Document:

ex10v11.htm

Exhibit 10.11

 

PROMISSORY NOTE

 

	
Principal

$2,000,000.00

	
Loan Date

12-10-2010

	
Maturity

12-09-2011

	
Loan No

418887

	
Call / Coll

11 / 3190

	
Account

12003591

	
Officer

081

	
Initials

	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing “***” has been omitted due to text length limitations.

	
Borrower:

	
Aetrium Incorporated

2350 Helen St

North St. Paul, MN  55109

	
Lender:

	
Bremer Bank, National Association

Minneapolis Office

8555 Eagle Point Blvd

P.O. Box 1000

Lake Elmo, MN  55042

 

	 Principal Amount:  $2,000,000.00 	 Date of Note:  December 10, 2010

 

PROMISE TO PAY.  Aetrium Incorporated (“Borrower”) promises to pay to Bremer Bank, National Association (“Lender”), or order, in lawful money of the United States of America, the principal amount of Two Million & 00/100 Dollars ($2,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance.  Interest shall be calculated from the date of each advance until repayment of each advance.

 

PAYMENT.  Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on December 9, 2011.  In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning January 3, 2011, with all subsequent interest payments to be due on the same day of each month after that.  Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges.  Borrower will pay Lender at Lender’s address shown above or at such other place as Lender may designate in writing.

 

VARIABLE INTEREST RATE.  The interest rate on this Note is subject to change from time to time based on changes in an index which is the rate as announced from time to time by Bremer Bank, National Association (the “Index”).  The Index is the Prime rate as published by Bloomberg at www.Bloomberg.com under “Market Data: Rates and Bonds: Key Rates,” as of the date of determination.  The Index is not necessarily the lowest rate charged by Lender on its loans and is set by Lender in its sole discretion.  If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying borrower.  Lender will tell Borrower the current Index rate upon Borrower’s request.  The interest rate change will not occur more often than each day.  Borrower understands that Lender may make loans based on other rates as well.  The Index currently is 3.250% per annum. Interest on the unpaid principal balance of this Note will be calculated as described in the “INTEREST CALCULATION METHOD” paragraph using a rate of 1.000 percentage point over the Index, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 4.500% per annum based on a year of 360 days.  NOTICE: Under no circumstances will the interest rate on this Note be less than 4.500% per annum or more than the maximum rate allowed by applicable law.

 

INTEREST CALCULATION METHOD.  Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance Is outstanding.  All interest payable under this Note Is computed using this method.

 

PREPAYMENT; MINIMUM INTEREST CHARGE.  in any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $10.00.  Other than Borrower’s obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid interest.  Rather, early payments will reduce the principal balance due.  Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Bremer Bank, National Association; Minneapolis Office; 8555 Eagle Point Blvd; P.O. Box 1000; Lake Elmo, MN 55042.

 

LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment.

 

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by adding a 2.000 percentage point margin (“Default Rate Margin”).  The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

 

DEFAULT.  Each of the following shall constitute an event of default (“Event of Default”) under this Note:

 

Payment Default.  Borrower falls to make any payment when due under this Note.

 

Other Defaults.  Borrower falls to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

 

Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents.

 

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

 

Insolvency.  The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

  

  

  

	
PROMISSORY NOTE

Loan No. 418887                                                                                                                                                                                                                                                            (Continued)

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  This includes a garnishment of any of Borrower’s accounts, Including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which Is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor.  Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

 

Change In Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse Change.  A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

 

LENDER’S RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

 

ATTORNEYS’ FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender’s reasonable attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit, including reasonable attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

 

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

 

GOVERNING LAW.  This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Minnesota without regard to its conflicts of law provisions.  This Note has been accepted by Lender in the State of Minnesota.

 

DISHONORED ITEM FEE.  Borrower will pay a fee to Lender of $15.00 if Borrower makes a payment on Borrower’s loan and the check or pre authorized charge with which Borrower pays is later dishonored.

 

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.

 

COLLATERAL.  Borrower acknowledges this Note is secured by all inventory, chattel paper, accounts, equipment and general intangibles as listed in the Commercial Security Agreement dated October 25, 2007 between the Borrower and the Lender.

 

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances under this Note may be requested either orally or in writing by Borrower or as provided in this paragraph.  Lender may, but need not, require that all oral requests be confirmed in writing.  All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender’s office shown above.  The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender’s address shown above, written notice of revocation of such authority: Any 2 of the following: John J. Pollock, President/COO of Aetrium Incorporated; Paul H. Askegaard, Treasurer/Asst Secretary of Aetrium Incorporated; and Douglas L Hemer, CAO/Secretary of Aetrium Incorporated.  Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower’s accounts with Lender.  The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender’s internal records, including daily computer print-outs.  Lender will have no obligation to advance funds under this Note if:  (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor’s guarantee of this Note or any other loan with Lender; or (D) Borrower has applied funds provided pursuant to this Note for purposes other than those authorized by Lender.

 

EXISTING SECURITY AGREEMENT.  This Promissory Note constitutes “Indebtedness” as defined in the Security Agreement dated October 25, 2007 between the Borrower and the Lender.

 

ADVANCE RESTRICTIONS.  ALL LOAN ADVANCES WILL BE AT THE SOLE AND ABSOLUTE DISCRETION OF THE BANK.

 

EXISTING LOAN AGREEMENT.  This Promissory Note constitutes “Indebtedness” as defined in the Business Loan Agreement dated December 3, 2009, between the Borrower and the Lender.

 

PRIOR NOTE.  This Promissory Note is accepted by Lender in substitution for, but not in payment of, that certain Promissory Note dated December 3, 2009, in the original principal amount of $2,000,000.00 between Aetrium Incorporated (“Borrower”) and Bremer Bank, National Association (“Lender”).

 

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

 

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.  Borrower may notify Lender if Lender reports any inaccurate information about Borrower’s account(s) to a consumer reporting agency. Borrower’s written notice describing the specific inaccuracy(ies) should be sent to Lender at the following address: Bremer Service Center Mail station – MN-001-23FO 8555 Eagle Point Blvd P.O. Box 1000 Lake Elmo, MN 55042.

 

GENERAL PROVISIONS.  If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  In addition, Lender shall have all the rights and remedies provided in the related documents or available at law, in equity, or otherwise.  Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently.  Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower shall not affect Lender’s right to declare a default and to exercise its rights and remedies.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note, and unless

 

  

  

  

	
PROMISSORY NOTE

Loan No. 418887                                                                                                                                                                                                                                                             (Continued) 

otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Note are joint and several.

 

SECTION DISCLOSURE.  To the extent not preempted by federal law, this loan is made under Minnesota Statutes, Section 47.59.

 

 

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

 

BORROWER:

 

AETRIUM INCORPORATED

 

 

	
By:  /s/ John J. Pollock

        John J. Pollock, President/COO of Aetrium Incorporated

 

By: /s/ Douglas L. Hemer

        Douglas L. Hemer, CAO/Secretary of Aetrium

        Incorporated

 

	
By: /s/ Paul H. Askegaard

Paul H. Askegaard, Treasurer/Asst Secretary of

Aetrium Incorporatedexhibit10-2.htm

Exhibit 10.2

AGREEMENT OF PURCHASE AND SALE

THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is made and entered into effective as of June 25, 2007 (the “Effective Date”) and between STANDARDMOTOR PRODUCTS, INC., a New York corporation (“Seller”) and THE LEATHER FACTORY, L.P., a Texas limited partnership (“Purchaser”).

WITNESSETH:

ARTICLE I

GENERAL

1.1           Agreement to Sell and Purchase. Seller hereby agrees to sell and convey to Purchaser, and Purchaser hereby agrees to purchase and accept from Seller, for the Purchase Price (hereinafter defined) and upon and subject to the terms and conditions hereinafter set forth, all of the following described property (hereinafter referred to collectively as the “Property”):

	  	
(a)

	
That certain tract or parcel of land owned by Seller lying and being situated in the City of Fort Worth, County of Tarrant, State of Texas, and being more particularly described as Exhibit A attached hereto, subject to the provisions of Section 1.4 herein (the “Land”);

	  	
(b)

	
All buildings, improvements and fixtures situated on the Land (collectively, the “Improvements”);

	  	
(c)

	
All of the rights and appurtenances pertaining to the Land and the Improvements, including all right, title and interest of Seller in and to adjacent streets, alleys, easements and rights-of-way;

	  	
(d)

	
All other rights, privileges and appurtenances owned by Seller and in anyway related to the property described above, and such other rights, interests and properties as may be specified in this Agreement to be sold, transferred, assigned or conveyed by Seller to Purchaser; and

	  	
(e)

	
All transferable licenses, permits, and certificates of occupancy, if any, that relate to the Land or Improvements.

	  	
(f)

	
The following personal property (“Personal Property”): electrical, plumbing, HVAC, air compressors, phone equipment system and one-half (1/2) of the cubical furniture, all racks, bins and shelving not presently subject to a lease agreement, as more particularly described on Exhibit D as “Modular Furniture to Convey with Property.

