EXHIBIT 10.34
LEASE
AGREEMENT ("Lease") dated August 14 1996 between: SDI
Technologies,
Inc. ("Landlord"), a Delaware Corporation, having an office at 1299
Main
Street, Rahway, New Jersey 07065, and FMI International Corp.
("Tenant"), having
an office at 800 Federal Blvd., Carteret, New Jersey 07008.
WITNESSETH
WHEREAS,
the Tenant through a sublease arrangement is currently leasing
a
total of 190,000 square feet of space from the Landlord at the
Building located
at 800 Federal Blvd., Carteret, New Jersey under the following two
lease
agreements: (i) Lease Agreement dated July 9, 1991 amended by
Addendum of
December 10, 1992, for 50,000 sq ft of space in Unit#2 of the
Building which
expires 12/31/97 with a cash security deposit of $25,000, and (ii)
Lease
Agreement dated December 10, 1992 amended by Addendum dated April
27, 1993, for
100,000 sq ft of space in Unit #3 of the building and 40,000 sq ft
of space in
the rear portion of Unit #1 of the Building which expires 12/31/97
with a letter
of credit security deposit in the amount of $60,000; and
WHEREAS,
The Tenant desires to enter into a direct Lease with the
Landlord
to extend the term of its possession of the above space until
January 31, 2003
under the following terms and conditions and also desires to lease
an additional
46,100 sq ft of space in Unit 2 of the Building effective February
1, 1998 and
an additional 30,500 sq ft of space in Unit 1 effective no later
than October 1,
1996;
NOW
THEREFORE, Landlord, for and in consideration of the rental and
other
charges hereinafter set forth and agreed to be paid by Tenant, and
the other
covenants and conditions hereinafter stipulated, hereby leases to
Tenant and
Tenant hereby leases from Landlord the following space at the
Building located
at 800 Federal Boulevard, Borough of Carteret, County of Middlesex,
State of New
Jersey:
(a) the entire portion of Unit #3 which consists of 100,000
square
feet, that rear portion of Unit #1 which is currently occupied by
Tenant and
consists of 40,000 square feet, and that portion of Unit #2 which
is currently
occupied by Tenant which consists of 50,000 square feet for a term
of five (5)
years and 1 month commencing on January 1, 1998 through January 31,
2003; and
(b) that portion of Unit #2 which is currently unoccupied by
Tenant
which consists of 46,100 square feet for a term of five (5) years
commencing
February 1, 1998 through January 31, 2003.
(c) that portion of Unit #1 which is currently unoccupied by
Tenant
which consists of 30,500 square feet commencing any time during the
month of
September 1996 (at the option of Tenant) through January 31,
2003.
(d) all of
the above space hereby being referred to as the demised
premises or Premises.
1. USE.
(a) Tenant shall use the Premises for the storage, packing and
distribution of dry goods, and for offices connected therewith, and
for no other
purpose.
(b) No outside storage of any product or material is permitted
by
Tenant. However, Tenant may store empty containers and trailers in
the parking
area
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immediately in front of the Premises provided such storage does not
interfere
with access to the building or the use of the building parking
areas and access
roads by the Landlord or any of its other tenants. In no event will
Tenant
generate, process, treat, store or dispose of any toxic or
hazardous material or
substances as defined by the laws, ordinances, rules and
regulations of the
Federal, State, County and Municipal authorities.
(c) Tenant shall, at Tenant's expense, obtain any and all
licenses
and permits necessary for such use. Landlord does not warrant the
existing or
future adequacies or sufficiencies of the demised premises for
Tenant's present
or future use. It is understood that: all such licenses and permits
and
applications for same shall be in the Tenant's name; all costs and
expenses
regarding the applications, permits and licenses shall be borne by
Tenant; and
failure to obtain such permits and licenses shall not relieve
Tenant of its
obligations under this Lease.
(d) Tenant shall, at Tenant's expense, agree to fully observe
and
comply with all laws, ordinances, rules and regulations of the
Federal, State,
County and Municipal authorities applicable to said Premises, or to
the business
to be conducted by the Tenant in the Premises.
(e) Schedule A attached hereto and made a part hereof is a list
of
those substances (particularly chemicals) Tenant shall use or store
on the
demised Premises in connection with Tenant's operation of its
business and use
of the Premises. Tenant hereby agrees that whenever a new substance
is planned
to be used or stored, or Tenant discontinues using or storing a
substance,
Tenant shall immediately submit to Landlord an updated list, and
obtain written
consent to such storage from Landlord.
2. RENT.
(a) The basic rent which Tenant covenants and agrees to pay and
Landlord agrees to accept for the demised premises is set forth on
Schedule B
and shall be payable in equal monthly installments in advance, on
the 1st day of
each month of the term, at the office of Landlord or such other
place as
Landlord may hereafter designate. All other sums payable by Tenant
hereunder
shall be payable within ten (10) days after Landlord renders a
statement
therefor, unless otherwise provided herein.
