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Exhibit 10.3
SECOND AMENDMENT TO LEASE
SECOND
AMENDMENT TO LEASE made as of the 7 th
day of May, 2003 by and between MITCHMAR ATLANTA PROPERTIES,
INC, a Delaware corporation having its principal office at c/o
JFI, 152 West 57 th
Street, 56 th
Floor, New York, New York 10019 (hereinafter called
“Landlord”), and SID TOOL CO., INC., a New York
corporation having its principal office at 75 Maxess Road,
Melville, New York 11747 (hereinafter called
“Tenant”).
RECITALS
WHEREAS,
Landlord and Tenant entered into an Agreement of Lease dated
as of July 13, 1989 (as amended, the “Original
Lease”) as amended by a First Amendment to Lease dated
as of August 10, 1996 (the “First Amendment”) for
the leasing of the 376,738 square foot building (the
“Building”) located at 6700 Discovery Boulevard,
Mableton, Georgia (the “Original Premises”) which
building is located on “Parcel C” as shown on
Exhibit A
annexed hereto and made a part hereof (the “Original
Building Lot”); and
WHEREAS,
Landlord owns two additional building lots (“Parcel
A” and “Parcel B”) as shown on
Exhibit B
annexed hereto and made a part hereof; and
WHEREAS,
pursuant to the terms of this Second Amendment, Tenant shall
lease all of Parcel A and Parcel B, and Landlord shall reserve
an easement of egress and ingress to Parcels A and B;
and
WHEREAS,
Landlord and Tenant desire to amend the Original Lease to,
among other things, lease to Tenant (i) an additional
approximately 148,000 square feet of space which is to be
added to the Building by Tenant pursuant to the terms of this
Second Amendment (the “Expansion Premises”), (ii)
Parcel A, and (iii) Parcel B (the Expansion Premises together
with Parcel A, Parcel B and the Original Premises hereinafter
collectively referred to as the “Demised Premises”
or the “Premises”), (ii) extend the term of the
Original Lease, as amended, to the Extended Expiration Date
(as hereinafter defined), and (iii) modify certain other
provisions of the Original Lease, as amended. This
second amendment to the lease shall be referred to herein as
the “Second Amendment”. The Original
Lease, the First Amendment and this Second Amendment shall be
collectively referred to herein as the
“Lease”.
NOW,
THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the
receipt and sufficiency of which being hereby acknowledged,
the parties agree as follows:
ARTICLE
I
Definitions
1.1
The
recitals are specifically incorporated into the body of this
Agreement and shall be binding upon the parties
hereto.
1.2
Unless
expressly set forth to the contrary in the Original Lease or First
Amendment and except as specifically modified by this Second
Amendment, all capitalized or defined terms shall have the meanings
ascribed to them in the Original Lease and the First
Amendment.
1.3
The
term “Effective Date”, as used herein, shall mean and
refer to the date which is the earlier to occur of (a) the
“substantial completion” (as hereinafter defined) of
the Expansion Premises Work (as hereinafter defined), (b)
Tenant’s occupancy of the Expansion Premises for the purposes
of conducting its business, and (c) October 1, 2003. The
term “substantially completed” or “substantial
completion” as used herein is defined to mean the date on
which the only items of the Expansion Premises Work to be completed
are those which do not interfere with Tenant’s occupancy and
substantially full enjoyment of the Expansion
Premises.
ARTICLE
II
Lease Modifications
2.1
The
Lease is hereby modified and amended as follows:
2.1.1
Granting Clause
and Construction of Addition
. (A) Effective as of the date hereof,
Landlord hereby leases to Tenant and Tenant hereby hires from
Landlord (i) the Expansion Premises, to be constructed by
Tenant on the Original Building Lot in accordance with the
terms hereof (the “Expansion Premises Work”), (ii)
Parcel A, and (iii) Parcel B.
(B) Tenant
shall (i) comply with all terms and conditions contained in
Paragraph 49 (as modified herein) of the Lease applicable to
Permitted Alterations (as hereinafter defined) with respect to
the Expansion Premises Work or with respect to any future
expansion work to be performed on either Parcel A or Parcel
B. Tenant shall deliver to Landlord complete and
detailed architectural, mechanical and electrical construction
drawings for the Expansion Premises Work (such plans being
herein referred to as the “Final Construction
Documents”), or with respect to any material future
expansion work to be performed on Parcel A or Parcel
B.