1.2           Purchase Price. The purchase price (the “Purchase Price”) to be paid for the Property shall be Four Million Five Hundred Thousand AND NO/100 DOLLARS ($4,500,000.00), payable in cash or immediately available wire transferred funds at the Closing (hereinafter defined).

1.3           Earnest Money. Within two (2) days following the Effective Date, and as conditions to Seller’s obligations hereunder, Purchaser shall deposit with Rattikin Title Company, 201 Main Street, Suite 800, Fort Worth, Texas 76102-4880, Attention: Mac Miles (the “Title Agent”), as agent  for                                                         (the “Title Company”), the sum of One Hundred Thousand and NO/100 Dollars ($100,000.00) to be invested by the Title Agent in a segregated, interest-bearing account with a financial institution approved by Seller and Purchaser whose accounts are insured by the Federal Deposit Insurance Corporation, and to be held and disbursed by the Title Agent strictly in accordance with the terms and provisions of this Agreement. The amount of such deposit is hereinafter referred to as “Earnest Money.” At the Closing (hereinafter defined), the Earnest Money shall be applied to the payment of the Purchase Price. All accrued interest on the Earnest Money shall become part of the Earnest Money and shall be distributed as part of Earnest Money in accordance with the terms of this Agreement.

1.4           Mineral Reservation. Seller agrees to sell and convey to the Purchaser fifty-one percent (51%) of the oil, gas, and other minerals in and under and that may be produced from the Land and all of the executive rights applicable to the Land together with the right of ingress and egress for the purpose of exploring, drilling, mining for, and producing oil, gas, and other minerals, which will entitle Purchaser to fifty-one percent (51%) of all royalties under any existing and/or future leases. Seller will reserve unto itself, its heirs, successors and assigns, forty-nine percent (49%) of the oil, gas, and other minerals in and under and that may be produced from the Land subject to this Agreement, together with the right to receive a like part of all royalties, bonuses, and rentals payable under any lease in the proportion that the reserved interest bears to one hundred percent (100%) of the fee mineral interest under the Land. Seller is expressly authorized to enter into any mineral lease pending Closing, and the conveyance to Purchaser under this Agreement will be subject to any mineral lease existing at Closing. In the event that a mineral lease is executed after the Effective Date, but prior to the Closing Date, Seller shall pay Purchaser at Closing fifty-one percent (51%) of all royalties, bonuses and rentals received by Seller after the Effective Date, but prior to Closing Date, on any such executed mineral lease. Purchaser agrees to ratify any mineral lease existing as of the Closing Date. Anything to the contrary herein notwithstanding, Purchaser has the right to approve any mineral lease prior to its execution. Such approval shall not be unreasonably withheld. If Purchaser fails to approve or reject any mineral lease within ten (10) business day after the same has been submitted to Purchaser by Seller, such mineral lease shall be deemed approved.

In the event that a mineral lease is executed after the Effective Date, but prior to the Closing Date, Seller shall pay Purchaser at Closing, in addition to the above, fifty-one percent (51%) of all payments received for surface damages and one-hundred percent (100%) of all payments received for easements for roads and transmission lines.

1.5           Excluded Assets. Seller shall retain and remove all office furniture in all private offices and conference rooms, one-half (1/2) of all cubical furniture, and all personal items of employees and officers of the company. Seller must obtain Purchaser’s written approval prior to removing any items from the Property.

ARTICLE II

TITLE COMMITMENT AND SURVEY;

REVIEW AND INSPECTION BY PURCHASER

2.1           Title Commitment. Seller, at Seller’s expense, will provide Purchaser an updated title commitment within fifteen (15) days of the effective date of this contract (the “Title Commitment”), issued by Title Company describing the Land (which legal description, as determined by the Survey referenced in Section 2.3 herein below, shall be incorporated into this Agreement and used in all closing documents), specifying Purchaser or its assignee as the prospective named insured, showing the Purchase Price as the prospective policy amount, showing the status of title of the Land and all exceptions (including, but not limited to, easements, declarations, restrictions, rights-of-way, covenants, reservations, encumbrances, liens and other conditions, if any, affecting the Land) which would appear in an Owner Policy of Title Insurance, when issued, together with true, correct and legible copies of all items and documents referred to therein including copies of tax certificates covering all taxes affecting the Property. With regard to the standard printed exceptions and other exceptions commonly included in title commitments, the exception for areas and boundaries shall (at Seller’s expense) be endorsed to provide that the exception shall be amended at Closing to except only to “Shortages in Area” upon receipt from Seller of a survey acceptable to the Title Company and the applicable premium therefor paid by Purchaser; no exceptions shall be permissible for parties in possession, except pursuant to recorded leases; the exception for restrictive covenants shall be deleted or endorsed “None of Record except... (with an express description by applicable recording data of those restrictive covenants and declarations of covenants affecting the Land)”; the exception for taxes shall be limited to standby fees and taxes owing for the year in which the Closing occurs and subsequent years and subsequent assessments for prior years due to changes in land use of the Property; there shall be no exception for any lien for service, labor or materials heretofore or hereafter provided, imposed by law and not shown by the public records; and there shall be no general exception for visible and apparent easements or roads and highways or similar items (with any such specific exception to be specifically referenced to, and shown on, the Survey described in Section 2.3 and also identified by any applicable recording data).

2.2           [Intentionally deleted]

2.3           Survey. Purchaser here by acknowledges that it is in receipt of a current “as-built” survey of the Land and Improvements (“Survey”), prepared by a duly licensed land surveyor or engineer reasonably acceptable to the Title Company and Seller. The Survey shall be currently dated, shall show the location on the Land of all improvements, buildings and set-back lines, fences, evidence of abandoned fences, ponds, creeks, streams, rivers, officially designated 100-year flood plains and flood prone areas, canals, ditches, ponds, streams, rivers, creeks, watercourses, easements, roads, rights-of-way and encroachments, and shall contain a legal description of the boundaries of the Land by metes and bounds (which shall include a reference to the recorded plat, if any), and a computation of the area comprising the Land in both acres and square feet (to the nearest one-thousandth of said respective measurement). At the Closing, the metes and bounds description of the Land reflected in the Survey will be used in the Deed (hereinafter defined) and any other documents requiring a legal description of the Land. The surveyor shall certify to Seller, to the Purchaser and/or its assigns, to Purchaser’s lender, and to the Title Company, in form acceptable to the Purchaser, that the Survey is correct and was made on the ground; that there are no visible discrepancies, conflicts, encroachments, protrusions, overlapping of improvements, violations of building or set-back lines, fences, evidence of abandoned fences, ponds, creeks, streams, rivers, officially designated 100-year flood plains or flood prone areas, canals, ditches, ponds, streams, rivers, creeks, watercourses, easements, roads or rights-of-way (except as are clearly shown and described on the survey plat); and that the computation of the area of the land shown is correct. Any and all recorded matters shown on the Survey shall be legibly identified by appropriate volume and page recording references with dates of recording noted and the Survey shall show the location of all adjoining streets.

2.4           Review Period and Cure Period. Purchaser shall have until the earlier to occur of (i) 5 days following the receipt of the Title Commitment or (ii) the expiration of the Inspection Period (hereinafter defined), to review the Title Commitment, and Survey (“Review Period”). In the event any exceptions to title appear in the Title Commitment, or any Uniform Commercial Code filings exist, or any matters appear in the Survey, that are unacceptable to Purchaser, Purchaser shall, within said Review Period, notify Seller in writing of such fact. Upon the expiration of said Review Period, Purchaser shall be deemed to have accepted all exceptions to title referenced in the Title Commitment and all matters shown on the Survey except for matters which are the subject of a notification permitted under the following sentence, and such accepted exceptions shall be included in the term “Permitted Exceptions” as used herein. In the event that Purchaser does object to any title exceptions or matters shown in the Title Commitment and/or the Survey within the Review Period, Seller shall have ten (10) days from receipt of notice of such objections ( “Cure Period”) within which to eliminate or modify any such unacceptable exceptions or items to the reasonable satisfaction of Purchaser. Seller may, but shall have no obligation, to eliminate any such unacceptable exceptions or items in order to so eliminate or modify such unacceptable items. In the event that Seller is unable or unwilling to eliminate or modify such unacceptable items to the reasonable satisfaction of Purchaser on or before the expiration of said Cure Period, Seller shall notify Purchaser in writing of such fact within said Cure Period. In the event Seller notifies Purchase that it is unwilling or unable to cure such unacceptable exceptions or Seller fails to notify Purchaser whether or not it will cure such items, Purchaser shall, on or before ten (10) days after the expiration of the Cure Period, either (a) waive such objections and accept title to the Property subject to such unacceptable items (which items shall then be deemed to constitute part of the “Permitted Exceptions”) or (b) terminate this Agreement by written notice to Seller and receive an immediate refund of the Earnest Money, plus all accrued interest thereon, whereupon this Agreement shall automatically be rendered null and void and of no further force and effect. The failure of Purchaser to so notify Seller of its decision on or before the ten (10) days after the expiration of the Cure Period shall be deemed to constitute Purchaser’s election to accept title to the Property subject to the unacceptable items.