(b) The Tenant agrees to maintain on deposit with the Landlord
during the term of this Lease a Letter of Credit for $60,000.00 and
$25,000 in
cash as security for the full and faithful performance by the
Tenant of all of
the terms and conditions upon the Tenant's part to be performed.
The security
deposits described herein shall be returned to the Tenant after the
time fixed
as the expiration of the term herein, provided the Tenant has fully
and
faithfully carried out all of the terms, covenants and conditions
on the
Tenant's part to be performed. In the event of a sale, subject to
this Lease,
the Landlord shall have the right to transfer the security deposit
to the vendee
for the benefit of the Tenant and the Landlord shall be considered
released by
the Tenant from all liability for the return of such security; and
the Tenant
agrees to look to the new landlord solely for the return of the
said security,
and it is agreed that this shall apply to every transfer or
assignment made of
the security to a new landlord.
3. NET
LEASE. (a) It is the mutual intention of Landlord and Tenant
that
the basic rent hereinabove specified shall be net to Landlord; that
all costs,
expenses and obligations of every kind relating to the demised
premises such as
Tenant's portion of the
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security and fire alarm system for the building (except as
otherwise
specifically provided in this lease) which may arise or become due
during the
term hereof shall be paid by Tenant; and that Landlord shall be and
it hereby is
indemnified by Tenant against liability for any such costs,
expenses and
obligations.
(b) Tenant shall pay all expenses of operation of the demised
premises other than (i) interest and amortization on any
mortgage(s) covering
the demised premises, and any income, franchise or other personal
or corporate
taxes of Landlord; and (ii) and Landlord's obligations under
Section 7 hereof to
make structural repairs. Tenant shall furnish to Landlord receipts
or other
satisfactory proof of payment of all obligations of Tenant
hereunder within ten
(10) days after demand by Landlord.
4. TAXES.
(a) In addition to the basic rent set forth in Section 2,
during
the original term of the Lease, Tenant shall pay its prorata share
(based on the
portion of the demised premises occupied by the Tenant compared to
the size of
the entire demised premises) of "real estate taxes".
(b) The term "real estate taxes" shall mean all taxes and
assessments levied, assessed or imposed by any governmental
authority upon or
against the land on which the demised premises are situated and the
buildings
and improvements thereon, and also any tax or assessment levied,
assessed or
imposed at any time by any governmental authority in connection
with the receipt
of income or rents from the said land and/or buildings to the
extent that the
same shall be in lieu of or a portion of any of the aforesaid taxes
or
assessments.
(c) The additional rent payable by Tenant under this Section
shall
be payable within ten (10) days after Landlord's delivery of a
statement to
Tenant therefor (but not earlier than one (1) month before the due
date(s) of
payment of the then current or previously due but unpaid
installment(s) of the
pertinent real estate taxes), accompanied by a photocopy of the
pertinent real
estate tax bill. Any such amount payable for a partial calendar
year at the
expiration of the term hereof shall be adjusted in proportion to
the number of
days in such partial calendar year during which this Lease shall be
in effect.
Landlord's failure to render any bill or statement under this
Section shall not
prejudice Landlord's rights thereafter to render the same or any
other statement
hereunder.
(d) In the event Landlord shall obtain any refund of real
estate
taxes to which Tenant has theretofore contributed its share,
Landlord shall
promptly remit to Tenant the latter's said share of the net refund
(after the
deduction of all costs and expenses of Landlord in connection
therewith).
(e) Except as may otherwise be provided in the Bond Financing
Agreement referred to in Section 22 of this Lease, Tenant may
contest in good
faith, by appropriate proceeding, at Tenant's own expense and free
of any
expense to Landlord, in Landlord's or Tenant's name, the amount of
any increase
in real estate taxes levied against the demised premises during the
term of this
Lease over the amount of such taxes for the base year, provided
Tenant shall
continue to pay its prorata share of such real estate taxes. In
such event the
proceeding shall be commenced as soon as possible after the
assessment of the
contested tax increase and shall be prosecuted to the final
adjudication with
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dispatch. Upon the termination of the proceeding and the
determination of the
amount of the real estate taxes which were subject to such contest,
any refund
received by Landlord shall be disbursed to Tenant in accordance
with
subparagraph (d) above.
5.
ADDITIONAL CHARGES. All charges, costs and expenses which Tenant
is
required to pay under this Lease, together with all interest and
penalties that
may accrue thereon in the event of Tenant's failure to pay such
amounts, and all
damages, costs and expenses which Landlord may reasonably incur by
reason of any
default of Tenant or failure on Tenant's part to comply with the
terms of this
Lease, shall be deemed to be additional rent, and in the event of
nonpayment by
Tenant, Landlord shall have all the rights and remedies with
respect thereto as
Landlord has for the nonpayment of the basic rent. Except as
otherwise expressly
provided herein, all basic rent and additional rent shall be
payable when due
without offset or deduction of any kind.
6.
