SIXTH AMENDMENT
Exhibit
10.5
SIXTH
AMENDMENT
AGREEMENT, made this 27th day of
June, 2008, entered into between XXXX-XXXX CW REALTY ASSOCIATES
L.L.C., a New York limited liability company, having its principal office
c/o Xxxx-Xxxx Realty Corporation, 000 Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
(herein referred to as "Landlord"), and AFP IMAGING CORPORATION, a New
York corporation, having an office at 000 Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
00000 (herein referred to as "Tenant").
W I T N E S S E T H
:
WHEREAS, Landlord’s
predecessor in interest, Xxxxxx Xxxxxx Company, and Tenant entered into a
written lease agreement dated June 11, 1985, as amended by First Amendment dated
July 18, 1991, Second Amendment dated June 30, 0000, Xxxxx Xxxxxxxxx dated June
8, 0000, Xxxxxx Xxxxxxxxx dated June 8, 1999 and Fifth Amendment dated March 4,
2004 (hereinafter collectively called the "Lease") wherein and whereby Landlord
currently leases to Tenant and Tenant currently hires from Landlord
approximately 47,735 square feet in the building known as 000 Xxxxxxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx, for a term which currently expires December 31, 2009,
and
WHEREAS, the parties hereto
desire to amend and extend the term of said Lease pursuant to the terms and
provisions set forth below;
NOW, THEREFORE, in
consideration of the mutual covenants herein contained and other good and
valuable consideration, each to the other in hand paid, IT IS AGREED as
follows:
1. The
Lease is hereby extended for a period of ten (10) years commencing on January 1,
2010 and expiring on December 31, 2019 (“Renewal Term”).
2. During
the Renewal Term, the Fixed Annual Rent shall be as follows:
|
Period
|
Yearly
Rate
|
Monthly
Installment
|
Annual
Rate Per
Rentable
Sq. Ft.
|
|
January
1, 2010 –
December
31, 2012
|
$548,952.50
|
$45,746.04
|
$11.50
|
|
January
1, 2013 –
December
31, 2016
|
$596,687.50
|
$49,723.96
|
$12.50
|
|
January
1, 2017 –
December
31, 2019
|
$644,422.50
|
$53,701.88
|
$13.50
|
3. As
of January 1, 2010, the definition of Base Tax set forth in the first sentence
of Article 42A(b) of the Lease (as recited in Paragraph 3 of the Second
Amendment to the Lease, as amended) is hereby deleted in its entirety and the
following shall be substituted in place thereof:
“(b) ‘Base
Tax’ is the product of the tax rates set forth on tax bills rendered for each
Tax for the 2008 calendar year for calendar year Taxes and the 2008/2009 fiscal
Tax Year for fiscal year Taxes multiplied by the full assessed valuations of the
Real Property for the 2008 calendar year for calendar year Taxes and the
2008/2009 fiscal Tax Year for fiscal year Taxes.”
4. As
of January 1, 2010, the Base Index set forth in Article 42B(i)(b) of the Lease
(as recited in Paragraph 4 of the Second Amendment to the Lease, as amended) is
hereby deleted in its entirety and the following shall be substituted in place
thereof:
“(b) ‘Base
Index’ shall mean the Index for the calendar month January, 2008.”
5. Landlord
hereby leases the demised premises to Tenant and Tenant hereby hires from
Landlord the demised premises in its as is condition during the Renewal Term,
upon the terms and conditions set forth herein. Landlord shall have
no obligation to perform any work in or about the demised premises, except that
Landlord shall, at its sole cost and expense, perform the following work: (i)
furnish and install a fire alarm panel; (ii) replace six (6) of the ten (10)
existing space heaters in the warehouse area (and shall guaranty the remaining
four (4) existing space heaters, as hereinafter provided); (iii) furnish and
install exit and emergency lights; (iv) replace exterior staircase with new
prefab concrete staircase in the loading dock area; (v) re-caulk and insulate
the area below windows; (vi) paint rusted soffitt on the exterior of the
building; (vii) update lobby entrance (to include new step coverings, a stone
floor, refinishing banisters, painting & installing a sliding glass window);
(viii) balance HVAC in office area (collectively, Landlord’s Work”). Landlord’s
Work shall be performed at a mutually convenient time following the execution
and delivery of this Sixth Amendment. Tenant shall permit Landlord access to the
demised premises at any time during normal business hours to perform Landlord’s
Work without same constituting an eviction or entitling Tenant to any abatement
of rent or otherwise. Tenant shall cooperate with Landlord during the
performance of Landlord’s Work by removing all wall hangings and relocating all
furniture, fixtures and personnel as may be necessary. Landlord shall use
commercially reasonable efforts to minimize interference with the conduct of
business by Tenant.
