FIFTH AMENDMENT OF LEASE AGREEMENT
Exhibit
10.6
FIFTH AMENDMENT OF LEASE
AGREEMENT
THIS
FIFTH AMENDMENT OF LEASE AGREEMENT (this “Fifth Amendment”) made as of the 25th
day of March, 2008 by and between MITCHMAR ATLANTA PROPERTIES,
INC., a Delaware corporation, having its principal office at c/o Jacobson
Family Investments, 000 Xxxx 00xx Xxxxxx,
00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter called “Landlord”), and SID TOOL CO., INC., a New York
corporation, having its principal office at 00 Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx
00000 (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, a Second Amendment to Lease dated as of May 7, 2003
(“Second Amendment”), a Third Amendment to Lease Agreement dated as of November
11, 2003, and a Fourth Amendment of Lease Agreement dated as of March 17, 2007
(“Fourth Amendment”) (collectively, the “Lease”) for the leasing of
the 376,738 square foot building (the “Building”) and an additional 148,000
square foot space (added to the Building by Tenant pursuant to the Second
Amendment) located at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxx, which
Building is located on “Parcel C” (the “Original Building Lot”), together with
two building lots known as Parcel A and Parcel B, as shown on Exhibit A annexed
hereto and made a part hereof (the “Existing Premises”); and
WHEREAS,
Landlord and Tenant desire to amend the Lease to, among other things, lease to
Tenant (i) an additional approximately 172,000 square foot warehouse addition,
to be constructed by Landlord on the Original Building Lot as an expansion to
the Building as more particularly shown on Exhibit A, pursuant to the terms of
this Fifth Amendment (the “Expansion Premises”; the Existing Premises and the
Expansion Premises together comprise the “New Premises”), (ii) extend the term
of the Lease, as amended by this Fifth Amendment, to the Extended Expiration
Date (as hereinafter defined), and (iii) modify certain other provisions of the
Lease as hereinafter set forth.
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 and except as specifically modified by this
Fifth Amendment, all capitalized or defined terms shall have the meanings
ascribed to them in the Lease.
1.3 The term
“Effective Date,” as used herein, shall mean and refer to the date which is the
earliest 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, or (c)
July 1, 2008. 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.
1.4 From and
after the Effective Date, the term “Building” shall be deemed to include the
Expansion Premises.
ARTICLE
II
Lease
Modifications
2.1 Granting Clause and
Construction of Expansion Premises
Work. (A) Effective as of the date hereof, Landlord
hereby leases to Tenant and Tenant hereby hires from Landlord the Expansion
Premises in accordance with the terms hereof.
(B) Landlord
shall perform, at Landlord's expense not to exceed the amount of Five Million
Three Hundred Seventy-Two Thousand Six Hundred Seventy-Five Dollars
($5,372,675.00), the work as described on Exhibit B attached hereto and made a
part hereof (the “Expansion Premises Work”). Landlord shall perform
the Expansion Premises Work in accordance with all applicable laws, rules,
orders, ordinances, regulations, statutes, requirements, codes and executive
orders of all governmental authorities having jurisdiction over the Expansion
Premises Work, and of any applicable fire rating bureau, or other body
exercising similar functions. Landlord shall perform Landlord's Work
in accordance with good construction practices prevailing in the jurisdiction
where the Expansion Premises Work is being constructed. In the event
that the cost of the Expansion Premises Work exceeds the amount for which
Landlord is responsible as provided in this paragraph, Tenant shall pay such
excess periodically within 10 days after submission by Landlord of an invoice
therefor.
(C) Notwithstanding
that Landlord has agreed to perform the Expansion Premises Work, nothing in the
Lease, as amended by this Fifth Amendment, shall require Landlord to
pay for any future expansions of, or additions to, the New
Premises.
2.2 Term. (A) Effective
as of the Effective Date, Section 2.1.3 of the Second Amendment 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-two (22) 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) For
the purposes of this Fifth Amendment, a “New Lease Year” shall be comprised of
twelve (12) consecutive calendar months. The first New Lease Year
shall commence on July 1, 2008 and end on June 30, 2009 and each succeeding New
Lease Year shall commence on the next succeeding July 1 and end on the next
succeeding June 30. Notwithstanding the foregoing, if the Effective
Date is other than July 1, 2008, then the first Lease Year shall include the
additional period from the Effective Date through and including June 30, 2008
(such additional period is hereinafter referred to as the “Stub
Period”).
