Exhibit 10.2

 

Lease for Commercial Land and Building

151 24th AVENUE SW, OWATONNA, MINNESOTA

 

This Agreement, made this 21st day of July, 2005 between Doug Hughes Properties,
LLC, (the “Landlord”), and Cybex International, Inc., (the “Tenant”).

 

WITNESSETH, that the said Landlord in consideration of the Rents, Covenants and
Conditions of this Lease, hereby leases to the Tenant the following described
Premises, situated in Steele County, at 151 24th Avenue SW, Owatonna, Minnesota,
described as approximately 200,000 square feet and attached property as more
particularly described in Exhibit A attached hereto.

 

LANDLORD & ADDRESS    Doug Hughes Properties, LLC,      Douglas W. Hughes,
President      1470 Sunset Drive SW      Owatonna, MN 55050      Cell
1-507-213-0414      Fax 1-507-455-1146 TENANT & ADDRESS    Cybex International,
Inc.      151 24th Ave SW      Owatonna, MN 55060      Attn: Ed Kurzontkowski

 

1. BINDING EFFECT, MINNESOTA LAW. This Lease shall bind the parties, their
heirs, personal representatives, successors, and assigns. This Lease shall be
governed by and construed and interpreted in accordance with the Laws of the
State of Minnesota.

 

2. EXHIBITS. The following Exhibits are attached hereto are incorporated as part
of the Lease.

 

  (a) PLAN DRAWING – Exhibit A

 

3. INTENDED USE OF PREMISES. It is understood and agreed to between the parties
that the Premises during the continuance of this Lease shall be used and
occupied for a Industrial Manufacturing, all related uses, any lawful purpose
and for no other purpose(s) without the written consent of Landlord, and that
Tenant will not use the Premises for any purpose in violation of any law,
municipal ordinance or regulation.

 

4. INSURANCE - BY TENANT. The Tenant will provide the Landlord a Certificate of
Insurance. The Tenant shall obtain and maintain the following insurance
coverages, through the expiration or termination of this Lease, at the Tenants
expense:

 

(a) A policy of comprehensive public liability insurance naming the Tenant as
the insured and Landlord as the additional insured to insure against injury to
property, persons, or loss of life arising out to the ownership, use occupancy,
or maintenance of the Premises, with limits of public liability not less than
$1,000,000 per occurrence combined single limit coverage for death and /or
bodily injury including personal injury and property damage liability.

 

(b) A policy providing “All Risk” coverage insuring Tenant’s business, leasehold
improvements, merchandise, trade fixtures, furnishings, equipment, full coverage
of loss of revenue and personal property.

 

(c) The Landlord may from time to time require that the policy limits of any or
all such insurance be increased to reflect the effects of inflation and changes
in normal commercial insurance practices.

 

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5. INSURANCE - BY LANDLORD. The Landlord shall obtain before the date hereof and
shall maintain through the expiration or termination of this Lease, the
following insurance coverages:

 

(a) A policy of comprehensive public liability insurance on the Common Areas
with limits of public liability not less than $1,000,000 per occurrence combined
single limit coverage for death and /or bodily injury including personal injury
and property damage liability.

 

(b) A policy providing “All Risk” coverage excluding the Tenant’s business,
leasehold improvements, merchandise, trade fixtures, furnishings, equipment,
loss of revenue, personal property and on the Premises. The coverage shall be
for the full insurable replacement value thereof.

 

(c) All premium costs and all other costs and expenses incurred by the Landlord
in providing the insurance required of Landlord shall be considered an Operating
Expense and applied to the Tenant’s monthly triple-net operating costs with the
rent.

 

6. MUTUAL WAIVER OF SUBROGATION. Landlord and Tenant each hereby waive and
release all claims, liabilities and causes of action against the other and their
agents, servants and employees for loss or damage to, or destruction of, the
buildings and other fire, explosion or other perils included in any insurance
maintained hereunder, whether caused by the negligence of any of said persons or
otherwise. This waiver shall remain in force as the insurer of the premises
shall consent thereto without additional premium, and if additional premium is
charged, Tenant shall pay the same to keep this waiver in force.

