Exhibit 10.20
LEASE
AGREEMENT
THIS LEASE AGREEMENT (this
“Lease”) is made and entered into as of this 1st day of
October, 2004, at Scranton, Pennsylvania, by and between ROBERT
O’LEARY and LINDA O’LEARY, of P.O. Box 132, Scranton,
Pennsylvania 18504, hereinafter called “Lessor” and BOB
O’LEARY HEALTH FOOD DISTRIBUTOR CO., INC., a Pennsylvania
corporation with its principal place of business at 701 North
Keyser Avenue, Scranton, Pennsylvania 18504, hereinafter called
“Lessee”.
ARTICLE 1
DEMISE, DESCRIPTION, USE, TERM AND
RENT
Lessor hereby exclusively leases to
Lessee and Lessee hereby leases from Lessor that certain property
hereinafter called the “Leased Premises” situated in
Scranton, Lackawanna County, Pennsylvania and more fully described
in the legal description and plot plan attached hereto, made part
hereof, and identified as Exhibit “A”, including all of
the improvements now or hereafter erected thereon (the
“Leased Premises”) for a term commencing on the date
hereof and extending for a period of ten (10) years hereafter (the
“Initial Term”) with the Lessee having the
Lessee’s option to renew or extend as herein set forth. The
said Leased Premises will be used by the Lessee for its nutritional
supplements business and uses related thereto and/or any other
lawful use. Lessor represents and warrants that the Leased Premises
constitute all of the property and improvements as used by Lessee
in the operation of its business prior to the date of this Lease
Agreement.
ARTICLE 2
RENT
Rent. Lessee agrees to and shall pay Lessor at
Scranton, Pennsylvania, or at such other place as the Lessor shall
designate from time to time in writing provided by Lessor to Lessee
in the manner set forth herein for the providing of notices, as
rent for the Leased Premises (the “Rent”), the
following:
For the first twelve (12) months of
the Initial Term, the minimum annual sum of $90,000 payable without
setoff or deduction in equal monthly installments of $7,500 each,
in advance, on the first day of each calendar month. For each
subsequent twelve-month period during the Term (as hereinafter
defined) the rent shall be increased by a sum equal to the
percentage increase in the Consumer Price Index from the first day
of the preceding term of the Lease to the first day of the next
year of the Lease so that there will be an annual increase (but no
decrease) in the rent to be paid by Lessee hereunder. The Consumer
Price Index shall, whenever used in this Lease, mean the Consumer
Price Index for all Urban Consumers - All Cities Average (1982-84 =
100) published by the Bureau of Labor Statistics of the U.S.
Department of Labor. Lessor shall provide written notice, including
a detail of such calculation, to Lessee of any change in rent
pursuant to this Article 2 as soon as Lessor can calculate the
increase in rent according to the formula.
Effect of Default in Rent and
Other Payments. If Lessee
fails to make a payment of any installment of Rent hereunder within
ten (10) days of the due date, such installment
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thereafter shall bear interest at the rate of
eight (8%) percent per annum from the date it is due until actually
paid. In like manner, all other obligations, benefits and
reasonable monies which are actually due to Lessor from Lessee
under the terms hereof, or which are actually and reasonably paid
by Lessor because of Lessee’s Default (as hereinafter
defined), shall bear interest at the rate of eight (8%) percent per
annum from the due date until paid or, in the case of sums paid by
Lessor because of Lessee’s Default, from the date such
payments are actually (i.e. not on the date an obligation is
incurred) made by Lessor until the date Lessor is reimbursed by
Lessee therefor.
ARTICLE 3
TAXES AND ASSESSMENTS
The Lessor shall pay all real estate
taxes assessed against the said Leased Premises upon receipt of the
said tax bill prior to the expiration of any discount period. The
Lessor should be responsible for that portion of the assessed real
estate taxes which is equivalent to the real estate taxes assessed
against the Leased Premises for the year 2004 (the “Base
Year”), and the Lessee shall reimburse Lessor for such real
estate taxes assessed each year in excess of the Base Year amount
and attributable to Lessee’s activities of the Leased
Premises and/or any improvements thereon made by or at the
direction of Lessee within thirty (30) days following receipt of
the tax bill and notice letter from the Lessor showing the amount
due from the Lessee. The Lessee shall have the right to appeal the
real estate tax assessment applicable to the Leased Premises at
Lessee’s sole expense and Lessor shall
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cooperate with the Lessee to the extent required
or desired by Lessee to perfect and pursue a real estate tax
assessment appeal. Any reduction or refund in the assessment as a
result of such appeal shall be promptly remitted to the Lessee in
proportion to the percentage of the tax bill that is the
responsibility of the Lessee.