2.3 Rent. (A) With
respect to the Existing Premises, Tenant shall continue to pay fixed rent in
accordance with the terms of the Second Amendment through the Effective
Date. Such fixed rent shall be allocable entirely to the Existing
Premises.
(B) With
respect to the New Premises, effective as of the Effective Date, the fixed rent
shall be as set forth on Exhibit B attached hereto and made a part
hereof. If the Effective Date is not the first day of a calendar
month, then the fixed rent for the period from the Effective Date to the end of
the calendar month in which the Effective Date occurs shall be an amount equal
to the product obtained by multiplying (a) the number of days from the Effective
Date to the end of the calendar month in which the Effective Date occurs, by (b)
a fraction, the numerator of which is $139,616.00 and the denominator of which
is the number of days in such calendar month in which the Effective Date
occurs.
(C) For
each rent period, each monthly installment of fixed rent during such period
shall be payable in advance on the first day of each calendar month occurring
during such period.
2.4 Fair Market Rent
Determination. (A) The term “Fair Market Rent”
shall mean the annual fair market rental value of the New
Premises. The Fair Market Rent shall be determined assuming that the
New Premises is free and clear of all leases and tenancies (including this
Lease), that the New Premises is available for the purposes permitted by this
Lease in the then rental market, that Landlord has had a reasonable time to
locate a tenant, and that neither Landlord nor the prospective tenant is under
any compulsion to rent, that the condition of the New Premises is in compliance
with the terms of this Lease, and taking into account all other relevant
factors.
(B) On
a date mutually agreed upon, but in no event later than one hundred eighty (180)
days before the end of the twentieth New Lease Year, Landlord and Tenant shall
each provide to the other a rent notice for the determination of the Fair Market
Rent for the New Premises (the “Rent Notice”), which Rent Notice shall set forth
each of their respective determinations of the Fair Market Rent (Landlord's
determination of the Fair Market Rent is referred to as "Landlord's
Determination" and Tenant's determination of the Fair Market Rent is referred to
as "Tenant's Determination"). If (i) Landlord fails to give
Landlord's Determination to Tenant, and (ii) Tenant tenders Tenant's
Determination to Landlord, then the Fair Market Rent for the New Premises shall
be Tenant's Determination. If (i) Tenant fails to give Tenant's
Determination to Landlord, and (ii) Landlord tenders Landlord's Determination to
Tenant, then the Fair Market Rent for the New Premises shall be Landlord's
Determination.
(C) If
Tenant's Determination is different than Landlord's Determination, then Landlord
and Tenant shall attempt in good faith to agree upon the Fair Market Rent for a
period of thirty (30) days after the date that Landlord gives Landlord's
Determination to Tenant, and Tenant gives Tenant's Determination to
Landlord. If the Landlord’s Determination and the Tenant’s
Determination differ by ten percent (10%) of the higher of such amounts or less,
then the Fair Market Rent for the New Premises shall be the average of the
Landlord’s Determination and the Tenant’s Determination. If the
Landlord’s Determination and the Tenant’s Determination differ by more than ten
percent (10%) of the higher of such amounts, then Landlord and Tenant shall
select jointly an independent real estate appraiser that (i) neither Landlord
nor Tenant, nor any of their respective Affiliates, has engaged during the
immediately preceding period of three (3) years, and (ii) has at least five (5)
years of experience in leasing properties that are similar in character to the
New Premises (such appraiser being referred to herein as the
"Appraiser"). Landlord and Tenant shall each pay fifty percent
(50%) of the Appraiser's fee. If Landlord and Tenant do not agree on
the Appraiser within ten (10) days after the last day of such period of thirty
(30) days, then either party shall have the right to institute an expedited
arbitration proceeding in accordance with the Commercial Rules of the American
Arbitration Association then currently in effect and the laws of the State of
Georgia for the sole purpose of designating the Appraiser.