 

7. INSURANCE – INDEMNIFICATION

 

(a) TENANT SHALL INDEMNIFY, defend and hold harmless the Landlord from and
against any and all claims arising from Tenant’s use of the Premises, or from
the conduct of Tenant’s business or from any activity, work or things done,
permitted or suffered by Tenant in or about the Premises and shall further
indemnify, defend and hold harmless Landlord from and against and all claims
arising from any negligence of the Tenant, or any of Tenant’s agents,
contractors, or employees, and from and against all cost, attorney’s fees,
expenses and liabilities incurred in the defense of any such claim or any action
of proceeding brought thereon, unless arising from Landlord’s negligence or
willful misconduct.

 

(b) LANDLORD SHALL INDEMNIFY, defend and hold harmless Tenant from and against
any and all claims arising from the conduct of Landlord’s business in or about
property, and shall further indemnify, defend and hold harmless Tenant from and
against any and all claims arising from any negligence of the Landlord, or
Landlord’s agents, contractors or employees, and from and against all costs,
attorney’ fees, expenses, and liabilities, incurred in the defense of any such
claim or any action or proceeding brought thereon.

 

8. INSURANCE - DAMAGE OR DESTRUCTION. In the event the Premises are damaged by
Fire, or any other casualty insured under Landlord’s fire and extended coverage
insurance policy, to the extent that the facility is temporarily unusable, rent
will abate proportionately and Landlord shall restore. Landlord and Tenant will
cover their own relocation and reconstruction costs during the reconstruction
process. Tenant shall have the right to terminate the lease if premises are more
than 50% damaged. Upon completion of such repairs and replacements by Landlord,
Tenant shall promptly repair or replace all portions of the Premises,
build-outs, lease-hold improvements, furniture, fixtures, to the condition
existing immediately preceding such casualty. Business Interruption Insurance –
Relocation Rent shall be covered through the insurance carried by the Tenant and
the Landlord’s loss of rent will be covered by Loss of Rent Insurance.

 

9. INSURANCE – CERTIFICATE OF INSURANCE FOR SERVICES PROVIDED FOR TENANT Anyone
performing services for the Tenant at these Premises will provide a Certificate
of Insurance and any or all licenses or contractor numbers to the Landlord.
These documents may be kept on file with the Tenant for documentation to the
Landlord.

 

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10. SUBORDINATION/ESTOPPEL CERTIFICATES. Tenant agrees to, and will upon demand
from Landlord, execute such instruments as may be required to subordinate the
rights and interest of tenant created by this lease to the lien of any first
mortgage at any time placed upon the leased premises and certified the lease is
unmodified. Such subordinations shall recognize this Lease and Tenant’s
Repurchase Option defined under Section 16b herein.

 

11. LEASE ACCEPTANCE. Tenant shall provide the Landlord with the Executed Lease
prior to the end of the contingency period for the purchase of the property,
provided this Lease shall not be in effect until completion of Closing on the
purchase of the property as provide for under that certain Purchase and Sale
Agreement dated July     , 2005 (the “Agreement”).

 

12. LEASE TERM BASE MONTHLY RENT AMOUNT

 

(a)    Years 1 though 5    $ 40,000 per month based on initial Annual Base Rent
of $2.40 per SF           $480,000 per year, payable in advance, in equal
monthly installments. (b)    Extension Years 6-10    $ 44,167 per month based on
Annual Base Rent of $2.65 per SF           $53,0004 per year, payable in
advance, in equal monthly installments. (c)    Plus Monthly Triple Net CAM
Operating Expenses for all Initial and Extension Lease Terms

 

13. LEASE TERM TRIPLE NET CAM EXPENSES

 

(a) Common Area Maintenance (CAM): The Tenant will be responsible for the CAM
Expenses. The CAM Expenses will be calculated based on the Percent of rentable
square footage occupied by the Tenant in relation to the total square footage of
building times the total amount of all CAM Operating Expenses paid during each
Lease Month.