2.1.2
Landlord’s
Contribution . The Expansion Premises Work
shall be performed at the sole cost and expense of
Tenant. Landlord hereby covenants to contribute
$4,750,000.00 (the “Landlord’s
Contribution”) toward the “hard costs” of
the Expansion Premises Work. Tenant shall, as the
Expansion Premises Work progresses, submit statements to
Landlord from time to time, but not more often than once per
month, setting forth the cost of those aspects of the
Expansion Premises Work which have been completed through the
date of such statement (such statement to be prepared in
accordance with standard progress payment application forms
issued by the American Institute of
Architects). Each such statement shall be
accompanied by a certificate from an authorized officer of
Tenant requesting that a payment be made to the identified
contractor, subcontractor or materialmen who is owed money for
that portion of the completed Expansion Premises Work (the
“Requested Allowance Payment”) and certifying that
the Requested Allowance Payment is for amounts due and owing
Tenant’s contractor, subcontractor or materialmen, in
connection with the Expansion Premises
Work. Following receipt of any such statement and
accompanying certificate, Landlord shall pay to Tenant’s
contractor, subcontractor or materialmen, a portion of the
Landlord’s Contribution in an amount equal to one
hundred percent (100%) of the subject Requested Allowance
Payment (but in no event shall the aggregate amount of such
payments by Landlord exceed the Landlord’s
Contribution). Landlord shall have the right to (a)
inspect all of the Expansion Premises Work to determine if it
has been completed substantially in accordance with the Final
Construction Documents, and (b) review all Expansion Premises
Work invoices and evidence of payment thereof, to the extent
such payments have already been made by Tenant. The
right to request that Landlord make payments to such
contractors, subcontractors, or materialmen for the cost of
the Expansion Premises Work as set forth herein shall be the
exclusive benefit of Tenant, it being the express intent of
the parties hereto that in no event shall such right be
conferred upon or for the benefit of any third party,
including without limitation, any contractor, subcontractor,
materialmen, laborer, architect, engineer, attorney or any
other person, firm or entity.
Tenant
agrees that if the Expansion Premises Work is not
substantially completed prior to October 1, 2003, then
Landlord, in its sole and absolute discretion, shall have the
right, but not the obligation, to complete the Expansion
Premises Work. Any amounts that Landlord incurs
which are greater than Landlord’s Contribution in order
to complete the Expansion Premises Work shall be considered
additional rent under the Lease and shall be immediately due
and payable upon demand therefor.
2.1.3
Term
. (A) Effective
as of the Effective Date, Paragraph 42 of the Rider to the
Lease is hereby modified and amended to reflect that the term
of the Lease is hereby extended to and including the day
preceding the day which is twenty (20) years after (i) the
Effective Date, if such date is the first day of a calendar
month, or (ii) the first day of the first full calendar month
following the Effective Date, if such date is not the first
day of a calendar month (the “Extended Expiration
Date”).
(B) A
“New Lease Year” shall be comprised of a period of
twelve (12) consecutive months. The first New Lease
Year shall commence on the Effective Date but, notwithstanding
the first sentence of this paragraph, if the Effective Date is
not the first day of a month, then the first New Lease Year
shall include the additional period from the Effective Date to
the end of the then current month. Each succeeding
New Lease Year shall end on the anniversary date of the last
day of the preceding New Lease Year. For example,
if the Effective Date is December 1, 2002, the first New Lease
Year would begin on December 1, 2002, and end on November 30,
2003, and each succeeding New Lease Year would end on November
30th. If, however, the Effective Date is December
2, 2002 the first New Lease Year would end on December 31,
2003, the second New Lease Year would commence on January 1,
2004, and each succeeding New Lease Year would end on December
31st.
2.1.4
Rent
. With respect to the Original Premises, Tenant
shall continue to pay fixed rent in accordance with Paragraph
43 of the New Lease through July 31, 2010, the current
expiration date. Thereafter, the fixed rent payable
with respect to the Original Premises for the balance of the
seventh New Lease Year (as defined in Section 2.13 (B)) shall
be $101,691.00 per month.
(A)
Beginning on the Eighth New Lease Year and for the balance of
the term, the fixed rent payable for the Original Premises
shall be as follows:
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i.
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During
each of the eighth and ninth New Lease Years, the fixed rent
attributable to the Original Premises shall be One Million Two
Hundred Twenty Thousand Two Hundred Ninety-Two and 00/100
($1,220,292.00) Dollars per annum payable in equal monthly
installments of $101,691.00;
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ii.
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During
each of the tenth, eleventh and twelfth New Lease Years, the fixed
rent attributable to the Original Premises shall be One Million Two
Hundred Fifty Thousand Seven Hundred Ninety-Nine and 30/100
($1,250,799.30) Dollars per annum payable in equal monthly
installments of $104,233.27;
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iii.
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During
each of the thirteenth, fourteenth and fifteenth New Lease Years,
the fixed rent attributable to the Original Premises shall be One
Million Two Hundred Eighty-Two Thousand Sixty-Nine and 20/100
($1,282,069.20) Dollars per annum payable in equal monthly
installments of $106,839.10);
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iv.
