance on the first day of each and every calendar month during
the Lease Term. If the Commencement Date occurs on a day other than
the first day of a calendar month or if the Lease Term ends on a
day other than the last day of a calendar month, the Rent due for
the partial calendar months occurring at the commencement and
expiration of the Lease Term shall be prorated on a per diem basis.
Notwithstanding the above, the first installment of rent shall be
due on August 1, 2009, and shall include the August 2009
monthly installment, as well as the prorated July 2009 monthly
installment (for the period commencing on the Commencement Date
through and including July 31, 2009).
(b) Except as otherwise set forth in
this Lease, all costs, expenses and obligations with respect to the
Premises shall be paid by Tenant, so that, except as otherwise set
forth in this Lease, the Annual Fixed Rent payable by Tenant to
Landlord hereunder shall be “net” to
Landlord.
(c) All sums other than Annual Fixed
Rent payable by Tenant under this Lease are referred to hereinafter
as Additional Rent and Landlord shall have the same rights and
remedies for non-payment thereof as Landlord has for non-payment of
Annual Fixed Rent. Annual Fixed Rent and Additional Rent are
sometimes referred to hereinafter collectively as
“Rent”.
(d) Except as otherwise set forth in
this Lease, all monetary obligations shall be paid without notice
or demand and without set-off, counterclaim, recoupment, abatement,
suspension, deferment, diminution, deduction, reduction or
defense.
3. Taxes and Other Charges
.
(a) Tenant shall pay before any
fine, penalty, interest or cost may be added thereto, or become due
or be imposed by operation of law for the non-payment thereof, all
taxes, including municipal and school taxes, assessments, rates and
charges, county taxes, excises, levies, and all other license and
permit fees and other governmental charges, and any taxes, charges
or fees in lieu of any of the foregoing, which during the Lease
Term may be assessed, levied, confirmed, imposed upon, or become
due and payable with respect to the Premises or any part thereof or
any appurtenance thereto (all of which are hereinafter collectively
called “Taxes”). Landlord shall promptly submit to
Tenant copies of all such tax bills directed to Landlord. Tenant
shall pay such Taxes directly to the government or other public
authority charged with the collection thereof. Tenant shall provide
Landlord with copies of receipts, canceled checks or other evidence
reasonably satisfactory to Landlord of the payment of such
Taxes.
(b) All Taxes which shall be
charged, laid, levied, assessed or imposed for each fiscal period
in which the Lease Term terminates shall be apportioned pro rata
between Landlord and Tenant in accordance with the portion of the
relevant fiscal period during which the Lease Term shall be in
effect. In the event that any payment of Taxes is due during the
Lease Term with respect to a fiscal period prior to the Lease Term
or that extends beyond the Lease Term, Landlord shall pay
Landlord’s proportionate share thereof (based upon the
portion of the fiscal period that extends beyond the Lease Term) to
Tenant at least ten (10) days prior to the date that payment
is due with the maximum discount. Provided that Tenant receives
Landlord’s payment as aforesaid, Tenant shall remit to the
taxing authority, the full amount due for the relevant fiscal
period. In the event that any payment of Taxes is due after the
expiration of the Lease Term with respect to a fiscal period that
includes part of the Lease Term, Tenant shall pay to Landlord
Tenant’s proportionate share thereof (based upon the portion
of the fiscal period that was included in the Lease Term) and if
the amount of such Taxes are not known prior to expiration of the
Lease Term, such proportionate share shall be estimated based on
the most recent known Taxes and such estimated taxes shall be paid
to Landlord prior to expiration of the Lease Term. The foregoing
covenant shall survive the expiration of the Lease Term.
2
(c) If any special assessment with
respect to the Premises may be paid in installments, Tenant shall
be obligated to pay only those installments which become due and
payable during the Lease Term.
(d) Nothing herein contained shall
require or be construed to require Tenant to pay any transfer,
recording, inheritance, estate, succession, franchise, excise,
business privilege, income, gross receipts or profit tax, or
capital levy that is or may be imposed upon Landlord.
(e) Tenant shall have the right to
contest any increase in any Taxes levied against the Premises, and
Landlord shall cooperate with any reasonable request by Tenant in
connection with such contest and permit Landlord’s name to be
used in such contest, to the extent reasonably
necessary.