2.5           Inspection by Purchaser. Purchaser shall have the right, at Purchaser’s expense, through July 12, 2007 (the “Inspection Period”) to inspect the Property and all documents in Seller’s possession relating to the Property and operations thereof, including without limitation books, records, service contracts, real estate tax statements covering the Property for the current year, all environmental reports covering the Property, if any, and other documents maintained by or for the Seller, and to conduct such due diligence review, inspections (including environmental inspection), tests and studies (including economic feasibility studies) (“Other Related Documents”) as Purchaser may deem necessary or appropriate in order to determine if the Property is in satisfactory condition and is suitable for Purchaser’s purpose.

Purchaser hereby acknowledges that Seller delivered and that Purchaser is in receipt of all documents that were in Seller’s possession relating to the Property and operations thereof, and Other Related Documents.

Purchaser shall provide Seller with a copy of any and all reports, inspections, tests and studies, or any other documents created in connection with a due diligence review pursuant to this provision, including without limitation Phase I and Phase II Environmental Report.

At least twenty-four (24) hours prior to any entry of the Property to conduct any supervised physical testing or inspection, Purchaser shall: (i) deliver to Seller telephonic, e-mail, or written notice of its intention to the enter the Property, and Seller shall have the right to have one or more of its agents and/or representatives accompany the Purchaser and (ii) provide Seller sufficient evidence to show that Purchaser and its agents and representatives who entered the Property are adequately covered by policies of insurance, issued by a carrier reasonably acceptable to Seller, insuring Purchaser and Seller against any and all liability arising out of Purchaser’s or Purchaser’s agents’ or representatives’ entry upon and investigation respecting the Property.

Purchaser shall indemnify, and hold harmless Seller for all reasonable costs and expenses required to repair or restore any property damaged by Purchaser or its agents in conducting such tests. The indemnification of Seller by Purchaser in the preceding sentence shall survive the termination of this Agreement or the Closing.

During the Inspection Period, Purchaser may, at Purchaser’s election and at its sole expense, perform any or all of the following, and Seller shall have absolutely no responsibility, obligation for payment of or reimbursement for, or liability in connection with such items:

(a)           Obtain a written commitment from the appropriate Governmental Authority that following the Closing, the Property will be appropriately zoned for Purchaser’s intended use thereof.

(b)           Obtain from the appropriate Governmental Authorities all permits, approvals and consents (or written commitments that such will be forthcoming) required by such Governmental Authorities, or alternatively satisfy itself that all such required permits, approvals and consents are readily obtainable, including without limitation any and all access and building permits, environmental and ecological approvals, subdivision plat approvals, site plan approvals, utility hook-up permits, and lot split approvals.

(c)           Conduct a Phase I environmental assessment of the Property, and conduct such additional environmental studies or assessments as Purchaser may deem appropriate. In that connection, Purchaser will rely solely on such assessments and reports which Purchaser shall conduct, and no representations, warranties, reports or environmental assessments provided by Seller will be relied upon by Purchaser in respect to the Property condition or Purchaser’s decision to purchase same.

In the event that Purchaser shall fail to close on the purchase of the Property, Purchaser will restore the Land and the Property to its condition immediately prior to Purchaser’s conducting of such inspections and tests.

2.6           Termination During Inspection Period. If the Purchaser determines, in Purchaser’s sole discretion, that the Property is not suitable for any reason for Purchaser’s intended use or is not in satisfactory condition, then Purchaser may terminate this Agreement by providing written notice of termination within the Inspection Period. The Earnest Money shall be refunded to the Purchaser less the sum of $100.00 to be retained by Seller as independent consideration for Purchaser’s right to terminate under this provision. If the Purchaser does not terminate this Agreement within the Inspection Period, any objections with respect to the condition of the Property, inspection, studies, and assessments under Section 2.2 shall be deemed waived by the Purchaser.

ARTICLE III

REPRESENTATIONS, WARRANTIES, COVENANTS, AND AGREEMENTS

3.1           Representations and Warranties of Purchaser.

To induce Seller to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, Purchaser represents and warrants to Seller, as of the Effective Date and as of the Closing Date, except where specific reference is made to another date or dates, in which case the other date or dates will apply, that:

(a)           Purchaser has full power and authority to execute, deliver, and consummate this Agreement subject to the conditions to Closing set forth in this Agreement. No provisions exist in any contract, document, or other instrument to which Purchaser is a party or by which Purchaser is bound that would be violated by consummation of the transactions contemplated by this Agreement.

(b)           Purchaser is a limited partnership duly organized, validly existing, and in good standing under the laws of the State of Texas.

(c)           Neither the execution nor delivery of this Agreement by Purchaser will result in a violation or breach of any term or provision or constitute a default under any agreement to which Purchaser is a party.

3.2           Representations and Warranties of Seller.

To induce Purchaser to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, Seller represents and warrants to Purchaser as of the Effective Date and as of the Closing Date, except where specific reference is made to another date or dates, in which case the other date or dates will apply, that:

(a)           There are no actions, suits or proceedings pending or, to the best knowledge and belief of Seller, threatened or asserted against Seller affecting any portion of the Property, at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign;

(b)           Seller has not received any notices of any condemnation actions, special assessments or increases in the asserted valuation of taxes or other impositions of any nature which are pending or being contemplated with respect to the Property or any portion thereof;

(c)           Except as to the Permitted Exceptions, there are no liens or security interests against the Land, the Improvements or against any other portion of the Property (which will not be paid on or before Closing), nor are there any actions pending which would result in the creation of any lien for any Improvements, and Seller shall not create or voluntarily permit to be created any liens, easements or other conditions affecting any portion of the Property without the prior written consent of Purchaser. At the Closing, there will be no unpaid bills or claims in connection with any construction or repair of the Improvements or other work performed or material purchased in connection with the Improvements;

(d)           Seller has full power and authority to execute, deliver, and consummate this Agreement subject to the conditions to Closing set forth in this Agreement, and by proper corporate action has duly authorized the execution and delivery of this Agreement and the consummation of the transaction herein contemplated;

(e)           This Agreement is a valid obligation of Seller and is binding upon Seller in accordance with its terms;

 

(f)           Seller is the owner of good and indefeasible fee simple title to the Property, free and clear of any liens, deeds of trust, pledges, security interests, leases, charges, encumbrances or restrictions of any kind, except as will be shown in the Title Commitment to be provided in accordance with this Agreement (which liens, deeds of trust, and security interests will be released at Closing as a condition precedent to Closing);

(g)           Seller has paid all taxes, charges and assessments (special or otherwise) required to be paid to any taxing authority which could in any way now or hereafter constitute a lien against the Property or any part thereof (except for taxes and assessments payable during the current year). Seller has not received any notice from any taxing authority or governmental agency asserting that Seller has failed to file or has improperly filed any tax return or report required to be filed by it, or that it has not paid all taxes, charges or assessments now owing by it (except current taxes and assessments not yet delinquent) which could in any way now or hereafter constitute a lien against the Property or any part thereof; and no action or proceeding is now pending by a governmental agency or authority for the assessment or collection of such taxes, charges or assessments against Seller; and

(h)           Neither the execution nor delivery of this Agreement by Seller will result in a violation or breach of any term or provision or constitute a default under any agreement to which Seller is a party.

ARTICLE IV

THE CLOSING

4.1           The Closing Date. The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place in the offices of the Title Agent within fifteen (15) days after the expiration of the Inspection Period, but not later then July 31, 2007 (the “Closing Date”).

4.2           Seller’s Obligations at the Closing. Seller shall deliver or cause to be delivered to Purchaser the following items at the Closing (or by such earlier date as specifically stated):

	  	
(a)

	
Special Warranty Deed (the “Deed”), in the form attached hereto as Exhibit “B” executed by Seller, conveying marketable title to the Land and Improvements to Purchaser, subject to the Permitted Exceptions,

	  	
(b)

	
Certificate of non-foreign status (the “Certificate of Nonforeign Status”), in the form attached hereto as Exhibit “C.”

	  	
(c)

	
Owner Policy of Title Insurance (the “Owner Title Policy” ) issued by the Title Company, insuring good and indefeasible title to the Property in Purchaser in a face amount equal to the Purchase Price, and containing no exceptions other than the Permitted Exceptions. Purchaser may request and obtain deletion of the survey exception save “shortages in area” at its sole cost and expense. Seller agrees to take all reasonable actions that may be required by the Title Company as a condition to issuing the Owner Title Policy including, but not limited to, providing aSeller’s affidavit attesting that, to the best of Seller’s knowledge: (a) no individual or entity has any claim against the Property under the applicable contractor’s lien laws; and (b) except for Seller, no individual or entity is either in possession of the Property or has a possessory interest or claim in the Property.