6. Notwithstanding
anything herein to the contrary, in addition to Landlord’s Work described in
Paragraph 5 above, Landlord shall also perform work in the demised premises as
shown on the floor plan attached hereto as Exhibit A-1 (the “Tenant Improvement
Work”). The parties agree that the cost of performing the Tenant Improvement
Work pursuant to Exhibit A-1 is TWO HUNDRED EIGHTY-TWO THOUSAND EIGHT HUNDRED
THIRTY-FIVE AND 00/100 DOLLARS ($282,835.00), as set forth on the construction
budget attached hereto as Exhibit B-1, subject to adjustment if Tenant requests
changes in the work. Notwithstanding anything contained herein to the
contrary, Landlord shall contribute a gross amount not to exceed SEVENTY FIVE
THOUSAND AND 00/100 DOLLARS ($75,000.00), which amount includes 5% for
Landlord’s contingency and 5% for Landlord’s overhead, for the Tenant
Improvement Work to be performed by Landlord. If as a result of changes in the
Tenant Improvement Work requested by Tenant, the cost thereof is less than
$75,000.00, Landlord shall be responsible for the first $75,000.00 of the cost
of the Tenant Improvement Work and any unused portion of Landlord’s contribution
shall remain available to be used by Tenant for other construction work to be
performed in the demised premises during the term of the Lease. Tenant shall contribute
the sum of TWO HUNDRED SEVEN THOUSAND EIGHT HUNDRED THIRTY-FIVE AND 00/100
DOLLARS ($207,835.00) (subject to adjustment if Tenant requests changes in the
work) toward the cost of the Tenant Improvement Work, which shall be paid by
Tenant to Landlord as follows: fifty percent (50%) simultaneously with the
execution and delivery of this Sixth Amendment by Tenant and the balance upon
commencement of the Tenant Improvement Work. Part of the Tenant Improvement Work
consists of replacing all existing lighting fixtures in the demised premises.
Any rebates resulting from said replacement shall be for the benefit of Tenant.
The Tenant Improvement Work shall be performed at a mutually convenient time
following the execution and delivery of this Sixth Amendment. Tenant shall
permit Landlord access to the demised premises at any time during normal
business hours to perform the Tenant Improvement Work without same constituting
an eviction or entitling Tenant to any abatement of rent or
otherwise. Tenant shall cooperate with Landlord during the
performance of Landlord’s Work by removing all wall hangings and relocating all
furniture, fixtures and personnel as may be necessary. Landlord shall use
commercially reasonable efforts to minimize interference with the conduct of
business by Tenant.
7.
Provided that Tenant continues its existing maintenance contract with
Landlord in full force and effect, from and after the date hereof, and during
the Renewal Term, Landlord shall guarantee the two (2) rooftop air-conditioning
units servicing the demised premises (unit model GCSII-953-250A-2Q and unit
model GCS3-953-125A-104) to be in good working order, including replacement (if
necessary in Landlord’s sole discretion). Such guarantee shall not
extend to cover any negligence by Tenant. All other rooftop
air-conditioning units are deemed to be in good working order and shall be
Tenant's responsibility per the terms of the Lease. In addition,
Landlord shall guarantee the four (4) remaining existing heating space heaters
in the warehouse area to be in good working order during the Renewal
Term.
8.
Article 57 (Right of First Refusal – Expansion) of the Lease is hereby
deleted in its entirety and the following is substituted in its
place:
(a)
i.
