Lease Between Firleigh Estates, Inc. And N. America Packaging Corporation

Exhibit 10.34


Property Address:

2160 Lithonia Industries Boulevard

Lithonia, Georgia


INDUSTRIAL BUILDING LEASE


THIS LEASE, made as of this 10 day of August, 2002 between Firleigh Estates, Inc. a North Carolina corporation (" Landlord" ) and North America Packaging Corporation, a Delaware corporation (" Tenant" );

ARTICLE I.

Basic Lease Terms

Section 1.1. Definitions . In addition to the other terms, which are elsewhere defined in this Lease, the following terms and phrases, whenever used in this Lease, shall have the meanings set forth in this Section, and only such meanings, unless such meanings are expressly contradicted, limited or expanded elsewhere herein.

A. Base Rent Schedule:


Period Annual
Base Rent
Monthly
Base Rent


08/12/02-12/31/02 $ 149,200.00 $ 12,433.33

01/01/03-12/31/03 $ 276,020.00 $ 23,001.67

01/01/04-12/31/04 $ 276,020.00 $ 23,001.67

01/01/05-12/31/05 $ 276,020.00 $ 23,001.67

01/01/06-12/31/06 $ 276,020.00 $ 23,001.67

01/01/07-12/31/07 $ 276,020.00 $ 23,001.67

01/01/08-12/31/08 $ 276,020.00 $ 23,001.67

01/01/09-12/31/09 $ 276,020.00 $ 23,001.67

01/01/10-12/31/10 $ 276,020.00 $ 23,001.67

01/01/11-12/31/11 $ 276,020.00 $ 23,001.67

01/01/11-12/31/11 $ 276,020.00 $ 23,001.67

01/01/13-12/31/13 $ 276,020.00 $ 23,001.67

01/01/14-12/31/14 $ 276,020.00 $ 23,001.67

01/01/15-12/31/15 $ 276,020.00 $ 23,001.67

01/01/16-12/31/16 $ 276,020.00 $ 23,001.67

01/01/17-08/15/17 $ 276,020.00 $ 23,001.67


During the Initial Term the annual base rent will be adjusted semi-annually to reflect, any increase of the Lessor' s interest rate of .5% over the base rate of 4.7%; this increase will be passed on to the Lessee January 1 and July 1, respectively. For example, a ..2% increase on 8/18/02 would not be adjusted for at 1/1/03. An additional increase of 3.5% on 2/2/03 would cause the base rate to increase over .5%, and the increase of 3.7% would be adjusted on 7/1/03 on an annualized basis, therefore increasing the lessee' s monthly payment. In the event there is no change in the interest rate the annual base rent will be adjusted annually by the annual percentage increase in the Consumer Price Index (CPI) as hereinafter defined in (A1). If the interest rate changes in any given year the increase passed on in the base rent will be the greater of the change in the Lessor' s interest rate or the change in the CPI.

B. Security Deposit: $23,001.67

C. Initial Term: The initial fifteen (15) year term

D. Effective Date: August 11, 2002

E. Commencement Date: August 11, 2002

F. Termination Date: August 11, 2017

G. Renewal Term: The Initial Term may be extended by three (3) consecutive renewal options of five (5) years each. H. Use: General office, warehouse, storage, and manufacturing uses and any other legally permitted activities or uses. I. Landlord' s Mailing Address:

Firleigh Estates, Inc.

714 South Bennett Street

Southern Pines, NC 28387

Attention: Marie Schwindl

Facsimile: 910-692-8000


Tenant' s Mailing Address:

North America Packaging Corporation 4101 Lake Boone Trail

Suite 201

Raleigh, NC 27607

Attention: Phillip O' Connor

Facsimile No: 919-791-2412

J. Change of Control: Change of Control shall occur if MVOC, LLC enters into a transaction, the result of which reduces its ownership of the common equity in North America Packaging Corporation to a level of 50% or less.


Section 1.2. Significance of Basic Lease Provisions . Each reference in this Lease to any of the Basic Lease terms contained in Section 1.1 of this Article shall be deemed and construed to incorporate all of the terms provided under each of such Basic Lease Terms.