SURRENDER. Tenant shall quit and surrender the premises at the end
of
the term, broom clean, in the same condition as when received,
reasonable wear
and tear and damage by fire, the elements or other casualty not due
to Tenant's
act or neglect and/or fully covered by Landlord's insurance
excepted. Tenant
shall make no alterations, additions or improvements to the
premises without
Landlord's prior written consent. Tenant shall have the right to
remove such
improvements made by Tenant to the premises provided the premises
are returned
to the Landlord in the same condition as when they were delivered
to Tenant at
the commencement of this Lease. All improvements made by Tenant to
the premises
which are so attached to the premises that they cannot be removed
without injury
thereto and which are not removed by the Tenant, and all
alterations and
additions to the premises shall become the property of Landlord
upon
installation, subject to Landlord's right, hereinafter provided, to
have same
removed by Tenant at the expiration of the term. Notwithstanding
anything to the
contrary hereinbefore stipulated, Landlord shall have the right, on
notice to
Tenant given at least thirty (30) days prior to the expiration of
the term, to
have all such alterations, additions and improvements, or such of
them as
Landlord shall designate removed by Tenant, at Tenant's cost and
expense,
provided that Tenant shall have no responsibility upon termination
of this Lease
to remove perimeter and location markings. Tenant, upon removal of
any
alterations, additions and improvements made by it shall restore
the premises to
the condition in which they were at the commencement of the term,
reasonable
wear and tear excepted. If any mechanic's lien is filed against the
demised
premises for work claimed to have been done or for materials
claimed to have
been furnished to Tenant, such lien shall be bonded or discharged
by Tenant
within thirty (30) days thereafter, at Tenant's expense.
7. REPAIRS
AND MAINTENANCE. (a) Throughout the term of this Lease, Tenant,
at its expense, shall (i) maintain in good condition the
demised-premises and
the fixtures and equipment therein and that part of the grounds on
which the
premises are situated, and (ii) except as otherwise provided in
Section 13
hereof, make all repairs, interior or exterior required to be made
thereto,
provided, however, that Landlord, at its expense, shall be
responsible for
structural repairs (the term "structural" shall include the roof,
walls,
columns, and floor) to the building unless the repair shall be of
damage
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caused by the misuse, act or neglect of Tenant or Tenant's agents,
employees or
business invitees, in which case all such repairs not fully covered
by
Landlord's insurance shall be made by Tenant, at Tenant's expense.
Wherever used
herein the term "repairs" shall include all necessary replacements.
All repairs
made by Tenant shall be made at least in quality and class to the
original work.
(b) Tenant shall maintain the demised premises in a clean and
orderly condition, free of dirt, rubbish, snow and ice, and shall
not cause nor
permit any rubbish or other materials to be placed on the adjoining
areas
retained by Landlord nor cause or permit any obstruction of such
areas.
(c) Except as aforesaid, or as otherwise expressly provided
herein,
Landlord shall not be required to furnish any services or
facilities or to make
any repair or alteration in or to the demised premises other than
the repair of
damages caused by the act or neglect of Landlord or Landlord's
agents, employees
or invitees. Except as aforesaid, Tenant hereby assumes full and
sole
responsibility for the condition, operation, repair, replacement,
maintenance
and management of the demised premises.
8.
MECHANICS LIENS. In the event that any mechanic's lien is filed
against
the premises for work claimed to have been done for, or materials
claimed to
have been furnished to Tenant or as the result of any alterations,
additions or
improvements made by Tenant, and Tenant shall have failed to fully
bond or
discharge the same, Landlord may give notice to Tenant of
Landlord's election to
pay the said lien in Tenant's behalf and effect the discharge
thereof of record
and if Tenant, within thirty (30) days after the giving of such
notice, shall
have failed to fully bond or discharge such lien, Landlord may pay
the same in
Tenant's behalf without inquiring into the validity thereof, and
Tenant shall
forthwith reimburse Landlord, on demand, for the total expenses
incurred by
Landlord in the discharge thereof.
9. FIRE
INSURANCE. Landlord shall continue to maintain, fire and
extended
coverage insurance protecting Landlord and Tenant as their
interests may appear
for replacement cost with respect to the demised premises during
the original
term of this Lease in companies and in manner and amounts
satisfactory to the
Landlord. Tenant shall be responsible to pay its prorata share
(based on the
portion of the demised premises occupied by the Tenant compared to
the size of
the entire demised premises) of the cost of any insurance
maintained by the
Landlord pursuant to this Section 9. Landlord shall bill to Tenant
such prorata
cost which bill shall be payable upon receipt by Tenant.
10.
UTILITIES. Tenant shall pay for the cost of heat and air
conditioning
for the demised premises. Tenant shall also pay for (i) all
electricity and gas
consumed by Tenant in the demised premises; and (ii) all water and
any other
utility services supplied thereto, and (iii) any sewer rent or
charge imposed or
assessed upon the premises.
11.