Subject to
the provisions of this Article, Tenant shall have the option to lease from
Landlord contiguous space in the building, as shown on the attached
floor plan annexed hereto and made a part hereof as Exhibit A-2, ("Additional
Space") at the expiration of the existing space lease (or if presently
un-leased, the initial space lease(s)) for such Additional Space,
subject to Landlord’s right to renew such leases or to enter into direct leases
with existing subtenants and subject to the rights of any existing tenants with
respect to the Additional Space. If the Term of this Lease shall be
in full force and effect on the expiration or termination date of the existing
space leases or initial space lease, as the case may be, for the Additional
Space, subject to Landlord’s right to renew such leases or enter into direct
leases with existing subtenants and subject to the rights of any existing
tenants with respect to the Additional Space, and the date upon which Tenant
shall exercise the option hereinafter referred to, Tenant shall have the option
to lease all, but not less than all of the Additional Space on an as-is basis,
provided Tenant gives Landlord written notice of such election within ten (10)
days after Tenant shall receive Landlord's notice that such Additional Space is
available for leasing to Tenant. If Tenant fails or refuses to
exercise this option within the time period set forth above (TIME BEING OF THE ESSENCE), then and in such event
Tenant shall have no further rights under this Section with respect to such
Additional Space. If Tenant shall elect to lease said Additional
Space: (v) said Additional Space shall be deemed incorporated within and part of
the demised premises on the date that Landlord shall notify Tenant that such
Additional Space is ready for occupancy by Tenant and shall expire on the
Expiration Date of this Lease, (x) the Fixed Annual Rent payable under this
Lease shall be increased by an amount such that during the balance of the term
of this Lease the Fixed Annual Rent for said Additional Space shall be the then
fair market rent for the Additional Space, as determined in the manner set forth
in clause (ii) below, (y) Tenant’s Percentage Share shall be proportionately
increased, and (z) all other terms and provisions set forth in this Lease shall
apply, except that Landlord not be required to perform any work with respect to
said Additional Space or provide any tenant improvement
allowance.
The
parties shall promptly execute an amendment of this Lease confirming Tenant's
election to lease said Additional Space and the incorporation of said Additional
Space into the demised premises.
ii.
Landlord
and Tenant shall use their best efforts, within thirty (30) days after Landlord
receives Tenant's notice of its election to lease said Additional Space,
("Negotiation Period") to agree upon the Fixed Annual Rent to be paid by Tenant
for said Additional Space. If Landlord and Tenant shall agree upon
the Fixed Annual Rent, the parties shall promptly execute an amendment to this
Lease stating the Fixed Annual Rent for the Additional Space.
If the
parties are unable to agree on the Fixed Annual Rent for said Additional Space
during the Negotiation Period, then within fifteen (15) days notice from the
other party, given after expiration of the Negotiation Period, each party, at
its cost and upon notice to the other party, shall appoint a person to act as an
appraiser hereunder, to determine the fair market rent for the Additional
Space. Each such person shall be a real estate broker or appraiser
with at least ten (10) years' active commercial real estate appraisal or
brokerage experience (involving the leasing of similar space as agent for both
landlords and tenants) in Westchester County. If a party does not
appoint a person to act as an appraiser within said fifteen (15) day period, the
person appointed by the other party shall be the sole appraiser and shall
determine the aforesaid fair market rent. Each notice containing the
name of a person to act as appraiser shall contain the person's
address. Before proceeding to establish the fair market rent, the
appraisers shall subscribe and swear to an oath fairly and impartially to
determine such rent.
If the two
appraisers are appointed by the parties as stated in the immediately preceding
paragraph, they shall meet promptly and attempt to determine the fair market
rent. If they are unable to agree within forty-five (45) days after
the appointment of the second appraiser, they shall attempt to select a third
person meeting the qualifications stated in the immediately preceding paragraph
within fifteen (15) days after the last day the two appraisers are given to
determine the fair market rent. If they are unable to agree on the
third person to act as appraiser within said fifteen (15) day period, the third
person shall be appointed by the American Arbitration Association, upon the
application of Landlord or Tenant to the office of the Association nearest the
Building. The person appointed to act as appraiser by the Association
shall be required to meet the qualifications stated in the immediately preceding
paragraph. Each of the parties shall bear fifty percent (50%) of the
cost of appointing the third person and of paying the third person's
fees. The third person, however selected, shall be required to take
an oath similar to that described above.