ARTICLE 4
INSURANCE
The parties agree to and shall
secure from a good and responsible company or companies of their
own choosing doing insurance business in the Commonwealth of
Pennsylvania with an A or best rating of at least AA and maintain
during the Term the following coverage:
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(a)
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Lessor shall
maintain at their expense fire and extended coverage insurance in
an amount not less than 100% of the full replacement value of the
building and other improvements on the Leased Premises, provided
that insurance in that percentage can be obtained and, if not, to
the highest percentage that can be obtained less than the said
100%.
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(b)
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Lessee shall maintain public
liability insurance in the minimum amount of $1,000,000 for the
loss from an accident resulting in bodily
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injury to or death of persons, and
$500,000 for loss from an accident resulting in damage to or
destruction of property.
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(c)
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Lessee shall
maintain at its expense fire and extended coverage insurance on
Lessee’s fixtures, machinery, equipment, goods, wares and
merchandise in or on the Leased Premises.
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Each of the parties to this Lease
shall list the other and the other’s employees, contractors
and agents as additional insureds on all such insurance
policies.
There shall be an equitable
abatement of rent during the period of repair and rebuilding unless
the Lessee maintains business interruption insurance in which case
the Rent shall be paid in full.
Subrogation Waiver
. Lessor and Lessee agree that, in
the event of loss due to any of the perils for which they have
agreed to provide insurance, each party shall look solely to its
insurance for recovery. Lessor and Lessee hereby grant to each
other, on behalf of any insurer providing insurance to either of
them with respect to the demised premises, a waiver of any right of
subrogation which any insurer of one party may acquire against the
other by virtue of payment of any loss under such insurance unless
the waiver cannot be obtained at regular rates.
Proof of Coverage
. Each party shall give the other
written notices that it has obtained the necessary coverage,
together with a copy of the declaration page of the
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appropriate policies. All such policies shall be
written so as to name the other party as additional
insured.
Failure to Secure
. If the required party at any time
during the Term should fail to secure or maintain the foregoing
insurance, the other party may, but shall not be required to,
obtain such insurance in the defaulting party’s name or as
agent of the defaulting party and shall be reimbursed by the
defaulting party for the actual cost of the insurance premiums. The
defaulting party shall pay the other party interest on paid
insurance premiums at the rate of eight (8%) percent per annum
computed from the date written notice is received that the premiums
have been paid.
Fire and Casualty
Damage . If the building
or other improvements on the Leased Premises should be damaged or
destroyed by fire, flood or other casualty, Lessee shall give
written notice thereof to Lessor as soon as is reasonably
practicable. The building insurance proceeds received by Lessor
under its insurance policies shall be used by Lessor to repair and
reconstruct the Leased Premises as soon as possible. If the repair
and reconstruction of the Leased Premises are, in Lessee’s
reasonable judgment, likely to take more than ninety (90) days,
then Lessee may terminate the Lease upon written notice to Lessor
within thirty (30) days of the casualty. If Lessee does not
terminate this Lease, the Lessor shall promptly repair and
reconstruct the Leased Premises.
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ARTICLE 5
UTILITIES
Lessee shall during the Term pay all
charges for telephone, gas, electricity, sewage, and water used in
or on the Leased Premises and for the removal of rubbish therefrom
and shall hold Lessor harmless from any liability resulting from
the interruption of such services, except to the extent caused by
the negligence or misconduct of Lessor, its employees, contractors
and/or agents. Such payments shall be made as they become
due.
ARTICLE 6
WASTE AND NUISANCE
Lessee shall not commit, or suffer
to be committed, any waste on the Leased Premises, nor shall it
maintain, commit, or permit the maintenance or commission of any
nuisance on the Leased Premises or use the Leased Premises for any
unlawful purpose.