LIABILITY INSURANCE. Tenant shall obtain and, at its expense, keep
in
effect during the term hereof general liability insurance issued by
one or more
insurance companies licensed to do business in New Jersey insuring
both Tenant
and Landlord and such other parties in interest whom Landlord may
designate
against liability to any
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person(s), firm or corporation for injury or damage occurring in
the demised
premises or in the parking area or on the grounds adjacent thereto
in combined
limits of not less than One Million Dollars ($1,000,000). Each such
policy shall
provide that it may not be cancelled by the insurance carrier(s)
without at
least fifteen (15) days prior registered or certified mail notice
of such
cancellation. Tenant shall deliver to Landlord or to such other
interested
parties whom Landlord may designate a certificate or certificates
issued by the
insurance carrier(s) certifying that such insurance is in effect,
and at least
fifteen (15) days prior to the expiration of any such policy,
Tenant shall
furnish evidence satisfactory to Landlord that such policy has been
renewed or
replaced. Should Tenant fail to obtain and/or maintain such
insurance, pay the
premiums thereon when due, and/or cause the foregoing
certificate(s) thereof or
evidence of renewal of such insurance, as the case may be, to be
delivered, then
Landlord shall have the right to effect such insurance and pay the
premiums
therefor, in which event the monies so paid by Landlord shall be
added and
become a part of the rental due on the 1st day of the next
succeeding month.
12.
SUBROGATION. There shall be no waiver of subrogation with respect
to
any insurance policies referred to in Section 9 hereof.
13. FIRE
OR OTHER CASUALTY. (a) If the demised premises shall be
partially
or totally damaged by fire or other casualty, the damage shall be
repaired by
and at the expense of Landlord, using the proceeds of the insurance
referred to
in Section 9 hereof; provided, however, that if the cost of
repairs, as
reasonably estimated by Landlord, will exceed twenty five percent
(25%) of the
replacement value of the building exclusive of foundation)
immediately prior to
the occurrence of the damage, Landlord shall have the right to
elect to
terminate this Lease, exercisable by Notice to Tenant given within
sixty (60)
days after the occurrence. If such partial or total damage is not
due to the
fault or neglect of Tenant or Tenant's agents, employees or
invitees, the rent
shall be apportioned or abated, as the case may be, from the date
of occurrence,
according to the extent to which the demised premises are usable by
Tenant,
during the period of repair or up to the effective date of
termination of the
Lease, if Landlord shall so elect. Additionally, if damage or
destruction of the
premises is due to the fault or neglect of Tenant or Tenant's
agents, employees
or invitees, then if and to the extent not covered by Landlord's
fire insurance,
the debris shall be removed by and at the expense of Tenant. If
such partial or
total damage is due to the fault or neglect of Tenant or Tenant's
agents,
employees or invitees, there shall be no apportionment or abatement
of rent
during the period of repair or from the date of the occurrence to
the effective
date of termination of the Lease, if Landlord shall so elect,
notwithstanding
any delay which may arise by reason of adjustment of insurance
claims, labor
troubles or any other cause beyond Landlord's control.
(b) Notwithstanding anything to the contrary stipulated in the
preceding paragraph (a), if Landlord shall not have duly elected to
terminate
this Lease but the premises shall not be restored to full
tenantability within
one (1) month after the date of the occurrence, Tenant shall have
the right, by
notice to Landlord given within five (5) days after the expiration
of the
foregoing one (1) month period, to terminate this Lease.
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(c) If the
respective notices by Landlord or Tenant, as the case may
be, provided in the preceding paragraphs (a) and (b) hereof shall
have been duly
given, the term of this Lease shall expire on the third day after
the giving of
such notice, with the same force and effect as if such date were
the date
originally fixed as the date of expiration of the term, and Tenant,
if then in
possession of any portion of the premises, shall vacate the entire
premises and
surrender the same to Landlord.
14.
CONDEMNATION. (a) If the demised premises, or such portion thereof
as
to render the balance (when reconstructed) unusable by Tenant,
shall be taken by
condemnation or right of eminent domain, either Landlord or Tenant,
upon notice
to the other, shall be entitled to terminate this Lease, provided
such notice is
given not later than thirty (30) days after Tenant has been
deprived of
possession. Should only part of the demised premises be so taken or
condemned,
and should this Lease not be terminated in accordance with the
foregoing
provision, Landlord covenants and agrees, within a reasonable time
after such
partial taking of the premises, to restore the demised premises to
an
architectural unit as nearly like their condition prior to such
taking as shall
be practicable. Should the net amount so awarded to Landlord be
insufficient to
cover the cost of restoring the demised premises, as estimated by
Landlord's
architect, Landlord may, but shall not be obligated to, supply the
amount of
such insufficiency and restore said premises as above provided,
with all
reasonable diligence, or alternatively Landlord may terminate this
Lease. Where
Tenant has not already exercised any right of termination accorded
to it under
the foregoing portion of this Section, Landlord shall notify Tenant
of
Landlord's election not later than ninety (90) days after the
final
determination of the amount of the award.