The three
appraisers shall meet and determine the fair market rent. A decision
in which two of the three appraisers concur shall be binding and conclusive upon
the parties. In deciding the dispute, the appraisers shall act in
accordance with the rules then in force of the American Arbitration Association,
subject however, to such limitations as may be placed on them by the provisions
of this Lease.
After the
Fixed Annual Rent for the Additional Space has been determined by the appraiser
or appraisers and the appraiser or appraisers shall have notified the parties,
at the request of either party, both parties shall execute and deliver to each
other an amendment of this Lease stating the Fixed Annual Rent for the
Additional Space.
If the
Fixed Annual Rent for said Additional Space has not been agreed to or
established prior to the incorporation of said Additional Space in the demised
premises, then Tenant shall pay to Landlord an annual rent ("Temporary Rent")
which Temporary Rent on a per square foot basis shall be equal to the Fixed
Annual Rent, on a per square foot basis, then being paid by Tenant for the
demised premises.
Thereafter,
if the parties shall agree upon a Fixed Annual Rent, or the Fixed Annual Rent
shall be established upon the determination of the fair market rent by the
appraiser or appraisers, at a rate at variance with the Temporary Rent (i) if
such Fixed Annual Rent is greater than the Temporary Rent, Tenant shall promptly
pay to Landlord the difference between the Fixed Annual Rent determined by
agreement or the appraisal process and the Temporary Rent, or (ii) if such Fixed
Annual Rent is less than the Temporary Rent, Landlord shall credit to Tenant's
subsequent monthly installments of Fixed Annual Rent the difference between the
Temporary Rent and the Fixed Annual Rent determined by agreement or the
appraisal process.
In
determining the fair market rent for said Additional Space, the appraiser or
appraisers shall be required to take into account the rentals at which leases
are then being concluded for comparable space in the Building and in comparable
buildings in the County of Westchester, New York. In no event shall
the Fixed Annual Rent for the Additional Space, on a per square foot basis, be
less than the Fixed Annual Rent for the demised premises, on a per square foot
basis.
(b) The
option granted to Tenant under this Article may be exercised only by Tenant, its
permitted successors and assigns, and not by any subtenant or any successor to
the interest of Tenant by reason of any action under the Bankruptcy Code, or by
any public officer, custodian, receiver, United States Trustee, trustee or
liquidator of Tenant or substantially all of Tenant's
property. Tenant shall have no right to exercise any of such options
subsequent to the date Landlord shall have the right to give the notice of
termination referred to in Article 17. Notwithstanding the foregoing,
Tenant shall have no right to exercise the option granted to Tenant hereunder
if, at the time it gives notice of such election (i) Tenant shall not be in
occupancy of substantially all of the demised premises or (ii) the demised
premises or any part thereof shall be the subject of a sublease. If
Tenant shall have elected to exercise its option hereunder, such election shall,
at Landlord’s option in its sole discretion, be deemed withdrawn if, at any time
after the giving of notice of such election and prior to the occupancy of the
Additional Space, Tenant shall sublease all or any part of the demised
premises.”
9. A
new Article 58 (Option to Renew) is added to the Lease as follows:
OPTION TO
RENEW:
(a) If
the term of this Lease shall then be in full force and effect and Tenant has
complied fully with its obligations hereunder, Tenant shall have the option to
extend the term of this Lease for a period of five (5) years (the "Renewal
Term") commencing on the day immediately following the Expiration Date, provided
however that Tenant shall give Landlord notice of its election to extend the
term no earlier than eighteen (18) months prior to the Expiration Date nor later
than twelve (12) months prior to the Expiration Date of the
term. TIME
BEING OF THE ESSENCE in connection with the exercise of Tenant's option
pursuant to this Article.
(b) Such
extension of the term of this Lease shall be upon the same covenants and
conditions, as herein set forth except for the Fixed Annual Rent (which shall be
determined in the manner set forth below), and except that Tenant shall have no
further right to extend the term of this Lease after the exercise of the single
option described in paragraph (a) of this Section. If Tenant shall
duly give notice of its election to extend the term of this Lease, the Renewal
Term shall be added to and become a part of the Term of this Lease (but shall
not be considered a part of the initial Term), and any reference in this Lease
to the "Term of this Lease", the "Term hereof", or any similar expression shall
be deemed to include such Renewal Term, and, in addition, the term "Expiration
Date" shall thereafter mean the last day of such Renewal
Term. Landlord shall have no obligation to perform any alteration or
preparatory or other work in and to the demised premises or provide a tenant
improvement allowance and Tenant shall continue possession thereof in its "as
is" condition.