	  	
(d)

	
Possession of Property, together with all keys and electronic pass cards or devices to all entrance doors to the Property, to the extent in Seller’s possession.

	  	
(e)

	
Such evidence of the authority of Seller to consummate the Closing as the title Company and Purchaser may reasonably require.

	  	
(f)

	
Such other documents as the Title Agent, Title Company or Purchaser may reasonably request.

	  	
(g)

	
Any and all documents which shall be necessary to complete the satisfaction of the Title Requirements set forth in Schedule C of the Commitment

	  	
(h)

	
Current real estate ad valorem tax statements covering the Land and Improvements, if available and if not previously furnished, and tax certificates for the previous year.

4.3           Purchaser’s Obligations at the Closing. Purchaser shall deliver or cause to be delivered to Seller the following items at the Closing:

	  	
(a)

	
The Purchase Price required by Section 1.2 above, by delivery to Seller of cash or immediately available wire transferred funds.

	  	
(b)

	
Such evidence of the authority of Purchaser to consummate the Closing as the Title Agent, Title Company and Seller may reasonably require.

 

4.4           Closing Costs. Seller shall pay the basic premium for the Title Policy (Texas form T-l), the fee for preparation and recording the Deed, and fifty percent (50%) of all other escrow and closing costs. Purchaser shall pay any documentary transfer tax and sales taxes due in connection with the consummation of the transaction contemplated herein, all costs and expenses incurred in connection with obtaining any financing for the purchase of the Property, including title, escrow, documentation and appraisal costs relating thereto, and any lender’s policy of title insurance, the cost of any title endorsements including the survey endorsement, and fifty percent (50%) of all other escrow and closing costs.

4.5           Prorations. At the Closing, the following items of revenue and expense shall be adjusted and apportioned in cash as of 11:59 p.m. on the day preceding the Closing Date (the “Adjustment Date”):

	  	
(a)

	
Real estate and other ad valorem taxes, assessments, personal property or use taxes and sewer charges, on the basis of the fiscal year for which such taxes or charges are assessed. If the actual ad valorem taxes are not available on the Closing Date for the tax year in which the Adjustment Date occurs, the proration of such taxes at the Closing shall be estimated based upon the most current information available to the parties, including information disclosed by the local tax office or other public information. “When actual figures are published or otherwise become available, Seller and Purchaser shall make such further adjustment as necessary to cause the proration to be accurate as of the Closing Date. Purchaser acknowledges that Seller may currently be appealing the valuation of the Property and agrees that Seller shall be entitled, at Seller’s cost and expense, to pursue such appeal to completion and to receive (i) any tax refunds for years prior to the year of the Closing, and (ii) a pro rata share of any tax refund for the year of the Closing, which pro rata share shall be calculated by multiplying the amount of the tax refund by the number of days in the year of the Closing that have elapsed prior to the Closing and dividing such product by 365. Further, with respect to any such appeal, if any tax refund creates an obligation to reimburse any tenants for any rents paid, that portion of such refund equal to the amount of such required reimbursement (after deduction of allocable expenses as may be provided in the Tenant Lease to such tenant) shall be paid to Purchaser and Purchaser shall disburse the same to such tenant.

	  	
(c)

	
All costs and expenses of operating the Property shall be determined to the Adjustment Date and paid by the Seller. If invoices for any of such charges, expenses or income figures to the Adjustment Date are unavailable on the Closing Date, a readjustment of these items will be made when such information becomes available.

	  	
(d)

	
No provision has been made for the proration of water charges, fuel charges or utility charges (including, without limitation, telephone, gas and electricity) as Seller shall terminate its account (but not the service itself) with the providers of all such services as of the Adjustment Date and the Purchaser shall, prior to the Closing Date, make application to the providers of such services for the continuation of such services in the name of Purchaser or its designee. It is anticipated that in connection with all such services, the meters will be read on or about the Adjustment Date and the Seller shall be responsible for paying the bills for such services accruing prior to the Adjustment Date and the Purchaser shall be responsible for the payment of all such accounts accruing on or after the Adjustment Date. If any such accounts are not handled in this matter, they shall be prorated as of the Adjustment Date in the manner described in Section 4.5(a) above. Seller shall be entitled to receive and retain all refundable cash or other deposits posted with utility companies serving the Property.

4.6           Lease. At Closing, Seller shall have the right to lease all improvements in accordance with the lease attached hereto marked Exhibit “E” and made a part hereof for all intents and purposes.

ARTICLE V

DAMAGE OR CONDEMNATION PRIOR TO THE CLOSING

5.1           Damage. If, at any time after the Effective Date and on or before the Closing Date, all or any portion of the Property is damages, destroyed or rendered inoperative (collectively, the “Damage”), by fire, flood, natural elements or other causes, Seller shall promptly notify Purchaser of such Damage and then the following shall apply:

	  	
(a)

	
If the damage is not Material (hereinafter defined), Purchaser shall proceed to close and purchase the Property as diminished by such Damage, subject to a reduction in the Purchase Price equal to the full estimated cost of repairing or restoring the Damage.

	  	
(b)

	
If the Damage is Material, then Purchaser, at its sole option, may elect either (i) to terminate this Agreement by written notice to Seller given at or prior to the Closing;, whereupon the Title Agent shall immediately return the Earnest Money to Purchaser and, upon Purchaser’s receipt thereof, neither party hereto shall have any further rights against, or obligations to, the other under this Agreement; or (ii) to agree to close and deduct from the Purchase Price the full estimated cost of repairing or restoring the Damage.

	  	
(c)

	
If the Damage is covered by insurance, the purchaser shall have the right to elect to close the purchase of the Property in its condition (with respect to the Damage covered by insurance) on the Closing Date and to receive a credit against the Purchase Price in the amount of any deductible, and take an assignment of the insurance proceeds, in which event Seller shall assign such insurance proceeds to the Purchaser, remit to Purchase any insurance proceeds received by Seller and shall permit Purchaser to conduct any remaining settlement or other negotiations with the insurer as to the amount of proceeds payable on account of the Damage.

	  	
(d)

	
For the purposes of this Section 5.1, Damage shall be deemed to be “Material” if the cost of repairing the Damage equals or exceeds the Purchase Price. The cost of repairing the Damage shall be determined in the following manner: Within 10 days after the Damage occurs, each party shall designate an engineering firm to act on its behalf, and the firms designated shall promptly consult with each other in an attempt to mutually agree upon the cost of repairing the Damage. If the firms cannot agree on the cost within the 10-day period after they have both been designated, they shall, within five days after such 10-day period, designate a third engineering firm, which. shall be instructed to determine the cost of repairing the Damage within 10 days after its designation. The cost of repairing the Damage as determined by the third engineering firm shall be conclusive.

5.2           Condemnation. After the Effective Date, in the event of a taking or threatened taking by condemnation or similar proceedings or actions of all the Property, or any portion of the Property, Purchaser shall have the option to terminate this Agreement upon written notice to Seller within five (5) business days after Purchaser receives notice of such taking or of such threatened taking, and upon receipt of such notice Seller shall promptly refund the Earnest Money to Purchaser. If Purchaser does not exercise its option under the immediately preceding sentence of this Section to terminate this Agreement, then the Agreement shall remain in full force and effect and Seller shall assign or pay to Purchaser at Closing, Seller’s entire interest in and to any and all condemnation awards or proceeds from any such proceedings or actions in lieu thereof.

ARTICLE VI

DEFAULTS

6.1           Default by Seller. In the event Purchaser is ready, willing and able to deliver all required items and close at the appointed time as provided herein, Seller defaults in its obligations to sell the Property, Purchaser shall be entitled, as its sole and exclusive remedy, to the return of the Earnest Money and reimbursement from Seller to Purchaser of its actual out-of-pocket expenses incurred in connection with this transaction, which return and payment shall operate to terminate this Agreement and release Seller from any and all duties, obligations and liability hereunder.

6.2           Default by Purchaser. In the event Seller is ready, willing and able to deliver all required items and close at the appointed time as provided herein and Purchaser defaults in its obligations to purchase the Property, Seller may, as its sole and exclusive remedy for such breach, terminate this Agreement by written notice to Purchaser and the Title Agent, and upon any such termination the Title Agent shall immediately deliver the Earnest Money to Seller as liquidated damages for the breach of this Agreement, it being agreed between the parties hereto that the actual damages to Seller in the event of such breach are impractical to ascertain and the amount of the Earnest Money is a reasonable estimate thereof. Seller expressly waives its right to specific performance or damages against Purchaser.

