SUBLEASE AGREEMENT
This SUBLEASE AGREEMENT (the "Sublease") dated as of January 1, 2008, by
and between HUTTIG BUILDING PRODUCTS, INC., as Delaware corporation (hereinafter
the "Sublessor") and AIR INDUSTRIES GROUP, INC., a New York corporation
(hereinafter the "Sublessee");
W I T N E S S E T H:
WHEREAS, Sublessor, as tenant, entered into a lease with Rechler Equity
Partners B-2, LLC, a Delaware limited liability company (hereinafter referred to
as "Prime Landlord"), dated September 20, 2005 (the "Prime Lease"), leasing
premises therein described situated within the City of Hauppauge, Town of Islip,
County of Suffolk, State of New York, known as and numbered ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ and
comprising approximately 125,000 square feet (the "Premises"), which Prime Lease
is attached hereto and incorporated by reference herein as Exhibit A; and
WHEREAS, Sublessee has offered to sublease a portion of the Premises;
NOW, THEREFORE, the parties hereto in consideration of the mutual
covenants herein contained hereby agree as follows:
1. Sublet Premises and Term.
A. In consideration of the obligation of Sublessee to pay rent herein
provided, and in consideration of the other terms, provisions and covenants
hereof, Sublessor hereby demises and leases to Sublessee, and Sublessee hereby
takes from Sublessor a portion of the Premises, such portion comprising
approximately 81,035 square feet and more particularly described as the
cross-hatched area on Exhibit B attached hereto and incorporated herein by
reference, together with all rights, privileges, easements, appurtenances, and
immunities belonging to or in any way pertaining to the Premises (hereinafter,
the "Sublet Premises").
B. The term of this Sublease shall commence on the later of January 1,
2008 or on the date when the Prime Landlord shall have consented to this
Sublease (the "Commencement Date"), and shall end on December 31, 2015.
C. Sublessee acknowledges that it has inspected and accepts the Sublet
Premises, and specifically the buildings and improvements comprising the same,
in their present condition as suitable for the purpose for which the Sublet
Premises are leased, subject to the requirements of this Sublease. Taking of
possession by Sublessee shall be deemed conclusively to establish that the
Sublet Premises were in good and satisfactory condition when possession was
taken. Sublessee further acknowledges that no representations as to the repair
of the Sublet Premises, nor promises to alter, remodel or improve the Sublet
Premises have been made by Sublessor, except for those improvements set forth in
Section 6B hereof or as otherwise expressly set forth in this Sublease. After
the Commencement Date Sublessee shall, upon request, execute and deliver to
Sublessor a letter of acceptance of delivery of the Sublet Premises. Sublessor
shall deliver to Sublessee the Sublet Premises in broom clean condition and the
doors and the mechanical, electrical, plumbing and heating and ventilating
systems serving the Sublet Premises shall be in good working order. Sublessor
makes no representation or warranty as to the condition of the roof.
D. Subject to all of the terms, covenants and conditions of this Sublease,
except Sublessee's obligation to pay base rent or additional rent, and provided
that the Prime Landlord shall have consented, Sublessor shall permit Sublessee
to enter the Sublet Premises prior to the Commencement Date in order for
Sublessee to deliver and store equipment and inventory in preparation for
Sublessee's occupancy thereof. In the event that Sublessee exercises this early
entry right, Sublessee shall obtain the insurance policies required hereunder as
of the date Sublessee first enters the Sublet Premises and shall deliver
certificates as required hereunder to Sublessor prior to gaining access.
2. Base Rent and Security Deposit.
A. Sublessee agrees to pay to Sublessor base rent for the Sublet Premises
in advance without deduction or set off, for the entire term hereof at the rates
set forth below:
Period Rate PSF Monthly Rent
------ -------- ------------
1/1/08 - 12/31/08 $6.35 $42,881.02
1/1/09 - 12/31/09 $6.54 $44,164.08
1/1/10 - 12/31/10 $6.74 $45,514.66
1/1/11 - 12/31/11 $6.94 $46,865.24
1/1/12 - 12/31/12 $7.15 $48,283.35
1/1/13 - 12/31/13 $7.36 $49,701.47
1/1/14 - 12/31/14 $7.58 $51,187.11
1/1/15 - 12/31/15 $7.81 $52,740.28
One such monthly installment shall be due and payable on the Commencement
Date and a like monthly installment shall be due and payable in advance, without
demand, on or before the first day of each calendar month succeeding the
Commencement Date during the hereby demised term, except that the rental payment
for any fractional calendar month at the commencement of the Sublease term shall
be prorated.
B. In addition, Sublessee agrees to deposit with Sublessor on the
Commencement Date the sum of Forty-Two Thousand Eight Hundred Eighty-One and
02/100 Dollars ($42,881.02), which sum shall be held by Sublessor, without
obligation for interest, as security for the performance of Sublessee's
covenants and obligations under this Sublease, it being expressly understood and
agreed that such deposit is not an advance rental deposit or a measure of
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Sublessor's damages in case of Sublessee's default. Upon the occurrence of any
event of default by Sublessee, Sublessor may, from time to time, without
prejudice to any other remedy provided herein or provided by law, use such fund
to the extent necessary to make good any arrearages of rent or other payments
due Sublessor hereunder, and any other damage, injury, expense or liability
caused by such event of default; and Sublessee shall pay to Sublessor, on
demand, the amount so applied in order to restore the security deposit to its
original amount. Although the security deposit shall be deemed the property of
Sublessor, any remaining balance of such deposit shall be returned by Sublessor
to Sublessee at such time after termination of this Sublease that all of the
Sublessee's obligations under this Sublease have been fulfilled.