ARTICLE II.

Premises

Section 2.1. Lease . Landlord, for and in consideration of the rents herein reserved and of the covenants and agreements herein contained on the part of Tenant to be kept, observed and performed, does by these presents, lease to Tenant, and Tenant hereby leases from Landlord, the real estate located at 2160 Lithonia Industries Boulevard, Lithonia, Georgia, and legally described on Exhibit A attached hereto and by this reference incorporated herein " Land" ), together with all improvements now located or hereafter constructed thereon (" Improvements" ), subject to covenants, conditions, agreements, easements, encumbrances and restrictions affecting the Land and the improvements thereon.


Section 2.2. Premises . The Land and Improvements are hereinafter referred to collectively as the " Premises" .


ARTICLE III.


Term, Option and Addition

Section 3.1. Term . The Initial Term of this Lease shall commence on the Commencement Date, effective as of the Effective Date, and shall end on the Termination Date, unless sooner terminated as hereinafter set forth. Landlord shall deliver possession of the Premises to Tenant upon the Commencement Date; otherwise, Tenant have the right to terminate this Lease within thirty (30) lays thereafter.


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Section 3.2. Renewal Term . In addition to the Initial Term hereof, Landlord hereby grants Tenant three 3) successive options to renew or extend the term of this Lease from the date upon which it would otherwise expire for three (3) additional periods of five (5) years each (each such period shall be referred to herein as the " Renewal Period" ) on the terms and conditions set forth in this Section 3.2.


(a) The term " Term" when used in this Lease shall include any and all Renewal Period(s). If Tenant elects to exercise any of such options, it shall do so by giving written notice of such election to Landlord (" Renewal Notice" ), on or before the date which is twelve (12) months before the beginning of the Renewal Period or Renewal Periods for which the term hereof is to be renewed or extended. Each such Renewal Period shall be on the same terms and conditions as set forth herein except for the rent which shall be adjusted annually, commencing on the first year of the Renewal Period, by an amount equal to the then prevailing Market Rental Rate (as hereinafter defined). The Base Rent during each Renewal Period shall be adjusted annually to equal 1.03 times the then applicable Base Rent. The " Market Rental Rate" shall mean for the purposes of this Section 3.2 the fair market rental rate with adjustments which could be obtained for the Premises or space of comparable size, age and construction in the regional area where the Premises are located for a similar terms in an arm' s length transaction on or about the date of the Renewal Notice between landlords and willing and informed tenants, determined in accordance with Section 3.2(b) below


(b) Upon delivery to Landlord of the Renewal Notice, Landlord and Tenant shall commence negotiations to agree upon the Market Rental Rate. If Landlord and Tenant are unable to reach agreement on the Market Rental Rate within five (5) business days after the date of delivery of the Renewal Notice, then the Market Rental Rate shall be determined as follow:

(i) If Landlord and Tenant are unable to agree on the Market Rental Rate within said five (5) business day period, then within five (5) business days thereafter Landlord and Tenant shall each simultaneously submit to the other in a sealed envelope, its good faith estimate of the Market Rental Rate. If the higher of such estimates is not more than 105% of the lower of such estimates, then the Market Rental Rate shall be the average of the two estimates. If the higher of such estimates is more than 105% of the lower of such estimates, then the Market Rental Rate shall be resolved by arbitration as set forth in subsection (ii) below.


(ii) The parties shall, within ten (10) days after the date of exchange of estimates, select as an arbitrator a mutually acceptable commercial real estate leasing broker with at least ten (10) years experience in leasing similar space in the general area in which the Premises are located. If the parties cannot agree on a broker, then within a second period of ten (10) days, each shall select an independent commercial real estate leasing broker meeting the aforementioned criteria and within a third period of ten (10) days, the two appointed brokers shall select a third broker meeting the aforementioned criteria and the third broker shall be the arbitrator. If one party shall fail to make such appointment within said ten (10) day period, then the commercial real estate leasing broker chosen by the other party shall be the arbitrator. As soon thereafter as practicable but in any case within ten (10) days of being chosen, the arbitrator (as chosen in accordance herewith) shall select one of the two estimates of the Market Rental Rate submitted by Landlord and Tenant, which must be the one that is the closest to the Market Rental Rate as determined by the arbitrator. The selection of the arbitrator shall be rendered in writing to both Landlord and Tenant and shall be final and binding upon them. The party whose estimate is not chosen by the arbitrator shall pay the costs of the arbitrator. Any fees of counsel or experts engaged directly by Landlord or Tenant, however, shall be borne by the party retaining such counsel or expert.