(b) Out of any award for any taking of the demised premises, in
condemnation proceedings or by right of eminent domain, Landlord
shall be
entitled to receive and retain the amounts awarded for such demised
premises and
for Landlord's business loss. Tenant shall have no rights in or to
any award
made to Landlord by the condemning authority, except that Tenant
shall have the
right to make a claim with respect to the award for the value of
its leasehold
provided Bank (as that term is defined in Section 21 below) will be
paid in full
by the condemnation proceedings. Tenant may, however, separately
claim or
institute such proceeding as it may elect against the condemning
authority for
the taking of Tenant's fixtures and equipment and for such other
damages which
Tenant may legally be entitled to recover separately from the
condemning
authority.
(c) In the event of any such taking of the demised premises,
the
basic rent, or a fair
and just proportion thereof, according to the nature and
extent of the damage
sustained shall be abated.
15.
DEFAULT. (a) If a decree or order of a court having jurisdiction
in
the premises shall be entered (i) adjudging Tenant bankrupt or
insolvent, or
(ii) approving as properly filed a petition seeking reorganization
of Tenant
under any bankruptcy or insolvency law, or (iii) for the winding up
or
liquidation of Tenant's affairs, or (iv) for the appointment of a
receiver or a
liquidator or trustee in bankruptcy or insolvency of Tenant or of
any of
Tenant's property, and such decree or order shall continue
undischarged or
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unstayed for thirty (30) days; or if Tenant shall institute or
consent to
insolvency or bankruptcy proceedings by or against Tenant, or file
a petition,
answer or consent seeking a reorganization under any insolvency or
bankruptcy
law, or consent to the appointment of a receiver or liquidator or
trustee in
bankruptcy or insolvency of Tenant or Tenant's property, or make
assignment for
the benefit of creditors, or admit in writing Tenant's inability to
pay debts
generally as they become due, or take corporate action in
furtherance of any of
the aforesaid purposes, then and in any such event Landlord may, if
Landlord so
elects, with or without notice or entry or other action, forthwith
terminate and
cancel this Lease, and shall upon such termination or cancellation
be entitled
to recover damages in an amount equal to the then present value of
the rent and
other charges provided to be paid by Tenant hereunder for the
residue of the
stated term, less the fair rental value of the premises for such
residue or in
any greater amount as may be permitted by law up to the full amount
of the rent
reserved by this Lease to the end of the stated term.
(b) Should Tenant default in the performance of any of its
obligations hereunder, or if the demised premises become vacant or
deserted,
Landlord may give notice to Tenant specifying the nature of said
default. Should
Tenant, within ten (10) days after the giving of such notice
respecting a
default in payment of rent or other charges, or within thirty (30)
days after
the giving of such notice respecting any other default, have failed
to remedy
the default specified in Landlord's notice or, if the remedying of
a default
other than the payment of rent or other charges shall require more
than thirty
(30) days, if performance thereof shall not have commenced during
the said
thirty (30) day period and thereafter have been completed with due
diligence,
Landlord, by notice to Tenant, may elect to terminate this Lease
and upon the
expiration of three (3) days from the date of Landlord's notice of
termination
the term of this Lease shall come to an end as fully and completely
as if the
date of expiration of said three (3) day period were the date
originally fixed
for the expiration of the term hereof, and Tenant shall then vacate
the demised
premises and surrender the same to Landlord but Tenant shall remain
liable as
hereinafter provided.
(c) If the term shall expire as aforesaid Landlord may, without
notice, reenter the demised premises either by force or otherwise
and dispossess
Tenant by summary proceedings or otherwise, and Tenant hereby
waives the service
of intention to reenter or to institute legal proceedings to that
end.
(d) In the case of any such default, re-entry, expiration
and/or
dispossess by summary proceedings or otherwise, Landlord or its
agents shall
have the right to and may peaceably enter the premises without
being liable for
any prosecution or damage therefor, and may relet the premises as
the agent of
Tenant, and receive the rent therefor, upon such terms as shall be
satisfactory
to Landlord and all rights of Tenant to repossess the premises
under this Lease
shall be forfeited. Such re-entry by Landlord shall not operate to
release
Tenant from any rent to be paid or covenants to be performed
hereunder during
the full term of this Lease. For the purpose of reletting, Landlord
shall be
authorized to make such repairs or alterations in or to the leased
premises as
may be necessary to place the same in good order and condition.
Tenant shall be
liable to Landlord for the cost of such repairs or alterations, and
all expenses
of such reletting. If the sum realized or to be realized from the
reletting is
insufficient to satisfy the rent and
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other charges provided in this Lease, Landlord, at its option may
require Tenant
to pay such deficiency, month by month, or may hold Tenant in
advance for the
entire deficiency to be realized during the term of reletting.
Tenant shall not
be entitled to any surplus accruing as a result of the reletting.
Landlord shall
have the right, as agent of Tenant, after provision of prior
written notice to
Tenant, to take possession of any furniture, fixtures or other
personal property
of Tenant found in or about the premises, and sell the same at
public or private
sale and to apply the proceeds thereof to the payment of any monies
becoming due
under this Lease, the Tenant hereby waiving the benefit of all laws
exempting
property from execution, levy and sale on distress or judgment.