3. Use. The Sublet Premises shall be used only for the purpose of
manufacturing, storing and distributing airplane parts and aircraft welded
assemblies, and storing, cutting and distributing metal plates for aircraft, and
for such other lawful purposes as may be incidental thereto, including general
office use. Outside storage is prohibited without Sublessor's prior written
consent. Sublessee shall, at its own cost and expense, obtain any and all
licenses and permits necessary for any such use. Sublessee shall comply with all
governmental laws, ordinances and regulations applicable to the use of the
Sublet Premises, including, without limitation, all applicable federal, state
and local laws, regulations or ordinances pertaining to air and water quality,
any Hazardous Materials (as hereinafter defined), waste disposal, air emissions
and other environmental matters, and shall promptly comply with all governmental
orders and directives for the correction, prevention and abatement of conditions
or nuisances in or upon, or connected with, the Sublet Premises, all at
Sublessee's sole expense. Sublessee shall not permit any objectionable or
unpleasant odors, smoke, dust, gas, noise or vibrations to emanate from the
Sublet Premises, nor take any other action which would constitute a nuisance or
would disturb or endanger any other tenants of the building in which the Sublet
Premises are situated or unreasonably interfere with their use of their
respective premises. Without Sublessor's prior written consent, Sublessee shall
not receive, store or otherwise handle any product, material or merchandise
which is explosive or highly flammable.
Sublessee will not permit the Sublet Premises to be used for any purpose
or in any manner (including without limitation any method of storage) which
would (i) cause the existing fire sprinkler system to be inadequate under
existing laws and codes, or (ii) render the insurance thereon void or cause the
insurance premiums to increase or cause the State Board of Insurance or other
insurance authority to disallow any sprinkler credits.
4. Taxes.
A. Sublessee agrees to pay to Sublessor, as additional rental hereunder,
for real estate taxes, assessments and governmental charges ("Taxes") levied
against the real estate and improvements thereon comprising the Premises in
excess of Taxes levied for the 2005/2006 base year as follows: If the Taxes due
and payable in any year during the term of this Sublease are greater than the
Taxes due and payable for 2005/2006 tax year, then Sublessee shall pay to
Sublessor, within fifteen (15) days after receipt of Sublessor's demand therefor
and reasonable supporting documentation, a sum equal to Sublessee's
proportionate share of such difference. Sublessee's proportionate share, as used
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in this Sublease, shall mean a fraction, the numerator of which is the space
contained in the Sublet Premises and the denominator of which is the entire
space contained in the Premises. At Sublessor's option, Sublessee shall pay each
month 1/12th of the estimated amount of Sublessee's next Tax payment and any
under or overpayment shall be paid by or credited to the Sublessee, as the case
may be, promptly after receipt of the Tax ▇▇▇▇ for that tax year. The current
Taxes for the 2006/2007 tax year are $________________.
B. If at any time during the term of this Sublease, the present method of
taxation shall be changed so that in lieu of the whole or any part of any Taxes
levied, assessed or imposed on real estate and the improvements thereon, there
shall be levied, assessed or imposed on Sublessor a capital levy or other tax
directly on the rents received therefrom and/or a franchise tax, assessment,
levy or charge measured by or based, in whole or in part, upon such rents for
the present or any future building or buildings on the Sublet Premises, then all
such taxes, assessments, levies or charges, or the part thereof so measured or
based, shall be deemed to be payable by Sublessee to Sublessor. Sublessee shall
pay any sales tax payable in respect of rent or additional rent.
5. Intentionally Left Blank.
6. Repairs and Maintenance.
A. During the term of this Sublease, Sublessor shall make or cause to be
made all structural repairs to the Sublet Premises, except those occasioned by
the acts of Sublessee, its agents, employees or invitees, which repairs shall be
made at Sublessee's sole cost and expense. Structural repairs are defined herein
to mean repairs to the roof, roof supports, bearing walls, foundation and
structural steel. Sublessee shall, at its own cost and expense, keep and
maintain the Sublet Premises in good condition, repair and maintenance and shall
make all nonstructural repairs and replacements in the Sublet Premises
including, but not limited to (i) maintenance, repair and replacement of the
electrical, plumbing, sprinkler, HVAC, sewer/sanitary, life safety and other
mechanical systems serving the Sublet Premises, (ii) maintenance, repair and
replacement of windows, glass and plate glass, doors and any special office
entry, walls and finish work, floors and floor covering, docks, dock boards,
truck doors and dock bumpers, (iii) regularly scheduled cleaning and maintenance
of the interior of the Sublet Premises, and (iv) keeping the exterior of the
Sublet Premises clean and free of debris, snow and ice and keeping the parking
areas, driveways, and the whole of the Sublet Premises in a clean and sanitary
condition.
B. The cost of maintenance and repair of any common party wall (any wall,
divider, partition or any other structure separating the Sublet Premises from
any adjacent premises occupied by other tenants) shall be shared equally by
Sublessee and the tenant occupying adjacent premises. Sublessee shall not damage
any party wall or disturb the integrity and support provided by any party wall
and shall, at its sole cost and expense, promptly repair any damage or injury to
any party wall caused by Sublessee or its employees, agents or invitees.
Notwithstanding the foregoing, Sublessor, at its sole cost and expense, shall
perform the work and make the installations set forth on Exhibit D hereto to
render secure the common wall shared with Sleepys, LLC, the existing subtenant
at the Demised Premises, such work to be performed in compliance with applicable
law and in a workmanlike manner.
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C. Sublessor shall maintain or cause to be maintained the exterior portion
of the Sublet Premises including landscaped areas, parking areas, driveways and
other exterior areas and Sublessee agrees to pay, upon Sublessor's demand
therefore, as additional rent, an amount equal to Sublessee's proportionate
share, as reasonably determined by Sublessor, of Sublessor's cost of maintenance
and repair of the exterior portion of the Sublet Premises (except to the extent
such costs are to be borne by Sublessor per Section 6(A) above) and of the
landscaped areas, parking areas, driveways and other exterior areas including,
without limitation, gardening, landscaping, planting, replanting and replacement
of flowers, shrubbery and grass, striping, repair of paving, curbs and walkways,
repair and cleaning of drainage facilities, snow and ice removal, exterior
lighting, sprinkler fireline systems and sprinkler supervisory service and
maintenance, repair and replacement of the sanitary system.