Section 3.3. Option to Purchase . During the term of the lease if Willard A. Rhodes the principal shareholder of Firleigh Estates, Inc. should become incapacitated for a period of more than six (6) months as determined by Rhode' s local physician, or die, or any time after the second year of the Initial Term to the end of the Initial term. Tenant shall have an option to purchase (" Option" ) all of Landlord' s right, title and fee simple interest in and to the Premises (the " Property" ). The Option is exclusive to Tenant and may not be assigned or conveyed by Tenant to any third party, including without limitation any assignee or subtenant permitted under the terms of this Lease. Tenant shall exercise the Option by (i) giving written notice (" Option Notice" ) to the Landlord of its intent to purchase the Property and (ii) submitting to Landlord the sum of Ten Thousand Dollars ($10,000.00) as a non-


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refundable earnest money deposit (" Earnest Money" ), both of which must be received by Landlord no earlier than thirty 30) days after Willard A. Rhodes becomes incapacitated or dies, or no earlier than the first day of the third year the Initial Term and no later than that day which is twelve months prior to the expiration of the Initial Term. The purchase price for the Property (the " Option Purchase Price" ) shall be an amount determined as follows:

(a) for the first, three years of the Initial Term, the Option Purchase Price shall include all costs including pre-closing costs expended by the Landlord to acquire the Property (the " Acquisition Costs" ), and the cost of all capital improvements made to the Property by the Landlord from the Effective Date to the date of closing under the Option (the " Capital Improvements" ). Should a Change Of Control occur prior to the commencement of year 4, the Option Purchase Price shall be increased by one hundred thousand dollars ($100,000.00).

(b) beginning in year 4 and for the remainder of the lease term the Option Purchase Price shall be an amount equal to the greater of (i) the fair market value of the property, as determined herein below or (ii) the purchase price and all pre-closing costs paid by the then existing Landlord to acquire the property, and all capital improvements paid by the then existing Landlord during the term of the lease. The fair market value of the property shall be determined as of the date of the Option Notice, as determined by an independent appraisal. Such appraisal shall be by agreement of two appraisers, one of whom shall be selected by each party hereto. If said appraisers fail to agree, the shall mutually appoint a third appraiser, and the value as determined by two of said three appraisers shall constitute the fair market value for the purposes hereof. Each party shall bear the expense of its own appraiser and shall pay 1 / 2 of the expenses of any third appraiser.

Within sixty (60) days of the date of the Option Notice, the parties will enter into a purchase and sale contract for the Property on terms and conditions reasonably satisfactory to both parties and incorporating the terms and conditions set forth herein. If the parties are unable to enter into such a contract within such time period after good faith efforts to do so, the Option shall terminate and be considered null and void. The purchase price for the Property (the " Option Purchase Price" ) shall be paid in immediately available funds at the closing. The Earnest Money shall apply to the Option Purchase Price at closing.


In addition, the following terms shall apply: (i) Tenant, as purchaser, shall be responsible for all costs and expenses of closing, including but not limited to survey, title, closing escrows, appraisal, environmental due diligence, all other due diligence and Landlord' s attorneys fees and expenses; (ii) Tenant, as purchaser, shall be responsible for any and all prepayment penalties incurred by Landlord, as seller, to repay any financing on the property: (iii) due to the existence of this Lease, there shall be no pro-rations and/or credits given at closing for taxes or insurance: (iv) as a part of the closing, the parties shall terminate this Lease in writing as of the closing date; and (v) except for a representation that Landlord has authority to sell the Property and is the fee simple owner of the Property, Landlord makes no representations or warranties regarding the Property which shall be purchased by Tenant n an as is, where is, condition and state, including without limitation any and all environmental conditions and matters. The closing on the purchase and sale of the Property shall occur within one hundred twenty (120) days after the date of the Option Notice. If the closing does not occur within such time period and such delay is not caused by the Landlord, Landlord shall have the option to terminate the purchase and sale contract, retain the non-refundable Earnest Money and the Tenant' s Option shall thereafter terminate and be considered null and void. If the closing does not occur within such time period and such delay is caused by the Landlord, the one hundred twenty (120) day period will be extended by the number of days of delay attributable to Landlord. Landlord shall convey title to the Property to Tenant by Limited Warranty Deed.