4. Utilities and Other Service
Charges . Tenant will pay for all water, gas, oil, electricity,
heat, telephone, sewage, trash removal, janitorial service and snow
removal and all other utilities and services used by Tenant at the
Premises during the Lease Term, except to the extent otherwise
expressly set forth in this Lease. Landlord is not obligated to
provide or pay for any utilities or services supplied to the
Premises, except as otherwise expressly set forth in this
Lease.
5. Maintenance and Repair
.
(a) Except as set forth in
subsection 5(b) below, Tenant, at its sole cost and expense
throughout the Lease Term, shall keep and maintain the Premises
(including but not limited to all HVAC and other building systems
and all fixtures and Improvements) in the same order and condition
as they are on the Commencement Date and shall make all repairs,
replacements and renewals necessary to keep them in such order and
condition, reasonable wear and tear and damage by fire or other
casualty (including the elements) excepted.
(b) Landlord, at its own cost and
expense, shall keep and maintain the roof, the structural
components of the Improvements (including the footings, exterior
walls, foundations and structural steel columns and girders) and
the parking areas in good order and condition and will make all
necessary repairs, replacements and renewals necessary to keep them
in such order and condition, reasonable wear and tear and damage by
fire or other casualty (including the elements) excepted.
Landlord’s obligations under this subsection 5(b) shall not
apply with respect to repairs, replacements and renewals
necessitated by Tenant’s misuse of the Premises or
intentional misconduct.
6. Use . Tenant shall have
the right to use the Premises for any other lawful purpose. Tenant
shall not use or occupy or permit any of the Premises to be used or
occupied, nor do or permit anything to be done in or on any of the
Premises, in a manner which creates or constitute a public or
private nuisance or waste.
7. Compliance with Law .
Except as set forth in the following paragraph, Tenant agrees that
during the Lease Term, it will, at its own cost and expense,
promptly comply with: (a) all present and future federal,
state, county, city and municipal or other statutes, charters,
laws, rules, orders, regulations and ordinances affecting the
Premises, the occupancy, use or repair thereof; (b) all rules,
orders, and regulations of all public officers including the
police, health and fire
3
departments and with the National Board of Fire
Underwriters or other similar organizations for the prevention of
fire or the corrections of hazardous conditions; and (c) the
requirements of all insurance companies having policies or public
liability, fire and other insurance at any time in force and effect
with respect to the Premises and its permanent
improvements.
Notwithstanding the foregoing,
Tenant shall in no event have any obligation to do any of the
following: (a) make any repair or replacement which would
otherwise be Landlord’s responsibility under subsection 5(b)
of this Lease; or (b) correct or remedy any environmental
problem which was not caused or created by Tenant during the Lease
Term.
8. Sublease and Assignment
.
(a) Tenant shall have the right to
sublease all or any portion of the Premises or assign this Lease
with the prior written approval of Landlord, which approval shall
not be unreasonably withheld, delayed or conditioned.
(b) Notwithstanding foregoing Tenant
will have the right to assign the Lease or sublet all or any part
of the Premises to an affiliate of Tenant without obtaining
Landlord’s approval Tenant shall provide notice of
Tenant’s intent to assign or sublet at least fifteen
(15) days prior to the effective date of the same.
Furthermore, any affiliate of Tenant shall be permitted to use all
or any part of the Premises, and such use shall not be considered
an assignment of the Lease or a sublet of the Premises. The term
“affiliate of Tenant” shall mean any person(s),
partnership(s), corporation(s), or other form of business or legal
association or entity (i) owning or controlling Tenant, under
common ownership or control with Tenant, or controlled by Tenant or
(ii) acquiring all or substantially all of Tenant’s
assets or ownership interests.
(c) No subleasing of the Premises or
assignment of this Lease, nor the granting of any consent by
Landlord with respect thereto, shall release or relieve Tenant from
liability for the payment of Rent or performance of any other
obligations of Tenant under this Lease, except in the case of an
assignment of this Lease to an affiliate of Tenant that has a net
worth on the date of the assignment at least equal to
Tenant’s net worth as of the Commencement Date (in which case
Tenant shall be released from any further liability or obligation
thereafter arising under this Lease provided such affiliate of
Tenant assumes all obligations of Tenant under this
Lease).
9. Fire or Other Casualty
.