(c) If
Tenant exercises its option for the Renewal Term, the Fixed Annual Rent during
the Renewal Term shall be the fair market rent for the demised premises, as
hereinafter defined.
(d) Landlord
and Tenant shall use their best efforts, within thirty (30) days after Landlord
receives Tenant's notice of its election to extend the Term of this Lease for
the Renewal Term ("Negotiation Period"), to agree upon the Fixed Annual Rent to
be paid by Tenant during the Renewal Term. If Landlord and Tenant
shall agree upon the Fixed Annual Rent for the Renewal Term, the parties shall
promptly execute an amendment to this Lease stating the Fixed Annual Rent for
the Renewal Term.
(e) If
the parties are unable to agree on the Fixed Annual Rent for the Renewal Term
during the Negotiation Period, then within fifteen (15) days after notice from
the other party, given after expiration of the Negotiation Period, each party,
at its cost and upon notice to the other party, shall appoint a person to act as
an appraiser hereunder, to determine the fair market rent for the demised
premises for the Renewal Term. Each such person shall be a real
estate broker or appraiser with at least ten years' active commercial real
estate appraisal or brokerage experience (involving the leasing of office space
as agent for both landlords and tenants) in the County of
Westchester. If a party does not appoint a person to act as an
appraiser within said fifteen (15) day period, the person appointed by the other
party shall be the sole appraiser and shall determine the aforesaid fair market
rent. Each notice containing the name of a person to act as appraiser
shall contain also the person's address. Before proceeding to
establish the fair market rent, the appraisers shall subscribe and swear to an
oath fairly and impartially to determine such rent.
If the two
appraisers are appointed by the parties as stated in the immediately preceding
paragraph, they shall meet promptly and attempt to determine the fair market
rent. If they are unable to agree within forty-five (45) days after
the appointment of the second appraiser, they shall attempt to select a third
person meeting the qualifications stated in the immediately preceding paragraph
within fifteen (15) days after the last day the two appraisers are given to
determine the fair market rent. If they are unable to agree on the
third person to act as appraiser within said fifteen (15) day period, the third
person shall be appointed by the American Arbitration Association (the
“Association”), upon the application of Landlord or Tenant to the office of the
Association nearest the Building. The person appointed to act as
appraiser by the Association shall be required to meet the qualifications stated
in the immediately preceding paragraph. Each of the parties shall
bear fifty percent (50%) of the cost of appointing the third person and of
paying the third person's fees. The third person, however selected,
shall be required to take an oath similar to that described above.
The three
appraisers shall meet and determine the fair market rent. A decision
in which two of the three appraisers concur shall be binding and conclusive upon
the parties. In deciding the dispute, the appraisers shall act in
accordance with the rules then in force of the Association, subject however, to
such limitations as may be placed on them by the provisions of this
Lease.
Notwithstanding
the foregoing, in no event shall the Fixed Annual Rent during the Renewal Term
be less than the Fixed Annual Rent during the last year of the Term of this
Lease immediately preceding the Renewal Term.
(f) After
the fair market rent for the Renewal Term has been determined by the appraiser
or appraisers and the appraiser or appraisers shall have notified the parties,
at the request of either party, both parties shall execute and deliver to each
other an amendment of this Lease stating the Fixed Annual Rent for the Renewal
Term.
(g) If
the Fixed Annual Rent for the Renewal Term has not been agreed to or established
prior to the commencement of the Renewal Term, then Tenant shall pay to Landlord
an annual rent ("Temporary Rent") which Temporary Rent shall be equal to two
hundred percent (200%) of the Fixed Annual Rent payable by Tenant for the last
year of the Term immediately preceding the Renewal Term. Thereafter,
if the parties shall agree upon a Fixed Annual Rent, or the Fixed Annual Rent
shall be established upon the determination of the fair market rent by the
appraiser or appraisers, at a rate at variance with the Temporary Rent (i) if
such Fixed Annual Rent is greater than the Temporary Rent, Tenant shall promptly
pay to Landlord the difference between the Fixed Annual Rent determined by
agreement or the appraisal process and the Temporary Rent, or (ii) if such Fixed
Annual Rent is less than the Temporary Rent, Landlord shall credit to Tenant's
subsequent monthly installments of Fixed Annual Rent the difference between the
Temporary Rent and the Fixed Annual Rent determined by agreement or the
appraisal process.