Section 3.4 Construction of Addition to Premises . The Tenant has submitted plans for an Addition of approximately 33,000 square feet and the related specifications for such addition attached hereto as Schedule B and incorporated herein by this reference (hereinafter the " Specifications" ). The Landlord has agreed to add this Addition pursuant to the Specifications approved by Tenant. The Landlord is responsible for all costs of construction of the Addition. If the costs for the Addition exceed $950,000, the base rent shall be increased by 10% of such increase over $950,000 annually. The Addition shall be completed by February 28, 2003 and final approval by architect or the City of Lithonia shall constitute acceptance by Tenant. Upon issuance by the City of Lithonia of a Certificate of Occupancy for the Addition the Addition shall be considered suitable for occupancy.


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Once completed the Addition shall be considered part of the Premises and the terms herein shall relate to the Addition as of the completion date to the same extent as if the Addition had initially been part of the Premises.


ARTICLE IV.


Condition of Demised Premises


Section 4.1. Condition of Premises . Tenant agrees to accept the Premises in an absolutely " as-is" condition, and Tenant acknowledges that Landlord, its agents, attorneys, representatives and employees have not and do not make any representations or warranties, express or implied, to Tenant regarding the Premises, including, but no limited to: (i) the zoning of the Premises; (ii) the condition of any underground, above ground or surface improvements; (iii) the size, area, use or type of the Premises or the fitness of the Premises for any intended or particular use; or (iv) the nature of the soil on and underlying the Premises or its suitability for development or any other use thereof. Tenant waives any claim that may exist for patent and/or latent defects or for mutual or unilateral mistake of fact.


ARTICLE V.


Rent

Section 5.1. Base Rent . In consideration of the leasing aforesaid, Tenant agrees to pay Landlord, without offset or deduction, base rent for the Initial Term (" Base Rent" ), payable monthly in advance in the amount of the Monthly Base Rent set forth in the Base Rent Schedule commencing on the Effective Date and continuing on the first (1st) day of each month thereafter for the balance of the Term of this Lease, and in addition thereto, shall pay such charges as are herein described as " Additional Rent." The term " Rent" when used in this Lease shall include all Base Rent payable under this Section 5.1, as well as the charges herein described as Additional Rent. All Rent payable hereunder shall be payable to Landlord at Landlord' s Mailing Address, or as Landlord may otherwise from time to time designate in writing.


Section 5.2. Interest and Late Charges on Late Payments . Rent not paid when due shall bear interest at the prime rate, as published in the Wall Street Journal from time to time, plus 300 basis points per annum, from the date when the same is payable under the terms of this Lease until the same shall be paid (the " Default Rate" ). Tenant further acknowledges that its late payment of any Rent will cause Landlord to incur certain costs and expenses not contemplated under this Lease, the exact amount of which is extremely difficult or impracticable to fix. Such costs and expenses will include, without limitation, loss of use of money, administrative and collection costs and processing and accounting expenses. Therefore, if any installment of Monthly Base Rent or any other sum due hereunder is not paid and received by Landlord within seven (7) days after being due, Tenant shall immediately pay to Landlord a late charge equal to five percent (5%) of the unpaid amount. Such late charge is in addition to any interest due pursuant to the first sentence of this Section 5.2. Landlord and Tenant agree that this late charge represents a reasonable estimate of costs and expenses incurred by Landlord from, and is fair compensation to Landlord for, its loss suffered, by such non-payment by Tenant. Acceptance of the late charge shall not constitute a waiver of Tenant' s default with respect to such non-payment by Tenant or prevent Landlord from exercising any other rights and remedies available to Landlord under this Lease. Failure to pay the late charge shall constitute a default under this Lease.