D. Sublessee shall, at its own cost and expense, enter into a regularly
scheduled preventive maintenance/service contract with a maintenance contractor
for servicing all heating and air conditioning systems and equipment within the
Sublet Premises. The maintenance contractor and the contract must be approved by
Sublessor. The service contract must include all services suggested by the
equipment manufacturer within the operation/maintenance manual and must become
effective (and a copy thereof delivered to Sublessor) within thirty (30) days of
the date Sublessee takes possession of the Sublet Premises.
7. Alterations. Sublessee may make the alterations described on Exhibit C
attached hereto provided that the Prime Landlord consents to such alterations
with no obligation on the part of Sublessor to restore the Sublet Premises upon
expiration or termination of the Prime Lease. Sublessee shall not make any other
alterations, additions or improvements to the Sublet Premises without the prior
written consent of Sublessor; provided, however, Sublessee may, without the
consent of Sublessor, but at its own cost and expense and in a good workmanlike
manner, make such minor alterations, additions or improvements or erect, remove
or alter such partitions, or erect such racks, shelves, bins, machinery and
trade fixtures as it may deem advisable, without altering the basic character of
the building or improvements and without overloading or damaging such building
or improvements, and in each case complying with all applicable governmental
laws, ordinances, regulations and other requirements. Sublessee shall make any
such alterations, additions and improvements in compliance with applicable law
and shall be responsible for obtaining necessary permits and any necessary
consent of the Prime Landlord. All alterations, additions, improvements and
partitions erected by Sublessee shall be and remain the property of Sublessee
during the term of this Sublease and Sublessee shall, unless Sublessor otherwise
elects as hereinafter provided, remove all alterations, additions, improvements
and partitions erected by Sublessee and restore the Sublet Premises to their
original condition by the date of termination of this Sublease; provided,
however, that if Sublessor so elects prior to termination of this Sublease, such
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alterations, additions, improvements and partitions shall become the property of
Sublessor as of the date of termination of this Sublease and shall be delivered
up to the Sublessor with the Sublet Premises. All racks, shelves, bins,
machinery and trade fixtures installed by Sublessee may be removed by Sublessee
prior to the termination of this Sublease if Sublessee so elects, and shall be
removed if required by Sublessor; upon any such removal Sublessee shall restore
the Sublet Premises to their original condition. All such removals and
restoration shall be accomplished in a good workmanlike manner so as not to
damage the primary structure or structural qualities of the buildings and other
improvements situated on the Sublet Premises.
8. Signs. Sublessee shall have the right to install signs upon the Sublet
Premises only when first approved in writing by Sublessor and subject to any
applicable governmental laws, ordinances, regulations and other requirements.
Sublessee shall remove all such signs by the termination of this Sublease. Such
installations and removals shall be made in such manner as to avoid injury to or
defacement of the building and other improvements, and Sublessee shall repair
any injury or defacement, including without limitation discoloration, caused by
such installation or removal.
9. Inspection. Prime Landlord, Sublessor and their agents and
representatives shall have the right to enter and inspect the Sublet Premises at
any reasonable time during business hours, for the purpose of ascertaining the
condition of the Sublet Premises or in order to make such repairs as may be
required or permitted to be made by Sublessor under the terms of this Sublease.
During the period that is six (6) months prior to the end of the term hereof,
Prime Landlord, Sublessor and their agents and representatives shall have the
right to enter the Sublet Premises at any reasonable time during business hours
for the purpose of showing the Sublet Premises, and shall have the right to
erect on the Sublet Premises a suitable sign indicating that the Sublet Premises
are available. Sublessee shall give written notice to Sublessor at least thirty
(30) days prior to vacating the Sublet Premises and shall arrange to meet with
Sublessor for a joint inspection of the Sublet Premises at the time of vacation.
In the event of Sublessee's failure to give such notice or arrange such joint
inspection, Sublessor's inspection at or after Sublessee's vacating the Sublet
Premises shall be conclusively deemed correct for purposes of determining
Sublessee's responsibility for repairs and restoration.
10. Utilities. Sublessor agrees to provide, at its cost, water,
electricity and telephone service connections to the Sublet Premises; but
Sublessee shall pay for all water, gas, heat, light, power, telephone, sewer,
sprinkler charges and other utilities and services used on or for the Sublet
Premises, together with any taxes, penalties, surcharges or the like pertaining
thereto, and maintenance charges for utilities, and shall furnish all electric
light bulbs, tubes and ballasts. If any such services are not separately metered
to Sublessee, Sublessee shall pay a reasonable proportion, as determined by
Sublessor, of all charges jointly metered with other premises. Sublessor shall
in no event be liable for any interruption or failure of utility services on the
Sublet Premises.
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11. Assignment and Subletting. Sublessee shall not have the right to
assign this Sublease or to sublet the whole or any part of the Sublet Premises
or to permit the use of the Sublet Premises by any party other than Sublessee
without the prior written consent of Sublessor, which consent shall not be
unreasonably withheld, and the Prime Landlord,. Notwithstanding any permitted
assignment or subletting, Sublessee shall at all times remain directly,
primarily and fully responsible and liable for the payment of the rent herein
specified and for compliance with all of Sublessee's other obligations under the
terms, provisions and covenants of this Sublease. Sublessor's or Prime
Landlord's consent to one assignment, subletting or occupation or use by other
parties shall not be deemed a consent to other subleases or assignments or
occupation or use by other parties. Upon the occurrence of an Event of Default
as hereinafter defined, if the Sublet Premises or any part thereof are then
assigned or sublet, Sublessor, in addition to any other remedies herein provided
or provided by law, may at its option collect directly from such assignee or
subtenant all rents becoming due to Sublessee under such assignment or sublease
and apply such rent against any sums due to Sublessor from Sublessee hereunder,
and no such collection shall be construed to constitute a novation or a release
of Sublessee from the further performance of Sublessee's obligations hereunder.
