AGREEMENT OF SUBLEASE
between
REVLON HOLDINGS INC. a Delaware Corporation, as Sublessor
and
POPULAR CLUB PLAN, INC. a New Jersey Corporation, as Sublessee
Dated: November 4, 1993
GREENBAUM, ROWE, XXXXX, XXXXX & XXXXX
Metro Corporate Campus One
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
TABLE OF CONTENTS
ARTICLE I....................................................... 1
Demise, Premises and Terms of Prime Lease................. 1
Section 1.1 Demise and Premises....................... 1
Section 1.2. The Prime Lease........................... 1
ARTICLE II...................................................... 3
Term, Commencement, Right of Renewal...................... 3
Section 2.1 Term and Commencement for IDP............. 3
Section 2.2 Occupancy Prior to Commencement........... 4
Section 2.3 Pro-Rata Rent During Pre-Commencement
Occupancy................................. 4
Section 2.4 Right of Renewal.......................... 4
Section 2.5 Certain Provisions Applicable to
All Extensions of the Sublease............ 5
ARTICLE III..................................................... 5
Expansion Options of Sublessee............................ 5
Section 3.1 Expansion #1 Option....................... 5
Section 3.2 Expansion #2 Option....................... 6
Section 3.3 Sublessor Cooperation..................... 7
Section 3.4 When Construction Funded and Performed
By Sublessee.............................. 7
Section 3.5 Funding of Construction
Costs by Sublessor-Procedure.............. 7
Section 3.6 Covenants of General
Application for Expansions................13
ARTICLE IV......................................................13
Covenants.................................................13
Section 4.1 Covenants Regarding
Condition of Demised Premises
and other Matters.........................14
ARTICLE V.......................................................14
Rent and Payment..........................................14
Section 5.1 Basic Rent During the Period
February 1, 1994 to
January 31, 1999..........................14
Section 5.2 Basic Rent For The IDP
During the Period February 1,
1999 to April 30, 2004....................14
Section 5.3 Basic Rent Concession.....................14
Section 5.4 Payment of Rent...........................15
Section 5.5 Additional Rent...........................15
Section 5.6 Basic Rent For the Balance of the Term....15
Section 5.7 Rent for Expansion #1 Space...............15
Section 5.8 Determination of the
Notice Date Interest Rate.................16
Section 5.9 Determination of the Completion Date
Interest Rate.............................16
Section 5.10 Rental for Expansion #1 Space
Following the Ten Year Expansion #1
Rent Period...............................16
Section 5.11 Rental for Expansion Space if
Sublessee Pays Construction Costs.........16
Section 5.12 Timing of Completion of Expansion
#1 Space..................................16
Section 5.13 Calculation of Aggregate Construction
Cost of Expansion #1......................17
Section 5.14 Sublessee to Complete Construction
Work and Use of CBA.......................17
Section 5.15 Overcharge or Deficiency in Completion
Budget Amount.............................17
ARTICLE VI......................................................17
Construction Or Other Work................................17
Section 6.1 Conditions As To Construction Work,
Expansion Space, and as to Repairs,
Alterations, Replacements or Other Work...17
ARTICLE VII.....................................................19
Mechanic's Liens..........................................19
Section 7.1 Mechanic's Liens Prohibited...............19
Section 7.2 Sublessor's Remedy for Sublessee's
Breach....................................19
Section 7.3 Non-Consent of Sublessor to Filing
of Liens..................................19
ARTICLE VIII....................................................19
Notices...................................................19
Section 8.1 Notices...................................19
ARTICLE IX......................................................20
Memorandum of Sublease....................................20
Section 9.1 Memorandum of Sublease....................20
ARTICLE X.......................................................20
Use.......................................................20
Section 10.1 Use.......................................20
ARTICLE XI......................................................20
Defaults and Remedies.....................................20
Section 11.1 Sublessee's Defaults......................20
Section 11.2 Sublessor's Remedies......................21
Section 11.3 Sublessor's Damages.......................22
Section 11.4 Waiver of Redemption......................22
Section 11.5 Provisions of Prime Lease as to
Defaults and Remedies Cumulative
with the Provisions of Sublease...........22
ARTICLE XII.....................................................22
General Provisions........................................22
Section 12.1 No Waste..................................22
Section 12.2 Limitation of Sublessor's Liability.......22
Section 12.3 Partial Invalidity........................23
Section 12.4 No Waiver.................................23
Section 12.5 Number and Gender.........................23
Section 12.6 Successors and Assigns....................23
Section 12.7 Article and Marginal Headings.............23
Section 12.8 Entire Agreement..........................23
Section 12.9 Obligations also Covenants................23
Section 12.10 Cost of Performing Obligations............23
Section 12.11 Remedies Cumulative.......................23
Section 12.12 Holding Over..............................23
Section 12.13 Signs.....................................24
Section 12.14 Property Insurance-Special Provision......24
Section 12.15 Brokerage.................................24
Section 12.16 Notice by Sublessee to Mortgagee..........24
Section 12.17 Sublessee Electric........................24
Section 12.18 Conduct of Sublessee's Work...............24
Section 12.19 Interest and Late Payment
Service Charge............................25
Section 12.20 Definitions...............................25
Section 12.21 Governing Law.............................28
ARTICLE XIII....................................................28
Assignment, Subletting, Etc...............................28
Section 13.1 Assignment, Subletting, Etc...............28
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ARTICLE XIV.....................................................29
Compliance with Laws, Rules and Regulations...............29
Section 14.1 Environmental Compliance..................29
EXHIBITS
Site Plan..................................................A
Legal Description..........................................B
Prime Lease................................................C
Schedule of Basic Rent.....................................D
Preliminary Expansion #1 Plans.............................E
Construction Criteria for Expansion #1 and Expansion #2....F
Sublessee Demolition Plan..................................G
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THIS Sublease, dated the 4th day of November, 1993,
between REVLON HOLDINGS INC. (formerly known as Revlon, Inc.), a
corporation of the State of Delaware, having an office at 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (hereinafter designated
as "Sublessor"), and POPULAR CLUB PLAN, INC., a corporation of
the State of New Jersey, having an office at 00 Xxxxxxx Xxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000 ("Sublessee").
W I T N E S S E T H:
ARTICLE I
Demise, Premises and Terms of Prime Lease
Section 1.1 Demise and Premises. Sublessor does hereby
demise and lease to Sublessee and Sublessee does hereby take and
hire from Sublessor all that certain tract or parcel of land,
including the building and improvements erected thereon,
consisting of 369,313 gross rentable square feet (hereinafter
designated as the "Building") as provided herein, situate, lying
and being in the Township of Edison, Middlesex County, New
Jersey, commonly known as 0 Xxxxxx Xxxxx, Xxxxxx, Xxx Xxxxxx and
shown on the plot plan designated Exhibit A, annexed hereto and
made a part hereof. The lands aforesaid being more particularly
described in Exhibit B annexed hereto and made a part hereof,
together with the rights and privileges, fixtures and equipment
therein and the easements, improvements, tenements, hereditaments
and appurtenances now or hereafter belonging or pertaining
thereto (all referred to hereinafter as the "Demised Premises" or
the "Premises"). The land and improvements demised hereunder
exclusive of any expansion are herein referred to as the Initial
Demised Premises (the "IDP"). If the Sublessor Funded Expansion
#1 Term, Sublessee Funded Expansion #1 Term, and/or Expansion #2
Term, as hereinafter defined, commences, then "Demised Premises"
or "Premises" shall thereafter be deemed to refer to the IDP as
well as the Expansion #1 Space and/or Expansion #2 Space, as
hereinafter defined in Article III. The Sublessee shall have
possession of the Premises for the term and at the rents as
herein provided, subject to the terms, covenants and conditions
herein contained which each of the parties hereto expressly
covenants and agrees to keep, perform and observe.
Section 1.2 The Prime Lease
(a) Except as otherwise expressly provided herein or
in a certain TriParty Agreement among the parties hereto and the
Prime Landlord ("Tri-Party Agreement") incorporated herein by
reference, all of the terms of that certain Lease Agreement dated
as of June 21, 1989 (the "Prime Lease") between SJDH Xxxxxx Drive
Trust (the "Prime Landlord") and Revlon, Inc. (the "Prime
Tenant") as they pertain to the Premises are hereby incorporated
into and made a part of this Sublease as if stated at length
herein, and Sublessee accepts this Sublease subject to, and
hereby agrees to be bound by all of the terms, covenants.
conditions and agreements contained in the Prime Lease to be
performed by Sublessor thereunder with respect to the Premises.
The Sublessor is the Prime Tenant under the Prime Lease. The
Sublessor's interest in the Prime Lease was assigned by Sublessor
to Revlon Consumer Products Corporation ("RCPC") by instrument of
assignment dated June 24, 1992 pursuant to which assignment
Sublessor remained primarily and directly liable under the Prime
Lease; the name of Revlon, Inc. was changed by a Certificate of
Amendment to the Certificate of Incorporation dated June 24, 1992
to Revlon Holdings Inc. By Reassignment and Release Agreement of
even date herewith, RCPC has reassigned to Sublessor all of the
tenant's right, title and interest and obligations under the
Prime Lease and RCPC is released from all obligations and
liabilities under the Prime Lease.
(b) Sublessor has heretofore provided Sublessee with a
true and accurate copy of the Prime Lease, a copy of which is
attached hereto as Exhibit C, which Prime Lease, as provided to
Sublessee, has not since been modified or amended, except as
provided in the Tri-
Party Agreement, and there is no other agreement or
understanding, other than the Tri-Party Agreement, to which
either Sublessor or Prime Landlord is a party varying the
provisions of the Prime Lease or otherwise affecting Sublessee's
rights or obligations under this Sublease. Sublessor further
represents that, as of the date of execution hereof, Sublessor
knows of no default and has not given notice to Prime Landlord of
any default and has not received any written notice of default
under the Prime Lease and the Prime Lease is in full force and
effect.
(c) Sublessee acknowledges that it has read and
examined the Prime Lease and is fully familiar with all of the
provisions thereof on the Prime Tenant's part to be performed,
and, subject to the express provisions of this Sublease, those
provisions applying to the Prime Landlord therein shall apply to
Sublessor and those applying to Prime Tenant therein shall apply
to Sublessee except that the following articles, portions and
provisions of the Prime Lease shall not be deemed a part of this
Sublease: the preface and paragraphs 2, 3, 5, 13 and 42. The
parties intend and agree that the payment of Basic Rent and
Additional Rent shall be absolutely net to the Sublessor and that
the Sublessee shall assume responsibility for any charge, cost or
expense relative to the Demised Premises during the Term, as the
same may be extended or renewed. Sublessee's obligation shall
include responsibility for all obligations for which Sublessor
may be liable under the Prime Lease except as may be expressly
provided in this Sublease.
(d) The parties hereto agree that subject to the
provisions of this Sublease, wherever the words "Demised
Premises" or words of similar import appear in the Prime Lease,
the same shall be deemed to mean the Premises subject to this
Sublease and wherever the words "Landlord" and "Tenant" appear in
the Prime Lease, the words shall be deemed to refer to Sublessor
and Sublessee respectively, so that, subject to the provisions of
this Sublease and the Tri-Party Agreement, Sublessor shall have
the rights and powers of Prime Landlord under the Prime Lease,
and Sublessee shall have and does hereby agree to be bound by and
accepts all the rights, powers, duties and obligations of the
Prime Tenant under the Prime Lease provided, however, that
notwithstanding the foregoing, Sublessor shall have no obligation
to perform or furnish any of the work, services, repairs or
maintenance undertaken to be made by Prime Landlord under the
Prime Lease, or any other term, covenant or condition required to
be performed by Prime Landlord under the Prime Lease. As provided
in Article 6 of the Prime Lease, Sublessee expressly assumes the
entire responsibility for maintenance and repair of the Demised
Premises.
(e) To the extent applicable to the Premises,
Sublessee shall have the benefit of each and every covenant and
agreement made by Prime Landlord to Sublessor under the Prime
Lease. In the event that Prime Landlord shall fail or refuse to
comply with any of the respective provisions of the Prime Lease,
Sublessor shall have no liability on account of any such failure
or refusal, provided that the Sublessee shall have the right to
exercise in the name of the Sublessor all the rights to enforce
compliance on the part of Prime Landlord as are available to the
Sublessor with respect to the Premises. Sublessor hereby agrees
to cooperate with and execute, all instruments and supply
information reasonably required by Sublessee in order to enforce
such compliance. Sublessee hereby agrees to indemnify and hold
Sublessor harmless of and from any and all damages, liabilities,
obligations, costs, losses, demands, expenses and injuries,
including reasonable attorneys' fees and expenses which may be
incurred by Sublessor in or as a result of such cooperation and
execution.
(f) In the event Sublessee shall default in the full
performance of any of the terms, covenants and conditions on its
part to be performed under this Sublease, then Sublessor shall
have, without limitation, all of those rights and remedies as
against the Sublessee as are held by the Prime Landlord under the
Prime Lease with respect to defaults by the Prime Tenant.
Notwithstanding the foregoing, this Sublease is separate from and
subordinate to the Prime Lease.
(g) If Sublessor shall default in the payment of any
rent due under the Prime Lease, Prime Landlord is hereby
authorized to collect any rents due or accruing under the
Sublease directly from the Sublessee and to apply the net amounts
so collected to the fixed annual rent and additional rent
reserved under the Prime Lease, and Sublessee shall be entitled
to apply the net amount so paid to the Prime Landlord to the
Basic Rent and/or the Expansion Rent as the case may be and
Additional Rent as such term is hereinafter defined which may be
due
2
hereunder. The receipt by Prime Landlord of any amounts from
Sublessee shall not be deemed or construed as releasing Sublessor
from its obligations under the Prime Lease or the acceptance of
Sublessee as a direct tenant.
(h) Sublessee shall not do or suffer or permit
anything to be done which would cause the Prime Lease to be
terminated or forfeited by virtue of any rights of termination or
forfeiture reserved or vested in Prime Landlord. If Sublessee
shall default in the performance of any of its obligations under
this Sublease or under the Prime Lease as incorporated by
reference pursuant to Section 1.2(a), after notice and the
opportunity to cure, Sublessor, without being under any
obligation to do so and without thereby waiving such default, may
remedy such default for the account and at the expense of
Sublessee. If Sublessor makes any expenditures or incurs any
obligation for the payment of money in connection therewith, such
sums paid or obligations incurred shall be deemed to be
Additional Rent hereunder and shall be paid to Sublessor by
Sublessee on demand together with interest at the Sublease
Interest Rate as such term is defined in Paragraph 12.20(av),
from the period that the funds are due until received by
Sublessor.
(i) Sublessor agrees that it shall not through action
or inaction cause a termination of the Prime Lease.