Section 5.3. Prior Occupancy . In the event the Premises are delivered to and are occupied by Tenant prior to the Commencement Date of the Term of this Lease, such occupancy shall be subject to all the terms and conditions of this Lease.

Section 5 4. Security Deposit . Concurrently with the execution of this Lease, Tenant has deposited with landlord one month' s Base Rent in the amount of Twenty Three Thousand One and 67/100 Dollars ($23,000.67) which amount shall be held by Landlord as security for the faithful performance by Tenant of all of the terms, covenants, conditions and agreements of this Lease. Landlord shall not be required to separate such security from Landlord' s general funds and no interest shall be payable thereon. In the event Tenant shall default in


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any of such terms, covenants, conditions, or agreements, including, but not limited to, the payment of any Rent hereunder. Landlord may use, apply or retain the whole or any part of the security required for the payment of any Rent or any other sum expended by Landlord by reason of Tenant' s default. Tenant, within five (5) days after written demand by Landlord, shall replenish the security or any portion thereof so used or applied by Landlord; Tenant' s failure to restore such security shall constitute a material breach of the Lease. The security deposit shall not be deemed an advance payment of Rent. If Lessee shall faithfully comply with all terms, covenants, conditions and agreements of this Lease, any balance of the security deposit then due shall be returned within fourteen (14) days after termination of this Lease, but only after delivery of entire possession of the Premises to Landlord and other performance by Tenant of all obligations required hereunder. In the event of sale of the Premises or of a sale of Landlord' s interest in this Lease, Landlord shall have the right to transfer the security deposit to its transferee, and upon such transfer, Landlord shall be released by Tenant form all liability with regard thereto, Tenant looking solely to the new landlord for the return of said security.

ARTICLE VI.

Taxes and Impositions; Utilities; Other Expenses

Section 6.1. Taxes . Tenant further agrees to pay before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, as Additional Rent for the Premises, all Taxes (as hereinafter defined) levied assessed or imposed upon the Premises or any part thereof accruing during the Term of this Lease, notwithstanding that such Taxes may not be due and payable until after the expiration of the Term of this Lease; provided, however, that the Taxes levied against the Premises shall be prorated between Landlord and Tenant for the last year of said Term, all on the basis of the most recent ascertainable taxes as applied to the most recent assessed valuation of the Premises. Tenant shall be responsible for all increases in Taxes based upon Tenant' s occupancy of the Premises. After the expiration of the Term hereof, Tenant hereby agrees to reprorate Taxes. In the event of any increase in Taxes from the Taxes reflected on the proration made upon the expiration of the Term of this Lease, Tenant agrees to immediately pay to Landlord such sums as reflected by such reproration. In the event of any decrease in Taxes from the Taxes reflected on the proration made upon the expiration of the Term of this Lease, Landlord agrees to immediately pay to Tenant such sums as reflected by such reproration. Benefit may be taken by Tenant of the provisions of any statute or ordinance permitting any special assessment to be paid over a period of years; provided, however, Tenant shall pay all installments of special assessments due during the Term hereof. Tenant may also take advantage of special use valuations and similar types of reductions on condition that Tenant is liable for any and all recapture of such special valuations, if any. Tenant shall, in addition to the foregoing, pay any new Tax of a nature not presently in effect but which may hereafter be levied, assessed or imposed upon Landlord or upon the Premises, if such tax shall be based upon or arise out of the ownership, use or operation of the Premises; provided, however, that for the purpose of computing Tenant' s liability for such new type of Tax, the Premises shall be deemed the only property of Landlord. As used herein, the term " Taxes" shall mean real estate taxes, assessments, sewer rents, rates and charges, permit and license fees, transit taxes, taxes based upon the receipt of rent, and any other federal, state or local governmental charge, general, special, ordinary or extraordinary, which may now or hereafter be assessed against the Premises or any portion thereof in any year during the Term hereof, and shall also include any personal property taxes (attributable to the year in which paid) imposed upon the furniture, fixtures, machinery, equipment, apparatus, systems and appurtenances used in connection with the operation of the Premises.