12. Fire and Casualty Damage.
A. In case the Sublet Premises are so injured or damaged by fire or other
cause as to be untenantable, Sublessor shall have the right at its option,
within sixty (60) days from the date of such fire or other cause, to repair and
restore the Sublet Premises to tenantable condition. No injury to the Sublet
Premises rendering same untenantable shall annul or void this Sublease, except
that Sublessee shall be entitled to a proportionate abatement of rent while
repairs are being made. If repairs cannot be made within sixty (60) days,
Sublessor, at its option, may make same within a reasonable time, this Sublease
continuing in full force and effect and the rent to be proportionately abated.
In the event that Sublessor does not so elect to make repairs which cannot be
made within sixty (60) days, or repairs cannot be made under current laws or
regulations, this Sublease may terminate at the option of either party. A total
destruction of the Sublet Premises shall automatically terminate this Sublease.
B. Each of Sublessor and Sublessee hereby releases the other from any and
all liability or responsibility to the other or any claiming through or under
them by way of subrogation or otherwise for any loss or damage to property
caused by fire or any other perils insured in policies of insurance covering
such property, even if such loss or damage shall have been caused by the fault
or negligence of the other party, or anyone for whom such party may be
responsible; provided, however, that this release shall be applicable and in
force and effect only with respect to loss or damage occurring during such times
as the releasor's policies shall contain a clause or endorsement to the effect
that any such release shall not adversely affect or impair said policies or
prejudice the right of the releasor to recover thereunder and then only to the
extent of the insurance proceeds payable under such policies.
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13. Liability and Insurance.
A. Sublessor shall not be liable to Sublessee or Sublessee's employees,
agents, patrons or visitors, or to any other person whomsoever, for any injury
to person or damage to property on or about the Sublet Premises, resulting from
and/or caused in part or whole by the negligence or misconduct of Sublessee, its
agents, servants or employees, or of any other person entering upon the Sublet
Premises, or caused by the building in which the Sublet Premises are located
becoming out of repair, or caused by leakage of gas, oil, water or steam, or by
electricity emanating from the Sublet Premises, or due to any cause whatsoever,
and Sublessee hereby covenants and agrees that it will at all times indemnify
and hold safe and harmless the Sublessor, the Sublessor's agents and employees
from any loss, liability, claims, suits, costs, expenses, including without
limitation attorneys' fees and damages, both real and alleged, arising out of
any such damage or injury; except injury to persons or damage to property the
sole cause of which is the negligence of Sublessor.
B. Sublessee shall procure and maintain throughout the term of this
Sublease (i) Commercial General Liability Insurance (or the equivalent ISO form
in use from time to time in the State of New York), on an occurrence basis, such
insurance to afford protection in an amount of not less than One Million
($1,000,000) Dollars coverage for bodily injury, death and property damage
occurring in or about the Sublet Premises arising out of any one occurrence and
Two Million ($2,000,000) Dollars in the aggregate (such limit to apply on a "per
location basis"), protecting Sublessee as the insured and Prime Landlord and
Sublessor against any and all claims for personal injury, death or property
damage occurring in or about the Sublet Premises; (ii) "All Risk" Property
Insurance on Sublessee's property; (iii) Workers Compensation Coverage, as
required by law, and Employers Liability coverage in an amount of not less than
One Million ($1,000,000) Dollars each accident/One Million ($1,000,000) Dollars
each employee and One Million ($1,000,000) Dollars policy limit; (iv) Business
Automobile Coverage in an amount of not less than One Million ($1,000,000)
Dollars combined single limit per accident for bodily injury or property damage
occurring in or about the Sublet Premises (which policy form shall include
coverage for "Any Auto" which includes autos owned, hired and non-owned); and
(v) Umbrella Liability Coverage with limits of liability of not less than Five
Million ($5,000,000) Dollars per occurrence and general aggregate per location.
All deductibles shall be paid by Sublessee. All such policies shall be procured
by Sublessee from responsible insurance companies satisfactory to Sublessor.
Certificates of such insurance shall be delivered to Sublessor prior to the
Commencement Date of this Sublease. Not less than fifteen (15) days prior to the
expiration date of any such policies, certificates of the renewals thereof
(bearing notations evidencing the payment of renewal premiums) shall be
delivered to Sublessor. Such certificates shall further provide that not less
than thirty (30) days' written notice shall be given to Sublessor before such
policy may be cancelled or changed to reduce insurance provided thereby.
C. Sublessee shall reimburse Sublessor, upon Sublessor's demand therefor,
as additional rent, for one hundred percent (100%) of any increase in premiums
over the premiums in effect on the Commencement Date for fire insurance upon the
Sublet Premises, including extended coverage, rental value, vandalism and
malicious mischief, as well as liability, which is maintained during the term of
this Sublease by Sublessor.
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14. Condemnation.
A. If the whole or any substantial part of the Sublet Premises should be
taken for any public or quasi-public use under governmental law, ordinance or
regulation, or by right of eminent domain, or by private purchase in lieu
thereof, and the taking would prevent or materially interfere with the use of
the Sublet Premises for the purpose for which they are then being used, this
Sublease shall terminate and the rent shall be abated during the unexpired
portion of this Sublease, effective when the physical taking of the Sublet
Premises shall occur.