ARTICLE VII

MISCELLANEOUS

7.1           Notices. Any notice, request, demand, instruction or other communication to be given to either party hereunder, shall be in writing and shall either be (i) hand-delivered; (ii) sent by recognized overnight mail service, or (iii)sent by confirmed telephone facsimile transmission to Seller, Seller’s attorney, Purchaser and Purchaser’s attorney, at their respective addresses set forth below. Notice shall be deemed to have been given upon receipt or refusal of delivery of said notice. The addressees and addresses for purposes of this paragraph may be changed by giving notice. Unless and until such written notice is received the last addressee and address stated herein shall be deemed to continue in effect for purposes hereunder. Such notices shall be given to the parties hereto at the following addresses or, if given by facsimile transmission over the telephone, at the following FAX numbers:

	
If to Seller, to:

	
Standard Motor Products, Inc.

	  	
cc: William D. Hayward

	  	
37-18 Northern Blvd.

	  	
Hiersche, Hayward, Drakeley, &Urbach

	  	
Long Island City, NY 11101

	  	
15303 Dallas Pkwy, Suite 700

	  	
Telephone: 718-392-0200

	  	
Addison, Texas 75001

	  	
Telecopier: 718-784-3284

	  	
Telephone: 972-701-7004

	  	  	  	
Telecopier: 972-701-8765

	  	  	  	  
	  	  	  	  
	
If to Purchaser, to:

	
Jon Thompson

	  	
cc: William M. Warren

	  	
The Leather Factory, L.P.

	  	
Loe, Warren, Rosenfield, Kaitcer, Hibbs& Windsor, P.C.

	  	
P.O. Box 50429

	  	
P.O. Box 100609

	  	
Fort Worth, Texas 76105

	  	
4420 W. Vickery Blvd.

	  	
Telephone: 817-496-4414

	  	
Fort Worth, Texas 76185-0609

	  	
Telecopier: 817-496-9806

	  	
Telephone: 817-377-0060

	  	  	  	
Telecopier: 817-377-1120

7.2           Brokerage Fees and Commissions. Conditioned upon the actual consummation of the sale contemplated hereby, Seller agrees to pay commission to Trey Fricke, Lee & Associates, 5050 Quorum Dr., Suite 460, Dallas, Texas 75254 (“Broker”) pursuant to separate Brokerage Agreement executed between Seller and Broker, and Seller agree to pay commission of three percent (3%) to The Staubach Company, 201 Main Street, Suite 1810, Fort Worth, Texas, 76102. If the sale contemplated hereby is not actually consummated for any reason, including the default of either or both parties, no commission shall be payable.

7.3           Entire Agreement. This Agreement embodies and constitutes the entire understanding between the parties hereto with respect to the transactions contemplated herein, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged into this Agreement.

7.4           Modification. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except as provided herein or by an instrument in writing, signed by the party against which the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument.

7.5           Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

7.6           Headings. Descriptive headings are used in this Agreement for convenience only and shall not control, limit, amplify or otherwise modify or affect the meaning or construction of any provision of this Agreement.

 

7.7           Binding Effect. Subject to the provisions of Section 7.8, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors and assigns.

7.8           Assignment. Purchaser shall not assign this Agreement, in whole or in part, without Seller’s written consent. Any such assignment shall be null and void.

7.9           Discharge of Obligations. The acceptance of the Deed by Purchaser shall be deemed to be a fall performance and discharge of every representation and warranty made by Seller herein and every agreement and obligation on the part of Seller to be performed pursuant to the provisions of this Agreement, except those, if any, which are herein specifically stated to survive Closing.

7.10           Time of Essence. Time is of the essence of this Agreement and of each covenant and agreement that is to be performed at a particular time or within a particular period of time. However, if the final date of any period which is set out in any provision of this Agreement or the Closing Date falls on a Saturday, Sunday or legal holiday under the laws of the United States or the State of Texas, then the time of such period or the Closing Date, as the case may be, shall be extended to the next date which is not a Saturday, Sunday or legal holiday.

7.11           Invalid Provision. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by such illegal, invalid or unenforceable provision or by its severance from this Agreement.

7.12           Disclaimers.

(a)           AS A MATERIAL INDUCEMENT TO SELLER TO ENTER INTO THIS AGREEMENT AND TO SELL THE PROPERTY TO PURCHASER, PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT;   (i) PURCHASER IS PURCHASING THE PROPERTY IN “AS IS, WHERE IS CONDITION, WITH ALL FAULTS”; (ii) PURCHASER IS PURCHASING THE PROPERTY SUBJECT TO ALL EXISTING LAWS,  STATUTES, ORDINANCES, CODES, RULES AND REGULATIONS, AND PURCHASER SHALL BE RESPONSIBLE FOR THE PAYMENT OF ALL CONNECTION CHARGES, PRO RATA FEES, DEVELOPER LIABILITY PAYMENTS AND LIKE CHARGES, FEES AND PAYMENTS REQUIRED IN CONNECTION WITH THE UTILIZATION OF UTILITIES, ROADS OR OTHER SIMILAR IMPROVEMENTS TO SERVE THE PROPERTY AND/OR ANY IMPROVEMENTS EXISTING OR HEREAFTER CONSTRUCTED OR PLACED THEREON; (HI) EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT AND EXCEPT FOR THE SPECIAL WARRANTY OF TITLE CONTAINED IN THE DEED, NEITHER SELLER NOR ANY PARTY REPRESENTING SELLER HAS MADE ANY WARRANTY OR REPRESENTATION TO PURCHASER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THE PROPERTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OR REPRESENTATIONS CONCERNING HABITABILITY, SUITABILITY, MERCHANTABILITY, WORKMANSHIP, ENVIRONMENTAL CONDITIONS, INCOME TO BE DERIVED FROM THE PROPERTY, EXPENSES TO BE INCURRED IN CONNECTION WITH THE PROPERTY, ZONING, BUILDING CODE, PLATTING, SUBDIVISION, ACCESS, AVAILABILITY OF UTILITIES OR COMPLIANCE WITH ANY LAWS, STATUTES, ORDINANCES, CODES, RULES OR REGULATIONS; AND (IV) EXCEPT FOR THE EXPRESS WARRANTIES AND REPRESENTATIONS CONTAINED IN THIS AGREEMENT AND THE SPECIAL WARRANTY OF TITLE CONTAINED IN THE DEED, PURCHASER WILL NOT RELY ON ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ORAL OR WRITTEN, OF SELLER OR ANY PARTY REPRESENTING SELLER BUT INSTEAD WILL RELY ON PURCHASER’S AND ANY CONSULTANT(S)’ INSPECTIONS, TESTS, SURVEYS, PROCEDURES AND INVESTIGATIONS OF THE PROPERTY.  PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT ANY REPORTS, AUDITS, ASSESSMENTS, STUDIES  OR OTHER INFORMATION WITH RESPECT OR PERTAINING TO THE PROPERTY  FURNISHED TO PURCHASER BY SELLER  (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL REPORTS AND ANY ENGINEERING REPORTS) OR BY ANY PARTY REPRESENTING SELLER HAVE BEEN PROVIDED BY SELLER TO PURCHASER WITHOUT ANY WARRANTY OR REPRESENTATION, EXPRESS  OR IMPLIED, ORAL OR WRITTEN, CONCERNING THE ADEQUACY OR THE ACCURACY THEREOF AND THAT PURCHASER WILL NOT RELY THEREON BUT INSTEAD WILL RELY ON PURCHASER’S OR ON THE APPLICABLE CONSULTANT(S)’ INVESTIGATIONS OF THE PROPERTY TO DETERMINE WHETHER THE PROPERTY IS IN A CONDITION . SATISFACTORY TO PURCHASER AND WHETHER THE PROPERTY IS SUITABLE FOR PURCHASER’S INTENDED USE. The deed conveying the property to Purchaser at Closing shall contain a provision substantially identical to that which is set forth above.

(b)          IF THIS AGREEMENT IS CLOSED, AS A MATERIAL INDUCEMENT TO SELLER TO SELL THE PROPERTY TO PURCHASER, PURCHASER AGREES THAT: (i) PURCHASER IS EXPRESSLY ASSUMING ALL RISKS, DUTIES AND OBLIGATIONS ARISING OR RESULTING FROM THE EXISTENCE OF ANY ADVERSE CONDITION IN, ON, UNDER OR ABOUT THE PROPERTY; AND (ii) EXCEPT IN THE INSTANCE OF FRAUD, PURCHASER HEREBY RELEASES SELLER AND SELLER’S EMPLOYEES, AGENTS AND CONTRACTORS FROM ALL RESPONSIBILITY AND LIABILITY FOR ANY AND ALL COSTS, EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES, ATTORNEYS’ DISBURSEMENTS AND COURT COSTS), DAMAGES, LOSSES, CLAIMS, CAUSES OF ACTION, LIABILITIES, LIENS, ENCUMBRANCES, PENALTIES, FINES AND CHARGES, REGARDLESS OF WHETHER ANY OF SUCH CLAIMS, CAUSES OF ACTIONS OR OTHER MATTERS ARE FOUNDED IN WHOLE OR IN PART UPON THE ALLEGED OR ACTUAL NEGLIGENCE OR STRICT LIABILITY OF SELLER OR SELLER’S EMPLOYEES, AGENTS AND CONTRACTORS, ARISING OR RESULTING FROM OR PERTAINING IN ANY WAY TO THE CONDITION, VALUATION OR UTILITY OF THE PROPERTY OTHER THAN THOSE (IF ANY) ARISING OUT OF ANY OF THE WARRANTIES AND REPRESENTATIONS CONTAINED IN THIS AGREEMENT BEING INCORRECT.