Tenant agrees to
pay, as additional rent, all reasonable attorneys' fees and other
expenses
incurred by Landlord in enforcing any of the obligations under this
Lease.
Tenant hereby waives any and all rights of redemption granted by or
under any
present or future laws in the event of Tenant being evicted or
dispossessed for
any cause, or in the event of Landlord's obtaining possession of
the demised
premises pursuant to the terms of this Lease.
16.
INDEMNIFICATION. Tenant covenants and agrees with Landlord that
during
the term of this Lease and any renewed term(s) hereof Tenant will
indemnify and
hold Landlord harmless from and against all claims, debts, demands
or
obligations which may be made against Landlord or Landlord's title
to the
premises arising by reason of or in connection with any breach of
any of the
provisions of this Lease by Tenant, and if it becomes necessary for
Landlord to
defend any action seeking to impose any such liability, Tenant will
pay Landlord
all court costs and reasonable attorneys' fees incurred by Landlord
in effecting
such defense in addition to any other sums which Landlord may be
obligated to
pay by reason of the entry of a judgment against Landlord in the
litigation in
which such claim is asserted.
17.SUBORDINATION. (a) Subject to the mortgagee's agreement to
the
provisions of subparagraph (b) of this Section, this Lease is
subject and
subordinate to all mortgages now affecting the demised premises and
all
mortgages made with a bank or other institutional lender hereafter
affecting the
demised premises, and to all renewals, modifications,
consolidations,
replacements and extensions thereof. This clause shall be
self-operative and no
further instruments of subordination shall be required. In
confirmation of this
subordination, Tenant shall promptly execute any subordination
agreement in
accordance with the terms hereof or any certificate thereof which
Landlord may
request. Should Tenant fail to do so within ten (10) days after
Landlord's
request therefor, Tenant hereby constitutes and appoints Landlord
as Tenant's
attorney-in-fact to execute any such subordination agreement or
certificate for
and on behalf of Tenant.
(b) Landlord agrees to request at the beginning of the term
hereof
and from time to time during the term hereof that the holder of
each such
mortgage (the "mortgagee") to agree in writing that in the event of
a default by
Landlord in the payment of any monies or in the performance of any
of Landlord's
other obligations under such mortgage and the mortgagee shall
institute
foreclosure proceedings, Tenant's use and possession of the
premises shall not
be disturbed and this Lease shall continue in full force and effect
so long as
Tenant shall pay the rent and additional rent and shall not
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otherwise be in default hereunder; provided, however, that Landlord
shall have
no responsibility for the failure or refusal of any mortgagee to
enter into such
"non-disturbance" agreement.
18. RIGHT
OF ENTRY. Landlord or Landlord's agents shall have the right,
after reasonable notice to Tenant and subject to Tenant's usual
security
requirements, to enter the demised premises at reasonable hours
during the day
or night to examine the same or to make such repairs or alterations
thereto as
Landlord shall deem necessary or desirable (there being no
obligation, however,
on the part of Landlord to make any such repairs or alterations),
and Landlord
shall be allowed to take all materials into and upon said premises
that may be
required for such work without the same constituting an eviction of
Tenant, in
whole or in part, and the rent herein stipulated shall not abate
while such
repairs are being made nor shall Landlord be liable for any loss or
interruption
of business of Tenant by reason of such work. For one year prior to
the
expiration of the term hereof and at any time thereafter, Landlord
may exhibit
the premises, at reasonable hours during the day or night, to
prospective
purchasers and put upon the premises a suitable "For Sale" sign.
For one year
prior to the term hereof, Landlord or Landlord's agents may exhibit
the premises
to prospective tenants and may place the usual "To Let" signs
thereon.
Notwithstanding anything to the contrary herein provided, the
foregoing entry
into the premises by Landlord or Landlord's agents for the purposes
aforesaid
shall not unreasonably interfere with the conduct of Tenant's
business.
19. LAWFUL
USE. Tenant will not at any time use or occupy the demised
premises in violation of any certificate of occupancy issued for
the demised
premises or in violation of any applicable laws, orders and
regulations of all
governmental authorities having jurisdiction thereof, now or
hereafter issued,
relating to Tenant's use and occupancy of the demised premises and
the conduct
of its business therein. In the event any such governmental
authority shall at
any time during the term or renewed term of this Lease contend
and/or declare by
notice, violation order or in any other manner whatsoever that the
demised
premises are being used for a purpose which is a violation of such
certificate
of occupancy, or in violation of law, Tenant shall, upon five (5)
days notice
from Landlord, immediately discontinue such use of the premises or
promptly take
such action as may be required to make such use legal. The failure
by Tenant to
do so shall be deemed a default by Tenant in the fulfillment of a
covenant
hereof for which Landlord shall have the right to terminate this
Lease. If
structural alterations or additions are required to comply with the
certificate
of occupancy or applicable laws unrelated to Tenant's business
operations and
its use of the premises, such alterations or additions shall be
made by
Landlord, at Landlord's expense.