B. If part of the Sublet Premises shall be taken for any public or
quasi-public use under any governmental law, ordinance, or regulation, or by
right of eminent domain, or by private purchase in lieu thereof, and this
Sublease is not terminated as provided in the subparagraph above, this Sublease
shall not terminate, but the rent payable hereunder during the unexpired portion
of the Sublease shall be reduced in the ratio which the diminution in the total
floor space of the Sublet Premises following such taking shall bear to the total
floor space immediately prior thereto.
C. All awards derived from any such taking shall belong to and be the
property of the Sublessor except that the Sublessee shall be entitled to receive
any award for relocation expenses.
15. Holding Over. Sublessee will, at the termination of this Sublease by
lapse of time or otherwise, yield up immediate possession to Sublessor. In the
event of any holding over by Sublessee or any of its successors in interest
after the expiration or termination of this Sublease, unless the parties hereto
otherwise agree in writing, the holdover tenancy shall be subject to termination
by Sublessor at any time upon not less than five (5) days' advance written
notice, or by Sublessee at any time upon not less than thirty (30) days' advance
written notice, and all of the other terms and provisions of this Sublease shall
be applicable during the period, except that Sublessee shall pay Sublessor from
time to time upon demand, as rental for the period of any holdover, an amount
equal to one and one-half (1-1/2) the rent in effect on the termination date,
computed on a daily basis for each day of the holdover period. No holding over
by Sublessee, whether with or without consent of Sublessor, shall operate to
extend this Sublease except as otherwise expressly provided.
16. Quiet Enjoyment. Sublessor covenants that it is the tenant pursuant to
the Prime Lease and has good title to the leasehold created thereby, free and
clear of all liens and encumbrances, excepting only the lien for current taxes
not yet due, such mortgage or mortgages as are permitted by the terms of this
Sublease, zoning ordinances, and other building and fire ordinances and
governmental regulations relating to the use of such property, and easements,
restrictions, and other conditions of record. Sublessee agrees to take the
Sublet Premises subject to the provisions of the Prime Lease. Sublessor
represents and warrants that it has full right and authority to enter into this
Sublease and that Sublessee, upon paying the rental herein set forth and
performing its other covenants and agreements herein set forth, shall peaceably
and quietly have, hold, and enjoy the Sublet Premises for the term hereof
without hindrance or molestation from Sublessor, subject to the terms and
provisions of this Sublease.
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17. Prime Lease. Except as may be inconsistent with the terms hereof, all
the terms, covenants and conditions contained in the Prime Lease (other than any
options or rights of first refusal granted to Sublessor or obligations of
Sublessor to offer to purchase the Sublet Premises) shall be applicable to this
Sublease with the same force and effect as if Sublessor were the lessor under
the Prime Lease and Sublessee were the lessee thereunder; and in case of any
breach hereof by Sublessee, Sublessor and Sublessee shall have all the rights
against each other as would be available to the Prime Landlord and the lessee
under the Prime Lease if such breach were by a party thereto. Neither Sublessor
nor Sublessee shall either do or permit anything to be done which would cause
the Prime Lease to be terminated or forfeited by reason of any right of
termination or forfeiture reserved or vested in the Prime Landlord. Sublessee
shall indemnify and hold Sublessor harmless from and against all claims of any
kind whatsoever by reason of any breach or default on the part of Sublessee by
reason of which the Prime Lease may be terminated or forfeited, except by reason
of any breach or default on the part of Sublessor that could cause the Prime
Lease to be terminated. Sublessor agrees that, provided that Sublessee is not in
default under the Sublease, Sublessor shall not (i) voluntarily surrender the
Sublet Premises prior to the expiration or termination of the term of the
Sublease, except in instances in which the Prime Lease terminates early due to
casualty damage, taking of the Premises by eminent domain or otherwise through
no fault of Sublessor, or (ii) breach its obligations under the Prime Lease so
as to give the Prime Landlord the right to terminate the Prime Lease, and
Sublessor agrees to indemnify and hold Sublessee harmless from losses or damages
arising from Sublessor's failure to comply with the foregoing. Sublessor shall
retain the right to exercise the cancellation option set forth in Section 66 of
the Prime Lease, but agrees that it shall exercise such right only with the
prior written consent of Sublessee. In the event that the cancellation option is
so exercised, Sublessee agrees to pay the associated termination fee of
$132,182.86.
18. Use of Hazardous Material.
A. As used herein, the term "Hazardous Material" means any hazardous or
toxic substance, material or waste which is or becomes regulated by any state or
local government authority or the United States Government. The term "Hazardous
Material" includes, without limitation, any material or substance which is (i)
listed in the United States Department of Transportation Hazardous Materials
Table (49 CFR ss.172.101, including the appendix to ss.172.101); (ii) identified
by the Environmental Protection Agency as a hazardous substance in 40 CFR Part
302; (iii) designated as a "hazardous substance" pursuant to Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. ss.1317); (iv) defined as a
"hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation
and Recovery Act, 42 U.S.C. ss.6901 et seq. (42 U.S.C. ss.6903); (v) defined as
a "hazardous waste" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss.9601 et seq. (42 U.S.C.
ss.9601); (vi) an asbestos containing material; (vii) any petroleum product or
material in any way derived from or containing any petroleum product; (viii)
defined as a "hazardous waste", a "hazardous material", a "hazardous substance",
a "contaminant", or as a "waste" under any statue, code or administrative rule
of any jurisdiction in which the Sublet Premises is located, or under any
amendments, revisions, supplements, or replacements of any of the above or any
regulations implementing any of the above.