ARTICLE II
Term, Commencement, Right of Renewal
Section 2.1 Term and Commencement for IDP.
(a) Term. The term of this Sublease for the IDP is ten
(10) years and three (3) months plus the fractional month, if
any, referred to herein (the "Initial Term"). The Initial Term
shall commence on February 1, 1994 (the "Commencement Date"), and
shall terminate at 5:00 p.m. on the 30th day of April, 2004.
Notwithstanding the intention that the Commencement Date shall be
February 1, 1994, if due to circumstances not foreseen at the
time of execution hereof the Commencement Date is not the first
day of a calendar month (the period between the Commencement Date
and the end of the month in which it falls being herein called
"Fractional Month"), this Sublease shall terminate on the last
day of the third month after the tenth anniversary of the
Commencement Date.
(b) Modification of the Initial Term Upon Expansion.
Following exercise by Sublessee of the Expansion #1 Option,
and/or Expansion #2 Option, as such term(s) are hereinafter
defined and more particularly set forth in Article III below, (i)
in the event Sublessor pays Construction Costs for the Expansion
#1 Space, as such term is hereinafter defined, then on the date
of the earlier of (a) the issuance of a temporary or permanent
certificate of occupancy for the Expansion #1 Space, or (b) one
year from the date notice is received by Sublessor that Sublessee
has exercised its Expansion #1 Option, such earlier date being
defined herein as ("the #1 Measuring Date"), the Initial Term
shall thereupon be modified, and shall provide by virtue hereof a
ten year combined term from the said #1 Measuring Date for the
combined Demised Premises of the IDP and the Expansion #1 Space,
which combined term shall expire on the tenth anniversary of the
#1 Measuring Date, the said ten year term is hereinafter referred
to as the "Sublessor Funded Expansion #1 Term"; (ii) in the event
Sublessee elects to pay the Construction Costs for the Expansion
#1 Space, the Initial Term shall be modified and shall provide by
virtue hereof for a 17-year combined term from said #1 Measuring
Date for the combined Demised Premises of the IDP and the
Expansion #1 Space subject to a limit of duration upon such
tenancy as will not extend beyond April 30, 2019 (the "Sublessee
Funded Expansion #1 Term"); (iii) on the date of the earlier of
(a) the issuance of a temporary or permanent certificate of
occupancy for the Expansion #2 Space, or (b) one year from the
date notice is received by Sublessor that Sublessee has exercised
its option to construct Expansion #2, such earlier date being
defined herein as (the "#2 Measuring Date"); the Initial Term or
the Sublessor Funded Expansion #1 Term or the Sublessee Funded
Expansion #1 Term, as the case may be, shall be deemed modified
and shall provide by virtue hereof a 15-year combined Term from
said #2 Measuring Date for the combined Demised Premises of the
IDP, the Expansion #1 Space and the Expansion #2 Space, as the
case may be. which combined term shall expire on the
3
15th anniversary of the #2 Measuring Date subject to a limit as
to duration thereof which shall not extend beyond April 30, 2019.
The said term is hereinafter referred to as the "Expansion #2
Term".
(c) Term After Expansion(s). Upon modification of the
Initial Term as provided in subsection (b) immediately above,
reference to term shall relate to the combined Demised Premises
and shall mean the modified combined term commencing on the #1
Measuring Date or #2 Measuring Date, and thereafter the Demised
Premises consisting of the IDP and the Expansion #1 Space and/or
the Expansion #2 Space, as the case may be, shall be inseparable,
and as combined, shall become the Demised Premises, although the
aggregate rental shall then have two components, Basic Rent and
Expansion Rent provided that Expansion Rent shall only be paid if
the Sublessor funds the Construction Work of Expansion Space #1.
In the event Sublessee funds the Construction Work of Expansion
Space #1, no Expansion Rent shall be paid by the Sublessee for
Expansion #1 Space during the Sublessee Funded Expansion #1 Term.
Basic Rent for the IDP shall either be at a fixed rate per square
foot or shall be established by determination of Fair Market
Rent, hereinafter defined, determined as more particularly
provided in Exhibit D and described in Article V hereof and keyed
to fixed calendar dates set forth on such Exhibit D regardless of
the date of the commencement of the modified terms.
Section 2.2 Occupancy Prior to Commencement. Subject
to all provisions of this Sublease relating to occupancy prior to
the Commencement Date, Sublessee shall have the right to occupy
and use the IDP prior to the commencement of the Initial Term,
but not prior to November 1, 1993 (the "Initial Occupancy Date"),
provided that the Demised Premises can then, under applicable
law, be legally occupied and used for the uses described in
Article X below.
Section 2.3 Pro-Rata Rent During Pre-Commencement
Occupancy. If Sublessee occupies the Demised Premises, as
aforesaid, (i) it shall commence to pay utilities and all other
charges payable under the Sublease, except Basic Rent, from and
after the Initial Occupancy Date, (ii) all of the other
provisions of this Sublease shall become operative with respect
to the Premises as if the Commencement Date had occurred. During
the pre-Commencement occupancy Sublessee shall at its cost and
expense as a condition precedent to such occupancy, obtain and
keep in force during such occupancy, insurance coverage in
amounts as required in the Prime Lease with respect to the entire
Demised Premises.
Section 2.4 Right of Renewal. Provided that the
Sublessee is not in material default of any of the provisions
hereof (including any event which with notice or passage of time
or both would be a material default) at the time of the exercise
of any renewal option or at the commencement of the then
applicable renewal term and subject to the terms of the Prime
Lease and the Tri-Party Agreement, Sublessor grants to Sublessee
rights of renewal as follows:
At the option of the Sublessee, the Term may be
extended for two (2) renewal periods of five years each by
written notice to the Sublessor at least three hundred and sixty
five (365) days prior to the expiration of the Initial Term or
the Sublessor Funded Expansion #1 Term, the Sublessee Funded
Expansion #1 Term or Expansion #2 Term, as the case may be, or
the first renewal term thereof, as the case may be. Upon valid
exercise of any of such right(s) of renewal, the term of this
Sublease shall remain in full force and effect except that the
rent both Basic Rent and Expansion Rent, shall be directly
related to the occurrence of the calendar periods shown on
Exhibit D and as stipulated in Article V hereof. Notwithstanding
rights granted to the Sublessee pursuant to this Article II
relating to the Sublessor Funded Expansion (#1) Term, the
Sublessee Funded Expansion #1 Term or the Expansion #2 Term and
the Expansion (#1 or #2) Space or any renewal rights granted
herein, the Sublessee's right to occupy the Premises shall not
extend beyond April 30, 2019. If Sublessee shall have exercised
the expansion option(s) and is not otherwise in material default
(including any event which with notice or passage of time or both
would be a material default) after notice and failure to cure as
contemplated in Section 11.1 below, of its obligations under this
Sublease, then any option to renew the Initial Term as set forth
herein shall be deemed to commence upon the expiration of the
applicable expansion term. However, regardless of the exercise of
any Expansion #1 Option or Expansion #2 Option, the Term and
right of possession of the Sublessee hereunder shall expire (if
not sooner terminated pursuant hereto) not later than April 30,
2019.
4
Section 2.5 Certain Provisions Applicable to All
Extensions of the Sublease. It is agreed by the parties hereto
that in the event the Sublessee shall become entitled to extend
the Term pursuant to the provisions hereof, such that the Term of
this Sublease would extend beyond the then pending term of the
Prime Lease, then and in such event, the Sublessor shall promptly
request the Prime Landlord to enter into an extension of the term
of the Prime Lease with the Sublessor. Pursuant to the provisions
of the Tri-Party Agreement among Sublessor, Sublessee and the
Prime Landlord, Prime Landlord shall have the option to either
extend the term of the Prime Lease to be co-terminous with the
Term of the Sublease, as extended in any instance, or to permit
Sublessee to remain in possession of the Demised Premises after
the expiration of the term of the Prime Lease pursuant to Section
3 of the Tri-Party Agreement. If the Prime Landlord elects not to
extend the term of the Prime Lease, Sublessor shall, upon
expiration of the Prime Lease, be thereupon released by Sublessee
from all obligations and liability under the Sublease (other than
with respect to any breach or non-performance occurring by the
Sublessor prior to the expiration or termination of the Term of
the Sublease).
ARTICLE III
Expansion Options of Sublessee
Section 3.1 Expansion #1 Option.
(a) Subject to all provisions hereof, and provided the
Sublessee is not in material default, including any event which
with notice or passage of time or both would be a material
default, the Sublessee is granted an option ("Expansion #1
Option") to be exercised as hereafter provided, to expand the
Premises by approximately fifty-eight thousand (58,000) gross
rentable square feet of building area as more particularly
described in subparagraph (b) below. Sublessee's right to
exercise the Expansion #1 Option will then be subject to the
obligation of Sublessee to demonstrate to Sublessor's reasonable
satisfaction, acting in good faith, that there shall not have
occurred any material adverse change to the Sublessee's financial
condition or to the financial condition of the Guarantor of this
Sublease, J. Crew Group Inc., a New York corporation
("Guarantor"), between the date of the execution of this Sublease
and Guaranty and the date upon which Sublessee exercises the
Expansion Option #1 aforesaid. The said Building addition is
hereafter referred to as (the "Expansion #1 Space").
At the time that Sublessee notifies Sublessor that
Sublessee is exercising its Expansion #1 Option, Sublessee shall
elect either to require the Expansion #1 Construction Costs to be
funded by the Sublessor or by the Sublessee. The right of the
Sublessee to require Sublessor to fund the Construction Costs
shall expire if notice of Sublessee's election as to funding of
Construction Costs by the Sublessor shall not have been received
by the Sublessor on or before January 1, 1996, time being of the
essence. Sublessor's obligation to fund the Expansion #1
Construction Costs is limited to Two Million ($2,000,000.00)
Dollars and any Construction Costs in excess of Two Million
($2,000,000.00) Dollars shall be paid solely by Sublessee. If
Sublessee fails to notify Sublessor on or before January 1, 1996
of Sublessee's exercise of its Expansion #1 Option and election
to require Sublessor to fund the Construction Costs for the
Expansion #1 Space, then Sublessor shall thereupon and thereby be
released from any obligation to fund the said Expansion;
nevertheless, Sublessee may exercise its Expansion #1 Option
after January 1, 1996 provided, however, that Sublessee is not
then in material default (including any event which with notice
or passage of time or both would be a material default) and that
Sublessee shall be responsible to fund the entire Expansion #1
Construction Costs. Regardless of whether Sublessee requires
Sublessor to fund the Expansion #1 Construction Costs, Sublessor
shall have the right to engage a certifying architect to inspect
the construction of the Expansion and to monitor the Construction
Work in order to certify the completion of Construction Work
during the course thereof in accordance with the plans and
specifications. The said certifying architect shall hereafter be
referred to as "Sublessor's Architect." The costs, fees and
expenses of the Sublessor's Architect shall be included in the
Expansion #1 Construction Costs. The Sublessor's Architect shall
be licensed and qualified in the State of New Jersey, said
Sublessor's Architect shall have access to the Demised Premises
as he deems necessary to inspect the Construction Work for the
purpose of certifying completion of the Construction Work and
compliance with the plans and specifications for the Expansion.
Sublessee shall provide at its own cost to the Sublessor's
Architect a complete set of plans and
5
specifications for the Construction Work together with any
addenda or change orders with respect thereto as they are issued.
(b) Preliminary and Final Plans. The parties hereto
have approved for purposes of identification general plans
locating and generally describing the Expansion #1 Space
identified as Expansion A on the Concept Sketch dated August 23,
1993 and attached hereto as Exhibit E along with certain
construction criteria as outlined in Exhibit F and taken together
with Exhibit E hereinafter called "Preliminary Expansion #1
Plans". In conjunction with Sublessee's exercise of the Expansion
#1 Option, Sublessee shall, either prior to or subsequent to the
formal exercise of the option, cause an architect, which
architect shall be selected by Sublessee, subject to the approval
of Sublessor which approval shall not be unreasonably withheld
(hereinafter designated as "Architect"), to prepare final plans
and specifications (herein designated as "Final Plans") which
shall be consistent with and shall substantially develop and
carry out the concept of the Preliminary Plans for the
Construction Work and which Final Plans shall comply with the
then existing requirements of the Edison Township Zoning
Ordinance without the need to obtain any variances or exceptions.
The Final Plans shall be subject to the Sublessor's approval,
which approval shall be forthcoming and shall not be unreasonably
withheld or delayed or conditioned, if they are consistent with
and substantially develop the Preliminary Expansion #1 Plans and
otherwise comply with all applicable zoning and building
ordinances, statutes and regulations. If not approved within
thirty (30) days after the receipt by Sublessor, Sublessor shall
notify Sublessee of the specific reasons for disapproval and
Sublessee shall be allowed a 30-day period for response to
Sublessor's disapproval objections and upon receipt of such
response, Sublessor- shall have an additional 30 days to review
the response.
Section 3.2 Expansion #2 Option.