PURCHASER AND SELLER AGREE THAT THE PROVISIONS OF THIS SECTION 7.12 SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.

7.13           No Third Party Beneficiary. The provisions of this Agreement and of the documents to be executed and delivered at Closing are and will be for the benefit of Seller and Purchaser only and are not for the benefit of any third party, and accordingly, no third party shall have the right to enforce the provisions of this Agreement or of the documents to be executed and delivered at Closing.

7.14           Termination of Agreement. It is understood and agreed that if either Purchaser or Seller terminates this Agreement pursuant to a right of termination granted hereunder, such termination shall operate to relieve Seller and Purchaser from all obligations under this Agreement, except for such obligations as are specifically stated herein to survive the termination of this Agreement.

7.15           Cross Indemnification. Anything to the contrary herein notwithstanding, Seller shall defend, indemnify and hold harmless Purchaser from all loss, expense (including reasonable counsel fees), damage and liability resulting from (a) claims of mechanics and materialmen based on work performed on or at the Property prior to the Closing, and (b) tort claims (including, without limitation, for bodily injury, wrongful death or property damage) against Purchaser or the Property based on causes of action which arose or accrued prior to the Closing, and (c) contract claims arising by, through, or under Seller, by tenants, employees, contractors, or utility companies, with respect to matters that occurred or obligations which accrued prior to the Closing. Except as otherwise expressly provided in this Agreement, including any express waivers by Seller, Purchaser shall defend, indemnify and hold harmless Seller from all loss, expense (including reasonable counsel fees), damage and liability resulting from (a) claims of mechanics and materialmen based on work performed on or at the Property on or subsequent to the Closing, and (b) tort claims (including, without limitation, for bodily injury, wrongful death or property damage) against Seller based on causes of action which arose or accrued on or subsequent to the Closing, and (c) contract claims arising by, through or under Purchaser, by tenants, employees, contractors, or utility companies, with respect to matters that occurred or obligations which accrued on or subsequent to the Closing. The indemnification obligations of Purchaser and Seller, as set forth under this Section 7.14 shall survive the Closing or any termination of this Agreement.

7.16           Further Assurances. Each party shall, when requested by the other party hereto, cause to be executed, acknowledged and delivered such further instruments and documents as may be necessary and proper, in the reasonable opinion of the requesting party, in order to carry out the intent and purpose of this Agreement; provided, however this Section 7.15 shall not be construed to increase the economic obligations or liabilities of either party hereto.

7.17           Non-Disclosure. Except to the extent required by law, reasonably necessary for Purchaser to obtain financing for the transaction, or either party’s consultation with its professionals in order to comply with the terms of this Agreement, neither party will, without the prior written consent of the other party, and each will direct its representatives not to make, directly or indirectly, any public comment, statement, or communication with respect to, or otherwise to disclosure or to permit the disclosure of the existence of discussions regarding a possible transaction among the parties or any of the terms, conditions, or other aspects of the transaction among the parties or any of the terms, conditions, or other aspects of the transaction proposed in this Agreement. If a party is required by law to make any such disclosure, it must first provide to the other party the content of the proposed disclosure, the reasons that such disclosure is required by law and the time and place that the disclosure will be made.

7.18           Multiple Counterparts. This Agreement maybe executed in a number of identical counterparts, each of which for all purposes is deemed original, and all of which constitute collectively one agreement. For purposes of this Agreement, facsimile signatures shall be deemed originals. Notwithstanding any other provisions of this Agreement, the parties hereto agree that the execution of this Agreement and any amendments hereto may be conducted by electronic means as provided by the Uniform Electronic Transactions Act as enacted in the State of Texas.

IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement to be effective as of the Effective Date.

 

 

	
SELLER:

	  
	  	  	  
	
STANDARD MOTOR PRODUCTS, INC.

	  
	  	  	  
	  	  	  
	
By:

	
/s/ Robert H. Martin

	  
	
Name:

	
ROBERT H. MARTIN

	  
	
Title:

	
TREASURER

	  
	  	  	  
	  	  	  
	
BUYER:

	  
	  	  	  
	
THE LEATHER FACTORY, L.P.,

	  
	
a Texas limited partnership

	  
	  	  	  
	
By  The Leather Factory, Inc.,

	  
	
A Nevada corporation

	  
	
General Partner

	  
	  	  	  
	  	  	  
	
By:

	
 /s/ Ron C. Morgan

	  
	
Name:

	
Ron C. Morgan

	  
	
Title:

	
President

	  

 

 

  

  

  

Exhibit A

Legal Description of Land

TRACT 1

Being Block 1 of Campus Industrial Park, an addition to the City of Fort Worth, Tarrant County, Texas, according to the plate thereof recorded in Volume 388-49, Page 61 of the Deed Records of Tarrant County, Texas, being that same tract of land conveyed to Standard Motors Products, Inc. by deed recorded in Volume 13156, Page 311 of the Deed Records of Tarrant County, Texas.

TRACT II

Being a tract of land situated in the Samuel Woody Survey, Abstract No. 1638, in the City of Fort Worth, Tarrant County, Texas, being that same tract of land conveyed to Standard Motor Products, Inc. by deed recorded in Volume 13156, Page 311 of the Deed Records of Tarrant County, Texas, and being more particularly described by metes and bounds as follows:

Beginning at a 5/8 inch Iron rod found for corner in the Northeast line of a tract of land conveyed to Texas Electric Service Company by deed recorded in Volume 2574, Page 545 of the Deed Records of Tarrant County, Texas, sold point being the South corner of Block 1 of Campus Industrial Park, an addition to the City of Fort Worth, Tarrant County, Texas, according to the plate thereof recorded in Volume 388-49, Page 61 of the Deed Records of Tarrant County, Texas, same being the West corner of herein described tract;

Thence North 27 Degrees 57 Minutes 23 Second East, along the Southeast line of said addition, a distance of 697.28 feet to a 5/8 inch Iron rod found for corner, said point being the West Corner of Campus Business Park, an addition to the City of Fort Worth, Tarrant County, Texas, according to the plat thereof recorded in Volume 388-92, Page 6 of the Deed Records of Tarrant County, Texas, same being the North corner of herein Described tract;

Thence South 62 Degrees 00 Minutes 56 Seconds East, along the Southwest line of said Campus Business Park addition, passing the South corner of said Campus Business Park addition, same being the most northerly West corner of a tract of land conveyed to Campus and I-20 Joint Venture by deed recorded in Volume 8342, Page 68 of the Deed Records of Tarrant County, Texas, and continuing along the most northerly Southwest line of said Campus and I-20 Joint Venture tract, for a total distance of 329.88 feet to a 5/8 inch iron rod found for corner, said point being the East corner of herein described tract;

Thence South 27 Degrees 57 Minutes 23 Seconds West, along the most southerly Northwest line of said Campus and I-20 Joint Venture tract, a distance of 780.11 feet to a 5/8 inch iron rod found for corner, said point being the beginning of a non-tangent curve to the left having a delta of 158 Degrees 06 Minutes 28 Seconds, a radius of 60.00 feet and a chord bearing and distance of South 51 Degrees 00 Minutes 26 Seconds West, 117.82 feet;

Thence, in a southwesterly direction, along said curve to the left, an arc length of 165.57 feet to a 1⁄2 inch iron rod found for corner in the Northeast line of said Texas Electric Service Company tract, said point being the South corner of herein described tract;

Thence North 28 Degrees 02 Minutes 34 Seconds West, along the Northeast line of said Texas Electric Service Company tract, a distance of 342.27 feet to the Point of Beginning and containing 259,182.73 square feet or 5.95 acres of land.

  

  

  

Exhibit B

After recording return to:

_____________________________________

_____________________________________

_____________________________________

SPECIAL WARRANTY DEED

THE STATE OF TEXAS                                                                            §

                   KNOW ALL PERSONS BY THESE PRESENTS:

COUNTY OF ________________                                                          §

THAT, STANDARD MOTOR PRODUCTS, INC., a New York corporation (hereinafter referred to as “Grantor”), for and in consideration of the sum of Ten and no/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which consideration are hereby acknowledged, has GRANTED, SOLD, AND CONVEYED and by these present does GRANT, SELL AND CONVEY unto THE LEATHER FACTORY, L.P., a Texas limited partnership, whose address is _______________________________ (herein referred to as “Grantee”), by, through, and under Grantor but not otherwise, the following described property:

BEING that certain tract of land location in _____________ County, Texas, and being more particularly described in Exhibit “A” attached hereto and fully made a part hereof by reference for all purposes, together with all buildings, improvements and fixtures located thereon and all rights and appurtenances thereto in anywise belonging to Grantor (all of said property and interest being collectedly referred to herein as the “Property”).