(a) The term “ Major
Casualty ” as used in this Section means any fire or
other casualty (including the elements) which causes damage to or
destruction of the Premises of such an extent that, in the opinion
of an independent licensed engineer or architect retained by Tenant
but reasonably approved by Landlord, it would require ninety
(90) days or more to restore the Premises to the condition
which existed prior to the Major Casualty, from the date that such
restoration is commenced. The term “ Minor Casualty
” as used in this Section means any fire or other casualty
(including the elements) which causes damage to or destruction of
the Premises of such an extent that it would require less than
ninety (90) days to restore the Premises to the condition
which existed prior to the Minor Casualty, from the date that such
restoration is commenced. The term “ Casualty ”
as used in this Section means either a Minor Casualty or a Major
Casualty.
4
(b) Promptly following the
occurrence of a Casualty, Tenant shall send written notice to
Landlord estimating the date (“ Restoration Completion
Date ”) that the Premises will be fully restored to the
condition which existed prior to the Casualty, including a copy of
the opinion of the engineer or architect setting forth the estimate
of the number of days required to restore the Premises to the
condition which existed prior to the Casualty, from the date that
such restoration is commenced.
(c) In the event of a Minor
Casualty, Tenant shall proceed with reasonable diligence to restore
the Premises as nearly as possible to its condition prior to the
occurrence of the Minor Casualty using available insurance
proceeds. In the event that Tenant’s insurance proceeds and
related deductible (which shall be paid by Tenant) are insufficient
to complete repair, restoration or rebuilding of the Premises,
Tenant shall be solely responsible for such deficiency.
(d) In the event of a Major
Casualty, Tenant shall give notice to Landlord, within thirty
(30) days after delivering Tenant’s notice specifying
the Restoration Completion Date, pursuant to which Tenant shall
elect to do either terminate this Lease or elect to keep this Lease
in effect. If Tenant elects to terminate this Lease, then this
Lease shall terminate as of the date of the Major Casualty, and
Tenant shall (i) assign to Landlord all of Tenant’s
right, title and interest in and to all insurance proceeds paid or
payable to Tenant on account of the Improvements, whereupon Tenant
shall have no further liability or obligation under this Lease,
including without limitation no obligation to repair, restore or
rebuild the Premises. Furthermore, if Tenant notifies Landlord that
Tenant elects to keep this Lease in effect, Tenant shall proceed
with reasonable diligence to restore the Premises as nearly as
possible to its condition prior to the occurrence of the Major
Casualty using available insurance proceeds. In the event that the
insurance proceeds and related deductible amount (which shall be
paid by Tenant) are insufficient to complete repair, restoration or
rebuilding of the Premises, Tenant shall be solely responsible for
such. Tenant shall have no right to terminate this Lease pursuant
to this Section 9(d) if such Casualty was caused by the misuse
of the Premises or intentional misconduct of Tenant.
(e) In the event that there occurs
any Casualty and this Lease is not terminated by Tenant pursuant to
subsection 9(d), Tenant’s obligation to pay Rent for any
portion of the Premises shall be equitably abated from the date of
the Casualty until the date that the Premises has been restored;
provided, however, that such abatement shall apply only to the
portion of the Premises rendered unusable for the operation of
Tenant’s business.
10. Insurance .
(a) During the Lease Term, Tenant,
at its expense, shall maintain in effect:
(i) fire and casualty insurance with
extended coverage (i.e., “all risk coverage”) in an
amount equal to the full replacement value of Tenant’s
alterations, trade fixtures and personal property at the Premises,
with a deductible that is determined by Tenant in accordance with
its internal insurance policies; and
(ii) commercial general liability
insurance in the amount of at least $1,000,000, combined single
limit, naming Landlord as an additional insured.
5
(iii) worker’s compensation
insurance covering Tenant’s employees at the Premises in
accordance with requirements of the State in which the Premises is
located.
(iv) fire and casualty insurance
with extended coverage (i.e. “all-risk coverage”), in
an amount not less than Four Million Dollars ($4,000,000), with
respect to the Improvements at the Premises (but not with respect
to Tenant’s alterations, trade fixtures or personal property
at the Premises), with a deductible not in excess of $100,000,
naming Landlord as its interests may appear. Tenant shall pay the
premiums for such insurance within and keep such insurance in force
at all time during the term of this Lease.
(b) All insurance required by
subsection 10(a) above shall be carried with companies licensed to
do business in the State in which the Premises is located. All
policies required by subsection 10(a) above shall provide that the
insurer will endeavor to provide at least thirty (30) days
written notice to any additional insureds before cancellation or
material modification. Tenant shall furnish Landlord with
certificates issued by its carrier(s) evidencing the coverage
required by subsection 10(a) above or replacements and renewals
thereof.