Subject to all provisions hereof, including but not
limited to Sublessor's consent which shall not be unreasonably
withheld, delayed or conditioned, if the Sublessee provides to
the Sublessor the covenants, representations and assurances
described below, and provided further that the Sublessee is not
in material default, including any event which with notice or
passage of time or both would be a material default, Sublessee is
hereby granted the option ("Expansion #2 Option") to construct an
addition to the Building not to exceed two hundred thousand
(200,000) gross rentable square feet of building area that will
be designed to be consistent and compatible with the Building and
with the zoning classification then applicable, said addition to
be erected at Sublessee's own cost and expense for all items of
Construction Costs within the scope of Construction Work for such
addition ("Expansion #2 Space"). The notice of Sublessee's
exercise of the Expansion #2 Option shall be delivered to the
Sublessor with covenants, representations and assurances for the
consideration of the Sublessor in the exercise of its reasonable
and good faith judgment as to whether or not to give its consent
for the construction of the Expansion #2 Space. The covenants,
representations and assurances to be relied upon by Sublessor
shall consist of: (i) general plans prepared by a New Jersey
licensed architect, reasonably satisfactory to Sublessor,
locating and describing the addition desired and the general
specifications thereof which are consistent with the general plan
of Expansion #2 Space identified as B and C on Exhibit E and the
construction criteria outlined in Exhibit F; (ii) a satisfactory
commitment from a surety reasonably acceptable to the Sublessor
confirming its agreement to issue its indemnity, performance and
completion bond to the Sublessor which will assure proper
completion of the project in a good and workmanlike manner and
payment for all work, labor and materials furnished to the
project; (iii) satisfactory reasonable evidence of Sublessee's
financial capacity to complete the project and that there has not
occurred any material adverse change in the financial condition
of the Sublessee or the Guarantor since the date of the execution
of this Sublease and the Guaranty; (iv) agreement by the
Sublessee to pay to Sublessor such Construction Costs in the
nature of application fees or fees for permits and costs and
expenses of approvals as may be incurred by the Sublessor in
conjunction with Sublessee's performance of Construction Work;
(v) the proposed improvements to comprise Expansion #2 Space
shall be in full compliance with all statutes, ordinances and
regulations governing land use and construction without the
necessity for any variances or exceptions. Sublessee agrees that
in conjunction with the planning and construction of Expansion #2
Space, any existing parking spaces which are removed shall be
replaced on-site at a ratio of two (2) new spaces for every three
(3) spaces removed in locations as shown on Exhibit E. If (a)
within the period May 1, 2004 to April 30, 2010 the applicable
zoning and land use statutes and/or
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ordinances are amended after the date hereof in a manner which
does not permit the construction or use of the Expansion #2 Space
for light industrial use, as at present, as a permitted use
("Zoning Change"), and (b) Sublessee in good faith desires to
construct the Expansion #2 Space but is unable to commence
construction because of the Zoning Change, then Sublessee shall
notify Sublessor of its inability to commence construction due to
the Zoning Change. Sublessee shall then proceed promptly at its
own cost, diligently and in good faith to seek a use variance
under applicable law to permit the expansion. Sublessor agrees to
cooperate with Sublessee, provided Sublessee shall pay reasonable
expenses incurred by Sublessor in providing such cooperation. If
the variance sought by Sublessee is not obtained within six (6)
months of the filing of the variance application, then the
Sublessee shall have the right to terminate this Sublease by
written notice of such termination to Sublessor, which
termination shall be effective as of eighteen (18) months after
Sublessor's receipt of Sublessee's notice of its inability to
commence said construction due to the Zoning Change. The parties
expressly acknowledge their mutual intention and agreement that
Sublessor shall have no obligation or responsibility whatsoever
with respect to costs or charges for Expansion #2 excepting such
costs and expenses as Sublessor may incur in its review of
Sublessee's covenants, representations and assurances. Upon
exercise of the Expansion #2 Option and upon Sublessee's
compliance with the conditions for the implementation thereof as
provided in this Sublease, Sublessee shall have the right at its
own cost, to perform Construction Work to erect an addition to
the Building for use in Sublessee's business which addition shall
become incorporated in and a part of the Demised Premises.
Section 3.3 Sublessor Cooperation. Sublessor agrees to
cooperate with Sublessee in connection with Sublessee's exercise
of Expansion #1 and #2 Options and to promptly review preliminary
plans and sign permit applications of approved plans, if
required, at the request of Sublessee in order to facilitate
exercise of Expansion #1 and Expansion #2 Options. Sublessee
shall pay all Sublessor's costs and expenses incurred in
connection with such cooperation.
Section 3.4 When Construction Funded and Performed By
Sublessee.
(a) This Lease provides in Article III, Sections 3.1
and 3.2 for the Sublessee to perform the Construction Work in
conjunction with the implementation of the Expansion #1 Option
and/or the Expansion #2 Option at Sublessee's own cost and
expense.
(b) Upon the exercise of (i) the Expansion #1 Option
where Sublessee does not require Sublessor to fund the Expansion
#1 Construction Costs, and after Sublessor's consent to the
implementation of Expansion #1 as provided herein; or (ii) upon
the exercise of the Expansion #2 Option and after Sublessor's
consent to the implementation of Expansion #2 as provided herein,
Sublessee shall thereby assume the obligation to pay all
Construction Costs for the Construction Work and to engage a
Qualified Contractor, defined in Section 12.20(as), as a general
contractor for the Construction Work. Sublessor shall have the
right to engage Sublessor's Architect.
(c) As a condition precedent to commencement of the
Construction Work by Sublessee, upon implementation of either
expansion option, Sublessee shall post an indemnity, performance
and completion bond issued by a surety acceptable to Sublessor
with Sublessor as joint obligee to guarantee the completion of
and payment for the Construction Work in an amount at least equal
to the Sublessee's Construction Costs as estimated by Sublessor's
Architect.
Section 3.5 Funding of Construction Costs by Sublessor
-Procedure. Upon the Sublessee's exercise of the Expansion #1
Option with an election to require Sublessor to fund Construction
Costs as more particularly provided in this Article III, Section
3.1 above, to a limit of Two Million ($2,000,000.00) Dollars
("Funding Limit"), the respective rights and obligations of the
parties and the procedure for such funding shall be as follows:
(a) Sublessor shall not be obligated to make the first
(1st) disbursement of the funding provided herein until Sublessor
shall have received, in each case, in form, manner and substance
reasonably satisfactory to Sublessor and its counsel:
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(i) evidence that the past and current taxes and
assessments which are paid or payable by the Sublessor
in accordance with the Sublease applicable to the
Premises to be paid by Sublessee have been paid in
full;
(ii) a detailed budget of the overall cost of the
Expansion, including construction cost of the
Expansion, building equipment, on-site improvements,
the cost of fixtures and equipment, "soft" costs
directly attributable to the Expansion, including
financing costs, engineering, architectural and legal
expenses;
(iii) a proposed construction progress and draw
schedule and schedule of payments to tradesmen
prepared by the General Contractor and subject to work
orders;
(iv) a leasehold title insurance policy or binder
expressly issued to cover the prospect of $2,000,000
in funding to be advanced by the Sublessor issued by a
company reasonably satisfactory to the Sublessor,
insuring or committing to insure the fee simple
interest of the Prime Landlord and the leasehold
interest of the Sublessor in the Expansion, free and
clear of all defects and encumbrances except as
described in Section 4.1 (iii), which policy or binder
shall include a UCC search, shall set forth a revised
description of the Demised Premises, shall have
attached thereto clear copies of all instruments which
will appear as exceptions in the policy, shall provide
full coverage against all mechanics' and materialmen's
liens, shall have read into it the survey of the
Demised Premises, and shall contain such reasonable
endorsements as may be reasonably requested by the
Sublessor;
(v) Foundations and Completion surveys of the Demised
Premises prepared and certified by a professional land
surveyor of the State of New Jersey, certified to
Sublessor and the title company, on which survey there
shall be indicated all buildings, structures and
improvements located on or over the Demised Premises,
all roadways, paths, and driveways running across the
Demised Premises, and all easements affecting or
appurtenant to the Demised Premises with deed book and
page references;
(vi) a certification from the Sublessor Architect that
upon completion of the Expansion in accordance with
the Plans and Specifications, the same will comply
with all applicable zoning, environmental protection,
land use, and building laws, ordinances and
regulations, and that the Plans and Specifications, in
his opinion, provide a functional layout and a
completed Expansion which, in the Sublessor's
Architect's opinion, at the time of such
certification, can be constructed within the amount of
the construction budget;
(vii) agreements of the Qualified Contractor and
Architect that they will perform their respective
contracts for the account of the Sublessor in the
event of a default by Sublessee hereunder or
thereunder and permitting the Sublessor to use the
Plans and Specifications without any cost or expense;
(viii) the policies (or certificates relating thereto)
of insurance required by this Sublease, accompanied by
evidence of the payment of the premiums therefor;
(ix) all applicable authorizations, consents,
licenses, approvals, and permits of governmental
authorities for the construction of the Expansion;
(x) if requested by the Sublessor within a reasonable
time prior to the first disbursement, a soils and
geological report issued by a professional engineer
satisfactory to the Sublessor, certifying as to the
adequacy of the subsoils and the foundations of the
Expansion as designed;
(xi) all required payment and performance bonds naming
the Sublessor as a joint obligee;
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(xii) such other documents, agreements,
certifications, affidavits, reports, and other
instruments as shall be required by this Sublease.
(b) Sublessor's obligation to make any disbursement
after the first disbursement shall be subject to the continuing
satisfaction of the conditions referred to in the immediately
preceding subsection 3.5(a) and its subparagraphs, as well as
satisfaction of the following conditions, all in form, manner and
substance reasonably satisfactory to Sublessor and its counsel:
(i) there shall be no Default under this Sublease,
provided, however, Sublessor may in its sole
discretion make disbursements notwithstanding the
existence of such a Default, and any disbursement so
made shall be deemed to have been made pursuant to
this Sublease;
(ii) all materials, equipment and fixtures
incorporated in the construction of the Expansion
shall have been purchased or will thereafter be
purchased so that the absolute ownership thereof shall
have vested or will vest in Sublessee immediately upon
payment of advances disbursed by the Sublessor or upon
Sublessor's receipt of a waiver of lien for the amount
disbursed upon delivery of said materials, equipment
and fixtures to the Premises, and Sublessee shall have
produced and furnished, if required by the Sublessor,
the contracts, bills of sale or other agreements under
which title thereto has vested;
(iii) the Sublessor shall be furnished with affidavits
from the Sublessee and the Qualified Contractor that,
except as otherwise indicated, all money previously
disbursed has been applied to the satisfaction of
Construction Costs for the Expansion, and that there
are presently no amounts owing to subcontractors,
materialmen or laborers, other than the holdbacks or
retainages provided for under existing contractual
arrangements between the various parties;
(iv) Sublessor shall have been furnished with a
certificate of in place value certified by Sublessor's
Architect and the Qualified Contractor drawn in
accordance with the budget furnished, and indicating
the amount of work completed by trade and the
percentage thereof, and also indicating that, to the
date of the certification, the Expansion has been
completed in accordance with the plans and
specifications;
(v) Sublessor shall have been furnished with copies of
all reports of any architects, engineers, managers or
any other person or entity consulted by Sublessee in
connection with the Expansion;
(vi) Sublessor shall have been furnished with a
written estimate by Sublessee of the cost of
completing the construction of the Expansion;
(vii) Sublessor shall have been furnished with a
notice of title continuation or an endorsement to the
title insurance policy, indicating that since the last
preceding disbursement, there has been no change in
the state of title;
(viii) Sublessor shall have been furnished with an
application for disbursement accompanied by a
certificate signed by the Sublessee certifying that
the work for which payment is sought has been
completed and has been fully paid for or will be fully
paid for with the proceeds of the disbursement. Each
application for a disbursement shall constitute an
affirmation by Sublessee that all of the
representations and warranties set forth in this
Sublease remain true and correct as of the date
thereof and, unless the Sublessor is notified to the
contrary prior to the disbursement of the requested
disbursement, will be true and correct on the date
thereof.
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(c) Applications for disbursements shall be made by
Sublessee to the Sublessor on or about the first day of
each month, after commencement of construction of the
Expansion, for work done and materials and labor supplied
during the preceding month or a part thereof with
disbursements to be made by Sublessor on or about the
twentieth day of each month, except that the Sublessor may,
at its option, upon request therefor by the Sublessee, make
advances at more frequent intervals. All applications for
disbursements shall be made in accordance with the American
Institute of Architects Form G #702 and #703, or in such
other form acceptable to Sublessor. Each such application
shall certify in detail acceptable to Sublessor the
expenditures made or expenses incurred by or for Sublessee
as to which the disbursement is requested, and shall be
accompanied with such supporting data, vouchers, invoices
and requisitions as Sublessor may reasonably require. With
each application for disbursement, the Sublessee shall
certify that the amount requested represents sums actually
spent or indebtedness actually incurred. The proceeds of
each disbursement shall be used by Sublessee solely to pay
or as reimbursement for the obligations for which the
disbursement is sought.
(d) Disbursements during construction shall be
limited to ninety percent (90%) of the value of work in
place and acceptably completed, all as determined by
Sublessor's Architect. At no time shall the aggregate
disbursements by the Sublessor pursuant hereto exceed the
Funding Limit. If the Sublessor shall, at any time,
determine that the Funding Limit proceeds remaining to be
disbursed are insufficient to pay the cost of completing
the Expansion, Sublessor and Sublessor's architect shall
have the right to require Sublessee to furnish sufficient
additional funds from some other source to cover the
resulting deficit before advancing any additional
disbursements. Limitations on the amounts advanced shall,
in the discretion of the Sublessor, be made to conform with
any restrictions or requirements of the Bank of New York,
first mortgagee. The Sublessor shall have no obligation to
make disbursement for the cost of materials not in place,
whether stored on- or off-site.
(e) All disbursements shall be subject to prior
inspection and approval of the construction by Sublessor,
which approval shall not be unreasonably withheld,
conditioned or delayed. All such inspections and approvals
shall be solely for Sublessor's benefit and no person or
party shall be entitled to rely thereon or to draw any
inference or conclusion therefrom. Sublessee acknowledges
that:
(i) Sublessor shall have the right to designate
a substitute Sublessor Architect to inspect the
Expansion, upon notice to Sublessee; and
(ii) the duties of the Sublessor's Architect run
solely to Sublessor and that the Sublessor's
representative shall have no obligations or
responsibilities to Sublessee or any of
Sublessee's agents, employees or contractors.
(f) The Sublessor shall not be required to make any
disbursement hereunder if at the time of the requested
disbursement:
(i) a Default, including any event which with notice
or passage of time or both would be a Default exists
hereunder; or
(ii) the amount of the requested advance is
inconsistent in any material respect with the budget
and the breakdown by trades provided to Sublessor by
Sublessee except when Construction Work is ahead of
plans and schedule; or
(iii) the Sublessor shall have determined in its
reasonable judgment that the Expansion cannot or will
not be constructed in accordance with the Plans and
Specifications; or
(iv) the Building and/or the Expansion has been
materially damaged or destroyed by fire or any other
casualty; or
10
(v) any insolvency or bankruptcy proceedings shall be
instituted with respect to the Qualified Contractor,
Sublessee or Guarantor; or
(vi) any legal action is pending which may have a
material adverse affect upon the ability of Sublessee,
the Guarantor, the Qualified Contractor, or the
Sublessor's Architect to complete their respective
undertakings in connection with (i) the Expansion (ii)
the Demised Premises, or (iii) the transactions
contemplated by or in this Sublease; or
(vii) the Sublessor shall have determined, in its
reasonable judgment, there has been a material
deviation from the Plans and Specifications or that
there are material defects in workmanship or
materials.
(g) Sublessee shall commence construction of the
Expansion not later than four (4) months after the date Sublessor
receives notice from Sublessee that Sublessee is exercising the
Expansion #1 Option. Sublessee shall complete the Construction
Work and the fitting out and equipping of the Expansion Space
with due diligence on or before one (1) year from the date
Sublessor receives notice that Sublessee is exercising the
Expansion #1 Option, Construction Work shall be performed in a
good and workmanlike manner, in strict accordance with the Plans
and Specifications and this Sublease. A master set of Plans and
Specifications, together with all amendments thereto, shall be
deposited and held by the Sublessor, and when so filed shall
govern on all matters that may arise with respect thereto. If
construction of the expansion is not commenced within the four
month period aforesaid, Sublessor shall be thereupon
automatically released from any obligation to fund the
Construction Costs for Expansion #1.