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During
each of the sixteenth, seventeenth and eighteenth New Lease Years,
the fixed rent attributable to the Original Premises shall be One
Million Three Hundred Fourteen Thousand One Hundred Twenty and
90/100 (1,314,120.90) Dollars per annum payable in equal monthly
installments of $109,510.07; and,
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v.
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During
each of the nineteenth and twentieth New Lease Years, the fixed
rent attributable to the Original Premises shall be One Million
Three Hundred Forty-Six Thousand Nine Hundred Seventy-Three and
90/100 ($1,346,973.90) Dollars per annum payable in equal monthly
installments of $112,247.82;
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(B)
With respect to the Expansion Premises, Parcel A and Parcel B,
collectively, the fixed rent shall be as follows:
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i.
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During
each of the first, second and third New Lease Years the fixed rent
attributable to the Expansion Premises, Parcel A and Parcel B shall
be an amount equal to Four Hundred Forty Four Thousand and 00/100
($444,000.00) Dollars per annum payable in equal monthly
installments of $37,000.00;
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ii.
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During
each of the fourth, fifth and sixth New Lease Years, the fixed rent
attributable to the Expansion Premises, Parcel A and Parcel B,
shall be Four Hundred Fifty Five Thousand One Hundred and 00/100
($455,100.00) Dollars per annum payable in equal monthly
installments of $37,925.00;
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iii.
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During
each of the seventh, eight and ninth New Lease Years, the fixed
rent attributable to the Expansion Premises, Parcel A and Parcel B,
shall be Four Hundred Sixty Six Thousand Four Hundred Seventy Seven
and 50/100 ($466,477.50) Dollars per annum payable in equal monthly
installments of $38,873.13;
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iv.
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During
each of the tenth, eleventh and twelfth New Lease Years, the fixed
rent attributable to the Expansion Premises, Parcel A and Parcel B,
shall be Four Hundred Seventy Eight Thousand One Hundred Thirty
Nine and 44/100 ($478,139.44) Dollars per annum payable in equal
monthly installments of $39,844.95;
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v.
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During
each of the thirteenth, fourteenth and fifteenth New Lease Years,
the fixed rent attributable to the Expansion Premises, Parcel A and
Parcel B, shall be Four Hundred Ninety Thousand Ninety Two and
93/100 ($490,092.93) Dollars per annum payable in equal monthly
installments of $40,841.08;
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vi.
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During
each of the sixteenth, seventeenth and eighteenth New Lease Years,
the fixed rent attributable to the Expansion Premises, Parcel A and
Parcel B, shall be Five Hundred Two Thousand Three Hundred Forty
Five and 25/100 ($502,345.25) Dollars per annum payable in equal
monthly installments of $41,862.10; and
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vii.
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During
each of the nineteenth and twentieth New Lease Years, the fixed
rent attributable to the Expansion Premises, Parcel A and Parcel B,
shall be Five Hundred Fourteen Thousand Nine Hundred Three and
88/100 ($514,903.88) Dollars per annum payable in equal monthly
installments of $42,908.66.
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2.1.5
Late
Fee . Effective as of the date hereof, the
following is hereby inserted as a new sentence at the end of
Paragraph 43(e) of the Lease:
Notwithstanding
the foregoing, in no event shall the late charge above exceed
that maximum late charge permitted by applicable
law. In the event such late charge would exceed the
maximum rate permitted by law, the actual late charge shall be
reduced to the maximum late charge permitted by
law.
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2.1.6
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Alterations . Effective as of the date hereof,
Paragraph 49 of the Lease is deleted and the following is hereby
inserted in lieu thereof:
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49. (A) Except
as provided herein, Tenant shall make no alterations,
decorations, installations, additions or improvements
(hereinafter collectively referred to as
“Alterations”) in or to the Demised Premises
without Landlord’s consent which shall not be
unreasonably withheld, conditioned or delayed. All
such Alterations shall be performed at the sole cost and
expense of Tenant. Tenant shall pay Landlord for
all reasonable costs and charges for such Alteration actually
incurred by Landlord in reviewing plans in connection with
such Alterations and the reasonable cost and expenses,
actually incurred in ensuring that such Alterations are made
in accordance with the terms hereof.
(B) All
Alterations including the Expansion Premises Work and any
future Alterations pertaining to Parcel A or Parcel B
(collectively, the “Permitted Alterations”) shall
be performed in accordance with the following
provisions:
(i) All
Permitted Alterations done by Tenant shall at all times comply
with (a) laws, rules, orders and regulations of governmental
authorities having jurisdiction thereof, and (b) rules and
regulations of the Landlord applicable to the Demised
Premises.