(c) Tenant may, at its option,
include the insurance coverage required by subsection 10(a) above
in general or blanket policies of insurance.
(d) Each casualty, fire, personal
property and extended coverage or “all-risk” insurance
policy required under this Lease (collectively, the “
Property Insurance ”) shall contain a clause in which
the underlying insurance carrier waives all rights of subrogation
with respect to losses payable under such policies. By this
paragraph, Landlord and Tenant intend, and hereby agree, that the
risk of loss or damage to property shall be borne by the
parties’ insurance carriers. It is hereby agreed that
Landlord and Tenant shall look solely to, and seek recovery from,
only their respective insurance carriers in the event a loss is
sustained for which Property Insurance is carried or is required to
be carried under this Lease. Landlord and Tenant expressly waive
any and all claims against each other with respect to claims,
damages or losses for which Property Insurance is carried or is
required to be carried hereunder. For this purpose, applicable
deductible amounts shall be treated as though they were recoverable
under such policies.
11. Alterations and Additions
.
(a) Tenant will be entitled to make
alterations (other than Major Alterations (as hereinafter defined))
without obtaining Landlord’s approval. Tenant shall not make
any Major Alteration to the Improvements without first securing
Landlord’s written approval, which approval shall not be
unreasonably withheld, conditioned or delayed. The term “
Major Alteration ” means any alteration or addition
which affects the roof, any structural component, or any mechanical
system of the Improvements. Any alterations and additions shall be
executed by Tenant in a good and workmanlike manner. Tenant shall
remove any Major Alteration which it installed and restore the
Premises to its previous condition, unless Landlord, in connection
with granting its consent to such Major Alteration, agrees in
writing that such alteration may be left in place.
(b) Any mechanic’s liens filed
against the Premises for work done or materials supplied to Tenant
in the making of alterations, decorations, installations,
additions, or improvements
6
shall be promptly paid or bonded and discharged
within thirty (30) days following notice to Tenant of the
intention by the labor material supplier to assert or file such
lien. Tenant agrees to indemnify and to save and hold Landlord
harmless against all damages, losses, judgments, costs, expenses
and attorneys fees Landlord may incur by reason of any such
liens.
12. Condemnation
(a) The term “ Total
Taking ” as used herein means any taking of all or a
portion of the Premises by condemnation or other governmental
proceeding as a result of which it is unreasonable or impossible
for Tenant to properly conduct its business in the Premises. The
term “ Partial Taking ” means any taking of a
portion of the Premises, other than a Total Taking. The term
“ Taking ” means either a Total Taking or a
Partial Taking.
(b) In the event of a Taking, the
entire proceeds of any condemnation award or compensation shall
belong to Landlord, except as hereinafter provided. In such event,
Tenant shall and hereby does assign all right, title and interest
in any condemnation award or compensation to Landlord, except as
hereinafter provided, and Tenant shall and hereby does waive in
favor of Landlord any interest therein, except as hereinafter
provided. Tenant shall have the right to claim from the condemning
authorities such compensation as may be separately awarded or
recoverable by Tenant in its own right on account of any and all
damages to Tenant’s business by reason of the condemnation
and for or on account of any cost or a loss to which Tenant might
be put in relocating its business or in removing Tenant’s
personalty.
(c) In the event of a Total Taking,
this Lease shall terminate on the date the possession of the
Premises is delivered to the condemning authority.
(d) In the event of a Partial
Taking, Landlord shall, using due diligence, repair and restore the
balance of the Premises remaining after the condemnation as nearly
as possible to the condition prior to the Partial Taking.
Notwithstanding the foregoing, in the event that the proceeds
received on account of a Partial Taking are insufficient to
complete repair, restoration or rebuilding of the Premises,
Landlord shall be solely responsible for such deficiency and shall
be directly responsible for payment of any costs in excess of the
condemnation proceeds. Following a Partial Taking, Rent shall be
equitably adjusted in the event that Tenant’s use of the
Premises is adversely affected by such Partial Taking.
13. Environmental
Provisions
(a) Definitions . For
purposes of this Section 13, the following terms shall have
the following meanings:
(i) “ Environmental Law
” means any federal, state, or local statute, law, order,
regulation, ordinance, constitution, agreement, permit, or decision
relating to pollution or protection of human health, safety or the
environment, as well as any principles of common law under which a
person may be held liable for the Release of any Hazardous
Sub