(h) The Expansion shall be constructed and equipped
strictly in accordance with all applicable ordinances and
statutes and in accordance and compliance with the requirements
of all governmental authorities having jurisdiction and in
conformity with the requirements of the Board of Fire
Underwriters or similar body. The Expansion shall be constructed
entirely on the Demised Premises and shall not encroach upon or
overhang any easement or right of way nor upon the land of
others, and the buildings when erected shall be wholly within the
building restriction lines, however established, and shall not
violate applicable use or other restrictions contained in prior
conveyances, zoning ordinances or regulations; and Sublessee will
furnish, from time to time, satisfactory evidence with respect
thereto, together with a survey certified by a licensed surveyor
of the State of New Jersey showing the Expansion to be entirely
on the Demised Premises and free from such violations as
aforesaid.
(i) Sublessee shall, upon demand of the Sublessor,
correct any structural defect in the Expansion or any departure
from the Plans and Specifications not approved by the Sublessor
but that was required to have been approved by the Sublessor, and
the disbursement of any advances shall not constitute a waiver of
the right of the Sublessor to require compliance with this
covenant with respect to any defects or departures from the Plans
and Specifications not theretofore discovered by or called to the
attention of the Sublessor.
(j) Sublessee shall notify Sublessor of any cessation,
stoppage or delay in the construction of the Expansion. Except
for delays and cessations caused by factors that are beyond the
control of Sublessee, the Sublessee shall not permit cessation of
the work of construction for a period in excess of ten (10) days
without the prior written consent of Sublessor. Sublessee shall
not permit construction to fall behind schedule to the extent
that the Expansion cannot reasonably be expected to be completed
on or within one (1) year from the date Sublessor receives notice
from Sublessee that Sublessee is exercising the Expansion #1
Option. Sublessee shall promptly notify Sublessor of any event
which it has reasonable basis to believe may cause construction
to be delayed or to fall behind schedule and any cost overrun
which will or may cause the total cost of construction to exceed
the amount set forth in the budget.
(k) Sublessee shall promptly advise Sublessor in
writing of (i) all litigation, regardless of amount, affecting
any part of the Premises and of all material litigation affecting
Sublessee, and (ii) all complaints and charges made by any
governmental authority affecting the Premises or affecting
Sublessee or its business which may delay or require changes in
the
11
construction of the Expansion or impair the fee simple title of
the Prime Landlord or the leasehold interest of the Sublessor.
(l) Aside from any brokerage commissions due or to
become due based upon the Expansion Rent, there is no brokerage
or other fee, commission or compensation which is to be paid by
the Sublessor, and Sublessee agrees to indemnify Sublessor
against any claims for brokerage fees or commissions and to pay
all expenses incurred by the Sublessor (including reasonable
attorneys' fees) in connection with the defense of any action or
proceeding brought to collect any such brokerage fees or
commissions.
(m) Sublessee will pay all expenses as set forth
herein incurred with respect to any and all transactions
contemplated herein and the preparation of any document
reasonably required hereunder and the prosecution or defense of
any action or proceeding or other litigation affecting Sublessor
or the Demised Premises related to or arising out of the
Construction Work, including (without limiting the generality of
the foregoing) all title insurance company premiums and charges,
taxes, insurance premiums, brokerage commissions, finders' fees,
placement fees, court costs, surveyors', photographers',
appraisers', architects', and engineers' fees, accountants' fees,
and attorneys' fees, and will reimburse to the Sublessor all
expenses paid to third parties of the nature described in this
paragraph which have been or may be incurred by the Sublessor
with respect to the Construction Work contemplated herein. The
Sublessor may, upon notice, pay or deduct from the disbursements
by Sublessor any of such expenses and any such funding so applied
shall be deemed to be disbursements under this Sublease.
(n) Sublessee agrees that it will receive all
disbursements hereunder as a trust fund to be applied solely for
the purpose of paying for the costs of the Expansion.
(o) Sublessee shall provide and maintain, or cause to
be provided and maintained, at all times insurance in such forms
and covering such risks and hazards and in such amounts and with
companies as are reasonably satisfactory to the Sublessor. While
the Expansion is under construction, said insurance shall
include, but not be limited to, workers' compensation insurance,
public liability insurance, and hazard insurance policies
including fire insurance with extended coverage on the standard
Builders Risk Completed Value form (non-reporting frill coverage)
with "all risk" insurance including collapse. Losses payable
thereunder shall be payable in accordance with the provisions
contained in such policies shall contain endorsement providing to
owner the protections of a standard mortgagee clause endorsement.
All such policies shall provide for at least thirty (30) days'
notice of cancellation or amendment to the Sublessor.
(p) The Sublessor shall, at all times until the
Sublessor's Architect has certified completion of the Expansion
in accordance with the plans and specifications, have the right
of entry and free access to the Demised Premises and the right to
inspect all work done, labor performed and materials furnished in
or about the Expansion and to inspect subcontracts and all books
and records of the Sublessee regarding the construction of the
Expansion.
(q) Sublessee shall protect and preserve the Demised
Premises, and all equipment and materials stored thereon or
incorporated into the Expansion, from loss, theft,
vandalism, removal, destruction and damage, will maintain the
same in good order and repair, and will not do or suffer to be
done any act whereby the value of any part of the Demised
Premises will or may be reduced or impaired.
(r) Sublessee agrees that no changes, modifications of
or amendments to the Plans and Specifications shall be made
without first obtaining the written approval of the Sublessor and
all governmental authorities with jurisdiction.
(s) Sublessee shall not create, assume, or suffer to
exist any mortgage, pledge, encumbrance, lien or security
interest, whether superior or subordinate to the Prime Landlord's
fee simple interest and the Sublessor's leasehold interest in the
Demised Premises or any part thereof.
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(t) No acceptance or approval (if any) of the Plans
and Specifications or any changes thereto by the Sublessor or
Sublessor's Architect nor any acknowledgment by the Sublessor or
Sublessor's Architect that the Expansion has been constructed in
accordance with the Plans and Specifications shall in any way be
deemed an express or implied warranty or representation or
approval by Sublessor or Sublessor's Architect that such
improvements: (a) are or will be structurally sound, (b) are in
good or workmanlike condition, repair or state of maintenance,
(c) have any particular use or purpose, or (d) have any
particular value.
(u) The rights and remedies herein expressed to be
vested in or conferred upon the Sublessor shall be cumulative and
shall be in addition to and not in substitution for or in
derogation of the rights and remedies conferred by any applicable
law or elsewhere in this Sublease.
(v) Nothing herein contained shall impose upon the
Sublessor any obligation to enforce any terms, covenants or
conditions contained herein. Failure of the Sublessor, in any one
or more instances, to insist upon strict performance by the
Sublessee of any terms, covenants or conditions of this Sublease
shall not be deemed to be a waiver or relinquishment of any such
terms, covenants and conditions.
(w) All conditions of the obligation of the Sublessor
to make advances hereunder are imposed solely and exclusively for
the benefit of the Sublessor and its assigns and no other person
or persons shall have standing to require satisfaction of such
conditions in accordance with their terms or be entitled to
assume that Sublessor will refuse to make advances in the absence
of strict compliance with any or all thereof and no other person
or persons shall, under any circumstances, be deemed to be a
beneficiary or beneficiaries of such conditions, any and all of
which may be waived in whole or in part by the Sublessor if in
its sole discretion it deems advisable to do so.
Section 3.6 Covenants of General Application for Expansions
If Sublessee timely and properly exercises its option
for the Expansion #1 Space without requiring funding by Sublessor
of the Construction Costs for the Expansion #1 space or, in any
event, if Sublessee timely and properly exercises its option for
the Expansion #2 Space, the Sublessee shall, nevertheless, in the
performance of Construction Work for Expansion #1 Space or
Expansion #2 Space, comply with the procedures and requirements
of Article III, Section 3.5, specifically, the following sections
which are acknowledged by the parties to be of general
application to the Expansion(s) whether or not the Construction
Costs are funded by the Sublessor or Sublessee: Article II,
Section 3.5(a)v, vi, ix, x; (h); (i); (j); (k); (1); (m); (o);
(p); (q); (r); (s); (t); (u).
ARTICLE IV
Covenants
Section 4.1 Covenants Regarding Condition of Demised
Premises and Other Matters. The parties agree that:
(i) Sublessee accepts the Demised Premises in their
"as is" and "where is" condition and assumes tenant's
responsibility for all maintenance and repair thereof
as is more particularly provided in the Prime Lease in
Article 6 thereof.
(ii) Sublessor represents:
(a) The intended use of the Demised Premises as
set forth in Article X below is a permitted use
under the zoning classification and laws and
ordinances applicable to the Demised Premises.
(b) All utilities serving the Demised Premises
will have been installed and paid for.
13
(c) The Premises are in compliance with all
applicable laws with regard to buildings or
improvements of the same type and character.
(d) Sublessor has paid all real estate taxes
required to be paid to date with respect to the
Demised Premises.
(iii) The Sublessee's interest in the Demised Premises
is subordinate to and only subordinate to the
following liens:
(a) the effect of any restrictions and easements
recorded in the public records of Middlesex
County;
(b) the Prime Lease;
(c) the Mortgage held by The Bank of New York,
recorded in Mortgage Book 3841 at Page 451 in the
Middlesex County Clerk's Office;
(d) Collateral Assignment of Lease recorded in
Mortgage Book 3841, Page 501; and
(e) Rent Security Agreement of even date herewith.
ARTICLE V
Rent and Payment
Section 5.1 Basic Rent During the Period February 1,
1994 to January 31, 1999. Sublessor reserves and Sublessee
covenants to pay to Sublessor as and for rental of the IDP, aside
from Expansion Rent, during the Initial Term or any expansion
term, as the case may be, without demand or notice, and without
any setoff or deduction, a net basic rental herein called Basic
Rent in addition to Expansion Rent, if any, in the amount of Nine
Hundred Sixty Thousand Two Hundred Thirteen and 80/100
($960,213.80) DOLLARS per annum, in sixty (60) equal monthly
installments of Eighty Thousand and Seventeen and 82/100
($80,017.82) DOLLARS each, in advance, on the first day of each
and every month beginning on February 1, 1994, subject to the
Basic Rent Concession set forth in Section 5.3 and monthly
thereafter through January 31 1999. The Basic Rent for the
Fractional Month, if any, shall be prorated and due and payable
by Sublessee on the Commencement Date.
Section 5.2 Basic Rent For The IDP During the Period
February 1, 1999 to April 30, 2004. Sublessor reserves and
Sublessee covenants to pay to Sublessor as and for Basic Rent for
the IDP during the period February 1, 1999 through April 30,
2004, aside from Expansion Rent during the Initial Term or any
expansion term, as the case may be, without demand or notice, and
without any setoff or deduction in the amount of One Million, One
Hundred Forty-Four Thousand Eight Hundred Seventy and 30/100
($1,144,870.30) DOLLARS per annum, in 63 (sixty-three) equal
monthly installments of Ninety-Five Thousand Four Hundred and
Five and 86/100 ($95,405.86) DOLLARS each, in advance, on the
first day of each and every month beginning on February 1, 1999
and monthly thereafter through April 30, 2004.
Section 5.3 Basic Rent Concession. Notwithstanding the
foregoing and provided that Sublessee is not then in breach or
default under any of the provisions of this Sublease, Sublessor
grants to Sublessee a rent concession applicable solely to the
IDP in Basic Rent equal to Two Hundred Forty Thousand and Fifty
Three and 46/100 ($240,053.46) DOLLARS for the three (3) month
period beginning on February 1,1994 and ending April 30, 1994.
Sublessee shall thereafter pay the Basic Rent set forth in
Section 5.1 hereof and any and all other charges due hereunder.
In the event Sublessee is in breach or default under any of the
terms, covenants and conditions in this Sublease at any time
during this Sublease, the rent concession shall be deemed to be
void ab initio and Sublessee shall be responsible to pay all of
the Basic Rent reserved hereunder. Nothing herein shall affect
Sublessee's liability for the payment of any Additional Rent
payable under this Sublease for the period of the rent
concession.
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Section 5.4 Payment of Rent. The Basic Rent, Expansion
Rent and the Additional Rent as such term is defined in Section
5.5 payable to the Sublessor under this Sublease shall be paid at
the above address of Sublessor or at such other address as may be
specified by Sublessor from time to time by notice given to
Sublessee.
Section 5.5 Additional Rent. All charges and costs
which Sublessee is required to pay pursuant to this Sublease,
including but not limited to Real Estate Taxes and Expansion
Rent, shall be deemed to be "Additional Rent" and in the event of
non-payment by Sublessee, the Sublessor shall have all the rights
and remedies with respect thereto as Sublessor has for the
non-payment of the Basic Rent.
Section 5.6 Basic Rent For the Balance of the Term.
(a) The Basic Rent for the IDP during the period May
1, 2004 to April 30, 2009 shall be equal to the Fair Market
Rental as herein defined for the Premises based on the Middlesex
County market area as of May 1, 2004, but in any event not
greater than $1,569,580.20 per annum based upon a rental of $4.25
per square foot and shall not be less than $1,144,870.30 per
annum based upon a rental of $3.10 per square foot. "Fair Market
Rental" shall be determined as follows: In the event Sublessee
has extended the Term pursuant to this Sublease, the Sublessor
shall on or about January 1, 2004 deliver to Sublessee a notice
in writing stating the Fair Market Rental for the Demised
Premises during the period May 1, 2004 through April 30, 2009. In
the event that the Sublessee shall object to the Fair Market
Rental quoted by Sublessor, the Fair Market Rental shall be
negotiated between Sublessor and Sublessee. If the parties are
unable to come to agreement on the issue of Fair Market Rental
within thirty (30) days after the Sublessor's notice to Sublessee
of the then Fair Market Rental, the parties agree jointly appoint
as arbitrator, a member of the American Institute of Real Estate
Appraisers who has no less than ten (10) years experience leasing
and/or appraising industrial and warehouse space in the Middlesex
County area rental market to determine Fair Market Rental. The
appointment of the arbitrator and determination of Fair Market
Rental shall be made within forty-five (45) days after
Sublessor's notice. The cost of the arbitrator shall be shared
equally by Sublessor and Sublessee. In the event the parties
cannot agree on the appointment of such arbitrator, they shall
request the President of the State Chapter of the American
Institute of Real Estate Appraisers to designate a member of the
Appraisal Institute (M.A.I.) who has been so designated for not
less than ten (10) years with the substantial experience in
industrial real estate in Middlesex County, New Jersey, as the
arbitrator. If the question of Fair Market Rental shall have been
submitted to arbitration according to the provisions of this
Section 5.6 paragraph (a), then the arbitrator's determinations
as to procedure and Fair Market Rental shall be final, binding
and conclusive upon the parties. The question of Fair Market
Rental shall be the sole substantive issue over which the
designated arbitrator shall have jurisdiction. The cost of the
arbitration shall be shared equally by Sublessor and Sublessee.