Nothing contained herein shall be construed to require Tenant to pay any franchise, inheritance, estate, succession or transfer tax of Landlord or any income or excess profits tax assessed upon or in respect of all income of Landlord or chargeable to or required to be paid by Landlord unless such tax shall be specifically levied against the rental income of Landlord derived hereunder (as opposed to a general income tax), which tax shall be paid by Tenant as part of Taxes hereunder, provided said rental income shall be considered as the sole income of Landlord.


Section 6.2. Estimated Payments . Following a noncompliance by Tenant of its obligations to pay Taxes on Insurance Premiums as and when due, Landlord may require (which requirement shall be in writing) as security for the obligations contained in Section 6.1 above, that Tenant shall deposit monthly with Landlord, or such other entity as Landlord may designate, on the first day of each and every month of the Term, a sum equal to one-twelfth of the last ascertainable amount (or at Landlord' s election, if Landlord' s interest hereunder is at any time


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subject to the lien of a mortgage or trust deed, a sum equal to one-twelfth of the mortgagee' s estimate of the current amount) of general real estate taxes and annual installments of special assessments levied with respect to the Premises (and, also Insurance Premiums as required under the terms of Section 10.3 of this Lease), which monthly deposits shall be held by Landlord or Landlord' s mortgagee in such account or accounts as may be authorized by then current state or federal banking laws, rules or regulations and which monthly deposits, subject to any provisions to the contrary in documentation securing Landlord' s mortgage indebtedness, shall be used as a fund to be applied, to the extent thereof, to the payment of Taxes and Insurance Premiums as the same become due and payable. The existence of said fund shall not limit or alter Tenant' s obligation to pay the Taxes and Insurance Premiums respecting which the fund was created; provided, however, that so long as Tenant shall not be in default hereunder, said fund shall be fully utilized for the payment of such Taxes and Insurance Premiums; provided, further that the disposition of any funds held by Landlord' s mortgagee shall be governed by the loan and mortgage documentation entered into by Landlord and said mortgagee. The amount of the fund shall be readjusted annually, on such date as Landlord shall determine, to reflect the actual amount of Taxes and Insurance Premiums. Tenant shall not be entitled to interest on said fund.

Section 6.3. Tax and Insurance Statement . If Landlord exercises its right to require monthly payments under Sections 6.2, then Landlord, as soon as reasonably feasible after the expiration of each calendar year contained within the Term (" Lease Year" ), will furnish Tenant a statement (" Tax and Insurance Statement" ) showing the following:

(i) Actual Taxes and Insurance Premiums for the Lease Year last ended and the amount of Taxes and Insurance Premiums payable by Tenant for such Lease Year: and

(ii) The amount of Additional Rent due Landlord for the Lease Year last ended, less credit for any items paid directly or deposited pursuant to Section 6.2 above.


Section 6.4. Adjustment Payments . Within thirty (30) days after Tenant' s receipt of any Tax and Insurance Statement, Tenant shall pay to Landlord the amount of Additional Rent shown on said Tax and Insurance Statement to be due Landlord for the Lease Year last ended. Tenant' s obligation to pay such Additional Rent shall survive the Term. If Tenant' s deposits made pursuant to Section 6.2 above exceed Tenant' s obligation, the excess amount shall be credited against the next installment of Rent coming due, with any balance to be paid directly to Tenant.


Section 6.5. Right to Pay . Landlord shall, at its option, have the right, without notice to Tenant, at all times during the Term to pay any such Taxes not timely paid by Tenant, and the amounts so paid, including reasonable expenses, shall be so much Additional Rent due at the next rent day after any such payments with interest at the Default Rate from the date of payment thereof.

Section 6.6. Landlord' s Contest of Taxes . To the extent Landlord desires, in Landlord' s reasonable business judgment to contest the imposition of any Taxes against the Land and Improvements, Landlord shall proceed with such protest in accordance with applicable law. Tenant agrees Taxes shall include all of Landlord' s reasonable costs and expenses, including legal fees and court costs, in pursuing any such contest to the extent that L ...