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B. Sublessee shall not cause or permit any Hazardous Material to be
brought upon, kept or used in or about the Sublet Premises by Sublessee, its
agents, employees, contractors or invitees without the prior written consent of
Sublessor, which Sublessor shall not unreasonably withhold as long as Sublessee
demonstrates to Sublessor's reasonable satisfaction that such Hazardous Material
is necessary or useful to Sublessee's business and will be used, kept, stored
and disposed of in a manner that complies with all laws regulating any such
Hazardous Material so brought upon or used or kept in or about the Sublet
Premises. If Sublessee breaches the obligations stated in the preceding
sentence, or if the presence of Hazardous Material on the Sublet Premises caused
or permitted by Sublessee, its agents, employees, contractors or invitees
results in contamination of the Sublet Premises, or if contamination of the
Sublet Premises by any Hazardous Material otherwise occurs for which Sublessee
is legally liable to Sublessor for damage resulting therefrom, then Sublessee
shall indemnify, defend and hold Sublessor harmless from any and all claims,
judgments, damages, penalties, fines, costs, liabilities or losses (including,
without limitation, diminution in value of the Sublet Premises, damages for the
loss or restriction on use of rentable or usable space or of any amenity of the
Sublet Premises, damages arising from any adverse impact on marketing of space,
and sums paid in settlement of claims, attorneys' fees, consultant fees and
expert fees) which arise during or after the lease term as a result of such
contamination. This indemnification of Sublessor by Sublessee includes, without
limitation, costs incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work required by
any federal, state or local governmental agency or political subdivision because
of any Hazardous Material present in the soil or ground water on or under the
Sublet Premises. Without limiting the foregoing, if the presence of any
Hazardous Material on the Sublet Premises caused or permitted by Sublessee, its
agents, employees, contractors, or invitees results in any contamination of the
Sublet Premises, Sublessee shall promptly take all actions at its sole expense
as are necessary to return the Sublet Premises to the condition existing prior
to the introduction of any such Hazardous Material to the Sublet Premises;
provided that Sublessor's approval of such actions shall first be obtained,
which approval shall not be unreasonably withheld so long as such actions would
not potentially have any material adverse long-term or short-term effect on the
Sublet Premises. The foregoing indemnity shall survive the expiration or earlier
termination of this Sublease.
19. Events of Default. The following events shall be deemed to be Events
of Default by Sublessee under this Sublease:
(a) Sublessee shall fail to pay any installment of the rent hereby
reserved when due, or any payment with respect to taxes hereunder when
due, or any other payment or reimbursement to Sublessor required herein
when due, and such failure shall continue for a period of ten (10) days
from the date such payment was due.
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(b) Sublessee shall become insolvent, or shall make a transfer in
fraud of creditors, or shall make an assignment for the benefit of
creditors.
(c) Sublessee shall file a bankruptcy or Sublessee shall be adjudged
bankrupt or insolvent in proceedings filed against Sublessee.
(d) A receiver or trustee shall be appointed for all or
substantially all of the assets of Sublessee.
(e) Sublessee shall desert or vacate any substantial portion of the
Sublet Premises.
(f) Sublessee shall fail to comply with any term, provision or
covenant of this Sublease (other than the foregoing in this Paragraph 19),
and shall not cure such failure within twenty (20) days after written
notice thereof to Sublessee.
20. Remedies. Upon the occurrence of any of Events of Default described in
Paragraph 19 hereof, Sublessor shall have the option to pursue any one or more
of the following remedies without any notice or demand whatsoever:
(a) Terminate this Sublease, in which event Sublessee shall
immediately surrender the Sublet Premises to Sublessor, and if Sublessee
fails so to do, Sublessor may, without prejudice to any other remedy which
it may have for possession or arrearages in rent, enter upon and take
possession of the Sublet Premises and expel or remove Sublessee and any
other person who may be occupying such Sublet Premises or any part
thereof, by force if necessary, without being liable for prosecution or
any claim for damages therefor; and Sublessee agrees to pay to Sublessor
on demand the amount of any loss and damage which Sublessor may suffer by
reason of such termination, whether through inability to relet the Sublet
Premises or through decrease in rent or otherwise.
(b) Enter upon and take possession of the Sublet Premises and expel
or remove Sublessee and any other person who may be occupying such Sublet
Premises or any part thereof, by force if necessary, without being liable
for prosecution or any claim for damages therefor, and relet the Sublet
Premises and receive the rent therefor; and Sublessee agrees to pay to the
Sublessor on demand any deficiency that may arise by reason of such
reletting.
(c) Enter upon the Sublet Premises, by force if necessary, without
being liable for prosecution or any claim for damages therefor, and do
whatever Sublessee is obligated to do under the terms of this Sublease;
and Sublessee agrees to reimburse Sublessor, on demand, for any expenses
which Sublessor may incur in thus effecting compliance with Sublessee's
obligations under this Sublease, and Sublessee further agrees that
Sublessor shall not be liable for any damages resulting to the Sublessee
from such action.
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In the event Sublessee fails to pay any installment of rent hereunder as
and when such installment is due, to help defray the additional cost to
Sublessor for processing such late payments, Sublessee shall pay to Sublessor on
demand a late charge in an amount equal to three percent (3%) of such
installment; and the failure to pay such amount within ten (10) days after
demand therefor shall be an Event of Default hereunder. The provision for such
late charge shall be in addition to all of Sublessor's other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Sublessor's remedies in any manner.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy herein provided constitute a forfeiture or waiver of
any rent due to Sublessor hereunder or of any damages accruing to Sublessor by
reason of the violation of any of the terms, provisions and covenants herein
contained. No act or thing done by the Sublessor or its agents during the term
hereby granted shall be deemed a termination of this Sublease or an acceptance
of the surrender of the Sublet Premises, and no agreement to terminate this
Sublease or to accept a surrender of said Sublet Premises shall be valid unless
in writing signed by Sublessor. No waiver by Sublessor or any violation or
breach of any of the terms, provisions and covenants herein contained shall be
deemed or construed to constitute a waiver of any other violation or breach of
any of the terms, provisions and covenants herein contained. Sublessor's
acceptance of the payment of rental or other payments hereunder after the
occurrence of an event of default shall not be construed as a waiver of such
default, unless Sublessor so notifies Sublessee in writing. Forbearance by
Sublessor to enforce one or more of the remedies herein provided upon an event
of default shall not be deemed or construed to constitute a waiver of such
default or of Sublessor's right to enforce any such remedies with respect to
such default or any subsequent default. If, on account of any breach or default
by Sublessee in Sublessee's obligations under the terms and conditions of this
Sublease, it shall become necessary or appropriate for Sublessor to employ or
consult with an attorney concerning or to enforce or defend any of Sublessor's
rights or remedies hereunder, Sublessee agrees to pay any reasonable attorneys'
fees so incurred.