The parties agree that the decision of the arbitrator shall be
subject to entry as a final judgment upon application of either
party in the Superior Court of New Jersey. The parties jointly
confer jurisdiction on such court for such purpose.
(b) The Basic Rent for the period May 1, 2009 through
April 30, 2014 for the IDP shall be equal to the Fair Market
Rental for the Premises based on the Middlesex County market area
as of May 1, 2009, but in no event less than the Basic Rent for
the period of May 1, 2004 through April 30, 2009. Fair Market
Rental for the period May 1, 2009 through April 30, 2014 shall be
determined in the same manner as described in subparagraph (a)
above. However, Sublessor shall provide written notice of Fair
Market Rental on or about January 1, 2009.
(c) The Basic Rent for the period May 1, 2014 to April
30, 2019 for the IDP shall be equal to the Fair Market Rental for
the Premises based on the Middlesex County market area as of May
1, 2014 but in no event less the Basic Rent for the period May 1,
2009 to April 30, 2014. Fair Market Rental for the period May 1,
2014 through April 30, 2019 shall be determined in the same
manner as described in subparagraph (a) above. However, Sublessor
shall provide written notice of Fair Market Rental on or about
January 1, 2014.
Section 5.7 Rent for Expansion #1 Space. In addition
to the payment of Basic Rent for the IDP, if Sublessee in the
exercise of the Expansion #1 Option requires Sublessor to fund
the Expansion #1 Construction Costs, Sublessee shall pay to
Sublessor, as rent for the
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Expansion Space ("Expansion Rent") in equal monthly installments
during the Sublessor Funded Expansion #1 Term, an amount
calculated as sufficient to fully amortize the Construction
Costs, defined in Section l2.20(j) below, over a ten (10) year
term with interest on the unpaid balance of such Construction
Costs at a fixed rate (the "Fixed Rate") as hereinafter defined.
The Fixed Rate shall be the average of the Notice Date Interest
Rate (as defined below) and the Completion Date Interest Rate (as
defined below). Interest at the Fixed Rate shall be calculated on
the basis of a 360-day year, 30-day month.
Section 5.8 Determination of the Notice Date Interest
Rate. On the date Sublessor receives notice that Sublessee is
exercising the Expansion #1 Option and requires Sublessor to fund
the Expansion #1 Construction Costs, the Notice Date Interest
Rate shall be determined as the higher of (i) the sum of the
Prime Spread (as defined below) plus the Prime Index (as defined
below); or (ii) the sum of the Treasury Spread (as defined below)
plus the Treasury Index (as defined below). The Prime Spread
shall be equal to five percent (5 %) per annum. The Prime Index
shall be "the base rate" or "prime rate" announced by Chemical
Bank (the "Prime Rate") on the first business day prior to
Sublessor's receipt of the Expansion #1 Notice from Sublessee,
whether or not such rate has actually been charged by such bank
provided, if Chemical Bank discontinues the practice of
announcing a "prime rate" or "base rate, " the Prime Index shall
mean the prime rate (or base rate) reported in the money column
or section of The Wall Street Journal as being the base rate on
corporate loans at large U.S. Money Center Banks (whether or not
such rate has actually been charged by any such bank) on the
first business day prior to Sublessor's receipt of the Expansion
#1 Notice from Sublessee. The Treasury Spread shall be five and
thirty-six one hundredths percent (5.36%) per annum. The Treasury
Index shall be the interest rate on the current coupon ten year
U.S. Government Treasury Note as published by The Wall Street
Journal (or such similar financial publication reporting such
data) on the first business day prior to Sublessor's receipt of
the Expansion #1 Option from data provided by the Federal Reserve
Bank of New York.
Section 5.9 Determination of the Completion Date
Interest Rate. On the earlier of: (i) the issuance of a temporary
or permanent certificate of occupancy for the Expansion #1 Space;
or (ii) one (1) year from the date notice is received by
Sublessor that Subtenant has exercised the Expansion #1 Option
and has required Sublessor to fund Expansion #1 Construction
Costs, the Notice Date Interest Rate shall be adjusted upwards or
downwards to reflect any change in the Prime Index or the
Treasury Index, as the case may be. The adjusted Notice Date
Interest Rate shall be referred to herein as the "Completion Date
Interest Rate".
Section 5.10 Rental for Expansion #1 Space Following
the Ten Year Expansion #1 Rent Period. The Expansion Rent for the
first ten (10) years for the Expansion #1 Space is a function
solely of the amortization of Construction Costs, plus applicable
interest on the outstanding balance. The per square foot rent for
the Expansion #1 Space after the first ten (10) years of the
Sublessor Funded Expansion #1 Term will be identical to the per
square foot rent for the IDP applicable for the same time periods
as outlined in Exhibit D and Section 5.6 (a), (b) and (c).
Section 5.11 Rental for Expansion Space if Sublessee
Pays Construction Costs. (a) If Sublessee exercises its option to
construct Expansion #1 Space and Sublessee funds the Construction
Work with respect to the said Expansion #1 Space, Sublessee shall
not be obligated to pay Expansion Rent with respect to Expansion
#1 Space during the Sublessee Funded Expansion #1 Term.
(b) If Sublessee exercises its option to construction
Expansion #2 Space in accordance with the provisions of this
Sublease, Sublessee will not be obligated to pay Expansion Rent
for the Expansion #2 Space during the Expansion #2 Term.
Notwithstanding anything herein, all of Sublessee's right to
possession of any and all portions of the Demised Premises shall
expire and terminate not later than April 30, 2019.
Section 5.12 Timing of Completion of Expansion #1
Space. If the Expansion #1 Space Construction Work is not
certified by the Sublessor's Architect to be completed, less
punchlist items, within one year from Sublessor's receipt of
notice of Sublessee's exercise of the Expansion #1 Option, then
the Expansion Rent shall be determined as provided in Section
5.13
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below, and the Sublessee shall commence payment of Expansion Rent
along with the installment of Basic Rent which is due and payable
on the first day of the twelfth month after the month in which
Sublessor received notice of Sublessee's exercise of the
Expansion #1 Option.
Section 5.13 Calculation of Aggregate Construction
Cost of Expansion #1. During the 11th month following the month
in which Sublessee provided notice of its exercise of the
Expansion #1 Option, Sublessor's Architect, in consultation with
the Architect, shall make a determination of the aggregate
Construction Costs for the Expansion #1 Space by calculating the
sum of: (i) advances disbursed by Sublessor pursuant to the
provisions of Section 3.5 hereof against certified value of work
in place; and (ii) the aggregate retainage withheld by the
Sublessor; and (iii) interest on the aggregate advances made by
the Sublessor pursuant to Section 3.5, said interest being
calculated at the Notice Date Interest Rate; and (iv) the amount
estimated by the Sublessor's Architect, in consultation with the
Architect, which is required to be expended for Construction
Costs to complete the Expansion #1 Space ("Completion Budget
Amount") or ("CBA"). The amount of the CBA is limited by
Sublessor's maximum obligation to fund no more than $2,000,000 of
the Expansion #1 Construction Costs. The CBA shall be used for
determination of Expansion Rent pursuant to Section 5.7.
Section 5.14 Sublessee to Complete Construction Work
and Use of CBA. The Sublessor shall deposit the CBA in a
Federally regulated banking institution money fund (the
"Completion Account") and the interest earned and paid thereon
shall be credited to such account. Sublessee shall cause the
Construction Work to proceed to completion and shall be entitled
to draw advances monthly for completed work in place from the CBA
pursuant to the procedures and requirements of Article II.
Section 5.15 Overcharge or Deficiency in Completion
Budget Amount. If the Construction Work is completed before
depletion of the CBA, the Sublessor shall cause any balance of
the CBA to be paid over to the Sublessee. If the CBA is depleted
prior to completion of the Construction Work, then Sublessee
shall replenish the CBA, which amount shall be deposited into the
Completion Account to the extent necessary to fund in full the
final completion of the Construction Work. Completion of
Construction Work under Sections 5.12, 5.13, 5.14 and 5.15 shall
be evidenced by the issuance of a Permanent Certificate of
Occupancy by municipal authorities of the Township of Edison and
the Sublessor's Architect's certification of completion.
ARTICLE VI
Construction Or Other Work
Section 6.1 Conditions As To Construction Work,
Expansion Space, and as to Repairs, Alterations, Replacements or
Other Work. Whenever any Construction Work, repairs, alterations,
replacements or other work in, on, to or about the Premises shall
be made by the Sublessee as provided in this Sublease:
(i) The work shall be done in a good and workmanlike
manner and in compliance with all applicable laws,
ordinances and codes, and all applicable governmental
rules, regulations and requirements, and in accordance
with the standards, if any, of the Board of Fire
Underwriters, or other organizations exercising the
functions of a board of fire underwriters whose
jurisdiction includes the Demised Premises.
(ii) All materials and workmanship shall be of good
quality, and in case of repairs, restoration, changes,
additions, alterations, replacements or improvements,
shall be at least equal to the original;
(iii) All said work shall be paid for as promptly as
is practicable and consistent with good business
practices under the then existing circumstances;
(iv) Such work shall be done as promptly as is
possible and practicable under the existing
circumstances;
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(v) Sublessee shall provide and maintain, or cause to
be provided and maintained, at all times, insurance in
such forms and covering such risks and hazards and in
such amounts and with companies as are reasonably
satisfactory to the Sublessor. While the Expansion is
under construction said insurance shall include. but
not be limited to, workers' compensation insurance,
public liability insurance, and hazard insurance
policies including fire insurance with extended
coverage on the standard Builders Risk Completed Value
form (non-reporting frill coverage) with "all risk
insurance including collapse." Losses payable
thereunder shall be payable in accordance with the
provisions contained in such policies shall contain
endorsement providing to owner the protections of a
standard mortgagee clause endorsement. All such
policies shall provide for at least thirty (30) days'
notice of cancellation or amendment to the Sublessor.
The comprehensive general liability insurance provided
by Sublessor, as Tenant under the Prime Lease in
Section 9.3 thereof shall be provided by Sublessee.
Sublessee agrees to provide insurance coverage for
hazards and with limits in compliance with Section 9
of the Prime Lease to apply to any Construction Work,
and evidence thereof shall be delivered to the
Sublessor prior to commencement of such work;
(vi) The Sublessee shall carry or cause its
contractors, if any, to carry worker's compensation
insurance as required by law in connection with such
work, and evidence thereof shall be delivered to the
Sublessor prior to commencement of such work;
(vii) Title to all buildings, building mixtures and
improvements erected and installed by Sublessee (but
not Sublessee's racking system, conveyor belts,
sorting system or other trade fixtures, however the
same may be attached to the realty) shall become the
property of Sublessor upon the expiration or earlier
termination of this Sublease;
(viii) The Sublessee shall procure a certificate of
occupancy or amended certificate of occupancy upon
completion of the work in each instance if under local
practice such certificates of occupancy are issued or
required in connection with such work. The Sublessee
shall also obtain the certificate from the Board of
Fire Underwriters, or other organization exercising
the same functions, whose jurisdiction includes the
Demised Premises, in each instance, certifying that
the electrical work has been properly completed
whenever the work done involves any electrical work
for which such a certificate is issued under local
practice. If, under local practice, official
certificates of occupancy are not issued or required
by a governmental officer or department, or if the
Board of Fire Underwriters, or other such organization
does not issue certificates on proper completion of
electrical work, this covenant shall be satisfied upon
issuance of such certifications by an architect or
engineer selected by Sublessee with approval of the
Sublessor. Upon the acceptance of the Certificates of
Occupancy or the alternative certifications from the
Architect or engineer as described and provided above,
the Sublessee will provide to the Sublessor the total
value of the new construction, and the Sublessor will
include this additional value in the Building
Insurance as provided in Article XII, Section 12.14;
(ix) Sublessee and/or Sublessor agree to join in the
applications for all permits and authorizations
whenever necessary;
(x) Construction Work on Expansion #1 and Expansion #2
shall also conform to the criteria stipulated in
Exhibit F.
18
ARTICLE VII
Mechanic's Liens
Section 7.1 Mechanic's Liens Prohibited. Sublessee
shall not suffer any mechanics's lien or construction contract to
be filed against the Demised Premises by reason of work, labor,
services or materials performed or furnished to Sublessee or to
anyone holding the Demised Premises, or any part thereof, through
or under Sublessee. If any construction contract, mechanics's
lien or any notice of intention to file a mechanic's lien shall
at any time be filed against the Demised Premises, (unless the
labor or materials were actually performed for or furnished to
Sublessor in connection with its obligations under this Sublease)
Sublessee shall at Sublessee's cost, within thirty (30) days
after knowledge or notice of the filing of any mechanic's lien
cause the same to be removed or discharged of record by payment,
bond, order of a court of competent jurisdiction, or otherwise.
Section 7.2 Sublessor's Remedy for Sublessee's Breach.
If Sublessee shall fail to remove or discharge any construction
contract or mechanic's lien or any notice of intention to file a
mechanic's lien within the prescribed time, then in addition to
any other right or remedy of Sublessor, Sublessor may, at its
option, procure the removal or discharge of the same by payment
or bond or otherwise. Any amount paid by Sublessor for such
purpose, together with all reasonable legal and other expenses of
Sublessor in procuring the removal or discharge of such
construction contract, lien or notice of intention and together
with interest thereon at the Sublease Interest Rate (as
hereinafter defined), shall be and become due and payable by
Sublessee to Sublessor as Additional Rent, and in the event of
Sublessee's failure to pay therefor within fifteen (15) days
after demand. the same shall be added to and be due and payable
with the next month's rent as Additional Rent.
Section 7.3 Non-Consent of Sublessor to Filing of
Liens. Nothing contained in this Sublease shall be construed as a
consent on the part of Sublessor to subject Sublessor's estate in
the Demised Premises to any lien or liability arising out of
Sublessee's use or occupancy of the Premises.