 

(b) CAM Expenses are the operating expenses consisting of, but not limited to:
real estate taxes and all taxes and assessments related to Premises, cleaning,
utilities, outdoor lighting, waste management, outdoor and indoor window
washing, lawn mowing and landscaping maintenance, snow and ice removal, property
and liability insurance, supplies, fire protection charges, pest control and any
and all other costs applied to the property. CAM shall not include management
fees.

 

(c) Any and all CAM Charges paid by the Landlord will be at the actual cost as a
pass-through to the Tenant with no commissions/percentages applied by the
Landlord. To simplify the monthly lease payment by making the payment equal each
month for a given lease year, the Lease payment will include an estimated
monthly CAM amount to equal the same payment each month and reconciled in the
first 60 days of the following year. To further simplify the monthly CAM
Expenses, many of the CAM related costs should be paid directly by the Tenant to
the provider except for the Property taxes. Tenant may audit Landlord’s records
relating to CAM Expenses.

 

14. LEASE TERMS

 

(a) The 5-Year Lease Term will begin in conjunction with the Closing of the
property purchase under the Agreement. The closing date will be the lease start
date.

 

(b) Tenant shall have the right to renew this lease for one (1) additional term
of five (5) years beyond the initial 5 year term. Tenant shall provide written
notice of its intent to renew ninety (90) days before the expiration of the
initial 5 year lease term. The rent during the renewal term shall be $2.65 per
rentable square feet of the Premises.

 

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15. LEASE MONTHLY RENT PAYMENT. The first Monthly Base Rent Payment shall be due
on the date of closing of the Agreement. The Tenant shall, for the duration of
the Lease Terms, pay to the Landlord the Base Monthly Rent, and the “Triple Net”
CAM Expenses by the 1st of each month. The Tenant will be responsible for all
CAM Expenses. At the end of the Lease Term or Lease Termination, whichever is
sooner, the Tenant will remain obligated to pay the final “Triple Net” CAM
Expenses when they become due approximately one month later. Late payments past
the 10th of the month will be charged 5% late fee of monthly total.

 

16. LEASE TERM EARLY OUT. It is the expectation of Landlord and Tenant for
Tenant to move into a new facility on or about 2007

 

(a) Tenant shall provide written notice to Landlord stating the commencement
date of its relocation to a new facility. Commencing with the start of the
Tenant’s move to a new facility, Tenant agrees to the payment in FULL of the
monthly base rent and CAM Expenses for a period of 90 days for the Premises.
Tenant may terminate the Lease any time after this 90 day period. Cybex will
have the first option to lease the Premises, if required. Marketing of the
Premises to new tenant(s) may be actively pursued beginning in 2005. During the
90 day transition period, Landlord may begin Code Compliance and preparation for
a new tenant.

 

(b) In the event Tenant elects not to relocate to a new facility, Tenant has the
option to purchase the property back. The Repurchase Option would be available
on August 1, 2007 at the earliest (2 years from the anticipated lease date) at
the sale of price $3,600,000 plus customary like expenses and subject to the
terms and conditions provided in the Agreement. The Repurchase Option period
will be August 1, 2007 through December 1, 2007 (120 days). Anytime during the
Repurchase Option period Tenant may exercise its option by written notice to
Landlord at which time a purchase agreement consistent with the applicable terms
and conditions of the Agreement would be entered into with the earliest possible
closing date scheduled to be no later then December 1, 2007. Tenant’s Repurchase
Option shall be recorded.

 

17. LEASE REMEDIES FOR DEFAULT OF LEASE

 

(a) Upon default of the Lease and the failure of the Tenant to make good on this
Lease, the parties agree that the Landlord shall have the option to terminate
this Lease or to re-enter and take possession of the demised Premises without
terminating this Lease. If Landlord elects to re-enter and take possession
without terminating this Lease, Landlord may re-let the Premises or any part
thereof upon such terms and conditions as Landlord, deems necessary.