(h) In
describing the fair market rent during the Renewal Term, the appraiser or
appraisers shall be required to take into account the rentals at which leases
are then being concluded (as of the last day of the Term) (for five (5) year
leases without renewal options with the Landlord and Tenant each acting
prudently, with knowledge and for self-interest, and assuming that neither is
under undue duress) for comparable space in the Building and in comparable
office buildings in the County of Westchester.
(i) The
option granted to Tenant under this Article may be exercised only by Tenant, its
affiliates, permitted successors and assigns, and not by any subtenant or any
successor to the interest of Tenant by reason of any action under the Bankruptcy
Code, or by any public officer, custodian, receiver, United States Trustee,
trustee or liquidator of Tenant or substantially all of Tenant's
property. Tenant shall have no right to exercise this option
subsequent to the date Landlord shall have the right to give the notice of
termination referred to in Article 17 of the Lease unless Tenant cures the
default within the applicable grace period. Notwithstanding the
foregoing, Tenant shall have no right to extend the term if, at the time it
gives notice of its election (i) Tenant shall not be in occupancy of
substantially all of the demised premises or (ii) the demised premises (or any
part thereof) shall be the subject of a sublease. If Tenant shall
have elected to extend the term, such election shall be (at Landlord’s sole
option) deemed withdrawn if, at any time after the giving of notice of such
election and prior to the commencement of the Renewal Term, Tenant shall
sublease (all or any portion of) the demised premises or assign Tenant’s
interest in this Lease.”
10. Tenant
agrees not to disclose the terms, covenants, conditions or other facts with
respect to this Sixth Amendment, including, but not limited to, the Fixed Annual
Rent, to any person, corporation, partnership, association, newspaper,
periodical or other entity except pursuant to a valid business purpose or as
required by law. This non-disclosure and confidentiality agreement
shall be binding upon Tenant without limitation as to time, and a breach of this
paragraph shall constitute a material breach under the Lease.
11. The
Tenant represents that it has dealt with no broker in connection with this Sixth
Amendment other than Austin Corporate Properties, Inc. and agrees to indemnify,
defend and hold Landlord harmless from any and all claims of any other broker
arising out of or in connection with negotiations of, or entering into of, this
Sixth Amendment.
12. Tenant
hereby represents to Landlord that (i) there exists no default under the Lease
either by Tenant or Landlord; (ii) Tenant is entitled to no credit, free rent or
other offset or abatement of the rents due under the Lease; and (iii) there
exists no offset, defense or counterclaim to Tenant’s obligation under the
Lease.
13. Except
as otherwise set forth herein, all the other terms and provisions contained in
the Lease shall remain in full force and effect.
14. It
is understood and agreed that this Sixth Amendment is submitted to the Tenant
for signature with the understanding that it shall not bind the Landlord unless
and until it has been executed by the Landlord and delivered to the Tenant or
Tenant's attorney.
15. The
Lease, as hereby amended, shall be binding upon the parties hereto, their
successors and assigns.
IN WITNESS WHEREOF, the
parties hereto have hereunto set their hands and seals the day and year first
above written.
|
XXXX-XXXX
CW REALTY ASSOCIATES L.L.C.
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By:
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Xxxx-Xxxx
Realty, L.P., member
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By:
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Xxxx-Xxxx
Realty Corporation, general partner
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By:
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/s/
Xxxxxxx X. Xxxxxxxx
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|||
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Xxxxxxx
X. Xxxxxxxx
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||||
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Executive
Vice President
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AFP
IMAGING CORPORATION
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By:
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/s/
Xxxxx Xxxxxx
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Name:
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Xxxxx Xxxxxx | |||
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Title:
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Chief
Financial Officer EVP Finance |
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