ARTICLE VIII
Notices
Section 8.1 Notices. Every notice required or
permitted under this Sublease shall, unless otherwise
specifically provided herein, be given in writing and shall be
sent by United States certified mail, return receipt requested,
or by a recognized overnight carrier which provides proof of
delivery, addressed by the party giving, making or sending the
same to the other at the other's address first above given, or to
such other address as either party may designate from time to
time by a notice given to the other party. Copies of all notices
sent hereunder shall be sent by facsimile. As to the Sublessor,
any notices shall be sent to the attention of Xxxxx X. Xxxxxxxxx,
Senior Vice President, Real Estate, with a copy to Senior Vice
President/General Counsel at the address first above given, the
Fax number at the date of execution hereof, for Xx. Xxxxx
Xxxxxxxxx being 000-000-0000 and for the Office of the Second
Vice President and General Counsel being 000-000-0000. As to the
Sublessee, any notices shall be sent to the attention of
President, Popular Club Plan, Inc., 00 Xxxxxxx Xxxxx, Xxxxxxxx,
Xxx Xxxxxx 00000, the Fax Number at the time of execution hereof
being (000) 000-0000, with copies to President, J. Crew Group,
Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, the Fax number
at the time of execution hereof being (000) 000-0000, and
Xxxxxxxx & Xxxxx, Esqs., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxxx X. Xxxxxxx, Esq., the Fax number on the
date hereof is 000-000-0000. During any postal strike or similar
interruption with the mails, personal delivery shall be
substituted for certified mail. Notice shall be deemed to be
given upon receipt, provided, however that in the event a party
shall refuse to accept delivery of said certified mail, the
notice shall nevertheless be deemed to be given upon the date of
refusal to accept delivery and further provided that if the
postal service is unable to deliver said certified mail, the
notice shall nevertheless be deemed to be given as of the date of
the Postal Service's second notice of attempted delivery. The
telephone facsimile numbers incorporated above are
19
stated for convenience only. The facsimile shall be used by the
parties as an ancillary method of, but shall not take the place
of, the formal notice communication by certified mail return
receipt requested or overnight carrier required herein.
ARTICLE IX
Memorandum of Sublease
Section 9.1 Memorandum of Sublease. Sublessee shall
not record this Sublease, but if either party should desire to
record a short form Memorandum of Sublease setting forth only the
parties, the Demised Premises and the Initial Term, expansion
term(s) and the renewal term(s), such Memorandum of Sublease
shall be executed, acknowledged and delivered by both parties
upon notice from either party.
ARTICLE X
Use
Section 10.1 Use. The Demised Premises shall be used
and occupied by Sublessee as executive offices and warehouse for
light assembly, packaging, marketing and distribution and for no
other purposes. Sublessee shall not use the Premises for
manufacturing or the handling of Hazardous Substances as defined
in Article XIV.
ARTICLE XI
Defaults and Remedies
Section 11.1 Sublessee's Defaults. "Default" shall
mean occurrence of any of the following: (a) failure to pay Basic
Rent, Expansion Rent or any Additional Rent or any other amounts
required to be paid by it hereunder and fails to cure the default
within five (5) days after receipt of notice specifying the
default, or (b) failure to comply with or failure to perform any
of the other covenants or conditions of this Sublease, and falls
to cure the same within thirty (30) days after the receipt of
notice specifying the default, or provided Sublessee proceeds
diligently if the default cannot be cured within thirty (30)
days, within such additional period of time beyond said thirty
(30) days as shall be required by reason of strikes, lockouts.
acts of God, governmental restrictions or prohibitions. or other
causes beyond Sublessee's control, whether similar or dissimilar
to the foregoing (each of which notices specifying a default is
referred to in this Sublease as "First Notice"), then at the
expiration of said five (5) days in the case of a default
described in (a), or at the expiration of said thirty (30) days
(or longer period as aforesaid) in the case of a default
described in (b), Sublessor may (1) cancel and terminate this
Sublease on not less than five (5) days' notice (hereinafter
called "Second Notice") to Sublessee, and on the date specified
in the Second Notice, the Initial Term, the Expansion Term or the
renewal term(s), as applicable, of this Sublease shall terminate
and expire, and Sublessee shall then quit and surrender the
Premises to Sublessor, but Sublessee shall remain liable as
hereinafter provided and or (2) Sublessor may at any time
thereafter re-enter and resume possession of the Premises by
summary proceedings, an action in ejectment or otherwise and
dispossess or remove Sublessee and other occupants and their
effects and hold the Premises as if this Sublease had not been
made; and Sublessee waives the service of any additional notice
of intention to re-enter or to institute legal proceedings to
that end.
Section 11.2 Sublessor's Remedies. If this Sublease
shall be terminated or if Sublessor shall be entitled to re-enter
the Demised Premises and dispossess or remove Sublessee under the
provisions of Article XI, the Sublessor, or Sublessor's agents or
servants, may immediately or at any time thereafter re-enter the
Demised Premises and remove therefrom the Sublessee, its agents,
employees, servants, licensees, and any subtenants and other
persons, firms or corporations, and all or any of its or their
property therefrom, either by summary dispossess proceedings or
by any suitable action or proceeding at law or otherwise, without
being liable to
20
indictment, prosecution or damages therefor, and repossess and
enjoy said premises together with all additions, alterations and
improvements thereto.
Section 11.3 Sublessor's Damages. In case of any
Default and termination, re-entry, or dispossess or removal by
summary proceedings or otherwise, the annual rent and all other
charges required to be paid by the Sublessee hereunder shall
thereupon become due and be paid up to the time of such
termination, re-entry, or dispossess or removal, and the
Sublessee shall also pay to the Sublessor all reasonable expenses
which the Sublessor may then or thereafter incur for necessary
legal expenses, attorneys' fees, brokerage commissions, and all
other necessary costs paid or incurred by the Sublessor for
restoring the Demised Premises to good order and condition and
for altering and otherwise preparing the same for re-letting. The
Sublessor may, at any time and from time to time, re-let the
Demised Premises, in whole or in part, either in its own name or
as agent of the Sublessee, for a term or terms which, at the
Sublessor's option, may be for the remainder of the then current
Initial Term, expansion term or renewal term(s), as the case may
be, of this Sublease, or for any longer or shorter period, and
(unless the statute or rule of law which governs the proceeding
in which such damages are to be proved, limits or shall limit the
amount of such claim capable of being so proved and allowed, in
which case the Sublessor shall be entitled to prove as and for
liquidated damages and have allowed an amount equal to the
maximum allowed by or under any such statute or rule of law) the
Sublessee shall be obligated to, and shall pay to the Sublessor
as damages, upon demand, and the Sublessor shall be entitled to
recover of and from the Sublessee, at the election of the
Sublessor, either:
(a) liquidated damages, in an amount which, at the
time of such termination, re-entry or dispossess or removal by
the Sublessor, as the case may be, is equal to the excess, if
any, of the then present value of the installments of Basic Rent,
Expansion Rent and Additional Rent reserved hereunder, for the
period which would otherwise have constituted the unexpired
portion of the then current applicable term of this Sublease,
over the then present value of the rental value of the Demised
Premises for such unexpired portion of the then current Term of
this Sublease, discounted at the rate of five (5 %) percent per
annum; or
(b) damages (payable in monthly installments, in
advance, on the first day of each calendar month following such
termination, re-entry or dispossess, and continuing until the
date originally fixed herein for the expiration of the then
current Term of this Sublease) in any amount or amounts equal to
the excess, if any, of (x) over (y) with (x) being the sums of
the aggregate expenses paid by the Sublessor during the month
immediately preceding such calendar month for all such items as,
by the terms of this Sublease, are required to be paid by the
Sublessee, plus an amount equal to the amount of Basic Rent,
Expansion Rent and Additional Rent which would have been payable
by the Sublessee hereunder in respect to such calendar month, had
this Sublease and the applicable term of this Sublease not been
so terminated, and had the Sublessor not so re-entered, plus the
amount of the rental value of any portion of the Demised Premises
occupied by the Sublessee or any agent of the Sublessee and (y)
being the sum of rents, if any, collected by or accruing to the
Sublessor in respect to such calendar month pursuant to such
re-letting or any holding over by any subtenants of the
Sublessee. Any suit for any month shall not prejudice in any way
the rights of the Sublessor to collect the deficiency for any
subsequent month by a similar proceeding. The Sublessor, at its
option and at its expense, may make such alterations, repairs
and/or decorations in the Demised Premises as in its reasonable
judgment the Sublessor considers advisable and necessary, and the
making of such alterations, repairs and/or decorations shall not
operate or be construed to release the Sublessee from liability
hereunder. Sublessor shall use reasonable efforts to mitigate
damages, but otherwise Sublessor shall in no event be liable in
any way whatsoever for failure to re-let the Demised Premises, or
in the event that the Demised Premises are re-let, for failure to
collect rent thereof under such re-letting; and in no event shall
the Sublessee be entitled to receive any excess of such rents
over the sums payable by the Sublessee to the Sublessor hereunder
but such excess shall be credited to the unpaid rentals due
thereunder, and to the expenses of re-letting and preparing for
re-letting as provided in subparagraph (a) hereof. Suit or suits
for the recovery of such damages, or any installments thereof,
may be brought by the Sublessor from time to time at its
election, and nothing herein contained shall be deemed to require
the Sublessor to postpone suit until the date when the Term of
this Sublease would have expired if it has not been terminated
under the
21
provisions of this Sublease, or under any provision of law, or
had the Sublessor not re-entered into or upon the Demised
Premises.
Section 11.4 Waiver of Redemption. Sublessee hereby
waives all rights of redemption to which Sublessee or any person
claiming under Sublessee might be entitled, after an abandonment
of the Premises, or after a surrender and acceptance of the
Premises and the Sublessee's subleasehold estate, or after a
dispossession of Sublessee from the Demised Premises, or after a
termination of this Sublease, or after a judgment against
Sublessee in an action in ejectment, or after the issuance of a
final order or warrant of dispossess in a summary proceeding, or
any other proceeding or action authorized by any rule of law or
statute now or hereafter in force or effect.
Section 11.5 Provisions of Prime Lease as to Defaults
and Remedies Cumulative with the Provisions of Sublease.
Notwithstanding anything herein, the provisions of Article XVII
of the Prime Lease provides cumulative rights and remedies for
the Sublessor supplementing the provisions of this Sublease. It
is intended that the Sublessor shall have the benefit of the
provisions of the Sublease and the Prime Lease with respect to
defaults and remedies which provide the greatest rights and
remedies, to Sublessor. The Sublessor may elect the applicable
clause stipulating defaults and remedies, but failure to make
such election shall not abrogate the cumulative benefit to the
Sublessor intended by this provision.
ARTICLE XII
General Provisions
Section 12.1 No Waste. The Sublessee covenants not to
do or suffer any waste or damage or injury to any building or
improvement now or hereafter on the Demised Premises, or the
fixtures and equipment thereof, or permit or suffer any
overloading of the floors thereon.
Section 12.2 Limitation of Sublessor's Liability. If
Sublessor shall breach any of the provisions hereof, Sublessor
shall only be liable to Sublessee for actual monetary damages and
not for consequential damages and Sublessor's liability shall in
no event exceed the Sublessor's interest in the Demised Premises
as of the date of Sublessor's breach except for (a) liabilities
relating to representations, covenants and warranties made by
Sublessor herein in Section 4. l(iii) concerning liens prior to
the lien of this Sublease or (b) representations, covenants and
warranties made by Sublessor as to the environmental matters and
compliance with applicable laws as set forth in Article XIV. In
any instance where Sublessor's disapproval or withholding of
consent is challenged under the provisions of this Sublease, the
sole remedy available to Sublessee shall be an order directing
that such consent or approval be given, without assessment of any
damages as a consequence of the withholding of such consent or
approval. Sublessee expressly agrees that any judgment which it
may obtain against Sublessor shall be recoverable and satisfied
solely out of the right, title and interest of Sublessor in the
Demised Premises and there shall be no liability beyond such
interest in the Demised Premises except for (a) liabilities
relating to representations, covenants and warranties made by
Sublessor herein in Section 4.1 (iii) concerning liens prior to
the lien of this Sublease or (b) representations, covenants and
warranties made by Sublessor as to the environmental matters and
compliance with applicable laws as set forth in Article XIV.
Sublessee shall not hold any shareholder, officer or director of
the Sublessor personally liable for any breach of representations
or warranties or any other default under any circumstances.
Sublessee shall have no rights of lien or levy against any other
property of Sublessor, nor shall any other property or assets of
the Sublessor be subject to levy, execution or other enforcement
proceedings for the collection of any such sums or satisfaction
of any such judgment or award and Sublessee expressly agrees that
any judgment which it may obtain against Sublessor shall be
recoverable and satisfied solely out of the right, title and
interest of Sublessor in the Demised Premises except for (a)
liabilities relating to representations, covenants and warranties
made by Sublessor herein in Section 4.1 (iii) concerning liens
prior to the lien of this Sublease or (b) representations,
covenants and warranties made by Sublessor as to the
environmental matters and compliance with applicable laws as set
forth in Article XIV.
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Section 12.3 Partial Invalidity. If any term or
provision of this Sublease or the application thereof to any
party or circumstances shall to any extent be invalid or
unenforceable, the remainder of this Sublease or the application
of such term or provision to parties or circumstances other than
those to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Sublease
shall be valid and enforced to the fullest extent permitted by
law.
Section 12.4 No Waiver. One or more waivers by either
party of the obligation of the other to perform any covenant or
condition shall not be construed as a waiver of a subsequent
breach of the same or any other covenant or condition.
The receipt of rent by the Sublessor, with knowledge
of any breach of this Sublease by the Sublessee or of any default
on the part of the Sublessee in the observance or performance of
any of the conditions or covenants of this Sublease, shall not be
deemed to be a waiver of any provision of this Sublease. Neither
the acceptance of the keys nor any other act or thing done by the
Sublessor or any agent or employee during the Term herein demised
shall be deemed to be an acceptance of a surrender of said
Premises, excepting only an agreement, in writing, signed by the
Sublessor accepting or agreeing to accept such a surrender.
Section 12.5 Number and Gender. Wherever herein the
singular number is used, the same shall include the plural and
the masculine gender shall include the feminine and neuter
genders.
Section 12.6 Successors and Assigns. Subject to the
provisions of Article XIII, the terms, covenants and conditions
herein contained shall be binding upon and inure to the benefit
of the respective parties and their successors and assigns.
Section 12.7 Article and Marginal Headings. The
article and marginal headings herein are intended for convenience
in finding the subject matters, and are not to be used in
determining the intent of the parties to this Sublease.
Section 12.8 Entire Agreement. This instrument, the
Tri-Party Agreement and the Subordination, Non-Disturbance and
Attornment Agreement among the Prime Landlord, Sublessor,
Sublessee, Guarantor and The Bank of New York, all of even date,
contain the entire and only agreement among the parties, and no
oral statements or representations or prior written matter not
contained in this instrument shall have any force or effect. This
Sublease shall not be modified in any way or terminated except by
a writing executed by Sublessor and Sublessee.
Section 12.9 Obligations also Covenants. Whenever in
this Sublease any words of obligation or duty are used, such
words or expressions shall have the same force and effect as
though made in the form of covenants.
Section 12.10 Cost of Performing Obligations. The
respective obligations of the parties to keep, perform and
observe any terms, covenants or conditions of this Sublease shall
be at the sole cost and expense of the party so obligated.