ARTICLE 7
REPAIRS
Lessee’s Duty to Repair and
Maintain . Lessee agrees
to keep the Leased Premises in as good order and condition as the
same shall exist on the date hereof, reasonable wear and tear and
damage by accident, fire, or other casualty. Lessee further agrees
to keep the Leased Premises clean, and except as specifically set
forth herein for “major replacements” that are the
responsibility of the Lessor, to repair or replace all broken or
damaged doors, windows, plumbing fixtures and pipes, floors,
stairways, railings, or other portions of the Leased Premises.
Lessee also agrees to maintain the curbs and pavements of the
Leased Premises, together with facilities appurtenant thereto,
including entryways and awnings.
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Lessee shall keep the said pavements and
appurtenances free of ice and snow and trash and expressly agrees
to assume sole liability for accidents alleged to have been caused
by their defective condition.
Lessor’s Duty
. The Lessor shall be responsible
only for major replacements to the building and with all other
maintenance and repairs to be the sole responsibility of the
Lessee. For purposes of this Lease, major replacements shall be
defined as (i) repairs to the roof (including any necessary
patching of the roof), floors or walls of the building, and (ii)
the replacement of any system such as plumbing, HVAC, mechanical,
light or electrical that will cost in excess of $5,000 per expense
based on the receipt of three estimates from the Lessee which shall
be reviewed by the Lessor and with the Lessor to have the right to
obtain additional estimates at its sole cost and expense for the
replacement but in any event, Lessor shall commence such major
replacements within fifteen (15) days of written demand by Lessee,
if possible, or as soon thereafter as reasonably possible after the
costs are agreed upon.
Lessor hereby represents and
warrants to Lessee that as of the commencement of the Lease term
the roof is water-tight, the floors and walls are structurally
sound and the HVAC, electrical, mechanical, plumbing and lighting
systems are in working order and condition.
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Lessee’s Duties
. In addition to the other
provisions hereof, the Lessee represents and agrees that it will do
the following:
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(a)
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keep the Leased
Premises as clean and sanitary as the condition of the Leased
Premises permits;
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(b)
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dispose from
the Leased Premises all rubbish, garbage and other waste, in a
clean and sanitary manner;
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(c)
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properly use
and operate all electrical, gas and plumbing fixtures, and keep
them clean and sanitary;
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(d)
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except as
permitted under Article 8, not permit any person on the premises,
with its permission, to willfully or wantonly destroy, deface,
damage, impair or remove any part of the Leased Premises or the
facilities, equipment or appurtenances thereto;
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(e)
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reasonably
maintain the landscaping and grounds surrounding the building as
well as the parking areas as has been done in the past.
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ARTICLE 8
ALTERATIONS, IMPROVEMENTS AND
FIXTURES
Lessee shall have the right to
improve, add to, or alter the Leased Premises and to install
fixtures thereon at its sole and absolute discretion; provided,
however, that it shall not remove any such improvements, additions,
alterations or fixtures (except removable trade fixtures) without
the prior written consent of Lessor, and provided further, that on
expiration or sooner termination of this Lease, all improvements,
including fixtures and any addition, alteration, or repair to the
Leased Premises placed on or made to the Leased
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Premises by Lessee during the Term, hereof,
shall revert to or become the absolute property of Lessor, free and
clear of any and all claims against them by Lessee or any third
person, and Lessee hereby agrees to hold Lessor harmless from any
claims that may be made against such improvements by any third
person and which may arise during the Term.
ARTICLE 9
QUIET POSSESSION
Covenant of Quiet
Possession . Lessor
shall, on the date hereof place Lessee in quiet possession of the
Leased Premises and shall secure Lessee in the quiet possession
thereof against all persons claiming the same during the entire
Term and any extensions thereof. Lessor warrants that the Leased
Premises may be used for a nutritional supplements business and
related uses under all applicable zoning or land use laws and any
private restrictions affecting the Leased Premises.
Subordination
. This Lease and any extensions of
the term hereof shall be subordinate, at the option of the Lessor,
to any and all mortgages and/or other liquidated liens given by
Lessor, provided the holder thereof agrees in a prior writing
reasonably satisfactory to Lessee and Lessee’s counsel not to
disturb Lessee’s pos