(D) The
parties shall instruct the Appraiser to choose either Landlord's Determination
or Tenant's Determination as the better estimate of Fair Market Rent for the New
Premises, within thirty (30) days after the date that the Appraiser is
designated. The Appraiser's aforesaid choice shall be conclusive and
binding upon Landlord and Tenant. Each party shall pay its own
counsel fees and expenses, if any, in connection with the procedure described in
this Paragraph 2.4. The Appraiser shall not have the power to
supplement or modify any of the provisions of this Lease.
(E) If
the final determination of the Fair Market Rent is not made on or before the
last day of the twentieth New Lease Year in accordance with the provisions of
this Paragraph 2.4, then, pending such final determination, the Fair Market Rent
shall be deemed to be an amount equal to the average of Landlord's Determination
and Tenant's Determination. If, based upon the final determination
hereunder of the Fair Market Rent, the payments made by Tenant on account of the
fixed rent for the period prior to the final determination of the Fair Market
Rent were less than the fixed rent payable for such period, then Tenant, not
later than the tenth (10th) day after Landlord's demand therefor, shall pay to
Landlord the amount of such deficiency, together with interest thereon at the
rate set forth in Paragraph 62 of the Lease. If, based upon the final
determination of the Fair Market Rent, the payments made by Tenant on account of
the fixed rent for the period prior to the final determination of the Fair
Market Rent were more than the fixed rent due hereunder for such period, then
Landlord, not later than the tenth (10th) day after Tenant's demand therefor,
shall pay such excess to Tenant (it being agreed that if Landlord fails to make
such payment within thirty (30) days after Tenant's demand therefor, then Tenant
shall have the right to apply against the Rental thereafter coming due hereunder
an aggregate amount equal to such excess, with interest thereon at the rate set
forth in Paragraph 62 of the Lease).
2.5 Effective
as of the date hereof, Paragraph 72 of the Lease shall be deleted in its
entirety and the following substituted therefor:
“72. Right of First Offer for
Building: (A) Landlord recognizes that, if Landlord
desires to sell the New Premises, Tenant would be the most likely
purchaser. Accordingly, Landlord and Tenant have agreed to this
Paragraph 72 for the purpose of facilitating such a sale in the future to
Tenant. In the event that Landlord desires to sell the New Premises
during the term of this Lease, then before offering it for sale to a third
party, and so long as Tenant is not in default under this Lease beyond any
notice or cure period provided herein for the cure thereof, Landlord shall
notify Tenant (“Landlord’s Notice”) of its intention to sell the New
Premises. Tenant shall, within fifteen days after receipt of
Landlord’s Notice, notify Landlord in writing (“Tenant’s Notice”) whether it is
interested in purchasing the New Premises. If Tenant does not
indicate that it is interested in purchasing the New Premises pursuant to
Tenant’s Notice within such fifteen day period, then Tenant shall not have the
right to purchase the New Premises and Landlord shall have the right, for a
period of twelve months after such fifteenth day, to sell the New Premises to a
third party on such terms and conditions as Landlord shall determine, and
Landlord shall not be required to offer the New Premises to Tenant during such
period. If, prior to the end of such twelve month period, Landlord
has entered into a binding contract with a third party for the sale of the New
Premises, the closing of such sale may occur after such twelve month
period. If Landlord has neither sold the New Premises nor entered
into a binding contract for the sale of the New Premises by the end of such
twelve month period and Landlord thereafter desires to sell the New Premises,
the provisions of this Paragraph 72 shall again be applicable.