Section 12.11 Remedies Cumulative. The specified
remedies to which the Sublessor may resort under the terms of
this Sublease are cumulative and are not intended to be exclusive
of any other remedies or means of redress to which the Sublessor
or Sublessee may be lawfully entitled in case of any breach or
threatened breach of any provision of this Sublease.
Section 12.12 Holding Over. If Sublessee holds over
after the expiration or earlier termination of this Sublease
("Holdover"), and if Sublessee is not otherwise in default
hereunder such holding over shall not be deemed to create an
extension of the term, but such occupancy shall be deemed to
create a month-to-month tenancy at the rate of one hundred
twenty-five (125 %) percent of the then current Basic Rent,
Additional Rent and the Expansion Rent for the first sixty (60)
days of the Holdover; and one hundred fifty (150%) percent of the
then current Basic Rent, Additional Rent and the Expansion Rent
for the next thirty (30) days or a portion thereof; and two
hundred (200%) percent of the then current Basic Rent, Additional
Rent and the Expansion Rent as the case may be thereafter during
such Holdover and on the
23
same terms and conditions (except as the same may be then
inapplicable in the then context of circumstances) as are in
effect on the date of said expiration or earlier termination.
Section 12.13 Signs.
(a) Sublessee shall have the right and privilege of
erecting signs for advertising purposes in connection with its
business at the Demised Premises as long as such signs meet with
the prior written approval of Sublessor and Prime Landlord, which
approval shall not be unreasonably withheld. Sublessee expressly
agrees that the privilege to erect signs is not intended and
shall not be applicable to any installation on the roof of the
Building.
(b) Sublessee shall be responsible for any damage
caused by said signs and any damage so caused shall be repaired
forthwith at Sublessee's sole cost and expense. In the event any
sign erected by Sublessee is removed during the Term of this
Sublease or at the expiration or earlier termination thereof,
Sublessee shall repair any damage whatsoever caused by the
removal at Sublessee's sole cost and expense.
Section 12.14 Property Insurance-Special Provision.
Sublessor will provide "all risk" property insurance for the full
replacement cost of the Building and all improvements and
betterments, except Sublessee's racking system, conveyor belts,
sorting systems or other trade fixtures as referred to in Article
VI, Section 6. 1(vii). The cost of this insurance will be
reimbursed to Sublessor by the Sublessee as Additional Rent in an
amount equal to the annual premium of the policy or the premium
developed by the Sublessee's insurance Company, whichever is
less.
Sublessee and Sublessor will mutually cause their
respective insurance companies to waive any rights of subrogation
under such property insurance against the Sublessor or Sublessee,
respectively.
Section 12.15 Brokerage. Sublessor and Sublessee
mutually represent and covenant to each other that neither party
dealt with a real estate broker or salesperson other than
Aramanda Realty Corp. and Xxxxxxx & Xxxxxxxxx of N.J. Sublessor
shall be responsible to pay to Aramanda Realty Corp. and to
Xxxxxxx & Xxxxxxxxx of N.J. any commission due.
The parties hereto agree to indemnify each other and
hold each other harmless against any and all claims, liabilities,
losses, judgments and expenses including legal fees which one
party suffers if the representation of the other party set forth
herein proves to be untrue.
Section 12.16 Notice by Sublessee to Mortgagee. If
required by the holder of a mortgage lien to which this Sublease
is subordinate (provided Sublessee is furnished with written
notice of such requirement), Sublessee agrees (a) to notify such
mortgagee of any alleged default by Sublessor in any of the
provisions of this Sublease: and (b) to allow to the said
mortgagee a reasonable period time to cure such alleged default.
Section 12.17 Sublessee Electric. Sublessee's use of
electric energy in the Demised Premises shall not at any time
exceed the capacity of any of the electrical conductors and
equipment in or serving the Demised Premises.
Section 12.18 Conduct of Sublessee's Work.
(a) The parties mutually acknowledge that Sublessee
may determine to effect installation on the Premises which are
the subject of this Sublease certain subleasehold improvements
("Sublessee's Work") in the nature of fixtures, equipment and
personalty. Such Sublessee's Work is contemplated to be effected
subsequent to the execution hereof and prior to the Commencement
Date as herein defined. Sublessee agrees to permit Sublessor and
its agents and contractors to enter upon the Premises for such
purposes with the understanding by the parties that it is of the
essence that the progress of the Construction Work shall not be
delayed, interrupted, or impeded; nor shall the Construction Work
be affected in any manner whatsoever which will result in an
increase in the Sublessor's cost in completion of the
Construction Work prior to the Commencement Date.
24
(b) Labor used in the performance of Sublessee's Work
("Sublessee's Labor") shall be such as is compatible with the
labor used in the performance of the Construction Work; and use
of Sublessee's Labor shall not result in any stoppage, delay or
interruption whatsoever in the Construction Work.
(c) In the event of any stoppage, delay or
interruption in the Construction Work while Sublessee's Labor is
engaged on the premises, Sublessee shall forthwith cease and
desist use of Sublessee's Labor on the premises upon receipt of
written notice from Sublessor demanding cessation of Sublessor's
Work. Thereafter, Sublessee shall not engage Sublessee's Labor on
the premises until Sublessor shall have given written approval
therefor.
(d) Sublessee shall have the right to perform
Construction Work in order to demolish, at its sole cost and
expense and risk, certain existing improvements hereby referred
to as the Cafeteria Improvements and Locker Room Areas together
with the adjacent restroom facilities shown on Exhibit G.
Sublessee shall indemnify Sublessor and the first mortgagee of
the Demised Premises for any losses, damages, liabilities,
claims, costs, expenses (including reasonable fees and expenses
of counsel) for personal injury or property damage which results
from or arises out of the performance of such Demolition provided
that Sublessee will be under no obligation to replace these
improvements at the termination of this Sublease or anytime
during the Term of this Sublease or extensions thereof.
Section 12.19 Interest and Late Payment Service
Charge. Sublessee covenants and agrees to pay to Sublessor
interest at the Sublease Interest Rate and a late payment service
charge equal to five (5 %) percent of any Basic Rent, Additional
Rent and Expansion Rent payment or any other payment prescribed
herein which has not been paid in accordance with the provisions
of this Sublease Agreement, provided, however, that such interest
and late payment service charges shall not commence to accrue
until a delinquency by Sublessee exceeds five (5) business days.
Said interest and late payment service charge shall be both paid
by Sublessee to Sublessor promptly upon proper notice and demand
therefor.
Section 12.20 Definitions.
(a) "Additional Rent" shall have the meaning provided
in Article V, Section 5.5.
(b) "Architect" shall have the meaning provided in
Article III, Section 3.1(b).
(c) "Assignment" shall have the meaning provided in
Article XIII, Section 13.1.
(d) "Basic Rent" shall have the meaning provided in
Article V.
(e) "Building" shall have the meaning provided in
Article I, Section 1.1.
(f) "Commencement Date" shall mean February 1, 1994.
(g) "Completion Account" shall have the meaning
provided in Article V, Section 5.14.
(h) "Completion Budget Amount" or "CBA" shall have the
meaning described in Section 5.13.
(i) "Completion Date Interest Rate" shall have the
meaning provided in Article V, Section 5.9.
(j) Construction Costs. Construction Costs shall mean,
in each instance whether or not involving an expansion as herein
contemplated, the aggregate direct and indirect costs for
Construction Work including, but not limited to, the actual cost
of work, labor, materials and equipment, financing, brokers fees
or commissions for financing, brokerage fees or
25
commissions for Expansion Rent, if any, and any and all
reasonable professional fees for accountants, architects,
engineers, planners, attorneys and other consultants. including
the cost of the Sublessor's Architect retained by the Sublessor
to insure that the Construction Work of the Qualified Contractor
and others engaged by the Sublessee is in accord with the
provisions of this Sublease and to certify the value of work in
place in accordance with the plans and specifications for the
purpose of progress payments with respect to Expansion #1 and
interest at the Sublessee Interest Rate on Sublessor's advances
up to the Funding Limits of the Construction Costs for the
Expansion #1 Space. Such interest shall compound monthly and be
calculated on a 30 day month and a 360 day year. Construction
Costs do not include any costs incurred by Sublessor or Sublessee
in negotiating this Sublease, the Tri-Party Agreement of even
date or any other document in conjunction therewith. Sublessor
and Sublessee shall each bear their respective costs incurred in
the negotiation of this Sublease and all other collateral
agreements executed in conjunction herewith.
(k) "Construction Work". The term "Construction Work"
is a collective term meaning the totality of all services, work,
labor, materials and equipment necessary, in each instance, in
the performance by Sublessee of the repairs, alterations and
other work contemplated herein, whether or not involving
Expansion #1 or Expansion #2, including, but not limited to, the
design of the improvements to be erected, site preparation and
sub-soil footings and foundations, grading, surfacing of parking
area, paths and ways, installation of all utilities; and the
cleanup and removal of debris, the work of accountants,
architects, engineers, planners, attorneys, surveyors and other
consultants performing services in conjunction with the foregoing
or any permitting or approval process required under applicable
law. It is intended that Construction Work when complete shall
place the completed Building, as expanded, in full availability
for the conduct of the business activity at the site permitted
under applicable land use regulations.
(l) "Default" shall have the meaning provided in
Article XI, Section 11.1.
(m) "Demised Premises" shall have the meanings
described in Article I.
(n) "EPA" shall mean the United States Environmental
Protection Agency.
(o) "Expansion" shall mean Expansion #1 Space and/or
Expansion #2 Space.
(p) "Expansion #1 shall mean Expansion #1 Space.
(q) "Expansion #2" shall mean Expansion #2 Space.
(r) "Expansion #1 Option" shall mean the rights of the
Sublessee described in Article III, Section 3.1.
(s) "Expansion #2 Option" shall mean the rights of the
Sublessee described in Article II, Section 3.2.
(t) "Expansion #1 Space" shall have the meaning
described in Article III, Section 3.1 and identified as A on
Exhibit E.
(u) "Expansion #2 Space" shall have the meaning
described in Article III, Section 3.2 and identified as B and C
on Exhibit E.
(v) "Expansion #2 Term" shall have the meaning
provided in Article 2, Section 2.1(b).
(w) "Fair Market Rental" shall have the meaning
provided in Article V, Section 5.6.
(x) "Fax" shall have the meaning provided in Article
VIII, Section 8.1.
(y) "Fixed Rate" shall have the meaning provided in
Article V, Section 5.7.
26
(z) "Fractional Month" shall have-the meaning provided
in Article II, Section 2.1(a).
(aa) "Funding Limit" shall have the meaning provided
in Section 3.5
(ab) "Guarantor" shall mean the J. Crew Group, Inc.
(ac) "Guaranty" shall mean the Guaranty dated the date
hereof between J. Crew Group, Inc. and Revlon Holdings Inc.
(ad) "Hazardous Substances" shall have the meaning
defined in Article XIV, Section 14.1.
(ae) "IDP" shall have the meaning described in Article
I, Section 1.1.
(af) "Initial Occupancy Date" shall mean November 1,
1993 as provided in Article II, Section 2.2.
(ag) "Initial Term" shall have the meaning provided in
Article II, Section 2.1(a).
(ah) "ISRA" shall mean N.J.S.A. 13:lK--6 et seq.,
Industrial Site Recovery Act.
(ai) "NJDEPE" shall mean the New Jersey Department of
Environmental Protection and Energy.
(aj) "Notice Date Interest Rate" shall have the
meaning provided in Article V, Section 5.8.
(ak) "Preliminary Expansion #1 Plans" shall have the
meaning provided in Article III, Section 3.1(b).
(al) "Premises" shall have the meaning provided in
Article I, Section 1.1.
(am) "Prime Index" shall have the meaning provided in
Article V, Section 5.8.
(an) "Prime Landlord" shall have the meaning described
in Article I, Section 1.2(a).
(ao) "Prime Lease" shall have the meaning provided in
Article I, Section 1.2(a).
(ap) "Prime Rate" shall be the "base rate" or "prime
rate" announced by Chemical Bank, whether or not such rate has
actually been charged by such bank provided, if Chemical Bank
discontinues the practice of announcing a "prime rate" or "base
rate", the Prime Rate shall mean the "prime rate" or "base rate"
reported in the money column or section of the Wall Street
Journal as being the base rate on corporate loans at large U.S.
Money Center Banks (whether or not such rate has actually been
charged by any such bank).
(aq) "Prime Spread" shall have the meaning provided in
Article V, Section 5.8.
(ar) "Prime Tenant" shall have-the meaning described
in Article I, Section 1.2(a).
(as) Qualified Contractor. The term "Qualified
Contractor" means an organization with at least ten years
experience in the construction of industrial/commercial
structures which has been selected by the Sublessee to perform
the Construction Work after the Sublessee has requested at least
two bids for the completion of the Construction Work, provided
the contractor selected from the bids received by the Sublessor
has demonstrated to the Sublessor's satisfaction that the
contractor possesses the requisite experience and financial
resources to complete the Construction Work.
27
(at) "RCPC" shall have the meaning provided in Article
I, Section 1.2(a).
(au) "Re-enter and Re-entry". The terms "re-enter" and
"re-entry" as used in this Sublease are not restricted to their
technical legal meaning.
(av) "Sublease Interest Rate." The term "Sublease
Interest Rate," as used in this Lease, shall mean interest at the
rate which is three (3 %) percent in excess of the Prime Rate.
(aw) "Sublessee Funded Expansion #1 Term" shall have
the meaning provided in Article 2, Section 2.l(b).
(ax) "Sublessor." The term "Sublessor" as used in this
Sublease means only the holder, for the time being, of
Sublessor's interest under this Sublease so that in the event of
any transfer of title to the Demised Premises Sublessor shall be
and hereby is entirely freed and relieved of all obligations of
Sublessor hereunder accruing after such transfer, and it shall be
deemed without further agreement between the parties that such
grantee, transferee or assignee has assumed and agreed to observe
and perform all obligations of Sublessor hereunder arising during
the period it is the holder of Sublessor's interest hereunder.
(ay) "Sublessor Funded Expansion #1 Term" shall have
the meaning described in Article I, Section 1.1 and Article II,
Section 2.1(b).
(az) "Sublessor's Architect" shall have the meaning
provided in Article III, Section 3.1(a).
(ba) "Treasury Index" shall have the meaning provided
in Article V, Section 5.8.
(bb) "Treasury Spread" shall have the meaning provided
in Article V, Section 5.8.
(bc) "Tri-Party Agreement" shall have the meaning
provided in Article I, Section 1.2(a).
(bd) "#1 Measuring Date" shall have the meaning
provided in Article II, Section 2.1(b).
(be) "#2 Measuring Date" shall have the meaning
provided in Article II, Section 2.1(b).