20. FORCE MAJEURE.
This lease and the obligations of Tenant to pay the
rent and other charges hereunder and perform all of the other
covenants and
agreements hereunder on the part of Tenant to be performed shall in
no way be
affected, impaired or excused because Landlord is unable to fulfill
any of
Landlord's obligations under this Lease or to supply or is delayed
in supplying
any service expressly or impliedly to be supplied or is unable to
make, or is
delayed in making any repairs, additions, alterations
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or decorations or is unable to supply or is delayed in supplying
any equipment
or fixtures if Landlord is prevented or delayed from so doing by
reason of
strike or labor troubles or any cause beyond Landlord's control,
including but
not limited to, governmental preemption in connection with a
National Emergency
or by reason of any rule, order or regulation of any department or
subdivision
thereof of any government agency or by reason of the conditions of
supply and
demand which have been or are affected by war or other emergency.
Provided that
in the event that Tenant is deprived of the use of any space rented
hereunder in
the premises for any of the reasons set forth above, Tenant shall
have its rent
abated for the period of such deprivation with respect to that
portion of the
demised premises which it has been deprived the use of. Conversely,
Tenant shall
not be deemed to be in default in the performance of any of its
obligations
hereunder other than its covenants to pay the rent and other
charges herein
provided to be paid by Tenant if Tenant is prevented or delayed in
performing
such non-monetary obligations for any of the reasons set forth in
the preceding
sentence of this Section.
21.
EXISTING MORTGAGES. (a) Tenant acknowledges that Landlord has
advised
Tenant that the demised premises are subject to a mortgage (the
"Mortgage") made
by the Landlord in favor of the the New Jersey Economic Development
Authority
(the "Authority") to secure the loan of the proceeds of the sale of
certain
bonds issued by the Authority in the aggregate principal amount of
Nine Million
($9,000,000) Dollars designated "Industrial Development Bond
(Soundesign
Corporation - 1984 Project)"(the "Bond") and sold to Manufacturers
Hanover Trust
Company (now Chemical Bank)(the "Bank") for the acquisition and
construction by
Landlord of the demised premises. In connection therewith, the
Authority, the
Landlord and the Bank have entered into a Bond Financing Agreement
which
stipulates the terms and conditions under which the Landlord may
lease the
demised premises.
(b) Tenant hereby acknowledges receipt from Landlord of a copy
of
the Bond Financing Agreement.
(c) To the extent that the provisions thereof are applicable to
Tenant, Tenant hereby covenants and agrees to be bound by and
perform each and
all of the provisions of the Bond Financing Agreement. Landlord
represents that
such provisions of the Bond Financing Agreement do not
substantially interfere
with Tenant's reasonable contemplated use of the premises.
22.
TAX-EXEMPT STATUS. (a) It is understood that the Bond is a
tax-exempt
industrial development bond. In order for the Bond to retain its
tax-exempt
status, the requirements under Section 144(a) of the Internal
Revenue Code
("Code") must continue to be satisfied by Tenant. Section 144(a) of
the Code
currently provides for a $10,000,000 limit on capital expenditures
for a
facility whether or not these expenditures are made from the
proceeds of the
bond issues. The limitation applies not only to a principal user of
such
facilities but also to any related parties as defined in the Code
within the
Project Municipality (as defined in the Bond Financing Agreement)
or the
facilities adjacent thereto or integrated with such facilities. The
capital
expenditure limitation applies for a period of three years prior to
the issuance
of the bonds and three years after the issuance of the bonds. Also,
all prior
issues within the Project Municipality (as defined in the
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Bond Financing Agreement) or the facilities adjacent thereto or
integrated with
such facilities with respect to a particular user and its related
parties are
aggregated together to determine whether the $l0,000,000 limitation
has been
exceeded with respect to any new issues, If the $10,000,000
limitation has been
exceeded through either excess capital expenditures or through the
issuance of
bonds in excess of the limitation, then all bonds with respect to
the facilities
for a particular user lose their tax-exempt status.
(b) Accordingly, Tenant hereby represents and expressly agrees
as
follows:
(i) Neither Tenant nor any of its related parties are or have
been
principal users with respect to any facilities financed through the
issuance of
industrial development bonds (as defined in Section 144(a) of the
Code) located
in the Project Municipality (as defined in the Bond Financing
Agreement) or the
facilities adjacent thereto or integrated with such facilities;
(ii) This Lease is subject to the lien of the Mortgage;
(iii) The demised premises (comprising a portion of the Project,
as
such term is defined in the Bond Financing Agreement) will be
operated by Tenant
as an authorized project under The New Jersey Economic Authority
Act, as amended
and supplemented, in accordance with the factual statement made by
the Tenant to
the Authority with respect to the number of persons employed by
Tenant at the
demised premises and Tenant's use of the demised premises;
(iv) So long as the Mortgage and the Bond shall remain unpaid,
Tenant will submit employment reports as to its operations in
accordance with
the requirements of Section 7.09 of the Bond Financing Agreement,
as follows:
within thirty (30) days after the close of each calendar year of
the term of
this Lease and any renewed term, Tenant shall furnish to Landlord a
list of
Tenant's employee's job descriptions and salaries and the number of
employees in
each category as of the year-end at the demised premises. Tenant
shall also
provide Landlord with the annual average number of full time, part
time or
seasonal employees at the demised premises in the following
categories: (i)
professional, managerial, technical and (ii) skilled, and (iii)
semi-skilled or
unskilled. Landlord shall then prepare the written report in
accordance with
Section 7.09 of the Bond Financing Agreement and file it with the
Authority on
behalf of the Tenant. Landlord shall reimburse Tenant for the
reasonable cost of
preparing the reports referred to herein.