(B) If
Tenant expresses its interest in purchasing the New Premises as provided in
Paragraph 72(A) pursuant to a timely delivered Tenant’s Notice, then within ten
days after such notice Landlord and Tenant shall each select an appraiser to
determine the then fair market value of the New Premises, which shall be the
price at which a willing buyer would buy and a willing seller would sell the New
Premises, neither being under a compulsion to buy or sell, as the case may be,
and assuming for this purpose Tenant’s compliance with all terms and conditions
of this Lease (the “Fair Market Value”). (The amount determined
by the appraiser selected by Landlord is hereinafter referred to as “Landlord’s
Value” and the amount determined by the appraiser selected by Tenant is
hereinafter referred to as “Tenant’s Value”.) If Landlord’s Value and
Tenant’s Value differ by 10% of the higher of such amounts or less, then the
Fair Market Value of the New Premises shall be the average of Landlord’s Value
and Tenant’s Value. If Landlord’s Value and Tenant’s Value differ by
more than 10% of the higher of such amounts, then the appraisers selected by
Landlord and Tenant shall jointly select a third appraiser and the third
appraiser shall be instructed to render his determination of the fair market
value of the New Premises, using the assumptions described above (the “Third
Appraiser’s Value”). If the Third Appraiser’s Value is within the
range established by Landlord’s Value and Tenant’s Value, then the Fair Market
Value of the New Premises shall be the average of the Third Appraiser’s Value
and whichever of Landlord’s Value and Tenant’s Value is closest in amount to the
Third Appraiser’s Value. If the Third Appraiser’s Value is outside
the range established by Landlord’s Value and Tenant’s Value, then the Fair
Market Value of the New Premises shall be whichever of Landlord’s Value and
Tenant’s Value is closer in amount to the Third Appraiser’s
Value. Each appraiser selected pursuant to this paragraph shall be an
independent real estate appraiser that (i) neither Landlord nor Tenant, nor any
of their respective Affiliates, has engaged during the immediately preceding
period of three years, and (ii) has at least five years of experience in
appraising properties that are similar in character to the New
Premises.
(C) Within
ten days after the determination of Fair Market Value, each of Landlord and
Tenant shall notify the other whether or not it is willing to sell or purchase,
as the case may be, the New Premises for a price equal to the Fair Market
Value. If Landlord is willing to sell and Tenant is willing to
purchase the New Premises for a price equal to the Fair Market Value, then such
sale shall be consummated within 60 days after the determination of the Fair
Market Value. The New Premises shall be sold on an “as is” basis and
the purchase price shall be payable in cash at closing. If Tenant
shall breach its obligation to consummate such purchase, such breach shall
constitute a default by Tenant under this Lease and, in addition to its rights
hereunder, Landlord shall be entitled to specific performance as well as all
other rights and remedies available at law or in equity. If Landlord
is not willing to sell the New Premises at the Fair Market Value, then Landlord
shall not be obligated to do so, but Landlord shall thereafter, for a period of
twelve months, be precluded from selling the New Premises to a third party
(subject to the provisions of Paragraph 72(D) in the event Landlord receives an
unsolicited offer to purchase the New Premises at a price greater than the Fair
Market Value). If Tenant is not willing to purchase the New Premises
at the Fair Market Value, then Tenant shall not be obligated to do so, but
Landlord shall thereafter, for a period of twelve months, be free to sell the
New Premises to a third party for a price equal to or greater than the Fair
Market Value. If, prior to the end of such twelve month period,
Landlord has entered into a binding contract with a third party for the sale of
the New Premises, the closing of such sale may occur after such twelve month
period.
(D) If Landlord shall
receive an unsolicited offer from an unrelated third party to purchase the New
Premises for a price and on other terms and conditions that Landlord is prepared
to accept (the “Third Party Offer”), Landlord shall notify Tenant of such offer
and Tenant shall have the right to purchase the Premises at the price and on the
other terms and conditions as are contained in the Third Party
Offer. Tenant shall have fifteen days to elect in writing to purchase
the New Premises at such price and on such terms and
conditions. Tenant’s failure to deliver such election shall be deemed
a rejection of its right to purchase the New Premises on such
terms. If Tenant elects to purchase the New Premises in accordance
with this Paragraph 72(D), the closing shall take place within 60 days after the
delivery of Tenant’s election. If Tenant does not timely elect to
acquire the New Premises, Landlord shall be free to accept the Third Party Offer
and to sell the New Premises to such third party pursuant thereto without being
required to comply with the provisions of Paragraph 72(A), 72(B) or
72(C).
(E) Time
is of the essence with respect to all of Tenant’s obligations under this
Paragraph 72. The rights afforded Tenant pursuant to this Paragraph
72 are personal to Sid Tool Co., Inc., are non-transferable by operation of law
or otherwise, and are subject to then existing rights, if any, granted to other
tenants at the Building.”