SUBJECT, HOWEVER, to the exceptions to title more particularly set forth on Exhibit “B” attached hereto and fully made a part hereof by reference for all purposes.

TO HAVE AND TO HOLD the above described Property unto the said Grantee, its legal representatives, successors and assigns FOREVER, and Grantor does hereby bind itself and its legal representatives, successors and assigns to WARRANT AND FOREVER DEFEND all and singular the Property unto the said Grantee, its successors, legal representatives and assigns, against every person whomsoever lawfully claiming or to claim the same or any part thereof, by, through, or under Grantor but not otherwise, except as to the reservations from and exceptions to warranty.

MINERAL RESERVATION.  Grantor sells and conveys to the Grantee all of the executive rights applicable to the Property together with the right of ingress and egress for the purpose of exploring, drilling, mining for, and producing oil, gas, and other minerals.  Grantor reserves unto itself, its heirs, successors and assigns, forty-nine percent (49%) of the oil, gas, and other minerals in and under and that may be produced from the Property, together with the right to receive a part of all royalties, bonuses, and rentals payable under any future lease in the proportion that the reserved interest bears to one hundred percent (100%) of the fee mineral interest under the Property.

GRANTEE HEREBY ACKNOWLEDGES AND AGREES THAT:  (i) GRANTEE IS PURCHASING THE PROPERTY IN “AS IS, WHERE IS CONDITION, WITH ALL FAULTS”; (ii) GRANTEE IS PURCHASING THE PROPERTY SUBJECT TO ALL EXISTING LAWS, STATUTES, ORDINANCES, CODES, RULES AND REGLUATIONS, AND GRANTEE SHALL BE RESPONSIBLE FOR THE PAYMENT OF ALL CONNECTION CHARGES, PRO RATA FEES, DEVELOPER LIABILITY PAYMENTS AND LIKE CHARGES, FEES AND PAYMENTS REQUIRED IN CONNECTION WITH THE UTILIZATION OF UTILITIES, ROADS OR OTHER SIMILAR IMPROVEMENTS TO SERVE THE PROPERTY AND/OR ANY IMPORVEMENTS EXISTING OR HEREAFTER CONSTRUCTED OR PLACED THEREON; (III) EXCEPT AS EXPRESSLY SET FORTH IN THIS SPECIAL WARRANTY DEED, NEITHER GRANTOR NOR ANY PARTY REPRESENTING GRANTOR HAS MADE ANY WARRANTY OR REPRESENTATION TO GRANTEE, EXPRESS OR IMPLIED, ORAL OR WRITTE, WITH RESPECT TO THE PROPERTY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OR PRESENTATIONS CONCERNING HABITABILITY, SUITABILITTY, MERCHANTABILITY, WORKMANSHIP, ENVIRONMENTAL CONDITIONS, INCOME TO BE DERIVED FROM THE PROPERTY, EXPENSES TO BE INCURRED IN CONNECTION WITH THE PROPERTY, ZONING, BUILDING CODE, PLATTING, SUBDIVISION, ACCESS, AVIALABILITY OF UTILITIES OR COMPLIANCE WITH ANY LAWS, STATUTES, ORDINANCES, CODES, RULES OR REGULATIONS; AND (IV) EXCEPT FOR THE EXPRESS WARRANTIES AND REPRESENTATIONS CONTAINED IN THIS SPECIAL WARRANTY DEED, GRANTEE WILL NOT RELY ON ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ORAL OR WRITTEN, OF GRANTOR OR ANY PARTY REPRESENTING GRANTOR BUT INSTEAD WILL RELY ON GRANTEE’S AND ANY CONSULTANT(S)

 INSPECTIONS, TESTS, SURVEYS, PROCEDURES AND INVESTIGATIONS OF THE PROPERTY.  GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT ANY REPORTS, AUDITS, ASSESSMENTS, STUDIES OR OTHER INFORMATION WITH RESPECT OR PERTAINING TO THE PROPERTY FURNISHED TO GRANTEE BY GRANTOR (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL REPORTS AND ANY ENGINEERING REPORTS) OR BY ANY PARTY REPRESENTING GRANTOR HAVE BEEN PROVIDED BY GRANTOR TO GRANTEE WITHOUT ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ORAL OR WRITTEN, CONCERNING THE ADEQUACY OR THE ACCURACY THEREOF AND THAT GRANTEE WILL NOT RELY THEREON BUT INSTEAD WILL RELY ON GRANTEE’S OR ON THE APPLICABLE CONSULTANT(S)’ INVESTIGATIONS OF THE PROPERTY TO DETERMINE WHETHER THE PROPOERTY IS IN A CONDITION SATISFACTORY TO GRANTEE AND WHETHER THE PROPERTY IS SUITABLE FOR GRANTEE’S INTENDED USE.

Ad valorem taxes applicable to the Property have been paid up to, and including the year 2006, and ad valorem taxes applicable to the Property have been estimated and tentatively prorated by Grantor and Grantee as of the date of this Deed.  Subject to any rights regarding reallocation of said prorations contained in any document executed on even date herewith, Grantee hereby assumes payment of ad valorem taxes for the year 2007.

EXECUTED the  _________day of ___________, 2007.

STANDARD MOTOR PRODUCTS, INC.

By:  __________________________________

Name:  ________________________________

Title:  _________________________________

THE STATE OF TEXAS                                     §

§

COUNTY OF DALLAS                                       §

This instrument was acknowledged before me on _______________________, 2007 by _______________, a _______________ of Standard Motor Products, Inc., a New York corporation, on behalf of such corporation.

_________________________________

Notary Public – State of Texas

  

  

  

Exhibit “C”

AFFIDAVIT

AFFIDAVIT OF NON-FOREIGN STATUS

ENTITY TRANSFEROR

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.  To inform the transferee that withholding tax is not required upon the disposition of a U.S. real property interest, the undersigned hereby certifies the following on behalf of STANDARD MOTOR PRODUCTS, INC. (“Transferor”).

	
1.  

	
 That Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign status (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

	
2.  

	
That Transferor’s United States employer identification number is 11-136202; and

	
3.  

	
That Transferor’s office address is 37-18 Northern Blvd, Long Island City, NY 11101.

The undersigned understands that this affidavit may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under the penalties of perjury, the undersigned declares that, to the best knowledge and belief of the undersigned, the foregoing is true, correct and complete.

EXECUTED this _____________ day of ____________________, 2007.

STANDARD MOTOR PRODUCTS, INC.

By:  __________________________________

Name:  ________________________________

Title:  _________________________________

THE STATE OF TEXAS                                     §

§

COUNTY OF DALLAS                                       §

This instrument was acknowledged before me on _______________________, 2007 by _______________, a _______________ of Standard Motor Products, Inc., a New York corporation, on behalf of such corporation.

_________________________________

Notary Public – State of Texas

  

  

  

Exhibit “D”

Modular Furniture

(to be furnished)

(graphic layout of modular furniture to convey with property)

  

  

  

 

Exhibit “E”

SHORT TERM LEASE AGREEMENT

THIS SHORT TERM LEASE AGREEMENT (the “Lease”) dated effective the _______ day of ________, 2007, is entered into by and between STANDARD MOTOR PRODUCTS, INC., a Texas corporation, hereinafter referred to as “Tenant” and THE LEATHER FACTORY, LP, a Texas limited partnership, hereinafter referred to as “Landlord”.

WITNESSETH:

	
1.  

	
 Leased Premises.  Landlord hereby leases, let and demises to the Tenant, in consideration of the rents, terms, provisions, and covenants hereinafter set forth, the premises that are lying and being situated in the City of Fort Worth, County of Tarrant, State of Texas, and are a Landlord’s building (hereinafter referred to as “Leased  Premises”) located on the land that is more fully described on Exhibit “A” attached hereto (herein referred to as “Land”).

	
2.  

	
Term.  The term of this Lease commences on the Closing Date as defined by that certain Agreement of Purchase and Sale dated _______________________________ and executed by and between Landlord and Tenant (hereinafter referred to as “Commencement Date”) and terminates on September 30, 2007, unless terminated earlier pursuant to the terms of this Lease (hereinafter referred to as “Original Term”).

	
3.  

	
Rent.  Tenant shall pay a “Rental Rate” (herein so called) for the entire Leased Premises in the amount of Forty Eight Thousand Six Hundred Ninety One and 00/100 Dollars ($48,691.00) per month ($3.00/sq ft gross), beginning on the Commencement Date, and proprated daily.  The first monthly installment shall be payable on the Commencement Date, and subsequent installments shall be payable on the first day of each month thereafter during the term of this Agreement.

If for some reason the Term Commencement Date is a day other than the first day of the month, the first payment shall include the prorated period from the Commencement Date until the last day of such much.