21. Sublessor's Lien. In addition to any statutory lien for rent in
Sublessor's favor, Sublessor shall have and Sublessee hereby grants to Sublessor
a continuing security interest for all rentals and other sums of money becoming
due hereunder form Sublessee, upon all equipment, fixtures, furniture,
inventory, accounts, contract rights, chattel paper and other personal property
of Sublessee situated on the Sublet Premises, and after the occurrence of an
Event of Default such property shall not be removed therefrom without the
consent of Sublessor until all arrearages in rent as well as any and all other
sums of money then due to Sublessor hereunder shall first have been paid and
discharged. After the occurrence of an Event of a Default under this Sublease,
Sublessor shall have, in addition to any other remedies provided herein or by
law, all rights and remedies under the Uniform Commercial Code, including
without limitation the right to sell the property described in this Paragraph 20
at public or private sale upon five (5) days' notice to Sublessee. Sublessee
hereby agrees to execute such financing statements and other instruments
necessary or desirable in Sublessor's discretion to perfect the security
interest hereby created. Any statutory lien for rent is not hereby waived, the
express contractual lien herein granted being in addition and supplementary
thereto.
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22. Mortgages and Prime Lease. Sublessee accepts this Sublease subject and
subordinate to the Prime Lease and any mortgage(s) and/or deed(s) of trust now
or at any time hereafter constituting a lien or charge upon the Sublet Premises
or the improvements situated thereon; provided, however, that if the Prime
Landlord, mortgagee, trustee, or holder of any such mortgage or deed of trust
elects to have Sublessee's interest in this Sublease superior to any such
instrument, then by notice to Sublessee from such mortgagee, trustee or holder,
this Sublease shall be deemed superior to such lien, whether this Sublease was
executed before or after said Prime Lease, mortgage or deed of trust. Sublessee
shall at any time hereafter, on demand, execute any instruments, releases or
other documents which may be required by any mortgagee for the purpose of
subjecting and subordinating this Sublease to the lien of any such Prime Lease,
mortgage and/or deed of trust.
23. Mechanic's Liens. Sublessee shall have no authority, express or
implied, to create or place any lien or encumbrance, of any kind or nature
whatsoever upon, or in any manner to bind, the interest of Sublessor in the
Sublet Premises or to charge the rentals payable hereunder for any claim in
favor of any person dealing with Sublessee, including those who may furnish
materials or perform labor for any construction or repairs, and each such claim
shall affect and each such lien shall attach to, if at all, only the Leasehold
interest granted to Sublessee by this instrument. Sublessee covenants and agrees
that it will pay or cause to be paid all sums legally due and payable by it on
account of any labor performed or materials furnished in connection with any
work performed on the Sublet Premises on which any lien is or can be validly and
legally asserted against its Leasehold interest in the Sublet Premises or the
improvements thereon and that it will save and hold Sublessor harmless from any
and all loss, cost or expense based on or arising out of asserted claims or
liens against the Leasehold estate or against the right, title and interest of
the Sublessor in the Sublet Premises or under the terms of this Sublease.
24. Notices. Each provision of this instrument or of any applicable
governmental laws, ordinances, regulations and other requirements with reference
to the sending, mailing or delivery of any notice or the making of any payment
by Sublessor to Sublessee or with reference to the sending, mailing, or delivery
of any notice or the making of any payment by Sublessee to Sublessor shall be
deemed to be complied with when and if the following steps are taken:
(a) All rent and other payments required to be made by Sublessee to
Sublessor hereunder shall be payable to Sublessor at the address
hereinbelow set forth or at such other address as Sublessor may specify
from time to time by written notice delivered in accordance herewith.
Sublessee's obligation to pay rent and any other amounts to Sublessor
under the terms of this Sublease shall not be deemed satisfied until such
rent and other amounts have been actually received by Sublessor.
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(b) Any notice or document required or permitted to be delivered
hereunder shall be deemed to be delivered whether actually received or not
when deposited in the United States Mail, postage prepaid, Certified or
Registered Mail, addressed to the parties hereto at the respective
addresses set out below, or at such other address as they have theretofore
specified by written notice delivered in accordance herewith:
Sublessor: Sublessee:
Huttig Building Products, Inc. Air Industries Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn.: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Attention: President and CEO
If and when included within the term "Sublessor", as used in this
instrument, there are more than one person, firm or corporation, all shall
jointly arrange among themselves for their joint execution of such a notice
specifying some individual at some specific address for the receipt of notices
and payments to Sublessor; if and when included within the term "Sublessee", as
used in this instrument, there are more than one person, firm or corporation,
all shall jointly arrange among themselves for their joint execution of such a
notice specifying some individual at some specific address within the
continental United States for the receipt of notices and payments to Sublessee.
All parties included within the terms "Sublessor" and "Sublessee", respectively,
shall be bound by notices given in accordance with the provisions of this
paragraph to the same effect as if each had received such notice.
25. Miscellaneous.
A. Words of any gender used in this Sublease shall be held and construed
to include any other gender, and words in the singular number shall be held to
include the plural, unless the context otherwise requires.
B. The terms, provisions, covenants, and conditions contained in this
Sublease shall apply to, inure to the benefit of, and be binding upon, the
parties hereto and upon their respective heirs, legal representatives,
successors and permitted assigns except as otherwise herein expressly provided.