ARTICLE
III
Broker
3.1 Landlord
and Tenant each represents that this Fifth Amendment was not brought about by
any broker and all negotiations with respect to this Fifth Amendment were
conducted exclusively between Landlord and Tenant. Each of Landlord
and Tenant agree that if any claim is made for commissions by any broker through
or on account of any acts of such party, Landlord or Tenant, as the case may be,
will indemnify, defend and hold the other party free and harmless from any and
all losses, liabilities, damages, costs and expenses in connection therewith,
including Landlord’s or Tenant’s reasonable attorneys’ fees and
disbursements.
ARTICLE
IV
Ratification
4.1 Tenant
represents and warrants that the Lease is presently in full force and effect,
that it knows of no event of default on the part of Landlord and that Tenant has
no defense or right of offset in connection with Landlord’s performance under
the Lease to this date.
4.2 The
parties hereby ratify and confirm all of the terms, covenants and conditions of
the Lease, except to the extent that those terms, covenants and conditions are
amended, modified or varied by this Fifth Amendment. If there is a conflict
between the provisions of the Lease and the provisions of this Fifth Amendment,
the provisions of this Fifth Amendment shall control.
4.3 This
Fifth Amendment shall be binding upon and shall inure to the benefit of the
parties hereto and there respective successors and/or assigns.
4.4 This
Fifth Amendment may be executed in counterparts, each of which when so executed
and delivered will be considered an original, but all of which will constitute
one and the same instrument.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the parties have executed this Fifth Amendment to Lease
Agreement as of the day and year first above written.
MITCHMAR ATLANTA
PROPERTIES, INC.
By:_____________________________
Name:
Title:
SID TOOL CO.,
INC.
By:_____________________________
Name:
Title:
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Exhibit
B
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Monthly
and Annual Rent Payments
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For
The Period from July 1, 2007 through June 30, 2030
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Lease
Period
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Monthly
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Annual
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|
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From
|
To
|
Rent
|
Rent
|
|
7/1/2007
|
6/30/2008
|
139,616.00
|
1,675,392.00
|
|
7/1/2008
|
6/30/2009
|
185,482.67
|
2,225,792.00
|
|
7/1/2009
|
6/30/2010
|
186,430.80
|
2,237,169.50
|
|
7/1/2010
|
6/30/2011
|
186,430.80
|
2,237,169.50
|
|
7/1/2011
|
6/30/2012
|
187,577.46
|
2,250,929.50
|
|
7/1/2012
|
6/30/2013
|
191,091.55
|
2,293,098.74
|
|
7/1/2013
|
6/30/2014
|
191,091.55
|
2,293,098.74
|
|
7/1/2014
|
6/30/2015
|
192,266.89
|
2,307,202.74
|
|
7/1/2015
|
6/30/2016
|
195,868.85
|
2,350,426.13
|
|
7/1/2016
|
6/30/2017
|
195,868.85
|
2,350,426.13
|
|
7/1/2017
|
6/30/2018
|
197,073.56
|
2,364,882.73
|
|
7/1/2018
|
6/30/2019
|
200,765.55
|
2,409,186.75
|
|
7/1/2019
|
6/30/2020
|
200,765.55
|
2,409,186.75
|
|
7/1/2020
|
6/30/2021
|
202,000.39
|
2,424,004.77
|
|
7/1/2021
|
6/30/2022
|
205,784.70
|
2,469,416.40
|
|
7/1/2022
|
6/30/2023
|
205,784.70
|
2,469,416.40
|
|
7/1/2023
|
6/30/2024
|
207,050.40
|
2,484,604.86
|
|
7/1/2024
|
6/30/2025
|
210,929.32
|
2,531,151.80
|
|
7/1/2025
|
6/30/2026
|
210,929.32
|
2,531,151.80
|
|
7/1/2026
|
6/30/2027
|
212,226.66
|
2,546,719.98
|
|
7/1/2027
|
6/30/2028
|
216,202.55
|
2,594,430.60
|
|
7/1/2028
|
6/30/2029
|
216,202.55
|
2,594,430.60
|
|
7/1/2029
|
6/30/2030
|
217,532.33
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2,610,387.98
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