 

(b) All rent paid by the Tenant to the Landlord during the re-letting period
shall be applied to reimburse the Landlord for all related expenses to a
default. In the event that the Landlord re-lets all or a portion of the Tenants
space, the Tenant will remain responsible only for rents and all other costs not
covered by the re-letting.

 

(c) Landlord shall have a duty to mitigate its damages and its potential loss of
rent and other expenses by diligently pursuing a new tenant in the event of an
early termination of the Lease as a result of Tenant’s default.

 

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18. LEASE TERM EXPIRATION - SURRENDER & VACATING THE PREMISE. On the last day of
the Lease Term, or earlier Lease Termination, the Tenant shall surrender and
completely vacate the Premises. All keys and or other access methods shall be
returned to the Landlord. If Tenant remains in possession of the Premises or any
part thereof after the expiration of a term of this Lease, Tenant shall pay
monthly rent equal to the current Lease Rent and CAM Charges until the Premise
is vacated.

 

19. LEASE DIFFERENCES. If Landlord or Tenant finds it necessary to implement the
terms of or to declare rights under this Lease through litigation, the
prevailing party shall be entitled to recover reasonable costs, attorney’s fees,
and expenses incurred from the other party.

 

20. LEASE RESPONSIBILITY OF LANDLORD. The term “Landlord” as used in this Lease
shall mean the owner of the property. In the event of any title transfer or
interest, Landlord shall be released from all liability as respects Landlords
obligations thereafter to be performed, provided successor assumes this Lease
and Repurchase Option in writing. Any and all deposits held by Landlord, which
the Tenant has an interest, shall be delivered to the Grantee less any expenses
or remaining unpaid CAM Expenses owed to Landlord. The Landlord will give proof
of transfer of these deposits to the Tenant.

 

21. LEASED PROPERTY CONDEMNATION

 

(a) In the event the whole Premises is taken or condemned for a public use or
purpose by a competent authority and the Premises cannot be used for the same
purpose intended under this Lease, this Lease shall terminate upon the delivery
of possession to the condemning authority. The Tenant shall have no claim
against Landlord by reason of such taking or condemnation and Tenant shall
continue to pay rent and other CAM Expenses hereunder until possession is
delivered. Tenant retains any award for business dislocation/relocation.

 

(b) In the event only a part of the Premises is taken or condemned but the
Premises or the part remaining can still be used for the same purpose and
substantially the same use to the Tenant as immediately prior to the taking or
condemnation, this Lease shall not terminate and Landlord shall repair and
restore the Premises and rent shall be adjusted pro-rata.

 

22. LEASE PROPERTY REPAIRS AND MAINTENANCE

 

(a) LANDLORD Obligations - The Landlord may perform updates to the property so
long as it does not interfere with the Tenant’s business. The Landlord shall not
have responsibility for damage to merchandise or to Tenant’s fixtures or
build-out improvements unless the Landlord, agents or contractors acting at
Landlord’s request are negligent in performing the maintenance or repair.

 

(b) TENANT Obligations - The Tenant shall keep its build-out improvements and
trade fixtures in the Premises maintained and repaired and shall make
replacements, maintenance and updates thereof, to maintain the integrity of the
property during the term of this Lease. The Tenant shall provide scheduled
maintenance, maintain and repair all mechanical systems, electrical, heating,
ventilating, air conditioning, restroom, lighting, etc. fixtures and facilities
that are a part of the Tenant’s operating function of the Premises, and/or
damaged as a result of negligence of the Tenant, agents, employees, invitees,
contractors, customers etc.. The Tenant shall replace all failed mechanical
systems, electrical, heating, ventilating, air conditioning, restroom fixtures,
lighting, etc. fixtures and facilities that are a part of the fixed assets of
the property that fail under normal circumstances. The Tenant shall keep the
exterior of the property maintained, repaired or replaced as needed to the
condition of the property at the time of closing and to any upgrades provided by
the Landlord. For remodeling and updating the Premises the Tenant, shall request
written permission from the Landlord.