(bf) "Zoning Change"' shall have the meaning provided
in Article III Section 3.2.
Section 12.21 Governing Law. The interpretation and
validity of this Sublease shall be governed by the laws of the
State of New Jersey applicable to contracts negotiated, executed
and to be performed in the State of New Jersey. Any controversy
arising out of the terms of this Sublease shall be resolved by
appropriate proceedings in either the United States District
Court for New Jersey or the Superior Court of New Jersey either
or which shall have sole and exclusive jurisdiction thereof.
ARTICLE XIII
Assignment, Subletting, Etc.
Section 13.1 Assignment. Subletting. Etc. Sublessee
shall not sell, assign, mortgage, pledge, or, in any manner,
transfer or encumber this Sublease or any estate or interest
hereunder, or sublet the Demised Premises or any part thereof
(any of the foregoing shall be referred to herein as
"Assignment") without the previous written consent of the
Sublessor which consent shall not be unreasonably withheld
provided that (i) Sublessee is not in material default
28
hereunder and no event has occurred which with notice or passage
of time, or both, would constitute a material default hereunder
(without regard to whether a notice of default has been served
pursuant to Article XI); (ii) Sublessee shall provide Sublessor
with access to the Demised Premises for inspection and testing
thereof; (iii) the use by the proposed assignee or sublessee does
not, in Sublessor's reasonable judgment, (a) adversely affect the
Demised Premises by virtue of environmentally related factors or
(b) lessen the value of the Premises; or (c) increase risk or
endanger the Building or the occupants thereof; and (iv)
Sublessee shall provide Sublessor with financial statements and
information demonstrating to Sublessor's reasonable satisfaction
that the prospective assignee or sublessee has the financial
capacity to perform the obligations of the Sublessee hereunder.
Any sale of stock or assets of the Sublessee or any merger,
consolidation or liquidation of the Sublessee shall be deemed to
be an Assignment for purposes of this Section 13.1 (other than an
initial public offering of not more than 19 % of the outstanding
common stock of Sublessee in an underwritten public offering
under the Securities Act of l933). Notwithstanding the foregoing,
in the case of any Assignment to a wholly owned subsidiary or
affiliate of Sublessee or J. Crew Group, Inc. (so long as
Sublessee or J. Crew Group, Inc. retains the controlling interest
in such affiliate) or to Sublessee's parent, such previous
written consent by Sublessor shall not be necessary, provided
that Sublessee shall provide thirty (30) days advance written
notice of any such Assignment to such a subsidiary or affiliate
and will provide Sublessor with any information reasonably
requested regarding the Assignee. In any of the events aforesaid
whether or not consent is required, Sublessee, nevertheless,
shall remain directly and primarily liable for the payment of the
Basic Rent, Additional Rent and Expansion Rent, and the
performance of Sublessee's other covenants and obligations
hereunder. Any amount received by Sublessee in connection with an
Assignment or to the extent such amount exceeds the amount
required to be paid by Sublessee to Sublessor under this Lease
(net of Sublessee's brokers fees, reasonable legal fees for
preparation of Assignment documents and reasonable cost of
alterations for the prospective assignee or sublessee) shall
belong to and be promptly remitted by Sublessee to Sublessor. No
consent to any Assignment of this Sublease shall be deemed or
construed to be a consent by Sublessor to any further or
additional Assignment. In the event of an Assignment , the
assignee or sublessee, as the case may be, shall (as condition to
Sublessor's consent thereto where consent is required, and in the
case of any assignment in which consent is not required) assume,
by written recordable instrument reasonably satisfactory to
Sublessor, the due performance of all of Sublessee's obligations
under this Lease. No Assignment shall be valid or effective in
the absence of such assumption. In connection with any
Assignment, the prospective Assignee shall not more than thirty
(30) days prior to the effective date of such Assignment, furnish
to the Sublessor in each case, its then current consolidated and
consolidating balance sheets as of the end of its most recent
fiscal year and the related statements of income, shareholders'
equity and changes in cash flow for such fiscal year, setting
forth in each, in comparative form the figures for the previous
fiscal year. All such consolidated statements reported on, shall
be without qualification, and by independent certified public
accountants satisfactory to the Sublessor. Each year thereafter,
within ninety (90) days of the end of each fiscal year, the
Assignee shall provide their respective financial statements in
the aforementioned form with the aforementioned required
certification of the respective independent certified public
accountants, to the Sublessor. A true copy of such Assignment and
the original assumption agreement or the sublease, as the case
may be, shall be delivered to Sublessor within ten (10) days of
the effective date thereof. Notwithstanding anything to the
contrary, Sublessor shall have the right, but not the obligation,
to notify Sublessee within thirty (30) days of receipt of
Sublessee's request for consent to an Assignment or subletting
that Sublessor has elected to terminate the Sublease which
termination shall become effective ninety (90) days after the
date Sublessee receives said notice of election from Sublessor.
ARTICLE XIV
Compliance with Laws, Rules and Regulations
Section 14.1 Environmental Compliance.
(a) The Sublessee shall at all times comply with
applicable municipal, state and federal laws, ordinances and
regulations relating to hazardous substances as defined in the
Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. ("ISRA")
and/or Spill Compensation and Control Act, N.J.S.A. 58:10-23.11,
et seq., or any other environmental law (the "Hazardous
29
Substances") from and after the signing of this Sublease. The
Sublessee shall at its own expense maintain in effect any
permits, licenses or other governmental approvals, if any,
required for the Sublessee's use of the Demised Premises. The
Sublessee shall make all disclosures required of the Sublessee by
any such laws, ordinances and regulations, and shall comply with
all orders, with respect to the Sublessee's use of the Demised
Premises, issued by any governmental authority having
jurisdiction over the Demised Premises, and take all action
required of such governmental authorities to bring the
Sublessee's activities on the Demised Premises into compliance
with all laws, rules, regulations and ordinances relating to
Hazardous Substances and affecting the Demised Premises except
arising from any compliance attributable to Sublessor or any
party in privity with Sublessor which responsibility for
compliance shall belong to Sublessor or any party in privity with
Sublessor.
(b) Sublessor shall, prior to the Initial Occupancy
Date, comply with Sublessor's obligations pursuant to ISRA and
any other environmental law, statute or ordinance, and such
compliance shall be a condition precedent to Sublessee's entry
and occupancy of the Premises.
(c) If at any time the Sublessee or Sublessor shall
become aware, or have reasonable cause to believe, that any
Hazardous Substance has been released or has otherwise come to be
located on or beneath the Premises, such party shall, immediately
upon discovering the release or the presence or suspected
presence of the Hazardous Substance, give written notice of that
condition to the other party. In addition, the party first
learning of the release or presence of a Hazardous Substance on
or beneath the Premises, shall immediately notify the other party
in writing of (i) any enforcement, cleanup, removal, or other
governmental or regulatory action instituted, completed, or
threatened pursuant to any Hazardous Substance laws, (ii) any
claim made or threatened by any person against Sublessor, the
Sublessee or the Premises arising out of or resulting from any
Hazardous Substances, and (iii) any reports made to any
municipal, state, or federal environmental agency arising out of
or in connection with any Hazardous Substance.
(d) Sublessee shall indemnify, defend (by counsel
acceptable to the Sublessor), protect, and hold harmless the
Sublessor and each of the Sublessor's partners, directors,
officers, employees, agents, attorneys, successors, and assigns,
from and against any and all claims, liabilities, penalties,
fines, judgments, forfeitures, losses, costs, or expenses
(including attorney's fees, consultants' fees, and expert fees)
for the death of or injury to any person or damage to any
property whatsoever, arising from or caused in whole or in part,
directly or indirectly, by (i) the presence in, or, under, or
about the Premises, or any discharge or release in or from the
Premises of any Hazardous Substance, which is caused by Sublessee
or anyone in privity with Sublessee, or (ii) Sublessee's failure
or the failure of anyone in privity with Sublessee to comply with
any Hazardous Substance law.
(e) Sublessor shall indemnify, defend (by counsel
acceptable to the Sublessee), protect, and hold harmless the
Sublessee and each of the Sublessee's partners, directors,
officers, employees, agents, attorneys, successors, and assigns
from and against any and all claims, liabilities, penalties,
fines, judgments, forfeitures, losses, costs or expenses
(including attorney's fees, consultants' fees, and experts' fees)
for the death of or injury to any person or damage to any
property whatsoever, arising from or caused in whole or in part,
directly or indirectly, by (i) the presence in, or, under, or
about the Premises, or any discharge or release in or from the
Premises of any Hazardous Substance, which is caused by the
Sublessor or any one in privity with Sublessor or (ii)
Sublessor's failure or the failure of anyone in privity with
Sublessor to comply with any Hazardous Substance law.
(f) The indemnity obligations created hereunder shall
include, without limitation, and whether foreseeable or
unforeseeable, any and all costs incurred in connection with any
site investigation of the Premises, and any and all costs for
repair, cleanup, detoxification or decontamination, or other
remedial action of the Premises. The obligations of the Sublessee
and Sublessor hereunder shall survive the expiration or earlier
termination of this Sublease, and any extensions thereof.
(g) Sublessee shall not engage in operations at the
Premises which involve the generation, manufacture, refining,
transportation, treatment, storage, handling or disposal of
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"hazardous substance" or "hazardous wastes", as such terms are
defined under ISRA except these ordinarily used for general
office purposes or ordinarily used for warehousing, light
assembly, packaging, marketing and distribution operations in
accordance with Article X use. Sublessee further covenants that
it will not cause or permit to exist as a result of an
intentional or unintentional action or omission on its part, the
releasing, spilling, leaking, pumping, pouring, emitting,
emptying or dumping from, on or about the Premises or the land on
which it is located of any hazardous substances (as such term is
defined under N.J.S.A. 58:l0-12.ll(b)(d) and N.J.A.C. 7:1-3.3).
(h) If ISRA is triggered by Sublessee's actions or any
party in privity with Sublessee, Sublessee shall, at Sublessee's
own expense, comply with ISRA and the regulations promulgated
thereunder to the extent ISRA is applicable to Sublessee. If ISRA
is triggered by Sublessor's actions or the actions of any party
in privity with the Sublessor. Sublessor shall, at Sublessor's
own expense, comply with ISRA and the regulations promulgated
thereunder to the extent ISRA is applicable to the Sublessor.
Sublessee shall, at Sublessee's own expense, make all submissions
to provide all information to, and comply with all requirements
of the Bureau of Industrial Site Evaluation ("the Bureau") of the
New Jersey Department of Environmental Protection and Energy
("NJDEPE"). Should the Bureau or any other division of NJDEPE
determine that a cleanup plan be prepared and that a cleanup be
undertaken because of any spills or discharges of hazardous
substances or wastes at the Premises which occur during the Term
of this Sublease, if caused by the Sublessee, then Sublessee
shall, at Sublessee's own expense, prepare and submit the
required plans and financial assurances, and carry out the
approved plans. If caused by Sublessor, then Sublessor shall, at
Sublessor's own expense, prepare and submit the required plans
and financial assurances, and carry out the approved plans.
Sublessee's obligations under this paragraph shall arise if there
is any closing, terminating or transferring of operations of an
industrial establishment at the Premises which triggers ISRA.
Upon Sublessee's request, Sublessor shall provide reasonable
cooperation at no expense to Sublessee unless ISRA is triggered
by Sublessee or someone in privity with Sublessee, in connection
with Sublessee's obligation to comply with ISRA. At no expense to
Sublessor, Sublessor shall promptly provide all information
reasonably required by Sublessee for preparation of
non-applicability affidavits and shall promptly review, revise as
necessary and sign such affidavits when requested by Sublessee.
Sublessee shall indemnify, defend and save harmless Sublessor
from all fines, suits, procedures, claims and actions of any kind
arising out of or in anyway connected with any spills or
discharges of hazardous substances or wastes at the Demised
Premises which occur during the Term of this Sublease and are
caused by Sublessee or any party in privity with the Sublessee;
and from all fines, suits, procedures, claims and actions of any
kind arising out of Sublessee's failure to provide all
information, make all submissions and take all actions required
by ISRA, the Bureau or any other division of NJDEPE. Sublessor
shall indemnify, defend and save harmless Sublessee from all
fines, suits, procedures, claims and actions of any kind arising
out of or in any way connected with any spills or discharges of
Hazardous Substances at the Demised Premises which occur prior to
the Term of this Sublease and are caused by Sublessor or any
party in privity with Sublessor; and from all fines, suits,
procedures, claims and actions of any kind arising out of
Sublessor's failure to provide all information, make all
submissions and take all actions required by ISRA, the Bureau or
any other division of NJDEPE. The obligations and liabilities
under this paragraph shall continue so long as Sublessee or
Sublessor remain responsible for any spills or discharges of
Hazardous Substances at the Premises . Sublessee's failure to
abide by the terms of this paragraph shall entitle Sublessor to
appropriate equitable relief.
(i) With respect to Sublessee's occupancy of the
Demised Premises, Sublessee shall promptly provide Sublessor with
any notices, correspondence and submissions made by Sublessee to
or to Sublessee from NJDEPE, the United States Environmental
Protection Agency (EPA), or any other local, state or federal
authority which requires submission (with respect to Sublessee's
occupancy of the Demised Premises) of any information concerning
environmental matters or Hazardous Substances. Similarly during
Sublessee's occupancy of the Demised Premises, Sublessor shall
promptly provide to Sublessee any notices, correspondence and
submissions made by Sublessor to or from NJDEPE, the United
States Environmental Protection Agency (EPA), or any of the
local, state or federal authority which requires submission (with
respect to the Demised Premises) of any information concerning
environmental matters or Hazardous Substances.
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(j) Sublessee represents and warrants that its SIC
Number is 5961. Sublessee hereby agrees that it shall promptly
inform Sublessor of any change in the business to be conducted in
the Demised Premises, but the Demised Premises shall be used only
for the purposes described in Article X.
(k) In the event of Sublessee's failure to comply in
full with this paragraph, Sublessor may, at its option, perform
any and all of Sublessee's obligations as aforesaid and all costs
and expenses reasonably incurred by Sublessor in the exercise of
this right shall be added to the next month's rent and be due and
payable as such, or the Sublessor may deduct the same from the
balance of any sum remaining in the Sublessor's hands.
(1) Sublessee's obligations under this paragraph shall
survive the expiration or earlier termination of this Sublease.
IN WITNESS WHEREOF, Sublessor and Sublessee have
executed this Sublease as of the day and year first above
written.
Attest: SUBLESSOR:
REVLON HOLDINGS INC. a Delaware
____________________________ Corporation
By:____________________________________
Attest: SUBLESSEE:
POPULAR CLUB PLAN, INC. a New Jersey
____________________________ Corporation, a Division of J. CREW GROUP, INC.
By:____________________________________
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