Tenant shall not be liable for any additional rents, such as what is commonly referred to as Cost of Maintenance of Common Areas or CAM Cost.  Such maintenance shall be at the sole expense of the Landlord.

	
4.  

	
Additional Rental Period.  Landlord hereby leases, lets and demises to the Tenant in consideration of the rents, terms, provisions, and convenants set forth, the protion of the Leased Premises described on Exhibit “B” attached hereto and made a part thereof for all intents and purposes, for a period beginning October 1, 2007 until October 31, 2007 (“Move Out Period”).  Said Move Out Period will be on the same terms and conditions as the Original Term with the following additions, revisions, and modifications:

	
a.  

	
 Rental Rate will be $3.00/sq ft gross for the area of the Leather Premises designated as “Tenant’s Portion” on Exhibit “B”.

	
b.  

	
Tenant will perform no manufacturing operations during the Move Out Period and access will be limited to Tenant’s disassembly and removal of equipment, furniture and machinery in Tenant’s Portion.

	
c.  

	
During the Move Out Period, Landlord and Tenant agree to cooperate fully in permitting access to the premises for Tenant to remove the equipment, furniture, and machinery and to permit Landlord access for remodeling.

	
d.  

	
Tenant will be responsible for prorate utilities, based on the percentage of square footage occupied by Tenant during the Move Out Period to the entire square footage of the Leased Premises.

	
e.  

	
In the event Tenant should vacate the “Tenant’s Portion” prior to October 31, 2007, Tenant shall be entitled to a rental refund prorated daily for each day Tenant vacated prior to October 31, 2007.

	
5.  

	
Permitted Use.  During the Original Term, the Leased Premises may be used by Tenant to perform manufacturing operations in the same manner as such were performed prior to the Commencement Date, and to remove Tenant’s furniture, fixtures, equipment, machinery, signs, and all other items of personal property which Tenant shall retain and remove pursuant to the terms of that certain Agreement of Purchase and Sale executed on _____________________, 2007 by and between Landlord and Tenant.  During the Move out Period, the Leased Premises may be used as specified in Paragraph 4 of this Lease.

	
6.  

	
Common Areas.  Landlord hereby grants to Tenant non-exclusive license and use lease for ingress, egress and parking purposes over and across the parking areas, driveways or any other portion of the Land outside of the Leased Premises, access and perimeter roads and any and all other areas devoted to public use, including the public restrooms located outside of the Leased Premises (hereinafter collectively referred to as the “Common Areas”).

	
7.  

	
Payment of Utilities.  Tenant agrees to pay all charges incurred by Tenant for usage of utility services including water, sewer, gas, electricity, telephone, or other utilities relating to the Land and Leased Premises.

	
8.  

	
Maintenance.  Landlord covenants and agrees, at its sole expense, to maintain all utility lines, in and on the Land and Leased Premises, in good condition and repair, unless Tenant activities result in the disruption of utilities services, in which Tenant shall make all necessary repairs or shall reimburse Landlord for its expenses of repair.

Landlord further covenants and agrees to maintain the Common Areas in good condition and repair during the term of this Lease.

In the even Landlord fails to maintain and repair any of the utilities or Common Areas consistent with prior use, in a manner satisfactory to Tenant, in Tenant’s sold judgment, Tenant may maintain and repair such items upon seventy-two (72) hours prior written notice to Landlord and receive reimbursement from Landlord.  The reimbursement shall be payable upon demand and include the costs of the maintenance and repairs.

Notwithstanding anything herein, Tenant realizes that during the Move Out Period, Landlord will be remodeling Lease Premises and may incur short period of utility outage.  Landlord and Tenant agree to minimize the effect of such outage.

	
9.  

	
Taxes.  Landlord, at its own expense, shall pay all taxes and assessments which may be levied upon or assessed against the Land and Leased Premises.

	
10.  

	
Insurance.  Landlord shall keep in full force and effect, at Landlord’s sole expense, any and all insurance policies.  Tenant will maintain Tenant’s insurance on its personal property and will also maintain premises liability coverage.

	
11.  

	
Indemnity.  Tenant hereby indemnifies and agrees to hold Landlord harmless from and against any and all costs, loss, damage or expense arising out of death of or injury to persons, or loss of or damage to property in connection with the occupancy of the Leased Premises by Tenant or as a result of the negligence of Tenant, its agents, servants, or employees.  In no event shall Tenant or Tenant’s insurance carrier be liable for any loss, cost, damage or expense arising out of death of or injury to persons, or loss of or damage to property caused by or resulting from the negligence, gross negligence, or willful conduct of Landlord or of its servants, employees and/or agents.

Land lord shall indemnify, defend, and hold harmless Tenant, its successors, assigns, agents, employees, invites, directors and officers from and against all fines, suits, losses, costs, liabilities, claims, demands, actions and judgments of every kind or character (1) arising out of death or injury to persons or loss of or damage to property in connection with Landlord’s occupancy of the Land or Leased Premises, (2) arising from Landlord’s breach of its agreements or its failure to perform its covenants under this Lease and (3) arising from or out of Landlord’s occupancy or use of the Leased Premises or Land.  However, such indemnity rights, as provided herein by Landlord, shall not be applicable if such loss, damage, or jnjury is caused by the gross negligence or willful misconduct of Tenant.

	
12.  

	
Termination.  Seller shall have the right to terminate this Lease, at any time, by present Landlord with a five (5) day written notice of termination.  In such event, Landlord shall reimburse Tenant for the period that was paid for and unoccupied by Tenant, prorated daily.  Upon such termination, Tenant and Landlord shall have no further liability and/or obligations to one another under the terms and conditions of this Lease.

	
13.  

	
Surrender of Leased Premises.  Within two (2) days after the expiration or termination of this Lease, Tenant shall surrender the Leased Premises to Landlord, in good condition, reasonable wear and tear expected.  Tenant shall deliver to Landlord the Leased Premises broom cleaned and free of debris.  Tenant shall be liable for prorate daily rent until the Leased Premises are surrendered.

	
14.  

	
Attorney’s fees.  Should either party to this Lease institute any action or proceeding in court to enforce any provision hereof or for damage by reason of an alleged breach of any provision of this Lease or for a declaration of such party’s rights or obligations hereunder, or for any other judicial remedy, the prevailing party shall be entitled to receive from the losing party such amount as the court may adjudge to be reasonable attorney’s fees for the services rendered the party finally prevailing in any such action or proceeding.

	
15.  

	
Applicable Law and Mandatory Venue.  The Lease shall be governed by, and construed in accordance with, the laws of the State of Texas.  The venue for any legal proceeding between the Landlord and Tenant shall be in Tarrant County, Texas.

	
16.  

	
Headings.  Descriptive headings are used in this Lease for convenience only and shall not control, limit, amplify or otherwise modify or affect the meaning or construction of any provision of the Lease.

	
17.  

	
Entire Agreement.  This Lease, together with any Exhibits or Addenda attached hereto, constitutes the entire agreement between Landlord and Tenant pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and undertakings of the parties in connection herewith.

	
18.  

	
Invalidity of Provision.  In the event that any term, provision, condition or covenant contained in this Lease, or the application thereof to any person or circumstance, shall, to any extent, be invalid or unenforceable, or be held to be invalid or unenforceable by any court of competent jurisdiction, the remainder of this Lease, or the application of such term, provision, condition or covenant to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and all such remaining terms, provisions, conditions and covenants in this Lease shall be deemed to be valid and enforceable.

	
19.  

	
Notices.  Any notice, request, demand, instruction or other communication to be given to either party hereunder, shall be in writing and shall either be (i) hand-delivered; (ii) sent by recognized overnight mail services, or (iii) sent by confirmed telephone facsimile transmission to the following addresses:

To the Landlord:                   Jon Thompson

The Leather Factory, LP

PO Box 50429

Fort Worth, Texas  76105

Telephone:  817-496-4414

Telecopier:  817-496-9806

To the Tenant:                      Robert H. Martin

Standard Motor Products, Inc.

37-18 Northern Blvd

Long Island City, NY  11101

Telephone:  718-392-0020

Telecopier:  718-784-3284

	
20.  

	
 Multiple Counterparts.  This Lease may be executed in a number of identical counterparts, each of which for all purposes is deemed an original, and all of which constitute collectively one agreement.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed and effective as of the _______day of _____________________, 2007.

	  	
THE LEATHER FACTORY, LP

	  	
A Texas limited partnership

	  	  
	  	
By:  The Leather Factory, Inc.

	  	
A Nevada corporation

	  	
General Partner

	  	  
	  	
By:  __________________________________

	  	
Name:  ________________________________

	  	
Title:  _________________________________

	  	
LANDLORD

	  	  
	  	  
	  	
STANDARD MOTOR PRODUCTS, INC.

	  	  
	  	
By:  __________________________________

	  	
Name:  ________________________________

	  	
Title:  _________________________________

	  	
TENANT

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