 

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23. LEASE REPAIRS AND MAINTENANCE - RIGHT OF ENTRY. The Landlord and its
authorized representatives shall have the right to enter the Premises at all
reasonable times upon reasonable notice for general inspection, alterations,
improvements, planned replacements, repairs or maintenance, additions, and
showing of Premises, as it pertains to the Landlord. The Landlord will give the
Tenant notice (unless for emergency purposes). Landlord and Tenant will mutually
work together to perform the necessary functions as efficiently as possible to
limit interruption to the Tenants business.

 

24. TENANT COVENANTS

 

(a) The Tenant shall conduct its business in a manner consistent with the
purpose and character of the property. The character of the property is any
business that does not create annoying sounds, music, noises, odors and
nuisances, which are audible or detectable outside of the Premises that disturb
neighbors to the property.

 

(b) To keeping the Premises clean and attractive in appearance at all times and
to keep any trash in proper containers in the interior of the Premises out of
sight until it is removed and put in the outdoor container. Tenant will be
responsible for their garbage service and all waste related to the Tenants
business.

 

(c) Not to perform activities, or perform anything, in or about the Premises
which exposes the Landlords insurance policies or increases the premiums
therefore.

 

(d) To comply with all applicable ordinances, rules, regulations, and
requirements of all federal, state, and municipal governments, which relate to
the Premises or the business Tenant conducts on or from the Premises.

 

25. TENANT UTILITIES IN PREMISE. The Tenant covenants and agrees that it shall
pay all billing and charges for heat, gas, electricity and other
Premises-Specific Utilities or Services (i.e. Cable, DSL, Telephone, Security
etc.) and any related CAM charges. If it is determined by the Landlord with
supporting data, that the Tenant, or due to the type of business, or occupant
load, is using the common utilities (i.e. water) in an un-proportionate amount
to their Tenant-Space, the proportionate calculation changes will be adjusted in
the Triple Net CAM Charges.

 

26. TENANT ENVIRONMENTAL RESPONSIBILITIES. The Tenant agrees to indemnify and
hold the Landlord harmless at all times against all liabilities of any nature,
whether accrued, absolute, contingent, known, or unknown, arising out of
environmental hazards created by the Tenant during the use and operation of the
Leased Premises by the Tenant. This indemnification’s shall continue after
termination of this Lease with respect to claims and liabilities arising out of
Tenants use of the Premises and Property. The Tenant shall conduct its business
in accordance with guidelines and regulations of the Minnesota Pollution Control
Agency, the U.S Environmental Protection Agency or any other agency having
jurisdiction over matters of pollution control of the environment.

 

27. TENANT SUBLETTING AND ASSIGNMENT OF PREMISES. The Tenant shall not assign
this Lease or sublet the Premises or any portion of the Premises without the
written consent of Landlord, not to be unreasonably withheld. Any Assignee or
Sub-lessee will be required to enter into an individual Lease as an amendment to
the Tenant’s Lease. The Tenant will remain under its Lease until the obligations
of the Lease have been satisfied. Neither this Lease nor any interest therein
shall be Assigned due to bankruptcy shall not be passed on to any trustee or
receivership in bankruptcy, insolvency or reorganization proceedings, any
creditors through attachments, executive or otherwise, any assignee for the
benefit of creditors, or by operation of law.

 

28. TENANT WAIVERS. Waivers of this lease shall be in writing by the Landlord
and Tenant for that specific part initialed and no other part.

 

29.