(ii) With
respect to all Permitted Alterations, architectural and
engineering plans and specifications prepared by and at the
expense of Tenant shall be submitted to Landlord for its prior
written approval in accordance with the following
requirements:
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a.
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With
respect to any Permitted Alterations to be performed by Tenant
pursuant to this Lease, Tenant shall, at its expense, furnish
Landlord with complete architectural, mechanical and electrical
construction documents for work to be performed by Tenant (the
“Tenant’s Plans”). All of the
Tenant’s Plans shall: (x) comply with all applicable laws and
the rules, regulations, requirements and orders of any and all
governmental agencies, departments or bureaus having jurisdiction,
and (y) be fully detailed, including locations and complete
dimensions;
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b.
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Tenant’s
Plans shall be subject to approval by Landlord, such approval not
to be unreasonably withheld, conditioned or delayed; Landlord shall
have twenty (20) days to render its decision. Failure to
render a decision within such time period shall be deemed
Landlord’s consent to Tenant’s Plans.
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c.
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Tenant
shall, at Tenant’s expense, (x) cause Tenant’s Plans to
be filed with the governmental agencies having jurisdiction there
over, (y) obtain when necessary all governmental permits, licenses,
authorization required for the work to be done in connection
therewith, and (z) obtain all necessary certificates of occupancy,
both temporary and permanent. Landlord shall execute
such documents as may be reasonably required in connection with the
foregoing and Landlord shall otherwise cooperate with Tenant in
connection with obtaining the foregoing, but without expense to
Landlord. Tenant shall make no amendments or additions
to Tenant’s Plans without the prior written reasonable
consent of Landlord in each instance;
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d.
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No
work (including the Expansion Premises Work) including any future
work pertaining to Parcel A or Parcel B shall commence until (x)
Tenant has procured all necessary permits therefor and has
delivered copies of same to Landlord, (y) Tenant has procured a
paid builder’s risk insurance policy naming Landlord as an
additional insured and has delivered to Landlord a certificate of
insurance evidencing such policy, and (z) Tenant or its contractor
has procured a workmen’s compensation insurance policy
covering activities of all persons working at the Premises naming
Landlord as an additional insured and has delivered to Landlord a
certificate of insurance evidencing such policy;
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e.
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Tenant
may use any licensed architect or engineer to prepare its plans and
to file for permits. However, all such plans and permit
applications shall be subject to review, revision and reasonable
approval by Landlord or its architect;
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f.
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Tenant,
at its expense, shall perform all work in connection with all
Permitted Alterations, in accordance with Tenant’s Plans and
Tenant shall pay any reasonable third party out of pocket costs
incurred by Landlord with respect to the review and approval of
Tenant’s Plans.
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(iii) Tenant
shall defend, indemnify and save harmless Landlord, its
officers, directors, shareholders, agents and employees
against any and all mechanics’ and other liens filed in
connection with its Permitted Alterations, repairs or
installations, including the liens of any conditional sales
of, or chattel mortgages upon, any materials, fixtures or
articles so installed in and constituting part of the Demised
Premises and against any loss, cost, liability, claim, damage
and expense, including reasonable counsel fees, penalties and
fines incurred in connection with any such lien, conditional
sale or chattel mortgage or any action or proceeding brought
thereon. As a condition precedent to
Landlord’s consent to the making by Tenant of Permitted
Alterations, Tenant agrees to obtain and deliver to Landlord,
written unconditional waivers of mechanics’ liens for
all work, labor and services to be performed and materials to
be furnished, signed by all contractors, subcontractors,
materialmen and laborers to become involved in such
work.
(iv) Tenant,
at its expense, shall procure the satisfaction, discharge or
bonding of all such hens within ten (10) days of the filing of
such lien against the Demised Premises or the
Building. If Tenant shall fail to cause such lien
to be discharged within the aforesaid period, then, in
addition to any other remedy, Landlord may, but shall not be
obligated to, discharge the same either by paying the amount
claimed to be due or by procuring the discharge of such lien
by deposit or by bonding proceedings, and in any such event
Landlord shall be entitled, if Landlord so elects, to compel
the prosecution of an action for the foreclosure of such lien
by the lienor and to pay the amount of the judgment in favor
of the lienor with interest, costs and
allowances. Any amount so paid by Landlord, and all
costs and expenses incurred by Landlord in connection
therewith, together with interest thereon at the maximum rate
permitted by law from the respective dates of Landlord’s
making of the payments or incurring of the cost and expense,
shall constitute additional rent and shall be paid on
demand.
(v) Nothing
in this Lease contained shall be construed in any way as
constituting the consent or request of Landlord, expressed or
implied, to any contractor, subcontractor, laborer or
materialmen for the performance of any labor or furnishing of
any material for any improvement, alteration or repair of the
Demised Premises, nor as giving any right or authority to
contract for the
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