Each party agrees to furnish the other, promptly upon demand, a corporate
resolution, proof of due authorization by partners, or other appropriate
documentation evidencing the due authorization of such party to enter into this
Sublease.
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C. The captions inserted in this Sublease are for convenience only and in
no way define, limit or otherwise describe the scope or intent of this Sublease,
or any provision hereof, or in any way affect the interpretation of this
Sublease.
D. Sublessee agrees from time to time within ten (10) days after request
of Sublessor, to deliver to Sublessor, or Sublessor's designee, an estoppel
certificate stating that this Sublease is in full force and effect, the date to
which rent has been paid, the unexpired term of this Sublease and such other
matters pertaining to this Sublease as may be reasonably requested by Sublessor.
It is understood and agreed that Sublessee's obligation to furnish such estoppel
certificates in a timely fashion is a material inducement for Sublessor's
execution of this Sublease.
E. This Sublease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
F. All obligations of Sublessee hereunder not fully performed as of the
expiration or earlier termination of the term of this Sublease shall survive the
expiration or earlier termination of the term hereof, including without
limitation all payment obligations with respect to taxes and insurance and all
obligations concerning the condition of the Sublet Premises. Upon the expiration
or earlier termination of the term hereof, and prior to Sublessee vacating the
Sublet Premises, Sublessee shall pay to Sublessor any amount reasonably
estimated by Sublessor as necessary to put the Sublet Premises, including
without limitation all heating and air conditioning systems and equipment
therein, in good condition and repair. Sublessee shall also, prior to vacating
the Sublet Premises, pay to Sublessor the amount, as estimated by Sublessor, of
Sublessee's obligation hereunder for real estate taxes and insurance premiums
for the year in which the Sublease expires or terminates. All such amounts shall
be used and held by Sublessor for payment of such obligations of Sublessee
hereunder, with Sublessee being liable for any additional costs therefor upon
demand by Sublessor, or with any excess to be returned to Sublessee after all
such obligations have been determined and satisfied, as the case may be. Any
security deposit held by Sublessor shall be credited against the amount payable
by Sublessee under this Paragraph 24(F).
G. This Sublease contains the entire agreement of the parties and no
representation or agreements, oral or otherwise, between the parties not
embodied herein shall be of any force or effect.
H. No failure of Sublessor to exercise any power given Sublessor
hereunder, or to insist upon strict compliance of any obligation hereunder, and
no custom or practice of the parties at variance with the terms hereof shall
constitute a waiver of Sublessor's right to demand exact compliance with the
terms hereof.
I. Time is of the essence of each term and provision of this Sublease.
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J. If any clause or provision of this Sublease is illegal, invalid or
unenforceable under present or future laws effective during the term of this
Sublease, then and in that event, it is the intention of the parties hereto that
the remainder of this Sublease shall not be affected thereby, and it is also the
intention of the parties of this Sublease that in lieu of each clause or
provision of this Sublease that is illegal, invalid or unenforceable, there be
added as a part of this Sublease contract a clause or provision as similar in
terms to such illegal, invalid or unenforceable clause or provision as may be
possible and be legal, valid and enforceable.
K. Because the Sublet Premises are on the open market and are presently
being shown, this Sublease shall be treated as an offer by the Sublessee with
the Sublet Premises being subject to prior sublease and offer subject to
withdrawal or non-acceptance by Sublessor or to other use of the Sublet Premises
without notice, and this Sublease shall not be valid or binding unless and until
accepted by Sublessor in writing and a fully executed copy delivered to both
parties hereto.
L. Tenant agrees that Tenant and not Sublessee shall be obligated to
reimburse the Prime Landlord for legal fees incurred by the Prime Landlord in
connection with this Sublease for which reimbursement is required pursuant to
Section 54(a)(v) of the Prime Lease.
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EXECUTED BY SUBLESSEE, this ____ day of ______________, 2007.
SUBLESSEE:
AIR INDUSTRIES GROUP, INC.
Attest/Witness:
By:
--------------------------------- ---------------------------------
Title:
--------------------------------- ---------------------------------
EXECUTED BY SUBLESSOR, this ____ day of _____________, 2007.
SUBLESSOR:
HUTTIG BUILDING PRODUCTS, INC.
Attest/Witness:
By:
--------------------------------- ---------------------------------
Title:
--------------------------------- ---------------------------------
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EXHIBIT A
PRIME LEASE
EXHIBIT B
SUBLET PREMISES
[FLOORPLAN GRAPHIC OMITTED]
--------------------------------
Sublessee shall not block or
otherwise restrict access to the
western portion of the Premises
or the western portion of the
parking area/truck court on
either the north or south side
of Sublessee's parking areas.
--------------------------------
EXHIBIT C
SUBLESSEE'S ALTERATIONS
Sublessee shall make the following alterations:
Overhead Door
o Remove and replace one of the metal overhead doors (from the street,
this would be the second to last door on the left side)
o Enlarge the existing opening to install a 14' x 14' overhead door,
with electrical connection
Concrete Floor Repair
o Remove damaged 12' x 16' x 4" concrete slab located inside the
doorway, and replace with new concrete, 12' x 16' x 8"
o Remove/repair 17' x 24' x 4" of damaged concrete from warehouse
floor, as required
Interior Walls (sheet rock, 2x4 framing)
o Install sheet rock walls from floor to bottom of joists in warehouse
to segregate one unit, approx. 16,600 sq ft of floor space
o One of these walls will have a metal door, 72" W x 84" H, with (2)
panes of 10" x 10" vision glass
o Create interior office space (sheetrock), as required, within the
existing footprint
EXHIBIT D
SUBLESSOR'S WORK
Sublessor shall fill in the existing holes in the demising wall with concrete
block so as to secure the Sublet Premises.