TENANT ALTERATIONS. Tenant shall not require Landlord’s consent to cut or drill
into or secure any fixture, apparatus or equipment or make alterations,
improvements or physical additions (collectively, “Alterations”) of a
non-structural kind to any part of the Premises. Further, Landlord’s

 

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consent shall not be required for (i) the installation of any office equipment
or fixtures including internal partitions which do not require disturbance of
any structural elements or systems (other than attachment thereto) within the
Premises or (ii) minor work, including decorations, which does not require
disturbance of any structural elements or systems (other than attachment
thereto) within the Premises and which costs in the aggregate less than $50,000.
Any alteration to the Premises that would require Landlord’s consent shall not
to be unreasonably withheld.

 

30. QUIET ENJOYMENT. Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term, without hindrance from Landlord, or anyone claiming by
through or under Landlord under and subject to the terms and conditions of this
Lease.

 

31. LANDLORD LIEN WAIVER. Landlord expressly waives any applicable common law or
statutory lien and is estopped from placing any lien and security interest upon
any and all goods, wares, equipment, fixtures, furniture, improvements and other
personal property of Tenant which may hereafter be situated on the Premises, and
all proceeds therefrom in an effort to secure payment of all rentals and other
sums of money becoming due hereunder from Tenant, and to secure payment of any
damages or loss which Landlord may suffer by reason of the breach by Tenant of
any covenant, agreement or condition contained herein.

 

32. BROKER. Tenant warrants and represents to Landlord that Tenant has not dealt
with any broker, agent or other party who might be deemed to be entitled to a
commission or finder’s fee in connection with the transactions contemplated
under this Lease. Tenant will indemnify, defend and hold harmless landlord from
and against any claim for a commission or finder’s fee made by any other party
by, through or under Tenant. Landlord warrants and represents to Tenant that
Landlord has not dealt with any broker, agent or other party who might be deemed
to be entitled to a commission or finder’s fee in connection with the
transactions contemplated under this Lease. Landlord will indemnify, defend and
hold harmless Tenant from and against any claim for a commission or finder’s fee
made by any party by, through or under Landlord. This Section shall survive the
termination or expiration of this Lease.

 

33. MISCELLANEOUS. Each Individual executing this Lease on behalf of Tenant
represents and warrants that he/she is duly authorized to execute and deliver
this Lease on behalf of Tenant and that this Lease is binding upon Tenant and
Landlord, and their respective successors and/or assigns. This Lease supersedes
any prior discussions, proposals, negotiations and discussions between the
parties and the Lease contains all the agreements, conditions, understandings,
representations and warranties made between the parties hereto with respect to
the subject matter hereof, and may not be modified orally or in any manner other
than by agreement in writing signed by both parties hereto or their respective
successors in interest. This Lease will transfer to each new owner of the Tenant
and Tenant’s business for the term of the Lease. Buyouts of the lease will be
acceptable.

 

IN WITNESS WHEREOF, Tenant and Landlord have executed this instrument as of the
date set

 

This 25th day of July 2005.

 

TENANT                 By  

/s/ Arthur W. Hicks, Jr.

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  Title   Sr. VP,   Its   Chief Financial Officer Corporate Name _Cybex
International, Inc. _   Date   7/25/05         LANDLORD                 BY  

/s/ Douglas W. Hughes

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  Title   President   Date   7/25/05     Douglas W. Hughes – Doug Hughes
Properties, LLC    

 

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STATE OF MINNESOTA    )          )   ss. COUNTY OF                         )    

 

The foregoing instrument was acknowledged before me this      day of
                    , 2005, by                             , the
                            , respectively                             , a Mass.
Corporation, on behalf of the Company.

 

 

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Notary Public

 

STATE OF MINNESOTA    )          )   ss. COUNTY OF                         )    

 

The foregoing instrument was acknowledged before me this      day of
                    , 2005, by                             , the
                            , respectively of Doug Hughes Properties, LLC, a
Minnesota limited liability company, on behalf of the limited liability company.

 

 

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Notary Public

 

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EXHIBIT A

 

PLAN DRAWING

 

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