(v) Tenant will not consolidate nor merge with a corporation or
become a member of a partnership, firm or association, or gain
control of any
person, firm or corporation, or acquire greater than 50% of the
outstanding
stock of any corporation, or enter into any exchange of property
for stock or
stock for property pursuant of a plan of reorganization with
another firm or
corporation, which corporation, partnership, firm or association
may under
Section 144(a) of the Internal Revenue Code (the "Code") constitute
a principal
user or a related person of a principal user with respect to
facilities which
are or which will be located in the Project Municipality (as
defined in the Bond
Financing Agreement) or the facilities adjacent thereto or
integrated with such
facilities, and as to which there is outstanding an issue of
industrial
development bond (as defined, in Section 144(a) of the Code) that
has been
issued prior to the issuance of the
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Bond and the proceeds of which prior issue of bonds have been or
will be used
with respect to such facilities.
(vi) Tenant will not assume obligations under any contract or
agreement which assumption would constitute Tenant a principal user
or a related
person of principal user with respect to facilities which are or
which will be
located in the Project Municipality (as defined in the Bond
Financing Agreement)
or the facilities adjacent thereto or integrated with such
facilities and as to
which there is outstanding an issue of industrial development bonds
(as defined
in Section 144(a) of the Code) that has been issued prior to the
issuance of the
Bond, the proceeds of which prior issues of bonds have been or will
be used with
respect to such facilities.
(vii) Tenant has not and will not make any capital expenditures
as
defined in Section 144(a) of the Code with respect to this facility
and/or any
other facilities in the Project Municipality (as defined in the
Bond Financing
Agreement) or the facilities adjacent thereto or integrated with
such facilities
which in the aggregate would exceed the Section 144(a)
limitation.
23.
COVENANTS OF LANDLORD. (a) Landlord covenants and agrees to
perform
all of Landlord's obligations under the Bond Financing Agreement
except to the
extent that such obligations are assumed by Tenant hereunder.
(b) Landlord further covenants and agrees with Tenant that upon
Tenant paying the rent, additional rent and other charges
hereinbefore
stipulated and observing and performing all the other obligations
on Tenant's
part hereunder, Tenant may peaceably and quietly occupy, possess
and enjoy the
demised premises subject, nevertheless, to the terms and conditions
of this
Lease.
24. CURE
OF DEFAULT. If during the term of this Lease or any renewed
term
hereof either Landlord or Tenant shall default in the performance
or observance
of any agreement, condition or other provision contained in this
Lease or in any
mortgage now or hereafter affecting the demised premises on its
part to be
performed or observed, and shall not cure such default within the
notice period
provided for under the applicable provisions of this Lease or such
mortgage and
in any case where no such notice is provided for, within twenty
(20) days after
notice in writing from the other party specifying the default (or
shall not
within said period commence to cure such default and thereafter
prosecute the
curing of such default to completion with due diligence), either
party may, at
its option, without waiving any claim for breach of agreement, at
any time
thereafter cure such default for the account of the defaulting
party, and the
defaulting party shall reimburse the other for any amount paid and
any
reasonable expenses or reasonable contractual liability so
incurred. Tenant may
deduct any such amount due it from rental payments next thereafter
accruing,
provided that it shall simultaneously notify the Authority and the
Bank during
the existence of the Bond Financing Agreement and/or the then
holder of any
mortgage covering the demised premises of the existence of such
default, and
Landlord may add any such amount due to it to the rental payment
next thereafter
accruing. Notwithstanding anything to the contrary hereinbefore
stipulated,
Landlord or Tenant may cure any such default as aforesaid prior to
the
expiration of said waiting period but after notice to the other
party if it is
necessary to avoid any default
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under the Bond Financing Agreement or such mortgage or to protect
the premises
and/or their respective interests therein or to prevent injury or
damage to
persons or property.
25.
CONDITION TO EXISTENCE OF LEASE. Pursuant to Section 7.14 of the
Bond
Financing Agreement, this Lease is conditioned upon and is subject
to the
express consent of all of the following parties: the Authority, the
Bank, and
any "Holders" as that term is defined in Section 1.01 (b) of the
Bond Financing
Agreement which consent has been previously obtained.
26.
ASSIGNMENT OR SUBLEASE. (a) Tenant shall not a
